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, 2000
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, 2000, there were issued and outstanding 59,600,123
shares of the registrant's Class A Common Stock, par value $0.10
per share, and 93,296,274 shares of its Class B Common Stock, par
value $0.10 per share.
FREEPORT-McMoRan COPPER & GOLD INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Operations 4
Statements of Cash Flow 5
Notes to Financial Statements 6
Remarks 8
Report of Independent Public Accountants 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information 20
Signature 20
Exhibit Index E-1
<PAGE> 2
FREEPORT-McMoRan COPPER & GOLD INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------- ----------
(In Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,861 $ 6,698
Accounts receivable 108,568 172,762
Inventories 387,343 368,125
Prepaid expenses and other 32,224 16,869
---------- ----------
Total current assets 533,996 564,454
Property, plant and equipment, net 3,297,419 3,363,291
Investment in PT Smelting 68,150 66,070
Other assets 85,087 89,101
---------- ----------
Total assets $3,984,652 $4,082,916
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 345,940 $ 317,339
Current portion of long-term debt
and short-term borrowings 205,148 114,789
Unearned customer receipts 58,519 40,235
Accrued income taxes 3,220 42,704
---------- ----------
Total current liabilities 612,827 515,067
Long-term debt, less current portion:
FCX and PT Freeport Indonesia
credit facilities 813,000 648,000
Senior notes 450,000 570,000
Infrastructure asset financings 421,621 443,150
Atlantic Copper debt 221,710 230,212
Equipment loans 60,064 65,656
Rio Tinto loan - 30,123
Other notes payable 46,896 46,329
Accrued postretirement benefits
and other liabilities 97,171 114,677
Deferred income taxes 564,707 553,394
Minority interests 147,573 181,921
Redeemable preferred stock 487,507 487,507
Stockholders' equity 61,576 196,880
---------- ----------
Total liabilities and
stockholders' equity $3,984,652 $4,082,916
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 3
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues $397,348 $470,335 $864,940 $886,171
Cost of sales:
Production and delivery 251,481 243,411 511,553 433,298
Depreciation and amortization 54,328 72,384 117,687 143,125
-------- -------- -------- --------
Total cost of sales 305,809 315,795 629,240 576,423
Exploration expenses 1,841 2,158 3,809 5,106
Equity in PT Smelting losses 5,878 4,942 3,637 12,465
General and administrative expenses 16,518 17,251 37,267 32,908
-------- -------- -------- --------
Total costs and expenses 330,046 340,146 673,953 626,902
-------- -------- -------- --------
Operating income 67,302 130,189 190,987 259,269
Interest expense, net (49,813) (47,904) (99,748) (98,223)
Other expense, net (3,605) (1,204) (8,379) (3,345)
-------- -------- -------- --------
Income before income taxes
and minority interests 13,884 81,081 82,860 157,701
Provision for income taxes (18,252) (42,216) (58,725) (82,292)
Minority interests in net income of
consolidated subsidiaries (4,808) (11,322) (14,580) (21,422)
-------- -------- -------- --------
Net income (loss) (9,176) 27,543 9,555 53,987
Preferred dividends (9,437) (8,582) (18,927) (17,316)
-------- -------- -------- --------
Net income (loss) applicable to
common stock $(18,613) $ 18,961 $ (9,372) $ 36,671
======== ======== ======== ========
Net income (loss) per share of common stock:
Basic $(.12) $.12 $(.06) $.22
===== ==== ===== ====
Diluted $(.12) $.12 $(.06) $.22
===== ==== ===== ====
Average common shares outstanding:
Basic 158,379 163,465 159,851 163,741
======= ======= ======= =======
Diluted 158,379 164,406 159,851 164,355
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 4
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF CASH FLOW (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
---------------------
2000 1999
-------- ---------
(In Thousands)
<S> <C> <C>
Cash flow from operating activities:
Net income $ 9,555 $ 53,987
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 117,687 143,125
Deferred income taxes 13,575 35,050
Equity in PT Smelting losses 3,637 12,465
Minority interests' share of net income 14,580 21,422
Other 14,795 12,310
(Increases) decreases in working capital:
Accounts receivable 59,542 32,604
Inventories (16,295) (20,173)
Prepaid expenses and other (878) (1,139)
Accounts payable and accrued liabilities 68,258 (4,983)
Accrued income taxes (56,222) (6,112)
--------- ---------
Decrease in working capital 54,405 197
--------- ---------
Net cash provided by operating activities 228,234 278,556
--------- ---------
Cash flow from investing activities:
PT Freeport Indonesia capital expenditures (87,376) (72,841)
Atlantic Copper capital expenditures (3,871) (3,728)
Investment in PT Smelting (5,717) -
Other (6,442) (833)
--------- ---------
Net cash used in investing activities (103,406) (77,402)
--------- ---------
Cash flow from financing activities:
Net repayments to Rio Tinto (60,564) (107,515)
Proceeds from other debt 368,538 131,027
Repayment of other debt (249,919) (182,247)
Purchase of FCX common shares (122,358) (7,921)
Cash dividends paid:
Preferred stock (18,980) (19,204)
Minority interests (30,808) (7,367)
Other (11,574) (9,242)
--------- ---------
Net cash used in financing activities (125,665) (202,469)
--------- ---------
Net decrease in cash and cash equivalents (837) (1,315)
Cash and cash equivalents at beginning of year 6,698 5,877
--------- ---------
Cash and cash equivalents at end of period $ 5,861 $ 4,562
========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 5
FREEPORT-McMoRan COPPER & GOLD INC.
NOTES TO FINANCIAL STATEMENTS
1. EARNINGS PER SHARE
Freeport-McMoRan Copper & Gold Inc.'s (FCX) basic net income
(loss) per share of common stock was calculated by dividing net
income (loss) applicable to common stock by the weighted-average
number of common shares outstanding during the period. Diluted
net income (loss) per share of common stock was calculated by
dividing net income (loss) applicable to common stock by the
weighted-average number of common shares outstanding during the
period plus the net effect of dilutive stock options. Stock
options representing less than 0.1 million shares in the second
quarter of 2000 and 0.7 million shares in the 2000 six-month
period that otherwise would have been considered dilutive were
excluded from the diluted net income (loss) per share calculation
because of the net losses for the periods. Dilutive stock
options represented 0.9 million shares in the second quarter of
1999 and 0.6 million shares in the 1999 six-month period.
Options excluded from the computation of diluted net income
(loss) per share of common stock, because their exercise prices
were greater than the average market price of the common stock
during the period, totaled options for 11.8 million shares
(average price of $21.47 per share) in each of the 2000 periods
and 11.1 million shares (average exercise price of $21.78 per
share) in each of the 1999 periods. Convertible preferred stock
outstanding was not included in the computation of diluted net
income (loss) per share of common stock because doing so would
have increased diluted net income per share of common stock or
decreased diluted net loss per share of common stock. The
preferred stock was convertible into 11.7 million shares of
common stock, and the related accrued dividends totaled $6.1
million in the second quarter of 2000, $5.3 million in the second
quarter of 1999, $12.2 million in the 2000 six-month period and
$10.5 million in the 1999 six-month period.
2. FINANCIAL CONTRACTS
At times, FCX has entered into financial contracts to manage
certain risks resulting from fluctuations in commodity prices
(primarily copper and gold), foreign currency 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. FCX
currently has no copper and gold price protection contracts
relating to its mine production other than its gold-denominated
preferred stock.
At June 30, 2000, FCX had redeemable preferred stock indexed
to commodities, open foreign currency forward contracts, open
forward copper sales and purchase contracts related to its
smelter operations 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 are recorded as an adjustment to revenues.
Atlantic Copper, S.A., a wholly owned subsidiary of FCX
(Atlantic Copper), hedges a portion of its anticipated Spanish
peseta cash outflows with foreign currency forward contracts. In
April 2000, PT Freeport Indonesia, FCX's majority-owned
subsidiary, also entered into contracts to hedge a portion of its
anticipated Australian dollar cash outflows with foreign currency
forward contracts. Changes in market value of foreign currency
forward contracts which protect anticipated transactions are
recognized in the period incurred. Atlantic Copper also enters
into futures contracts to hedge its price risk whenever its
physical purchases and sales pricing periods do not match, and
whenever it extends the pricing terms on its copper sales. Gains
and losses on these contracts are recognized with the hedged
transaction. Atlantic Copper has interest rate swap contracts to
limit the effect of increases in the interest rates on variable-
rate debt. The costs associated with these contracts are
amortized to interest expense over the terms of the agreements.
