SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission file number 1-9164
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Organized in Delaware I.R.S. Employer Identification No. 72-1067072
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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Depositary Units New York Stock Exchange
8 3/4% Senior Subordinated Notes due 2004 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
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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 Depositary Units held by non-affiliates of
the registrant was approximately $754,133,000 on March 10, 1995.
Documents Incorporated by Reference
Portions of the registrant's Annual Report to unitholders for the year ended
December 31, 1994 (Parts I, II, III and IV).
TABLE OF CONTENTS
Page
Part I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Items 1 and 2. Business and Properties . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . 1
Management . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agricultural Minerals. . . . . . . . . . . . . . . . . . . . 2
Fertilizer Business . . . . . . . . . . . . . . . . . . . 2
Sulphur Business. . . . . . . . . . . . . . . . . . . . . 6
Oil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Competition. . . . . . . . . . . . . . . . . . . . . . . . 9
Research and Development . . . . . . . . . . . . . . . . . . 10
Environmental Matters. . . . . . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . . . . . . 11
Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 10. Directors and Executive Officers
of the Registrant . . . . . . . . . . . . . . . . . . . . 13
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . . . . . . 17
Part IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K . . . . . . . . . . . . . . . . . 17
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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.
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INTRODUCTION
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP"), a
Delaware limited partnership organized in 1986, participates in one of the
largest and lowest cost phosphate fertilizer producers in the world through
its joint venture interest in IMC-Agrico Company, a Delaware general
partnership ("IMC-Agrico"). IMC-Agrico's business includes the mining and
sale of phosphate rock, the production, distribution and sale of phosphate
fertilizers, and the extraction of uranium oxide from phosphoric acid. FRP's
business also includes the mining, purchase, transportation, terminaling and
sale of sulphur, and the production of oil reserves at Main Pass Block 299
("Main Pass"), offshore Louisiana in the Gulf of Mexico. For information with
respect to industry segments, including export sales and major customers,
reference is made to Note 8 to the financial statements of FRP referred to on
page F-1 hereof (the "FRP Financial Statements").
In January 1995, FRP acquired essentially all of the domestic assets of
Pennzoil Sulphur Co. ("Pennzoil"), a division of Pennzoil Company, including
the Culberson mine in Texas, sulphur terminals and loading facilities in
Galveston, Texas and Tampa, Florida, land and marine transportation equipment
and associated commercial contracts and obligations. Pennzoil will receive
quarterly payments from FRP over 20 years based on the prevailing price of
sulphur.
In October 1994, FRP announced that it had agreed in principle to acquire
Fertiberia, S.L. ("Fertiberia"), the restructured nitrogen and phosphate
fertilizer business of Ercros, S.A. ("Ercros"), a Spanish conglomerate. Since
September 1993, FRP has managed this company with the goal of establishing
Fertiberia as a financially viable concern. FRP intends to continue to work
with the Spanish authorities on improving the operations of Fertiberia and
eventually to acquire substantially all of Fertiberia's outstanding stock in
return for agreeing to make a capital contribution of $11.5 million upon
closing of the acquisition and a further contingent payment of $10 million in
January 1998. As part of the agreement, $38.5 million of nonrecourse
financing has been arranged at Fertiberia with payment terms dependent upon
its financial performance. The acquisition of Fertiberia, one of the largest
fertilizer manufacturers in Europe, is subject to a number of conditions.
The Managing General Partners and the Special General Partners of FRP are
Freeport-McMoRan Inc. ("FTX"*) and FMRP Inc. ("FMRP"), a wholly owned
subsidiary of FTX. The current capitalization of FRP consists of an aggregate
1% basic general partnership interest (the "FRP Basic Interest"), units of
limited partnership interest ("FRP Units") of which a portion is deposited
with Mellon Bank, N.A., as depositary units ("FRP Depositary Units"), and
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*The term "FTX", as used in this report, means Freeport-McMoRan Inc., its
divisions, and its direct and indirect subsidiaries and affiliates other than
FRP, or any one or more of them, unless the context requires Freeport-McMoRan
Inc. only.
additional units of general partnership interest ("FRP Unit Equivalents").
FRP Depositary Units are listed and publicly traded on the New York Stock
Exchange ("NYSE"). Unless otherwise indicated, FRP Units, FRP Depositary
Units and FRP Unit Equivalents are sometimes hereinafter referred to,
individually and collectively, as "Partnership Units".
Including the FRP Basic Interest, FTX and FMRP, as of March 10, 1995,
held Partnership Units representing an approximate 51.4% interest in FRP, with
the remaining interest being publicly owned and traded on the NYSE. The
public unitholders are entitled, through the cash distribution for the fourth
quarter of 1996, to receive minimum quarterly distributions prior to any
distribution on the partnership units held by FTX and FMRP. For additional
information with respect to FRP distributions, reference is made to Note 3 to
the FRP Financial Statements.
MANAGEMENT
As provided in the FRP partnership agreement, limited partners may not
take part in the management of FRP. FTX, as Administrative Managing General
Partner, exercises all management powers over the business and affairs of FRP.
FRP does not have directors. Instead, directors and officers of FTX,
along with FRP's elected officers, perform all FRP management functions and
carry out the activities of FRP. Such elected officers of FRP continue to
be employees or officers of FTX or its subsidiaries, but, subject to certain
exceptions, are employed principally for the operation of FRP's businesses.
Pursuant to the FRP partnership agreement, FTX also furnishes general executive,
administrative, financial, accounting, legal, environmental, tax, research and
development, sales and certain other services to FRP and is reimbursed by FRP
for all direct and indirect costs in connection therewith. FTX and FMRP do
not receive any compensation as general partners of FRP. For additional
information with respect to management, reference is made to Note 6 to the FRP
Financial Statements.
AGRICULTURAL MINERALS
FRP's agricultural minerals segment consists of FRP's interest in the
IMC-Agrico fertilizer business and FRP's sulphur business.
Fertilizer Business
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IMC-Agrico Company
In July 1993, FRP and IMC Fertilizer, Inc., now IMC Global Inc. ("IGL"),
contributed their respective phosphate fertilizer businesses, including the
mining and sale of phosphate rock and the production, distribution and sale of
phosphate chemicals, uranium oxide and related products, to IMC-Agrico. At
the time, FRP and IGL were among the largest integrated phosphate fertilizer
producers in the world and both were among the lowest cost producers. As a
result of the formation of IMC-Agrico, FRP expects that it and IGL together
will be able to achieve beginning in the 1995/1996 fertilizer year
approximately $135 million per year of savings in aggregate production costs
and selling, general and administrative expenses. FRP estimates that it and
IGL actually realized $90 million of savings in the 1993/1994 fertilizer year.
Under the IMC-Agrico Partnership Agreement (the "Partnership Agreement"), IMC-
Agrico will distribute quarterly to the Partners Distributable Cash, as
defined in the Partnership Agreement, based on sharing ratios that vary from
year to year for the first five fiscal years ending June 30, 1998. The
sharing ratios are based on the parties' initial projections of their
respective contributions to the cash flow of IMC-Agrico and on an equal
sharing of the anticipated synergistic savings. For further information, see
Note 2 to the FRP Financial Statements.
IMC-Agrico is governed by a policy committee (the "Policy Committee")
with equal representation from FRP and IGL, which establishes policies
relating to the strategic direction of IMC-Agrico and assures that such
policies are implemented. The Policy Committee has the sole authority to make
certain Major Decisions, as defined in the Partnership Agreement, including
the creation of major indebtedness, major acquisitions and dispositions, and
approval of budgets, subject to the authority of the Chief Executive Officers
of FRP and IGL to resolve disputes.
Phosphate Rock
IMC-Agrico's phosphate mining operations and production plants are
located in Polk, Hillsborough, Hardee and Manatee Counties in central Florida.
IMC-Agrico mines phosphate rock for both internal production of phosphoric
acid at plants in Florida and Louisiana and phosphate rock sales to external
customers under long-term contracts and in the spot market. The rock is
reacted with sulphuric acid, produced in part from sulphur from Main Pass, to
provide phosphoric acid which is then further processed at IMC-Agrico's
fertilizer plants. IMC-Agrico's annual phosphate rock capacity is
approximately 31.5 million tons per year and accounts for approximately 54% of
U.S. phosphate rock capacity and 18% of world capacity. IMC-Agrico's
phosphate rock mines produced 20.9 million tons of phosphate rock in the year
ended December 31, 1994, compared to a total production by U.S. phosphate
mines of 41.5 million tons of phosphate rock. Production was at less than
full capacity in 1994 because of actions to control inventory.
As of December 31, 1994, FRP, through IMC-Agrico, had proved and probable
reserves of 206.7 million short tons, plus an additional 190.2 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.) For information with respect to FRP's phosphate rock
reserves, reference is made to Note 10 to the FRP Financial Statements. For
information concerning FRP's sales of phosphate rock, see "Selected Financial
and Operating Data" on page 13 of FRP's 1994 Annual Report to unitholders,
which is incorporated herein by reference.
Phosphate Fertilizers
IMC-Agrico manufactures fertilizer and related products, including
sulphuric acid, phosphoric acid, granulated phosphates (principally diammonium
phosphate ("DAP"), monoammonium phosphate ("MAP") and granular triple
superphosphate ("GTSP")), anhydrous ammonia and urea. IMC-Agrico's fertilizer
operations consist of six plants, three in central Florida and three on the
Mississippi River in Louisiana. Although certain plants were temporarily
idled in 1994 due to weak market conditions, all of the plants were in
operation by early 1995.
IMC-Agrico's plants located in Florida consist of New Wales, Nichols and
South Pierce. The New Wales plant, located near Mulberry, Florida, has
facilities for the production of sulphuric acid, phosphoric acid, DAP, MAP and
GTSP. The Nichols facility, located at Nichols, Florida, has facilities for
the production of sulphuric acid, phosphoric acid and DAP. South Pierce,
located at Bartow, Florida, has facilities for the production of sulphuric
acid, phosphoric acid, GTSP and technical grade DAP and MAP for industrial
uses.
IMC-Agrico's Faustina, Uncle Sam and Taft plants are located in
Louisiana. The Faustina plant, located at Donaldsonville, Louisiana, has
facilities for the production of anhydrous ammonia, urea, sulphuric acid,
phosphoric acid, DAP and MAP. The Uncle Sam plant, located at Uncle Sam,
Louisiana, has facilities for the production of sulphuric acid and phosphoric
acid. The Taft plant, located at Taft, Louisiana, has facilities for the
manufacture of DAP and MAP.
IMC-Agrico's plants have an estimated annual sustainable capacity to
produce 530,000 tons of anhydrous ammonia, 260,000 tons of urea, approximately
10.4 million tons of sulphuric acid, and approximately 8.2 million tons of
granulated phosphates. IMC-Agrico's phosphoric acid capacity is approximately
4.0 million tons of contained P2O5*, approximately 32% of U.S. production
capacity and 11% of world capacity. In 1994 IMC-Agrico produced approximately
10.2 million tons of sulphuric acid, 3.7 million tons of phosphoric acid, and
7.1 million tons of granulated phosphates. For information concerning FRP's
sales of phosphate fertilizers, see "Selected Financial and Operating Data" on
page 13 of FRP's 1994 Annual Report to unitholders, which is incorporated
herein by reference.
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 and IGL both have interests in a joint
venture which began mining sulphur reserves at Main Pass in April 1992. FRP
continues to operate the Main Pass joint venture through Freeport Sulphur
Company ("FSC"), its sulphur division. FRP and IGL entered into an agreement
to supply IMC-Agrico with its sulphur requirements. FRP supplies its share of
the requirements through FSC. IGL supplies its share of the requirements
through its share of Main Pass production and purchases from third parties.
IMC-Agrico's ammonia needs are fulfilled primarily by third party domestic
suppliers under long-term contracts and by internal production at its Faustina
plant.
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*P2O5 is an industry term indicating a product's phosphate content measured
chemically in units of phosphorous pentoxide.
Marketing
Since July 1993, all fertilizer marketing functions for FRP have been
handled by IGL on behalf of IMC-Agrico. IMC-Agrico markets products
throughout the eastern two-thirds of the United States in the domestic market
and, primarily through the American Phosphate Export Association ("Amphos"), a
Webb-Pomerene association, overseas. Phoschem and Phosrock, the primary units
of Amphos, market phosphate chemical fertilizers and phosphate rock,
respectively, for IMC-Agrico and other U.S. firms. Effective January 1995,
the marketing activities of Phoschem have been consolidated into those of its
member companies with IMC-Agrico marketing DAP, MAP and GTSP for the members.
This change will allow IMC-Agrico to interface directly with its major
international customers and better pursue growth and marketing opportunities.
In 1994 IMC-Agrico used approximately 59% of its phosphate rock shipments
at its plants in Florida and Louisiana, with most of the balance being sold in
the domestic market. Approximately half of IMC-Agrico's phosphate fertilizer
shipments in 1994 were sold in the domestic market, with the balance sold
abroad.
Although phosphate fertilizer sales do not vary significantly from month
to month, the largest sales periods occur prior to the fall and spring planting
of crops. Historically, domestic sales decline somewhat after the spring
planting season but this drop in domestic sales occurs at a time when
major international buyers purchase product for mid-year delivery.
World phosphate prices declined to a nearly 20 year low during mid-1993,
due to a number of factors, including a significant decline in import demand
by China; a sharp increase to record levels of U.S. producer held stocks of
finished phosphate fertilizers; intense competition in offshore markets
traditionally served by U.S. producers, particularly MAP from the former
Soviet Union; unsettled import policies in other key overseas markets such as
China and India and continued lower demand in Europe. Prices significantly
improved during 1994 as China returned to the market purchasing record
volumes. FRP believes that the price outlook for phosphate fertilizers has
improved substantially based in part on this return by China to the
marketplace at more traditional volume levels, a significant reduction in the
stocks of finished phosphate materials held by producers (in spite of near
maximum industry operating rates) and stable domestic demand.
Uranium
The phosphate rock used in the production of phosphoric acid contains
small amounts of uranium. At its uranium extraction facilities, IMC-Agrico
extracts and processes uranium oxide ("yellowcake") as a by-product of
phosphoric acid. Production of yellowcake is dependent on the quantity and
uranium content of phosphoric acid produced by its host plants. Yellowcake,
after further processing, is used as a fuel by electric utilities. Although
IMC-Agrico has the capacity to extract yellowcake at several phosphoric acid
plants, production has been suspended at certain of the plants because of the
depressed market price of yellowcake and, at present, uranium does not
significantly contribute to IMC-Agrico's revenues.
Operating and Environmental Hazards
The production of fertilizers involves the handling of chemicals, some of
which may have the potential, if released in sufficient quantities, to expose
IMC-Agrico to certain liabilities. However, IMC-Agrico has a program in place
to minimize the potential for such releases. FRP, through FTX, and IMC-Agrico
carry insurance for certain of these risks, and management believes that the
types and limits of such insurance coverages are adequate and consistent with
prudent business practices.
Sulphur Business
----------------
FRP, through FSC, is involved in the mining, purchase, transportation,
terminaling and sale of sulphur. In January 1995, FRP acquired essentially
all of the domestic assets of Pennzoil, including the Culberson mine in Texas,
sulphur terminals and loading facilities in Galveston, Texas and Tampa,
Florida, land and marine transportation and equipment and associated
commercial contracts and obligations. As a result, substantially all of FRP's
sulphur mining assets are located in the Gulf of Mexico offshore Louisiana and
in Culberson County, Texas.
Production
In January 1994, production ceased at FRP's Caminada sulphur mine,
leaving at that time the Main Pass sulphur mine, located in federal waters in
the Gulf of Mexico, as FRP's only producing sulphur mine. The Main Pass mine
utilizes the Frasch Mining process, which involves the drilling of wells and
the injection of superheated water into the underground sulphur deposit to melt
the solid sulphur, which is then brought to the surface in liquid form. FRP
has been using the Frasch process for over 80 years. FRP has also developed
technology which allows it to use sea water in the Frasch process. FRP is not
aware of any other company that has developed Frasch sulphur mines using
superheated sea water.
Main Pass, discovered by FRP in 1988, currently has the highest
production rate of any sulphur mine in the world and the largest 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, which began
initial production at minimal levels in the second quarter of 1992, is
estimated to contain proved recoverable sulphur reserves totaling 70.3 million
long tons (41.0 million long tons net to FRP) at December 31, 1994. The mine
is owned 58.3% by FRP, 25% by IGL and 16.7% by Homestake Sulphur Company
("Homestake"). The development and production of the Main Pass reserves are
being conducted by FTX, through FSC, on behalf of FRP, as operator of the Main
Pass joint venture, pursuant to a management services agreement. FTX
completed development of Main Pass in 1993. Sulphur production reached design
production capacity of 5,500 long tons per day (approximately 2 million long
tons per year) on schedule in December 1993 and has since sustained production
above that level. During 1994 production averaged 6,200 long tons per day as
FTX focused on increasing and sustaining production of Main Pass while
implementing new strategies to strengthen operating efficiencies and lower
costs. Main Pass is subject to a 12.5% federal royalty based on net mine
revenues. For additional information with respect to FRP's sulphur reserves,
reference is made to Note 10 to the FRP Financial Statements.
