SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
Commission File Number: 1-9916
Freeport-McMoRan Copper & Gold Inc.
Incorporated in Delaware 74-2480931
(IRS Employer
Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
---
On June 30, 1997, there were issued and outstanding 81,853,744
shares of the registrant's Class A Common Stock, par value $0.10 per
share, and 116,985,113 shares of its Class B Common Stock, par value
$0.10 per share.
<PAGE> 1
FREEPORT-McMoRan COPPER & GOLD INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Income 4
Statements of Cash Flow 5
Notes to Financial Statements 6
Remarks 7
Report of Independent Public Accountants 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Part II. Other Information 16
Signature 17
Exhibit Index E-1
<PAGE> 2
FREEPORT-McMoRan COPPER & GOLD INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED BALANCE SHEETS (Unaudited)
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
(In Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,607 $ 37,118
Accounts receivable 238,099 236,750
Inventories 391,372 375,712
Prepaid expenses and other 8,660 11,636
---------- ----------
Total current assets 661,738 661,216
Property, plant and equipment, net 3,289,251 3,088,644
Other assets 154,724 115,674
---------- ----------
Total assets $4,105,713 $3,865,534
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 401,024 $ 358,255
Current portion of long-term debt and
short-term borrowings 117,934 136,617
Accrued income taxes 57,378 103,003
---------- ----------
Total current liabilities 576,336 597,875
Long-term debt, less current portion 1,794,159 1,426,299
Accrued postretirement benefits and
other liabilities 149,400 200,646
Deferred income taxes 392,800 359,684
Minority interests 74,388 105,644
Mandatory redeemable preferred stock 500,007 500,007
Stockholders' equity 618,623 675,379
---------- ----------
Total liabilities and stockholders'
equity $4,105,713 $3,865,534
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 3
<TABLE>
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF INCOME (Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues $ 566,950 $ 424,348 $1,090,730 $ 812,740
Cost of sales:
Production and delivery 262,918 238,886 512,404 443,728
Depreciation and
amortization 54,609 43,415 101,865 78,576
---------- ---------- ---------- ----------
Total cost of sales 317,527 282,301 614,269 522,304
Exploration expenses 6,234 - 8,962 -
General and
administrative expenses 29,488 30,420 56,190 73,266
---------- ---------- ---------- ----------
Total costs and
expenses 353,249 312,721 679,421 595,570
---------- ---------- ---------- ----------
Operating income 213,701 111,627 411,309 217,170
Interest expense, net (40,476) (29,545) (73,624) (53,075)
Other income (expense),net (523) 2,965 1,475 3,872
---------- ---------- ---------- ----------
Income before income
taxes and minority
interests 172,702 85,047 339,160 167,967
Provision for income taxes (78,284) (36,733) (156,890) (75,354)
Minority interests in
net income of consolidated
subsidiaries (15,361) (5,643) (31,392) (13,806)
---------- ---------- ---------- ----------
Net income 79,057 42,671 150,878 78,807
Preferred dividends (9,205) (13,626) (18,575) (27,312)
---------- ---------- ---------- ----------
Net income applicable
to common stock $ 69,852 $ 29,045 $ 132,303 $ 51,495
========== ========== ========== ==========
Net income per primary
and fully diluted share of
common stock $.35 $.15 $.66 $.26
========== ========== ========== ==========
Average common
shares outstanding 200,875 197,169 201,945 197,768
========== ========== ========== ==========
Dividends paid per
common share $.225 $.225 $.45 $.45
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 4
<TABLE>
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF CASH FLOW (Unaudited)
<CAPTION>
Six Months Ended June 30,
--------------------------
1997 1996
---------- ----------
(In Thousands)
<S> <C> <C>
Cash flow from operating activities:
Net income $ 150,878 $ 78,807
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 101,865 78,576
Deferred income taxes 49,968 14,810
Deferral of unearned income 30,102 -
Recognition of unearned income (70,229) -
Minority interests' share of net income 31,392 13,806
Other (17,131) (10,057)
(Increase) decrease in working capital:
Accounts receivable (29,023) 68,515
Inventories (23,799) (12,052)
Prepaid expenses and other 1,091 5,481
Accounts payable and accrued
liabilities 25,118 21,148
Accrued income taxes (45,625) (50,918)
---------- ----------
(Increase) decrease in working capital (72,238) 32,174
---------- ----------
Net cash provided by operating activities 204,607 208,116
---------- ----------
Cash flow from investing activities:
Capital expenditures:
PT-FI (249,462) (140,296)
Atlantic Copper (3,111) (51,893)
Investment in Gresik smelter (16,859) (17,131)
Other (344) -
---------- ----------
Net cash used in investing activities (269,776) (209,320)
---------- ----------
Cash flow from financing activities:
Proceeds from debt 507,711 400,370
Repayment of debt (250,208) (92,580)
Net proceeds from infrastructure financing 27,344 -
Purchase of FCX common shares (102,319) (156,899)
Cash dividends paid:
Common stock (90,321) (88,366)
Preferred stock (20,650) (25,569)
Minority interests (16,918) (20,028)
Other (2,981) 2,428
---------- ----------
Net cash provided by financing activities 51,658 19,356
---------- ----------
Net increase (decrease) in cash and
cash equivalents (13,511) 18,152
Cash and cash equivalents at beginning
of year 37,118 26,883
---------- ----------
Cash and cash equivalents at end
of period $ 23,607 $ 45,035
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 5
FREEPORT-McMoRan COPPER & GOLD INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSANG PROPERTIES
In February 1997, Freeport-McMoRan Copper & Gold Inc. (FCX) entered
into an agreement with BRE-X Minerals Ltd. (BRE-X) to participate as
a 15 percent owner and the operator of the Busang gold mining
prospect in East Kalimantan, Indonesia, subject to the confirmation
of the existence of a commercially viable resource. Based on
information obtained by FCX during its due diligence review, a
commercially viable resource was not identified and in May 1997, FCX
withdrew from the Busang project. The approximate $2 million cost
of the due diligence activities was charged to expense as incurred.
FCX has no future financial obligations or commitments with respect
to Busang or BRE-X.
2. NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128 (SFAS
128), "Earnings Per Share," which simplifies the computation of
earnings per share (EPS). SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997 and
requires restatement for all prior period EPS data presented.
Adoption of SFAS 128 will not have a material impact on FCX's
previously reported earnings per share.
In June 1997, the FASB issued SFAS 130, "Reporting
Comprehensive Income," and SFAS 131, "Disclosures About Segments of
an Enterprise and Related Information." SFAS 130 establishes
standards for reporting and display of comprehensive income in the
financial statements. Comprehensive income is the total of net
income and all other nonowner changes in equity. SFAS 131 requires
that companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance. SFAS 130 and 131 are effective for 1998. Adoption of
these standards is not expected to have an effect on FCX's financial
position or results of operations.
3. FINANCIAL CONTRACTS
FCX has entered into financial contracts to manage certain risks
resulting from fluctuations in commodity prices (primarily copper
and gold), foreign exchange rates and interest rates by creating
offsetting exposures. Costs or premiums and gains or losses on the
contracts, including closed contracts, are recognized with the
hedged transaction. Also, gains or losses are recognized if the
hedged transaction is no longer expected to occur or if deferral
criteria are not met. FCX monitors its credit risk on an ongoing
basis and considers this risk to be minimal because its contracts
are with a diversified group of financially strong counterparties.
At June 30, 1997, FCX had redeemable preferred stock indexed to
commodities, unrecognized deferred gains on closed forward gold
sales contracts, open copper forward sales contracts, deferred
premiums on copper call option contracts, deferred costs on foreign
exchange option contracts, open foreign exchange forward contracts
and interest rate swap contracts. Redeemable preferred stock
indexed to commodities is treated as a hedge of future production
and is carried at its original issue value. As principal payments
occur, differences between the carrying value and the payment will
be recorded as an adjustment to revenues.
Deferred gains on closed forward gold sales contracts are
recorded as unearned income. These closed contracts hedge future
firm commitments for gold sales and will be recognized as revenues
with the hedged gold sales. Open copper forward sales contracts
hedge previously recorded copper sales, and fluctuations in their
value are recognized currently in revenues when the underlying
exposure is recognized. Premiums received on the sale of copper
call option contracts are recorded as unearned income until the
maturity of the option contracts when the premium received is
recorded as income. FCX hedges its anticipated Spanish peseta cash
flows with foreign exchange option contracts and foreign exchange
forward contracts. Gains and losses, including costs, on option
contracts that qualify as hedges are recognized in income when the
underlying hedged transaction is recognized or when a previously
anticipated transaction is no longer expected to occur. Changes in
market value of forward exchange contracts which protect anticipated
transactions are recognized in the period incurred. FCX has
interest rate swap contracts to limit the effect of increases in the
interest rates on floating rate debt. The costs associated with
these contracts are amortized to interest expense over the terms of
the agreements.
