Item 3. Legal Proceedings. - ---------------------------
Although the Company may be from time to time involved in various legal proceedings of a character normally incident to the ordinary course of its businesses, the Company believes that potential liability in any such pending or threatened proceedings would not have a material adverse effect on the financial condition or results of operations of the Company. FTX maintains liability insurance to cover some, but not all, potential liabilities normally incident to the ordinary course of its businesses as well as other insurance coverages customary in its businesses, with such coverage limits as management deems prudent.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders. - -------------------------------------------------------------
Not applicable.
Executive Officers of the Registrant. - -------------------------------------
Listed below are the names and ages, as of March 15, 1994, of the present executive officers of FTX together with the principal positions and offices with FTX held by each. All officers of FTX serve at the pleasure of the Board of Directors of FTX.
Name Age Position or Office ---- --- ------------------
James R. Moffett 55 Chairman of the Board and Chief Executive Officer Rene L. Latiolais 51 President and Chief Operating Officer George A. Mealey 60 Executive Vice President John G. Amato 50 General Counsel Richard C. Adkerson 47 Senior Vice President Richard H. Block 43 Senior Vice President Thomas J. Egan 49 Senior Vice President Charles W. Goodyear 36 Senior Vice President W. Russell King 44 Senior Vice President
The individuals listed above, with the exceptions of Messrs. Adkerson, Amato, and Goodyear, have served the Company in various executive capacities for at least the last five years. Until 1989, Mr. Adkerson was a partner in Arthur Andersen & Co., an independent public accounting firm, and Mr. Goodyear was a Vice President of Kidder, Peabody & Co. Incorporated, an investment banking firm. During the past five years, and prior to that period, Mr. Amato has been engaged in the private practice of law and has served as outside counsel to the Company.
PART II ---------
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder ----------------------------------------------------------------------- Matters. --------
The information set forth under the captions "Common Shares" and "Common Share Dividends", on the inside back cover of FTX's 1993 Annual Report to stockholders, is incorporated herein by reference. As of March 10, 1994, there were 26,596 record holders of FTX's common stock.
Item 6.
Item 6. Selected Financial Data. - ---------------------------------
The information set forth under the caption "Financial Highlights" on page 1 of FTX's 1993 Annual Report to stockholders, is incorporated herein by reference.
FTX's ratio of earnings to fixed charges for each of the years 1989 through 1993, inclusive, was 2.5x, 5.6x, 1.6x, 2.5x and a shortfall of $239.1 million, respectively. For this calculation, earnings are income from continuing operations before income taxes, minority interests and fixed charges. Fixed charges are interest, that portion of rent deemed representative of interest and the preferred stock dividend requirements of majority-owned subsidiaries.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------ Results of Operations. ---------------------
ORE RESERVE ADDITIONS AND ONGOING EXPLORATION PROGRAM Total estimated proved and probable recoverable reserves at P.T. Freeport Indonesia Company (PT-FI), Freeport-McMoRan Copper & Gold Inc.'s (FCX) principal operating unit, have increased since December 31, 1992, by 5.9 billion pounds of copper (a 28 percent increase), 7.0 million ounces of gold (a 22 percent increase), and 32.0 million ounces of silver (a 72 percent increase), bringing PT-FI's total year-end 1993 estimated proved and probable recoverable reserves to 26.8 billion pounds of copper, 39.1 million ounces of gold, and 76.7 million ounces of silver. The increases, net of production during the year, were added primarily at the Grasberg deposit, but also include additions at the underground mine at the DOZ (Deep Ore Zone) deposit and the recently discovered Big Gossan deposit.
In addition to continued delineation of the Grasberg deposit and other deposits including Big Gossan, PT-FI is proceeding with its ongoing exploration program for mineralization within the original mining area. During 1993, PT-FI initiated helicopter-supported surface drilling of the Wanagon gold/silver/copper prospect, located 1.5 miles northwest of Big Gossan and 2 miles southwest of Grasberg, where seven holes were drilled. Significant copper mineralization has been encountered below the 2,900 meter elevation.
Preliminary exploration of the new contract of work area (New COW Area) has indicated numerous promising targets. Extensive stream sediment sampling within the new acreage has generated analytical results which are being evaluated. This sampling program, when coupled with regional mapping completed on the ground and from aerial photographs, has led to the outlining of over 50 exploration targets. PT-FI has also completed a fixed-wing air-magnetometer survey of the entire New COW Area. Detailed follow-up exploration of these anomalies by additional mapping and sampling and through the use of both aerial and ground magnetic surveys is now in progress. Systematic drilling of these targets has already commenced with significant mineralization being discovered at several prospects. Additional drilling is required to determine if any of these are commercially viable. Initial surface and stream sampling began on an additional 2.5 million acres, just north and west of our existing COW area, on which an affiliate has an exploration permit and a pending COW.
1993 RESULTS OF OPERATIONS COMPARED WITH 1992
1993 1992 -------- -------- (In Millions, Except Per Share Amounts)
Revenues $1,610.6 $1,654.9 Operating income (loss) (93.4)(a) 251.9 Net income (loss) applicable to common stock (126.2)(b) 169.1(c) Net income (loss) per primary share (.89)(b) 1.17(c) Earnings by sources:(d) Metals $173.5 $283.6 Agricultural minerals (55.9) 18.0 Energy (39.7) (28.2) Other (37.8) (19.9) -------- -------- Segment earnings $ 40.1 $253.5 ======== ========
a. Includes a pretax charge of $196.4 million related to restructuring the administrative organization, the loss on the sale of the Freeport- McMoRan Resource Partners, Limited Partnership (FRP) producing geothermal assets, the charge to expense for the recoverability of certain assets, and adjustments to general and administrative expenses and production and delivery costs discussed below, net of the gain on the sale of a nonproducing oil and gas property and certain previously mined phosphate rock acreage (Note 4). b. Includes a $37.5 million charge ($.25 per share) related to the items discussed in Note A, net of a gain on the conversion of FCX notes (Note 5). Also includes a $20.7 million charge ($.15 per share), after taxes and minority interests, for the cumulative effect of the changes in accounting principle (Note 1). c. Includes a $134.7 million gain ($.93 per share) on the sale/conversion of FCX securities (Notes 2 and 5). d. Operating income plus other income, less provision for restructuring charges and the gain/loss on valuation and sale of assets from the Statements of Operations.
After discussions with the staff of the Securities and Exchange Commission (SEC), Freeport-McMoRan Inc. (FTX or the Company) is reclassifying certain expenses and accruals previously recorded in 1993 as restructuring and valuation of assets. In response to inquiries, the Company advised the SEC staff that $27.4 million originally reported as restructuring and valuation of assets represented the cumulative effect of changes in accounting principle resulting from the adoption of the new accounting policies that the Company considered preferable, as described in Note 1 to the financial statements. The Company also informed the SEC staff of the components of other charges included in the amount originally reported as restructuring and valuation of assets. The Company concluded that the reclassification and the related supplemental disclosures more accurately reflect the nature of these charges to 1993 net income in accordance with generally accepted accounting principles. These reclassifications had no impact on net income or net income per share.
FTX incurred a net loss applicable to common stock for 1993 of $126.2 million compared with income of $169.1 million for 1992. Excluding the items footnoted in the table above, 1993 earnings reflected reduced earnings from its metals and agricultural minerals business segments, generally caused by lower product realizations (see operating statistics in Note 11 to the financial statements). The reduction in general and administrative expenses reflects the initial benefits from the restructuring during the first half of 1993. Interest expense increased, as no interest was capitalized on the Main Pass sulphur operations subsequent to it becoming operational for accounting purposes in July 1993. FTX's 1993 effective tax rate for operations (excluding the net credit attributable to the nonrecurring items) rose due to the higher portion of income from FTX's metals operations in Indonesia, where the effective tax rate is higher, and from a $15.7 million loss at Rio Tinto Minera, S.A. (RTM) for which no tax benefit is recorded. Additionally, minority interests' share of net income was impacted by an increase in FCX's preferred stock dividend requirements following the issuance of additional FCX preferred stock during 1993 (Note 2).
