Exhibit 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission file number 1-9164
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Organized in Delaware I.R.S. Employer Identification No. 72-1067072
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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Depositary Units New York Stock Exchange
8 3/4% Senior Subordinated Notes due 2004 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Depositary Units held by non-affiliates of
the registrant was approximately $754,133,000 on March 10, 1995.
Documents Incorporated by Reference
Portions of the registrant's Annual Report to unitholders for the year ended
December 31, 1994 (Parts I, II, III and IV).
TABLE OF CONTENTS
Page
Part I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Items 1 and 2. Business and Properties . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . 1
Management . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agricultural Minerals. . . . . . . . . . . . . . . . . . . . 2
Fertilizer Business . . . . . . . . . . . . . . . . . . . 2
Sulphur Business. . . . . . . . . . . . . . . . . . . . . 6
Oil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Competition. . . . . . . . . . . . . . . . . . . . . . . . 9
Research and Development . . . . . . . . . . . . . . . . . . 10
Environmental Matters. . . . . . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . . . . . . 11
Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters. . . . . . . . . . . . . . 12
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . 12
Item 8. Financial Statements and Supplementary Data. . . . . . . . 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . 12
Part III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 10. Directors and Executive Officers
of the Registrant . . . . . . . . . . . . . . . . . . . . 13
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . . . . . . 17
Part IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K . . . . . . . . . . . . . . . . . 17
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . F-1
Report of Independent Public Accountants. . . . . . . . . . . . . . . F-1
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
PART I
Items 1 and 2. Business and Properties.
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INTRODUCTION
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP"), a
Delaware limited partnership organized in 1986, participates in one of the
largest and lowest cost phosphate fertilizer producers in the world through
its joint venture interest in IMC-Agrico Company, a Delaware general
partnership ("IMC-Agrico"). IMC-Agrico's business includes the mining and
sale of phosphate rock, the production, distribution and sale of phosphate
fertilizers, and the extraction of uranium oxide from phosphoric acid. FRP's
business also includes the mining, purchase, transportation, terminaling and
sale of sulphur, and the production of oil reserves at Main Pass Block 299
("Main Pass"), offshore Louisiana in the Gulf of Mexico. For information with
respect to industry segments, including export sales and major customers,
reference is made to Note 8 to the financial statements of FRP referred to on
page F-1 hereof (the "FRP Financial Statements").
In January 1995, FRP acquired essentially all of the domestic assets of
Pennzoil Sulphur Co. ("Pennzoil"), a division of Pennzoil Company, including
the Culberson mine in Texas, sulphur terminals and loading facilities in
Galveston, Texas and Tampa, Florida, land and marine transportation equipment
and associated commercial contracts and obligations. Pennzoil will receive
quarterly payments from FRP over 20 years based on the prevailing price of
sulphur.
In October 1994, FRP announced that it had agreed in principle to acquire
Fertiberia, S.L. ("Fertiberia"), the restructured nitrogen and phosphate
fertilizer business of Ercros, S.A. ("Ercros"), a Spanish conglomerate. Since
September 1993, FRP has managed this company with the goal of establishing
Fertiberia as a financially viable concern. FRP intends to continue to work
with the Spanish authorities on improving the operations of Fertiberia and
eventually to acquire substantially all of Fertiberia's outstanding stock in
return for agreeing to make a capital contribution of $11.5 million upon
closing of the acquisition and a further contingent payment of $10 million in
January 1998. As part of the agreement, $38.5 million of nonrecourse
financing has been arranged at Fertiberia with payment terms dependent upon
its financial performance. The acquisition of Fertiberia, one of the largest
fertilizer manufacturers in Europe, is subject to a number of conditions.
The Managing General Partners and the Special General Partners of FRP are
Freeport-McMoRan Inc. ("FTX"*) and FMRP Inc. ("FMRP"), a wholly owned
subsidiary of FTX. The current capitalization of FRP consists of an aggregate
1% basic general partnership interest (the "FRP Basic Interest"), units of
limited partnership interest ("FRP Units") of which a portion is deposited
with Mellon Bank, N.A., as depositary units ("FRP Depositary Units"), and
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*The term "FTX", as used in this report, means Freeport-McMoRan Inc., its
divisions, and its direct and indirect subsidiaries and affiliates other than
FRP, or any one or more of them, unless the context requires Freeport-McMoRan
Inc. only.
additional units of general partnership interest ("FRP Unit Equivalents").
FRP Depositary Units are listed and publicly traded on the New York Stock
Exchange ("NYSE"). Unless otherwise indicated, FRP Units, FRP Depositary
Units and FRP Unit Equivalents are sometimes hereinafter referred to,
individually and collectively, as "Partnership Units".
Including the FRP Basic Interest, FTX and FMRP, as of March 10, 1995,
held Partnership Units representing an approximate 51.4% interest in FRP, with
the remaining interest being publicly owned and traded on the NYSE. The
public unitholders are entitled, through the cash distribution for the fourth
quarter of 1996, to receive minimum quarterly distributions prior to any
distribution on the partnership units held by FTX and FMRP. For additional
information with respect to FRP distributions, reference is made to Note 3 to
the FRP Financial Statements.
MANAGEMENT
As provided in the FRP partnership agreement, limited partners may not
take part in the management of FRP. FTX, as Administrative Managing General
Partner, exercises all management powers over the business and affairs of FRP.
FRP does not have directors. Instead, directors and officers of FTX,
along with FRP's elected officers, perform all FRP management functions and
carry out the activities of FRP. Such elected officers of FRP continue to
be employees or officers of FTX or its subsidiaries, but, subject to certain
exceptions, are employed principally for the operation of FRP's businesses.
Pursuant to the FRP partnership agreement, FTX also furnishes general executive,
administrative, financial, accounting, legal, environmental, tax, research and
development, sales and certain other services to FRP and is reimbursed by FRP
for all direct and indirect costs in connection therewith. FTX and FMRP do
not receive any compensation as general partners of FRP. For additional
information with respect to management, reference is made to Note 6 to the FRP
Financial Statements.
AGRICULTURAL MINERALS
FRP's agricultural minerals segment consists of FRP's interest in the
IMC-Agrico fertilizer business and FRP's sulphur business.
Fertilizer Business
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IMC-Agrico Company
In July 1993, FRP and IMC Fertilizer, Inc., now IMC Global Inc. ("IGL"),
contributed their respective phosphate fertilizer businesses, including the
mining and sale of phosphate rock and the production, distribution and sale of
phosphate chemicals, uranium oxide and related products, to IMC-Agrico. At
the time, FRP and IGL were among the largest integrated phosphate fertilizer
producers in the world and both were among the lowest cost producers. As a
result of the formation of IMC-Agrico, FRP expects that it and IGL together
will be able to achieve beginning in the 1995/1996 fertilizer year
approximately $135 million per year of savings in aggregate production costs
and selling, general and administrative expenses. FRP estimates that it and
IGL actually realized $90 million of savings in the 1993/1994 fertilizer year.