<PAGE> 6
4. INTEREST COST
Interest expense excludes capitalized interest of $5.1 million in
the second quarter of 1997, $5.9 million in the second quarter of
1996, $6.8 million in the first six months of 1997 and $15.3 million
in the first six months of 1996.
5. RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the first six months of
1997 and 1996 was 5.1 to 1 and 3.2 to 1, respectively. For this
calculation, earnings consist of income from continuing operations
before income taxes, minority interests and fixed charges. Fixed
charges include interest and that portion of rent deemed
representative of interest.
----------------------
Remarks
The information furnished herein should be read in conjunction with
FCX's financial statements contained in its 1996 Annual Report to
stockholders and incorporated by reference in its Annual Report on
Form 10-K.
The information furnished herein reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of the
results for the periods. All such adjustments are, in the opinion
of management, of a normal recurring nature.
<PAGE> 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders of
Freeport-McMoRan Copper & Gold Inc.:
We have reviewed the accompanying condensed balance sheet of
Freeport-McMoRan Copper & Gold Inc. (a Delaware corporation) as of
June 30, 1997, the related statements of income for the three and
six-month periods ended June 30, 1997 and 1996, and the statements
of cash flow for the six-month periods ended June 30, 1997 and 1996.
These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to the financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit
in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the balance sheet of Freeport-McMoRan
Copper & Gold Inc. as of December 31, 1996, and the related
statements of income, shareholders' equity and cash flows for the
year then ended (not presented herein), and in our report dated
January 22, 1997, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in
the accompanying condensed balance sheet as of December 31, 1996, is
fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
July 22, 1997
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OVERVIEW
Freeport-McMoRan Copper & Gold Inc. (FCX) operates through its
majority-owned subsidiaries, P.T. Freeport Indonesia Company (PT-FI)
and P.T. IRJA Eastern Minerals Corporation (Eastern Mining), and
through Atlantic Copper Holding, S.A. (Atlantic), a wholly owned
subsidiary. PT-FI's operations involve mineral exploration and
development, mining and milling of ore containing copper, gold and
silver in Irian Jaya, Indonesia and the worldwide marketing of
concentrates containing those metals. PT-FI also has a 25 percent
interest in a joint venture to construct and operate a copper
smelter and refinery in Indonesia. Eastern Mining conducts mineral
exploration activities in Irian Jaya. Atlantic is engaged in the
smelting and refining of copper concentrates in Spain and marketing
refined copper products.
Summary comparative results for the second-quarter and six-month
periods follow (in millions, except per share amounts):
<TABLE>
<CAPTION>
Second Quarter Six Months
------------------- ---------------------
1997 1996 1997 1996
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
Revenues $ 567.0 $ 424.3 $ 1,090.7 $ 812.7
Operating income 213.7 111.6 411.3 217.2a
Net income applicable
to common stock 69.9 29.0 132.3 51.5a
Net income per common share .35 .15 .66 .26a
Operating income (loss) by subsidiary:
PT-FI $ 214.1 $ 114.1 $ 399.9 $ 218.1
Atlantic 5.8 4.5 9.5 0.3
Eastern Mining (2.8) - (5.5) -
Intercompany eliminations
and other b (3.4) (7.0) 7.4 (1.2)
-------- -------- ---------- --------
$ 213.7 $ 111.6 $ 411.3 $ 217.2
======== ======== ========== ========
<FN>
a. Includes charges totaling $17.4 million ($8.0 million to net
income or $0.04 per share) consisting of $12.7 million for stock
appreciation rights costs caused by the increase in FCX's common
stock price during the period, $3.0 million for costs related to a
civil disturbance during the period and $1.7 million ($1.2 million
to production cost and $0.5 million to general and administrative
expenses) for an early retirement program.
b. Profit on PT-FI sales to Atlantic is not reflected in FCX's
consolidated results until completion of the smelting and refining
process. The eliminations totaled $1.6 million in the second quarter
of 1997, $(3.1) million in the second quarter of 1996, $16.7 million
in the first six months of 1997 and $6.2 million in the first six months
of 1996. Concentrate sales to Atlantic may cause fluctuations in FCX's
consolidated quarterly earnings depending on the timing of the shipments
and prices.
</FN>
</TABLE>
FCX's revenues are derived primarily from PT-FI's sale of copper
concentrates, which also contain significant amounts of gold, and
the sale of copper cathodes and wire rod by Atlantic. FCX's
revenues and net income can vary significantly with fluctuations in
the market prices of copper and gold. At various times, in response
to market conditions, FCX has entered into or liquidated copper and
gold price protection contracts for some portion of its expected
future mine production to mitigate the risk of adverse price
fluctuations (see "PT-FI Outlook and Price Protection Program").
Excluding the effects of price protection contracts and based on
projected 1997 annual sales, a $0.01 per pound change in the average
price realized on copper sales would have an approximate $10 million
impact on revenues and an approximate $5 million impact on net
income. A $10 per ounce change in the average price realized on
annual gold sales would have an approximate $17 million impact on
revenues and an approximate $8 million impact on net income.
Higher second-quarter and six-month 1997 revenues primarily reflect
higher PT-FI copper sales volumes and prices compared with the 1996
periods. Also included in 1997 revenues are the benefits of re-
pricing prior period "open" concentrate sales, the sale of copper
put option contracts and the impact of forward copper and gold sales
contracts, which collectively provided $63.9 million to second-
quarter revenues ($31.1 million to net income or $0.15 per share)
and $119.0 million to six-month revenues ($58.0 million to net
income or $0.29 per share). Cost of sales for 1997 increased
because of the higher sales volumes and an increase in the PT-FI
depreciation rate. FCX reported exploration expense in the 1997
periods primarily for exploration costs incurred in the Eastern
Mining and PT-FI Block B areas not reimbursed by Rio Tinto plc
(formerly The RTZ-CRA Group). As discussed below, Rio Tinto funded
all of FCX's 1996 exploration costs. General and administrative
expenses in the 1997 six-month period were lower primarily because
of charges in 1996 for stock appreciation rights. Net interest expense
<PAGE> 9
reflects higher average debt levels and lower capitalized
interest amounts in 1997. The increases in the provision for income
taxes and minority interests in 1997 primarily reflect higher net
income at PT-FI. Preferred dividends in the 1997 periods were lower
when compared to the 1996 periods because in December 1996 the
depositary shares representing Convertible Exchangeable Preferred
Stock were all converted to FCX common stock or redeemed for cash.
RESULTS OF OPERATIONS
PT-FI Revenues. A reconciliation of PT-FI revenues between the
periods follows (in millions):
<TABLE>
<CAPTION>
Second Six
Quarter Months
---------- ----------
<S> <C> <C>
Revenues -1996 $ 312.1 $ 615.2
Increases (decreases):
Price realizations:
Copper 75.7 124.1
Gold (2.3) (3.0)
Sales volumes:
Copper 33.4 64.7
Gold (1.6) 26.5
Adjustments to prior period open sales 1.8 59.6
Treatment charges, royalties and other (16.9) (35.8)
---------- ----------
Revenues -1997 $ 452.2 $ 851.3
========== ==========
</TABLE>
PT-FI's second-quarter and six-month 1997 revenues benefited from
higher copper sales volumes and prices than the 1996 periods. PT-
FI's 1997 revenues included net upward adjustments on open prior
period concentrate sales of $28.4 million in the second quarter and
$55.5 million in the six-month period primarily because of rising
copper prices. Second-quarter and six-month 1996 PT-FI revenues
included net downward adjustments on prior period open concentrate
sales of $23.4 million and $4.1 million, respectively, primarily
because of falling copper prices. Treatment charges increased
because of higher sales volumes and higher negotiated rates because
of tighter market conditions at the end of 1996. Treatment rates
for a significant portion of PT-FI's 1997 projected sales were
negotiated in the fourth quarter of 1996. Additionally, royalties
and a portion of treatment charges vary with the price of copper.
PT-FI Outlook and Price Protection Program. PT-FI has commitments
from various parties, including Atlantic, to purchase virtually all
of its expected 1997 production at market prices. Sales for 1997
are estimated to total at least 1.1 billion pounds of copper and
1.65 million ounces of gold. Strong 1997 copper and gold sales
reflect the expectation of producing greater than mine-life grades
during the year. Third and fourth-quarter 1997 copper sales are
projected to approximate second quarter levels. Gold sales for 1997
may be higher than projected because of potentially higher gold
grades in the second half of the year.