FTX recognized its proportionate share of FRP's earnings, including the recognition of a portion of the gain deferred by FTX (Note 2), during 1993 and 1992. If in future quarters FTX were to receive no distributions from FRP, the deferred gain would be fully recognized in the third quarter of 1994. Subsequent to the recognition of the balance of the deferred gain, when FRP distributions are not paid to FTX in any quarter, FTX will recognize a smaller share of any FRP net income, or a larger share of any FRP net loss, than that which would be recognized based on FTX's ownership interest in FRP.
Restructuring Activities. During the second quarter of 1993, FTX undertook a restructuring of its administrative organization. This restructuring represented a major step by FTX to lower its costs of operating and administering its businesses in response to weak market prices of the commodities produced by its operating units. As part of this restructuring, FTX significantly reduced the number of employees engaged in administrative functions, changed its management information systems (MIS) environment to achieve efficiencies, reduced its needs for office space, outsourced a number of administrative functions, and implemented other actions to lower costs. As a result of this restructuring process, the level of FTX's administrative cost has been reduced substantially over what it would have been otherwise, which benefit will continue in the future. However, the restructuring process entailed incurring certain one-time costs by FTX.
FTX's restructuring costs totaled $67.1 million, consisting of the following: $30.3 million for personnel related costs; $15.0 million relating to excess office space and furniture and fixtures resulting from the staff reduction; $8.2 million relating to the cost to downsize its computing and MIS structure; $4.8 million of deferred charges relating to FTX's and PT-FI's credit facilities which were substantially revised in June 1993; and $8.8 million related to costs directly associated with the formation of IMC-Agrico Company, discussed below. As of December 31, 1993, the remaining accrual for these restructuring costs was approximately $7 million.
In connection with the restructuring project, FTX changed its accounting systems and undertook a detailed review of its accounting records and valuation of various assets and liabilities. As a result of this process, FTX recorded charges totaling $65.1 million, comprised of the following: (a) $26.2 million of production and delivery costs consisting of $10.4 million for revised estimates of prior year costs; $6.3 million for revised estimates of environmental liabilities; $5.0 for materials and supplies inventory obsolescence; and $4.5 million of adjustments in converting accounting systems, (b) $18.7 million of depreciation and amortization costs consisting of $11.5 million for estimated future abandonment and reclamation costs and $7.2 million for the write-down of miscellaneous properties, (c) $4.4 million of exploration expenses for the write-down of an unproved oil and gas property, and (d) $15.8 million of general and administrative expenses consisting of $9.4 million to downsize FTX's computing and MIS structure and $6.4 million for the write-off of miscellaneous assets.
Metals Operations. The Company's metals segment operations are conducted through its affiliate FCX, and FCX's operating units PT-FI and RTM. FCX contributed 1993 earnings of $173.5 million on revenues of $925.9 million compared with earnings of $283.6 million on revenues of $714.3 million for 1992. Significant items impacting the segment earnings are as follows (in millions):
Metals earnings - 1992 $283.6 Major increases (decreases) RTM revenues 288.4 Elimination of intercompany sales (47.7) Concentrate: Realizations: Copper (84.7) Gold 14.7 Sales volumes: Copper (5.5) Gold 30.2 Treatment charges 23.6 Adjustments to prior year concentrate sales (13.0) Other 5.6 ------ Revenue variance 211.6 Cost of sales (277.8)* Exploration expenses (21.6) General and administrative and other (22.3)* ------ (110.1) ------ Metals earnings - 1993 $173.5 ======
* Includes $10.0 million in cost of sales and $6.3 million in general and administrative expenses resulting from the restructuring project discussed above.
Revenues in 1993 increased as a result of the acquisition of RTM, adding sales of copper cathodes and anodes ($204.9 million), gold bullion ($57.4 million), and other products ($26.1 million). Excluding RTM, revenues declined 4 percent when compared to 1992. Copper price realizations, taking into account PT-FI's $.90 per pound price protection program, were 12 percent lower than in 1992, but gold price realizations were up 6 percent. Although ore production averaged 62,300 metric tons of ore milled per day (MTPD) in 1993 (8 percent higher than in 1992), copper sales volumes decreased slightly from 1992 primarily because of sales from inventory in 1992. Gold sales volumes in 1993 benefited from significantly higher fourth-quarter 1993 gold grades (a 46 percent increase over fourth- quarter 1992 and a 38 percent increase over third-quarter 1993), which are not anticipated to continue in 1994, and an increase in gold recovery rates for the year which improve with higher gold grades. Revenues also benefited from a decline in treatment charges of 3.4 cents per pound from 1992, resulting from a tightening in the concentrate market as the industry's inventories were reduced for much of 1993. Additionally, lower copper prices led to lower treatment charges since these charges vary with the price of copper. Adjustments to prior year concentrate sales include changes in prices on all metals for prior year open sales as well as the related impact on treatment charges. Open copper sales at the beginning of 1993 were recorded at an average price of $1.04 per pound, but subsequently were adjusted downward as copper prices fell during the year, negatively impacting 1993 revenues. As of December 31, 1993, 213.4 million pounds of copper remained to be contractually priced during future quotational periods. As a result of PT-FI's price protection program, discussed below, these pounds are recorded at $.90 per pound. The copper price on the London Metal Exchange (LME) was $.84 per pound on February 1, 1994.
In June 1993, two of PT-FI's four mill level ore passes caved, resulting in a blockage of a portion of the ore pass delivery system. The blockage's primary effect was to limit mill throughput to approximately 40,700 MTPD for approximately eight weeks. The impact of the blockage was minimized by using an ore stockpile adjacent to the mill and installing conveyors to alternative ore pass systems. The ore pass blockage has been rectified through the temporary use of alternative delivery systems and by- passes. A permanent delivery system is expected to be in service by mid- 1994. The copper recovery rate for 1993 was adversely affected because the ore milled from the stockpile contained higher than normal oxidized copper, which yields lower copper recoveries. The Company's insurance policies are expected to cover the property damage and business interruption claims relative to the blockage.
PT-FI's unit site production and delivery costs, excluding $10.0 million of charges related to the restructuring project, increased slightly from 1992 primarily as a result of costs incurred in connection with the ore pass blockage and an increase in production overhead costs related to expansion activities. Unit cash production costs declined significantly to 31.1 cents per pound in 1993 from 40.7 cents per pound in 1992, benefiting from higher gold and silver credits, lower treatment charges, and reduced royalties primarily due to lower copper prices on which such royalties are based. PT-FI's depreciation rate increased from 7.4 cents per recoverable pound during 1992 to 8.3 cents in 1993, reflecting the increased cost relating to the 66,000 MTPD expansion. As a result of the reserve additions discussed earlier, PT-FI's depreciation rate is expected to decrease to 7.5 cents per recoverable payable pound for 1994, absent any other significant changes in ore reserves. In addition, FCX is amortizing costs in excess of book value ($2.4 million of amortization in 1993) relating to certain capital stock transactions with PT-FI. Amortization of these excess costs is expected to be $3.6 million per year starting in 1994.
Exploration expenditures in Irian Jaya totaled $31.7 million in 1993, compared to $12.2 million in 1992 and are projected to be approximately $35 million in 1994. Exploration expenditures in Spain are expected to be approximately $6 million in 1994.
FCX's general and administrative expenses increased from $68.5 million in 1992 to $81.4 million in 1993 primarily because of the increased personnel and facilities needed due to the expansion at PT-FI and the acquisition of RTM. Included in the 1993 expense is $5.0 million at RTM (since its acquisition in March 1993) and charges totaling $6.3 million resulting from the restructuring project discussed above. Further increases in general and administrative expenses are anticipated in conjunction with continuing expansion at PT-FI. Metals segment general and administrative expenses, including those of RTM, are currently expected to increase by approximately 25 percent in 1994.