In June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging
Activities," (SFAS 133) which establishes accounting and
reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. In June 1999, the FASB
delayed SFAS 133's effective date by one year to fiscal years
beginning after June 15, 2000 with earlier applicatioo permitted.
FCX expects to adopt SFAS 133 eeffffective January 1, 2001.
Adoption is expected to require FCX to report other comprehensive
income or loss items for changes in the fair value of financial
instruments that qualify as hedges. FCX expects to be able to
continue its current accounting for its redeemable preferred
stock indexed to commodities under the provisions of
<PAGE> 6
SFAS 133 that allow such instruments issued before January 1, 1998
to be excluded from those instruments required to be adjusted for
changes in their fair values.
3. INTEREST COST
Interest expense excludes capitalized interest of $1.5 million in
the second quarter of 2000, $0.8 million in the second quarter of
1999, $2.9 million in the first six months of 2000 and $1.3
million in the first six months of 1999.
4. BUSINESS SEGMENTS
FCX has two operating segments: "mining and exploration" and
"smelting and refining." The mining and exploration segment
includes the copper and gold mining operations of PT Freeport
Indonesia in Indonesia and FCX's Indonesian exploration
activities. The smelting and refining segment includes Atlantic
Copper's operations in Spain and PT Freeport Indonesia's equity
investment in PT Smelting in Gresik, Indonesia. The segment data
presented below were prepared on the same basis as the
consolidated FCX financial statements.
<TABLE>
<CAPTION>
Mining Smelting
and and Eliminations FCX
Exploration Refining and Other Total
----------- -------- ------------ --------
(In Thousands)
<S> <C> <C> <C> <C>
Three months ended June 30, 2000
Revenues $259,885a $201,795 $ (64,332)b $397,348
Production and delivery 134,748 191,095 (74,362)b 251,481
Depreciation and amortization 46,123 7,088 1,117 54,328
Exploration expenses 1,487 - 354 1,841
Equity in PT Smelting losses - 5,878c - 5,878
General and administrative expenses 13,081 1,857 1,580 16,518
-------- -------- --------- --------
Operating income (loss) $ 64,446 $ (4,123) $ 6,979 $ 67,302
======== ======== ========= ========
Interest expense, net $ 31,869 $ 6,094 $ 11,850 $ 49,813
======== ======== ========= ========
Provision for income taxes $ 11,634 $ 264 $ 6,354 $ 18,252
======== ======== ========= ========
Three months ended June 30, 1999
Revenues $347,480a $196,025 $ (73,170)b $470,335
Production and delivery 132,204 184,659 (73,452)b 243,411
Depreciation and amortization 63,950 7,317 1,117 72,384
Exploration expenses 2,265 - (107) 2,158
Equity in PT Smelting losses - 4,942c - 4,942
General and administrative expenses 13,111 2,332 1,808 17,251
-------- -------- --------- --------
Operating income (loss) $135,950 $ (3,225) $ (2,536) $130,189
======== ======== ========= ========
Interest expense, net $ 34,469 $ 6,380 $ 7,055 $ 47,904
======== ======== ========= ========
Provision (benefit) for income taxes$ 36,977 $ (703) $ 5,942 $ 42,216
======== ======== ========= ========
Six months ended June 30, 2000
Revenues $567,380a $426,682 $(129,122)b $864,940
Production and delivery 278,488 402,445 (169,380)b 511,553
Depreciation and amortization 101,185 14,268 2,234 117,687
Exploration expenses 3,057 - 752 3,809
Equity in PT Smelting losses - 3,637c - 3,637
General and administrative expenses 30,017 4,174 3,076 37,267
-------- -------- --------- --------
Operating income $154,633 $ 2,158 $ 34,196 $190,987
======== ======== ========= ========
Interest expense, net $ 65,559 $ 12,848 $ 21,341 $ 99,748
======== ======== ========= ========
Provision for income taxes $ 34,756 $ 1,728 $ 22,241 $ 58,725
======== ======== ========= ========
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
Six months ended June 30, 1999
Revenues $664,355a $378,226 $(156,410)b $886,171
Production and delivery 262,524 349,019 (178,245)b 433,298
Depreciation and amortization 126,280 14,611 2,234 143,125
Exploration expenses 4,749 - 357 5,106
Equity in PT Smelting losses - 12,465c - 12,465
General and administrative expenses 24,713 4,491 3,704 32,908
-------- -------- --------- --------
Operating income (loss) $246,089 $ (2,360) $ 15,540 $259,269
======== ======== ========= ========
Interest expense, net $ 71,379 $ 13,416 $ 13,428 $ 98,223
======== ======== ========= ========
Provision (benefit) for income taxes$ 64,555 $ (1,571) $ 19,308 $ 82,292
======== ======== ========= ========
</TABLE>
a. Includes PT Freeport Indonesia sales to PT Smelting totaling
$58.9 million in the second quarter of 2000, $64.3 million
in the second quarter of 1999, $129.4 million in the six-
month period ended June 30, 2000 and $88.5 million in the
six-month period ended June 30, 1999.
b. Represents elimination of intersegment sales from PT
Freeport Indonesia to Atlantic Copper and the change in
deferred profits on intersegment sales remaining in Atlantic
Copper's inventories.
c. Includes effect of changes in deferred intercompany profits
on 25 percent of PT Freeport Indonesia's sales to PT
Smelting that remain in PT Smelting's inventory at period
end, totaling $(0.7) million in the second quarter of 2000,
$1.9 million in the second quarter of 1999, $(4.7) million
in the six-month period ended June 30, 2000 and $4.3 million
in the six-month period ended June 30, 1999.
5. RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the first six months
of 2000 and 1999 was 1.8 to 1 and 2.6 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 1999 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> 8
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, 2000, the related statements of operations for the
three and six-month periods ended June 30, 2000 and 1999, and the
statements of cash flow for the six-month periods ended June 30,
2000 and 1999. 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 financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with auditing standards generally
accepted in the United States, 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 accounting
principles generally accepted in the United States.
We have previously audited, in accordance with auditing
standards generally accepted in the United States, the balance
sheet of Freeport-McMoRan Copper & Gold Inc. as of December 31,
1999, and the related statements of income, stockholders' equity
and cash flow for the year then ended (not presented herein),
and, in our report dated January 18, 2000, 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, 1999, 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 18, 2000
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OVERVIEW
Management's discussion and analysis presented below should be
read in conjunction with our discussion and analysis and our
financial statements contained in our 1999 Annual Report. The
results of operations reported and summarized below are not
necessarily indicative of future operating results.
Summary comparative results for the second-quarter and six-
month periods follow (in millions, except per share amounts):
<TABLE>
<CAPTION>
Second Quarter Six Months
-------------- --------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $397.3 $470.3 $864.9 $886.2
Operating income 67.3 130.2 191.0 259.3
Net income (loss) applicable
to common stock (18.6) 19.0 (9.4) 36.7
Diluted net income (loss)
per share of common stock (.12) .12 (.06) .22
Lower second-quarter and six-month 2000 consolidated
revenues primarily reflect lower sales volumes at PT Freeport
Indonesia resulting from delayed concentrate shipments because of
weather and sea conditions at its port in Irian Jaya (Papua) and
lower production, partially offset by higher copper prices.
Second-quarter 2000 revenues benefited by $6.2 million ($3.0
million to net income/loss or $0.02 per share) from adjustments
to prior period "open" concentrate sales. Second-quarter 1999
revenues benefited by $11.7 million ($5.7 million to net income
or $0.03 per share) from adjustments to prior period open
concentrate sales. Six-month 2000 revenues benefited by $10.5
million ($5.1 million to net income/loss or $0.03 per share) from
adjustments to prior year concentrate sales. Six-month 1999
revenues benefited by $6.2 million ($3.0 million to net income or
$0.02 per share) from adjustments to prior year concentrate
sales.