The primary fuel source at Main Pass is natural gas. A contract with an
initial term of 20 years, effective from April 1992, was executed for the
purchase of natural gas at market based prices.
FRP currently supplements its sulphur production by purchasing from third
party sources. This sulphur is purchased from companies which recover sulphur
in the production of oil and natural gas and the refining of petroleum
products.
Marketing
Sulphur produced by FRP at Main Pass is transported by barge to its
storage, handling and shipping facilities located at Port Sulphur, Louisiana.
Sulphur production from FRP's Culberson mine is transported in liquid form by
unit train to Galveston. At both Port Sulphur and Galveston, sulphur
purchased from others or transported for others may also be received. Sulphur
is transported from Port Sulphur by barge to IMC-Agrico and customer plants 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 also processes and
transports for a fee both IGL's and Homestake's share of Main Pass sulphur and
serves as marketing agent for Homestake.
FRP's sulphur is used in the manufacture of sulphuric acid, which, in
turn, is primarily used to produce phosphoric acid, the basic material for the
production of phosphate fertilizers. The phosphate fertilizer industry,
including the IMC-Agrico phosphate facilities, accounts for approximately 92%
of FRP's total sulphur sales. A small number of companies consume a large
portion of the total sulphur consumed in the United States. Substantially all
of the sulphur sold by FRP is supplied under contracts having a term of one to
three years. FRP has entered into a long-term contract to supply IMC-Agrico
with sulphur. For additional information with respect to FRP's sales of
sulphur, reference is made to "Selected Financial and Operating Data"
appearing on page 13 of FRP's 1994 Annual Report to unitholders.
Globally, approximately 62% of annual sulphur demand arises from the
production of fertilizers, principally phosphate fertilizers. Improved
phosphate fertilizer operating rates, coupled with reduced imports, resulted
in sulphur price increases in Tampa, Florida since mid-1994. To the extent
U.S. phosphate fertilizer production remains strong, improved sulphur demand
is expected to continue, although the availability of Canadian sulphur limits
the potential for significant price increases.
OIL
The Main Pass project also contains oil* reserves associated with the
same caprock reservoir at Main Pass as the sulphur reserves. The development
and production of these Main Pass reserves are being conducted by FTX on
behalf of FRP, as operator of the joint venture, pursuant to a management
services agreement. Oil production commenced in the fourth quarter of 1991
and averaged approximately 14,400 barrels of oil per day ("BOPD") during 1994.
As of December 31, 1994, FRP estimates that remaining proved recoverable oil
reserves at Main Pass are 15.5 million barrels (7.3 million barrels net to
FRP). FRP is engaged in oil operations only at Main Pass and does not
currently intend to pursue oil operations that are not related to Main Pass.
For information relating to estimates of FRP's net interests in proved
oil reserves as of December 31, 1994, reference is made to Note 10 to the FRP
Financial Statements. No favorable or adverse event or major discovery has
occurred since December 31, 1994, that FRP believes would cause a significant
change in estimated proved reserves.
Production and Marketing Conditions
Since completion of development drilling in mid-April 1993, oil
production for the Main Pass joint venture has increased significantly and
averaged over 15,000 BOPD for December 1994. Because of the complexities of
producing sour crude in an offshore environment, periodic curtailments down to
5,500 BOPD may be required to perform maintenance repairs. The Company's
share of oil production was approximately 2.5 million barrels for 1994.
Production in 1995 is expected to approximate that of 1994, with the
anticipated drilling of additional wells expected to partially offset
declining reservoir production. Production is expected to decline thereafter.
For information concerning FRP's sales of oil during the year ended December
31, 1994, reference is made to "Selected Financial and Operating Data"
appearing on page 13 of FRP's 1994 Annual Report to unitholders, incorporated
herein by reference. For information concerning the interaction between
concurrent oil and sulphur production, see "Sulphur Business" above.
Oil prices have historically exhibited, and can be expected to continue
to exhibit, volatility as a result of such factors as political uncertainty in
the Middle East, actions of the Organization of Petroleum Exporting Countries
and changes in worldwide weather and economic conditions. Main Pass oil
contains sulphur and is generally heavier than other Gulf Coast crude oils.
As a result, it sells at a discount relative to Gulf Coast crude oils
containing less sulphur and to lighter grade crude oils.
Acreage
FRP's interest in Main Pass, in federal waters offshore Louisiana,
constitutes the only oil property owned by FRP. The property consists of
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*As used in this portion of the report, "oil" refers to crude oil,
condensate and natural gas liquids.
1,125 gross acres (656 acres net to FRP) and is fully developed within the
meaning of governmental reporting requirements.
FRP possesses a leasehold interest in its Main Pass oil property which is
maintained by production and will remain in effect until production and
drilling and development operations cease. FRP believes that the lease terms
are sufficient to allow for reasonable development of the reserves.
Operating Hazards
FRP's oil activities are subject to all of the risks normally incident to
the development and production of sour oil, including blowouts, cratering and
fires, each of which could result in injury to personnel and/or damage to
property. Additionally, offshore operations are subject to marine perils,
including hurricanes and other adverse weather conditions. FRP, through FTX,
carries insurance for certain of these risks, and management believes that the
types and limits of such insurance coverages are adequate and consistent with
prudent business practices.
Government Regulation
Domestic oil operations are subject to extensive state and federal
regulation. Compliance is often burdensome, and failure to comply carries
substantial penalties. The heavy and increasing regulatory burden on the oil
industry increases the cost of doing business and, consequently, affects
profitability.
Federal laws and regulations impose liability upon the lessee under a
federal lease for the cost of cleanup of pollution resulting from a lessee's
operations, and such lessee could be subject to liability for pollution
damages. A serious incident of pollution may also result in a requirement to
suspend or cease operations in the particular area. FRP, through FTX, carries
insurance against some, but not all, of these risks. For further information
with respect to environmental risks and FRP's responses thereto, see
"Environmental Matters" below.
COMPETITION
The fertilizer and phosphate rock mining industries are highly
competitive. In these global businesses, IMC-Agrico faces stiff competition
from overseas producers, most of which are state supported, especially those in
North Africa, and most recently those in the former Soviet Union. In the
United States, IMC-Agrico competes against a number of major phosphate
fertilizer producers, including large cooperatives. FRP, through IMC-Agrico,
is one of the largest and lowest cost producers of phosphate rock and the
largest integrated producer of phosphate fertilizers in the world. FRP's
significant phosphate rock and sulphur reserves and production, through IMC-
Agrico and FSC, substantially reduce the sensitivity of its phosphate
fertilizer costs to changes in raw material prices. The strategic location of
fertilizer operations on the Mississippi River system reduces transportation
costs for finished products sold in the Midwest farmbelt. FRP believes that
its internal production of raw materials, through FSC and IMC-Agrico, and the
strategic location of IMC-Agrico's operations provide it with a competitive
advantage over other United States based producers. The acquisition of the
Pennzoil sulphur assets enhances FRP's competitive position with regard to the
raw material requirements of its phosphate fertilizer operations and to the
reduction of operating costs.
In 1994, two companies operating domestic Frasch sulphur mines accounted
for approximately 24% of total domestic consumption of sulphur in all forms.
Domestic recovered sulphur, produced by more than 50 companies at more than
130 refineries and gas treatment plants, supplied approximately 50%, while
imported sulphur, primarily from Canada and Mexico, accounted for
approximately 12% of domestic sulphur consumption. The remaining 14% of
domestic sulphur consumption was met in the form of sulphuric acid produced in
metals smelting operations and from imported sulphuric acid. FRP's production
of sulphur accounts for approximately 22% of domestic and 6% of world
elemental sulphur production for the year ended December 31, 1994. With the
achievement of full operations at Main Pass at the end of 1993, FRP became the
largest Frasch sulphur producer in the world.
A large number of companies and individuals are engaged in the
development and production of oil. Many of these companies possess financial
resources equal to or greater than those of FRP.
RESEARCH AND DEVELOPMENT
In 1993, FTX contracted with Crescent Technology, Inc. ("Crescent") to
furnish engineering consulting, research and development, environmental and
safety services to FTX. Crescent owns and operates laboratory and pilot plant
facilities at Belle Chasse, Louisiana, where mineral analyses, metallurgical
work and other research and testing are conducted which contribute to FTX's
commercial operations, including those of FRP. Additionally, Crescent
maintains engineering consulting and mine development groups in New Orleans,
Louisiana, which provide the engineering consulting, environmental services
and design and construction supervision activities required to implement new
ventures and apply improvements to existing operations of FRP.
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 full compliance with applicable laws and regulations. FTX has
contracted with Crescent to develop and implement corporatewide environmental
programs that include the activities of FRP and to study and implement methods
to reduce discharges and emissions.
FRP's operations are subject to federal, state and local laws and
regulations relating to the protection of the environment. Exploration,
mining, development and production of natural resources, and the chemical
processing operations of IMC-Agrico, like similar operations of other
companies, may affect the environment. Moreover, such operations may involve
the extraction, handling, production, processing, treatment, storage,
transportation and disposal of materials and waste products which, under
certain conditions, may be toxic or hazardous and expressly regulated under
environmental laws. Present and future environmental laws and regulations
applicable to the operations of FRP or IMC-Agrico may require substantial
capital expenditures or affect their operations in other ways that cannot now
be accurately predicted.
FRP has made, and continues to make, expenditures at its operations for
protection of the environment. In 1992, at a cost of $35.7 million, FRP
completed the replacement of two sulphuric acid production units at an
existing fertilizer plant thereby substantially reducing air emissions and
increasing plant efficiency. As successor to FRP, IMC-Agrico completed at the
end of 1993, at a cost of $27 million, an innovative drainage and cover plan
for phosphogypsum storage areas in Louisiana to substantially reduce
substances in wastewater discharged from its fertilizer operations, while at
the same time increasing the capacity of these storage areas.
Continued government and public emphasis on environmental matters can be
expected to result in increased future investments for environmental controls.
On analyzing its operations and those of IMC-Agrico in relation to current and
anticipated environmental requirements, FRP does not expect that these
investments will have a significant impact on its future operations or
financial condition. For additional information concerning environmental
matters, reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 8 through 11 and 14
through 16, of FRP's 1994 Annual Report to unitholders, which is incorporated
herein by reference.
Item 3. Legal Proceedings.
- --------------------------
Although FRP may be from time to time involved in various legal
proceedings of a character normally incident to the ordinary course of its
businesses, FRP believes that potential liability in any such pending or
threatened proceedings would not have a material adverse effect on the
financial condition or results of operations of FRP. FRP, through FTX,
maintains liability insurance to cover some, but not all, potential
liabilities normally incident to the ordinary course of its businesses as well
as other insurance coverages customary in its businesses, with such coverage
limits as management deems prudent.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
- -----------------------------------------------------------------------------
Matters.
-------
The information set forth under the captions "FRP Units" and "Cash
Distributions", on the inside back cover of FRP's 1994 Annual Report to
unitholders is incorporated herein by reference. As of March 10, 1995, there
were 17,453 record holders of FRP Units.
Item 6. Selected Financial Data.
- --------------------------------
The information set forth under the caption "Selected Financial and
Operating Data" on page 13 of FRP's 1994 Annual Report to unitholders is
incorporated herein by reference.
FRP's ratio of earnings to fixed charges for each of the years 1990
through 1994 inclusive, was 16.5x, 4.4x, 1.0x, a shortfall of $233.5 million
and 3.2x, respectively. For purposes of this calculation, earnings are income
from continuing operations before fixed charges. Fixed charges are interest
and that portion of rent deemed representative of interest.
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 8 through
11 and 14 through 16, of FRP's 1994 Annual Report to unitholders, is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
- ----------------------------------------------------
The financial statements of FRP, the notes thereto and the report thereon
of Arthur Andersen LLP, appearing on pages 17 through 27 inclusive, of FRP's
1994 Annual Report to unitholders, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- --------------------------------------------------------------------------------
Financial Disclosure.
--------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
- ------------------------------------------------------------
FRP has no directors; instead, the general partners in FRP, FTX and FMRP,
perform comparable functions for FRP. In addition to the elected executive
officers of FRP (the "Elected FRP Executive Officers"), certain employees of
the general partners have management responsibilities with respect to FRP and
are thus deemed by FRP to be executive officers of FRP (the "Designated FRP
Executive Officers") for purposes of the federal securities laws.
The following table shows, as of March 15, 1995, the names, ages,
positions with the general partners and principal occupations of the Elected
FRP Executive Officers and the Designated FRP Executive Officers
(collectively, the "FRP Executive Officers"):
Name Age Positions and Principal Occupations
---- --- -----------------------------------
Richard C. Adkerson 48 Senior Vice President of FTX.
John G. Amato 51 General Counsel of FRP. General Counsel of FTX.
Director of FMRP.
Richard H. Block 44 Senior Vice President - Fertilizer Operations of
FRP. Senior Vice President of FTX.
Thomas J. Egan 50 Senior Vice President of FTX.
Robert B. Foster 51 Senior Vice President - Sulphur Operations of
FRP.
Charles W. Goodyear 37 Senior Vice President - Finance and Accounting
and Chief Financial Officer of FRP. Senior Vice
President of FTX. Director of FMRP.
W. Russell King 45 Senior Vice President of FTX.
Rene L. Latiolais 52 President and Chief Executive Officer of FRP.
Director, President, and Chief Operating
Officer of FTX. Director, Chairman of the Board,
and President of FMRP.
George A. Mealey 61 Executive Vice President of FTX. Director,
President, and Chief Executive Officer of
Freeport-McMoRan Copper & Gold Inc., a subsidiary
of FTX.
James R. Moffett 56 Director, Chairman of the Board, and Chief
Executive Officer of FTX.
All of the individuals above have served FTX or FRP in various executive
capacities for at least the last five years.
All Elected FRP Executive Officers and all officers of FTX serve at the
pleasure of the Board of Directors of FTX. All officers of FMRP serve at the
pleasure of the Board of Directors of FMRP.
According to (i) the Forms 3 and 4 and any amendments thereto filed
pursuant to Section 16(a) of the Securities Exchange Act of 1934 ("Section
16") and furnished to FRP during 1994 by persons subject to Section 16 at any
time during 1994 with respect to securities of FRP ("FRP Section 16
Insiders"), (ii) the Forms 5 with respect to 1994 and any amendments thereto
filed pursuant to Section 16 and furnished to FRP by FRP Section 16 Insiders,
and (iii) the written representations from certain FRP Section 16 Insiders
that no Form 5 with respect to the securities of FRP was required to be filed
by such FRP Section 16 Insider, respectively, with respect to 1994, no FRP
Section 16 Insider failed to file altogether or timely any Forms 3, 4, or 5
required by Section 16 with respect to the securities of FRP or to disclose on
such Forms transactions required to be reported thereon.
Item 11. Executive Compensation.
- --------------------------------
FRP does not employ any of the FRP Executive Officers, nor does it
compensate them for their services. The FRP Executive Officers are either
employed or retained by FTX. The President and Chief Executive Officer of
FRP, Rene L. Latiolais, is employed by FTX. The four most highly compensated
FRP Executive Officers other than Mr. Latiolais are James R. Moffett, Richard
C. Adkerson, Charles W. Goodyear, and Robert B. Foster; they are also employed
by FTX. The determination as to which FRP Executive Officers were the most
highly compensated was made by reference to the total annual salary and bonus
for 1994 of each of the FRP Executive Officers employed by FTX that was
allocated to FRP by FTX pursuant to the FRP partnership agreement on the basis
of time devoted to FRP activities.
The services of all the FRP Executive Officers and the services of the
other officers of FRP are provided to FRP by FTX under the FRP partnership
agreement. FRP reimburses FTX at FTX's cost, including allocated overhead,
for such services. All the FRP Executive Officers are compensated exclusively
by FTX for their services to FRP. All the FRP Executive Officers are eligible
to participate in certain FTX benefit plans and programs. The total costs to
FTX for the FRP Executive Officers, including the costs borne by FTX with
respect to such plans and programs, are allocated to FRP, to the extent
practicable, in proportion to the time spent by such FRP Executive Officers on
FRP affairs. No other payment is made by FRP to FTX for providing such
compensation and benefit plans and programs to the FRP Executive Officers.
Reference is made to the information set forth under the caption
"Management" above and to the information set forth in Note 6 to the FRP
Financial Statements.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
According to information furnished by each of the persons known to FRP to
be a beneficial owner of more than 5% of Partnership Units, the number of
Partnership Units beneficially owned by each of them as of December 31, 1994,
was as follows:
Number of
Partnership Units Percent
Beneficially of
Name and Address of Person Owned Class
- -------------------------- ----- -----
Freeport-McMoRan Inc. 52,167,657(a) 50.9%
1615 Poydras Street
New Orleans, Louisiana 70112
Vanguard/Windsor Fund, Inc. 5,798,300(b) 5.7%
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
- ---------------
(a) These Partnership Units consist of 17,741 FRP Depositary Units and
52,149,916 FRP Unit Equivalents. FTX has sole voting and investment
power with respect to such Partnership Units.