PT-FI's copper concentrates, which contain significant amounts of recoverable gold and silver, are sold primarily under long-term sales agreements which accounted for virtually all of PT-FI's 1993 sales. PT-FI has commitments from various parties to purchase virtually all of its estimated 1994 production. Concentrate sales agreements provide for provisional billings based on world metals prices, primarily the LME, generally at the time of loading. As is customary within the industry, sales under these long-term contracts usually "final-price" within a few months of shipment. Certain terms of the long-term contracts, including treatment charges, are negotiated annually on a portion of the tonnage to reflect current market conditions. Treatment charges have declined during 1993 as a result of the tightening in the concentrate market and are expected to remain at or below 1993 levels. RTM has commitments from most of its suppliers for 1994 treatment charge rates in excess of current spot market rates.
The increased production at PT-FI has required it to market its concentrate globally. Its principal markets include Japan, Asia, Europe, and North America. PT-FI's mill throughput is currently forecast to be approximately 67,000 MTPD for 1994 as it continues to integrate new mill equipment for the expansion to 115,000 MTPD. Current estimates for 1994 production are approximately 700 million pounds of copper and 780,000 ounces of gold for PT-FI and 165,000 ounces of gold at RTM. RTM, whose smelter can be expanded, was acquired to provide low-cost smelter capacity for a portion of PT-FI's concentrate and to improve PT-FI's competitive position in marketing concentrate to other parties.
During 1993, copper prices dropped to their lowest levels since 1987, reflecting lower demand caused by the continuing global recession, but recovered to a level in excess of $.80 per pound. Prices for copper, gold, and silver are influenced by many factors beyond the Company's control and can fluctuate sharply. PT-FI has a price protection program for virtually all of its estimated copper sales to be priced in 1994 at an average floor price of $.90 per pound of copper, while allowing full benefit from prices above this amount. Based on projected 1994 PT-FI copper sales of approximately 720 million pounds, a 1 cent per pound change in the average annual copper price received over $.90 per pound would have an approximately $6 million effect on pretax operating income and cash flow. Based on projected 1994 gold sales of approximately 800,000 ounces by PT- FI, a $10 per ounce change in the average annual gold price received would have an approximately $8 million effect on pretax operating income and cash flow.
Agricultural Minerals Operations. FRP and IMC Fertilizer, Inc. (IMC) formed a joint venture (IMC-Agrico Company), effective July 1, 1993, for their respective phosphate fertilizer businesses, including phosphate rock and uranium. IMC-Agrico Company is governed by a policy committee having equal representation from each company and is managed by IMC. Combined annual savings of at least $95 million in production, marketing, and general and administrative costs are expected to result from this transaction, the full effect beginning by the end of the second year of operations. The operating efficiencies achievable by the joint venture should enable it to generate positive cash flow in a low-price environment, such as that experienced in 1993, and to be in a position to earn significant profits if product prices rise to historical levels. As discussed above and in Note 4 to the financial statements, significant restructuring charges were recorded in connection with this transaction.
As a result of the joint venture, FRP is engaged in the phosphate rock mining, fertilizer production, and uranium oxide extraction businesses only through IMC-Agrico Company. FRP will continue to operate its sulphur and oil businesses. FRP has varying sharing ratios in IMC-Agrico Company, as discussed in Note 2 to the financial statements, which were based on the projected contributions of FRP and IMC to the cash flow of the joint venture and on an equal sharing of the anticipated savings.
FRP transferred the assets it contributed to IMC-Agrico Company at their book carrying cost and proportionately consolidates its interest in IMC-Agrico Company. As a result, FRP's operating results subsequent to the formation of IMC-Agrico Company vary significantly in certain respects from those previously reported. Phosphate fertilizer realizations and unit production costs were fundamentally changed as the majority of the FRP contributed fertilizer production facilities are located on the Mississippi River, whereas the IMC contributed fertilizer production facilities are located in Florida. Fertilizer produced on the Mississippi River commands a higher sales price in the domestic market because of its proximity to markets; however, raw material transportation costs at the Florida facilities are lower for phosphate rock, partially offset by increased sulphur transportation costs.
The Company's agricultural minerals segment, which includes FRP's fertilizer, phosphate rock, and sulphur businesses, reported a loss of $55.9 million on revenues of $619.3 million for 1993 compared with earnings of $18.0 million on revenues of $799.0 million for 1992. Significant items impacting the segment earnings are as follows (in millions):
Agricultural minerals earnings - 1992 $ 18.0 Major increases (decreases) Sales volumes (67.4) Realizations (103.2) Other (9.1) ------ Revenue variance (179.7) Cost of sales 81.4* General and administrative and other 24.4* ------ (73.9) ------ Agricultural minerals earnings - 1993 $(55.9) ======
* Includes $17.5 million in cost of sales and $7.3 million in general and administrative expenses resulting from the restructuring project discussed above.
Weak industrywide demand and changes attributable to FRP's participation in IMC-Agrico Company resulted in FRP's 1993 reported sales volumes for diammonium phosphate (DAP), its principal fertilizer product, declining 17 percent from that of a year-ago. The weakness in the phosphate fertilizer market prompted IMC-Agrico Company to make strategic curtailments in its phosphate fertilizer production. However, late in the year increased export purchases contributed to a rise in market prices, helping to rekindle domestic buying interests which had been unwilling to make purchase commitments. The increased demand, coupled with low industrywide production levels, caused reduced inventory levels. Late in 1993, IMC-Agrico Company increased its production levels in response to the improving markets and projected domestic and international demand for its fertilizer products. Unit production cost, excluding charges related to the restructuring project, declined from 1992 reflecting initial production efficiencies from the joint venture, reduced raw material costs for sulphur, and lower phosphate rock mining expenses, partially offset by increased natural gas costs and lower production volumes. FRP's realization for DAP was lower reflecting the near 20-year low prices realized during 1993 as well as an increase in the lower-priced Florida sales by IMC-Agrico Company.
FRP believes that the outlook for 1994 is for improved prices caused by more normal market demand. Spot market prices improved from a low of nearly $100 per short ton of DAP (central Florida) in July 1993 to just over $140 per ton by year end. Industry inventories at year end were below average levels, despite a fourth quarter rebound in industry production. Export demand is expected to remain at more normal levels during the first half of 1994, with China, India, and Pakistan expected to be active purchasers. Additionally, domestic phosphate fertilizer demand is expected to benefit from increased corn acreage planted due to lower government set- asides and to increased fertilizer application rates necessitated by the widespread flooding that caused a depletion of nutrients in a number of midwestern states.
FRP's proportionate share of the larger IMC-Agrico Company phosphate rock operation caused 1993 sales volumes to increase from 1992, with IMC- Agrico Company operating its most efficient facilities to minimize costs.
Combined sulphur production from the Caminada and Main Pass mines increased compared with 1992; however, sales volumes declined 16 percent, primarily because of reduced purchases by IMC-Agrico Company resulting from its curtailed fertilizer production. Due to the significant decline in the market price of sulphur, FRP recorded a second-quarter 1993 noncash charge to earnings (not included in segment earnings) for the excess of capitalized cost over expected realization of its non-Main Pass sulphur assets, primarily the Caminada sulphur mine (Note 4). Due to significant improvements in Main Pass sulphur production, FRP ceased the marginally profitable Caminada operations in January 1994. The shutdown of Caminada will have no material impact on FTX's reported earnings. Although reduced global demand has forced production cutbacks worldwide, sulphur prices remain depressed. A rebound in price is not expected until demand improves.
At Main Pass, sulphur production increased significantly during 1993 and achieved, on schedule, full design operating rates of 5,500 tons per day (approximately 2 million tons per year) in December 1993 and has since sustained production at or above that level. As a result of the production increases, Main Pass sulphur became operational for accounting purposes beginning July 1, 1993. Recognizing Main Pass sulphur operations in income and discontinuing associated capitalized interest did not affect cash flow, but adversely affected reported operating results.
