FREEPORT-McMoRan COPPER & GOLD INC. REPORTS THIRD-QUARTER 2001 RESULTS.Business Editors NEW ORLEANS--(BUSINESS WIRE)--Oct. 16, 2001 Freeport-McMoRan Freeport-McMoRan Copper & Gold Inc., (NYSE: FCX) often called simply Freeport, is the world's lowest-cost copper producer and one of the world's largest producers of gold. Copper & Gold Inc. (NYSE NYSE See: New York Stock Exchange :FCX FCX French Connexion (gaming site) FCX Freeport-McMoran Copper & Gold Inc (stock symbol) FCX Fuel Cell Experiment (Honda) FCX Fire Coordination Exercise FCX Fire Control Exercise ) HIGHLIGHTS
-- Third-Quarter 2001 earnings: $0.03 net income per share; vs. prior year:
$0.06 net loss per share.
-- Quarterly operating cash flows: $184 million; $475 million year-to-date.
-- Third-Quarter net debt reductions: $95 million; $272 million year-to-date.
-- Quarterly sales: 350.6 million pounds of copper; 686,300 ounces of gold,
higher than previous estimates.
-- Unit net cash production cost: $0.05 per pound of copper; vs. $0.33 per
pound last year.
-- Quarterly operating records: 244,600 metric tons of ore throughput per day;
89.9 percent gold recovery rate.
-- Successful refinancing transactions: $604 million 8 1/4% convertible senior
notes offering and extension of bank credit facilities through December 2005.
Third Quarter Nine Months
------------------------ -------------------------
2001 2000 2001 2000
----------- ----------- ----------- ------------
(In thousands, except per share amounts)
Revenues $ 441,238 $ 473,837 $ 1,426,584 $ 1,338,777
Operating income 109,994 90,099 449,856 273,291
Net income (loss) 4,248 (9,192) 78,579 (18,564)
Diluted net income
(loss) per share .03 (.06) .54 (.12)
Diluted average
shares outstanding 144,658 150,088 144,907 156,597
Freeport-McMoRan Copper & Gold Inc. (FCX) reported third-quarter 2001 net income applicable to common stock of $4.2 million, $0.03 per share, compared with a third-quarter 2000 net loss of $9.2 million, $0.06 per share. For the nine months ended September September: see month. 30, 2001, FCX reported net income of $78.6 million, $0.54 per share, compared with a net loss of $18.6 million, $0.12 per share, a year ago. Mr. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. R. Moffett Moffett may refer to:
Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. despite today's low Today's Low The intra-day low trading price. Notes: In other words, this is the lowest price that a stock traded at during the course of the day. More often than not this is lower than the closing price. See also: Today's High commodity price environment. Our mining complex, located in the remote province of Papua Papua, province, Indonesia Papua (păp`  ə, –y (Irian Jaya Irian Jaya, province, Indonesia: see Papua. ),
Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. , has not been impacted by today's world political
situation."Mr. Moffett continued, "Our successful $604 million convertible senior notes offering in August reflects the market's confidence in the continuing strong operating and financial performance of our Indonesian mining unit. This offering and the extension of our bank credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities through the end of 2005 give us the financial flexibility to continue to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our business plan." PRODUCTION AND SALES. FCX's Indonesian mining unit, PT Freeport Freeport, city, Bahamas Freeport, city (1990 pop. 25,115), Grand Bahama Island, Bahamas. A popular resort area, it developed out of a 1955 agreement between the Bahamian colonial government and a private development company to create a free port and Indonesia (PT-FI), recorded sales of 350.6 million pounds of copper and 686,300 ounces of gold during the third quarter of 2001, compared with 388.3 million pounds of copper and 422,700 ounces of gold during the third quarter of 2000. Gold sales were 62 percent higher in the 2001 third quarter compared to 2000 because of a significant improvement in gold grade, record gold recoveries (89.9 percent compared to prior year recoveries of 82.1 percent) and record mill throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. of 244,600 metric tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. of ore ore, metal-bearing mineral mass that can be profitably mined. Nearly all rock deposits contain some metallic minerals, but in many cases the concentration of metal is too low to justify mining the ore. per day compared to 221,500 metric tons per day last year. Copper sales were 10 percent lower than the prior year quarter primarily because of lower copper ore grades Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly and recoveries. PT-FI estimates fourth-quarter 2001 sales to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 330 million pounds of copper and 440,000 ounces of gold, reflecting previously reported expected lower ore grades. Because of the immense size of the Grasberg ore body, there are periods such as the upcoming quarter when the sequencing of mining results in production from ore that is economical, but lower than