(b) Vanguard/Windsor Fund, Inc. has sole voting power and shared investment
power as to all 5,798,300 Partnership Units.
The other general partner in FRP, FMRP, did not own beneficially any
Partnership Units as of December 31, 1994.
According to information furnished by each of the Elected FRP Executive
Officers and the Designated FRP Executive Officers (collectively, the "FRP
Executive Officers"), the number of FRP Depositary Units and shares of FTX
common stock ("FTX Shares") beneficially owned by each of them as of December
31, 1994, was as follows:
Number of Number of
FRP Depositary Units FTX Shares
Name of Individual Beneficially Beneficially
or Identity of Group Owned(a) Owned(a)
- -------------------- -------- --------
Richard C. Adkerson 0 289,170(b)(c)
Robert B. Foster 41 118,308(b)
Charles W. Goodyear 0 284,893(b)(d)
Rene L. Latiolais 617(e) 640,893(b)
James R. Moffett 65,439(f) 3,551,945(b)(f)
10 FRP Executive
Officers as a group,
including those
persons named above 76,546(g) 5,971,120(g)
- ---------------
(a) Except as otherwise noted, the individuals referred to have sole voting
and investment power with respect to such FRP Depositary Units and FTX
Shares. With the exception of Mr. Moffett, who beneficially owns 2.6% of
the outstanding FTX Shares, each of the individuals referred to holds
less than 1% of the outstanding FRP Depositary Units and FTX Shares,
respectively.
(b) Includes FTX Shares held by the trustee under the Employee Capital
Accumulation Program of FTX, as follows: Mr. Adkerson, 3,423 FTX Shares;
Mr. Foster, 711 FTX Shares; Mr. Goodyear, 2,742 FTX Shares; Mr.
Latiolais, 16,022 FTX Shares; Mr. Moffett, 23,742 FTX Shares; all FRP
Executive Officers as a group (9 persons), 86,084 FTX Shares. Also
includes FTX Shares that could be acquired within 60 days after December
31, 1994 upon the exercise of options granted pursuant to the employee
stock option plans of FTX, as follows: Mr. Adkerson, 282,087 FTX Shares;
Mr. Foster, 100,747 Shares; Mr. Goodyear, 282,087 FTX Shares; Mr.
Latiolais, 454,898 FTX Shares; Mr. Moffett, 2,016,805 FTX Shares; all FRP
Executive Officers as a group (10 persons), 4,024,586 FTX Shares.
(c) Includes 776 FTX Shares that may be acquired upon the conversion of 6.55%
Convertible Subordinated Notes due January 15, 2001 of FTX held in trust
for the benefit of Mr. Adkerson and 2,884 FTX Shares that may be acquired
upon the conversion of Zero Coupon Convertible Subordinated Debentures
due 2006 of FTX held in trust for the benefit of Mr. Adkerson.
(d) Includes 64 FTX Shares held in a retirement account for the benefit of
Mr. Goodyear.
(e) Includes 483 FRP Depositary Units held for the benefit of Mr. Latiolais
by the custodian under FRP's Depositary Unit Reinvestment Plan.
(f) Includes a total of 39,600 FRP Depositary Units and 214,648 FTX Shares
held for the benefit of a trust with respect to which Mr. Moffett and an
FRP Executive Officer, as co-trustees of such trust, have sole voting and
investment power but have no beneficial interest therein. Mr. Moffett
and such FRP Executive Officer disclaim beneficial ownership of such FRP
Depositary Units and FTX Shares held for the benefit of such trust.
Includes a total of 25,839 FRP Depositary Units and 85,140 FTX Shares
held for the benefit of two trusts created by Mr. Moffett for the benefit
of his two children, who are adults. An FRP Executive Officer and
another individual, as co-trustees of the two trusts, have sole voting
and investment power with respect to such FRP Depositary Units and FTX
Shares held for the benefit of such trusts but have no beneficial
interest therein. Mr. Moffett and such FRP Executive Officer disclaim
beneficial ownership of such FRP Depositary Units and FTX Shares held for
the benefit of such trusts. Includes a total of 88,000 FTX Shares held
for the benefit of a trust created by Mr. Moffett for the benefit of an
educational fund and his two children, who are adults. An FRP Executive
Officer and another individual, as co-trustees of such trust, have sole
voting and investment power with respect to such FTX Shares held for the
benefit of such trust but have no beneficial interest therein. Mr.
Moffett and such FRP Executive Officer disclaim beneficial ownership of
such FTX Shares held for the benefit of such trust.
(g) See notes (b) through (f) above. Includes 6 FRP Depositary Units and
1,516 FTX Shares held in trust for the benefit of one of the FRP
Executive Officers, 92 FTX Shares held in trust for the benefit of the
spouse of such FRP Executive Officer as to which beneficial ownership is
disclaimed, and a total of 2,300 FTX Shares held by such FRP Executive
Officer as custodian as to which beneficial ownership is disclaimed.
These total numbers of FRP Depositary Units and FTX Shares represent less
than 1% of the outstanding FRP Depositary Units and approximately 4.2% of
the outstanding FTX Shares, respectively.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Reference is made to the information set forth under the caption
"Management" above, to the information set forth in Item 11 above and to the
information set forth in Note 6 to the FRP Financial Statements.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- --------------------------------------------------------------------------
(a)(1), (a)(2), and (d). Financial Statements. Reference is made to the
Index to Financial Statements appearing on page F-1 hereof.
(a)(3) and (c). Exhibits. Reference is made to the Exhibit Index
beginning on page E-1 hereof.
(b). Reports on Form 8-K. No reports on Form 8-K were filed by the
registrant during the fourth quarter of 1994.
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on March 22, 1995.
FREEPORT-McMoRan RESOURCE
PARTNERS, LIMITED PARTNERSHIP
By: FREEPORT-McMoRan INC.,
Its Administrative Managing
General Partner
By: /s/ James R. Moffett
---------------------
James R. Moffett
Chairman of the Board
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 March 22, 1995.
/s/ Rene L. Latiolais President and Chief Executive Officer
- ---------------------
Rene L. Latiolais of Freeport-McMoRan Resource
Partners, Limited Partnership and
Director of Freeport-McMoRan Inc.
(Principal Executive Officer)
/s/ Charles W. Goodyear Senior Vice President and Chief
- -----------------------
Charles W. Goodyear Financial Officer of Freeport-McMoRan
Resource Partners, Limited
Partnership
(Principal Financial Officer)
/s/ Nancy D. Bonner Vice President and Controller of
- -------------------
Nancy D. Bonner Freeport-McMoRan Resource Partners,
Limited Partnership
(Principal Accounting Officer)
Robert W. Bruce III* Director of Freeport-McMoRan Inc.
Thomas B. Coleman* Director of Freeport-McMoRan Inc.
William H. Cunningham* Director of Freeport-McMoRan Inc.
Robert A. Day* Director of Freeport-McMoRan Inc.
William B. Harrison, Jr.* Director of Freeport-McMoRan Inc.
Henry A. Kissinger* Director of Freeport-McMoRan Inc.
Bobby Lee Lackey* Director of Freeport-McMoRan Inc.
Gabrielle K. McDonald* Director of Freeport-McMoRan Inc.
/s/ James R. Moffett Director, Chairman of the Board
- --------------------
James R. Moffett and Chief Executive Officer
of Freeport-McMoRan Inc.
George Putnam* Director of Freeport-McMoRan Inc.
B. M. Rankin, Jr.* Director of Freeport-McMoRan Inc.
Benno C. Schmidt* Director of Freeport-McMoRan Inc.
J. Taylor Wharton* Director of Freeport-McMoRan Inc.
Ward W. Woods, Jr.* Director of Freeport-McMoRan Inc.
*By: /s/ James R. Moffett
--------------------
James R. Moffett
Attorney-in-Fact
INDEX TO FINANCIAL STATEMENTS
-----------------------------
The financial statements of FRP, the notes thereto, and the report
thereon of Arthur Andersen LLP, appearing on pages 17 through 27, inclusive,
of FRP's 1994 Annual Report to unitholders are incorporated by reference.
The financial statement schedules listed below should be read in
conjunction with such financial statements contained in FRP's 1994 Annual
Report to unitholders.
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 thereof.
* * *
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
We have audited, in accordance with generally accepted auditing standards,
the financial statements as of December 31, 1994 and 1993 and for each of the
three years in the period ended December 31, 1993 included in Freeport-McMoRan
Resource Partners, Limited Partnership's annual report to unitholders
incorporated by reference in this Form 10-K, and have issued our report
thereon dated January 24, 1995. 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. The
schedules for the years ended December 31, 1994, 1993 and 1992 have been
subjected to the auditing procedures applied in the audit 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 24, 1995
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
December 31,
------------------------
1994 1993
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and short-term investments $ 8,409 $ 5,300
Accounts receivable:
Customers 9,359 6,193
Other 12,134 12,811
Inventories:
Products 25,443 31,458
Materials and supplies 6,150 7,877
Prepaid expenses and other 273 273
---------- ----------
Total current assets 61,768 63,912
Property, plant and equipment-net 506,590 530,568
Investment in IMC-Agrico 397,937 494,883
Other assets 43,256 91,174
---------- ----------
Total assets $1,009,551 $1,180,537
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities $ 29,877 $ 37,175
Current portion of long-term debt - -
---------- ----------
Total current liabilities 29,877 37,175
Long-term debt, less current portion 355,000 475,900
Reclamation and mine shutdown reserves 58,762 58,896
Accrued postretirement benefits and other
liabilities 118,252 116,162
Partners' capital 447,660 492,404
---------- ----------
Total liabilities and partners' capital $1,009,551 $1,180,537
========== ==========
The footnotes contained in FRP's 1994 Annual Report to unitholders are an
integral part of these statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
Years Ended December 31,
---------------------------------
1994 1993 1992
-------- --------- --------
(In Thousands)
Revenues $111,185 $ 424,717 $877,058
Cost of sales:
Production and delivery 61,211 344,944 652,169
Depreciation and amortization 38,825 81,521 119,259
-------- --------- --------
Total cost of sales 100,036 426,465 771,428
Exploration expenses - 3,092 5,814
Provision for restructuring charges - 33,947 -
Loss on valuation and sale of assets, net - 114,802 -
General and administrative expenses 28,949 58,660 79,073
-------- --------- --------
Total costs and expenses 128,985 636,966 856,315
-------- --------- --------
Operating income (loss) (17,800) (212,249) 20,743
Interest expense, net (32,297) (12,293) (869)
Equity in earnings of IMC-Agrico 136,671 1,037 -
Other income, net (2,608) 1,094 337
-------- --------- -------
Income (loss) before changes in
accounting principle 83,966 (222,411) 20,211
Cumulative effect of changes in
accounting principle - (23,700) -
-------- --------- --------
Net income (loss) $ 83,966 $(246,111) $ 20,211
======== ========= ========
The footnotes contained in FRP's 1994 Annual Report to unitholders are an
integral part of these statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOW
Years Ended December 31,
-------------------------------
1994 1993 1992
-------- --------- --------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $ 83,966 $(246,111) $ 20,211
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Cumulative effect of changes in
accounting principle - 23,700 -
Depreciation and amortization 38,825 81,521 119,259
Other noncash charges to income 6,495 7,150 -
Provision for restructuring charges, net
of payments - 3,143 -
Loss on valuation and sale of assets, net - 114,802 -
Equity in (earnings) of IMC-Agrico (136,671) (1,037) -
Cash distributions received from IMC-
Agrico 233,617 - -
(Increase) decrease in working capital, net
of effect of acquisitions and dispositions:
Accounts receivable (2,311) (1,552) 18,317
Inventories 7,058 (4,750) (9,983)
Prepaid expenses and other - 1,933 (9,995)
Accounts payable and accrued
liabilities (389) 1,561 (3,011)
Reclamation and mine shutdown
expenditures (5,270) (9,980) (18,038)
Other 5,056 2,935 3,301
--------- --------- --------
Net cash provided by (used in) operating
activities 230,376 (26,685) 120,061
--------- --------- --------
Cash flow from investing activities:
Capital expenditures:
Main Pass (10,941) (37,427) (117,902)
Other (290) (10,152) (86,815)
Sale of assets 36,919 49,961 -
Other 530 4,711 (5,219)
-------- --------- --------
Net cash provided by (used in) investing
activities 26,218 7,093 (209,936)
-------- --------- --------
Cash flow from financing activities:
Distributions to partners (127,368) (121,180) (151,210)
Proceeds from debt 85,400 572,137 639,891
Repayment of debt (356,300) (433,164) (826,095)
Purchase of partnerhsip units (1,342) - -
Proceeds from sale of 8 3/4% Senior
Subordinated Notes 146,125 - -
Proceeds from sale of partnership units - - 430,534
-------- --------- --------
Net cash provided by (used in) financing
activities (253,485) 17,793 93,120
-------- --------- --------
Net increase (decrease) in cash and short-
term investments 3,109 (1,799) 3,245
Cash and short-term investments at
beginning of year 5,300 7,099 3,854
-------- --------- --------
Cash and short-term investments at end of
year $ 8,409 $ 5,300 $ 7,099
======== ========= ========
Interest paid $ 25,094 $ 22,997 $ 19,818
======== ========= ========
The footnotes contained in FRP's 1994 Annual Report to unitholders are an
integral part of these statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1994, 1993 and 1992
Col. A Col. B Col. C Col. D Col. E
- ----------------- ------------ ----------------------- --------- ----------
Additions
----------------------
Balance at Charged toCharged 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:
1994:
Sulphur $57,287 $ 1,041 $ - $(3,223) $55,105
Fertilizer 38,437 2,310 - (3,064) 37,683
Oil 1,609 2,385 - (337) 3,657
------- ------- ----- ------- -------
$97,333 $ 5,736 $ - $(6,624)(a) $96,445
======= ======= ===== ======= =======
1993:
Sulphur $35,200 $27,562 $ - $(5,475) $57,287
Fertilizer 18,543 5,365 - 14,529 (b) 38,437
Oil 1,409 1,021 - (821) 1,609
------- ------- ----- ------- -------
$55,152 $33,948 $ - $ 8,233 (c) $97,333
======= ======= ===== ======= =======
1992:
Sulphur $29,715 $ 4,335 $ - $ 1,150 $35,200
Fertilizer 21,772 7,123 - (10,352) 18,543
Oil - 1,443 - (34) 1,409
------- ------- ----- ------- -------
$51,487 $12,901 $ - $(9,236)(d) $55,152
======= ======= ===== ======= =======
a. Includes expenditures of $11.2 million, net of a $4.6 million decrease in
short-term payables.
b. Includes $19.7 million which represents FRP's proportionate share of
IMC-Agrico liabilities (see Note 2 to the Financial Statements) in excess
of the FRP contributed amounts.
c. Includes expenditures of $13.2 million, net of a $1.7 million decrease in
short-term payables and the item discussed in Note b.
d. Includes expenditures of $21.2 million, net of a $12 million decrease in
short-term payables.
Freeport-McMoRan Resource Partners, Limited Partnership
Exhibit Index
-------------
Sequentially
Exhibit Numbered
Number Page
------ ----
3.1 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).
3.2 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.
3.3 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").
3.4 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.
3.5 Amendment to the FRP Partnership
Agreement dated as of January 27, 1992
between FTX, as Administrative
Managing General Partner, and FMRP, 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").
3.6 Amendment to the FRP Partnership
Agreement dated as of October 14, 1992
between FTX, as Administrative
Managing General Partner, and FMRP, 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").
3.7 Amended and Restated Certificate of
Limited Partnership of FRP dated June
12, 1986 (the "FRP Partnership
Certificate"). Incorporated by
reference to Exhibit 3.3 to FRP's
Registration Statement on Form S-1, as
amended, as filed with the Commission
on June 20, 1986 (Registration No. 33-
5561).
3.8 Certificate of Amendment to the FRP
Partnership Certificate dated as of
January 12, 1989. Incorporated by
reference to Exhibit 3.6 to the Annual
Report on Form 10-K for the fiscal
year ended December 31, 1993 (the "FRP
1993 Form 10-K").
3.9 Certificate of Amendment to the FRP
Partnership Certificate dated as of
December 29, 1989. Incorporated by
reference to Exhibit 19.1 to the FRP
1990 First Quarter Form 10-Q.
3.10 Certificate of Amendment to the FRP
Partnership Certificate dated as of
April 12, 1990. Incorporated by
reference to Exhibit 19.4 to the FRP
1990 First Quarter Form 10-Q.
4.1 Deposit Agreement dated as of June 27,
1986 (the "Deposit Agreement") among
FRP, The Chase Manhattan Bank, N.A.
("Chase") and Freeport Minerals
Company ("Freeport Minerals"), 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.
4.2 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.
4.3 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.
4.4 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.
4.5 Form of Depositary Receipt.
Incorporated by reference to Exhibit
4.5 to the FRP 1992 Form 10-K.
