SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995
Commission File Number: 1-8124
Freeport-McMoRan Inc.
Incorporated in Delaware 13-3051048
(IRS Employer Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code:(504) 582-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
-- --
On October 20, 1995, there were issued and outstanding 28,066,098 shares of
the registrant's Common Stock, par value $0.01 per share.
FREEPORT-McMoRan INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Condensed Balance Sheets 3
Statements of Income 4
Statements of Cash Flow 6
Notes to Financial Statements 8
Remarks 10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. Other Information 17
Signature 18
Exhibit Index E-1
FREEPORT-McMoRan INC.
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements.
---------------------
FREEPORT-McMoRan INC.
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
ASSETS (In Thousands)
Current assets:
Cash and short-term investments $ 28,746 $ 13,810
Accounts receivable 76,380 89,925
Inventories 106,699 109,677
Prepaid expenses and other 6,853 7,433
---------- ----------
Total current assets 218,678 220,845
Property, plant and equipment, net 974,344 964,539
Net assets of discontinued operations - 328,880
Other assets 62,768 135,178
---------- ----------
Total assets $1,255,790 $1,649,442
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 205,296 $ 191,553
Long-term debt, less current portion 300,915 1,122,070
Accrued postretirement benefits and
pension costs 165,659 158,707
Reclamation and mine shutdown reserves 133,377 112,777
Other liabilities and deferred credits 116,138 77,034
Minority interests 197,018 217,768
Stockholders' equity (deficit) 137,387 (230,467)
---------- ----------
Total liabilities and stockholders' equity $1,255,790 $1,649,442
========== ==========
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan INC.
STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands, Except Per Share Amounts)
Revenues $243,066 $189,803 $730,943 $560,190
Cost of sales:
Production and delivery 171,232 141,356 509,658 414,302
Depreciation and
amortization 11,230 9,543 32,642 37,389
-------- -------- -------- --------
Total cost of sales 182,462 150,899 542,300 451,691
Exploration expenses - - - 5,904
General and administrative
expenses 28,973 13,650 59,954 45,010
-------- -------- -------- --------
Total costs and expenses 211,435 164,549 602,254 502,605
-------- -------- -------- --------
Operating income 31,631 25,254 128,689 57,585
Interest expense, net (9,614) (17,347) (40,844) (54,373)
Other income (expense), net 926 140 1,577 (1,113)
-------- -------- -------- --------
Income before income taxes
and minority interests 22,943 8,047 89,422 2,099
(Provision) benefit for
income taxes (872) 4,482 (7,429) 11,893
Minority interests in net
income of consolidated
subsidiaries (21,440) (22,299) (71,851) (38,799)
-------- -------- -------- --------
Income (loss) from continuing
operations before
extraordinary item 631 (9,770) 10,142 (24,807)
Discontinued operations 24,967 21,222 340,424 73,529
-------- -------- -------- --------
Income before extraordinary
item 25,598 11,452 350,566 48,722
Extraordinary loss - - - (9,108)
-------- -------- -------- --------
Net income 25,598 11,452 350,566 39,614
Preferred dividends (1,095) (5,408) (41,187) (16,563)
-------- -------- -------- --------
Net income applicable to
common stock $ 24,503 $ 6,044 $309,379 $ 23,051
======== ======== ======== ========
Net income (loss) per primary share:
Continuing operations $.02 $(.42) $ .40 $(1.07)
Discontinued operations .88 .92 13.44 3.16
Extraordinary loss - - - (.39)
Preferred dividends (.04) (.24) (1.62) (.71)
---- ----- ------ ------
$.86 $ .26 $12.22 $ .99
==== ===== ====== ======
Net income (loss) per fully diluted share:
Continuing operations $.02 $(.42) $ .88 $(1.07)
Discontinued operations .88 .92 11.53 3.16
Extraordinary loss - - - (.39)
Preferred dividends (.04) (.24) (1.13) (.71)
---- ----- ------ ------
$.86 $ .26 $11.28 $ .99
==== ===== ====== ======
Average common and common equivalent
shares outstanding:
Primary 28,460 23,034 25,322 23,256
====== ====== ====== ======
Fully diluted 28,567 23,034 29,513 23,256
====== ====== ====== ======
Dividends per common share:
Cash $.09 $ - $ .09 $1.88
Property - 1.58 1.56 6.11
---- ----- ----- -----
$.09 $1.58 $1.65 $7.99
==== ===== ===== =====
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan INC.