Under the IMC-Agrico Partnership Agreement (the "Partnership Agreement"), IMC-
Agrico will distribute quarterly to the Partners Distributable Cash, as
defined in the Partnership Agreement, based on sharing ratios that vary from
year to year for the first five fiscal years ending June 30, 1998. The
sharing ratios are based on the parties' initial projections of their
respective contributions to the cash flow of IMC-Agrico and on an equal
sharing of the anticipated synergistic savings. For further information, see
Note 2 to the FRP Financial Statements.
IMC-Agrico is governed by a policy committee (the "Policy Committee")
with equal representation from FRP and IGL, which establishes policies
relating to the strategic direction of IMC-Agrico and assures that such
policies are implemented. The Policy Committee has the sole authority to make
certain Major Decisions, as defined in the Partnership Agreement, including
the creation of major indebtedness, major acquisitions and dispositions, and
approval of budgets, subject to the authority of the Chief Executive Officers
of FRP and IGL to resolve disputes.
Phosphate Rock
IMC-Agrico's phosphate mining operations and production plants are
located in Polk, Hillsborough, Hardee and Manatee Counties in central Florida.
IMC-Agrico mines phosphate rock for both internal production of phosphoric
acid at plants in Florida and Louisiana and phosphate rock sales to external
customers under long-term contracts and in the spot market. The rock is
reacted with sulphuric acid, produced in part from sulphur from Main Pass, to
provide phosphoric acid which is then further processed at IMC-Agrico's
fertilizer plants. IMC-Agrico's annual phosphate rock capacity is
approximately 31.5 million tons per year and accounts for approximately 54% of
U.S. phosphate rock capacity and 18% of world capacity. IMC-Agrico's
phosphate rock mines produced 20.9 million tons of phosphate rock in the year
ended December 31, 1994, compared to a total production by U.S. phosphate
mines of 41.5 million tons of phosphate rock. Production was at less than
full capacity in 1994 because of actions to control inventory.
As of December 31, 1994, FRP, through IMC-Agrico, had proved and probable
reserves of 206.7 million short tons, plus an additional 190.2 million short
tons of phosphate rock deposits. (Deposits are ore bodies which require
additional economic and mining feasibility studies before they can be
classified as reserves.) For information with respect to FRP's phosphate rock
reserves, reference is made to Note 10 to the FRP Financial Statements. For
information concerning FRP's sales of phosphate rock, see "Selected Financial
and Operating Data" on page 13 of FRP's 1994 Annual Report to unitholders,
which is incorporated herein by reference.
Phosphate Fertilizers
IMC-Agrico manufactures fertilizer and related products, including
sulphuric acid, phosphoric acid, granulated phosphates (principally diammonium
phosphate ("DAP"), monoammonium phosphate ("MAP") and granular triple
superphosphate ("GTSP")), anhydrous ammonia and urea. IMC-Agrico's fertilizer
operations consist of six plants, three in central Florida and three on the
Mississippi River in Louisiana. Although certain plants were temporarily
idled in 1994 due to weak market conditions, all of the plants were in
operation by early 1995.
IMC-Agrico's plants located in Florida consist of New Wales, Nichols and
South Pierce. The New Wales plant, located near Mulberry, Florida, has
facilities for the production of sulphuric acid, phosphoric acid, DAP, MAP and
GTSP. The Nichols facility, located at Nichols, Florida, has facilities for
the production of sulphuric acid, phosphoric acid and DAP. South Pierce,
located at Bartow, Florida, has facilities for the production of sulphuric
acid, phosphoric acid, GTSP and technical grade DAP and MAP for industrial
uses.
IMC-Agrico's Faustina, Uncle Sam and Taft plants are located in
Louisiana. The Faustina plant, located at Donaldsonville, Louisiana, has
facilities for the production of anhydrous ammonia, urea, sulphuric acid,
phosphoric acid, DAP and MAP. The Uncle Sam plant, located at Uncle Sam,
Louisiana, has facilities for the production of sulphuric acid and phosphoric
acid. The Taft plant, located at Taft, Louisiana, has facilities for the
manufacture of DAP and MAP.
IMC-Agrico's plants have an estimated annual sustainable capacity to
produce 530,000 tons of anhydrous ammonia, 260,000 tons of urea, approximately
10.4 million tons of sulphuric acid, and approximately 8.2 million tons of
granulated phosphates. IMC-Agrico's phosphoric acid capacity is approximately
4.0 million tons of contained P2O5*, approximately 32% of U.S. production
capacity and 11% of world capacity. In 1994 IMC-Agrico produced approximately
10.2 million tons of sulphuric acid, 3.7 million tons of phosphoric acid, and
7.1 million tons of granulated phosphates. For information concerning FRP's
sales of phosphate fertilizers, see "Selected Financial and Operating Data" on
page 13 of FRP's 1994 Annual Report to unitholders, which is incorporated
herein by reference.
Phosphate rock, sulphur and ammonia are the three principal raw materials
used in the production of phosphate fertilizers. Phosphate rock is supplied
by IMC-Agrico's Florida mines. FRP and IGL both have interests in a joint
venture which began mining sulphur reserves at Main Pass in April 1992. FRP
continues to operate the Main Pass joint venture through Freeport Sulphur
Company ("FSC"), its sulphur division. FRP and IGL entered into an agreement
to supply IMC-Agrico with its sulphur requirements. FRP supplies its share of
the requirements through FSC. IGL supplies its share of the requirements
through its share of Main Pass production and purchases from third parties.
IMC-Agrico's ammonia needs are fulfilled primarily by third party domestic
suppliers under long-term contracts and by internal production at its Faustina
plant.
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*P2O5 is an industry term indicating a product's phosphate content measured
chemically in units of phosphorous pentoxide.
Marketing
Since July 1993, all fertilizer marketing functions for FRP have been
handled by IGL on behalf of IMC-Agrico. IMC-Agrico markets products
throughout the eastern two-thirds of the United States in the domestic market
and, primarily through the American Phosphate Export Association ("Amphos"), a
Webb-Pomerene association, overseas. Phoschem and Phosrock, the primary units
of Amphos, market phosphate chemical fertilizers and phosphate rock,
respectively, for IMC-Agrico and other U.S. firms. Effective January 1995,
the marketing activities of Phoschem have been consolidated into those of its
member companies with IMC-Agrico marketing DAP, MAP and GTSP for the members.
This change will allow IMC-Agrico to interface directly with its major
international customers and better pursue growth and marketing opportunities.
In 1994 IMC-Agrico used approximately 59% of its phosphate rock shipments
at its plants in Florida and Louisiana, with most of the balance being sold in
the domestic market. Approximately half of IMC-Agrico's phosphate fertilizer
shipments in 1994 were sold in the domestic market, with the balance sold
abroad.
Although phosphate fertilizer sales do not vary significantly from month
to month, the largest sales periods occur prior to the fall and spring planting
of crops. Historically, domestic sales decline somewhat after the spring
planting season but this drop in domestic sales occurs at a time when
major international buyers purchase product for mid-year delivery.