In late 1999, PT Freeport Indonesia began a program using
forward contracts to fix the prices of a portion of its open
concentrate sales when market conditions are favorable. During
the second quarter of 2000 PT Freeport Indonesia entered into
forward copper sales contracts to fix the price at $0.81 per
pound on approximately 60 percent of its March 31, 2000 open
concentrate sales. During the first quarter of 2000 PT Freeport
Indonesia entered into forward copper sales contracts to fix the
price at $0.85 per pound on approximately 50 percent of its
December 31, 1999 open concentrate sales. We recorded $0.8
million of additional revenues in the second quarter of 2000 and
$6.9 million in the first quarter of 2000 from these forward
sales. These amounts are included in the $6.2 million and $10.5
million benefits mentioned above for the second-quarter and six-
month 2000 periods, respectively. We remain unhedged with
respect to our copper mine production.
Cost of sales for the 2000 periods reflects lower
depreciation and amortization because of lower sales volumes at
PT Freeport Indonesia. Production and delivery costs were higher
because of higher costs at Atlantic Copper resulting from
increased sales volumes and higher copper concentrate costs,
partly offset by the effects of favorable currency exchange
rates. Higher equipment maintenance and fuel costs at PT
Freeport Indonesia also contributed to the increases in
production costs.
PT Freeport Indonesia records its share of PT Smelting's
operating losses under the equity method and eliminates profits
on 25 percent of its copper concentrate sales to PT Smelting
until PT Smelting makes the final sale. General and
administrative expenses in the six-month 2000 period were higher
primarily because of contribution commitments to support small
business development programs within Irian Jaya (Papua) over a
two-year period, partly offset by a reversal of costs for stock
appreciation rights. The higher effective rate for income taxes
in the 2000 periods as compared with the 1999 periods primarily
reflects an increase in net interest costs at the parent company
level, for which there is very little tax benefit, and lower
reported PT Freeport Indonesia taxable income. Lower minority
interest charges in the 2000 periods primarily reflect lower net
income at PT Freeport Indonesia.
<PAGE> 10
RESULTS OF OPERATIONS
We have two operating segments: "mining and exploration" and
"smelting and refining." The mining and exploration segment
includes PT Freeport Indonesia's copper and gold mining
operations in Indonesia and FCX's Indonesian exploration
activities. The smelting and refining segment includes Atlantic
Copper's operations in Spain and PT Freeport Indonesia's 25
percent equity investment in PT Smelting. Summary comparative
operating income (loss) by segment for the second-quarter and
six-month periods follows (in millions):
</TABLE>
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------- ---------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Mining and exploration $ 64.4 $136.0 $154.6 $246.1
Smelting and refining (4.1) (3.2) 2.2 (2.4)
Intercompany eliminations and other 7.0 (2.6) 34.2 15.6
------ ------ ------ ------
FCX operating income a $ 67.3 $130.2 $191.0 $259.3
====== ====== ====== ======
</TABLE>
a. Profits on 100 percent of PT Freeport Indonesia's sales to
Atlantic Copper and 25 percent of PT Freeport Indonesia's
sales to PT Smelting are deferred until the final sale to
third parties has occurred. Changes in the amount of these
deferred profits benefited operating income by $11.2 million
in the second quarter of 2000, $2.3 million in the second
quarter of 1999, $46.5 million in the six-month 2000 period
and $26.5 million in the six-month 1999 period. Our
consolidated quarterly earnings fluctuate depending on the
timing and prices of these sales.
MINING AND EXPLORATION
A summary of increases (decreases) in PT Freeport Indonesia
revenues between the periods follows (in millions):
<TABLE>
<CAPTION>
Second Six
Quarter Months
------- ------
<S> <C> <C>
PT Freeport Indonesia
revenues - 1999 periods $347.5 $664.4
Increases (decreases):
Price realizations:
Copper 27.7 66.9
Gold 2.3 4.6
Sales volumes:
Copper (67.7) (94.3)
Gold (71.7) (116.2)
Adjustments, primarily for
copper pricing on
prior period open sales (0.1) 8.4
Treatment charges, royalties and other 21.9 33.6
------ ------
PT Freeport Indonesia
revenues - 2000 periods $259.9 $567.4
====== ======
</TABLE>
PT Freeport Indonesia's 2000 revenues for both second-
quarter and six-month periods benefited from a 16 percent
increase in copper price realizations compared to the 1999
periods. However, these increased realizations were more than
offset by decreases in copper and gold sales volumes. Second-
quarter 2000 copper sales volumes declined 28 percent and gold
sales volumes declined 44 percent as compared to the 1999 period.
Six-month 2000 copper sales volumes declined 20 percent and gold
sales volumes declined 35 percent as compared to the 1999 period.
The declines in sales volumes primarily relate to delayed
concentrate shipments because of weather and sea conditions at PT
Freeport Indonesia's portsite and lower production. PT Freeport
Indonesia's second-quarter 2000 revenues included net upward
adjustments on prior period open concentrate sales totaling $8.7
million compared with $16.8 million in 1999, an $8.1 million net
reduction from 1999 to 2000. Six-month 2000 revenues included
net upward adjustments on prior year open sales totaling $7.8
million compared with $8.2 million in 1999, a $0.4 million net
reduction from 1999 to 2000. Treatment charges and royalties in
total were lower in 2000 primarily because of lower sales volumes
and because treatment rates were lower than in the prior year.
PT Freeport Indonesia Sales Outlook and Price Protection Program
Net of Rio Tinto plc's interest, PT Freeport Indonesia's share of
sales for the third quarter of 2000 is projected to approximate
380 million pounds of copper and 460,000 ounces of gold. PT
Freeport Indonesia's share of sales for 2000 is projected to
approximate 1.4 billion pounds of copper and 1.9 million ounces
of gold as ore grades are expected to improve significantly in
the second half of 2000. Projected
<PAGE> 11
2000 copper and gold sales
reflect the expectation of slightly higher average mill
throughput rates than in 1999, offset by lower average ore grades
and the impact of the specified sharing arrangement with Rio
Tinto, which will result in a smaller proportion of production
attributed to PT Freeport Indonesia compared to 1999.
At June 30, 2000, we had consolidated copper sales totaling
159.2 million pounds recorded at an average price of $0.79 per
pound remaining to be finally priced. Approximately 90 percent of
these open pounds are expected to be finally priced during the
third quarter of 2000 with the remaining pounds to be priced
during the fourth quarter of 2000. A one-cent movement in the
average price used for these open pounds would have an
approximate $0.8 million impact on our 2000 net income.
In early July 2000, PT Freeport Indonesia entered into
forward copper sales contracts to fix the price at $0.82 per
pound on approximately 60 percent of its June 30, 2000 open
pounds.
<TABLE>
<CAPTION>
PT Freeport Indonesia Operating Results
Second Quarter Six Months
----------------- ------------------
2000 1999 2000 1999
------- ------- ------- ---------
<S> <C> <C> <C> <C>
PT Freeport Indonesia, Net of Rio Tinto's Interest
Copper
Production (000s of
recoverable pounds) 287,300 358,900 595,800 713,200
Sales (000s of
recoverable pounds) 256,200 355,300 562,100 701,600
Average realized price $.79 $.68 $.79 $.68
Gold
Production (recoverable ounces) 358,800 590,800 806,100 1,200,600
Sales (recoverable ounces) 330,500 593,900 774,700 1,193,300
Average realized price $279.26 $272.17 $283.70 $277.71
Gross profit per pound of copper (cents):
Average realized price 79.1 68.3 79.5 67.6
----- ----- ----- -----
Production costs:
Site production and delivery 51.1 37.1 49.1 37.3
Gold and silver credits (37.1) (46.5) (40.5) (48.3)
Treatment charges 18.1 19.0 18.0 19.1
Royalty on metals 1.3 1.4 1.3 1.5
----- ----- ----- -----
Cash production costs 33.4 11.0 27.9 9.6
Depreciation and amortization 18.0 18.0 18.0 18.0
----- ----- ----- -----
Total production costs 51.4 29.0 45.9 27.6
----- ----- ----- -----
Adjustments, primarily for copper
pricing on prior year sales 4.6 3.4 0.3 (1.0)
----- ----- ----- -----
Gross profit per pound of copper 32.3 42.7 33.9 39.0
===== ===== ===== =====
PT Freeport Indonesia, 100% Operating Statistics
Ore milled (metric tons per
day, MTPD) 218,500 216,800 225,000 219,500
Copper grade (percent) .94 1.16 .94 1.15
Gold grade (grams per metric ton) .86 1.39 .93 1.35
Recovery rate (percent)
Copper 86.4 84.6 86.1 83.5
Gold 84.1 82.7 84.5 83.7
Copper
Production (000s of
recoverable pounds) 336,500 412,400 697,200 809,100
Sales (000s of
recoverable pounds) 300,100 407,600 658,200 798,600
Gold
Production (recoverable ounces) 442,900 739,300 999,900 1,470,700
Sales (recoverable ounces) 407,600 740,800 958,600 1,463,700
</TABLE>
PT Freeport Indonesia's mill throughput averaged 218,500
MTPD for the second quarter of 2000. As expected, higher
throughput and recovery rates in the 2000 periods were offset by
lower ore grades. Although average mill throughput rates for the
2000 periods were higher as compared to the 1999 periods, the
second-quarter 2000 rate declined from the first-quarter 2000
rate (231,600 MTPD) because of
<PAGE> 12
temporary ore delivery bottlenecks
during the quarter. In May 2000, PT Freeport Indonesia, in
consultation with the Government of Indonesia, voluntarily agreed
to temporarily limit its mill throughput rates from Grasberg open
pit production (see "Environmental Matters"). Mill throughput
rates will vary in the future based on the characteristics of the
ore being processed as PT Freeport Indonesia manages its
operations to optimize metal production.