STATEMENTS OF CASH FLOW (Unaudited)
Nine Months Ended
September 30,
-------------------
1995 1994
-------- --------
Cash flow from operating activities: (In Thousands)
Net income $350,566 $ 39,614
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary loss - 9,108
Depreciation and amortization 84,475 94,059
Amortization of debt discount and financing costs 15,522 25,300
Deferred income taxes 88,195 63,459
Recognition of unearned income (36,207) -
Minority interests' share of net income 154,844 104,257
Cash distribution from IMC-Agrico in excess of
interest in capital 31,751 33,801
Reclamation and mine shutdown expenditures (9,215) (6,968)
Gain on FCX securities transactions (435,060) (95,723)
Loss on recapitalization of FTX securities 44,371 -
(Increase) decrease in working capital, net of
effect of acquisition:
Accounts receivable 27,467 6,901
Inventories (22,318) (18,623)
Prepaid expenses and other (648) 9,262
Accounts payable and accrued liabilities 14,517 15,858
Other 5,726 (6,350)
-------- --------
Net cash provided by operating activities 313,986 273,955
-------- --------
Cash flow from investing activities:
Capital expenditures:
FCX (308,099) (533,453)
FRP (21,410) (21,775)
Other (1,893) (27,912)
Sales of assets 23,577 110,502
-------- --------
Net cash used in investing activities (307,825) (472,638)
-------- --------
Cash flow from financing activities:
Proceeds from sale of:
FRP 8 3/4% Senior subordinated notes $ - $146,125
FCX Preferred Stock - 252,985
FCX 9 3/4% Senior subordinated notes - 116,276
FCX Class A common shares 497,166 -
Purchase of FTX, FCX and FRP equity shares (130,733) (82,367)
Distributions paid to minority interests (151,277) (171,145)
Distribution of MOXY shares - (35,441)
Proceeds from (repayments of) debt, net (145,908) 145,578
Purchase/redemption of FTX securities:
10 7/8% Senior debentures - (142,919)
ABC debentures (280,826) -
6.55% Senior notes (14,955) -
Net proceeds from infrastructure financing 228,899 17,319
FTX cash dividends paid:
Common stock (2,740) (44,242)
Preferred stock (7,661) (16,641)
Other 3,712 2,164
-------- --------
Net cash provided by (used in) financing activities (4,323) 187,692
-------- --------
Net increase (decrease) in cash and short-term
investments 1,838 (10,991)
Net (increase) decrease attributable to discontinued
operations 13,098 (8,791)
Cash and short-term investments at beginning of year 13,810 25,987
-------- --------
Cash and short-term investments at end of period $ 28,746 $ 6,205
======== ========
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan INC.
NOTES TO FINANCIAL STATEMENTS
1. REVERSE STOCK SPLIT
In October 1995, Freeport-McMoRan Inc. (FTX) effected a one-for-six reverse
split of its common stock. Accordingly, all common share and per share
amounts have been restated.