Oil and Gas Operations. During the second quarter of 1992, FTX transferred substantially all of its non-Main Pass oil and gas properties to FM Properties Inc. (FMPO), whose shares were distributed to FTX shareholders. Currently, FTX's oil and gas operations (excluding Main Pass oil operations) involve exploring for new reserves. These activities generated a 1993 loss of $38.2 million, including exploration expense of $22.3 million and $11.5 million of charges resulting from the restructuring project, compared with a 1992 loss of $32.8 million, including exploration expense of $18.3 million. In July 1993, FTX sold its interest in the recently discovered undeveloped reserves at East Cameron Blocks 331/332, offshore Louisiana in the Gulf of Mexico, for $95.3 million cash, recognizing a pretax gain of $69.1 million (not included in segment earnings). FTX had drilled seven development wells, then sold the property before setting permanent production facilities.
Main Pass oil operations achieved the following:
1993 1992 --------- --------- Sales (barrels) 3,443,000 4,884,000 Average realized price $14.43 $15.91 Earnings (in millions) $(1.5) $4.6
Since completion of development drilling in mid-April 1993, oil production for the Main Pass joint venture (in which FRP owns a 58.3 percent interest) increased significantly, averaging over 20,000 barrels per day for December 1993. Production for 1994 is expected to approximate that of 1993 if water encroachment follows current trends, with the anticipated drilling of additional wells (estimated to cost FRP approximately $4 million) offsetting a production decline in existing wells. Due to the dramatic decline in oil prices at year-end, FRP recorded a $60.0 million charge to earnings (not included in segment earnings) reflecting the excess net book value of its Main Pass oil investment over the estimated future net cash flow to be received. Future price declines, increases in costs, or negative reserve revisions could result in an additional charge to future earnings.
CAPITAL RESOURCES AND LIQUIDITY Cash flow from operating activities declined in 1993 to $117.3 million from $339.6 million for 1992, due to lower income from operations partially offset by working capital changes. Net cash used in investing activities was $429.0 million compared with $885.5 million for 1992. Increased metals capital expenditures were incurred associated with PT-FI's expansion whereas lower capital expenditures were incurred at Main Pass and in FRP's agricultural minerals operations, due to completion of development projects in 1992. Asset sales generated proceeds of $145.2 million during 1993, whereas 1992 included a use of $211.9 million for the purchase of an indirect interest in PT-FI. Net cash used in financing activities was $29.5 million, whereas 1992 provided net cash of $837.3 million. The 1993 period includes $561.1 million of proceeds from the FCX preferred stock offerings, whereas 1992 includes $1.3 billion of proceeds from equity security offerings. Increased distributions to minority interest holders of FCX and FRP securities as a result of the equity sales during 1993 and 1992 were offset by reduced FTX common stock purchases. Net long-term debt repayments were $159.5 million in 1993 versus net borrowings of $53.7 million in 1992.
Cash flow from operations for 1992 totaled $339.6 million, up from $249.9 million in 1991, as increased income from operations was partially offset by working capital changes. Net cash used in investing activities increased to $885.5 million in 1992 compared with $408.0 million for 1991, primarily due to the purchase of the indirect PT-FI interest partially offset by lower overall capital expenditures, while 1991 included $461.5 million in proceeds from the sale of oil and gas assets. Cash flow from financing activities totaled $837.3 million in 1992 compared with $200.1 million in 1991, reflecting increased issuance of equity securities by FTX and its affiliates, receipt of proceeds from the 1991 sale of PT-FI common shares, and net long-term borrowings, partially offset by increased FTX common stock purchases and cash dividends on FTX stock and distributions to minority interests due to the additional FTX preferred stock and FRP and FCX equity securities issued during 1992.
RTM's principal operations currently consist of a copper smelter. The FCX purchase proceeds will be used by RTM for working capital requirements and capital expenditures, including funding a portion of the expansion of its smelter production capacity (expected to cost approximately $50 million) from its current 150,000 metric tons of metal per year to 180,000 metric tons of metal per year by mid-1995. RTM is also studying further expansion of the smelter facilities to as much as 270,000 metric tons of metal production per year and is assessing the opportunity to expand its tankhouse operations from 135,000 metric tons per year to 215,000 metric tons per year. RTM's 1993 cash flow from operations was negative primarily due to cash requirements related to shutdown costs for RTM's gold mine. RTM has relied on short-term credit facilities and the FCX purchase proceeds to fund this shortfall. RTM is currently evaluating financing alternatives to fund its short-term needs and to provide long-term funding for expansion. RTM's future cash flow is dependent on a number of variables including fluctuations in the exchange rate between the United States dollar and the Spanish peseta, future prices and sales volumes of gold, the size and timing of the smelter and tankhouse expansions, and the supply/demand for smelter capacity and its impact on related treatment and refining charges.
During 1992, FCX established the Enhanced Infrastructure Project (EIP). The full EIP (currently expected to involve aggregate cost of as much as $500 million to $600 million) includes plans for commercial, residential, educational, retail, medical, recreational, environmental and other infrastructure facilities to be constructed during the next 20 years for PT-FI operations. The EIP will develop and promote the growth of local and other third-party activities and enterprises in Irian Jaya through the creation of certain necessary support facilities. The initial phase of the EIP is under construction and is scheduled for completion in 1995. Additional expenditures for EIP assets beyond the initial phase depend on the long-term growth of PT-FI's operations and would be expected to be funded by third-party financing sources, which may include debt, equity or asset sales. As discussed in Note 9 to the financial statements, certain portions of the EIP and other existing infrastructure assets are expected to be sold in the near future to provide additional funds for the expansion to 115,000 MTPD.
Through 1995, FTX's capital expenditures are expected to be greater than cash flow from operations. Upon completion of FCX's previously announced 115,000 MTPD expansion by year-end 1995, annual production is expected to approach 1.1 billion pounds of copper and 1.5 million ounces of gold. Completion of the FCX expansion, along with the additional cash flow generated through savings achieved by IMC-Agrico Company, are expected to enhance FTX's financial flexibility. Subsequently, capital expenditures will be determined by the results of FCX's exploration activities and ongoing capital maintenance programs. Estimated capital expenditures for 1994 and 1995 for the expansion to 115,000 MTPD, the initial phase of the EIP, ongoing capital maintenance expenditures, and the expansion of RTM's smelter to 180,000 metric tons of metal per year are expected to range from $850 million to $950 million and will be funded by operating cash flow, sales of existing and to-be-constructed infrastructure assets and a wide range of financing sources the Company believes are available as a result of the future cash flow from FTX's mineral reserve asset base. These sources include, but are not limited to, FTX's credit facility (Note 5) and the public and private issuances of securities.
The new contract of work (New COW) contains provisions for PT-FI to conduct or cause to be conducted a feasibility study relating to the construction of a copper smelting facility in Indonesia and for the eventual construction of such a facility, if it is deemed to be economically viable by PT-FI and the Government of Indonesia. PT-FI has participated in a group assessing the feasibility of constructing a copper smelting facility in Indonesia. The New COW also provides that the Indonesian government will not nationalize the mining operations of PT-FI or expropriate assets of PT-FI. Disputes under the New COW are to be resolved by international arbitration. The 1967 Foreign Capital Investment Law, which expresses Indonesia's foreign investment policy, provides basic guarantees of remittance rights and protection against nationalization, a framework for incentives and some basic rules as to other rights and obligations of foreign investors.
FTX is primarily a holding company and the principal sources of its cash flow are dividends and distributions from its ownership in FCX and FRP. FCX currently pays an annual cash dividend of 60 cents per share to FTX and to its public common shareholders. Management anticipates that this dividend will continue at this level through completion of the expansion in 1995, absent significant changes in the prices of copper and gold. FCX's Board of Directors determines its dividend payment on a quarterly basis and at its discretion may change or maintain the dividend payment. Publicly owned FRP units have cumulative rights to receive quarterly distributions of 60 cents per unit through the distribution for the quarter ending December 31, 1996 (the Preference Period) before any distributions may be made to FTX. FRP has announced that it no longer intends to supplement distributable cash with borrowings. Therefore, FRP's future distributions will be dependent on the distributions received from IMC-Agrico Company, which will primarily be determined by prices and sales volumes of its commodities and cost reductions achieved by its combined operations, and the future cash flow of FRP's oil and sulphur operations (including reclamation expenditures related to its non-Main Pass sulphur assets). On January 21, 1994, FRP declared a distribution of 60 cents per publicly held unit ($30.3 million) and 12 cents per FTX-owned unit ($6.2 million), bringing the total unpaid distribution due FTX to $239.2 million. Unpaid distributions will be recoverable from future FRP cash available for quarterly distributions as discussed in Note 2 to the financial statements. The January 1994 distribution included $30.9 million received from IMC- Agrico Company for its fourth-quarter 1993 distribution (including $9.3 million from working capital reductions) and $13.0 million in proceeds from the sale of certain previously mined phosphate rock acreage.