World phosphate prices declined to a nearly 20 year low during mid-1993,
due to a number of factors, including a significant decline in import demand
by China; a sharp increase to record levels of U.S. producer held stocks of
finished phosphate fertilizers; intense competition in offshore markets
traditionally served by U.S. producers, particularly MAP from the former
Soviet Union; unsettled import policies in other key overseas markets such as
China and India and continued lower demand in Europe. Prices significantly
improved during 1994 as China returned to the market purchasing record
volumes. FRP believes that the price outlook for phosphate fertilizers has
improved substantially based in part on this return by China to the
marketplace at more traditional volume levels, a significant reduction in the
stocks of finished phosphate materials held by producers (in spite of near
maximum industry operating rates) and stable domestic demand.
Uranium
The phosphate rock used in the production of phosphoric acid contains
small amounts of uranium. At its uranium extraction facilities, IMC-Agrico
extracts and processes uranium oxide ("yellowcake") as a by-product of
phosphoric acid. Production of yellowcake is dependent on the quantity and
uranium content of phosphoric acid produced by its host plants. Yellowcake,
after further processing, is used as a fuel by electric utilities. Although
IMC-Agrico has the capacity to extract yellowcake at several phosphoric acid
plants, production has been suspended at certain of the plants because of the
depressed market price of yellowcake and, at present, uranium does not
significantly contribute to IMC-Agrico's revenues.
Operating and Environmental Hazards
The production of fertilizers involves the handling of chemicals, some of
which may have the potential, if released in sufficient quantities, to expose
IMC-Agrico to certain liabilities. However, IMC-Agrico has a program in place
to minimize the potential for such releases. FRP, through FTX, and IMC-Agrico
carry insurance for certain of these risks, and management believes that the
types and limits of such insurance coverages are adequate and consistent with
prudent business practices.
Sulphur Business
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FRP, through FSC, is involved in the mining, purchase, transportation,
terminaling and sale of sulphur. In January 1995, FRP acquired essentially
all of the domestic assets of Pennzoil, including the Culberson mine in Texas,
sulphur terminals and loading facilities in Galveston, Texas and Tampa,
Florida, land and marine transportation and equipment and associated
commercial contracts and obligations. As a result, substantially all of FRP's
sulphur mining assets are located in the Gulf of Mexico offshore Louisiana and
in Culberson County, Texas.
Production
In January 1994, production ceased at FRP's Caminada sulphur mine,
leaving at that time the Main Pass sulphur mine, located in federal waters in
the Gulf of Mexico, as FRP's only producing sulphur mine. The Main Pass mine
utilizes the Frasch Mining process, which involves the drilling of wells and
the injection of superheated water into the underground sulphur deposit to melt
the solid sulphur, which is then brought to the surface in liquid form. FRP
has been using the Frasch process for over 80 years. FRP has also developed
technology which allows it to use sea water in the Frasch process. FRP is not
aware of any other company that has developed Frasch sulphur mines using
superheated sea water.
Main Pass, discovered by FRP in 1988, currently has the highest
production rate of any sulphur mine in the world and the largest existing
Frasch sulphur reserve in North America. The Main Pass offshore complex, more
than a mile in length, is one of the largest structures of its type in the
world and the largest in the Gulf of Mexico. The Main Pass mine, which began
initial production at minimal levels in the second quarter of 1992, is
estimated to contain proved recoverable sulphur reserves totaling 70.3 million
long tons (41.0 million long tons net to FRP) at December 31, 1994. The mine
is owned 58.3% by FRP, 25% by IGL and 16.7% by Homestake Sulphur Company
("Homestake"). The development and production of the Main Pass reserves are
being conducted by FTX, through FSC, on behalf of FRP, as operator of the Main
Pass joint venture, pursuant to a management services agreement. FTX
completed development of Main Pass in 1993. Sulphur production reached design
production capacity of 5,500 long tons per day (approximately 2 million long
tons per year) on schedule in December 1993 and has since sustained production
above that level. During 1994 production averaged 6,200 long tons per day as
FTX focused on increasing and sustaining production of Main Pass while
implementing new strategies to strengthen operating efficiencies and lower
costs. Main Pass is subject to a 12.5% federal royalty based on net mine
revenues. For additional information with respect to FRP's sulphur reserves,
reference is made to Note 10 to the FRP Financial Statements.
The primary fuel source at Main Pass is natural gas. A contract with an
initial term of 20 years, effective from April 1992, was executed for the
purchase of natural gas at market based prices.
FRP currently supplements its sulphur production by purchasing from third
party sources. This sulphur is purchased from companies which recover sulphur
in the production of oil and natural gas and the refining of petroleum
products.
Marketing
Sulphur produced by FRP at Main Pass is transported by barge to its
storage, handling and shipping facilities located at Port Sulphur, Louisiana.
Sulphur production from FRP's Culberson mine is transported in liquid form by
unit train to Galveston. At both Port Sulphur and Galveston, sulphur
purchased from others or transported for others may also be received. Sulphur
is transported from Port Sulphur by barge to IMC-Agrico and customer plants on
the Mississippi River. Molten sulphur is also transported from Galveston and
Port Sulphur by tanker to FRP's terminals at Tampa. Similar facilities at
Pensacola, Florida are used for storage, handling and shipping of sulphur
purchased from others or transported for others. FRP also processes and
transports for a fee both IGL's and Homestake's share of Main Pass sulphur and
serves as marketing agent for Homestake.
FRP's sulphur is used in the manufacture of sulphuric acid, which, in
turn, is primarily used to produce phosphoric acid, the basic material for the
production of phosphate fertilizers. The phosphate fertilizer industry,
including the IMC-Agrico phosphate facilities, accounts for approximately 92%
of FRP's total sulphur sales. A small number of companies consume a large
portion of the total sulphur consumed in the United States. Substantially all
of the sulphur sold by FRP is supplied under contracts having a term of one to
three years. FRP has entered into a long-term contract to supply IMC-Agrico
with sulphur. For additional information with respect to FRP's sales of
sulphur, reference is made to "Selected Financial and Operating Data"
appearing on page 13 of FRP's 1994 Annual Report to unitholders.
Globally, approximately 62% of annual sulphur demand arises from the
production of fertilizers, principally phosphate fertilizers. Improved
phosphate fertilizer operating rates, coupled with reduced imports, resulted
in sulphur price increases in Tampa, Florida since mid-1994. To the extent
U.S. phosphate fertilizer production remains strong, improved sulphur demand
is expected to continue, although the availability of Canadian sulphur limits
the potential for significant price increases.
OIL
The Main Pass project also contains oil* reserves associated with the
same caprock reservoir at Main Pass as the sulphur reserves. The development
and production of these Main Pass reserves are being conducted by FTX on
behalf of FRP, as operator of the joint venture, pursuant to a management
services agreement. Oil production commenced in the fourth quarter of 1991
and averaged approximately 14,400 barrels of oil per day ("BOPD") during 1994.
As of December 31, 1994, FRP estimates that remaining proved recoverable oil
reserves at Main Pass are 15.5 million barrels (7.3 million barrels net to
FRP). FRP is engaged in oil operations only at Main Pass and does not
currently intend to pursue oil operations that are not related to Main Pass.