4.6 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.
4.7 FRP Depositary Unit Reinvestment Plan.
Incorporated by reference to Exhibit
4.4 to the FRP 1991 Form 10-K.
4.8 Credit Agreement dated as of June 1,
1993 (the "FTX/FRP Credit Agreement")
among FTX, FRP, the several banks
which are parties thereto (the
"FTX/FRP Banks") and Chemical Bank, as
Agent (the "FTX/FRP Bank Agent").
Incorporated by reference to Exhibit
4.8 to the FRP 1993 Form 10-K.
4.9 First Amendment dated as of February
2, 1994 to the FTX/FRP Credit Agree-
ment among FTX, FRP, the FTX/FRP Banks
and the FTX/FRP Bank Agent.
Incorporated by reference to Exhibit
4.9 to the FRP 1993 Form 10-K.
4.10 Second Amendment dated as of March 1,
1994 to the FTX/FRP Credit Agreement
among FTX, FRP, the FTX/FRP Banks and
the FTX/FRP Bank Agent. Incorporated
by reference to Exhibit 4.10 to the
FRP 1993 Form 10-K.
4.11 Third Consent and Waiver dated as of
October 18, 1994 to the FTX/FRP Credit
Agreement among FTX, FRP, the FTX/FRP
Banks and the FTX/FRP Bank Agent.
4.12 Fourth Amendment, Consent and Limited
Waiver dated as of November 23, 1994
to the FTX/FRP Credit Agreement among
FTX, FRP, the FTX/FRP Banks and the
FTX/FRP Bank Agent.
4.13 Subordinated Indenture as of October
26, 1990 between FRP and Manufacturers
Hanover Trust Company ("MHTC") as
Trustee, relating to $150,000,000
principal amount of 8 3/4% Senior
Subordinated Notes due 2004 of FRP
(the "Subordinated Indenture").
Incorporated by reference to Exhibit
4.11 to the FRP 1993 Form 10-K.
4.14 First Supplemental Indenture dated as
of February 15, 1994 between FRP and
Chemical Bank, as Successor to MHTC,
as Trustee, to the Subordinated
Indenture. Incorporated by reference
to Exhibit 4.12 to the FRP 1993 Form
10-K.
10.1 Contribution Agreement dated as of
April 5, 1993 between FRP and IGL (the
"FRP-IGL 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-IGL 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 July 1, 1993
among IMC-Agrico GP Company, Agrico,
Limited Partnership and IMC-Agrico MP
Inc. Incorporated by reference to
Exhibit 2.3 to the FRP July 15, 1993
Form 8-K.
10.4 Parent Agreement dated as of July 1,
1993 among IGL, FRP, FTX and IMC-
Agrico. Incorporated by reference to
Exhibit 2.4 to the FRP July 15, 1993
Form 8-K.
10.5 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").
10.6 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.
12.1 FRP Computation of Ratio of Earnings
to Fixed Charges.
13.1 Those portions of the 1994 Annual
Report to unitholders of FRP which are
incorporated herein by reference.
21.1 Subsidiaries of FRP.
23.1 Consent of Arthur Andersen LLP dated
March 22, 1995.
24.1 Powers of Attorney pursuant to which
this report has been signed on behalf
of certain directors of FTX.
27.1 FRP Financial Data Schedule
Exhibit 3.2
AMENDMENT
TO
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
This amendment is to the Amended and Restated Agreement
of Limited Partnership (the "Agreement") which was entered into
as of May 29, 1987 by and among Freeport Minerals Company and
Geysers Geothermal Company, as the Managing General Partners, and
Freeport-McMoRan Inc. and Freeport Phosphate Rock Company, as the
Special General Partners, amending and restating the Agreement of
Limited Partnership entered into as of April 17, 1986.
1. Section 15.1 of the Agreement provides for certain
amendments to the Agreement to be adopted solely by Freeport
Minerals Company, as Administrative Managing General Partner.
This Amendment is being undertaken pursuant to subdivision (d)
(i) of such Section 15.1.
2. For all purposes of the Agreement, the designation
and status of Geysers Geothermal Company, as Managing General
Partner and of Freeport-McMoRan Inc. as Special General Partner
are modified hereby. From and after the date hereof,
(i) GGC shall be a Special General Partner;
(ii) Freeport-McMoRan Inc. shall be a Managing
General Partner;
(iii) Freeport-McMoRan Inc., as Managing General
Partner, will assume all the obligations and duties of
Geysers Geothermal Company as a Managing General Partner as
provided for in the Agreement, including, without
limitation, the covenants and restriction contained in
Section 13.1 of the Agreement. Freeport-McMoRan Inc. will
acknowledge such assumption by executing and delivering this
Amendment.
IN WITNESS WHEREOF, Freeport Minerals Company, as
Administrative Managing General Partner, and Freeport-McMoRan
Inc., as a General Partner, have executed this Agreement as of
December 16, 1988.
FREEPORT MINERALS COMPANY,
as Administrative
Managing General Partner
By: /s/ Milton H. Ward
---------------------
Milton H. Ward
Chairman of the Board
and President
FREEPORT-McMoRan INC.
as General Partner
By: /s/ Milton H. Ward
-------------------
Milton H. Ward
President
Exhibit 4.11
THIRD CONSENT AND WAIVER dated as of
October 18, 1994 (this "Consent"), relating
to the Amended and Restated Credit Agreement
dated as of June 1, 1993 (as amended by the
First Amendment dated as of February 2, 1994,
and the Second Consent, waiver and Amendment
dated as of March 1, 1994, the "Credit
Agreement"), among FREEPORT-McMoRan INC., a
Delaware corporation ("FTX"),
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED
PARTNERSHIP, a Delaware limited partnership
("FRP"), the undersigned banks (collectively,
the "Banks") and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks
(in such capacity, the "Agent"). Capitalized
terms used herein and not otherwise defined
herein shall have the meanings given such
terms in the Credit Agreement.
WHEREAS, FCX has advised the Banks and the Agent
that it wishes to make an investment of up to $31,000,000 in
Freeport-McMoRan Spain Inc. ("Freeport Spain") substantially
as described in Exhibit A hereto (the "RTM Transaction");
and
WHEREAS, the Banks and the Agent are willing to
consent to the consummation of the RTM Transaction, subject
to the terms and conditions of this Consent.
NOW, THEREFORE, in consideration of the premises
and the agreements, provisions and covenants herein
contained, FTX, FRP, the Agent and the Required Banks hereby
agree, on the terms and subject to the conditions set forth
herein, as follows:
SECTION 1. Consent. The Banks and the Agent
hereby agree that FCX may make an equity investment of up to
$31,000,000 in Freeport Spain substantially as described in
Exhibit A hereto (the "RTM Investment") and agree that the
RTM Investment shall not be included in the calculation of
the permitted investment limit set forth in Section 5.2(1)
of the Credit Agreement.
SECTION 2. Conditions to Effectiveness. This
Consent shall become effective on the date of receipt (the
"Effective Date") by the Agent of executed counterparts of
this Consent which, when taken together, bear the signatures
of FTX, FRP, the Agent and the Required Banks.
SECTION 3. Counterparts. This Consent may be
executed in multiple counterparts, each of which shall
constitute an original, but all of which when taken together
shall constitute but one instrument.
SECTION 4. Limited Effect. Except as expressly
set forth herein, this Consent shall not by implication or
otherwise limit, impair, constitute a waiver of or otherwise
affect the rights and remedies of the Banks and the Agent
under the Credit Agreement, nor alter, modify, amend or in
any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement,
all of which are ratified and affirmed in all respects and
shall continue in full force and effect. This Consent shall
apply and be effective only with respect to the provisions
of the Credit Agreement specifically referred to herein.
Except as expressly set forth herein, the Credit Agreement
shall continue in full force and effect in accordance with
the provisions thereof.
SECTION 5. APPLICABLE LAW. THIS CONSENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
SECTION 6. Expenses. FTX shall pay all out-of-
pocket expenses incurred by the Agent in connection with the
preparation of this Consent, including, but not limited to,
the reasonable fees and disbursements of Cravath, Swaine &
Moore, special counsel for the Agent.
SECTION 7. Headings. The headings of this
Consent are for reference only and shall not limit or
otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Consent to be executed by their duly authorized
officers or agents as of the date first above written.
FREEPORT-McMoRan INC.,
by: /s/ R. Foster Duncan
---------------------
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-McMoRan RESOURCE
PARTNERS, Limited PARTNERSHIP,
by FREEPORT McMoRan INC., its
Administrative Managing
General Partner,
by: /s/ R. Foster Duncan
-----------------------
Name: R. Foster Duncan
Title: Treasurer
CHEMICAL BANK, individually and
as
Agent,
by: /s/ Theodore L. Parker
----------------------
Name: Theodore L. Parker
Title: Vice President
Exhibit 4.12
FOURTH AMENDMENT, CONSENT AND LIMITED
WAIVER dated as of November 23, 1994 (this
"Amendment"), relating to the Amended and
Restated Credit Agreement dated as of June 1,
1993 (as amended by the First Amendment dated
as of February 2, 1994, the Second Consent,
Waiver and Amendment dated as of March 1,
1994, and the Third Consent and Waiver dated
as of October 18, 1994, the "Credit
Agreement"), among FREEPORT-McMoRan INC., a
Delaware corporation ("FTX"), FREEPORT--
McMoRan RESOURCE PARTNERS, LIMITED
PARTNERSHIP, a Delaware limited partnership
("FRP"), the undersigned banks (collectively,
the "Banks") and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks
(in such capacity, the "Agent"). Capitalized
terms used herein and not otherwise defined
herein shall have the meanings given such
terms in the Credit Agreement.
WHEREAS, FTX has advised the Banks and the Agent
that FCX wishes to borrow $70,000,000 (the "Caterpillar
Debt") from Caterpillar Financial Services Corporation
("Caterpillar"), with a guarantee thereof by FI (together
with the Caterpillar Debt, the "Caterpillar Obligations"),
such guarantee to be secured by certain specified heavy
equipment of FI and related spare parts (the "Caterpillar
Assets") to be released from the lien of the FI Security
Documents, all substantially on the terms set forth on
Exhibit A hereto (the "Caterpillar Transaction");
WHEREAS, FRP has advised the Banks and the Agent
that it wishes to purchase certain assets from Pennzoil
Company substantially on the terms described in Exhibit B
hereto (the "Pennzoil Transaction");
WHEREAS, FTX has advised the Banks and the Agent
that FI wishes to consummate the Power Facilities Transfer
by selling certain specified power generation and transfer
assets (the "PFT Assets") to P.T. Puncak Jaya Power ("Jaya
Power"), by entering into various contracts relating to the
supply and purchase of the electric power generated from the
PFT Assets (the obligations of FI relating to the PFT
Transaction being collectively referred to as the "PFT
obligations") and by making an equity investment of up to
$17,750,000 in Jaya Power, all substantially on the terms
set forth on Exhibit C hereto (collectively, the "PFT
Transaction");
WHEREAS, FTX has advised the Banks and the Agent
that FI wishes to enter into a financing transaction with
P.T. ALatieF P&O Port Development Corporation ("P&O") to be
secured by certain specified port facilities and assets (the
"P&O Assets") to be released from the Lien of the FI
Security Documents (all obligations of FI relating to the
P&O Transaction being collectively referred to as the "P&O
Obligations"), all substantially as described in Exhibit D
hereto (the "P&O Transaction");
WHEREAS, FTX has advised the Banks and the Agent
that FI wishes to enter into a financing transaction with
P.T. Airfast Aviation Facilities Company ("Avco") to be
secured by certain specified aircraft and airport facilities
(the "Airfast Assets") to be released from the Lien of the
FI Security Documents (all obligations of FI relating to the
Airfast Transaction being collectively referred to as the
"Airfast Obligations"), and to make an equity investment of
up to $2,000,000 in Avco (the "Airfast Transaction"), all
substantially as described in Exhibit E hereto (the "Airfast
Transaction"); and
WHEREAS, the Banks and the Agent are willing to
consent to FI, FCX and FRP, as applicable, entering into the
Caterpillar Transaction, the Pennzoil Transaction, the PFT
Transaction, the P&O Transaction and the Airfast Transaction
(each a "Transaction") and to provide certain amendments and
limited waivers of provisions of the Credit Agreement with
respect thereto, all subject to the terms, conditions,
covenants, limitations and restrictions of this Amendment.
NOW, THEREFORE, in consideration of the premises
and the agreements, provisions and covenants herein
contained, FTX, FRP, the Agent and the Required Banks hereby
agree, on the terms and subject to the conditions set forth
herein, as follows:
SECTION 1. Amendments, Consents and Limited
Waivers. (a) Subject to the covenants, limitations and
reservations set forth below and subject to the written
approval of the Agent of all relevant documentation
governing the Caterpillar Transaction (the "Caterpillar
Documents"), the Required Banks and the Agent consent to the
execution by FI and FCX of the Caterpillar Documents in the
form so approved and agree that incurrence by FI and FCX of
the Caterpillar obligations will not be prohibited by
Section 5.2(g) of the Credit Agreement, provided that,
except to the extent specifically waived or consented to
hereby, the Agent and the Banks hereby reserve all rights
and remedies under the Loan Documents with respect to (and
shall not be deemed, by implication or otherwise, to have
consented to or waived) any performance by FI or FCX under
the Caterpillar Documents which would be a Default or Event
of Default, including without limitation any voluntary
prepayment prohibited by clause (iii) below. FTX hereby
covenants and agrees that (i) it shall cause FI to ensure
that the Agent promptly receives copies of all material
notices delivered by or to FI or FCX pursuant to the
Caterpillar Documents which are not otherwise provided to
the Agent under any other agreement, (ii) it shall not
permit FI or FCX, without the prior written consent of the
Required Banks, to enter into any amendment or modification
of any of the Caterpillar Documents which would have an
adverse effect upon the rights and remedies of the Agent and
the Banks under the Loan Documents or of the Agent, the FI
Trustee and the banks party to the FI Credit Agreement (the
"FI Banks") under the FI Credit Agreement and the
documentation related thereto (including the FI Security
Documentation) or the collateral therefor (the "FI
Collateral and Rights") or impair the ability of any of FTX
and the Restricted Subsidiaries to perform all of their
respective obligations under the Loan Documents; and (iii)
no voluntary prepayment of the Caterpillar Obligations shall
be made by FTX or any Restricted Subsidiary or, directly or
indirectly, with or from any funds or assets provided,
directly or indirectly, by FTX or any Restricted Subsidiary
beyond those expressly permitted by Section 5.2(1) of the
Credit Agreement (collectively, "Restricted Assets"), during
the continuance of any Default or Event of Default or, if,
after giving effect to any such voluntary prepayment any
Default or Event of Default would then exist or result from
such transaction. The undertakings of FTX under clause (i)
of the preceding sentence and under clauses (ii) and (iii)
thereof shall be deemed to be covenants under Sections 5.1
and 5.2, respectively, of the Credit Agreement for all
purposes, including for purposes of Article VII thereof.
Subject to all the foregoing, the Banks and the Agent
acknowledge receipt of the terms and conditions of the
Caterpillar Transaction for purposes of Section 5.2(g)(viii)
of the Credit Agreement. The parties hereto further agree
that Section 5.2(g)(i) of the Credit Agreement is hereby
amended by the deletion of the word "and" at the end of
clause (G) thereof, by the substitution of a semi-colon for
the period at the end of clause (H) thereof and by the
addition of a new clause (I) to read as follows:
"(I) up to $70,000,000 aggregate principal amount
of borrowings from Caterpillar Financial Services
Corporation ("Caterpillar") by FCX, and the Guarantee
thereof by FI, all subject to the terms set forth in
the Fourth Amendment and subject to the limitations and
reservation of rights set forth therein; and"
and that Section 5.2(d)(iv) of the Credit Agreement is
amended by the addition of the following immediately after
the reference to "Section 5.2(g)(x)":
"; and the Liens on the Caterpillar Assets (as
defined in to the Fourth Amendment). "
(b) The Required Banks and the Agent hereby
consent to the terms of the Pennzoil Transaction
substantially as set forth in Exhibit B hereto, and the
Required Banks and FTX acknowledge and agree that the
payment obligation of FRP in connection with the Pennzoil
Transaction is an "obligation for deferred payment for
property purchased having an original maturity greater than
one year after the date of incurrence thereof" contemplated
by the definition of "Indebtedness for Borrowed Money" in
Section 1.1 of the Credit Agreement and shall, until the
recalculation of the Borrowing Base next occurring under the
FTX Credit Agreement, be calculated as having an original
principal amount of zero for all purposes of calculations of
Borrowing Base Debt; Section 5.2(g)(i) of the Credit
Agreement is hereby amended by the addition of a new clause
(J) to read as follows:
"(J) the deferred payment obligation for the property
purchased in the Pennzoil Transaction (as defined in
the Fourth Amendment) on substantially the terms set
forth in Exhibit B to the Fourth Amendment."
and Section 5.2(d)(iv) of the Credit Agreement is hereby
amended by the addition of the following at the end thereof:
"; and, so long as such Liens are limited to only those
assets purchased in the Pennzoil Transaction referred
to in Section 5.2(g)(i)(J), Liens securing the Debt
referred to in Section 5.2(g)(i)(J)."