In the past, including in 1993, the FTX Board of Directors has decided to borrow funds when the cash received from FCX, FRP, and asset sales was insufficient to pay dividends and cover FTX's other cash requirements for interest, general and administrative expenses, and oil and gas operations. These decisions reflected the Board's analyses of FTX's estimated future cash flow from the Company's large and long-lived mineral reserves, current and expected commodity price levels, its borrowing capacity, and its cash requirements in determining the dividend that the Board considers prudent. FTX's 10 7/8% Senior Subordinated Debentures potentially restrict dividend payments (Note 7); however, management has alternative courses of action that it plans to pursue to eliminate the effect of this restriction. If low commodity prices persist over an extended period, the Board can be expected to change the Company's dividend, in which event there may be a reduced dividend, a lower cash dividend supplemented by a property dividend in the form of securities in its publicly traded subsidiaries or, in an extreme case, an elimination of the dividend. If, however, the Company's cash flow from its mineral reserves increase significantly because of higher commodity prices or increased production levels, the Board is likely to raise future dividends over current levels.
Management believes that operating cash flow, existing lines of credit ($425.0 million available as of February 1, 1994), selected asset sales, third-party financing, and discretion with respect to capital, exploration and development spending provides FTX with sufficient financial flexibility and capital resources to meet its anticipated cash requirements.
ENVIRONMENTAL FTX has a history of commitment to environmental responsibility. Since the 1940s, long before public attention focused on the importance of maintaining environmental quality, FTX has conducted preoperational, bioassay, marine ecological, and other environmental surveys to ensure the environmental compatibility of its operations. FTX's Environmental Policy commits FTX's operations to full compliance with local, state, and federal laws and regulations, and prescribes the use of periodic environmental audits of all domestic facilities to evaluate compliance status and communicate that information to management. FTX has access to environmental specialists who have developed and implemented corporatewide environmental programs. FTX's operating units continue to study and implement methods to reduce discharges and emissions.
Federal legislation (sometimes referred to as "Superfund") requires payments for cleanup of certain abandoned waste disposal sites, even though such waste disposal activities were performed in compliance with regulations applicable at the time of disposal. Under the Superfund legislation, one party may, under certain circumstances, be required to bear more than its proportional share of cleanup costs at a site where it has responsibility pursuant to the legislation, if payments cannot be obtained from other responsible parties. Other legislation mandates cleanup of certain wastes at unabandoned sites. States also have regulatory programs that can mandate waste cleanup. Liability under these laws involves inherent uncertainties.
FTX has received notices from governmental agencies that it is one of many potentially responsible parties at certain sites under relevant federal and state environmental laws. Further, FTX is aware of additional sites for which it may receive such notices in the future. Some of these sites involve significant cleanup costs; however, at each of these sites other large and viable companies with equal or larger proportionate shares are among the potentially responsible parties. The ultimate settlement for such sites usually occurs several years subsequent to the receipt of notices identifying potentially responsible parties because of the many complex technical and financial issues associated with site cleanup. FTX believes that the aggregation of any costs associated with these potential liabilities will not exceed amounts accrued and expects that any costs would be incurred over a period of years.
The Company maintains insurance coverage in amounts deemed prudent for certain types of damages associated with environmental liabilities which arise from unexpected and unforeseen events and has an indemnification agreement covering certain acquired sites (Note 9).
FTX has made, and will continue to make, expenditures at its operations for protection of the environment. Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls, which will be charged against income from future operations. Present and future environmental laws and regulations applicable to FTX's operations may require substantial capital expenditures and may affect its operations in other ways that cannot now be accurately predicted.
1992 RESULTS OF OPERATIONS COMPARED WITH 1991 1992 1991 -------- -------- (In Millions, Except Per Share Amounts) Revenues $1,654.9 $1,579.2 Operating income 251.9 223.9 Net income applicable to common stock 169.1(a) 40.1(b) Net income per primary share 1.17(a) .29(b) Earnings by sources:(c) Metals $283.6 $181.2 Agricultural minerals 18.0 78.9 Energy (28.2) (6.0) Other (19.9) (6.6) -------- -------- Segment earnings $253.5 $247.5 ======== ========
a. Includes a $134.7 million gain ($.93 per share) from the sale/issuance of FCX Class A common stock. b. Includes a $7.3 million gain ($.05 per share) from an insurance settlement (Note 9). Also includes a $55.7 million charge ($.40 per share) for the cumulative effect of the change in accounting for postretirement benefits other than pensions (Note 8). c. Operating income plus other income, less gain/loss on valuation and sale of assets from the Statements of Operations.
Record metals segment earnings were partially offset by reduced agricultural minerals and energy segment earnings and an increase in general and administrative expenses caused by the significant additional effort and support required by FTX's expanding operations and increased community and philanthropic efforts. Earnings for 1992 benefited from lower interest expense reflecting reductions in average debt levels, lower interest rates, and increased capitalized interest associated with the copper mine/mill expansion and Main Pass development. Earnings for 1992 were also impacted by a greater minority interest ownership of FRP, FCX, and PT-FI, reflecting equity sales by those entities, and an increase in preferred stock dividends because of the March 1992 issuance of FTX's $4.375 Convertible Exchangeable Preferred Stock (Note 7). Net income for 1991 benefited from the reversal of deferred tax reserves no longer required.
Metals Operations. FCX contributed 1992 earnings of $283.6 million compared with $181.2 million for 1991. Revenues in 1992 totaled $714.3 million compared with $467.5 million in 1991. Significant items impacting the segment earnings are as follows (in millions):
Metals earnings - 1991 $181.2 Major increases (decreases) Realizations: Copper 8.8 Gold (7.4) Sales volumes: Copper 218.5 Gold 95.7 Treatment charges (73.0) Adjustments to prior year concentrate sales 12.5 Other (8.3) ------ Revenue variance 246.8 Cost of sales (114.5) Exploration expenses (5.7) General and administrative and other (24.2) ------ 102.4 ------ Metals earnings - 1992 $283.6 ======
The increase in revenues was primarily attributable to a 71 percent and 48 percent increase in gold and copper sales volumes, respectively, reflecting higher production rates due to the mine/mill expansion, higher gold grades, and the sale of all year-end 1991 inventory. Revenues were negatively impacted by a 3.6 cents per pound increase in treatment charges compared with 1991 because of tight market conditions in the smelting industry early in 1992 and increased spot market sales attributable to higher than anticipated production due to the early completion of the 57,000 MTPD expansion program. A $5.7 million upward revenue adjustment was made in 1992 compared with a $6.8 million downward revenue adjustment in 1991 for prior year concentrate sales contractually priced during the year. The amortization of the price protection programs decreased revenues by $8.9 million in 1992 and $6.2 million in 1991.
Cost of sales for 1992 were $357.2 million, an increase of 47 percent from 1991 due primarily to the 48 percent increase in copper sales volumes. Unit site production and delivery costs were 47.4 cents in 1992 compared with 46.5 cents in 1991. FCX's depreciation rate declined from an average 8.7 cents per recoverable pound during 1991 to 7.4 cents in 1992 because of the significant increase in ore reserves during 1991.