For information relating to estimates of FRP's net interests in proved
oil reserves as of December 31, 1994, reference is made to Note 10 to the FRP
Financial Statements. No favorable or adverse event or major discovery has
occurred since December 31, 1994, that FRP believes would cause a significant
change in estimated proved reserves.
Production and Marketing Conditions
Since completion of development drilling in mid-April 1993, oil
production for the Main Pass joint venture has increased significantly and
averaged over 15,000 BOPD for December 1994. Because of the complexities of
producing sour crude in an offshore environment, periodic curtailments down to
5,500 BOPD may be required to perform maintenance repairs. The Company's
share of oil production was approximately 2.5 million barrels for 1994.
Production in 1995 is expected to approximate that of 1994, with the
anticipated drilling of additional wells expected to partially offset
declining reservoir production. Production is expected to decline thereafter.
For information concerning FRP's sales of oil during the year ended December
31, 1994, reference is made to "Selected Financial and Operating Data"
appearing on page 13 of FRP's 1994 Annual Report to unitholders, incorporated
herein by reference. For information concerning the interaction between
concurrent oil and sulphur production, see "Sulphur Business" above.
Oil prices have historically exhibited, and can be expected to continue
to exhibit, volatility as a result of such factors as political uncertainty in
the Middle East, actions of the Organization of Petroleum Exporting Countries
and changes in worldwide weather and economic conditions. Main Pass oil
contains sulphur and is generally heavier than other Gulf Coast crude oils.
As a result, it sells at a discount relative to Gulf Coast crude oils
containing less sulphur and to lighter grade crude oils.
Acreage
FRP's interest in Main Pass, in federal waters offshore Louisiana,
constitutes the only oil property owned by FRP. The property consists of
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*As used in this portion of the report, "oil" refers to crude oil,
condensate and natural gas liquids.
1,125 gross acres (656 acres net to FRP) and is fully developed within the
meaning of governmental reporting requirements.
FRP possesses a leasehold interest in its Main Pass oil property which is
maintained by production and will remain in effect until production and
drilling and development operations cease. FRP believes that the lease terms
are sufficient to allow for reasonable development of the reserves.
Operating Hazards
FRP's oil activities are subject to all of the risks normally incident to
the development and production of sour oil, including blowouts, cratering and
fires, each of which could result in injury to personnel and/or damage to
property. Additionally, offshore operations are subject to marine perils,
including hurricanes and other adverse weather conditions. FRP, through FTX,
carries insurance for certain of these risks, and management believes that the
types and limits of such insurance coverages are adequate and consistent with
prudent business practices.
Government Regulation
Domestic oil operations are subject to extensive state and federal
regulation. Compliance is often burdensome, and failure to comply carries
substantial penalties. The heavy and increasing regulatory burden on the oil
industry increases the cost of doing business and, consequently, affects
profitability.
Federal laws and regulations impose liability upon the lessee under a
federal lease for the cost of cleanup of pollution resulting from a lessee's
operations, and such lessee could be subject to liability for pollution
damages. A serious incident of pollution may also result in a requirement to
suspend or cease operations in the particular area. FRP, through FTX, carries
insurance against some, but not all, of these risks. For further information
with respect to environmental risks and FRP's responses thereto, see
"Environmental Matters" below.
COMPETITION
The fertilizer and phosphate rock mining industries are highly
competitive. In these global businesses, IMC-Agrico faces stiff competition
from overseas producers, most of which are state supported, especially those in
North Africa, and most recently those in the former Soviet Union. In the
United States, IMC-Agrico competes against a number of major phosphate
fertilizer producers, including large cooperatives. FRP, through IMC-Agrico,
is one of the largest and lowest cost producers of phosphate rock and the
largest integrated producer of phosphate fertilizers in the world. FRP's
significant phosphate rock and sulphur reserves and production, through IMC-
Agrico and FSC, substantially reduce the sensitivity of its phosphate
fertilizer costs to changes in raw material prices. The strategic location of
fertilizer operations on the Mississippi River system reduces transportation
costs for finished products sold in the Midwest farmbelt. FRP believes that
its internal production of raw materials, through FSC and IMC-Agrico, and the
strategic location of IMC-Agrico's operations provide it with a competitive
advantage over other United States based producers. The acquisition of the
Pennzoil sulphur assets enhances FRP's competitive position with regard to the
raw material requirements of its phosphate fertilizer operations and to the
reduction of operating costs.
In 1994, two companies operating domestic Frasch sulphur mines accounted
for approximately 24% of total domestic consumption of sulphur in all forms.
Domestic recovered sulphur, produced by more than 50 companies at more than
130 refineries and gas treatment plants, supplied approximately 50%, while
imported sulphur, primarily from Canada and Mexico, accounted for
approximately 12% of domestic sulphur consumption. The remaining 14% of
domestic sulphur consumption was met in the form of sulphuric acid produced in
metals smelting operations and from imported sulphuric acid. FRP's production
of sulphur accounts for approximately 22% of domestic and 6% of world
elemental sulphur production for the year ended December 31, 1994. With the
achievement of full operations at Main Pass at the end of 1993, FRP became the
largest Frasch sulphur producer in the world.
A large number of companies and individuals are engaged in the
development and production of oil. Many of these companies possess financial
resources equal to or greater than those of FRP.
RESEARCH AND DEVELOPMENT
In 1993, FTX contracted with Crescent Technology, Inc. ("Crescent") to
furnish engineering consulting, research and development, environmental and
safety services to FTX. Crescent owns and operates laboratory and pilot plant
facilities at Belle Chasse, Louisiana, where mineral analyses, metallurgical
work and other research and testing are conducted which contribute to FTX's
commercial operations, including those of FRP. Additionally, Crescent
maintains engineering consulting and mine development groups in New Orleans,
Louisiana, which provide the engineering consulting, environmental services
and design and construction supervision activities required to implement new
ventures and apply improvements to existing operations of FRP.
ENVIRONMENTAL MATTERS
FTX and FRP have a history of commitment to environmental responsibility.
Since the 1940s, long before the general public recognized 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 its
operations to full compliance with applicable laws and regulations. FTX has
contracted with Crescent to develop and implement corporatewide environmental
programs that include the activities of FRP and to study and implement methods
to reduce discharges and emissions.
FRP's operations are subject to federal, state and local laws and
regulations relating to the protection of the environment. Exploration,
mining, development and production of natural resources, and the chemical
processing operations of IMC-Agrico, like similar operations of other
companies, may affect the environment. Moreover, such operations may involve
the extraction, handling, production, processing, treatment, storage,
transportation and disposal of materials and waste products which, under
certain conditions, may be toxic or hazardous and expressly regulated under
environmental laws. Present and future environmental laws and regulations
applicable to the operations of FRP or IMC-Agrico may require substantial
capital expenditures or affect their operations in other ways that cannot now
be accurately predicted.
FRP has made, and continues to make, expenditures at its operations for
protection of the environment. In 1992, at a cost of $35.7 million, FRP
completed the replacement of two sulphuric acid production units at an
existing fertilizer plant thereby substantially reducing air emissions and
increasing plant efficiency. As successor to FRP, IMC-Agrico completed at the
end of 1993, at a cost of $27 million, an innovative drainage and cover plan
for phosphogypsum storage areas in Louisiana to substantially reduce
substances in wastewater discharged from its fertilizer operations, while at
the same time increasing the capacity of these storage areas.