Copper and gold production volumes were lower in the 2000
periods as compared to the 1999 periods because of 1) changes in
the sequence of mining material in the open pit which resulted in
the deferral of high grade ore to the second half of 2000 and 2)
reduced ore throughput rates.
Unit site production and delivery costs in the second
quarter of 2000 averaged $0.51 per pound of copper, $0.14 per
pound higher than the $0.37 reported in the second quarter of
1999. The recent overburden stockpile slippage incident (see
"Environmental Matters"), lower ore grades, and higher
maintenance and fuel costs contributed to higher unit costs. The
lower grades and higher costs also affected unit site production
and delivery costs for the first six months of 2000 resulting in
a $0.12 per pound increase as compared to the 1999 period. Gold
credits in the 2000 periods, $0.37 per pound in the second
quarter and $0.41 per pound in the six-month period, were lower
as compared with the 1999 period amounts, $0.47 per pound in the
second quarter and $0.48 per pound in the six-month period,
because of lower gold ore grades. Unit treatment charges were
lower in the 2000 periods because of related market conditions,
which benefited producers.
We conduct the majority of our operations in Indonesia and
Spain where our functional currency is the U.S. dollar. All of
our reevenues are denominated in U.S. dollass; however, some costs
and certain asseet and liability accounts are denominated in
Indonesian rupiah, Australian dollars or Spanish pesetas.
Generally, our results are positively affected when the U.S.
dollar strengthens against these foreign currencies and adversely
affected when the U.S. dollar weakens against these foreign
currencies.
Since 1997, the Indonesian rupiah and the U.S. dollar
exchange rate has been extremely volatile. The rupiah - U.S.
dollar exchange rates were 6,970 rupiah to one U.S. dollar at
December 31, 1999, 7,440 rupiah to one U.S. dollar at March 31,
2000, 8,725 rupiah to one U.S. dollar at June 30, 2000 and 8,875
rupiah to one U.S. dollar at July 24, 2000. Assuming estimated
aggregate 2000 rupiah payments of 800 billion and a June 30, 2000
exchange rate of 8,725 rupiah to one U.S. dollar, a one-thousand-
rupiah increase in the exchange rate would result in an
approximate $9 million decrease in annual operating costs. A one-
thousand-rupiah decrease in the exchange rate would result in an
approximate $12 million increase in annual operating costs. PT
Freeport Indonesia recorded aggregate gains (losses) totaling
$0.6 million during the second quarter of 2000, $(0.2) million in
the second quarter of 1999, $0.4 million in the six-month 2000
period and $(0.9) million during the six-month 1999 period
related to its rupiah-denominated net assets. Operationally PT
Freeport Indonesia has benefited from a weakened rupiah currency,
primarily through lower labor costs.
During 1998, PT Freeport Indonesia began a currency hedging
program to reduce its exposure to changes in the Indonesian
rupiah and Australian dollar by entering into foreign currency
forward contracts to hedge a portion of its anticipated payments
in these currencies. The last of these contracts expired in
September 1999. PT Freeport Indonesia recorded aggregate gains
to production costs totaling $3.2 million in the second quarter
of 1999 and $4.1 million in the first six months of 1999 related
to these contracts.
During the second quarter of 2000, PT Freeport Indonesia
entered into foreign currency forward contracts to hedge a
portion of its aggregate anticipated Australian dollar payments
for the remainder of 2000 and for 2001. As of June 30, 2000,
these contracts hedge 174.0 million of Australian dollar payments
through December 2001, or approximately 80 percent of aggregate
projected Australian dollar payments for the remainder of 2000
and 50 percent of aggregate projected 2001 Australian dollar
payments at an average exchange rate of $0.59 to one Australian
dollar. PT Freeport Indonesia recorded aggregate gains to
production costs during the second quarter of 2000 totaling $2.3
million related to these contracts.
In July 2000, PT Freeport Indonesia entered into foreign
currency forward contracts to hedge a portion of its aggregate
projected April through July 2001 Indonesian rupiah payments.
The contracts hedge 60 billion of rupiah payments during the
period covered at an exchange rate of 10,000 rupiah to one U.S.
dollar.
<PAGE> 13
Current accounting rules require us to record changes in
market value on all of our open foreign currency contracts
designated as hedges of anticipated payments to net income each
reporting period. Effective January 2001, we will be able to
elect to change our accounting method for foreign currency
contracts and thereby record gains/losses on such contracts,
which cover future periods, to other comprehensive income (i.e. a
component of equity) instead of net income if the contracts
qualify for hedge accounting treatment under recently promulgated
accounting standards.
Exploration Activities
Our exploration activities are primarily focused on prospects in
Irian Jaya (Papua), Indonesia. Rio Tinto shares in 40 percent of
our exploration costs and results in Irian Jaya (Papua).
Exploration drilling within PT Freeport Indonesia's Block A
area continues to focus on converting resources to reserves at
Kucing Liar, Deep Grasberg, the Deep Ore Zone and a newly defined
surface target called Ertsberg East. Drilling between Deep
Grasberg and Kucing Liar is proceeding with significant
mineralized intervals intersected on the south side of the
present Grasberg block cave reserve. Extensions of the Deep Ore
Zone continue to be confirmed by recent drilling, and the
continuity of mineralization adjacent to the existing block cave
ore reserve is being confirmed. Drills have been moved to test
mineralization in the Ertsberg East area for possible open-pit
operations. Several other prospects are being reviewed in Block
A.
Field exploration activities outside of our current mining
operations area have been suspended pending the resolution of a
number of regulatory and local community issues.
SMELTING AND REFINING
Atlantic Copper Operating Results
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------- ----------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues (in millions) $201.8 $196.0 $426.7 $378.2
Operating income (in millions) $1.8 $1.7 $5.8 $10.1
Concentrate treated (metric tons) 238,500 225,100 483,200 463,700
Anode production (000s of pounds) 167,800 153,700 346,100 317,700
Cathode and wire rod sales (000s of pounds) 147,100 138,100 284,200 276,500
Gold sales in anodes and slimes (ounces) 173,200 265,000 384,400 451,000
</TABLE>
Atlantic Copper reported higher revenues in the 2000 periods
as compared with the 1999 periods primarily because of higher
copper prices and higher cathode and wire rod sales volumes.
Second-quarter 2000 operating income was basically unchanged
compared with the 1999 quarter. Cathode cash production costs of
$0.12 per pound in the second-quarter and six-month 2000 periods
were lower than the $0.15 per pound reported in the 1999 quarter
and $0.14 per pound reported in the 1999 six-month period
primarily because of higher production volumes and favorable
currency exchange rates. The benefits from lower cathode cash
production costs were essentially offset by lower treatment and
refining rates ($0.17 per pound in the second quarter of 2000
compared with $0.19 per pound in the second quarter of 1999).
Six-month 2000 operating income declined by $4.3 million compared
with the six-month 1999 period primarily because of lower
treatment charges ($0.17 per pound in 2000 and $0.21 per pound in
1999). Lower treatment charges, which negatively affect Atlantic
Copper, benefit PT Freeport Indonesia as discussed above.