2. DISCONTINUED OPERATIONS
In July 1995, FTX distributed 117,909,323 shares of Freeport-McMoRan Copper
& Gold Inc. (FCX) Class B common stock to FTX common stockholders. As a
result, FTX no longer owns any interest in FCX. In connection with a
recapitalization of its liabilities, FTX sold 21.5 million shares of FCX
Class A common stock in May 1995 to RTZ Corporation PLC (RTZ) for $450
million cash, recognizing a pretax gain of $391.2 million, and another 2.4
million shares in July 1995 to RTZ for $50.2 million cash, recognizing a
pretax gain of $43.8 million in the third quarter. FTX's financial
statements have been restated to reflect the metals segment as a
discontinued operation. Discontinued operations results follow (in
millions):
Third Quarter Nine Months
-------------- ------------------
1995 1994 1995 1994
----- ------ ------ ------
Revenues $ - $313.4 $830.3 $861.0
===== ====== ====== ======
Income from discontinued
operations $ - $58.4 $222.0 $153.7
Minority interest - (24.1) (83.0) (65.5)
Provision for taxes - (28.3) (95.5) (72.4)
----- ----- ------ ------
- 6.0 43.5 15.8
Gain on FCX securities transactions 43.8 25.7 435.1 95.7
Deferred taxes no longer required - - 76.2 -
Recapitalization losses (Note 4) (1.0) - (44.3) -
Provision for taxes (17.8) (10.5) (170.1) (38.0)
----- ----- ------ ------
$25.0 $21.2 $340.4 $ 73.5
===== ===== ====== ======
Income from discontinued operations includes allocated interest from
FTX totaling $4.8 million for the third quarter of 1994 and $16.6 million
and $14.1 million for the nine-month period of 1995 and 1994, respectively.
3. SALE OF FREEPORT COPPER COMPANY STOCK
In September 1995, FCX paid FTX $25 million cash for 100 percent of the
stock of Freeport Copper Company whose sole asset is a 50 percent interest
in a joint venture with ASARCO Santa Cruz, Inc. controlling approximately
7,600 contiguous acres in Arizona. The joint venture is involved in a
research project for an experimental in-situ leaching process that would be
used to mine copper ore.
4. RECAPITALIZATION ACTIVITIES
In April 1995, FTX exchanged 1.9 million FTX common shares for 4 million
shares of its $4.375 Convertible Exchangeable Preferred Stock ($4.375
Preferred Stock) in accordance with an exchange offer whereby FTX
temporarily increased the FTX shares issuable upon conversion. As a result
of the exchange offer, FTX recorded a noncash charge of $33.5 million to
preferred dividends in the second quarter of 1995. As of September 30,
1995, 1 million shares ($50.1 million) of $4.375 Preferred Stock remained
outstanding and are convertible into FTX common stock at a conversion price
of $27.36 per share or the equivalent of 1.8 shares of FTX common stock for
each share of $4.375 Preferred Stock.
In June 1995, FTX redeemed $749.2 million principal amount of its Zero
Coupon Convertible Subordinated Debentures (ABC Debentures) for $280.8
million cash (equal to book value). Additionally in June 1995, FTX
redeemed $16.4 million face amount of 6.55% Convertible Subordinated notes
(6.55% Notes), with a book value of $14.1 million, for $15 million of cash.
Prior to the redemption, FTX increased the number of FTX common shares that
would be received upon conversion of the 6.55% Notes. Holders of $356.6
million face amount of 6.55% Notes converted their notes at the enhanced
rate into 3.3 million FTX common shares, resulting in an increase of $346.4
million to stockholders' equity. FTX recorded a pretax loss on
recapitalization of the ABC Debentures and 6.55% Notes totaling $44.3
million primarily because of enhancements to the conversion rates.
5. NEW CREDIT FACILITY
In July 1995, FTX entered into a new credit facility providing $400 million
of credit, all of which is available to Freeport-McMoRan Resource Partners,
Limited Partnership (FRP) and $75 million of which is available to FTX as
the holding company. The new variable rate facility matures July 2000 and
has covenants and security requirements which are similar to FTX's previous
credit agreement.
As part of the FTX restructuring, FCX assumed an obligation to
guarantee up to $90 million of the indebtedness of FM Properties Inc.
(FMPO)and FTX is paying an annual three percent fee to FCX on the amount
guaranteed. FTX agreed to guarantee an aggregate additional amount of FMPO
debt of up to approximately $60 million. At September 30, 1995, the
indebtedness of FMPO totaled approximately $116 million, of which $26
million was guaranteed by FTX.