average in grade. PT-FI expects its sales for 2001 to approximate 1.4 billion pounds of copper and nearly 2.6 million ounces of gold, an increase from 2000 of over 650,000 ounces reflecting higher gold ore grades and recoveries. At September 30, 2001, concentrate sales containing 175.4 million pounds of copper were provisionally pro·vi·sion·al adj. Provided or serving only for the time being. See Synonyms at temporary. n. 1. A person hired temporarily for a job, typically before having taken an examination qualifying the person for permanent priced at an average of $0.64 per pound and remain subject to final pricing over the next several months. Each $0.01 change in the price realized from the provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. price would result in an approximate $0.9 million, $0.006 per share, effect on FCX's 2001 net income. Third-quarter 2001 earnings were reduced by $4.7 million, $0.03 per share, because of downward pricing adjustments to provisionally priced sales recognized in prior quarters. CASH PRODUCTION COSTS. PT-FI remains the world's lowest-cost copper producer. Average unit net cash production costs, including gold and silver credits, were $0.05 per pound of copper during the third quarter of 2001, compared with $0.33 per pound in the third quarter of 2000. Lower unit production and delivery costs ($0.41 in 2001 compared with $0.44 in 2000) and higher gold credits per pound of copper ($0.55 in 2001 versus $0.31 in 2000) were the primary reasons for the improvement in third-quarter 2001 average unit net cash production costs. Compared with the prior-year period, third-quarter 2001 unit net production and delivery costs benefited from the previously reported change in the estimated ratio of waste rock to ore over the life of the mine and the effect of weaker foreign currencies, partially offset by lower volumes. Unit net cash production costs for 2001 are expected to average less than $0.10 per pound of copper. SMELTER OPERATIONS. FCX's investment in smelters serves an important role in its concentrate marketing strategy. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. one-half of PT-FI's concentrate production is sold to its affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: smelters, Atlantic Copper and PT Smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. , and the remainder is sold to other customers. Through downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). integration, FCX is able to achieve operating hedges for changes in treatment charges for smelting and refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar PT-FI's copper concentrates. While the current low smelter treatment and refining charges adversely affect the operating results of our smelter operations, they benefit the operating results of the mining operations of PT-FI. Taking into account taxes and minority ownership interests, an equivalent change in smelting and refining charge rates would essentially offset in FCX's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: operating results. Atlantic Copper, FCX's wholly owned Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. smelting unit, treated 240,100 metric tons of concentrate in the third quarter of 2001, 2 percent less than the 245,200 metric tons treated in the year-ago quarter. Anode anode (ăn`ōd), electrode through which current enters an electric device. In electrolysis, it is the positive electrode in the electrolytic cell. anode Terminal or electrode from which electrons leave a system. production of 169.6 million pounds exceeded the 164.3 million pounds reported last year and cathode production of 138.9 million pounds was slightly lower than the 147.3 million pounds of cathode production reported in the third quarter of 2000. Unit cathode cash production costs remained unchanged at $0.12 per pound in the 2001 quarter compared to the 2000 quarter. Atlantic Copper expects cathode cash production costs per pound of copper to average approximately $0.12 per pound for the fourth quarter of 2001. Atlantic Copper recorded operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $0.3 million for the third quarter of 2001, compared with a $14.7 million operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the 2000 period. The 2000 period included mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. losses totaling $19.1 million on Atlantic Copper's euro hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. contracts, prior to FCX's adoption of new accounting rules for hedging contracts on January January: see month. 