A portion of Atlantic Copper's operating costs and certain
Atlantic Copper asset and liability accounts are denominated in
Spanish pesetas. Based on estimated 2000 peseta payments of 15
billion and a June 30, 2000 exchange rate of 174.1 pesetas to one
U.S. dollar, a ten-peseta increase or decrease in the exchange
rate could result in a corresponding approximate $5 million
change in annual operating costs, before any hedging effects.
Atlantic Copper had peseta-denominated net monetary liabilities
at June 30, 2000 totaling $80.6 million recorded at an exchange
rate of 174.1 pesetas to one U.S. dollar. Adjustments to these
net liabilities to reflect changes in the exchange rate are
recorded as currency transaction gains or losses in other income
and totaled gains (losses) of $(0.3) million in the second
quarter of 2000, $3.2 million in the second quarter of 1999, $2.1
million in the first six months of 2000 and $9.6 million in the
first six months of 1999.
<PAGE> 14
Atlantic Copper has a currency hedging program using foreign
currency forward contracts to reduce its expoossure to changes in
the U.S. dollar and Spanish peseta exchange rate. At June 30,
2000, Atlantic Copper had contracts to purchase 35.2 billion
Spanish pesetas at an average exchange rate of 160.3 pesetas to
one U.S. dollar through December 2003. These contracts currently
hedge approximately 75 percent of Atlantic Copper's projected
2000 net peseta cash outflows and approximately 60 percent of
Atlantic Copper's projected 2001 through 2003 net peseta cash
outflows. In addition to the currency transaction gains noted
above, Atlantic Copper recorded losses to other income related to
its forward currency contracts totaling $1.8 million in the
second quarter of 2000, $2.5 million in the second quarter of
1999, $7.8 million in the first six months of 2000 and $9.0
million in the first six months of 1999. Current accounting
rules require us to record changes in market value on all of our
open foreign currency contracts designated as hedges of
anticipated payments to net income each reporting period.
Effective January 2001, we will be able to elect to change our
accounting method for foreign currency contracts and thereby
record gains/losses on such contracts, which cover future
periods, to other comprehensive income (i.e. a component of
equity) instead of net income if the contracts qualify for hedge
accounting treatment under recently promulgated accounting
standards.
PT Smelting Operating Results
PT Freeport Indonesia accounts for its 25 percent interest in PT
Smelting under the equity method. PT Smelting temporarily shut
down its smelter, as planned, at the end of March 2000 for the
tie-in of a new third anode furnace as well as for planned
maintenance. The smelter restarted at the end of April and
remains on schedule to operate at full design capacity of 200,000
metric tons of copper per year by the end of 2000. Our revenues
include $58.9 million in the second quarter of 2000, $64.3
million in the second quarter of 1999, $129.4 million in the
first six months of 2000 and $88.5 million in the first six
months of 1999 from PT Freeport Indonesia sales to PT Smelting.
PT Freeport Indonesia's share of PT Smelting's net operating
losses, which are recorded as Equity in PT Smelting losses in the
Statements of Operations, totaled $6.6 million in the second
quarter of 2000, $3.0 million in the second quarter of 1999, $8.3
million in the first six months of 2000 and $8.2 million in the
first six months of 1999. We also defer recognizing profits on
25 percent of PT Freeport Indonesia sales to PT Smelting, for
which the final sale has not occurred. Changes in these deferred
amounts resulted in additional income (losses) of $0.7 million in
the second quarter of 2000, $(1.9) million in the second quarter
of 1999, $4.7 million in the first six months of 2000 and a
$(4.3) million in the first six months of 1999. Changes in these
deferred profits are recorded as part of Equity in PT Smelting
losses in the Statements of Operations.
OTHER FINANCIAL RESULTS
The FCX/Rio Tinto joint ventures incurred exploration costs of
$2.7 million in the 2000 second quarter, $3.9 million in the 1999
second quarter, $5.5 million in the 2000 six-month period and
$9.2 million in the 1999 six-month period. Substantially all
costs in the joint venture areas are now being shared 60 percent
by us and 40 percent by Rio Tinto.
Second-quarter 2000 general and administrative expenses of
$16.5 million were lower than the $17.3 million reported in the
1999 quarter mostly because the 1999 quarter included charges
totaling $1.7 million for an early retirement program and for
costs of stock appreciation rights because of an increase in our
stock price during the 1999 quarter. Six-month 2000 general and
administrative expenses were $4.4 million higher compared to the
1999 period primarily because of a $6.0 million charge for
contribution commitments to support small business development
programs within Irian Jaya (Papua) that will be paid over a two-
year period. The six-month 2000 period also included an $0.8
million charge for personnel severance costs, offset by a $1.5
million reversal of costs for stock appreciation rights because
of a decrease in our common stock price.
Our total interest costs (before capitalization) were $51.4
million for the 2000 quarter, $48.7 million in the 1999 quarter,
$102.6 million in the first six months of 2000 and $99.5 million
in the first six months of 1999. Higher interest rates in the
2000 periods were only partially offset by lower debt levels. We
capitalized $1.5 million of interest costs in the second quarter
of 2000, $0.8 million in the second quarter of 1999, $2.9 million
in the first six months of 2000 and $1.3 million in the first six
months of 1999.
Our effective tax rate was 71 percent for the first six
months of 2000 and 52 percent for the first six months of 1999.
The combination of lower reported PT Freeport Indonesia taxable
income and higher parent company costs in the first six months of
2000 caused the majority of the increase in the effective
<PAGE> 15
tax rate compared with the 1999 period. PT Freeport Indonesia's
Contract of Work provides a 35 percent income tax rate and a 10
percent withholding on dividends paid to FCX by PT Freeport
Indonesia and on interest for debt incurred after the signing of
the Contract of Work. No income taxes are recorded at Atlantic
Copper, which is subject to taxation in Spain, because it has not
generated significant taxable income in recent years and has a
substantial tax loss carryforward for which no financial
statement benefit has been provided. Additionally, our parent
company costs generate only a small U.S. tax benefit because our
parent company has no U.S.-sourced income.
CAPITAL RESOURCES AND LIQUIDITY
Our primary sources of cash are operating cash flows and
borrowings, while our primary uses of cash include capital
expenditures, repayments of debt, dividends and purchases of our
common stock. Net cash provided by operating activities was
$228.2 million for the first six months of 2000, compared with
$278.6 million for the 1999 period. Net cash used in investing
activities totaled $103.4 million in the 2000 period, compared
with $77.4 million in the 1999 period, primarily for PT Freeport
Indonesia capital expenditures. Net cash used in financing
activities totaled $125.7 million in 2000 compared with $202.5
million in 1999.
Operating Activities
Lower net income and non-cash charges were only partly offset by
working capital changes in the first six months of 2000,
resulting in a decrease in operating cash flow of $50.3 million,
to $228.2 million, from the year-ago period. The net decrease in
working capital for the first six months of 2000 primarily
reflects an increase in accounts payable and accrued liabilities
and the collection of accounts receivable. The net decrease in
working capital for the first six months of 1999 primarily
reflects the collection of accounts receivable partly offset by
an increase in inventories.
Investing Activities
Our six-month 2000 capital expenditures were higher compared to
the 1999 period primarily because of payments for deferred
purchases of mine equipment. Our capital expenditures for 2000
are expected to total approximately $200 million, including $35
million for underground mine development, primarily the Deep Ore
Zone, which is expected to start production later this year and
ramp up to full production of 25,000 metric tons of ore per day
by 2004. Funding is expected to be provided by operating cash
flow and PT Freeport Indonesia's bank credit facilities $133.0
million commitment available at July 24, 2000).
Atlantic Copper has an unfunded contractual obligation
($62.2 million at Junee 30, 2000) to supleement amounts paid to
retired employeess. Spanish legislation requires that Atlantic
Copper fund this obligation over a multi-year period commencing
in 2001. Atlantic Copper is reviewing its options for complying
with Spanish laws.
Financing Activities
Repayments to Rio Tinto totaled $60.6 million in the first six
months of 2000 and $107.5 million in the first six months of 1999
from PT Freeport Indonesia's share of incremental cash flow
attributable to the fourth concentrator mill expansion. After
less than 2 / years, PT Freeport Indonesia has fully repaid the
$450 million loan from Rio Tinto, which funded PT Freeport
Indonesia's share of the fourth concentrator mill expansion. PT
Freeport Indonesia's 60 percent share of incremental cash flows
from the expansion is now available for PT Freeport Indonesia's
general uses . Net borrowings of other debt totaled $118.6
million in the first six months of 2000, compared with net
repayments of $51.2 million in the first six months of 1999.