Continued government and public emphasis on environmental matters can be
expected to result in increased future investments for environmental controls.
On analyzing its operations and those of IMC-Agrico in relation to current and
anticipated environmental requirements, FRP does not expect that these
investments will have a significant impact on its future operations or
financial condition. For additional information concerning environmental
matters, reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 8 through 11 and 14
through 16, of FRP's 1994 Annual Report to unitholders, which is incorporated
herein by reference.
Item 3. Legal Proceedings.
--------------------------
Although FRP may be from time to time involved in various legal
proceedings of a character normally incident to the ordinary course of its
businesses, FRP 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 FRP. FRP, through 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. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
-----------------------------------------------------------------------------
Matters.
-------
The information set forth under the captions "FRP Units" and "Cash
Distributions", on the inside back cover of FRP's 1994 Annual Report to
unitholders is incorporated herein by reference. As of March 10, 1995, there
were 17,453 record holders of FRP Units.
Item 6. Selected Financial Data.
--------------------------------
The information set forth under the caption "Selected Financial and
Operating Data" on page 13 of FRP's 1994 Annual Report to unitholders is
incorporated herein by reference.
FRP's ratio of earnings to fixed charges for each of the years 1990
through 1994 inclusive, was 16.5x, 4.4x, 1.0x, a shortfall of $233.5 million
and 3.2x, respectively. For purposes of this calculation, earnings are income
from continuing operations before fixed charges. Fixed charges are interest
and that portion of rent deemed representative of interest.
Item 7. Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------------
Results of Operations.
---------------------
The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations", on pages 8 through
11 and 14 through 16, of FRP's 1994 Annual Report to unitholders, is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
----------------------------------------------------
The financial statements of FRP, the notes thereto and the report thereon
of Arthur Andersen LLP, appearing on pages 17 through 27 inclusive, of FRP's
1994 Annual Report to unitholders, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
--------------------------------------------------------------------------------
Financial Disclosure.
--------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
------------------------------------------------------------
FRP has no directors; instead, the general partners in FRP, FTX and FMRP,
perform comparable functions for FRP. In addition to the elected executive
officers of FRP (the "Elected FRP Executive Officers"), certain employees of
the general partners have management responsibilities with respect to FRP and
are thus deemed by FRP to be executive officers of FRP (the "Designated FRP
Executive Officers") for purposes of the federal securities laws.
The following table shows, as of March 15, 1995, the names, ages,
positions with the general partners and principal occupations of the Elected
FRP Executive Officers and the Designated FRP Executive Officers
(collectively, the "FRP Executive Officers"):
Name Age Positions and Principal Occupations
---- --- -----------------------------------
Richard C. Adkerson 48 Senior Vice President of FTX.
John G. Amato 51 General Counsel of FRP. General Counsel of FTX.
Director of FMRP.
Richard H. Block 44 Senior Vice President - Fertilizer Operations of
FRP. Senior Vice President of FTX.
Thomas J. Egan 50 Senior Vice President of FTX.
Robert B. Foster 51 Senior Vice President - Sulphur Operations of
FRP.
Charles W. Goodyear 37 Senior Vice President - Finance and Accounting
and Chief Financial Officer of FRP. Senior Vice
President of FTX. Director of FMRP.
W. Russell King 45 Senior Vice President of FTX.
Rene L. Latiolais 52 President and Chief Executive Officer of FRP.
Director, President, and Chief Operating
Officer of FTX. Director, Chairman of the Board,
and President of FMRP.
George A. Mealey 61 Executive Vice President of FTX. Director,
President, and Chief Executive Officer of
Freeport-McMoRan Copper & Gold Inc., a subsidiary
of FTX.
James R. Moffett 56 Director, Chairman of the Board, and Chief
Executive Officer of FTX.
All of the individuals above have served FTX or FRP in various executive
capacities for at least the last five years.
All Elected FRP Executive Officers and all officers of FTX serve at the
pleasure of the Board of Directors of FTX. All officers of FMRP serve at the
pleasure of the Board of Directors of FMRP.
According to (i) the Forms 3 and 4 and any amendments thereto filed
pursuant to Section 16(a) of the Securities Exchange Act of 1934 ("Section
16") and furnished to FRP during 1994 by persons subject to Section 16 at any
time during 1994 with respect to securities of FRP ("FRP Section 16
Insiders"), (ii) the Forms 5 with respect to 1994 and any amendments thereto
filed pursuant to Section 16 and furnished to FRP by FRP Section 16 Insiders,
and (iii) the written representations from certain FRP Section 16 Insiders
that no Form 5 with respect to the securities of FRP was required to be filed
by such FRP Section 16 Insider, respectively, with respect to 1994, no FRP
Section 16 Insider failed to file altogether or timely any Forms 3, 4, or 5
required by Section 16 with respect to the securities of FRP or to disclose on
such Forms transactions required to be reported thereon.
Item 11. Executive Compensation.
--------------------------------
FRP does not employ any of the FRP Executive Officers, nor does it
compensate them for their services. The FRP Executive Officers are either
employed or retained by FTX. The President and Chief Executive Officer of
FRP, Rene L. Latiolais, is employed by FTX. The four most highly compensated
FRP Executive Officers other than Mr. Latiolais are James R. Moffett, Richard
C. Adkerson, Charles W. Goodyear, and Robert B. Foster; they are also employed
by FTX. The determination as to which FRP Executive Officers were the most
highly compensated was made by reference to the total annual salary and bonus
for 1994 of each of the FRP Executive Officers employed by FTX that was
allocated to FRP by FTX pursuant to the FRP partnership agreement on the basis
of time devoted to FRP activities.
The services of all the FRP Executive Officers and the services of the
other officers of FRP are provided to FRP by FTX under the FRP partnership
agreement. FRP reimburses FTX at FTX's cost, including allocated overhead,
for such services. All the FRP Executive Officers are compensated exclusively
by FTX for their services to FRP. All the FRP Executive Officers are eligible
to participate in certain FTX benefit plans and programs. The total costs to
FTX for the FRP Executive Officers, including the costs borne by FTX with
respect to such plans and programs, are allocated to FRP, to the extent
practicable, in proportion to the time spent by such FRP Executive Officers on
FRP affairs. No other payment is made by FRP to FTX for providing such
compensation and benefit plans and programs to the FRP Executive Officers.
Reference is made to the information set forth under the caption
"Management" above and to the information set forth in Note 6 to the FRP
Financial Statements.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------
According to information furnished by each of the persons known to FRP to
be a beneficial owner of more than 5% of Partnership Units, the number of
Partnership Units beneficially owned by each of them as of December 31, 1994,
was as follows:
Number of
Partnership Units Percent
Beneficially of
Name and Address of Person Owned Class
-------------------------- ----- -----
Freeport-McMoRan Inc. 52,167,657(a) 50.9%
1615 Poydras Street
New Orleans, Louisiana 70112
Vanguard/Windsor Fund, Inc. 5,798,300(b) 5.7%
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
---------------
(a) These Partnership Units consist of 17,741 FRP Depositary Units and
52,149,916 FRP Unit Equivalents. FTX has sole voting and investment
power with respect to such Partnership Units.