(c) Subject to the covenants, limitations and
reservations set forth below and subject to the written
approval of the Agent of all relevant documentation
governing the PFT Transaction (the "PFT Documents"), the
Required Banks and the Agent consent to the execution by FI
of the PFT Documents in the form so approved and agree that
the existence of the PFT Obligations shall not be prohibited
by Sections 5.2(g) or 5.2(1) of the Credit Agreement,
provided that, except to the extent specifically waived or
consented to hereby, the Agent and the Banks hereby reserve
all rights and remedies under the Loan Documents with
respect to (and shall not be deemed, by implication or
otherwise, to have consented to or waived) any performance
by FI under the PFT Documents which would be a Default or
Event of Default, including without limitation any voluntary
prepayment or repurchase prohibited by clause (iii) below.
FTX hereby covenants and agrees that (i) it shall cause FI
to ensure that the Agent promptly receives copies of all
material notices provided by or to FI under the PFT
Documents which are not otherwise provided to the Agent
under any other agreement; (ii) it shall not permit FI,
without the prior written consent of the Required Banks, to
enter into any amendment or modification of any of the PFT
Documents which would have an adverse effect upon the FI
Collateral and Rights or impair the ability of any of the
FTX and the Restricted Subsidiaries to perform all of their
respective obligations under the Loan Documents and (iii) no
voluntary prepayment of the PFT Obligations or voluntary
repurchase of the PFT Assets shall be made by FTX or any
Restricted Subsidiary or directly or indirectly from or with
any Restricted Asset during the continuance of any Default
or Event of Default or, if, after giving effect to any such
voluntary prepayment or voluntary repurchase, any Default or
Event of Default would then exist or result from such
transaction. The undertakings of FTX under clause (i) of
the preceding sentence and under clauses (ii) and (iii)
thereof shall be deemed to be covenants under Sections 5.1
and 5.2, respectively, of the Credit Agreement for all
purposes, including for purposes of Article VII thereof.
The Required Banks and FTX further agree that the obligation
of FI to pay the Debt Component under and as defined in the
Power Sales Agreement (the "Power Sales Agreement") between
FI and Jaya Power in the form approved by the Agent as part
of the PFT Documents shall be deemed to be Indebtedness for
Borrowed Money of FI for all purposes of the Credit
Agreement, including without limitation Section 7.1(i)
thereof. Subject to all the foregoing, the Banks and the
Agent acknowledge receipt of the terms and conditions of the
PFT Transaction to the extent deemed a Capitalized Lease for
the purposes of Section 5.2(g)(viii) of the Credit
Agreement; agree that only the book amount of the debt
portion of such PFT Obligations shall be counted as
Borrowing Base Debt (but only if and to the extent that the
equity portion of the PFT Obligations has been taken into
account in the most recent determination of the Borrowing
Base); and agree that FI may make an investment (through
either the acquisition of an equity interest in, or the
purchase of subordinated debt securities of, Jaya Power) of
up to $17,750,000 in Jaya Power on substantially the terms
set forth in Exhibit C hereto (the "Power Investment"),
which investments and the PFT Obligations shall not be
included in the calculation of the permitted investment
limit set forth in Section 5.2(1) of the Credit Agreement.
Subject, however, to all of the covenants, agreements,
limitations and reservations set forth in this paragraph
(c), the Required Banks authorize the Agent to approve, and
the Agent hereby approves, the terms and conditions of the
PFT Transaction, substantially as set forth on Exhibit C
hereto as contemplated by the definition of "Power
Facilities Transfer" in Section 1.1 of the Credit Agreement;
and the parties hereto agree that Article VII of the Credit
Agreement is amended by the addition of a new section (p) to
read as follows:
"(p) any default or other event shall occur with
respect to the PFT Documents which would (with or
without the passage of time or the giving of notice)
permit acceleration or require prepayment of the PFT
Obligations other than with respect to a casualty event
or condemnation affecting the PFT Assets (as such term
is defined in the Fourth Amendment), permit foreclosure
upon the PFT Assets or require FI to repurchase the PFT
Assets;"
and that Article I of the Credit Agreement is amended by the
addition of the following definitions in their appropriate
alphabetical order:
""Fourth Amendment" means the Fourth Amendment,
Consent and Limited Waiver hereto dated as of November
23, 1994."
""PFT Documents" means each of the agreements
governing the Power Facilities Transfer and related
transactions as permitted by the Fourth Amendment."
(d) Subject to the covenants, limitations and
reservations provided below and subject to the written
approval of the Agent of all relevant documentation
governing the P&O Transaction (the "P&O Documents"), the
Required Banks and the Agent hereby consent to the execution
by FI of the P&O Documents in the form so approved and agree
that the existence of the P&O Obligations will not be
prohibited by Sections 5.2(g) or 5.2(1) of the Credit
Agreement; provided, that, except to the extent specifically
waived or consented to hereby, the Agent and the Banks
hereby reserve all rights and remedies under the Loan
Documents with respect to (and shall not be deemed, by
implication or otherwise, to have consented to or waived)
any performance by FI under the P&O Documents which would be
a Default or Event of Default, including without limitation
any voluntary prepayment or repurchase prohibited by clause
(iii) below. FTX hereby covenants and agrees that (i) it
shall cause FI to ensure that the Agent promptly receives
copies of all material notices delivered by or to FI
pursuant to the P&O Documents which are not otherwise
provided to the Agent under any other agreement; (ii) it
shall not permit FI, without the prior written consent of
the Required Banks, to enter into any amendment or
modification of any of the P&O Documents which would have an
adverse effect upon the FI Collateral and Rights or impair
the ability of any of FTX and the Restricted Subsidiaries to
perform all of their respective obligations under the Loan
Documents; and (iii) no voluntary prepayment of the P&O
Obligations or voluntary repurchase of the P&O Assets shall
be made by FTX or any Restricted Subsidiary or directly or
indirectly from or with any Restricted Asset during the
continuance of any Default or Event of Default or, if, after
giving effect to any such voluntary prepayment or voluntary
repurchase, any Default or Event of Default would then exist
or result from such transaction. The undertakings of FTX
under clause (i) of the preceding sentence and under clauses
(ii)and (iii) thereof shall be deemed to be covenants under
Sections 5.1 and 5.2, respectively, of the Credit Agreement
for all purposes, including for purposes of Article VII
thereof. Subject to all the foregoing, the Agent and the
Required Banks waive, with respect to the transfer of assets
by FI described in Exhibit D hereto, the provisions of
Section 5.2(c) of the Credit Agreement relating to the
prohibition of transfer of any substantial part of the
assets of FI and agree that the P&O Obligations shall not be
included in the calculation of the permitted investment
limit set forth in Section 5.2(1) of the Credit Agreement.
The Agent and the Banks acknowledge receipt of the terms and
conditions of the P&O Transaction and the related
Capitalized Leases for purposes of Section 5.2(g)(viii) of
the Credit Agreement. The parties hereto further agree that
Article VII of the Credit Agreement is amended by the
addition of a new section (q) to read as follows:
"(q) any default or other event shall occur with
respect to the P&O Documents which would (with or
without the passage of time or the giving of notice)
permit acceleration or require prepayment of the P&O
Obligations other than with respect to a casualty event
or condemnation affecting the P&O Assets (as such term
is defined in the Fourth Amendment), permit foreclosure
upon any of the P&O Assets or require FI to repurchase
the P&O Assets; or"
and that Article I of the Credit Agreement is amended by the
addition of the following definition in its appropriate
alphabetical order:
""P&O Documents" means each of the agreements
governing the sale and leaseback transaction between FI
and P.T. ALatieF P&O Port Development Corporation
substantially on the terms permitted by the Fourth
Amendment."
(e) Subject to the covenants, limitations and
reservations set forth below and subject to the written
approval of the Agent of all documentation governing the
Airfast Transaction (the "Airfast Documents"), the Required
Banks and the Agent hereby consent to the execution by FI of
the Airfast Documents in the form so approved and agree that
the existence of the Airfast Obligations will not be
prohibited by Sections 5.2(g) or 5.2(1) of the Credit
Agreement, provided that, except to the extent specifically
waived or consented to hereby, the Agent and the Banks
hereby reserve all rights and remedies under the Loan
Documents with respect to (and shall not be deemed, by
implication or otherwise, to have consented to or waived)
any performance by FI under the Airfast Documents which
would be a Default or Event of Default, including without
limitation any voluntary prepayment or repurchase prohibited
by clause (iii) below. FTX hereby covenants and agrees that
(i) it shall cause FI to ensure that the Agent promptly
receives copies of all material notices delivered by or to
FI pursuant to the Airfast Documents which are not otherwise
provided to the Agent under any other agreement; (ii) it
shall permit FI, without the prior written consent of the
Required Banks, to enter into any amendment or modification
of any of the Airfast Documents which would have an adverse
effect upon the FI Collateral and Rights or impair the
ability of any of FTX and the Restricted Subsidiaries to
perform all of their respective obligations under the Loan
Documents; and (iii) no voluntary prepayment of the Airfast
Obligations or voluntary repurchase of the Airfast Assets
shall be made by FTX or any Restricted Subsidiary or
directly or indirectly from or with any Restricted Asset
during the continuance of any Default or Event of Default
or, if, after giving effect to any such voluntary prepayment
or voluntary repurchase, any Default or Event of Default
would then exist or result from such transaction. The
undertakings of FTX under clause (i) of the preceding
sentence and under clauses (ii) and (iii) thereof shall be
deemed to be covenants under Sections 5.1 and 5.2,
respectively, of the Credit Agreement for all purposes,
including for purposes of Article VII thereof. Subject to
all of the foregoing, the Agent and the Required Banks agree
that FI may make an equity investment (either through the
acquisition of an equity interest in, or the purchase of
subordinated debt securities of, Avco) of up to $2,000,000
in Avco on substantially the terms set forth in Exhibit E
hereto (the "Airfast Investment"); agree that the Airfast
Investment and the Airfast Obligations shall not be included
in the calculation of the permitted investment limit set
forth in Section 5.2(1) of the Credit Agreement; and agree
that only the book amount of the debt portion of such
Capitalized Lease obligations shall be counted as Borrowing
Base Debt (but only if and to the extent that the equity
portion of such Capitalized Lease has been taken into
account in the most recent determination of the Borrowing
Base). The Agent and the Banks acknowledge receipt of the
terms and conditions of the Airfast Transaction and the
related Capitalized Leases for purposes of Section
5.2(g)(viii) of the Credit Agreement. The parties hereto
further agree that Article VII of the Credit Agreement is
amended by the addition of the following section (r) to read
as follows:
"(r) any default or other event shall occur with
respect to the Airfast Documents which would (with or
without the passage of time or the giving of notice)
permit acceleration or require prepayment of the
Airfast Obligations other than with respect to a
casualty event or governmental taking affecting the
Airfast Assets (as such terms are defined in the Fourth
Amendment), permit foreclosure upon the Airfast Assets
or require FI to repurchase the Airfast Assets."
and agree that Article I of the Credit Agreement is amended
by the addition of the following definition in its
appropriate alphabetical order:
""Airfast Documents" means each of the agreements
governing the sale and leaseback transaction between FI
and P.T. Airfast Aviation Facilities Company on
substantially the terms permitted by Exhibit E to the
Fourth Amendment."
SECTION 2. Representations and Warranties;
Condition Precedent. (a) Each of FTX and FRP hereby
represent and warrant to the Agent and the Banks that as of
the date hereof, and after giving effect to this Amendment,
no Default or Event of Default has occurred and is
continuing and the representations and warranties contained
in the Credit Agreement are true and correct in all material
respects.
(b) The consents on the part of the Banks
provided for in Section 1 shall be subject to the foregoing
representations and warranties being true and correct on and
as of the date hereof.
SECTION 3. Conditions to Effectiveness. This
Amendment shall become effective (subject, with respect to
each Transaction, to (i) the Fourth Amendment, Consent and
Limited Waiver dated as of November 23, 1994, to the FI
Credit Agreement having become effective with respect to
such Transaction and (ii) the receipt and written approval
by the Agent of the necessary documentation for such
Transaction referred to herein) on the date of receipt (the
"Effective Date") by the Agent of executed counterparts of
this Amendment which, when taken together, bear the
signatures of FTX, FRP, the Agent and the Required Banks.
SECTION 4. Counterparts.. This Amendment may be
executed in multiple counterparts, each of which shall
constitute an original, but all of which when taken together
shall constitute but one instrument.
SECTION 5. Limited Effect. Section 1 hereof
constitutes a modification and amendment of the Credit
Agreement effective for each Transaction as of its
respective Effective Date. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise
limit, impair, constitute a waiver of or otherwise affect
the rights and remedies of the Banks and the Agent under the
Credit Agreement, nor alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants
or agreements contained in the Credit Agreement, all of
which are ratified and affirmed in all respects and shall
continue in full force and effect. This Amendment shall
apply and be effective only with respect to the provisions
of the Credit Agreement specifically referred to herein.
Except as expressly set forth herein, the Credit Agreement
shall continue in full force and effect in accordance with
the provisions thereof.
SECTION 6. APPLICABLE LAW. THIS AMENDMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 7. Expenses. FTX shall pay all out-of-
pocket expenses incurred by the Agent in connection with the
preparation of this Amendment, including, but not limited
to, the reasonable fees and disbursements of Cravath, Swaine
& Moore, special counsel for the Agent.
SECTION 8. Headings. The headings of this
Amendment are for reference only and shall not limit or
otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their duly authorized
officers or agents as of the date first above written.
FREEPORT-McMoRan INC.,
by: /s/ R. Foster Duncan
--------------------
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-McMoRan RESOURCE
PARTNERS, LIMITED PARTNERSHIP,
by FREEPORT McMoRan INC., its
Administrative Managing
General Partner,
by: /s/ R. Foster Duncan
----------------------
Name: R. Foster Duncan
Title: Treasurer
CHEMICAL BANK, individually and
as
Agent,
by: /s/Theodore L. Parker
---------------------
Name: Theodore L. Parker
Title:Vice President
Exhibit 12.1
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Computation of Ratio of Earnings to Fixed Charges
Years Ended December 31,
--------------------------------------------------
1990 1991 1992 1993 1994
-------- -------- ------- --------- --------
(In Thousands)
Income (loss) from
continuing operations $243,647 $111,839 $20,211 $(222,411) $ 83,966
Add:
Interest expense 7,641 506 869 12,870 33,519
Rental expense factor(a) 1,678 1,915 2,371 1,378 3,899
-------- -------- ------- --------- --------
Earnings available for
fixed charges $252,966 $114,260 $23,451 $(208,163) $121,384
======== ======== ======= ========= ========
Interest expense $ 7,641 $ 506 $ 869 $ 12,870 $ 33,519
Capitalized interest 6,000 23,271 19,116 11,070 -
Rental expense factor(a) 1,678 1,915 2,371 1,378 3,899
-------- -------- ------- --------- --------
Fixed charges $ 15,319 $ 25,692 $22,356 $ 25,318 $ 37,418
======== ======== ======= ========= ========
Ratio of earnings to fixed
charges(b) 16.5X 4.4X 1.0X (c) 3.2X
===== ==== ==== ====
a. Portion of rent deemed representative of an interest factor.
b. For purposes of this calculation, earnings are income from continuing
operations before fixed charges. Fixed charges consist of interest and
that portion of rent deemed representative of interest.
c. Earnings were inadequate to cover fixed charges by $233.5 million.