6. ACQUISITION
In January 1995, FRP acquired essentially all of the domestic assets of
Pennzoil Co.'s sulphur division. Pennzoil will receive quarterly payments
from FRP over 20 years based on the prevailing price of sulphur. The
installment payments may be terminated earlier by FRP through the exercise
of a $65 million call option or by Pennzoil through a $10 million put
option. Neither option may be exercised prior to 1999. The purchase price
allocation follows (in thousands):
Current assets $ 5,635
Current liabilities (14,065)
Property, plant and equipment 60,159
Accrued long-term liabilities (51,729)
-------
Net cash investment $ -
=======
Accrued long-term liabilities include the estimated future installment
payments based on the prevailing sulphur price upon acquisition and
estimated future reclamation and mine shutdown costs.
7. PARENT COMPANY BALANCE SHEETS
The unaudited, unconsolidated condensed balance sheet of FTX as of
September 30, 1995 follows (in thousands):
Cash and short-term investments $ 4,891
Accounts receivable from FRP 46,000
Other current assets 26,744
Property, plant and equipment, net 49,053
Investment in FRP 209,314
Investment in FCX -
Other assets 6,108
--------
Total assets $342,110
========
Accounts payable and accrued liabilities $100,918
Long-term debt -
Other liabilities and deferred credits 103,805
Stockholders' equity 137,387
--------
Total liabilities and stockholders' equity $342,110
========
-----------------
Remarks
The information furnished herein should be read in conjunction with FTX's
financial statements contained in its 1994 Annual Report to stockholders
and incorporated by reference in its Annual Report on Form 10-K.
The information furnished herein reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for
the periods. All such adjustments are, in the opinion of management, of a
normal recurring nature.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESTRUCTURE AND RECAPITALIZATION
In October 1995, Freeport-McMoRan Inc. (FTX) effected a one-for-six reverse
split of its common stock. Accordingly, all common and per share amounts
have been restated.
In July 1995, FTX declared a special tax-free dividend of the Class B
common stock of Freeport-McMoRan Copper & Gold Inc. (FCX) to FTX common
stockholders (Note 2). Prior to the distribution, FTX completed certain
recapitalization activities, including the sale of 23.9 million shares of
FCX Class A common stock for $500.2 million (Note 2), the
conversion/redemption of FTX's preferred stock and publicly held debt
securities (Note 4) and the repayment of FTX's parent company bank
borrowings using a portion of the proceeds from the FCX Class A common
stock sale. These activities allowed for the separation of FTX's
copper/gold and agricultural minerals businesses into two independent
financial and operating entities. FTX's ongoing business operations now
essentially consist of its 51.4 percent ownership in Freeport-McMoRan
Resource Partners, Limited Partnership (FRP).
RESULTS OF OPERATIONS
Because FTX no longer owns any interest in FCX, FTX's financial results
were restated to reflect the FCX metals segment as discontinued operations.
Third Quarter Nine Months
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
(In Millions, Except Per Share Amounts)
Revenues $243.1 $189.8 $730.9 $560.2
Operating income 31.6 a 25.3 128.7 a 57.6
Income (loss) from continuing
operations b $ 0.6 a $ (9.8) $ 10.2 a $(24.8)
Discontinued operations (Note 2) 25.0 21.2 340.4 73.5
Extraordinary loss - - - (9.1)
Preferred dividends (Note 4) (1.1) (5.4) (41.2) (16.5)
------ ------ ------ ------
Net income to common stock $ 24.5 $ 6.0 $309.4 $ 23.1
====== ====== ====== ======
a. Includes a $12.3 million noncash general and administrative expense
charge ($3.9 million to net income) under FTX's incentive compensation
program resulting from the rise in its common stock price during the third
quarter.
b. Includes minority interests after-tax charges of $5.2 million and $7.1
million for the third quarter of 1995 and 1994, respectively, and $10.2
million and $7.1 million for the nine-month period of 1995 and 1994,
respectively, because FTX was not paid a proportionate share of FRP
distributions during the period. For the third-quarter and nine-month
periods of 1994, FTX also recognized $4.6 million and $32.6 million,
respectively, of the gain deferred in connection with the public sale of
FRP units in 1992.