The significant decline in gold prices in early 1997 increased the
value of PT-FI's forward gold sales contracts covering 876,000
ounces of gold at an average price of $376.08 per ounce from
February 1997 through August 1997. In February 1997, PT-FI closed
these contracts and realized $30.1 million cash. As a result, PT-FI
will report gold revenues through August 1997 at a higher price than
realized under its contract terms with customers, but PT-FI no
longer has any forward gold sales position unless PT-FI resumes its
forward sales program. PT-FI recognized $17.5 million of gold
revenues from forward sales contracts during the second quarter of
1997 and $31.6 million during the first six months of 1997. PT-FI
will also recognize $6.0 million in the third quarter of 1997 from
closed forward sales contracts. PT-FI has suspended its program of
selling gold forward on a six-month basis but may reinstate the
program in the future. Consequently, future gold sales will be
priced at current market prices as long as the forward sales program
is suspended. The closing London Bullion Market Association spot
gold price was $326.20 per ounce on July 21, 1997.
The significant decline in copper prices during 1996 increased the
value of put option contracts that PT-FI purchased under its price
protection program to provide a floor price of $0.90 per pound for
essentially all copper sales through the second quarter of 1997 at
an average cost of approximately $0.02 per pound. During the third
quarter of 1996, PT-FI sold all of its put option contracts covering
approximately 1.2 billion pounds of copper for $97.2 million cash.
As a result, PT-FI reported copper revenues through June 30, 1997 at
a higher price than realized under its copper concentrate sales
contracts, but PT-FI no longer has any price protection on its
future copper sales. As conditions warrant, PT-FI may enter into
new contracts to provide a floor price for its future copper sales
through put option
<PAGE> 10
contracts, when attainable at an acceptable cost.
PT-FI recognized $23.0 million of additional copper revenues in the
first quarter of 1997 and $23.1 million in the second quarter of
1997 from the sale of its put option contracts. The original
acquisition cost of the contracts totaled $5.2 million for the first
quarter and $5.3 million for the second quarter. PT-FI has now
recognized the full $97.2 million from the 1996 sale of its copper
put option contracts.
PT-FI's concentrate sales agreements, with regard to copper, provide
for provisional billings at the time of shipment with final
settlement generally based on the average London Metal Exchange
(LME) price for a specified future month. Copper revenues on
provisionally priced open pounds are adjusted monthly based on then
current prices. In June 1997, PT-FI entered into forward sales
contracts to fix prices on 56.5 million open pounds of copper sales
at an average of $1.22 per pound. PT-FI recorded $5.3 million of
additional revenues in June 1997 from these forward sales. At June
30, 1997, FCX had consolidated copper sales totaling 304.0 million
pounds recorded at an average price of $1.06 per pound remaining to
be finally priced and not hedged with forward contracts.
Approximately 60 percent of these open pounds (average price of
$1.08 per pound) are expected to be finally priced during the third
quarter of 1997 with most of the remaining pounds (average price of
$1.03 per pound) to be priced during the fourth quarter of 1997. A
one cent movement in the average price used for these open pounds
will have an approximate $1.3 million impact on FCX's 1997 net
income.
PT-FI Operating Results.
<TABLE>
<CAPTION>
Second Quarter Six Months
-------------------- ---------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Ore milled (metric tons
per day, MTPD) 130,800 128,000 127,400 126,900
Copper grade (%) 1.35 1.34 1.30 1.28
Gold grade (grams per
metric ton) 1.31 1.54 1.32 1.41
Recovery rate (%)
Copper 85.9 85.7 85.2 83.6
Gold 79.2 78.2 77.8 74.9
Copper
Production (000s of
recoverable pounds) 292,800 284,600 545,300 527,500
Sales (000s of recoverable
pounds) 305,900 269,200 562,000 494,200
Average realized price a $1.16 $.91 $1.17 $.95
Gold
Production (recoverable
ounces) 386,900 434,000 737,500 754,100
Sales (recoverable ounces)431,700 436,000 805,200 737,100
Average realized price b $382.16 $387.38 $384.86 $388.62
Gross profit per pound of copper (cents):
Average realized price 115.8 91.0 117.5 95.4
----- ----- ----- -----
Production costs:
Site production and
delivery 53.8 51.0 56.3 54.5c
Gold and silver credits (54.0) (62.5) (55.0) (58.2)
Treatment charges 25.8 21.9 25.7 22.5
Royalty on metals 3.4 3.7 3.3 3.8
----- ----- ----- -----
Cash production costs 29.0 14.1 30.3 22.6
Depreciation and
amortization 15.0 13.0 15.0 13.0
----- ----- ----- -----
Total production costs 44.0 27.1 45.3 35.6
----- ----- ----- -----
Revenue adjustments d 7.2 (11.9) 8.0 (2.8)
----- ----- ----- -----
Gross profit per pound of
copper 79.0 52.0 80.2 57.0
===== ===== ===== =====
<FN>
a. Amounts were $1.06 for the 1997 quarter, $0.90 for the 1996
quarter, $1.08 for the 1997 six-month period and $0.95 for the 1996
six-month period before adjustments from copper put option and
forward sales contracts.
b. Amounts were $340.70 for the 1997 quarter, $388.89 for the 1996
quarter, $344.86 for the 1997 six-month period and $390.77 for the
1996 six-month period before adjustments from forward gold sales
contracts.
c. Includes $4.2 million (0.9 cents per pound) for costs related
to a first-quarter civil disturbance and an early retirement
program.
d. Reflects adjustments to PT-FI revenues for prior period
concentrate sales and amortization of the price protection program
cost.
</FN>
</TABLE>
Higher unit site production costs in 1997 primarily relate to
operating the first phase of an enhanced infrastructure program
(EIP) discussed below. Lower gold grades and prices in the 1997
<PAGE> 11
periods resulted in lower gold credits compared with 1996. As
discussed, unit treatment charge rates were higher in the 1997
periods because of higher negotiated rates and higher copper prices.
PT-FI's copper royalty rate varies from 1.5 percent, at a copper
price of $0.90 or less, to 3.5 percent, at a copper price over
$1.10, on copper net revenue. The gold and silver royalty rate is
1.0 percent.
PT-FI's depreciation rate of 15.0 cents per pound for 1997 reflects
an increase over the 1996 rate because of the first phase of the EIP
and other 1997 capital additions. The EIP is designed to provide
the infrastructure needed for PT-FI's growing operations and for
expected future growth, to enhance the living conditions of PT-FI's
employees, and to develop and promote the growth of local and third
party activities and enterprises in Irian Jaya. The first phase of
the EIP was completed in 1996; therefore, the 1996 rate of 13.0
cents per pound did not include the EIP for a full year.
Exploration Activities. Exploration activities within Block A
continue to yield positive results and will favorably impact future
mine planning and expansion decisions. The Amole adit has now
advanced approximately halfway across the Grasberg intrusive.
Continuous sampling of the adit, beginning at the south Grasberg
intrusive contact and extending 250 meters toward the center of the
Grasberg complex, has averaged 2.98 percent copper equivalent
including local intervals of 2.0-2.5 percent copper and 2.0-10.0
grams of gold per ton. Underground drilling from the Amole adit as
well as from the Kucing Liar/Lembah Tembaga adits continue to
delineate Kucing Liar mineralization which is currently projected to
be a 200-250 million metric ton geologic resource of 2.0 percent
copper equivalent, as previously reported, on the southern quadrant
of the Grasberg intrusive. Additionally, surface drilling on the
northern flank of the Grasberg intrusive has commenced to test for
Kucing Liar-type mineralization between the 2,500-2,900 meter
elevation. FCX believes that both Kucing Liar and heavy sulfide
"skarn-type" mineralization could surround the Grasberg intrusive at
these depths.
Drilling to test the deep Grasberg continues from within the
advancing Amole adit. A nearly vertical drill hole, the GR43-1, has
been drilled from the Amole adit at an elevation of 2,960 meters to
test for Grasberg mineralization below the current block cave
reserve which bottoms at an elevation of 2,820 meters. Assay results
from the top 160 meters (between the 2,960-2,800 meter elevations)
averaged 1.92 percent copper equivalent with similar looking
material extending to the present hole depth of 550 meters at an
elevation of 2,410 meters. The hole is continuing deeper and
additional assays are pending.
At FCX's Wabu porphyry prospect in Block B, geophysical
surveying and surface mapping and sampling have identified a
potential copper/gold target, which may represent the source of the
mineralizing solutions responsible for the 3-4 million once gold
resource previously announced at the Wabu Ridge prospect. Drilling
activities at Wabu Ridge have continued to yield promising results
and the near surface gold resource is expanding. Drilling is
continuing at Wabu Ridge and to test the porphyry mineralization.