Agricultural Minerals Operations. Revenues and earnings for 1992 totaled $799.0 million and $18.0 million compared with $880.5 million and $78.9 million for 1991, respectively, reflecting weak market prices for phosphate fertilizers and sulphur. However, FRP's 1992 average unit production cost for phosphate fertilizers was lower than during 1991. Significant items impacting the segment earnings are as follows (in millions):
Agricultural minerals earnings - 1991 $ 78.9 Major increases (decreases) Sales volumes 27.0 Realizations (107.8) Other (.7) ------ Revenue variance (81.5) Cost of sales 41.9 General and administrative and other (21.3) ------ (60.9) ------ Agricultural minerals earnings - 1992 $ 18.0 ======
Phosphate fertilizer sales volumes were slightly lower during 1992, whereas the average realization was 13 percent lower. Phosphate fertilizer realizations declined steadily throughout 1992 because of curtailed purchases by China, the largest single fertilizer importer, and supply and demand uncertainty in Europe, the former Soviet Union, and India. Also contributing to the decline in prices were lower raw material costs, most notably for sulphur, as producers in the weakening market passed along these cost savings to buyers in an attempt to preserve market share. FRP's phosphate rock and fertilizer facilities operated at or near capacity, with the 1992 phosphate fertilizer unit production cost averaging 7 percent less than during 1991 due to reduced raw material costs for sulphur and lower phosphate rock mining expenses, despite higher natural gas costs. Unit production cost also benefited during the latter part of 1992 as FRP completed a $60.0 million capital program to improve efficiency and lower costs.
Sulphur production and sales volumes for 1992 declined 8 percent and 7 percent, respectively, from 1991 as the Garden Island Bay and Grand Isle mines ceased production in 1991. However, production increased at the Caminada mine, which had a significantly lower unit production cost than either Garden Island Bay or Grand Isle had prior to depletion, resulting in an average sulphur unit production cost 7 percent lower than during 1991. FRP's 1992 sulphur realization reflects the price declines which occurred since mid-1991, as world sulphur markets were burdened by the collapse of the Soviet Union as well as by a further decline in demand in Western Europe. During 1992, several Canadian sulphur marketers built inventory rather than accept depressed prices; however, others intensified their efforts to sell into the important Tampa, Florida market.
Phosphate rock production and sales benefited from the capacity expansion completed in mid-1992 at one of FRP's two operated phosphate rock mines, and also reflect the output from FRP's central Florida Pebbledale property, where sales began in July 1991 under a mining agreement with IMC.
Oil and Gas Operations. FTX's oil and gas operations (excluding the Main Pass oil operation) generated a loss of $32.8 million on revenues of $49.8 million in 1992 compared with a loss of $22.5 million on revenues of $180.0 million for 1991 reflecting the transfer of oil and gas properties to FMPO as well as the sale of a significant portion of its oil and gas properties in 1991.
Revenues and earnings from Main Pass, which initiated oil production in late 1991, were $78.0 million and $4.6 million, respectively, on sales net to FRP of 4.9 million barrels at an average realization of $15.91 per barrel. Revenues for 1991 were $4.8 million, generating a $.6 million loss, on net sales of .4 million barrels at an average realization of $13.34 per barrel. Earnings for 1992 benefited from FRP's marketing efforts, which alleviated earlier problems related to its high-sulphur oil, and high average production rates.
____________________________
The results of operations reported and summarized above are not necessarily indicative of future operating results.
Item 8.
Item 8. Financial Statements and Supplementary Data. - -----------------------------------------------------
The financial statements of FTX and its consolidated subsidiaries, the notes thereto, the report of management and the report thereon of Arthur Andersen & Co., appearing on pages 33 through 56, inclusive, of FTX's 1993 Annual Report to stockholders, are incorporated herein by reference.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and - ------------------------------------------------------------------------ Financial Disclosure. ----------------------
Not applicable.
PART III --------
Items 10, 11, 12, and 13. Directors and Executive Officers of the Registrant, - ------------------------------------------------------------------------------ Executive Compensation, Security Ownership of Certain Beneficial Owners ----------------------------------------------------------------------- and Management, and Certain Relationships and Related Transactions. -------------------------------------------------------------------
The information set forth under the caption "Election of Directors," beginning on page 4 of the Proxy Statement dated March 31, 1994, submitted to the stockholders of FTX in connection with its 1994 Annual Meeting to be held on May 3, 1994, is incorporated herein by reference.
PART IV -------
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. - --------------------------------------------------------------------------
(a)(1), (a)(2), and (d). Financial Statements. See Index to Financial Statements appearing on page hereof.
(a)(3) and (c). Exhibits. See Exhibit Index beginning on page E-1 hereof.
(b). Reports on Form 8-K. No reports on Form 8-K were filed by the registrant during the fourth quarter of 1993.
SIGNATURES ----------
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 30, 1994.
FREEPORT-McMoRan INC.
By: /s/ James R. Moffett ------------------------------- James R. Moffett Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 30, 1994.
/s/ James R. Moffett Chairman of the Board, Chief - --------------------------- Executive Officer and Director James R. Moffett (Principal Executive Officer)
Richard C. Adkerson* Senior Vice President and Chief Financial Officer (Principal Financial Officer)
John T. Eads* Controller-Financial Reporting (Principal Accounting Officer)
Robert W. Bruce III* Director
Thomas B. Coleman* Director
William H. Cunningham* Director
Robert A. Day* Director
William B. Harrison, Jr.* Director
Henry A. Kissinger* Director
Bobby Lee Lackey* Director
Rene L. Latiolais* Director
Gabrielle K. McDonald* Director
W. K. McWilliams, Jr.* Director
George Putnam* Director
B. M. Rankin, Jr.* Director
Benno C. Schmidt* Director
J. Taylor Wharton* Director
Ward W. Woods, Jr.* Director
*By: /s/ James R. Moffett ------------------------------ James R. Moffett Attorney-in-Fact
-----------------------------
The financial statements of FTX and its consolidated subsidiaries, the notes thereto, and the report thereon of Arthur Andersen & Co., appearing on pages 33 through 56, inclusive, of FTX's 1993 Annual Report to stockholders are incorporated by reference.
The financial statement schedules listed below should be read in conjunction with such financial statements contained in FTX's 1993 Annual Report to stockholders.
Page ---- Report of Independent Public Accountants . . . . . . . . . . II-Amounts Receivable from Employees . . . . . . . . . . . . III-Condensed Financial Information of Registrant . . . . . V-Property, Plant and Equipment . . . . . . . . . . . . . . VI-Accumulated Depreciation and Amortization . . . . . . . . VIII-Valuation and Qualifying Accounts . . . . . . . . . . . X-Supplementary Income Statement Information . . . . . . . .
Schedules other than those listed above have been omitted, since they are either not required, not applicable or the required information is included in the financial statements or notes thereto.
* * * *
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
We have audited, in accordance with generally accepted auditing standards, the financial statements as of December 31, 1993 and 1992 and for each of the three years in the period ended December 31, 1993 included in Freeport-McMoRan Inc.'s annual report to stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 25, 1994. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in the index above are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. The schedules for the years ended December 31, 1993, 1992 and 1991 have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
Arthur Andersen & Co.
New Orleans, Louisiana January 25, 1994
The footnotes contained in FTX's 1993 Annual Report to stockholders are an integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENT OF CASH FLOW
The footnotes contained in FTX's 1993 Annual Report to stockholders are an integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT for the years ended December 31, 1993, 1992, and 1991
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION for the years ended December 31, 1993, 1992, and 1991
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS for the years ended December 31, 1993, 1992, and 1991
FREEPORT-MCMORAN INC.
EXHIBIT INDEX -------------
Sequentially Exhibit Numbered Number Page - ------ -----------
3.1 Composite copy of the Certificate of Incorporation of FTX, as amended. Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of FTX for the quarter ended June 30, 1992 (the "FTX 1992 Second Quarter Form 10-Q").
3.2 By-Laws of FTX, as amended. Incorporated by reference to Exhibit 3.2 to the FTX 1992 Second Quarter Form 10-Q.
4.1 Certificate of Designations of the $1.875 Convertible Exchangeable Preferred Stock of FTX. Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q of FTX for the quarter ended June 30, 1987 (the "FTX 1987 Second Quarter Form 10-Q").