In 1998, PT Freeport Indonesia reacquired for $30 million an
aggregate one-third interest in certain infrastructure asset
joint ventures owned by PT AlatieF Nusakarya Corporation, an
Indonesian investor. The joint ventures had purchased $270.0
million of infrastructure assets from PT Freeport Indonesia
during the period from December 1993 to March 1997, and PT
Freeport Indonesia had sold its one-third interest in the joint
ventures to PT AlatieF in March 1997. In April 2000, PT Freeport
Indonesia paid $12.5 million to increase its aggregate ownership
interest in the joint ventures to 47 percent. We are
consolidating the joint ventures for financial reporting purposes
because the agreements provide the joint venture partners with a
guaranteed annual return on their investment. PT Freeport
Indonesia expects to purchase the remaining 53 percent interest
in the joint ventures with an additional cash payment and the
assumption of certain debt in the third quarter of 2000. PT
Freeport Indonesia's increased ownership in the joint ventures
will benefit net income because it will eliminate PT Freeport
Indonesia's obligation to pay a guaranteed 15 percent after-tax
return to the previous owners in the joint ventures.
<PAGE> 16
In June 2000, our Board of Directors authorized a 20 million
share increase in our open market share repurchase program,
bringing the total shares approved for purchase under this
program to 80 million. During the first six months of 2000, we
acquired 10.6 million of our shares for $129.2 million (an
average of $12.15 per share). During the first six months of
1999, we acquired 0.8 million of our shares for $7.8 million (an
average of $9.20 per share). From inception of this program in
July 1995 through July 24, 2000, we have purchased a total of
64.3 million shares for $1.2 billion (an average of $18.49 per
share) and approximately 15.7 million shares remain available
under the program. The timing of future purchases is dependent
upon many factors, including the price of common shares, our
business and financial position, and general economic and market
conditions.
In response to volatile copper and gold markets, in early
1998 we began an effort to reduce our costs and enhance our
production. Our overall strategy remains focused on optimizing
the performance of our expanded milling facilities so that we can
achieve higher sales levels at low costs. PT Freeport Indonesia
is implementing a number of initiatives in 2000 designed to
further improve operating processes and reduce costs. We believe
we have the overall financial flexibility to continue to invest
in operations and maintain our exploration program while still
retaining our options to reduce our overall debt levels or
repurchase FCX shares. As discussed above, our credit facility
availability at July 24, 2000 was $133.0 million. We believe we
can continue to generate sufficient cash flows from operations to
meet our planned capital requirements without obtaining new
capital, barring any unforeseen events. However, because of the
economic and political issues affecting Indonesia and the
volatility of copper and gold prices, our ability to obtain
capital is limited at this time, and the cost of new capital, if
available, would be high.
In 1997, we guaranteed a $254.0 million loan from a
commercial bank to PT Nusamba Mineral Industri, an Indonesian
company. Nusamba used the funds to purchase from a third party
for $315 million approximately 51 percent of the capital stock of
PT Indocopper Investama Corporation, a company whose only
significant asset is 9.4 percent of PT Freeport Indonesia's
stock. We own the remaining 49 percent of PT Indocopper
Investama. The loan is secured by a pledge of the PT Indocopper
Investama stock owned by Nusamba and is due March 2002. The
purchase price was negotiated based primarily on FCX's market
value at the time of the transaction. We also agreed to lend to
Nusamba any amounts necessary to cover shortfalls between the
interest payments on the loan and the dividends received by
Nusamba on the PT Indocopper Investama stock. At June 30, 2000,
we had loaned $54.0 million to Nusamba for this purpose. The
amount of any future shortfalls will depend primarily on the
level of PT Freeport Indonesia's dividends to PT Indocopper
Investama. Once the total of the guaranteed loan and the amounts
we have subsequently loaned to Nusamba reach the original
purchase price ($315 million), we expect to begin expensing any
additional amounts we loan to Nusamba.
The effect of the current economic and political situation
in Indonesia on Indonesian companies, including Nusamba, is
uncertain. Should these uncertainties result in our being
required to honor our guarantee of Nusamba's commercial bank
loan, we would anticipate negotiating satisfaction of the amounts
due with the bank on mutually acceptable terms. However, any
such terms likely would be restrictive and costly, given
commercial lending markets' assessment of Indonesian creditors.
DEVELOPMENTS IN INDONESIA
The Indonesian government continues to try to address the
important political and economic issues it faces.
Regarding economic matters, political and social issues
facing Indonesia continue to strain the President's and
government's efforts to achieve economic recovery in Indonesia,
including its widespread provinces. After trading in a range of
7,000-8,000 rupiah to one U.S. dollar during the first quarter of
2000, in early July 2000 the Indonesian currency weakened to a
16-month low, approximating 9,500 rupiah to one U.S. dollar. The
Indonesian government continues to face the important tasks of
restructuring the country's debt and the banking system.
President Wahid and other government representatives also have
made significant efforts to encourage renewal of foreign
investment in Indonesia.
With respect to political matters, the government is
developing and implementing new laws granting greater autonomy to
the provincial governments, while continuing to preserve the
central government's sovereignty. Although some in the Indonesian
media and others have called for re-negotiation of existing
contracts and agreements between the central government and
foreign-owned companies, including PT Freeport Indonesia's
Contract of Work, President Wahid and other senior
<PAGE> 17
government officials have made numerous public statements that existing
contracts would be honored and will remain unaffected by any
changes in provincial autonomy.
While the Indonesian government permitted the Papuans to
meet to voice their aspiattiions, the President and other
Indonesian leaders have made it clear that Irian Jaya (Papua)
must remain part of Indonesia. Moreover, the U.S. Government,
Japan, Australia and the European Union, have stated that they do
not support Independence for Irian Jaya (Papua) and strongly
support the territorial integrity of Indonesia. Key Papuan
leaders have said independence should be regarded as a long-term
goal and that they should pursue that goal peacefully. We regard
the statement of the Papuan Congress to be part of the ongoing
dialogue between Jakarta and the Papuans over greater autonomy
and thus is indicative of Indonesia's new democratic form of
government.
Recently, certain non-governmental organizations have
criticized PT Freeport Indonesia's independent environmental
audit by Montgomery Watson, which was publicly released in
December 1999. In response to this criticism, the Indonesian
environmental minister has requested clarification of several of
the audit's findings, which we have provided. Additionally, the
Indonesian government has formed a "fact-finding" team to review
these and other criticisms. This team consists of members of the
Department of Mines and Energy (DOME), the Department of Finance,
the environmental ministry and representatives of provincial and
local governments in Irian Jaya (Papua). PT Freeport Indonesia
welcomes this team and is cooperating fully in this effort, as we
believe it represents an opportunity for responsible members of
the government to develop an objective, first-hand understanding
of our operations.
ENVIRONMENTAL MATTERS
On May 4, 2000, an incident at the Wanagon overburden stockpile
involving the slippage of overburden caused a wave of water and
material to overtop the Wanagon basin spillway and enter the
nearby Wanagon valley. Four employees of a contractor of PT
Freeport Indonesia working in the area perished in the incident.
All other workers in the area were located and were unharmed.
No injuries were reported at Banti, the nearest village inhabited
by local people, located approximately 12 kilometers downstream
of the Wanagon basin. PT Freeport Indonesia charged $2.9 million
to second-quarter production costs primarily for assets lost as a
result of the incident.
Daily rainfall amounts for the four days preceding the
incident were about 40 millimeters, nearly five times normal
levels, and are believed to have contributed to the slippage. PT
Freeport Indonesia environmental specialists have been taking
water samples in the Wanagon River and other locations downstream
to assess the environmental impact. Based on the analysis to-
date, no threat to human health and no long-term environmental
impacts have been identified as a result of the overflow event.
The material in the Wanagon basin includes the byproduct of
treating acid rock drainage from the overburden in the basin with
lime as approved by the DOME in PT Freeport Indonesia's mine
plan. The overflow from the basin consisted of this material
together with crushed overburden, which is natural rock, and
other natural sediments.