1, 2001, as described below. FCX's third-quarter 2001 financial results also reflect an approximately $0.03 per share noncash charge Noncash charge A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow. That is, this is treated as an accounting expense -- not a real expense that demands cash. for the effect of the strengthened euro dollar on a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. pension liability for Atlantic Copper. Accounting standards require assets and liabilities denominated in a foreign currency to be adjusted as exchange rates fluctuate and the adjustments must be included in current period earnings. Beginning in 2001, the effect of exchange rate fluctuations on FCX's hedges for future operating and interest costs are reported in stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. as other comprehensive income and not in current earnings. During the third quarter, FCX recorded a net gain of $10.1 million, $0.07 per share, as other comprehensive income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the hedge positions for Atlantic Copper and PT-FI. Profits on intercompany sales from PT-FI to Atlantic Copper that remain in Atlantic Copper's inventories are deferred and recognized as income when the copper concentrate is processed and sold. The impact of deferred intercompany sales to Atlantic Copper resulted in reductions to FCX's net income totaling $4.8 million, $0.03 per share, in the third quarter of 2001, compared with a $4.3 million reduction in net income, $0.03 per share, in the third quarter of 2000. PT Smelting, PT-FI's 25 percent-owned Indonesian smelting unit, operated at 111 percent of its design capacity of 200,000 metric tons of copper per year during the third quarter of 2001. PT Smelting's copper cathode cash production costs per pound totaled $0.12 in the 2001 quarter compared with $0.09 in the 2000 quarter. Unit costs were higher in the 2001 quarter because of higher maintenance costs. FCX recorded operating income of $1.9 million, $0.7 million ($0.005 per share) to net income, for its equity interest in PT Smelting during the third quarter of 2001, compared with a $5.4 million charge, $3.7 million ($0.02 per share) to net income in the 2000 quarter. Third-quarter 2001 operating income included the recognition of $2.8 million of previously deferred income associated with intercompany sales to PT Smelting, while the third quarter of 2000 included a $1.8 million deferral deferral - Waiting for quiet on the Ethernet. of operating income. CASH FLOWS AND DEBT REPAYMENTS. FCX generated operating cash flows of $184.3 million during the third quarter of 2001, of which $95 million was used to reduce net debt and commodity preferred stocks Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. (net of $139.8 million of restricted investments in U.S. government securities purchased as security for future interest payments) and $38.1 million for capital expenditures. For the nine months ended September 30, 2001, FCX generated $475.1 million of operating cash flow and net debt was reduced by $272 million, net of restricted investments. SALE OF CONVERTIBLE SENIOR NOTES AND AGREEMENT TO AMEND amend v. to alter or change by adding, subtracting, or substituting. One can amend a statute, a contract or a written pleading filed in a law suit. The change is usually called an amendment. CREDIT FACILITIES. As previously announced in August 2001, FCX sold $603.8 million of 8 1/4% Convertible Senior Notes due August 2006. Net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). were used to reduce outstanding amounts under the FCX/PT-FI bank credit facilities, with a portion used to purchase U.S. government securities totaling $139.8 million as security for the first six scheduled semi-annual interest payments. As of September 30, 2001, borrowings under FCX's bank credit facilities were $214.0 million. As previously announced, FCX is amending its bank credit facilities to extend the maturities through December December: see month. 2005 with lending commitments of $734 million, including $253.4 million if FCX is required to perform under its guarantee of the debt of PT Nusamba Mineral Industri which matures in March 2002. If FCX were to be required to perform under this guarantee, it would acquire rights to Nusamba's 4.7 percent interest in PT-FI. TRUST FUND FOR TRIBAL COMMUNITIES. As previously announced, FCX and PT-FI have established a trust for the Amungme The Amungme are a Melanesian group of about 13,000 people living in the highlands of the Papua province of Indonesia. They practice shifting agriculture, supplementing their livelihood by hunting and gathering. and Kamoro tribes in villages closest to PT-FI's operations for voluntary special recognition of their traditional land rights in the Grasberg mining area, as part of an agreement first outlined with these tribes in 1996. Under the agreement, PT-FI will fund $500,000 per year to the trust and has provided $2.5 million ($2.2 million, net of Rio See RapidIO and MP3. Tinto's share) representing funding for 1996 through 2000. The Amungme and Kamoro leaders have indicated that they intend to use a portion of the funds to purchase FCX shares in the public market to be owned and held by the trust. EXPLORATION. The reserve extension drilling program has been completed at the Ertsberg Stockwork Stock´work` n. 1. (Mining) A system of working in ore, etc., when it lies not in strata or veins, but in solid masses, so as to be worked in chambers or stories. 