4.2 Certificate of Designations of the $4.375 Convertible Exchangeable Preferred Stock of FTX. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of FTX dated March 23, 1992.
4.3 Indenture dated as of May 15, 1986 between FTX and Manufacturers Hanover Trust Company ("Manufacturers"), Trustee, relating to $150,000,000 principal amount of 10-7/8% Senior Subordinated Debentures due 2001 of FTX. Incorporated by reference to Exhibit 19.1 to the Quarterly Report on Form 10-Q of FTX for the quarter ended September 30, 1986.
4.4 Subordinated Indenture dated as of November 9, 1990 between FTX and Chemical Bank, Trustee, relating to subordinated indebtedness of FTX. Incorporated by reference to Exhibit 28.2 to the Current Report on Form 8- K of FTX dated February 7, 1991 (the "FTX February 7, 1991 Form 8-K").
4.5 Supplemental Indenture No. 1 dated as of February 5, 1991 between FTX and Chemical Bank, Trustee, relating to $373,000,000 principal amount of 6.55% Convertible Subordinated Notes due 2001 of FTX. Incorporated by reference to Exhibit 28.3 to the FTX February 7, 1991 Form 8-K.
4.6 Supplemental Indenture No. 2 dated as of August 5, 1991 between FTX and Chemical Bank, Trustee, relating to $750,000,000 face amount of Zero Coupon Convertible Subordinated Debentures due 2006 of FTX. Incorporated by reference to Exhibit (4-a) to the Current Report on Form 8-K of FTX dated August 9, 1991.
4.7 Credit Agreement dated as of June 1, 1993 (the "FTX/FRP Credit Agreement") among FTX, FRP, the several banks which are parties thereto (the "FTX/FRP Banks") and Chemical Bank, as Agent (the "FTX/FRP Bank Agent"). Incorporated by reference to Exhibit 4.8 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1993 (the "FRP 1993 Form 10-K").
4.8 First Amendment dated as of February 2, 1994 to the FTX/FRP Credit Agreement among FTX, FRP, the FTX/FRP Banks and the FTX/FRP Bank Agent. Incorporated by reference to Exhibit 4.9 to the FRP 1993 Form 10-K.
4.9 Second Amendment dated as of March 1, 1994 to the FTX/FRP Credit Agreement among FTX, FRP, the FTX/FRP Banks and the FTX/FRP Bank Agent. Incorporated by reference to Exhibit 4.10 to the FRP 1993 Form 10-K.
4.10 Amended and Restated Agreement of Limited Partnership of FRP dated as of May 29, 1987 (the "FRP Partnership Agreement") among FTX, Freeport Phosphate Rock Company and Geysers Geothermal Company, as general partners, and Freeport Minerals Company, as general partner and attorney-in-fact for the limited partners, of FRP. Incorporated by reference to Exhibit B to the Prospectus dated May 29, 1987 included in FRP's Registration Statement on Form S-1, as amended, as filed with the Commission on May 29, 1987 (Registration No. 33-13513).
4.11 Amendment to the FRP Partnership Agreement dated as of April 6, 1990 effected by FTX, as Administrative Managing General Partner of FRP. Incorporated by reference to Exhibit 19.3 to the Quarterly Report on Form 10-Q of FRP for the quarter ended March 31, 1990 (the "FRP 1990 First Quarter Form 10-Q").
4.12 Amendment to the FRP Partnership Agreement dated as of January 27, 1992 between FTX, as Administrative Managing General Partner, and FMRP Inc., as Managing General Partner of FRP. Incorporated by reference to Exhibit 3.3 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1991 (the "FRP 1991 Form 10-K").
4.13 Amendment to the FRP Partnership Agreement dated as of October 14, 1992 between FTX, as Administrative Managing General Partner, and FMRP Inc., as Managing General Partner of FRP. Incorporated by reference to Exhibit 3.4 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1992 (the "FRP 1992 Form 10-K").
4.14 Deposit Agreement dated as of June 27, 1986 (the "Deposit Agreement") among FRP, The Chase Manhattan Bank, N.A. ("Chase") and Freeport Minerals Company, as attorney-in-fact of those limited partners and assignees holding depositary receipts for units of limited partnership interests in FRP ("Depositary Receipts"). Incorporated by reference to Exhibit 28.4 to the Current Report on Form 8- K of FTX dated July 11, 1986.
4.15 Resignation dated December 26, 1991 of Chase as Depositary under the Deposit Agreement and appointment dated December 27, 1991 of Mellon Bank, N.A. ("Mellon") as successor Depositary, effective January 1, 1992. Incorporated by reference to Exhibit 4.5 to the FRP 1991 Form 10- K.
4.16 Service Agreement dated as of January 1, 1992 between FRP and Mellon pursuant to which Mellon will serve as Depositary under the Deposit Agreement and Custodian under the Custodial Agreement. Incorporated by reference to Exhibit 4.6 to the FRP 1991 Form 10-K.
4.17 Amendment to the Deposit Agreement dated as of November 18, 1992 between FRP and Mellon. Incorporated by reference to Exhibit 4.4 to the FRP 1992 Form 10-K.
4.18 Form of Depositary Receipt. Incorporated by reference to Exhibit 4.5 to the FRP 1992 Form 10-K.
4.19 Custodial Agreement regarding the FRP Depositary Unit Reinvestment Plan among FTX, FRP and Chase, effective as of April 1, 1987 (the "Custodial Agreement"). Incorporated by reference to Exhibit 19.1 to the FRP 1987 Second Quarter Form 10-Q.
4.20 FRP Depositary Unit Reinvestment Plan. Incorporated by reference to Exhibit 4.4 to the FRP 1991 Form 10- K.
4.21 Composite copy of the Certificate of Incorporation of FCX. Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of FCX for the fiscal year ended December 31, 1993 (the "FCX 1993 Form 10-K").
4.22 Credit Agreement dated as of June 1, 1993 (the "PT-FI Credit Agreement") among PT-FI, the several banks which are parties thereto (the "PT-FI Banks"), Morgan Guaranty Trust Company of New York ("Morgan"), as PT-FI Trustee (the "PT-FI Trustee"), and Chemical Bank, as Agent (the "PT- FI Bank Agent"). Incorporated by reference to Exhibit 4.10 to the FCX 1993 Form 10-K.
4.23 First Amendment dated as of February 2, 1994 to the PT-FI Credit Agreement among PT-FI, the PT-FI Banks, the PT- FI Trustee and the PT-FI Bank Agent. Incorporated by reference to Exhibit 4.11 to the FCX 1993 Form 10-K.
4.24 Second Amendment dated as of March 1, 1994 to the PT-FI Credit Agreement among PT-FI, the PT-FI Trustee and the PT-FI Bank Agent. Incorporated by reference to Exhibit 4.12 to the FCX 1993 Form 10-K.
4.25 Automatic Stock Purchase Plan of FTX. Incorporated by reference to Exhibit 4.28 to the Annual Report on Form 10- K of FTX for the fiscal year ended December 31, 1992 (the "FTX 1992 Form 10-K").
10.1 Overriding Royalty Conveyance dated September 28, 1983, from McMoRan- Freeport Oil Company to McMoRan Oil & Gas Co. Incorporated by reference to Exhibit 2.2 to the Quarterly Report on Form 10-Q of FTX for the quarter ended September 30, 1983 (the "FTX 1983 Third Quarter Form 10-Q").
10.2 Royalty Trust Indenture dated as of September 30, 1983 between FTX, as Trustor, and First City National Bank of Houston ("First City"), as Trustee. Incorporated by reference to Exhibit 2.3 to the FTX 1983 Third Quarter Form 10-Q.
10.3 First Amended and Restated Articles of General Partnership of Freeport- McMoRan Oil and Gas Royalty Partnership dated as of September 30, 1983 between McMoRan Offshore Management Co. and First City, as Trustee. Incorporated by reference to Exhibit 2.4 to the FTX 1983 Third Quarter Form 10-Q.