PT Freeport Indonesia notified the appropriate officials of
the DOME and BAPEDAL, Indonesia's Environmental Ministry, and
cooperated with a joint team of DOME and BAPEDAL representatives
who have studied the incident. Shortly after the incident, the
DOME informed PT Freeport Indonesia that it must suspend
stockpiling overburden in the immediate area affected by the
slippage. PT Freeport Indonesia had not stockpiled overburden in
the Wanagon area since the end of March 2000. On May 24, 2000, PT
Freeport Indonesia, in consultation with the Government of
Indonesia, voluntarily agreed to temporarily limit production at
its Grasberg open pit to an average of no more than 200,000 MTPD
pending the conclusion of technical studies and recommendations
for safe re-use of the Wanagon basin.
In early July 2000, PT Freeport Indonesia began implementing
an overburden stockpile stabilization plan at the Wanagon
overburden stockpile. The plan, approved by the DOME, involves
the placement of eight million metric tons of overburden within a
sixty-day period. During the sixty-day period, PT Freeport
Indonesia will submit a comprehensive report to DOME on its
overburden stockpile plan for the Wanagon basin area. After
submitting its report to DOME, PT Freeport Indonesia expects to
resume normal overburden placement activities, with certain
modifications based on studies following the May 4th incident.
<PAGE> 18
CAUTIONARY STATEMENT
Our discussion and analysis contains forward-looking statements
in which we discuss factors we believe may affect our performance
in the future. Forward-looking statements are all statements
other than historical facts, such as those regarding anticipated
sales volumes, ore grades, commodity prices, capital
expenditures, debt repayments, political, economic and social
conditions in our areas of operations, treatment charge rates,
exploration efforts and results, the availability of financing
and PT Smelting operating levels. We caution you that these
statements are not guarantees of future performance, and our
actual results may differ materially from those projected,
anticipated or assumed in the forward-looking statements.
Important factors that can cause our actual results to differ
materially from those anticipated in the forward-looking
statements include unanticipated declines in the average grades
of ore mined, unanticipated milling and other processing
problems, labor relations, weather conditions, the speculative
nature of mineral exploration, fluctuations in interest rates and
other adverse financial market conditions, and other factors
described in more detail under the heading "Cautionary
Statements" in our Form 10-K for the year ended December 31,
1999.
<PAGE> 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Yosefa Alomang v. Freeport-McMoRan Inc. and Freeport-McMoRan
Copper & Gold Inc., Civ. No. 96-9962 (Orleans Civ. Dist. Ct. La.
Filed June 19, 1996). The plaintiff alleged environmental, human
rights and social/cultural violations in Indonesia and seeks
unspecified monetary damages and other equitable relief. In
addition, the plaintiff alleged that she was a third-party
beneficiary under the 1967 and the 1991 Contracts of Work, and
claimed that she had not received fair compensation for her land
rights.
On March 21, 2000 the trial court dismissed the entire case
with prejudice, granting FCX's exception of no cause of action.
On March 24, 2000, the plaintiff filed a petition of appeal to
the Louisiana Fourth Circuit. FCX will continue to defend this
action vigorously.
In addition to the foregoing proceedings, FCX may be from
time to time involved in various legal proceedings of a character
normally incident to the ordinary course of its business.
Management believes that potential liability in any proceedings
would not have a material adverse effect on the financial
condition or results of operations of FCX. FCX maintains
liability insurance to cover some, but not all, potential
liabilities normally incident to the ordinary course of its
business as well as other insurance coverage customary in its
business, with coverage limits as management deems prudent.
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 May 4, 2000, May 24, 2000 and June 23,
2000 reporting information under items 5 and 7.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
FREEPORT-McMoRan COPPER & GOLD INC.
By: \s\ C. Donald Whitmire, Jr.
--------------------------------
C. Donald Whitmire, Jr.
Vice President and
Controller-Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: August 2, 2000
<PAGE> 20
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Exhibit
Number Description
----- -----------
2.1 Agreement, dated as of May 2, 1995 by and between Freeport-
McMoRan Inc. (FTX) and FCX and The RTZ Corporation PLC, RTZ
Indonesia Limited, and RTZ America, Inc. (the Rio Tinto
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 Rio Tinto 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 Amended By-Laws of FCX dated as of March 12, 1999.
Incorporated by reference to Exhibit 3.2 to the Annual
Report on Form 10-K of FCX for the fiscal year ended
December 31, 1998 (the 1998 FCX 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,
ChaseMellon Shareholder Services, L.L.C. (ChaseMellon), 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,
ChaseMellon, 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,
ChaseMellon, 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).
<PAGE> E-1
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Exhibit
Number Description
----- -----------
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.
4.11 Deposit Agreement dated as of July 25, 1994 among FCX,
ChaseMellon, 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 Freeport Indonesia Credit Agreement)
among PT Freeport Indonesia, FCX, the several financial
institutions that are parties thereto, First Trust of New
York, National Association, as PT Freeport Indonesia
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 Freeport
Indonesia Credit Agreement among PT Freeport Indonesia, FCX,
the several financial institutions that are parties thereto,
First Trust of New York, National Association, as PT
Freeport Indonesia 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 Freeport
Indonesia Credit Agreement among PT Freeport Indonesia, FCX,
the several financial institutions that are parties thereto,
First Trust of New York, National Association, as PT
Freeport Indonesia 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 Amendment dated as of March 7, 1997 to the PT Freeport
Indonesia Credit Agreement among PT Freeport Indonesia, FCX,
the several financial institutions that are parties thereto,
First Trust of New York, National Association, as PT
Freeport Indonesia Trustee, The Chase Manhattan Bank, as
administrative agent, security agent and JAA security agent,
and The Chase Manhattan Bank, as dooccumentary agent.
Incorporated by reference to Exhibit 4.16 to the Annual
Report of FCX on Form 10-K for the year ended December 31,
1997 (the FCX 1997 Form 10-K).
4.17 Amendment dated as of July 24, 1997 to the PT Freeport
Indonesia Credit Agreement among PT Freeport Indonesia, FCX,
the several financial institutions that are parties thereto,
First Trust of New York, National Association, as PT
Freeport Indonesia Trustee, The Chase Manhattan Bank, as
administrative agent, security agent and JAA security agent,
and The Chase Manhattan Bank, as documentary agent.
Incorporated by reference to Exhibit 4.17 to the FCX 1997
Form 10-K.
<PAGE> E-2
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Exhibit
Number Description
----- -----------
4.18 $200 million Credit Agreement dated as of June 30, 1995 (the
CDF) among PT Freeport Indonesia, FCX, the several financial
institutions that are parties thereto, First Trust of New
York, National Association, as PT Freeport Indonesia
Trustee, Chemical Bank, as administrative agent and FCX
collateral agent, 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.
4.19 Amendment dated as of July 15, 1996 to the CDF among PT
Freeport Indonesia, FCX, the several financial institutions
that are parties thereto, First Trust of New York, National
Association, as PT Freeport Indonesia 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.
4.20 Amendment dated as of October 9, 1996 to the CDF among PT
Freeport Indonesia, FCX, the several financial institutions
that are parties thereto, First Trust of New York, National
Association, as PT Freeport Indonesia 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.
4.21 Amendment dated as of March 7, 1997 to the CDF among PT
Freeport Indonesia, FCX, the several financial institutions
that are parties thereto, First Trust of New York, National
Association, as PT Freeport Indonesia Trustee, The Chase
Manhattan Bank, as administrative agent, security agent and
JAA security agent, and The Chase Manhattan Bank, as
documentary agent. Incorporated by reference to Exhibit
4.21 to the FCX 1997 Form 10-K.
4.22 Amendment dated as of July 24, 1997 to the CDF among PT
Freeport Indonesia, FCX, the several financial institutions
that are parties thereto, First Trust of New York, National
Association, as PT Freeport Indonesia Trustee, The Chase
Manhattan Bank, as administrative agent, security agent and
JAA security agent, and The Chase Manhattan Bank, as
documentary agent. Incorporated by reference to Exhibit
4.22 to the FCX 1997 Form 10-K.
4.23 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.
4.24 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.
4.25 Certificate of Designations of Series A Participating
Cumulative Preferred stock of FCX. Incorporated by
reference to Exhibit 4.25 to the Quarterly Report on Form
10-Q of FCX for the quarter ended March 31, 2000 (the FCX
2000 First Quarter Form 10-Q).
4.26 Rights Agreement dated as of May 3, 2000 between FCX and
Chasemellon Shareholder Services, L.L.C., as Rights Agent.