2. (Geol. Zone (ESZ ESZ Emergency Service Zone (geographic area defining an Emergency Service Number, ESN) ), adjacent to the Deep Ore Zone (DOZ DOZ Dozen Doz Dozent (German) DOZ Description Out of Zip ) mine. The results indicate an expansion of the footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. of the lower ESZ mining block and additional filling in of ore between the DOZ mine reserve and the ESZ reserve. PT-FI is currently evaluating the potential for exploiting the two deposits as one, by an outward extension of the DOZ mine infrastructure. Exploration drilling also continues at the Grasberg Underground. This drilling at the perimeter The boundary of a system or network, which defines the inside and outside. It is typically determined by firewalls and addresses. See DMZ. of the Grasberg intrusion Unauthorized access to a computer system or network. See intruder and IDS. is directed at closing the gap between the Grasberg block cave mine reserve and the Kucing Liar Liar - MIT Scheme mine reserve. The exploration drilling program at GBT-A (also previously referred to as Guru Ridge ridge (rij) a linear projection or projecting structure; a crest. dental ridge any linear elevation on the crown of a tooth. dermal ridges cristae cutis. ) has been completed. With current copper and gold metals prices, PT-FI will not pursue current development of this surface deposit, but will continue to study and evaluate the prospect and mining opportunities for other smaller near-surface ore bodies, including the Dom Dom (dōm), peak, 14,942 ft (4,554 m) high, Valais canton, S Switzerland, in the Mischabelhörner group. It is the highest peak entirely in Switzerland. ore body. FCX explores for, develops, mines and processes ore containing copper, gold and silver in Indonesia, and smelts
Smelts are a family, Osmeridae, of small anadromous fish. and refines copper concentrates in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. and Indonesia. Cautionary Statement. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 statements regarding anticipated sales volumes, projected unit production costs and the impact of copper price changes. Important factors that might cause future results to differ from these projections include industry risks, commodity prices, Indonesian political risks and other factors described in FCX's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2000 filed with the Securities and Exchange Commission. A copy of this press release is available by calling 800/469-1253 and on our web site at "www.fcx.com." A conference call with securities analysts about third-quarter 2001 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Interested parties may listen to the conference call live by accessing the call on "www.fcx.com" or "www.ccbn.com." A replay of the call will be available through Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November November: see month. 9, 2001.
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA
(Page 1 of 2)
Third Quarter Nine Months
-------------------------- --------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
PT Freeport Indonesia, Net of Rio Tinto's Interest
Copper
Production
(000s of
recoverable
pounds) 341,000 362,500 1,077,200 958,300
Sales (000s of
recoverable
pounds) 350,600 388,300 1,073,800 950,400
Average
realized
price $ .65 $ .86 $ .70 $ .83
Gold
Production
(recoverable
ounces) 673,800 385,400 2,156,200 1,191,500
Sales
(recoverable
ounces) 686,300 422,700 2,144,600 1,197,400
Average
realized
price $ 277.08 $ 276.23 $ 268.70 $ 281.02
Silver
Production
(recoverable
ounces) 872,700 894,200 3,009,700 2,393,900
Sales
(recoverable
ounces) 892,400 950,900 2,998,900 2,353,500
Average
realized
price $ 6.33 $ 5.48 $ 4.96 $ 5.18
PT Freeport Indonesia, Gross Profit per Pound of Copper (cents):
Average realized
price 65.4 86.3 69.9 83.0
----------- ----------- ----------- -----------
Production costs:
Site production
and delivery 40.7(a) 43.7(b) 37.4(a) 46.9(b)
Gold and silver
credits (55.1) (31.3) (54.8) (36.7)
Treatment
charges 18.0 18.8 18.1 18.3
Royalty
on metals 1.7 1.3 1.9 1.3
----------- ----------- ----------- -----------
Cash
production
costs 5.3 32.5 2.6 29.8
Depreciation and
amortization 18.0 18.0 18.0 18.0
----------- ----------- ----------- -----------
Total
production
costs 23.3 50.5 20.6 47.8
----------- ----------- ----------- -----------
Adjustments,
primarily for
copper pricing
on prior period
open sales (2.9) 1.9 -- 0.2
----------- ----------- ----------- -----------
Gross profit
per pound
of copper 39.2 37.7 49.3 35.4
=========== =========== =========== ===========
a. Amounts are net of deferred mining costs totaling $8.1 million or
2.3 cents per pound in the third quarter of 2001 and $26.2 million
or 2.4 cents per pound in the first nine months of 2001. During
the fourth quarter of 2000, PT Freeport Indonesia changed its
estimated average ratio of waste rock to ore over the life of the
mine in its deferred mining calculation to 1.6 to 1 from 2.4 to 1.
b. Net of deferred mining costs totaling $3.3 million (0.9 cents per
pound) in the third quarter of 2000 and includes recaptured mining
costs totaling $9.9 million or 1.0 cents per pound in the first
nine months of 2000.