10.4 Contract of Work dated December 30, 1991 between The Government of the Republic of Indonesia and PT-FI. Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of FCX for the fiscal year ended December 31, 1991.
10.5 Contribution Agreement dated as of April 5, 1993 between FRP and IMC (the "FRP-IMC Contribution Agreement"). Incorporated by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q of FRP for the quarter ended June 30, 1993 (the "FRP 1993 Second Quarter Form 10-Q").
10.6 First Amendment dated as of July 1, 1993 to the FRP-IMC Contribution Agreement. Incorporated by reference to Exhibit 2.2 to the FRP 1993 Second Quarter Form 10-Q.
10.7 Amended and Restated Partnership Agreement dated as of July 1, 1993 among IMC-Agrico GP Company, Agrico, Limited Partnership and IMC-Agrico MP Inc. Incorporated by reference to Exhibit 2.3 to the FRP 1993 Second Quarter Form 10-Q.
10.8 Parent Agreement dated as of July 1, 1993 among IMC, FRP, FTX and IMC- Agrico. Incorporated by reference to Exhibit 2.4 to the FRP 1993 Second Quarter Form 10-Q.
Executive Compensation Plans and Arrangements (Exhibits 10.9 through 10.40)
10.9 FTX Employee Retirement Plan as of January 1, 1986. Incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K of Freeport-McMoRan Energy Partners, Ltd. ("FMP") for the fiscal year ended December 31, 1986.
10.10 Amendment No. 1 dated as of January 14, 1987 to the FTX Employee Retirement Plan. Incorporated by reference to Exhibit 10.10 to the FTX 1987 Form 10-K.
10.11 Amendment No. 2 dated as of May 31, 1987 to the FTX Employee Retirement Plan. Incorporated by reference to Exhibit 10.11 to the FTX 1987 Form 10-K.
10.12 Amendments to the FTX Employee Retirement Plan dated August 31, 1988, March 21, 1989 and December 29, 1989. Incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K of FMP for the fiscal year ended December 31, 1989 (the "FMP 1989 Form 10-K").
10.13 Amendment to the FTX Employee Retirement Plan dated March 6, 1990. Incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1989.
10.14 Amendment to the FTX Employee Retirement Plan dated December 20, 1991. Incorporated by reference to Exhibit 10.6 to the FRP 1991 Form 10-K.
10.15 Master Trust Agreement dated as of October 1, 1990 between FTX and Continental Bank, N.A., relating to the FTX Employee Retirement Plan. Incorporated by reference to Exhibit 19.2 to the Quarterly Report on Form 10-Q of FTX for the quarter ended September 30, 1990 (the "FTX 1990 Third Quarter Form 10-Q").
10.16 Excess Benefits Plan of FTX. Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of FTX for the quarter ended March 31, 1988.
10.17 Amendments to the Excess Benefits Plan of FTX dated January 17, 1989, December 8, 1989, June 29, 1990 and October 17, 1990. Incorporated by reference to Exhibits 19.3, 19.4, 19.5 and 19.6, respectively, to the FTX 1990 Third Quarter Form 10-Q.
10.18 Amended and Restated FTX Employee Capital Accumulation Program dated September 14, 1990, generally effective as of January 1, 1989. Incorporated by reference to Exhibit 19.1 to the FTX 1990 Third Quarter Form 10-Q.
10.19 FTX Supplemental Executive Capital Accumulation Plan. Incorporated by reference to Exhibit 10.13 to the FTX 1987 Form 10-K.
10.20 Amendments, effective March 1, 1989 and January 1, 1990, to the FTX Supplemental Executive Capital Accumulation Plan. Incorporated by reference to Exhibit 10.20 to the FMP 1989 Form 10-K.
10.21 Amendment, effective May 1, 1991, to the FTX Supplemental Executive Capital Accumulation Plan. Incorporated by reference to Exhibit 19.1 to the FTX 1991 Third Quarter Form 10-Q.
10.22 Annual Incentive Plan of FTX, as amended. Incorporated by reference to Exhibit 10.18 to the FTX 1992 Form 10-K.
10.23 1992 Long-Term Performance Incentive Plan of FTX. Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of FTX for the quarter ended June 30, 1992 (the "FCX 1992 Second Quarter Form 10-Q").
10.24 1987 Long-Term Performance Incentive Plan of FTX, as amended. Incorporated by reference to Exhibit 10.15 to the FRP 1991 Form 10-K.
10.25 FTX Variable Compensation Incentive Program, as amended. Incorporated by reference to Exhibit 19.4 to the FTX 1991 Third Quarter Form 10-Q.
10.26 Incentive Compensation Plan of FTX. Incorporated by reference to Exhibit 20.3 to the Quarterly Report on Form 10-Q of FTX for the Quarter ended June 30, 1981.
10.27 FTX Performance Incentive Awards Program, as amended. Incorporated by reference to Exhibit 19.5 to the FTX 1991 Third Quarter Form 10-Q.
10.28 FTX 1992 Stock Option Plan. Incorporated by reference to Exhibit 10.3 to the FCX 1992 Second Quarter Form 10-Q.
10.29 1982 Stock Option Plan of FTX, as amended. Incorporated by reference to Exhibit 19.6 to the FTX 1991 Third Quarter Form 10-Q.
10.30 FTX 1992 Stock Incentive Unit Plan. Incorporated by reference to Exhibit 10.2 to the FCX 1992 Second Quarter Form 10-Q.
10.31 1988 Stock Option Plan for Non- Employee Directors of FTX, as amended. Incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q of FTX for the quarter ended June 30, 1992.
10.32 FTX 1991 Plan for Deferral of Directors' Fees. Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of FTX for the fiscal year ended December 31, 1991.
10.33 FTX Directors' Charitable Gift Program. Incorporated by reference to Exhibit 10.29 to the FTX 1992 Form 10-K.
10.34 FTX Matching Gifts Program. Incorporated by reference to Exhibit 10.30 to the FTX 1992 Form 10-K.
10.35 Financial Counseling and Tax Return Preparation and Certification Program of FTX. Incorporated by reference to Exhibit 10.31 to the FTX 1992 Form 10-K.
10.36 FTX Executive Universal Life Insurance Plan. Incorporated by reference to Exhibit 10.32 to the FTX 1992 Form 10-K.
10.37 Letter Agreement dated January 2, 1986 between FTX and Benno C. Schmidt. Incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K of FTX for the fiscal year ended December 31, 1985.
10.38 Agreement for Consulting Services between FTX and B. M. Rankin, Jr., effective as of January 1, 1990. Incorporated by reference to Exhibit 19.2 to the Quarterly Report on Form 10-Q of FTX for the quarter ended March 31, 1990.
10.39 Consulting Agreement dated as of December 22, 1988, between FTX and Kissinger Associates, Inc. ("Kissinger Associates"). Incorporated by reference to Exhibit 10.35 to the FTX 1992 Form 10-K.
10.40 Letter Agreement dated May 1, 1989, between FTX and Kent Associates, Inc. (predecessor in interest to Kissinger Associates). Incorporated by reference to Exhibit 10.36 to the FTX 1992 Form 10-K.
11.1 FTX and Consolidated Subsidiaries Computation of Net Income Per Common and Common Equivalent Share.
12.1 FTX Computation of Ratio of Earnings to Fixed Charges.
13.1 Those portions of the 1993 Annual Report to stockholders of FTX which are incorporated herein by reference.
18.1 Letter from Arthur Andersen & Co. concerning changes in accounting principles.
21.1 Subsidiaries of FTX.
23.1 Consent of Arthur Andersen & Co. dated March 25, 1994.
24.1 Certified resolution of the Board of Directors of FTX authorizing this report to be signed on behalf of any officer or director pursuant to a Power of Attorney.
24.2 Powers of Attorney pursuant to which this report has been signed on behalf of certain officers and directors of FTX.
99.1 Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1993.
99.2 Annual report on Form 10-K of FCX for the fiscal year ended December 31, 1993.