Exploration activities also continue in the Eastern Mining Blocks I,
II, and III areas. Three rigs are actively exploring in Block I to
follow up on geophysical and geochemical anomalies previously
identified. Surface mineralization has been discovered in the Block
II area and exploration drilling activities are under way. Several
anomalies have also been identified within Block III where follow-up
exploration is planned for the second half of the year.
Atlantic Results.
<TABLE>
<CAPTION>
Second Quarter Six Months
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues (in millions) $211.7 $207.3 $433.8 $369.0
Concentrate treated (metric tons) 209,100 200,800 441,500 365,500
Anode production (000s of pounds) 146,400 135,800 302,100 244,600
Cathode and wire rod sales
(000s of pounds) 121,300 117,500 242,900 218,700
</TABLE>
Atlantic reported higher revenues and cost of sales in the 1997
periods because of increases in production from its newly expanded
facilities. Atlantic reached its full production capacity of
270,000 metric tons of metal per year in June 1996. Atlantic also
is benefiting from higher treatment and refining rates in 1997
($0.26 per pound in second-quarter 1997 compared with $0.25 per
pound in second-quarter 1996). Cathode cash production costs ($0.14
per pound) were the same for both quarters. Higher treatment
charges, which negatively affect PT-FI, benefit Atlantic. The
effect of an equivalent change in treatment charges on PT-FI and
Atlantic now largely offset in FCX's consolidated financial results,
after taking into account income taxes and minority interests. In
May 1997, Atlantic entered into contracts to hedge a portion of its
treatment charges for June 1997 through September 1997 because of
the increases in copper prices. Atlantic collected $2.5 million,
recognizing $0.6 million in second-quarter 1997 operating income and
will recognize $1.9 million in the third quarter of 1997.
<PAGE> 12
A portion of Atlantic's operating costs and certain Atlantic
assets and liabilities are denominated in Spanish pesetas. On an
annual basis, a one peseta change in the U.S. dollar and Spanish
peseta exchange rate results in an approximate $1.5 million change
in FCX's annual net income before any hedging effects. FCX's other
income included currency translation gains totaling $2.5 million in
the second quarter of 1997, $4.3 million in the second quarter of
1996, $12.1 million in the 1997 six-month period and $7.6 million in
the 1996 six-month period.
Atlantic has a currency hedging program to reduce its exposure
to changes in the U.S. dollar and Spanish peseta exchange rate that
involves foreign exchange option and forward contracts. These
contracts currently hedge approximately 80 percent of Atlantic's
projected net peseta cash outflows through July 1998. In addition
to the currency translation gains noted above, Atlantic recorded
losses to other income related to its foreign currency contracts
totaling $1.3 million in the second quarter of 1997 and $5.8 million
in the 1997 six-month period.
Other Financial Results. The FCX/Rio Tinto joint ventures incurred
$11.8 million of exploration costs in the 1997 second quarter
compared with $6.9 million in the 1996 quarter as they continued to
aggressively explore the Contract of Work (COW) areas. FCX reported
$6.2 million of exploration expense in the second quarter of 1997
primarily for exploration costs incurred in the Eastern Mining and
PT-FI Block B areas. Costs in these areas are now being shared 60
percent by FCX and 40 percent by Rio Tinto. All 1996 exploration
costs were reimbursed by Rio Tinto. Approximately $17 million for
PT-FI's Block A remains to be applied to the Rio Tinto $100 million
exploration funding received in 1996. FCX expects to report
exploration expenses totaling approximately $20 million for 1997.
FCX's total interest cost (before capitalization) rose to $80.4
million for the 1997 period from $68.4 million in the 1996 period
because of an increase in debt levels associated with the expansions
and the FCX share purchase program. FCX capitalized $6.8 million of
interest costs in the first six months of 1997 primarily for the
"fourth concentrator mill expansion" project. Because of the EIP
project at PT-FI and the expansion at Atlantic, $15.3 million of
interest was capitalized during the first six months of 1996.
Interest expense is expected to be higher throughout 1997 because of
the infrastructure transactions with P.T. ALatieF Nusakarya
Corporation (ALatieF) discussed below, higher debt levels and
reduced capitalized interest.
FCX's effective tax rate was 46 percent for the first six
months of 1997 and 45 percent for the 1996 period. PT-FI's COW
provides a 35 percent income tax rate and a 10 percent withholding
on dividends paid to FCX by PT-FI and on interest for debt incurred
after the signing of the COW. The withholding rate declined from 15
percent to 10 percent beginning February 1997 because of an
amendment to the United States/Indonesia tax treaty. Included in
the 1997 provision for income taxes is $7.6 million representing
additional amounts payable pursuant to an Indonesian Presidential
Decree. No income tax benefit is recorded for the losses at
Atlantic, which is subject to taxation in Spain, because it has not
generated taxable income in recent years.
CAPITAL RESOURCES AND LIQUIDITY
FCX's primary sources of cash are operating cash flows and
borrowings, while its primary cash outflows include capital
expenditures, dividends and purchases of its common stock. Net cash
provided by operating activities was $204.6 million for the first
six months of 1997, compared with $208.1 million for the 1996
period. Cash flow used in investing activities in the 1997 period
primarily reflects PT-FI capital expenditures associated with the
"fourth concentrator mill expansion," which are being funded with
nonrecourse borrowings from Rio Tinto. Cash flow provided by
financing activities totaled $51.7 million in 1997 compared with
$19.4 million in 1996.
Operating Activities. Higher net income in 1997 was offset by an
increase in working capital, excluding cash and cash equivalents.
The increase in depreciation and amortization primarily reflects the
higher rate at PT-FI and higher sales volumes. PT-FI collected
$30.1 million from closed gold forward sales contracts in 1997 and
recognized $70.2 million of gains on the closed gold forward sales
contracts and copper put options contracts sold in 1996. Working
capital, excluding cash and cash equivalents, increased in 1997 as a
decrease in accrued income taxes reflecting the March 1997 payment
on PT-FI's 1996 income tax liability and increases in accounts
receivable and inventories were only partially offset by an increase
in accounts payable.
Investing Activities. FCX's 1997 capital expenditures have
increased compared to the 1996 period primarily because of PT-FI's
"fourth concentrator mill expansion." Atlantic completed its
expansion to 270,000 metric tons per year in 1996.
<PAGE> 13
PT-FI's capital expenditures for the remainder of 1997 are
expected to approximate $100 million (excluding the "fourth
concentrator mill expansion" discussed below), representing mine and
mill sustaining capital and long-term enhancement projects. Funding
is expected to be provided by operating cash flow, PT-FI's bank
credit facilities ($861.0 million commitment available at July
21, 1997) and other financing sources. FCX and Rio Tinto are
continuing construction on the "fourth concentrator mill expansion"
of PT-FI's facilities. The optimum rate following this expansion is
expected to be at least 190,000-200,000 MTPD, subject to certain
approvals. Completion is anticipated no later than mid-1998. Costs
for the expansion are expected to approximate $960 million,
including both working capital and $300 million for a coal-fired
power plant and related facilities. The new power plant facilities
are expected to be sold in late 1997 to the joint venture that owns
the assets which currently provide electricity to PT-FI.
Pursuant to the Rio Tinto joint venture, Rio Tinto has a 40
percent interest in certain assets and future production exceeding
specified annual amounts of copper, gold, and silver through 2021
from expansion of PT-FI's existing mining and milling capacity
financed by Rio Tinto. To finance the expansion, Rio Tinto will
provide up to $750 million for defined costs, of which 40 percent
will be funded directly and 60 percent will be loaned to PT-FI on a
nonrecourse basis. Expansion costs above $750 million will be
funded 60 percent by PT-FI and 40 percent by Rio Tinto except for
approximately $80 million for costs to be funded by PT-FI to enhance
the profitability of PT-FI's existing operations. Incremental cash
flow attributable to such expansion projects will be shared on the
basis of 60 percent to PT-FI and 40 percent Rio Tinto. PT-FI has
assigned its interest in such incremental cash flow to Rio Tinto
until Rio Tinto has received an amount of funds from such assigned
interest equal to the funds loaned to PT-FI plus interest based on
Rio Tinto's cost of borrowing. The incremental production from the
expansion, as well as production from PT-FI's existing operations
will share proportionately in operating and administrative costs.
PT-FI will continue to receive 100 percent of the cash flow from
specified annual amounts of copper, gold and silver through 2021
calculated by reference to its proved and probable reserves as of
December 31, 1994.