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA
(Page 2 of 2)
Third Quarter Nine Months
-------------------------- --------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
PT Freeport Indonesia, 100% Operating Statistics
Ore milled
(metric tons
per day) 244,600 221,500 238,100 223,900
Average ore grade
Copper (percent) 0.96 1.09 1.04 0.99
Gold (grams per
metric ton) 1.36 0.89 1.53 0.92
Gold (ounce
per metric ton) .044 .029 .049 .030
Silver (grams
per metric ton) 3.03 2.62 3.27 2.73
Silver (ounce
per metric ton) .098 .084 .105 .088
Recovery rates
(percent)
Copper 85.3 88.8 87.1 87.1
Gold 89.9 82.1 89.0 83.7
Silver 58.9 68.4 60.4 57.4
Copper (000s of
recoverable pounds)
Production 389,900 415,400 1,237,200 1,112,600
Sales 401,000 445,700 1,233,600 1,103,900
Gold (recoverable
ounces)
Production 887,700 470,900 2,816,200 1,470,800
Sales 903,900 517,500 2,798,700 1,476,100
Silver (recoverable
ounces)
Production 1,009,700 930,600 3,353,900 2,525,200
Sales 1,030,200 992,500 3,346,300 2,500,500
Atlantic Copper
Concentrate treated
(metric tons) 240,100 245,200 640,900 728,400
Anodes (000s of
pounds)
Production 169,600 164,300 447,900 510,400
Sales 30,100 12,900 59,800 75,500
Cathodes (000s
of pounds)
Production 138,900 147,300 376,900 435,700
Sales (including
wire rod and
wire) 138,000 143,200 402,700 427,400
Gold sales in
anodes and
slimes (ounces) 274,900 119,000 564,100 503,400
Cathode cash
production
cost per
pound before
hedging $ .12 $ .12 $ .15 $ .13
PT Smelting, 25%-owned by PT Freeport Indonesia
Concentrate
treated
(metric tons) 178,800 185,700 520,200 404,000
Anodes (000s
of pounds)
Production 122,000 120,000 356,800 258,700
Sales 300 8,000 7,500 23,000
Cathodes (000s
of pounds)
Production 121,900 106,500 349,300 234,300
Sales 119,600 100,000 347,600 228,800
Cathode cash
production
cost per
pound $ .12 $ .09 $ .12 $ .13
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(In Thousands, Except Per Share Amounts)
Revenues $ 441,238(a) $ 473,837(a) $ 1,426,584(a) $ 1,338,777(a)
Cost of sales:
Production
and delivery 245,168(b) 278,886(c,d) 706,362(b) 798,234(d)
Depreciation and
amortization 71,000 77,825 217,448 195,512
----------- ----------- ----------- -----------
Total cost
of sales 316,168 356,711 923,810 993,746
Exploration
expenses 1,989 2,915(c) 6,460 6,724
Equity in PT
Smelting
(earnings)
losses (1,875) 5,383 945 9,020
General and
administrative
expenses 14,962 18,729(c) 45,513 55,996(e)
----------- ----------- ----------- -----------
Total
costs and
expenses 331,244 383,738 976,728 1,065,486
----------- ----------- ----------- -----------
Operating
income 109,994 90,099 449,856 273,291
Interest
expense, net (40,115) (53,539) (129,945) (153,287)
Other income
(expense), net (7,915) 5,598 (4,795) 5,014
----------- ----------- ----------- -----------
Income before
income taxes
and minority
interests 61,964 42,158 315,116 125,018
Provision for
income taxes (40,285) (34,752) (173,308) (93,477)
Minority
interests in
net income of
consolidated
subsidiaries (8,247) (7,252) (35,855) (21,832)
----------- ----------- ----------- -----------
Net income 13,432 154 105,953 9,709
Preferred
dividends (9,184) (9,346) (27,374) (28,273)
----------- ----------- ----------- -----------
Net income (loss)
applicable
to common
stock $ 4,248 $ (9,192) $ 78,579 $ (18,564)
=========== =========== =========== ===========
Net income (loss)
per share of
common stock:
Basic $ .03 $ (.06) $ .55 $ (.12)
=========== =========== =========== ===========
Diluted $ .03 $ (.06) $ .54 $ (.12)
=========== =========== =========== ===========
Average common shares
outstanding:
Basic 143,973 150,088 143,944 156,597
=========== =========== =========== ===========
Diluted 144,658 150,088 144,907 156,597
=========== =========== =========== ===========
a. Includes adjustments to prior period concentrate sales totaling
$(13.2) million in the 2001 quarter, $5.1 million in the 2000
quarter, $(2.8) million in the 2001 nine-month period and $10.5
million in the 2000 nine-month period.