Exhibit 13.1
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SELECTED FINANCIAL AND OPERATING DATA
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(Financial Data In Thousands, Except Per Unit Amounts)
FINANCIAL
Revenues $ 765,278 $ 669,160 $ 877,058 $ 885,209 $ 850,651
Operating income (loss) 120,618a (210,848)b 20,743 67,196 227,383e
Net income (loss) 83,966a (246,111)b,c 20,211 15,046d 243,647e
Net income (loss) per unit .81a (2.37)b,c .20 .18d 2.95e
Distributions per publicly
held unit 2.40 2.40 2.40 2.40 2.40
Average units outstanding 103,683 103,698 101,449 83,630 82,556
At December 31:
Property, plant and
equipment, net 910,469 970,960 1,074,332 1,009,517 683,303
Total assets 1,146,931 1,296,873 1,493,507 1,443,114 1,119,322
Long-term debt 368,637 488,102 356,563 542,766 120,817
Partners' capital 447,660 492,404 859,695 560,160 722,815
OPERATING
Phosphate fertilizers (short tons)f
Diammonium phosphate
Sales:
Florida 1,081,300
Louisiana 970,100
Other 216,500
----------
Total sales 2,267,900 2,303,200 2,760,000 2,841,000 2,568,000
Average realized price:g
Florida $146.53
Louisiana 152.48
Monoammonium phosphate
Sales:
Granular 298,300 423,300 509,000 476,000 438,000
Powdered 162,000 55,400 - - -
Average realized price:g
Granular $158.54
Powdered 129.24
Granular triple superphosphate
Sales 465,200 564,700 715,000 710,000 717,000
Average realized
price g $114.76
Phosphate rock (short tons)f
Sales 4,373,400 3,840,300 3,440,500 2,247,000 1,455,400
Average realized
price g $21.38
Sulphur (long tons)
Sales h 2,087,800 1,973,200 2,346,100 2,528,200 2,491,000
Oil (barrels)
Sales 2,533,700 3,443,000 4,884,000 350,800 -
Average realized
price $13.74 $14.43 $15.91 $13.34
a. Includes a $10.9 million charge ($0.11 per unit) for certain remedia-
tion costs (Note 7) and other miscellaneous charges.
b. Includes a net charge of $173.6 million ($1.67 per unit) primarily for
restructuring, asset recoverability and other related charges (Note 4).
c. Includes a $23.7 million charge ($0.23 per unit) for the cumulative
effect of changes in accounting principle (Note 1).
d. Includes a $17.7 million ($0.21 per unit) insurance settlement gain
from hull damage sustained on a sulphur tanker and a $96.8 million
charge ($1.16 per unit) for the cumulative effect of the change in
accounting for postretirement benefits other than pensions.
e. Includes a $162.5 million gain ($1.97 per unit) from the sale and
restructuring of assets.
f. Certain information prior to the formation of IMC-Agrico was not
recorded on a basis consistent with that currently being presented and
therefore is not available. Reflects FRP's 46.5 percent share of
the IMC-Agrico assets for the year ended June 30, 1994, while FRP
received 58.6 percent of the cash flow generated during such period.
FRP's share of the IMC-Agrico assets for the year ended June 30, 1995 is
45.1 percent, while FRP will receive 55 percent of the cash flow.
g. Represents average realization f.o.b. plant/mine.
h. Includes 739,900 tons, 1,138,800 tons, 1,654,300 tons, 1,612,400 tons
and 1,564,000 tons for 1994-1990, respectively, which represent
internal consumption and Main Pass start-up sales that are not included
in sales for accounting purposes.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
For FRP 1994 was a year of building on the accomplishments of 1993. Following
the significant restructuring activities undertaken during the prior year, FRP
concentrated on maximizing the operational and organizational efficiencies
available as a result of the formation of IMC-Agrico. In addition to these
benefits, the phosphate fertilizer market continued to strengthen and the Main
Pass sulphur project operated at above design capacity. With the significant
restructuring activities behind FRP, it can now focus on growth opportunities
such as the January 1995 purchase of the Pennzoil sulphur assets and the pending
acquisition of the Fertiberia fertilizer operations.
RESULTS OF OPERATIONS
1994 1993 1992
------ ------ ------
(In Millions,
Except Per Unit Amounts)
Revenues $765.3 $669.2 $877.1
Operating income (loss) 120.6a (210.8)b 20.7
Net income (loss) 84.0a (246.1)b,c 20.2
Net income (loss) per unit .81a (2.37)b,c .20
a. Includes a $10.9 million charge ($0.11 per unit) for certain remediation
costs (Note 7) and other miscellaneous charges.
b. Includes a net charge of $173.6 million ($1.67 per unit) primarily for
restructuring, asset recoverability and other related charges (Note 4).
c. Includes a $23.7 million charge ($0.23 per unit) for the cumulative
effect of changes in accounting principle (Note 1).
1994 COMPARED WITH 1993
FRP's results primarily reflect the improvement in the phosphate fertilizer
market during 1994 and the ongoing benefits from the formation of IMC-Agrico
and other restructuring activities undertaken in 1993. Partially offsetting
these positive factors were increased raw material prices for ammonia and
reduced oil sales volumes (see Selected Financial and Operating Data).
Depreciation and amortization in 1994 was lower as a result of
adjustments caused by FRP's disproportionate interest in IMC-Agrico cash
distributions (Note 2) and from lower Main Pass oil sales volumes, partially
offset by increased sulphur sales volumes. Also, the 1993 amount included
$7.6 million in charges from the restructuring project discussed below.
General and administrative expenses reflect the benefits from the
formation of IMC-Agrico and the other 1993 restructuring activities. The 1994
amount also benefited from a $2.2 million reduction in the estimated cost of
excess office space (originally estimated as part of 1993 restructuring
costs), whereas 1993 includes $7.3 million in restructuring related charges.
Interest expense in 1994 increased as a result of the Main Pass sulphur
project becoming operational for accounting purposes in July 1993 (previously,
related interest costs were capitalized), rising interest rates and the
issuance of the 8 3/4% Senior Subordinated Notes due 2004 (Note 5) which were
used to reduce lower variable rate bank borrowings. These increases were
partially offset by a reduction in average debt levels.
Agricultural Minerals Operations- FRP's agricultural minerals segment, which
includes its fertilizer and phosphate rock operations (conducted through IMC-
Agrico) and its sulphur business, reported 1994 operating income of $123.8
million on revenues of $730.4 million compared with an operating loss of $105
million on revenues of $619.3 million in 1993. Significant items affecting
operating income follow (in millions):
Agricultural minerals operating loss - 1993 $ (105.0)
--------
Increases (decreases):
Sales volumes 15.8
Realizations 102.7
Other (7.4)
--------
Revenue variance 111.1
Cost of sales 46.8a,b
1993 provision for restructuring charges 33.9
1993 loss on valuation and sale of assets, net 14.8
General and administrative and exploration 22.2a
--------
228.8
--------
Agricultural minerals operating income - 1994 $ 123.8
========
a. 1993 included $17.5 million in cost of sales and $7.3 million in general
and administrative expenses resulting from the restructuring project.
b. 1994 included a $15.8 million reduction and 1993 included a $10.8 million
increase to depreciation and amortization caused by FRP's disproportionate
interest in IMC-Agrico cash distributions.
FRP's 1994 sales volumes for DAP, its principal fertilizer product, were
slightly below 1993 levels. Sales activity benefited from continued strong
export demand and improved domestic activity. This demand caused producer
inventories to remain at prior-year levels despite a rise in industrywide
production. As a result, phosphate fertilizer prices rose sharply from the
near 20-year lows experienced during 1993, with FRP's average DAP realization
increasing 32 percent. Unit production costs benefited from efficiencies at
IMC-Agrico, somewhat offset by higher raw material prices for ammonia.
Strong export demand for phosphate fertilizer products has continued into
early 1995, resulting in improving phosphate fertilizer prices. IMC-Agrico
resumed production at its only idle fertilizer facility in January 1995.
FRP's phosphate rock sales volumes rose 14 percent during 1994,
reflecting increased demand and the addition of a long-term supply contract in
October 1994.
Main Pass sulphur production averaged nearly 6,200 TPD, exceeding full
design operating rates of 5,500 TPD, which lowered unit production costs from
1993. Production is expected to be maintained near the 6,000 TPD level for
the immediate future. With increased Main Pass production, FRP ceased
operating the marginally profitable Caminada mine in January 1994. Average
sulphur realizations for 1994 were lower, reflecting the decline in prices
which occurred throughout 1993. However, improved phosphate fertilizer
operating rates, coupled with reduced imports, resulted in sulphur price
increases in Tampa, Florida since mid-1994. As a result, Tampa sulphur prices
are currently above year-ago levels. To the extent U.S. phosphate fertilizer
production remains strong, improved sulphur demand is expected to continue,
although the availability of Canadian sulphur impacts the potential for
significant price increases.
Oil Operation-
1994 1993
--------- ---------
Sales (barrels) 2,533,700 3,443,000
Average realized price $13.74 $14.43
Operating income (in millions) $2.8 $(61.5)
Main Pass oil production was limited during 1994 because of a
redevelopment program which involved drilling two additional wells and
recompleting three existing wells. FRP's 1995 net production is estimated to
approximate 1994 levels, as the benefits of the redevelopment program are
expected to partially offset declining reservoir production. Oil realizations
recovered somewhat from the significant decline which occurred in late 1993,
with prices rising to near $15 per barrel in January 1995. The 1993 price
decline resulted in a $60 million charge to FRP's earnings for the excess net
book value of its Main Pass oil assets over the estimated future net cash flow
to be received.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by (used in) operating activities was $221.4 million in
1994, $(2.9) million in 1993 and $120.1 million in 1992. Fluctuations in these
amounts were caused primarily by the varying level of FRP's earnings. Also
benefiting the 1994 period were working capital reductions achieved by IMC-
Agrico as well as the sale of receivables (Note 1). Future operating cash
flow would benefit from the Fertiberia purchase, discussed below, although
cash flow from Fertiberia for the foreseeable future would be reinvested to
improve its viability.
Net cash provided by (used in) investing activities was $15.6 million in
1994, $2.5 million in 1993 and $(209.9) million in 1992. Capital expenditures
have declined significantly following the completion of Main Pass development
expenditures and a cost efficiency program during 1992. Capital expenditures
for 1995, excluding those associated with Fertiberia, are estimated to remain
near 1994 levels. Investing cash flows for 1994 and 1993 benefited from the
receipt of proceeds from asset sales.
Net cash provided by (used in) financing activities totaled $(251.6)
million in 1994, $17.8 million in 1993 and $93.1 million in 1992.
Distributions to partners are primarily to the public unitholders and do not
reflect the unpaid distributions to FTX since early 1992, discussed below. In
1992, FRP used the proceeds from the public sale of FRP units to reduce its
indebtedness. In early 1994, FRP issued $150 million of 8 3/4% Senior
Subordinated Notes, using the proceeds to reduce other indebtedness, thereby
lengthening the maturity and fixing the interest cost on a portion of FRP's
debt at a time when long-term interest rates were favorable. FRP received
$27.9 million of the IMC-Agrico fourth-quarter 1994 distribution before year
end contributing to the 1994 debt reduction.
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.
FRP has agreed in principle to acquire Fertiberia, S.L., the restructured
nitrogen and phosphate fertilizer business of Ercros, S.A., a Spanish
conglomerate. Since September 1993, FRP has managed this company with the
goal of establishing Fertiberia as a financially viable concern. FRP intends
to continue to work with the Spanish authorities on improving the operations
of Fertiberia and eventually to acquire essentially all of the company's
capital stock in return for agreeing to make a capital contribution of $11.5
million upon closing and a further contingent payment of $10 million in
January 1998. As part of the agreement, $38.5 million of nonrecourse
financing has been arranged at Fertiberia with payment terms dependent upon
its financial performance. The acquisition of Fertiberia, one of the largest
fertilizer manufacturers in Europe, is conditioned upon satisfaction of a
number of issues.
Publicly owned FRP units have cumulative rights to receive quarterly
distributions of 60 cents per unit through the distribution for the quarter
ending December 31, 1996 (the Preference Period) before any distributions may
be made to FTX. On January 20, 1995, FRP declared a distribution of 60 cents
per publicly held unit ($30.2 million) and 26 cents per FTX-owned unit ($13.9
million), payable February 15, 1995, bringing the total unpaid distribution to
FTX to $353.1 million. Unpaid distributions to FTX will be recoverable from
one-half of the excess of future quarterly FRP distributions over 60 cents per
unit for all units. The January 1995 distributable cash included $52.2
million from IMC-Agrico. FRP's future distributions will be dependent on the
distributions received from IMC-Agrico and Fertiberia and future cash flow
from FRP's sulphur and oil operations.
FRP believes that its short-term cash requirements will be met from
internally generated funds and borrowings under its existing credit facilities
($414 million available under the FRP credit facility as of January 20, 1995).
FTX is pursuing a plan to separate its two principal businesses, copper/gold
and agricultural minerals, into two independent financial and operating
entities (Note 5). The plan is contingent on a number of factors and will
require a series of steps to implement over several months. In connection
with this restructuring plan, the existing FTX revolving credit agreement in
which FRP participates will be replaced with a new facility for FRP and FTX
which is expected to provide greater access to credit markets and reduce
financing costs.
1993 COMPARED WITH 1992
Results for 1993 were adversely affected by significantly reduced sales
volumes and average market prices for FRP's products and charges resulting from
the restructuring project. The reduction in general and administrative expenses
reflected the initial benefits from the restructuring activities, partially
offset by $7.3 million in related charges. Interest expense increased due to
the Main Pass sulphur project becoming operational for accounting purposes.
During 1993, FTX undertook a restructuring of its administrative
organization. This restructuring represented a major step by FTX to lower the
costs of operating and administering its businesses in response to weak market
prices of commodities produced by its operating units. As part of this
restructuring, FTX significantly reduced the number of employees engaged in
administrative functions, changed its management information systems
environment to achieve efficiencies, reduced its needs for office space,
outsourced a number of administrative functions and took other actions to
lower costs. The restructuring process resulted in FTX incurring one-time
costs, portions of which were allocated to FRP pursuant to its management
services agreement with FTX (Note 4).
Agricultural Minerals Operations- FRP's agricultural minerals segment
reported a 1993 loss of $105 million on revenues of $619.3 million compared
with operating income of $16.6 million on revenues of $799 million in 1992.
Significant items affecting operating income follow (in millions):
Agricultural minerals operating income - 1992 $ 16.6
-------
Increases (decreases):
Sales volumes (67.4)
Realizations (103.2)
Other (9.1)
-------
Revenue variance (179.7)
Cost of sales 89.5a
1993 provision for restructuring charges (33.9)
1993 loss on valuation and sale of assets, net (14.8)
General and administrative and exploration 17.3a
-------
(121.6)
-------
Agricultural minerals operating loss - 1993 $(105.0)
=======
a. 1993 included $17.5 million in cost of sales and $7.3 million in general
and administrative expenses resulting from the restructuring project.
Weak industrywide demand and changes attributable to FRP's participation
in IMC-Agrico resulted in 1993 DAP sales volumes declining 17 percent. Unit
production costs, excluding charges related to the restructuring project,
declined from 1992 reflecting initial production efficiencies from IMC-Agrico,
reduced raw material costs for sulphur and lower phosphate rock mining
expenses, partially offset by increased natural gas costs and lower production
volumes. FRP's realization for DAP was lower, reflecting the near 20-year low
prices realized during 1993 as well as an increase in the lower-priced Florida
sales by IMC-Agrico. FRP's proportionate share of the larger IMC-Agrico
phosphate rock operation caused 1993 sales volumes to increase 12 percent.
Combined sulphur production from the Caminada and Main Pass mines
increased compared with 1992. However, sales volumes declined 16 percent,
primarily because of reduced purchases by IMC-Agrico resulting from its
curtailed fertilizer production. Due to a significant decline in the market
price of sulphur during 1993, FRP recorded a 1993 charge to earnings for the
excess of capitalized cost over expected realization of its non-Main Pass
sulphur assets, primarily the Caminada sulphur mine (Note 4). Main Pass
sulphur became operational for accounting purposes beginning July 1993.
Oil Operation-
1993 1992
--------- ---------
Sales (barrels) 3,443,000 4,884,000
Average realized price $14.43 $15.91
Operating income (in millions) $(61.5) $4.6
Main Pass oil production during early 1993 was hampered by water
encroachment. As discussed earlier, the 1993 operating loss includes a $60
million recoverability charge because of lower oil prices.
ENVIRONMENTAL
FTX and its affiliates, including FRP, have a history of commitment to
environmental responsibility. Since the 1940s, long before public attention
focused on the importance of maintaining environmental quality, FTX and its
affiliates have conducted preoperational, bioassay, marine ecological and
other environmental surveys to ensure the environmental compatibility of its
operations. FTX's Environmental Policy commits FTX and its affiliates'
operations to full compliance with local, state and federal laws and
regulations, and prescribes the use of periodic environmental audits of all
domestic 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, including FRP, continue to study and implement methods to
reduce discharges and emissions.
Federal legislation (sometimes referred to as "Superfund") requires
payments for cleanup of certain abandoned waste disposal sites, even though
such waste disposal activities were performed in compliance with regulations
applicable at the time of disposal. 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
unabandoned sites. States also have regulatory programs that can mandate
waste cleanup. Liability under these laws involves inherent uncertainties.
FRP has received notices from governmental agencies that it is one of
many potentially responsible parties at certain sites under relevant federal
and state environmental laws. Further, FRP is aware of additional sites for
which it may receive such notices in the future. Some of these sites involve
significant cleanup costs; however, at each of these sites other large and
viable companies with equal or larger proportionate shares are among the
potentially responsible parties. The ultimate settlement for such sites
usually occurs several years subsequent to the receipt of notices identifying
potentially responsible parties because of the many complex technical and
financial issues associated with site cleanup. FRP believes that the
aggregation of any costs associated with these potential liabilities will not
exceed amounts accrued and expects that any costs would be incurred over a
period of years.
FRP, through 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 7).
In June 1994, a sinkhole was found at a phosphogypsum storage area at
IMC-Agrico's New Wales, Florida facility. In addition, there was an earthen
dam breach at two of its phosphate rock facilities in late 1994 (Note 7).