Atlantic received $7.5 million from the Spanish government in
May 1997, which represented the final installment of $52.8 million
in total grants related to Atlantic's expansion of its production
capacity to 270,000 metric tons of metal per year. Atlantic
completed a $13.0 million "debottlenecking" project in June 1997
that has increased annual production capacity by 20,000 metric tons
and improved its profitability. Atlantic is now fine-tuning its
operations and working to increase its refining capacity to enhance
profits further.
Construction began in 1996 on PT-FI's 25 percent owned, 200,000
metric tons of metal per year copper smelter/refinery complex in
Gresik, Indonesia. The estimated aggregate project cost, before
working capital requirements, is approximately $625 million. This
project is being financed by a $300 million nonrecourse term loan
and a $110 million working capital facility from a group of
commercial banks. The remaining funding is being provided pro rata
by PT-FI (25 percent) and the other owners (75 percent). Upon
completion of the Gresik smelter in mid-1998 and the PT-FI "fourth
concentrator mill expansion," FCX anticipates that at least 50
percent of PT-FI's annual concentrate production will be sold to
Atlantic and the Gresik smelter at market prices.
Financing Activities. Net proceeds from debt totaled $257.5 million
in the first six months of 1997, including $265.3 million of
nonrecourse borrowings from Rio Tinto, while the 1996 period
included $307.8 million of net proceeds from debt. In March 1997,
PT-FI completed the final $75 million sale of infrastructure assets
to joint ventures owned one-third by PT-FI and two-thirds by
ALatieF, an Indonesian investor. The sales to the ALatieF joint
ventures totaled $270.0 million during the period from December 1993
to March 1997. PT-FI subsequently sold its one-third interest in
the joint ventures to ALatieF and is leasing the infrastructure
assets under capital lease arrangements. PT-FI continues to
guarantee an approximately $50 million bank loan associated with the
purchases. PT-FI no longer consolidates the joint ventures. Because
of PT-FI's sale of its interest in the joint ventures and the
resulting change in accounting for these transactions as capital
leases rather than consolidation, PT-FI's interest expense is higher
and minority interest charges are lower.
During the first six months of 1997, FCX acquired 3.5 million
of its shares for $102.7 million (an average of $29.27 per share)
under its open market share purchase program of up to 20 million
shares. From July 1 through July 21, 1997, FCX purchased 2.8 million
shares for $74.0 million (an average of $26.91 per share). From
inception of this program through July 21, 1997, FCX has purchased
a total of 18.2 million shares for $505.7 million (an average of
$27.85 per share). The timing of purchases is
<PAGE> 14
dependent upon many factors, including the price of common shares,
the Company's business and financial position, and general economic
and market conditions.
OTHER MATTERS
In March 1997, PT Nusamba Mineral Industri (Nusamba), a subsidiary
of PT Nusantara Ampera Bakti, acquired from a third party
approximately 51 percent of the capital stock of P.T. Indocopper
Investama Corporation (PT-II). FCX owns 49 percent of the capital
stock of PT-II and PT-II owns 9.4 percent of the outstanding PT-FI
stock. Nusamba financed $254.0 million of the $315.0 million
purchase price with a commercial loan. FCX has agreed that if
Nusamba defaults on the loan, FCX will purchase the PT-II stock or
the lenders' interest in the commercial loan for the amount then due
by Nusamba under the loan. FCX also agreed to lend to Nusamba any
shortfalls between the interest payments due on the commercial loan
and the dividends received by Nusamba from PT-II. At June 30, 1997,
$3.1 million was due from Nusamba because of interest payment
shortfalls.
CAUTIONARY STATEMENT
Management's discussion and analysis of financial condition and
results of operations contains forward-looking statements regarding
copper and gold sales volumes, exploration activities, capital
expenditures, expansion costs, Gresik smelter costs and the
availability of financing. Important factors that might cause
future results to differ from these projections include
unanticipated declines in the average grades of ore mined,
unanticipated milling and other processing problems, the speculative
nature of mineral exploration, fluctuations in interest rates and
other adverse financial market conditions, and other factors
described in more detail in FCX's Form 10-K for the year ended
December 31, 1996 filed with the Securities and Exchange Commission.
--------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
<PAGE> 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed in the Exhibit
Index beginning on Page E-1 hereof.
(b) During the quarter for which this report is filed,
the registrant filed three Current Reports on Form 8-K, dated April
9, 1997, May 5, 1997 and May 12, 1997 reporting information under
Item 5. No financial statements were filed in connection with such
reports.
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
FREEPORT-McMoRan COPPER & GOLD INC.
By: /s/ Michael A. Weaver
-----------------------
Michael A. Weaver
Controller-Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: August 6, 1997
<PAGE> 17
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Sequentially
Numbered
Number Description Page
- ------ ----------- -----------
2.1 Agreement, dated as of May 2, 1995 by and between FTX and FCX
and The RTZ Corporation PLC, RTZ Indonesia Limited, and RTZ
America, Inc. (the "RTZ Agreement"). Incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K of
FTX dated as of May 26, 1995.
2.2 Amendment dated May 31, 1995 to the RTZ Agreement.
Incorporated by reference to Exhibit 2.1 to the Quarterly
Report on Form 10-Q of FTX for the quarter ended June 30,
1995.
2.3 Distribution Agreement dated as of July 5, 1995 between FTX and
FCX. Incorporated by reference to Exhibit 2.1 to the
Quarterly Report on Form 10-Q of FTX for the quarter ended
September 30, 1995 (the "FTX 1995 Third Quarter Form 10-Q").
3.1 Composite copy of the Certificate of Incorporation of FCX.
Incorporated by reference to Exhibit 3.1 to the Quarterly
Report on Form 10-Q of FCX for the quarter ended June 30,
1995 (the "FCX 1995 Second Quarter Form 10-Q").
3.2 By-Laws of FCX, as amended. Incorporated by reference to
Exhibit 3.2 to the Annual Report on Form 10-K of FCX for the
fiscal year ended December 31, 1996 (the "FCX 1996 Form 10-
K").
4.1 Certificate of Designations of the Step-Up Convertible
Preferred Stock of FCX. Incorporated by reference to Exhibit
4.2 to the FCX 1995 Second Quarter Form 10-Q.
4.2 Deposit Agreement dated as of July 1, 1993 among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and
holders of depositary receipts ("Step-Up Depositary
Receipts") evidencing certain Depositary Shares, each of
which, in turn, represents 0.05 shares of Step-Up Convertible
Preferred Stock. Incorporated by reference to Exhibit 4.5 to
the Annual Report on Form 10-K of FCX for the fiscal year
ended December 31, 1993 (the "FCX 1993 Form 10-K").
4.3 Form of Step-Up Depositary Receipt. Incorporated by reference
to Exhibit 4.6 to the FCX 1993 Form 10-K.
4.4 Certificate of Designations of the Gold-Denominated Preferred
Stock of FCX. Incorporated by reference to Exhibit 4.3 to the
FCX 1995 Second Quarter Form 10-Q.
4.5 Deposit Agreement dated as of August 12, 1993 among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and
holders of depositary receipts ("Gold-Denominated Depositary
Receipts") evidencing certain Depositary Shares, each of
which, in turn, represents 0.05 shares of Gold-Denominated
Preferred Stock. Incorporated by reference to Exhibit 4.8 to
the FCX 1993 Form 10-K.
4.6 Form of Gold-Denominated Depositary Receipt. Incorporated by
reference to Exhibit 4.9 to the FCX 1993 Form 10-K.
4.7 Certificate of Designations of the Gold-Denominated Preferred
Stock, Series II (the "Gold-Denominated Preferred Stock II")
of FCX. Incorporated by reference to Exhibit 4.4 to the FCX
1995 Second Quarter Form 10-Q.
4.8 Deposit Agreement dated as of January 15, 1994, among FCX,
Chase Mellon Shareholder Services, L.L.C., as Depositary, and
holders of depositary receipts ("Gold-Denominated II
Depositary Receipts") evidencing certain Depositary Shares,
each of which, in turn, represents 0.05 shares of
Gold-Denominated Preferred Stock II. Incorporated by
reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q
of FCX for the quarter ended March 31, 1994 (the "FCX 1994
First Quarter Form 10-Q").
4.9 Form of Gold-Denominated II Depositary Receipt. Incorporated
by reference to Exhibit 4.3 to the FCX 1994 First Quarter
Form 10-Q.
4.10 Certificate of Designations of the Silver-Denominated
Preferred Stock of FCX. Incorporated by reference to Exhibit
4.5 to the FCX 1995 Second Quarter Form 10-Q.
