Notes Payable.  As discussed in Note 2, FCX acquired the 85.7 percent ownership interest in Puncakjaya Power owned by affiliates of Duke Energy Corporation in July 2003. Puncakjaya Power’s bank debt is secured by the power-related assets operated by Puncakjaya Power. 

At December 31, 2003, FCX and PT Freeport Indonesia had vendor-financed equipment loans secured by certain PT Freeport Indonesia assets. The FCX loan had a $19.3 million balance. PT Freeport Indonesia had three equipment loans with this vendor ($43.4 million outstanding at December 31, 2003) and had capital leases with this vendor totaling $47.6 million at December 31, 2003. Interest rates on all of the equipment loans and the leases are variable. In 2004, FCX and PT Freeport Indonesia paid the outstanding balances of their loans and PT Freeport Indonesia had capital leases totaling $72.5 million at December 31, 2004. 

Atlantic Copper has a variable-rate project loan (the Atlantic Copper facility). In February 2004, FCX used a portion of the proceeds from the sale of the 6 7 /8% Senior Notes (see below) to repay $162.4 million of Atlantic Copper’s borrowings and to refinance certain other FCX debt maturities. Atlantic Copper recorded a $3.7 million charge for losses on early extin- guishment of debt for repayment of certain of its debt. As of December 31, 2004, the variable-rate project loan, nonrecourse to FCX, consisted of a $50.0 million working capital revolver ($4.4 million outstanding at December 31, 2004) that matures December 2007. Subsequent to December 31, 2004, the commitment was reduced to $44.0 million. The Atlantic Copper facility restricts other borrowings and borrowings under the facility are secured by certain Atlantic Copper receivables and inventory. Atlantic Copper’s other working capital revolver required 20 percent of amounts borrowed under the facility to be deposited in a restricted account which totaled $11.0 million at December 31, 2003. 

FCX and PT Freeport Indonesia have a $195 million revolving credit facility, which matures in September 2006. The facility sets limitations on liens and limitations on transactions with affiliates, and requires that certain financial ratios be main- tained. The credit facility allows common stock dividends, common stock purchases and investments as long as avail- ability under the facility plus available cash exceeds $200 million or otherwise as long as certain other thresholds are exceeded. Security for obligations outstanding under the credit facility includes over 80 percent of PT Freeport Indonesia’s assets, 50.1 percent of the outstanding stock of PT Freeport Indonesia, the outstanding stock of PT Indocopper Investama owned by FCX, and a pledge of PT Freeport Indonesia’s rights under its Contract of Work (see Note 10). PT Freeport Indonesia and FCX guarantee each other’s obligations under the credit facility. No amounts are currently outstanding under the facility. FCX and PT Freeport 

Indonesia recorded charges to other expense totaling $5.6 million, $3.7 million to net income, in 2003 to accelerate amortization of deferred financing costs related to the prior credit facility. 

Senior Notes.  In February 2003, FCX sold $575 million of 7% Convertible Senior Notes due 2011 for net proceeds of $559.1 million. Interest on the notes is payable semian- nually on March 1 and September 1 of each year, beginning September 1, 2003. The notes are convertible, at the option of the holder, at any time on or prior to maturity into shares of FCX’s common stock at a conversion price of $30.87 per share, which is equal to a conversion rate of approximately 32.39 shares of common stock per $1,000 principal amount of notes. The notes are unsecured. 

In January 2003, FCX sold $500 million of 10 1 /8% Senior Notes due 2010 for net proceeds of $487.3 million. Interest on the notes is payable semiannually on February 1 and August 1 of each year, beginning August 1, 2003. FCX may redeem some or all of the notes at its option at a make- whole redemption price prior to February 1, 2007, and after- wards at stated redemption prices. The indenture governing the notes contains restrictions and limitations on incurring debt, creating liens, entering into sale leaseback transac- tions, taking actions to limit distributions from certain subsidiaries, selling assets, entering into certain transactions with affiliates, paying cash dividends on common stock, repurchasing or redeeming common or preferred equity, prepaying subordinated debt and making investments. The notes are unsecured. 

In February 2004, FCX sold $350 million of 6 7 /8% Senior Notes due 2014 for net proceeds of $344.4 million. Interest on the notes is payable semiannually on February 1 and August 1 of each year, beginning August 1, 2004. FCX may redeem some or all of the notes at its option at a make-whole redemption price prior to February 1, 2009, and afterwards at stated redemption prices. The indenture governing the notes contains certain restrictions, including restrictions on incurring debt, creating liens, selling assets, entering into certain transactions with affiliates, paying cash dividends on common stock, repurchasing or redeeming common or preferred equity, prepaying subordinated debt and making investments. During the second quarter of 2004, FCX purchased in the open market $9.7 million of the 6 7 /8% Senior Notes for $8.8 million, which, including deferred financing costs, resulted in a gain of $0.8 million recorded as a reduction to losses on early extinguishment and conversion of debt. 

In April 2003, FCX concluded tender offers for its 7.20% Senior Notes due 2026 and its 7.50% Senior Notes due 2006. Of the total $450 million outstanding at December 31, 2002, 