(b) Vanguard/Windsor Fund, Inc. has sole voting power and shared investment
power as to all 5,798,300 Partnership Units.
The other general partner in FRP, FMRP, did not own beneficially any
Partnership Units as of December 31, 1994.
According to information furnished by each of the Elected FRP Executive
Officers and the Designated FRP Executive Officers (collectively, the "FRP
Executive Officers"), the number of FRP Depositary Units and shares of FTX
common stock ("FTX Shares") beneficially owned by each of them as of December
31, 1994, was as follows:
Number of Number of
FRP Depositary Units FTX Shares
Name of Individual Beneficially Beneficially
or Identity of Group Owned(a) Owned(a)
-------------------- -------- --------
Richard C. Adkerson 0 289,170(b)(c)
Robert B. Foster 41 118,308(b)
Charles W. Goodyear 0 284,893(b)(d)
Rene L. Latiolais 617(e) 640,893(b)
James R. Moffett 65,439(f) 3,551,945(b)(f)
10 FRP Executive
Officers as a group,
including those
persons named above 76,546(g) 5,971,120(g)
---------------
(a) Except as otherwise noted, the individuals referred to have sole voting
and investment power with respect to such FRP Depositary Units and FTX
Shares. With the exception of Mr. Moffett, who beneficially owns 2.6% of
the outstanding FTX Shares, each of the individuals referred to holds
less than 1% of the outstanding FRP Depositary Units and FTX Shares,
respectively.
(b) Includes FTX Shares held by the trustee under the Employee Capital
Accumulation Program of FTX, as follows: Mr. Adkerson, 3,423 FTX Shares;
Mr. Foster, 711 FTX Shares; Mr. Goodyear, 2,742 FTX Shares; Mr.
Latiolais, 16,022 FTX Shares; Mr. Moffett, 23,742 FTX Shares; all FRP
Executive Officers as a group (9 persons), 86,084 FTX Shares. Also
includes FTX Shares that could be acquired within 60 days after December
31, 1994 upon the exercise of options granted pursuant to the employee
stock option plans of FTX, as follows: Mr. Adkerson, 282,087 FTX Shares;
Mr. Foster, 100,747 Shares; Mr. Goodyear, 282,087 FTX Shares; Mr.
Latiolais, 454,898 FTX Shares; Mr. Moffett, 2,016,805 FTX Shares; all FRP
Executive Officers as a group (10 persons), 4,024,586 FTX Shares.
(c) Includes 776 FTX Shares that may be acquired upon the conversion of 6.55%
Convertible Subordinated Notes due January 15, 2001 of FTX held in trust
for the benefit of Mr. Adkerson and 2,884 FTX Shares that may be acquired
upon the conversion of Zero Coupon Convertible Subordinated Debentures
due 2006 of FTX held in trust for the benefit of Mr. Adkerson.
(d) Includes 64 FTX Shares held in a retirement account for the benefit of
Mr. Goodyear.
(e) Includes 483 FRP Depositary Units held for the benefit of Mr. Latiolais
by the custodian under FRP's Depositary Unit Reinvestment Plan.
(f) Includes a total of 39,600 FRP Depositary Units and 214,648 FTX Shares
held for the benefit of a trust with respect to which Mr. Moffett and an
FRP Executive Officer, as co-trustees of such trust, have sole voting and
investment power but have no beneficial interest therein. Mr. Moffett
and such FRP Executive Officer disclaim beneficial ownership of such FRP
Depositary Units and FTX Shares held for the benefit of such trust.
Includes a total of 25,839 FRP Depositary Units and 85,140 FTX Shares
held for the benefit of two trusts created by Mr. Moffett for the benefit
of his two children, who are adults. An FRP Executive Officer and
another individual, as co-trustees of the two trusts, have sole voting
and investment power with respect to such FRP Depositary Units and FTX
Shares held for the benefit of such trusts but have no beneficial
interest therein. Mr. Moffett and such FRP Executive Officer disclaim
beneficial ownership of such FRP Depositary Units and FTX Shares held for
the benefit of such trusts. Includes a total of 88,000 FTX Shares held
for the benefit of a trust created by Mr. Moffett for the benefit of an
educational fund and his two children, who are adults. An FRP Executive
Officer and another individual, as co-trustees of such trust, have sole
voting and investment power with respect to such FTX Shares held for the
benefit of such trust but have no beneficial interest therein. Mr.
Moffett and such FRP Executive Officer disclaim beneficial ownership of
such FTX Shares held for the benefit of such trust.
(g) See notes (b) through (f) above. Includes 6 FRP Depositary Units and
1,516 FTX Shares held in trust for the benefit of one of the FRP
Executive Officers, 92 FTX Shares held in trust for the benefit of the
spouse of such FRP Executive Officer as to which beneficial ownership is
disclaimed, and a total of 2,300 FTX Shares held by such FRP Executive
Officer as custodian as to which beneficial ownership is disclaimed.
These total numbers of FRP Depositary Units and FTX Shares represent less
than 1% of the outstanding FRP Depositary Units and approximately 4.2% of
the outstanding FTX Shares, respectively.
Item 13. Certain Relationships and Related Transactions.
--------------------------------------------------------
Reference is made to the information set forth under the caption
"Management" above, to the information set forth in Item 11 above and to the
information set forth in Note 6 to the FRP Financial Statements.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
--------------------------------------------------------------------------
(a)(1), (a)(2), and (d). Financial Statements. Reference is made to the
Index to Financial Statements appearing on page F-1 hereof.
(a)(3) and (c). Exhibits. Reference is made to the 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 1994.
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 22, 1995.
FREEPORT-McMoRan RESOURCE
PARTNERS, LIMITED PARTNERSHIP
By: FREEPORT-McMoRan INC.,
Its Administrative Managing
General Partner
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 22, 1995.
/s/ Rene L. Latiolais President and Chief Executive Officer
---------------------
Rene L. Latiolais of Freeport-McMoRan Resource
Partners, Limited Partnership and
Director of Freeport-McMoRan Inc.
(Principal Executive Officer)
/s/ Charles W. Goodyear Senior Vice President and Chief
-----------------------
Charles W. Goodyear Financial Officer of Freeport-McMoRan
Resource Partners, Limited
Partnership
(Principal Financial Officer)
/s/ Nancy D. Bonner Vice President and Controller of
-------------------
Nancy D. Bonner Freeport-McMoRan Resource Partners,
Limited Partnership
(Principal Accounting Officer)
Robert W. Bruce III* Director of Freeport-McMoRan Inc.
Thomas B. Coleman* Director of Freeport-McMoRan Inc.
William H. Cunningham* Director of Freeport-McMoRan Inc.
Robert A. Day* Director of Freeport-McMoRan Inc.
William B. Harrison, Jr.* Director of Freeport-McMoRan Inc.
Henry A. Kissinger* Director of Freeport-McMoRan Inc.