<PAGE> E-1
4.11 Deposit Agreement dated as of July 25, 1994 among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and
holders of depositary receipts ("Silver-Denominated
Depositary Receipts") evidencing certain Depositary Shares,
each of which, in turn, initially represents 0.025 shares of
Silver-Denominated Preferred Stock. Incorporated by
reference to Exhibit 4.2 to the July 15, 1994 Form 8-A.
4.12 Form of Silver-Denominated Depositary Receipt. Incorporated
by reference to Exhibit 4.1 to the July 15, 1994, Form 8-A.
4.13 $550 million Composite Restated Credit Agreement dated as of
July 17, 1995 (the "PT-FI Credit Agreement") among PT-FI,
FCX, the several financial institutions that are parties
thereto, First Trust of New York, National Association, as
PT-FI Trustee, Chemical Bank, as administrative agent and FCX
collateral agent, and The Chase Manhattan Bank (National
Association), as documentary agent. Incorporated by
reference to Exhibit 4.16 to the Annual Report of FCX on Form
10-K for the year ended December 31, 1995 (the "FCX 1995 Form
10-K").
4.14 Amendment dated as of July 15, 1996 to the PT-FI Credit
Agreement among PT-FI, FCX, the several financial
institutions that are parties thereto, First Trust of New
York, National Association, as PT-FI Trustee, Chemical Bank,
as administrative agent and FCX collateral agent, and The
Chase Manhattan Bank (National Association), as documentary
agent. Incorporated by reference to Exhibit 4.2 to the
Quarterly Report of FCX on Form 10-Q for the quarter ended
September 30, 1996 (the "FCX 1996 Third Quarter Form 10-Q").
4.15 Amendment dated as of October 9, 1996 to the PT-FI Credit
Agreement among PT-FI, FCX, the several financial
institutions that are parties thereto, First Trust of New
York, National Association, as PT-FI Trustee, The Chase
Manhattan Bank (formerly Chemical Bank), as administrative
agent, security agent and JAA security agent, and The Chase
Manhattan Bank (as successor to The Chase Manhattan Bank
(National Association)), as documentary agent. Incorporated
by reference to Exhibit 10.2 to the Current Report on Form 8-
K of FCX dated and filed November 13, 1996 (the "FCX November
13, 1996 Form 8-K").
4.16 $200 million Credit Agreement dated as of June 30, 1995 (the
"CDF") among PT-FI, FCX, the several financial institutions
that are parties thereto, First Trust of New York, National
Association, as PT-FI Trustee, Chemical Bank, as
administrative agent and FCX collateral agent, and The Chase
Manhattan Bank (National Association), as documentary agent.
Incorporated by reference to Exhibit 4.2 to the FCX 1995
Third Quarter Form 10-Q.
4.17 Amendment dated as of July 15, 1996 to the CDF among PT-FI,
FCX, the several financial institutions that are parties
thereto, First Trust of New York, National Association, as
PT-FI Trustee, Chemical Bank, as administrative agent and FCX
collateral agent, and The Chase Manhattan Bank (National
Association), as documentary agent. Incorporated by
reference to Exhibit 4.1 to the FCX 1996 Third Quarter Form
10-Q.
4.18 Amendment dated as of October 9, 1996 to the CDF among PT-FI,
FCX, the several financial institutions that are parties
thereto, First Trust of New York, National Association, as
PT-FI Trustee, The Chase Manhattan Bank (formerly Chemical
Bank), as administrative agent, security agent and JAA
security agent, and The Chase Manhattan Bank (as successor to
The Chase Manhattan Bank (National Association)), as
documentary agent. Incorporated by reference to Exhibit 10.1
to the FCX November 13, 1996 Form 8-K.
4.19 Senior Indenture dated as of November 15, 1996 from FCX to
The Chase Manhattan Bank, as Trustee. Incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K of
FCX dated November 13, 1996 and filed November 15, 1996 (the
"FCX November 15, 1996 Form 8-K").
4.20 First Supplemental Indenture dated as of November 18, 1996
from FCX to The Chase Manhattan Bank, as Trustee, providing
for the issuance of the Senior Notes and supplementing the
Senior Indenture dated November 15, 1996 from FCX to such
Trustee, providing for the issuance of Debt Securities.
Incorporated by reference to Exhibit 4.20 to the FCX 1996
Form 10-K.
10.1 Freeport-McMoRan Copper & Gold Inc. 1995 Stock Option Plan, as
amended.
11.1 Computation of Net Income per Common and Common Equivalent
Share
15.1 Letter on unaudited interim financial information
27.1 Financial Data Schedule
<PAGE> E-2
Exhibit 10.1
FREEPORT-McMoRan COPPER & GOLD INC.
1995 STOCK OPTION PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Copper &
Gold Inc. 1995 Stock Option Plan (the "Plan") is to motivate and
reward key personnel by giving them a proprietary interest in the
Company's continued success.
SECTION 2
Definitions. As used in the Plan, the following terms
shall have the meanings set forth below:
"Award" shall mean any Option, Stock Appreciation
Right, Limited Right or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing any Award,
which may, but need not, be executed or acknowledged by a
Participant.
"Board" shall mean the Board of Directors of the
Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean a committee of the Board
designated by the Board to administer the Plan and composed of
not fewer than two directors, each of whom, to the extent
necessary to comply with Rule 16b-3 only, is a "non-employer
director" within the meaning of Rule 16b-3 and, to the extent
necessary to comply with Section 162(m) only, is an "outside
director" under Section 162(m). Until otherwise determined by
the Board, the Committee shall be the Corporate Personnel Committee
of the Board.
"Company" shall mean Freeport-McMoRan Copper & Gold
Inc.
"Designated Beneficiary" shall mean the beneficiary
designated by the Participant, in a manner determined by the
Committee, to receive the benefits due the Participant under the
Plan in the event of the Participant's death. In the absence of
an effective designation by the Participant, Designated
Beneficiary shall mean the Participant's estate.
"Employee" shall mean (i) any person providing services
as an officer of the Company or a Subsidiary, whether or not
employed by such entity, including any such person who is also a
director of the Company, (ii) any employee of the Company or a
Subsidiary, including any director who is also an employee of the
Company or a Subsidiary, (iii) any officer or employee of an
entity with which the Company has contracted to receive executive
or management services who provides services to the Company or a
Subsidiary through such arrangement and (iv) any person who has
agreed in writing to become a person described in clauses (i),
(ii) or (iii) within not more than 30 days following the date of
grant of such person's first Award under the Plan.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
"Incentive Stock Option" shall mean an option granted
under Section 6 of the Plan that is intended to meet the
requirements of Section 422 of the Code or any successor
provision thereto.
"Limited Right" shall mean any right granted under
Section 8 of the Plan.
"Nonqualified Stock Option" shall mean an option
granted under Section 6 of the Plan that is not intended to be an
Incentive Stock Option.
"Offer" shall mean any tender offer, exchange offer or
series of purchases or other acquisitions, or any combination of
those transactions, as a result of which any person, or any two
or more persons acting as a group, and all affiliates of such
person or persons, shall beneficially own more than 40% of all
classes and series of the Company's stock outstanding, taken as a
whole, that has voting rights with respect to the election of
directors of the Company (not including any series of preferred
stock of the Company that has the right to elect directors only
upon the failure of the Company to pay dividends).
"Offer Price" shall mean the highest price per Share
paid in any Offer that is in effect at any time during the period
beginning on the ninetieth day prior to the date on which a
Limited Right is exercised and ending on and including the date
of exercise of such Limited Right. Any securities or property
that comprise all or a portion of the consideration paid for
Shares in the Offer shall be valued in determining the Offer
Price at the higher of (i) the valuation placed on such
securities or property by the person or persons making such
Offer, or (ii) the valuation, if any, placed on such securities
or property by the Committee or the Board.
"Option" shall mean an Incentive Stock Option or a
Nonqualified Stock Option.
"Other Stock-Based Award" shall mean any right or award
granted under Section 9 of the Plan.
"Participant" shall mean any Employee granted an Award
under the Plan.
"Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision
thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the
SEC under the Exchange Act, or any successor rule or regulation
thereto as in effect from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange
Commission, including the staff thereof, or any successor
thereto.
"Section 162(m)" shall mean Section 162(m) of the Code
and all regulations promulgated thereunder as in effect from time
to time.
"Shares" shall mean the shares of Class B Common Stock,
par value $0.10 per share, of the Company and such other
securities of the Company or a Subsidiary as the Committee may
from time to time designate.
"Stock Appreciation Right" shall mean any right granted
under Section 7 of the Plan.