While there is no evidence indicating underground water contamination in areas
away from the facilities, this issue continues to be monitored. If there were
contamination, which IMC-Agrico considers unlikely, the costs that would be
required are uncertain and cannot be estimated at the present. If significant
costs were incurred it would be necessary to determine the applicability of
insurance coverage maintained by IMC-Agrico, and separately by FRP, and for
the sharing of costs between the joint venture partners.
FRP has 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 FRP's operations may require substantial capital expenditures
and may affect its operations in other ways that cannot now be accurately
predicted.
-----------------------------
The results of operations reported and summarized above are not necessarily
indicative of future operating results.
REPORT OF MANAGEMENT
Freeport-McMoRan Inc., the Administrative Managing General Partner (the
General Partner) of Freeport-McMoRan Resource Partners, Limited Partnership
(the Partnership) 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 General Partner 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 General Partner's internal auditors, Price Waterhouse
LLP. In accordance with generally accepted auditing standards, the
Partnership'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 of the General Partner, through its Audit
Committee composed solely of non-employee directors, is responsible for
overseeing the integrity and reliability of the Partnership's accounting and
financial reporting practices and the effectiveness of its system of internal
controls. Arthur Andersen LLP and Price Waterhouse LLP meet regularly with,
and have access to, this committee, with and without management present, to
discuss the results of their audit work.
Rene L. Latiolais Charles W. Goodyear
President and Chief Executive Officer Senior Vice President and
Chief Financial Officer
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
BALANCE SHEETS
December 31,
----------------------
1994 1993
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and short-term investments $ 9,859 $ 24,448
Accounts receivable:
Customers 42,312 45,200
Other 15,953 17,702
Inventories:
Products 79,377 100,392
Materials and supplies 30,300 33,013
Prepaid expenses and other 1,350 2,143
---------- ----------
Total current assets 179,151 222,898
---------- ----------
Property, plant and equipment 1,744,392 1,762,012
Less accumulated depreciation and amortization 833,923 791,052
---------- ----------
Net property, plant and equipment 910,469 970,960
---------- ----------
Other assets 57,311 103,015
---------- ----------
Total assets $1,146,931 $1,296,873
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities $ 84,574 $ 78,443
Current portion of long-term debt 314 465
---------- ----------
Total current liabilities 84,888 78,908
Long-term debt, less current portion 368,637 488,102
Reclamation and mine shutdown reserves 96,445 97,333
Accrued postretirement benefits and
other liabilities 149,301 140,126
Partners' capital 447,660 492,404
---------- ----------
Total liabilities and partners' capital $1,146,931 $1,296,873
========== ==========
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
Years Ended December 31,
--------------------------------
1994 1993 1992
-------- --------- --------
(In Thousands,
Except Per Unit Amounts)
Revenues $765,278 $ 669,160 $877,058
Cost of sales:
Production and delivery 547,297 556,712 652,169
Depreciation and amortization 52,344 104,686 119,259
-------- --------- --------
Total cost of sales 599,641 661,398 771,428
Exploration expenses - 3,092 5,814
Provision for restructuring charges - 33,947 -
Loss on valuation and sale of assets, net - 114,802 -
General and administrative expenses 45,019 66,769 79,073
-------- --------- --------
Total costs and expenses 644,660 880,008 856,315
-------- --------- --------
Operating income (loss) 120,618 (210,848) 20,743
Interest expense, net (33,519) (12,870) (869)
Other income (expense), net (3,133) 1,307 337
-------- --------- --------
Income (loss) before changes in
accounting principle 83,966 (222,411) 20,211
Cumulative effect of changes in
accounting principle - (23,700) -
-------- --------- --------
Net income (loss) $ 83,966 $(246,111) $ 20,211
======== ========= ========
Net income (loss) per unit:
Before changes in accounting principle $.81 $(2.14) $.20
Cumulative effect of changes in
accounting principle - (.23) -
---- ------ ----
$.81 $(2.37) $.20
==== ====== ====
Average units outstanding 103,683 103,698 101,449
======= ======= =======
Distributions per publicly held unit $2.40 $2.40 $2.40
===== ===== =====
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOW
Years Ended December 31,
--------------------------------
1994 1993 1992
-------- --------- --------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $ 83,966 $(246,111) $ 20,211
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Cumulative effect of changes in
accounting principle - 23,700 -
Depreciation and amortization 52,344 104,686 119,259
Other noncash charges to income 12,200 7,845 5,194
Provision for restructuring charges, net
of payments - 3,143 -
Loss on valuation and sale of assets, net - 114,802 -
Cash distribution from IMC-Agrico in
excess of capital interest 43,293 - -
Reclamation and mine shutdown
expenditures (9,837) (9,980) (18,038)
(Increase) decrease in working capital, net
of effect of acquisitions and dispositions:
Accounts receivable 3,531 710 18,317
Inventories 20,522 20,793 (9,983)
Prepaid expenses and other 679 (495) (9,995)
Accounts payable and accrued
liabilities 14,688 (31,427) (3,011)
Other 44 9,388 (1,893)
-------- --------- --------
Net cash provided by (used in) operating
activities 221,430 (2,946) 120,061
-------- --------- --------
Cash flow from investing activities:
Capital expenditures:
Main Pass (10,941) (37,427) (117,902)
Agricultural minerals (18,740) (14,743) (86,815)
Sale of assets 44,774 49,961 -
Other 530 4,711 (5,219)
-------- --------- --------
Net cash provided by (used in) investing
activities 15,623 2,502 (209,936)
-------- --------- --------
Cash flow from financing activities:
Distributions to partners (127,368) (121,180) (151,210)
Proceeds from debt 89,629 572,137 639,891
Repayment of debt (358,686) (433,164) (826,095)
Purchase of Partnership units (1,342) - -
Proceeds from sale of:
8 3/4% Senior subordinated notes 146,125 - -
Partnership units - - 430,534
-------- --------- --------
Net cash provided by (used in) financing
activities (251,642) 17,793 93,120
-------- --------- --------
Net increase (decrease) in cash and
short-term investments (14,589) 17,349 3,245
Cash and short-term investments at
beginning of year 24,448 7,099 3,854
-------- --------- --------
Cash and short-term investments at
end of year $ 9,859 $ 24,448 $ 7,099
======== ========= ========
Interest paid $ 26,349 $ 22,997 $ 19,818
======== ========= ========
The accompanying notes are an integral part of these financial statements.
<TABLE>
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<CAPTION>
Units Outstanding Partners' Capital
--------------------------- ------------------------------
General Limited Total General Limited Total
------- ------- ------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 53,016 30,952 83,968 $353,680 $206,480 $560,160
Sale of partnership units 192 19,538 19,730 160,443 270,091 430,534
Net income - - - 10,543 9,668 20,211
Partnership distributions - - - (41,760) (109,450) (151,210)
Reallocation due to
disproportionate distributions - - - (41,787) 41,787 -
------ ------ ------- -------- -------- --------
Balance at December 31, 1992 53,208 50,490 103,698 441,119 418,576 859,695
Net loss - - - (126,277) (119,834) (246,111)
Partnership distributions - - - - (121,180) (121,180)
Reallocation due to
disproportionate distributions - - - (62,176) 62,176 -
Other (3) 3 - (23) 23 -
------ ------ ------- -------- -------- --------
Balance at December 31, 1993 53,205 50,493 103,698 252,643 239,761 492,404
Net income - - - 43,089 40,877 83,966
Partnership distributions - - - (6,184) (121,184) (127,368)
Purchase of Partnership units - (95) (95) (490) (852) (1,342)
Reallocation due to
disproportionate distributions - - - (59,166) 59,166 -
------ ------ ------- -------- -------- --------
Balance at December 31, 1994 53,205 50,398 103,603 $229,892 $217,768 $447,660
====== ====== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Ownership. The financial statements of Freeport-
McMoRan Resource Partners, Limited Partnership (FRP), a Delaware limited
partnership, include all majority-owned subsidiaries. Investments in joint
ventures, including IMC-Agrico Company (Note 2), and partnerships are
generally 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 1994 presentation. Freeport-McMoRan Inc. (FTX) owned 51.4
percent and 51.3 percent of FRP as of December 31, 1994 and 1993,
respectively, and serves as FRP's general partner.
Cash and Short-Term Investments. Highly liquid investments purchased with a
maturity of three months or less are considered cash equivalents.
Accounts Receivable. In 1994, IMC-Agrico Company (IMC-Agrico) entered into an
agreement whereby it can sell on an ongoing basis up to $75 million of
accounts receivable. FRP's accounts receivable at December 31, 1994 were net
of $17.9 million of receivables sold.
Inventories. Inventories are generally stated at the lower of average cost or
market and removed at average cost.
Property, Plant and Equipment. Property, plant and equipment is carried at
cost, including capitalized interest during the construction and development
period. Expenditures for replacements and improvements are capitalized. FRP
follows the successful efforts accounting method for its sole oil property,
Main Pass Block 299. 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.
Environmental Remediation and Compliance. Environmental expenditures that
relate to current operations are expensed or capitalized as appropriate.
Expenditures resulting from the remediation of an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recognized for remedial activities
when the efforts are probable and the cost can be reasonably estimated.
Estimated future expenditures to restore properties and related
facilities to a state required to comply with environmental and other
regulations are accrued over the life of the properties. The future
expenditures are estimated based on current costs, laws and regulations. As
of December 31, 1994, FRP had accrued $55 million for abandonment and
restoration of its non-Main Pass sulphur assets, approximately one-half of
which will be reimbursed by third parties, and $42.8 million for reclamation
of land relating to mining and processing phosphate rock. FRP estimates that
its share of abandonment and restoration costs for the Main Pass sulphur mine
will approximate $35 million, $1.4 million of which had been accrued at
December 31, 1994, with essentially all costs being incurred after mine
closure in approximately 30 years. These estimates are by their nature
imprecise and can be expected to be revised over time due to changes in
government regulations, operations, technology and inflation.
Income Taxes. FRP is not a taxable entity; therefore, no income taxes are
reported in its financial statements.
Changes in Accounting Principle. During 1993, FRP adopted the following
changes in accounting principle effective January 1, 1993:
Periodic Scheduled Maintenance - These costs are expensed when incurred.
Previously, costs were capitalized when incurred and amortized.
Deferred Charges - Costs that directly relate to the acquisition,
construction and development of assets and to the issuance of debt and related
instruments are deferred. Previously, certain other costs that benefited
future periods were deferred.
Management Information Systems (MIS) - MIS equipment and software that
have a material impact on net income are capitalized. Other MIS costs,
including equipment and purchased software, that involve immaterial amounts
(currently individual expenditures of less than $0.5 million) and short
estimated productive lives (currently less than three years) are expensed when
incurred. Previously, most expenditures for MIS equipment and purchased
software were capitalized.
These changes were adopted to improve the measurement of operating
results by expensing cash expenditures when incurred unless they directly
relate to long-lived asset additions. The change in accounting for MIS costs
also recognizes the rapid rate of technology change in MIS which results in a
need for continuing investments. These changes did not have a material impact
on 1993 income before changes in accounting principle.
2. IMC-AGRICO
In July 1993, FRP and IMC Global Inc. (IGL) formed the IMC-Agrico joint
venture, operated by IGL, for their respective phosphate fertilizer
businesses, including phosphate rock and uranium. FRP's "Current Interest",
reflecting cash to be distributed from ongoing operations, initially was 58.6
percent and its "Capital Interest", reflecting the purchase or sale of long-
term assets or any required capital contributions, was 46.5 percent. These
ownership percentages (55 percent and 45.1 percent, respectively, at December
31, 1994) decline in annual increments to 40.6 percent for the fiscal year
ending June 30, 1998 and remain constant thereafter. At December 31, 1994,
FRP's investment in IMC-Agrico totaled $399.2 million. IMC-Agrico's assets
are not available to FRP until distributions are paid by the joint venture.
3. DISTRIBUTIONS
Publicly owned FRP units have cumulative rights to receive quarterly
distributions of 60 cents per unit through the distribution for the quarter
ending December 31, 1996 (the Preference Period) before any distributions may
be made to FTX.
On January 20, 1995, FRP declared a distribution of 60 cents per publicly
held unit ($30.2 million) and 26 cents per FTX-owned unit ($13.9 million),
bringing the total unpaid distribution to FTX to $353.1 million. During the
Preference Period the unpaid FTX distributions will be payable, after a 60
cents per unit quarterly distribution is paid to all unitholders, equal to the
lesser of any deficiency or one-half of the amount by which distributable cash
exceeds a 60 cents per unit distribution. Remaining distributable cash will
be paid to all unitholders according to their percentage interests. After the
Preference Period, distribution deficiencies on FTX-owned FRP units will be
paid as described above after any deficiencies in the cumulative quarterly
distribution to the public are paid and a quarterly distribution of 60 cents
per unit has been paid to all unitholders.
4. RESTRUCTURING AND VALUATION CHARGES
Restructuring Charges. During 1993, FRP recognized restructuring expenses
totaling $33.9 million, including $22.1 million allocated from FTX based on
historical allocations. The charges consisted of $15.5 million for personnel
related costs, $7 million for excess office space and furniture and fixtures
resulting from staff reductions, $1.8 million for downsizing its MIS
structure, $8.8 million for IMC-Agrico formation costs and $0.8 million of
deferred charges relating to FRP's credit facility which was substantially
revised.
In connection with the restructuring project, FRP changed its accounting
systems and undertook a detailed review of its accounting records and
valuation of various assets and liabilities. As a result of this process, FRP
recorded charges totaling $24.9 million, comprised of (a) $10 million of
production and delivery costs consisting of $6.3 million for revised estimates
of environmental liabilities and $3.7 million primarily for adjustments in
converting accounting systems, (b) $7.6 million of depreciation and
amortization consisting of $6.5 million for estimated future abandonment and
reclamation costs and $1.1 million for the write-down of miscellaneous
properties and (c) $7.3 million of general and administrative expenses
consisting of $4 million to downsize FRP's MIS structure and $3.3 million for
the write-off of miscellaneous assets.
Asset Sales/Recoverability. During 1993, FRP sold its remaining interests in
producing geothermal properties for $63.5 million, consisting of $23 million
in cash and $40.5 million of interest-bearing notes (included in other
assets), recognizing a $31 million charge to expense and recording a $9
million charge for impairment of its undeveloped geothermal properties. In
1994, FRP received prepayment of these notes.
In 1993, FRP charged $86.6 million to expense for the recovery of certain
assets, primarily its Main Pass oil and non-Main Pass sulphur assets. FRP
also recognized an $11.8 million gain primarily from the sale of certain
previously mined phosphate rock acreage.
5. LONG-TERM DEBT
December 31,
--------------------
1994 1993
-------- --------
(In Thousands)
FRP credit agreement, average rate of 5.2%
in 1994 and 4.1% in 1993 $205,000 $375,000
8 3/4% Senior Subordinated Notes due 2004 150,000 -
Note payable to FTX - 100,900
Other 13,951 12,667
-------- --------
368,951 488,567
Less current portion 314 465
-------- --------
$368,637 $488,102
======== ========
FTX has a variable rate credit agreement (the Credit Agreement), in which
FRP participates, structured as a revolving line of credit through June 1996
followed by a 3 1/2 year reducing revolver. The Credit Agreement is part of
an $800 million committed credit facility and is subject to a borrowing base,
redetermined annually by the banks, which establishes maximum consolidated
debt for FTX and its subsidiaries. As of December 31, 1994, $466.7 million
was available under the borrowing base and $377 million of borrowings were
unused under the credit facility. To the extent FTX and its other
subsidiaries incur additional debt, the amount available to FRP under the
Credit Agreement may be reduced.
FTX guarantees any FRP bank borrowings and is required to retain control
of FRP. FRP is not permitted to enter into any agreement restricting its
ability to make distributions or create liens on its assets. Under certain
circumstances, FTX could be required to pledge its FRP units and FRP could be
required to grant a security interest in its assets. The Credit Agreement
provides for working capital requirements, specified coverage of fixed charges
and restrictions on other borrowings.
FTX is pursuing a plan to separate its two principal businesses,
copper/gold and agricultural minerals, into two independent financial and
operating entities. To accomplish this plan, FTX would make a pro rata
distribution of its common stock ownership in Freeport-McMoRan Copper & Gold
Inc. (FCX) to FTX common stockholders. The proposed distribution is
contingent on a number of factors and will require a series of steps to
implement over several months. In connection with this restructuring plan,
the Credit Agreement will be replaced with a new facility for FRP and FTX,
eliminating any ties to FCX borrowings.
In February 1994, IMC-Agrico entered into a three-year $75 million
variable rate credit facility (the IMC-Agrico Facility). Borrowings under the
IMC-Agrico Facility are unsecured with a negative pledge on substantially all
of IMC-Agrico's assets. The IMC-Agrico Facility has minimum capital, fixed
charge and current ratio requirements for IMC-Agrico; places limitations on
debt at IMC-Agrico; and restricts the ability of IMC-Agrico to make cash
distributions in excess of distributable cash generated.
In February 1994, FRP sold publicly $150 million of 8 3/4% Senior
Subordinated Notes. Based on the December 31, 1994 closing market price, this
debt had a fair value of $134.3 million.