Bobby Lee Lackey* Director of Freeport-McMoRan Inc.
Gabrielle K. McDonald* Director of Freeport-McMoRan Inc.
/s/ James R. Moffett Director, Chairman of the Board
--------------------
James R. Moffett and Chief Executive Officer
of Freeport-McMoRan Inc.
George Putnam* Director of Freeport-McMoRan Inc.
B. M. Rankin, Jr.* Director of Freeport-McMoRan Inc.
Benno C. Schmidt* Director of Freeport-McMoRan Inc.
J. Taylor Wharton* Director of Freeport-McMoRan Inc.
Ward W. Woods, Jr.* Director of Freeport-McMoRan Inc.
*By: /s/ James R. Moffett
--------------------
James R. Moffett
Attorney-in-Fact
INDEX TO FINANCIAL STATEMENTS
-----------------------------
The financial statements of FRP, the notes thereto, and the report
thereon of Arthur Andersen LLP, appearing on pages 17 through 27, inclusive,
of FRP's 1994 Annual Report to unitholders are incorporated by reference.
The financial statement schedules listed below should be read in
conjunction with such financial statements contained in FRP's 1994 Annual
Report to unitholders.
Page
----
Report of Independent Public Accountants...................... F-1
III-Condensed Financial Information of Registrant............. F-2
VIII-Valuation and Qualifying Accounts........................ F-5
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 thereof.
* * *
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
We have audited, in accordance with generally accepted auditing standards,
the financial statements as of December 31, 1994 and 1993 and for each of the
three years in the period ended December 31, 1993 included in Freeport-McMoRan
Resource Partners, Limited Partnership's annual report to unitholders
incorporated by reference in this Form 10-K, and have issued our report
thereon dated January 24, 1995. 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, 1994, 1993 and 1992 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 LLP
New Orleans, Louisiana,
January 24, 1995
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
December 31,
------------------------
1994 1993
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and short-term investments $ 8,409 $ 5,300
Accounts receivable:
Customers 9,359 6,193
Other 12,134 12,811
Inventories:
Products 25,443 31,458
Materials and supplies 6,150 7,877
Prepaid expenses and other 273 273
---------- ----------
Total current assets 61,768 63,912
Property, plant and equipment-net 506,590 530,568
Investment in IMC-Agrico 397,937 494,883
Other assets 43,256 91,174
---------- ----------
Total assets $1,009,551 $1,180,537
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities $ 29,877 $ 37,175
Current portion of long-term debt - -
---------- ----------
Total current liabilities 29,877 37,175
Long-term debt, less current portion 355,000 475,900
Reclamation and mine shutdown reserves 58,762 58,896
Accrued postretirement benefits and other
liabilities 118,252 116,162
Partners' capital 447,660 492,404
---------- ----------
Total liabilities and partners' capital $1,009,551 $1,180,537
========== ==========
The footnotes contained in FRP's 1994 Annual Report to unitholders are an
integral part of these statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
Years Ended December 31,
---------------------------------
1994 1993 1992
-------- --------- --------
(In Thousands)
Revenues $111,185 $ 424,717 $877,058
Cost of sales:
Production and delivery 61,211 344,944 652,169
Depreciation and amortization 38,825 81,521 119,259
-------- --------- --------
Total cost of sales 100,036 426,465 771,428
Exploration expenses - 3,092 5,814
Provision for restructuring charges - 33,947 -
Loss on valuation and sale of assets, net - 114,802 -
General and administrative expenses 28,949 58,660 79,073
-------- --------- --------
Total costs and expenses 128,985 636,966 856,315
-------- --------- --------
Operating income (loss) (17,800) (212,249) 20,743
Interest expense, net (32,297) (12,293) (869)
Equity in earnings of IMC-Agrico 136,671 1,037 -
Other income, net (2,608) 1,094 337
-------- --------- -------
Income (loss) before changes in
accounting principle 83,966 (222,411) 20,211
Cumulative effect of changes in
accounting principle - (23,700) -
-------- --------- --------
Net income (loss) $ 83,966 $(246,111) $ 20,211
======== ========= ========
The footnotes contained in FRP's 1994 Annual Report to unitholders are an
integral part of these statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOW
Years Ended December 31,
-------------------------------
1994 1993 1992
-------- --------- --------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $ 83,966 $(246,111) $ 20,211
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Cumulative effect of changes in
accounting principle - 23,700 -
Depreciation and amortization 38,825 81,521 119,259
Other noncash charges to income 6,495 7,150 -
Provision for restructuring charges, net
of payments - 3,143 -
Loss on valuation and sale of assets, net - 114,802 -
Equity in (earnings) of IMC-Agrico (136,671) (1,037) -
Cash distributions received from IMC-
Agrico 233,617 - -
(Increase) decrease in working capital, net
of effect of acquisitions and dispositions:
Accounts receivable (2,311) (1,552) 18,317
Inventories 7,058 (4,750) (9,983)
Prepaid expenses and other - 1,933 (9,995)
Accounts payable and accrued
liabilities (389) 1,561 (3,011)
Reclamation and mine shutdown
expenditures (5,270) (9,980) (18,038)
Other 5,056 2,935 3,301
--------- --------- --------
Net cash provided by (used in) operating
activities 230,376 (26,685) 120,061
--------- --------- --------
Cash flow from investing activities:
Capital expenditures:
Main Pass (10,941) (37,427) (117,902)
Other (290) (10,152) (86,815)
Sale of assets 36,919 49,961 -
Other 530 4,711 (5,219)
-------- --------- --------
Net cash provided by (used in) investing
activities 26,218 7,093 (209,936)
-------- --------- --------
Cash flow from financing activities:
Distributions to partners (127,368) (121,180) (151,210)
Proceeds from debt 85,400 572,137 639,891
Repayment of debt (356,300) (433,164) (826,095)
Purchase of partnerhsip units (1,342) - -
Proceeds from sale of 8 3/4% Senior
Subordinated Notes 146,125 - -
Proceeds from sale of partnership units - - 430,534
-------- --------- --------
Net cash provided by (used in) financing
activities (253,485) 17,793 93,120
-------- --------- --------
Net increase (decrease) in cash and short-
term investments 3,109 (1,799) 3,245
Cash and short-term investments at
beginning of year 5,300 7,099 3,854
-------- --------- --------
Cash and short-term investments at end of
year $ 8,409 $ 5,300 $ 7,099
======== ========= ========
Interest paid $ 25,094 $ 22,997 $ 19,818
======== ========= ========
The footnotes contained in FRP's 1994 Annual Report to unitholders are an
integral part of these statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1994, 1993 and 1992
Col. A Col. B Col. C Col. D Col. E
----------------- ------------ ----------------------- --------- ----------
Additions
----------------------
Balance at Charged toCharged to Balance at
Beginning of Costs and Other Other-Add End
Description Period Expenses Accounts (Deduct) of Period
----------------- ------------ --------------------- --------- ----------
(In Thousands)
Reserves and allowances
deducted from asset
accounts:
Reclamation and mine
shutdown reserves:
1994:
Sulphur $57,287 $ 1,041 $ - $(3,223) $55,105
Fertilizer 38,437 2,310 - (3,064) 37,683
Oil 1,609 2,385 - (337) 3,657
------- ------- ----- ------- -------
$97,333 $ 5,736 $ - $(6,624)(a) $96,445
======= ======= ===== ======= =======
1993:
Sulphur $35,200 $27,562 $ - $(5,475) $57,287
Fertilizer 18,543 5,365 - 14,529 (b) 38,437
Oil 1,409 1,021 - (821) 1,609
------- ------- ----- ------- -------
$55,152 $33,948 $ - $ 8,233 (c) $97,333
======= ======= ===== ======= =======
1992:
Sulphur $29,715 $ 4,335 $ - $ 1,150 $35,200
Fertilizer 21,772 7,123 - (10,352) 18,543
Oil - 1,443 - (34) 1,409
------- ------- ----- ------- -------
$51,487 $12,901 $ - $(9,236)(d) $55,152
======= ======= ===== ======= =======
a. Includes expenditures of $11.2 million, net of a $4.6 million decrease in
short-term payables.