"Subsidiary" shall mean (i) any corporation or other
entity in which the Company possesses directly or indirectly
equity interests representing at least 50% of the total ordinary
voting power or at least 50% of the total value of all classes of
equity interests of such corporation or other entity and (ii) any
other entity in which the Company has a direct or indirect
economic interest that is designated as a Subsidiary by the
Committee.
SECTION 3
Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law,
and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to an
eligible Employee; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights or other
matters are to be calculated in connection with, Awards; (iv)
determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, whole Shares, other whole
securities, other Awards, other property or other cash amounts
payable by the Company upon the exercise of that or other Awards,
or canceled, forfeited or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or
suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable by the Company with respect
to an Award shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii)
interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (viii) establish,
amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or
desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive
and binding upon all Persons, including the Company, any
Subsidiary, any Participant, any holder or beneficiary of any
Award, any stockholder of the Company and any Employee.
SECTION 4
Eligibility. Any Employee who is not a member of the
Committee shall be eligible to be granted an Award.
SECTION 5
(a) Shares Available for Awards. Subject to
adjustment as provided in Section 5(b):
(i) Calculation of Number of Shares Available. The
number of Shares with respect to which Awards may be granted
under the Plan shall be 10,000,000. If, after the effective date
of the Plan, an Award granted under the Plan expires or is
exercised, forfeited, canceled or terminated without the delivery
of Shares, then the Shares covered by such Award or to which such
Award relates, or the number of Shares otherwise counted against
the aggregate number of Shares with respect to which Awards may
be granted, to the extent of any such expiration, exercise,
forfeiture, cancellation or termination without the delivery
of Shares, shall again be, or shall become, Shares with respect
to which Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the
Company, any Shares with respect to which Awards are made by the
Company, or any Shares with respect to which the Company becomes
obligated to make Awards, through the assumption of, or in
substitution for, outstanding awards previously granted by an
acquired company or a company with which
the Company combines, shall not be counted against the Shares
available for Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist of authorized
and unissued Shares or of treasury Shares, including Shares held
by the Company or a Subsidiary and Shares acquired in the open
market or otherwise obtained by the Company or a Subsidiary.
(iv) Individual Limit. Any provision of the Plan to
the contrary notwithstanding, no individual may receive in any
year Awards under the Plan that relate to more than 1,750,000
Shares.
(b) Adjustments. In the event that the Committee
determines that any dividend or other distribution (whether in
the form of cash, Shares, Subsidiary securities, other securities
or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate to
prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it
may deem equitable, adjust any or all of (i) the number and type
of Shares (or other securities or property) with respect to which
Awards may be granted, (ii) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any Award and,
if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award and, if deemed appropriate, adjust
outstanding Awards to provide the rights contemplated by Section
9(b) hereof; provided, in each case, that with respect to Awards
of Incentive Stock Options no such adjustment shall be authorized
to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code or any successor provision thereto
and, with respect to all Awards under the Plan, no such
adjustment shall be authorized to the extent that such authority
would be inconsistent with the requirements for full
deductibility under Section 162(m) of the Code and the
regulations thereunder; and provided further, that the number of
Shares subject to any Award denominated in Shares shall always be
a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to
determine the Employees to whom Options shall be granted, the
number of Shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority
to grant Incentive Stock Options, Nonqualified Stock Options or
both. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with
such rules as may be required by Section 422 of the Code, as from
time to time amended, and any implementing regulations. Except
in the case of an Option granted in assumption of or substitution
for an outstanding award of a company acquired by the Company or
with which the Company combines, the exercise price of any Option
granted under this Plan shall not be less than 100% of the fair
market value of the underlying Shares on the date of grant.
(b) Exercise. Each Option shall be exercisable at
such times and subject to such terms and conditions as the
Committee may, in its sole discretion, specify in the applicable
Award Agreement or thereafter, provided, however, that in no
event may any Option granted hereunder be
exercisable after the expiration of 10 years after the date of
such grant. The Committee may impose such conditions with
respect to the exercise of Options, including without limitation,
any condition relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.
(c) Payment. No Shares shall be delivered pursuant to
any exercise of an Option until payment in full of the option
price therefor is received by the Company. Such payment may be
made in cash, or its equivalent, or, if and to the extent
permitted by the Committee, by applying cash amounts payable by
the Company upon the exercise of such Option or other Awards by
the holder thereof or by exchanging whole Shares owned by such
holder (which are not the subject of any pledge or other security
interest), or by a combination of the foregoing, provided that
the combined value of all cash, cash equivalents, cash amounts so
payable by the Company upon exercises of Awards and the fair
market value of any such whole Shares so tendered to the Company,
valued (in accordance with procedures established by the
Committee) as of the effective date of such exercise, is at least
equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the
provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be
covered by each Award of Stock Appreciation Rights, the grant
price thereof and the conditions and limitations applicable to
the exercise thereof. Stock Appreciation Rights may be granted
in tandem with another Award, in addition to another Award, or
freestanding and unrelated to any other Award. Stock
Appreciation Rights granted in tandem with or in addition to an
Option or other Award may be granted either at the same time as
the Option or other Award or at a later time. Stock Appreciation
Rights shall not be exercisable after the expiration of 10 years
after the date of grant. Except in the case of a Stock
Appreciation Right granted in assumption of or substitution for
an outstanding award of a company acquired by the Company or with
which the Company combines, the grant price of any Stock
Appreciation Right granted under this Plan shall not be less than
100% of the fair market value of the Shares covered by such Stock
Appreciation Right on the date of grant or, in the case of a
Stock Appreciation Right granted in tandem with a then
outstanding Option or other Award, on the date of grant of such
related Option or Award.
(b) A Stock Appreciation Right shall entitle the
holder thereof to receive upon exercise, for each Share to which
the SAR relates, an amount equal to the excess, if any, of the
fair market value of a Share on the date of exercise of the Stock
Appreciation Right over the grant price. Any Stock Appreciation
Right shall be settled in cash, unless the Committee shall
determine at the time of grant of a Stock Appreciation Right that
it shall or may be settled in cash, Shares or a combination of
cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to
determine the Employees to whom Limited Rights shall be granted,
the number of Shares to be covered by each Award of Limited
Rights, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Limited Rights
may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any Award.
Limited Rights granted in tandem with or in addition to an Award
may be granted either at the same time as the Award or at a later
time. Limited Rights shall not be exercisable after the
expiration of 10 years after the date of grant and shall only be
exercisable during a period determined at the time of grant by
the Committee beginning not earlier than one day and ending not
more than ninety days after the expiration date of an Offer.
Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by
the Company or with which the Company combines, the grant price
of any Limited Right granted under this Plan shall not be less
than 100% of the fair market value of the Shares covered by such
Limited Right on the date of grant or, in the case of a Limited
Right granted in tandem with a then outstanding Option or other
Award, on the date of grant of such related Option or Award.
(b) A Limited Right shall entitle the holder thereof
to receive upon exercise, for each Share to which the Limited
Right relates, an amount equal to the excess, if any, of the
Offer Price on the date of exercise of the Limited Right over the
grant price. Any Limited Right shall be settled in cash, unless
the Committee shall determine at the time of grant of a Limited
Right that it shall or may be settled in cash, Shares or a
combination of cash and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby
authorized to grant to eligible Employees an "Other Stock-Based
Award", which shall consist of an Award, the value of which is
based in whole or in part on the value of Shares, that is not an
instrument or Award specified in Sections 6 through 8 of this
Plan. Other Stock-Based Awards may be awards of Shares or may be
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible or
exchangeable into or exercisable for Shares), as deemed by the
Committee consistent with the purposes of the Plan. The
Committee shall determine the terms and conditions of any such
Other Stock-Based Award. Except in the case of an Other Stock-
Based Award granted in assumption of or in substitution for an
outstanding award of a company acquired by the Company or with
which the Company combines, the price at which securities may be
purchased pursuant to any Other Stock-Based Award granted under
this Plan, or the provision, if any, of any such Award that is
analogous to the purchase or exercise price, shall not be less
than 100% of the fair market value of the securities to which
such Award relates on the date of grant.
(b) Dividend Equivalents. In the sole and complete
discretion of the Committee, an Award, whether made as an Other
Stock-Based Award under this Section 9 or as an Award granted
pursuant to Sections 6 through 8 hereof, may provide the holder
thereof with dividends or dividend equivalents, payable in cash,
Shares, Subsidiary securities, other securities or other property
on a current or deferred basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend,
suspend or terminate the Plan or any portion thereof at any time,
provided that no amendment shall be made without stockholder
approval if such approval is necessary to comply with any tax or
regulatory requirement. Notwithstanding anything to the contrary
contained herein, the Committee may amend the Plan in such manner
as may be necessary for the Plan to conform with local rules and
regulations in any jurisdiction outside the United States.