At times FRP has minimized amounts outstanding under the Credit Agreement
by borrowing excess funds from FTX. Interest was charged based on Credit
Agreement rates and totaled $0.6 million in 1994, $6.3 million in 1993 and
$8.1 million in 1992.
FRP entered into an interest rate swap in 1988 to manage exposure to
interest rate changes on a portion of its variable rate debt. FRP pays 10.2
percent on $40.1 million of financing at December 31, 1994, reducing annually
through 1999. FRP received an average interest rate of 4.3 percent in 1994,
3.3 percent in 1993 and 4 percent in 1992, resulting in additional interest
costs of $2.6 million, $3.5 million and $3.5 million, respectively. Based on
market conditions at December 31, 1994, unwinding this interest swap would
require an estimated $2.1 million.
The minimum principal payments scheduled for each of the five succeeding
years based on the amounts and terms outstanding at December 31, 1994 are $0.3
million in 1995, $29.6 million in 1996, $59 million in 1997, $59 million in
1998 and $59.1 million in 1999.
Capitalized interest totaled $11.1 million in 1993 and $19.1 million in
1992.
6. PENSION AND OTHER EMPLOYEE BENEFITS
Management Services Agreement. FRP has no employees and a limited number of
officers, each of whom is an employee or officer of FTX. Under a management
services agreement, FRP reimburses FTX for costs related to FRP's activities.
These costs totaled $25 million in 1994, $47.1 million in 1993 (excluding
restructuring costs) and $59.6 million in 1992. FTX operates the Main Pass
oil facilities and charges for specified overhead and other costs, FRP's share
being $0.8 million in 1994, $0.9 million in 1993 and $1.9 million in 1992.
Pensions. Substantially all employees are covered by FTX's defined benefit
plan. The accumulated benefits and plan assets are not separately determined
and amounts allocated to FRP under this plan have not been material. As of
December 31, 1994, FTX's accumulated benefit obligation under the plan was
fully funded. The employees transferred to IMC-Agrico no longer accrue
additional benefits under the FTX plan, but do earn benefits under the IMC-
Agrico plan.
The operator of IMC-Agrico maintains non-contributory pension plans that
cover substantially all of its employees. As of July 1, 1994, FRP's share of
the actuarial present value of the vested projected benefit obligation was
$7.5 million based on a discount rate of 8.4 percent and a 5 percent annual
increase in future compensation levels. As of December 31, 1994, these plans
were unfunded. FRP's share of the expense related to these plans totaled $3.6
million in 1994 and $1.5 million in 1993.
Other Postretirement Benefits. FTX provides certain health care and life
insurance benefits for retired employees. The related expense allocated from
FTX totaled $9.9 million in 1994 ($1.1 million for service cost and $8.8
million in interest for prior period services), $9.6 million in 1993 ($1.5
million and $8.1 million, respectively) and $9.8 million in 1992 ($1.1 million
and $8.7 million, respectively). Summary information of the plan follows:
December 31,
----------------------
1994 1993
-------- --------
(In Thousands)
Actuarial present value of accumulated
postretirement obligation:
Retirees $ 92,577 $ 91,098
Fully eligible active plan participants 7,455 10,821
Other active plan participants 3,903 10,834
-------- --------
Total accumulated postretirement obligation 103,935 112,753
Unrecognized net gain (loss) 3,418 (10,953)
-------- --------
Accrued postretirement benefit cost $107,353 $101,800
======== ========
The initial health care cost trend rate used was 11.5 percent for 1993,
decreasing 0.5 percent per year until reaching 6 percent. A one percent
increase in the trend rate would increase the amounts by approximately 10
percent. The discount rate used was 8.25 percent in 1994 and 7 percent in
1993. FTX has the right to modify or terminate these benefits. FRP
anticipates funding these costs, in addition to the annual cash costs, over
the expected life of its mineral reserves.
The operator of IMC-Agrico provides certain health care benefits for
retired employees. At July 1, 1994, FRP's share of the accumulated
postretirement obligation was $3.6 million, which was unfunded, with FRP's
share of expense being $0.5 million in 1994 and $0.4 million in 1993. The
initial health care cost trend rate used was 10.4 percent, decreasing
gradually to 5.5 percent in 2003. The discount rate used was 8.4 percent.
Employees are not vested and benefits are subject to change.
7. COMMITMENTS AND CONTINGENCIES
Long-Term Contracts and Operating Leases. FRP has an agreement in which a
third party provides and operates a sulphur tanker through 2009 for minimum
annual payments of $12.8 million. FRP's minimum annual contractual charges
under noncancellable long-term contracts and operating leases, including the
sulphur tanker, total $211.9 million, with $16.8 million in 1995, $16.2
million in 1996, $15 million in 1997, $14.8 million in 1998 and $14.8 million
in 1999.
Environmental. FRP has an indemnification for environmental remediation costs
in excess of an aggregate $5 million on certain identified sites (FRP has
previously accrued the $5 million). The third party has assumed management of
these sites. Based on FRP's review of the potential liabilities and the third
party's financial condition, FRP concluded that it is remote that FRP would
have any additional liability. FRP believes its exposure on other abandoned
environmental sites will not exceed amounts accrued and expects that any costs
would be incurred over a period of years.
In June 1994, a sinkhole was found at a phosphogypsum storage area at
IMC-Agrico's New Wales, Florida facility. In addition, there was an earthen
dam breach at two of its phosphate rock facilities in late 1994. IMC-Agrico
accrued $10.8 million ($4.9 million net to FRP) during 1994 for costs to
rectify these situations. While there is no evidence indicating underground
water contamination in areas away from the facilities, this issue continues to
be monitored. If there were contamination, which IMC-Agrico considers
unlikely, the costs that would be required are uncertain and cannot be
estimated at the present. If significant costs were incurred it would be
necessary to determine the applicability of insurance coverage maintained by
IMC-Agrico, and separately by FRP, and for the sharing of costs between the
joint venture partners.
FRP has made, and will continue to make, expenditures at its operations
for protection of the environment. FRP is subject to contingencies as a
result of environmental laws and regulations. The related future cost is
indeterminable due to such factors as the unknown timing and extent of the
corrective actions that may be required and the application of joint and
several liability. However, FRP believes that such costs will not have a
material adverse effect on its operations or financial position.
8. SEGMENT FINANCIAL INFORMATION
Agricultural
Minerals Oil Other Total
------------ -------- -------- ----------
(In Thousands)
1994
Revenues a $ 730,391 $ 34,887 $ - $ 765,278
Operating income 123,782 2,790 (5,954) 120,618
Depreciation and amortization 33,811 18,533 - 52,344
Capital expenditures 20,278 9,403 - 29,681
Total assets 1,083,375 38,432 25,124 b 1,146,931
1993
Revenues a 619,332 49,828 - 669,160
Operating loss (105,020) (61,545) (44,283) (210,848)
Depreciation and amortization 70,803 33,883 - 104,686
Capital expenditures 46,270c 4,939 - 51,209
Total assets 1,194,304 44,887 57,682 b 1,296,873
1992
Revenues a 799,032 78,026 - 877,058
Operating income 16,625 4,644 (526) 20,743
Depreciation and amortization 66,299 52,960 - 119,259
Capital expenditures 170,224c 5,088 - 175,312
Total assets 1,233,085 128,535 131,887 b 1,493,507
a. No customers accounted for ten percent or more of total revenues. Export
sales totaled 38 percent in 1994, 32 percent in 1993 and 38 percent in
1992.
b. Includes geothermal assets of $9.2 million in 1994, $49.5 million in 1993
and $114.4 million in 1992.
c. Includes Main Pass sulphur development costs ($16.6 million in 1993 and
$20.8 million in 1992) and capitalized interest ($11.1 million in 1993 and
$17.7 million in 1992) prior to becoming operational for accounting
purposes in 1993.
9. ACQUISITION
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.
10. SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED)
Proved and probable mineral reserves, including proved oil reserves, follow:
December 31,
------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
(In Thousands)
Sulphur-long tonsa 41,018 38,637 41,570 42,780 44,125
Phosphate rock-short tonsb 206,661 215,156 208,655 206,183 205,752
Oil-barrels 7,279 9,962 13,861 18,496 18,785
a. Includes 41 million tons in 1994, 38.6 million tons in 1993, 39 million
tons in 1992 and 39.1 million tons in 1991 and 1990, net to FRP before
royalties, at Main Pass, subject to a 12.5 percent federal royalty based
on net mine revenues.
b. For 1994 and 1993, represents FRP's share, based on its Capital Interest
ownership, of the IMC-Agrico reserves. Contains an average of 68 percent
bone phosphate of lime.
11. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Operating Net Income Net Income
Revenues Income (Loss) (Loss) (Loss) Per Unit
-------- ------------- ---------- ---------------
(In Thousands, Except Per Unit Amounts)
1994
1st Quartera $182,073 $ 23,451 $ 13,413 $ .13
2nd Quartera 185,444 28,762 20,536 .20
3rd Quartera 188,479 32,072 23,261 .22
4th Quartera 209,282 36,333 26,756 .26
-------- --------- ---------
$765,278 $ 120,618 $ 83,966 .81
======== ========= =========
1993
1st Quarterb $162,423 $ (60,919) $ (84,617) $(.82)
2nd Quarterc 201,684 (80,140) (79,616) (.77)
3rd Quarter 136,945 (12,364) (18,051) (.17)
4th Quarterd 168,108 (57,425) (63,827) (.62)
-------- --------- ---------
$669,160 $(210,848) $(246,111) (2.37)
======== ========= =========
a. Includes charges of $2.9 million ($0.03 per unit), $0.9 million ($0.01 per
unit), $3.4 million ($0.03 per unit) and $3.7 million ($0.04 per unit) for
the first, second, third and fourth quarters of 1994, respectively, for
certain remediation costs and other miscellaneous charges.
b. Includes a $43.2 million charge ($0.42 per unit) related to restructuring
costs and the sale of producing geothermal assets. Also includes a $23.7
million charge ($0.23 per unit) for the cumulative effect of changes in
accounting principle.
c. Includes an $82.1 million charge ($0.79 per unit) for restructuring, asset
recoverability and other related charges.
d. Includes a $60 million charge ($0.58 per unit) for the recoverability of
Main Pass oil assets and a $10.7 million gain ($0.11 per unit) from the
sale of certain previously mined phosphate rock acreage.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE PARTNERS OF FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP:
We have audited the accompanying balance sheets of Freeport-McMoRan Resource
Partners, Limited Partnership (the Partnership), a Delaware Limited
Partnership, as of December 31, 1994 and 1993, and the related statements of
operations, cash flow and changes in partners' capital for each of the three
years in the period ended December 31, 1994. These financial statements are
the responsibility of the General Partner'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 Partnership's share of the Joint Venture constitutes 47 percent
of assets and 85 percent and 37 percent of revenues of the Partnership's
totals as of December 31, 1994 and 1993 and the years then ended,
respectively. Those statements were audited by other auditors whose report
has been furnished to us and our opinion, insofar as it relates to the amounts
included for the Partnership's interest in the Joint Venture, is based solely
on the report 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 report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1994
and 1993 and the results of its operations and its cash flow for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, effective January 1,
1993, the Partnership changed its method of accounting for periodic scheduled
maintenance costs, deferred charges and costs of management information
systems.
Arthur Andersen LLP
New Orleans, Louisiana,
January 24, 1995
FRP Units. Our units trade on the New York Stock Exchange (NYSE) under the
symbol "FRP." The FRP unit price is reported daily in the financial press
under "FMRP" in most listings of NYSE securities. At year-end 1994, the
number of holders of record of the partnership's units was 17,723. Under
federal law, ownership of FRP units is limited to "United States citizens." A
United States citizen is defined as a person who is eligible to own interests
in federal mineral leases, which generally includes (i) U.S. citizens, (ii)
domestic entities owned by U.S. citizens and (iii) domestic corporations owned
by U.S. citizens and/or certain foreign persons.
Unit price ranges on the NYSE composite tape during 1994 and 1993:
1994 1993
------------------- -------------------
High Low High Low
------ ------ ------ ------
First Quarter $20.50 $17.88 $20.63 $16.75
Second Quarter 20.00 17.13 18.63 16.88
Third Quarter 18.63 16.13 20.50 15.88
Fourth Quarter 17.38 13.38 21.00 15.88
Cash Distributions. Cash distributions declared and paid to public
unitholders during the past 12 months total $2.40 per unit. If in any quarter
through December 31, 1996, FRP's unitholders receive cash distributions of
less than 60 cents per publicly held unit, public unitholders are entitled to
receive in subsequent quarters any prior quarter's shortfall below 60 cents
per publicly held unit before any cash distributions may be made to holders of
general partnership interests. The total unpaid distribution to the general
partners is currently $353.1 million. Cash distributions of 60 cents per
publicly held unit were declared for each of the quarterly periods of 1994 and
1993 as shown below:
1994
---------------------------------
Record Date Payment Date
------------- -------------
First Quarter Apr. 29, 1994 May 14, 1994
Second Quarter Jul. 29, 1994 Aug. 15, 1994
Third Quarter Oct. 31, 1994 Nov. 15, 1994
Fourth Quarter Jan. 31, 1995 Feb. 15, 1995
1993
---------------------------------
Record Date Payment Date
------------- -------------
First Quarter Apr. 30, 1993 May 15, 1993
Second Quarter Jul. 30, 1993 Aug. 14, 1993
Third Quarter Oct. 29, 1993 Nov. 15, 1993
Fourth Quarter Jan. 31, 1994 Feb. 15, 1994
Cash distributions in 1994 were a return of capital for federal income tax
purposes and will generally not be taxed. In March unitholders receive
individualized tax information for the previous year from the partnership. For
additional information, please contact the Investor Relations Department.
FRP has announced that beginning with the cash distribution for the fourth
quarter of 1993, it no longer intends to supplement distributable cash with
borrowings. FRP's ability to continue to distribute cash to its public unit-
holders is dependent on the cash distributions received from IMC-Agrico Company,
which will primarily be determined by prices of its commodities and the cost
reductions achieved by its combined operations, and the future cash flow of
FRP's sulphur and oil operations. As a result, future FRP distributions will be
effected by the cyclical nature of its agricultural minerals business.
EXHIBIT 21.1
List of Subsidiaries of
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Name Under Which
Entity Organized It Does Business
- ------------------ --------- ----------------
IMC-Agrico Company Delaware Same
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports included herein or
incorporated by reference in this Form 10-K, into Freeport-
McMoRan Resource Partners, Limited Partnership's previously filed
Registration Statement on Form S-3 (File No. 33-37441).
/s/ Arthur Andersen LLP
-------------------------
Arthur Andersen LLP
New Orleans, Louisiana
March 22, 1995
Exhibit 24.1
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 and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Robert W. Bruce III
------------------------
Robert W. Bruce III
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Thomas B. Coleman
------------------------
Thomas B. Coleman
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ William H. Cunningham
------------------------
William H. Cunningham
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 and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Robert A. Day
------------------------
Robert A. Day
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ William B. Harrison, Jr.
----------------------------
William B. Harrison, Jr.
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Henry A. Kissinger
------------------------
Henry A. Kissinger
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Bobby Lee Lackey
------------------------
Bobby Lee Lackey
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 and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 13th day of February, 1995.
/s/ Gabrielle K. McDonald
--------------------------
Gabrielle K. McDonald
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ George Putnam
------------------------
George Putnam
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ B. M. Rankin, Jr.
------------------------
B. M. Rankin, Jr.
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Benno C. Schmidt
------------------------
Benno C. Schmidt
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 and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ J. Taylor Wharton
------------------------
J. Taylor Wharton
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of
Directors of Freeport-McMoRan Inc., a Delaware corporation and
Administrative Managing General Partner of Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), does hereby make,
constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS, and
CHARLES W. GOODYEAR, 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 FRP on
Form 10-K for the year ended December 31,1994, 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 31st day of January, 1995.
/s/ Ward W. Woods, Jr.
------------------------
Ward W. Woods, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Freeport-McMoRan Resource Partners, Limited Partnership consolidated
financial statements at December 31, 1994 and for the year then ended,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000793421
<NAME> FREEPORT-MCMORAN RESOURCE PARTNERS, LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,859
<SECURITIES> 0
<RECEIVABLES> 42,312
<ALLOWANCES> 0
<INVENTORY> 109,677
<CURRENT-ASSETS> 179,151
<PP&E> 1,744,392
<DEPRECIATION> 833,923
<TOTAL-ASSETS> 1,146,931
<CURRENT-LIABILITIES> 84,888
<BONDS> 368,637
<COMMON> 447,660
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,146,931
<SALES> 765,278
<TOTAL-REVENUES> 765,278
<CGS> 599,641
<TOTAL-COSTS> 599,641
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,519
<INCOME-PRETAX> 83,966
<INCOME-TAX> 0
<INCOME-CONTINUING> 83,966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,966
<EPS-PRIMARY> .81
<EPS-DILUTED> 0
</TABLE>