b. Includes $19.7 million which represents FRP's proportionate share of
IMC-Agrico liabilities (see Note 2 to the Financial Statements) in excess
of the FRP contributed amounts.
c. Includes expenditures of $13.2 million, net of a $1.7 million decrease in
short-term payables and the item discussed in Note b.
d. Includes expenditures of $21.2 million, net of a $12 million decrease in
short-term payables.
Freeport-McMoRan Resource Partners, Limited Partnership
Exhibit Index
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Sequentially
Exhibit Numbered
Number Page
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3.1 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 ("FMC"), 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).
3.2 Amendment to the FRP Partnership
Agreement dated as of December 16, 1988
effected by FMC, as Administrative
Managing General Partner, and FTX, as
General Partner of FRP.
3.3 Amendment to the FRP Partnership
Agreement dated as of March 29, 1990
effected by FMC, as Administrative
Managing General Partner, and FTX, as
Managing General Partner, of FRP.
Incorporated by reference to Exhibit
19.2 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").
3.4 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 FRP 1990 First Quarter
Form 10-Q.
3.5 Amendment to the FRP Partnership
Agreement dated as of January 27, 1992
between FTX, as Administrative
Managing General Partner, and FMRP, 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").
3.6 Amendment to the FRP Partnership
Agreement dated as of October 14, 1992
between FTX, as Administrative
Managing General Partner, and FMRP, 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").
3.7 Amended and Restated Certificate of
Limited Partnership of FRP dated June
12, 1986 (the "FRP Partnership
Certificate"). Incorporated by
reference to Exhibit 3.3 to FRP's
Registration Statement on Form S-1, as
amended, as filed with the Commission
on June 20, 1986 (Registration No. 33-
5561).
3.8 Certificate of Amendment to the FRP
Partnership Certificate dated as of
January 12, 1989. Incorporated by
reference to Exhibit 3.6 to the Annual
Report on Form 10-K for the fiscal
year ended December 31, 1993 (the "FRP
1993 Form 10-K").
3.9 Certificate of Amendment to the FRP
Partnership Certificate dated as of
December 29, 1989. Incorporated by
reference to Exhibit 19.1 to the FRP
1990 First Quarter Form 10-Q.
3.10 Certificate of Amendment to the FRP
Partnership Certificate dated as of
April 12, 1990. Incorporated by
reference to Exhibit 19.4 to the FRP
1990 First Quarter Form 10-Q.
4.1 Deposit Agreement dated as of June 27,
1986 (the "Deposit Agreement") among
FRP, The Chase Manhattan Bank, N.A.
("Chase") and Freeport Minerals
Company ("Freeport Minerals"), 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.
4.2 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.
4.3 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.
4.4 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.
4.5 Form of Depositary Receipt.
Incorporated by reference to Exhibit
4.5 to the FRP 1992 Form 10-K.
4.6 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
Quarterly Report on Form 10-Q of FRP
for the quarter ended June 30, 1987.
4.7 FRP Depositary Unit Reinvestment Plan.
Incorporated by reference to Exhibit
4.4 to the FRP 1991 Form 10-K.
4.8 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 FRP 1993 Form 10-K.
4.9 First Amendment dated as of February
2, 1994 to the FTX/FRP Credit Agree-
ment 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.
4.10 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.
4.11 Third Consent and Waiver dated as of
October 18, 1994 to the FTX/FRP Credit
Agreement among FTX, FRP, the FTX/FRP
Banks and the FTX/FRP Bank Agent.
4.12 Fourth Amendment, Consent and Limited
Waiver dated as of November 23, 1994
to the FTX/FRP Credit Agreement among
FTX, FRP, the FTX/FRP Banks and the
FTX/FRP Bank Agent.
4.13 Subordinated Indenture as of October
26, 1990 between FRP and Manufacturers
Hanover Trust Company ("MHTC") as
Trustee, relating to $150,000,000
principal amount of 8 3/4% Senior
Subordinated Notes due 2004 of FRP
(the "Subordinated Indenture").
Incorporated by reference to Exhibit
4.11 to the FRP 1993 Form 10-K.
4.14 First Supplemental Indenture dated as
of February 15, 1994 between FRP and
Chemical Bank, as Successor to MHTC,
as Trustee, to the Subordinated
Indenture. Incorporated by reference
to Exhibit 4.12 to the FRP 1993 Form
10-K.
10.1 Contribution Agreement dated as of
April 5, 1993 between FRP and IGL (the
"FRP-IGL Contribution Agreement").
Incorporated by reference to Exhibit
2.1 to the Current Report on Form 8-K
of FRP dated July 15, 1993 (the "FRP
July 15, 1993 Form 8-K").
10.2 First Amendment dated as of July 1,
1993 to the FRP-IGL Contribution
Agreement. Incorporated by reference
to Exhibit 2.2 to the FRP July 15,
1993 Form 8-K.
10.3 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 July 15, 1993
Form 8-K.
10.4 Parent Agreement dated as of July 1,
1993 among IGL, FRP, FTX and IMC-
Agrico. Incorporated by reference to
Exhibit 2.4 to the FRP July 15, 1993
Form 8-K.
10.5 Asset Purchase Agreement dated as of
October 22, 1994 between FRP and
Pennzoil Company (the "Asset Purchase
Agreement"). Incorporated by
reference to Exhibit 2.1 to the
Current Report on Form 8-K of FRP
dated January 18, 1995 (the "FRP
January 18, 1995 8-K").
10.6 Amendment No. 1 dated as of January 3,
1995 to the Asset Purchase Agreement.
Incorporated by reference to Exhibit
2.2 to the FRP January 18, 1995 8-K.
12.1 FRP Computation of Ratio of Earnings
to Fixed Charges.
13.1 Those portions of the 1994 Annual
Report to unitholders of FRP which are
incorporated herein by reference.
21.1 Subsidiaries of FRP.
23.1 Consent of Arthur Andersen LLP dated
March 22, 1995.
24.1 Powers of Attorney pursuant to which
this report has been signed on behalf
of certain directors of FTX.
27.1 FRP Financial Data Schedule