(b) Amendments to Awards. The Committee may amend,
modify or terminate any outstanding Award with the holder's
consent at any time prior to payment or exercise in any manner
not inconsistent with the terms of the Plan, including without
limitation, (i) to change the date or dates as of which an Award
becomes exercisable, or (ii) to cancel an Award and grant a new
Award in substitution therefor under such different terms and
conditions as it determines in its sole and complete discretion
to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. The Committee is hereby
authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in Section 5(b) hereof) affecting the Company, or the
financial statements of the Company or any Subsidiary, or of
changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such
adjustments are appropriate to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available
under the Plan.
(d) Cancellation. Any provision of this Plan or any
Award Agreement to the contrary notwithstanding, the Committee
may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the
holder of such canceled Award equal in value to such canceled
Award. The determinations of value under this subparagraph shall
be made by the Committee in its sole discretion.
SECTION 11
(a) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more
officers of the Company the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards to,
or to cancel, modify or waive rights with respect to, or to
alter, discontinue, suspend, or terminate Awards held by,
Employees who are not officers or directors of the Company for
purposes of Section 16 of the Exchange Act, or any successor
section thereto, or who are otherwise not subject to such
Section.
(b) Award Agreements. Each Award hereunder shall be
evidenced by a writing delivered to the Participant that shall
specify the terms and conditions thereof and any rules applicable
thereto, including but not limited to the effect on such Award of
the death, retirement or other termination of employment of the
Participant and the effect thereon, if any, of a change in
control of the Company.
(c) Withholding. A Participant may be required to pay
to the Company, and the Company shall have the right to deduct
from all amounts paid to a Participant (whether under the Plan or
otherwise), any taxes required by law to be paid or withheld in
respect of Awards hereunder to such Participant. The Committee
may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting,
exercise or payment of any Award.
(d) Transferability. No Awards granted hereunder may
be transferred, pledged, assigned or otherwise encumbered by a
Participant except: (i) by will; (ii) by the laws of descent and
distribution; (iii) pursuant to a domestic relations order, as
defined in the Code, if permitted by the Committee and so
provided in the Award Agreement or an amendment thereto; or (iv)
if permitted by the Committee and so provided in the Award
Agreement or an amendment thereto, Options and Limited Rights
granted in tandem therewith may be transferred or assigned (a) to
Immediate Family Members, (b) to a partnership in which Immediate
Family Members, or entities in which Immediate Family Members are
the owners, members or beneficiaries, as appropriate, are the
partners, (c) to a limited liability company in which Immediate
Family Members, or entities in which Immediate Family Members are
the owners, members or beneficiaries, as appropriate,
are the members, or (d) to a trust for the benefit of Immediate
Family Members; provided, however, that no more than a de minimus
beneficial interest in a partnership, limited liability company
or trust described in (b), (c) or (d) above may be owned by a
person who is not an Immediate Family Member or by an entity that
is not beneficially owned solely by Immediate Family Members.
"Immediate Family Members" shall be defined as the spouse and
natural or adopted children or grandchildren of the Participant
and their spouses. To the extent that an Incentive Stock Option
is permitted to be transferred during the lifetime of the
Participant, it shall be treated thereafter as a Nonqualified
Stock Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Awards, or levy of
attachment or similar process upon Awards not specifically
permitted herein, shall be null and void and without effect. The
designation of a Designated Beneficiary shall not
be a violation of this Section 11(d).
(e) Share Certificates. All certificates for Shares
or other securities delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which such
Shares or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(f) No Limit on Other Compensation Arrangements.
Nothing contained in the Plan shall prevent the Company from
adopting or continuing in effect other compensation arrangements,
which may, but need not, provide for the grant of options, stock
appreciation rights and other types of Awards provided for
hereunder (subject to stockholder approval of any such
arrangement if approval is required), and such arrangements may
be either generally applicable or applicable only in specific
cases.
(g) No Right to Employment. The grant of an Award
shall not be construed as giving a Participant the right to be
retained in the employ of the Company or any Subsidiary or in the
employ of any other entity providing services to the Company.
The Company or any Subsidiary or any such entity may at any time
dismiss a Participant from employment, or terminate any
arrangement pursuant to which the Participant provides services
to the Company, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement. No Employee, Participant or other person shall
have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Participants
or holders or beneficiaries of Awards.
(h) Governing Law. The validity, construction, and
effect of the Plan, any rules and regulations relating to the
Plan and any Award Agreement shall be determined in accordance
with the laws of the State
of Delaware.
(i) Severability. If any provision of the Plan or any
Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Person or Award,
or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(j) No Trust or Fund Created. Neither the Plan nor
any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the
Company and a Participant or any other Person. To the extent
that any Person acquires a right to receive payments from the
Company pursuant to an Award, such right shall be no greater than
the right of any unsecured general creditor of the Company.
(k) No Fractional Shares. No fractional Shares shall
be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional
Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(l) Headings. Headings are given to the subsections
of the Plan solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant
to the construction or interpretation of the Plan or any
provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall be
effective as of the date of its approval by the holders of the
common stock of the Company.
SECTION 13
Term of the Plan. No Award shall be granted under the
Plan after the fifth anniversary of the effective date of the
Plan; however, unless otherwise expressly provided in the Plan or
in an applicable Award Agreement, any Award theretofore granted may,
and the authority of the Committee to amend, alter, adjust,
suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under any such Award shall, extend beyond
such date.
Exhibit 11.1
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
(In Thousands, Except Per Share Amounts)
Primary:
Net income applicable
to common stock $ 69,852 $ 29,045 $ 132,303 $ 51,495
========== ========== ========== =========
Average common shares
outstanding 199,289 195,239 200,311 195,958
Common stock equivalents:
Stock options 1,586 1,930 1,634 1,810
---------- ---------- ---------- ---------
Common and common
equivalent shares 200,875 197,169 201,945 197,768
========== ========== ========== =========
Net income per common
and common equivalent
share $.35 $.15 $.66 $.26
==== ==== ==== ====
Fully diluted: (1)
Net income applicable to common stock:
Net Income $ 69,852 $ 29,045 $ 132,303 $ 51,495
Plus preferred dividends 5,250 9,168 10,500 18,336
---------- ---------- ---------- ---------
Net Income applicable
to common stock $ 75,102 $ 38,213 $ 142,803 $ 69,831
========== ========== ========== =========
Average common shares
outstanding 199,289 195,239 200,311 195,958
Common stock
equivalents:
Stock options 1,724 1,942 1,724 1,942
Convertible
securities:
Preferred stock 11,690 20,743 11,690 20,788
---------- ---------- ---------- ---------
Common and common
equivalent shares 212,703 217,924 213,725 218,688
========== ========== ========== =========
Net income per common
and common equivalent
share $.35 $.18 $.67 $.32
==== ==== ==== ====
(1) This calculation is submitted in accordance with Regulation S-K
item 601 (b)(11), despite not being required by APB Opinion No. 15
because it results in no dilution.
Exhibit 15.1
July 22, 1997
Freeport-McMoRan Copper & Gold Inc.
1615 Poydras St.
New Orleans, LA 70112
Gentlemen,
We are aware that Freeport-McMoRan Copper & Gold Inc. has
incorporated by reference in its Registration Statements
(File Nos. 33-63271, 33-63269, 33-63267, 33-45787, 33-52503,
33-63376, and 333-02699) its Form 10-Q for the quarter ended
June 30, 1997, which includes our report dated July 22, 1997
covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the
Securities Act of 1993 (the Act), this report is not
considered a part of the registration statements prepared or
certified by our firm or a report prepared or certified by
our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/Arthur Andersen LLP
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000831259
<NAME> FREEPORT-MCMORAN COPPER & GOLD INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,607
<SECURITIES> 0
<RECEIVABLES> 162,763
<ALLOWANCES> 0
<INVENTORY> 391,372
<CURRENT-ASSETS> 661,738
<PP&E> 4,274,047
<DEPRECIATION> 984,796
<TOTAL-ASSETS> 4,105,713
<CURRENT-LIABILITIES> 576,336
<BONDS> 1,794,159
500,007
349,990
<COMMON> 21,830
<OTHER-SE> 246,803
<TOTAL-LIABILITY-AND-EQUITY> 4,105,713
<SALES> 1,090,730
<TOTAL-REVENUES> 1,090,730
<CGS> 614,269
<TOTAL-COSTS> 614,269
<OTHER-EXPENSES> 8,962
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,624
<INCOME-PRETAX> 339,160
<INCOME-TAX> 156,890
<INCOME-CONTINUING> 150,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,878
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