b. Includes a $2.2 million charge for the initial funding of a trust
to be established for voluntary special recognition of tribal
communities' traditional land rights in the PT Freeport Indonesia
operations area.
c. Includes charges totaling $2.8 million to production and delivery
costs, $0.6 million to exploration expenses and $2.3 million to
general and administrative expenses for personnel severance costs.
d. Includes net charges totaling $26.6 million in the 2000 quarter
and $33.2 million in the 2000 nine-month period for the impact of
weaker foreign currencies.
e. Includes net charges totaling $7.6 million, consisting of a $6.0
million charge for contribution commitments to support small
business development programs within Papua (Irian Jaya) over a
two-year period and charges totaling $3.1 million for personnel
severance costs, partly offset by a $1.5 million reversal of costs
for stock appreciation rights caused by the decrease in FCX's
common stock price during the first quarter of 2000.
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED BALANCE SHEETS (Unaudited)
September 30, December 31,
2001 2000
----------- -----------
(In Thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 32,874 $ 7,968
Restricted investments 49,809 --
Accounts receivable 118,573 149,085
Inventories 375,883 400,607
Prepaid expenses and other 3,928 11,462
----------- -----------
Total current assets 581,067 569,122
Property, plant and equipment, net 3,206,402 3,248,710
Restricted investments 90,750 --
Investment in PT Smelting 55,209 56,154
Other assets 102,256 76,755
----------- -----------
Total assets $ 4,035,684 $ 3,950,741
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 334,330 $ 313,208
Current portion of long-term debt
and short-term borrowings 112,990 202,294
Unearned customer receipts 65,660 28,688
Rio Tinto share of joint venture cash flows 55,908 78,706
Accrued income taxes 31,071 11,016
----------- -----------
Total current liabilities 599,959 633,912
Long-term debt, less current portion:
FCX and PT Freeport Indonesia credit
facilities 214,000 760,000
Convertible senior notes 603,750 --
Senior notes 450,000 450,000
Infrastructure asset financings 389,101 457,673
Atlantic Copper debt 233,128 246,727
Equipment and other loans 66,833 73,331
Accrued postretirement benefits and other
liabilities 118,160 112,831
Deferred income taxes 651,028 599,536
Minority interests 138,186 103,795
Redeemable preferred stock 462,504 475,005
Stockholders' equity 109,035 37,931
----------- -----------
Total liabilities and stockholders' equity $ 4,035,684 $ 3,950,741
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FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30,
--------------------------
2001 2000
----------- -----------
(In Thousands)
Cash flow from operating activities:
Net income $ 105,953 $ 9,709
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 217,448 195,512
Deferred income taxes 51,171 18,707
Equity in PT Smelting losses 945 9,020
Minority interests' share of net income 35,855 21,832
Other, including change in deferred mining
costs (19,284) 27,511
(Increases) decreases in working capital:
Accounts receivable 30,347 5,090
Inventories 20,243 (30,571)
Prepaid expenses and other 7,495 8,077
Accounts payable and accrued liabilities 22,884 93,019
Rio Tinto share of joint venture cash
flows (15,797) (11,147)
Accrued income taxes 17,857 (41,838)
----------- -----------
Decrease in working capital 83,029 22,630
----------- -----------
Net cash provided by operating activities 475,117 304,921
----------- -----------
Cash flow from investing activities:
Purchase of restricted investments (139,762) --
PT Freeport Indonesia capital
expenditures (109,400) (117,950)
Atlantic Copper capital expenditures (9,382) (8,377)
Investment in PT Smelting -- (5,717)
Other 4,572 13
----------- -----------
Net cash used in investing activities (253,972) (132,031)
----------- -----------
Cash flow from financing activities:
Proceeds from sale of convertible senior
notes 582,619 --
Proceeds from other debt 77,523 399,601
Repayments of debt (802,115) (331,674)
Purchases of FCX common shares (3,436) (158,731)
Partial redemption of preferred stock (10,386) (11,893)
Cash dividends paid:
Preferred stock (27,419) (28,464)
Minority interests (6,786) (31,757)
Other (6,239) (10,692)
----------- -----------
Net cash used in financing activities (196,239) (173,610)
----------- -----------
Net increase (decrease) in cash and cash
equivalents 24,906 (720)
Cash and cash equivalents at beginning
of year 7,968 6,698
----------- -----------
Cash and cash equivalents at end of period $ 32,874 $ 5,978
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