Incorporated by reference to Exhibit 4.26 to the FCX 2000
First Quarter Form 10-Q.
10.1 Contract of Work dated December 30, 1991 between the
Government of the Republic of Indonesia and PT Freeport
Indonesia. Incorporated by reference to Exhibit 10.2 to the
FCX 1995 Form 10-K.
10.2 Contract of Work dated August 15, 1994 between the
Government of the Republic of Indonesia and PT Irja Eastern
Minerals Corporation. Incorporated by reference to Exhibit
10.2 to the FCX 1995 Form 10-K.
<PAGE> E-3
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Exhibit
Number Description
----- -----------
10.3 Agreement dated as of October 11, 1996 to Amend and Restate
Trust Agreement among PT Freeport Indonesia, FCX, the RTZ
Corporation PLC, P.T. RTZ-CRA Indonesia, RTZ Indonesian
Finance Limited and First Trust of New York, National
Association, and The Chase Manhattan Bank, as Administrative
Agent, JAA Security Agent and Security Agent. Incorporated
by reference to Exhibit 10.3 to the FCX November 13, 1996
Form 8-K.
10.4 Credit Agreement dated October 11, 1996 between PT Freeport
Indonesia and RTZ Indonesian Finance Limited. Incorporated
by reference to Exhibit 10.4 to the FCX November 13, 1996
Form 8-K.
10.5 Participation Agreement dated as of October 11, 1996 between
PT Freeport Indonesia and P.T. RTZ-CRA Indonesia with
respect to a certain contract of work. Incorporated by
reference to Exhibit 10.5 to the FCX November 13, 1996 Form 8-K.
10.6 Second Amended and Restated Joint Venture and Shareholders'
Agreement dated as of December 11, 1996 among Mitsubishi
Materials Corporation, Nippon Mining and Metals Company,
Limited and PT Freeport Indonesia. Incorporated by
reference to Exhibit 10.3 of the FCX 1996 Form 10-K.
10.7 Put and Guaranty Agreement dated as of March 21, 1997
between FCX and The Chase Manhattan Bank. Incorporated by
reference to Exhibit 10.7 to the FCX 1997 Form 10-K.
10.8 Subordinated Loan Agreement dated as of March 21, 1997
between FCX and PT Nusamba Mineral Industri. Incorporated
by reference to Exhibit 10.8 to the FCX 1997 Form 10-K.
10.9 Amended and Restated Power Sales Agreement dated as of
December 18, 1997 between PT Freeport Indonesia and P.T.
Puncakjaya Power. Incorporated by reference to Exhibit 10.9
to the FCX 1997 Form 10-K.
10.10 Option, Mandatory Purchase and Right of First Refusal
Agreement dated as of December 19, 1997 among PT Freeport
Indonesia, P.T. Puncakjaya Power, Duke Irian Jaya, Inc.,
Westcoast Power, Inc. and P.T. Prasarana Nusantara Jaya.
Incorporated by reference to Exhibit 10.10 to the FCX 1997
Form 10-K.
Executive Compensation Plans and Arrangements (Exhibits
10.11 through 10.33)
10.11 Annual Incentive Plan of FCX as amended effective
February 2, 1999. Incorporated by reference to Exhibit
10.11 to the 1998 FCX Form 10-K.
10.12 1995 Long-Term Performance Incentive Plan of FCX.
Incorporated by reference to Exhibit 10.9 to the FCX 1996
Form 10-K.
10.13 FCX Performance Incentive Awards Program as amended
effective February 2, 1999. Incorporated by reference to
Exhibit 10.13 to the 1998 FCX Form 10-K.
10.14 FCX President's Award Program. Incorporated by
reference to Exhibit 10.8 to the FCX 1995 Form 10-K.
10.15 FCX Adjusted Stock Award Plan, as amended.
Incorporated by reference to Exhibit 10.15 to the 1997 FCX
Form 10-K.
<PAGE> E-4
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
10.16 FCX 1995 Stock Option Plan. Incorporated by reference
to Exhibit 10.13 to the FCX 1996 Form 10-K.
10.17 FCX 1995 Stock Option Plan for Non-Employee Directors,
as amended. Incorporated by reference to Exhibit 10.17 to
the FCX 1997 Form 10-K.
10.18 FCX 1999 Stock Incentive Plan. Incorporated by reference to
Exhibit 10.18 to the Quarterly Report on Form 10-Q of FCX
for the quarter ended June 30, 1999.
10.19 FCX 1999 Long-Term Performance Incentive Plan. Incorporated
by reference to Exhibit 10.19 to the Annual Report of FCX on
Form 10-K for the year ended December 31, 1999 (the FCX 1999
Form 10-K).
10.20 Financial Counseling and Tax Return Preparation and
Certification Program of FCX. Incorporated by reference to
Exhibit 10.12 to the FCX 1995 Form 10-K.
10.21 FM Services Company Performance Incentive Awards
Program as amended effective February 2, 1999. Incorporated
by reference to Exhibit 10.19 to the 1998 FCX Form 10-K.
10.22 FM Services Company Financial Counseling and Tax Return
Preparation and Certification Program. Incorporated by
reference to Exhibit 10.14 to the FCX 1995 Form 10-K.
10.23 Consulting Agreement dated as of December 22, 1988
between FTX and Kissinger Associates, Inc. (Kissinger
Associates). Incorporated by reference to Exhibit 10.21 to
the FCX 1997 Form 10-K.
10.24 Letter Agreement dated May 1, 1989 between FTX and Kent
Associates, Inc. (Kent Associates, predecessor in interest
to Kissinger Associates). Incorporated by reference to
Exhibit 10.22 to the FCX 1997 Form 10-K.
10.25 Letter Agreement dated January 27, 1997 among Kissinger
Associates, Kent Associates, FTX, FCX and FMS. Incorporated
by reference to Exhibit 10.20 to the FCX 1996 Form 10-K.
10.26 Agreement for Consulting Services between FTX and B. M.
Rankin, Jr. effective as of January 1, 1991 (assigned to FMS
as of January 1, 1996). Incorporated by reference to Exhibit
10.24 to the FCX 1997 Form 10-K.
10.27 Supplemental Agreement between FMS and B. M. Rankin Jr.
dated December 15, 1997. Incorporated by reference to
Exhibit 10.25 to the FCX 1997 Form 10-K.
10.28 Supplemental Agreement between FMS and B.M. Rankin Jr.
dated December 7, 1998. Incorporated by reference to Exhibit
10.26 to the 1998 FCX Form 10-K.
10.29 Letter Agreement effective as of January 7, 1997
between Senator J. Bennett Johnston, Jr. and FMS.
Incorporated by reference to Exhibit 10.25 of the FCX 1996
Form 10-K.
10.30 Supplemental Letter Agreement dated April 13, 2000
between J. Bennett Johnston, Jr. and FMS. Incorporated by
reference to Exhibit 10.30 to the FCX 2000 First Quarter
Form 10-Q.
10.31 Letter Agreement dated January 25, 1999 between FMS and
Rene L. Latiolais. Incorporated by reference to Exhibit
10.30 to the 1998 FCX Form 10-K.
10.32 Supplemental Letter Agreement dated August 4, 1999
between FMS and Rene L. Latiolais. Incorporated by reference
to Exhibit 10.32 of the FCX 1999 Form 10-K.
<PAGE> E-5
Freeport-McMoRan Copper & Gold Inc.
EXHIBIT INDEX
Exhibit
Number Description
-----
10.33 Supplemental Letter Agreement dated July 10, 2000 between
FMS and Rene L. Latiolais.
10.34 Letter Agreement dated November 1, 1999 between FMS and
Gabrielle K. McDonald. Incorporated by reference to Exhibit
10.33 of the FCX 1999 Form 10-K.
10.35 Supplemental Letter Agreement dated May 17, 2000 between FMS
and Gabrielle K. McDonald.
10.36 Concentrate Purchase and Sales Agreement dated effective
December 11, 1996 between PT Freeport Indonesia and P T
Smelting. Incorporated by reference to Exhibit 10.34 of the
FCX 1999 Form 10-K.
15.1 Letter dated July 18, 2000 from Arthur Andersen LLP
regarding unaudited interim financial statements.
27.1 FCX Financial Data Schedule.
<PAGE> E-6