FTX benefited from significantly higher operating results from its
agricultural minerals segment during the 1995 periods, reflecting the
strengthening in the phosphate fertilizer markets which began in mid-1993
and has continued throughout 1995. FTX has not incurred any exploration
costs subsequent to the May 1994 formation of McMoRan Oil & Gas Co. (MOXY).
Interest expense was lower in the 1995 quarter because of reductions to
debt levels, which will continue to benefit future periods. Minority
interests share of 1995 net income reflects the higher level of earnings at
FRP and the minority interest charge discussed above.
Agricultural Minerals Operations
- --------------------------------
FTX's agricultural minerals segment, which includes FRP's fertilizer and
phosphate rock operations (conducted through IMC-Agrico)and its sulphur
business, reported third-quarter 1995 operating income of $40.9 million on
revenues of $234.7 million compared with operating income of $33.4 million
on revenues of $182.2 million for the 1994 period. Operating income for
the first nine months of 1995 was $145.1 million on revenues of $703.6
million compared with operating income of $84.8 million on revenues of
$531.2 million for the year-ago period. Significant items impacting
operating income follow (in millions):
Third Nine
Quarter Months
------- ------
Agricultural minerals operating income - 1994 $33.4 $84.8
----- ------
Increases (decreases):
Sales volumes 17.4 70.4
Realizations 31.7 99.8
Other 3.4 2.2
----- ------
Revenue variance 52.5 172.4
Cost of sales (35.0)a (102.7)a
General and administrative and other (10.0)b (9.4)b
----- ------
7.5 60.3
----- ------
Agricultural minerals operating income - 1995 $40.9 $145.1
===== ======
a. Includes a reduction to depreciation and amortization of $6 million and
$7.7 million for the third quarter of 1995 and 1994, respectively, and
$22.1 million and $14.9 million for the nine-month period of 1995 and 1994,
respectively, caused by FRP's disproportionate interest in IMC-Agrico cash
distributions.
b. Includes $8.5 million of the stock option charge discussed earlier.
FRP's third-quarter 1995 phosphate fertilizer sales volumes were
higher than those of the year-ago quarter, with IMC-Agrico experiencing
continued excellent export demand and strengthening domestic sales for
diammonium phosphate (DAP), its principal fertilizer product. These
increased exports coupled with the seasonal rebound in fall domestic
movement caused IMC-Agrico to restart its Taft fertilizer facility in
August 1995. Despite current industrywide capacity utilization approaching
100 percent, domestic phosphate fertilizer producer inventories have
recently declined. This tight supply/demand situation is reflected in the
improved phosphate fertilizer realizations. FRP's average DAP realization
increased 15 percent from the year-ago period (up 3 percent from the
previous quarter). FRP's 1995 DAP realizations include large forward sales
to China at below current market prices, contracted during mid-1995 and
late-1994 at then market terms. Unit production costs benefited from
ongoing cost savings achieved at IMC-Agrico, somewhat offset by higher raw
material costs for ammonia.
Fertilizer prices continue to rise into the fourth quarter and are
expected to remain firm for the near term, as the tight supply/demand
situation benefits producers at a time when no operable idle capacity
exists and several turnarounds are planned, including IMC-Agrico
facilities. Furthermore, strong domestic demand is expected to continue
into the spring of 1996 due to an expectation of a 13 percent increase in
planted corn acreage. Domestic corn and wheat ending stocks are currently
forecast to be at their lowest level in 20 years further strengthening
grain prices and the outlook for next spring's fertilizer use. FRP's
export sales through year-end 1995 will continue to come principally from
the agreement that was reached with China. IMC-Agrico is committed to
maintaining a reasonable balance between supply and demand and will adjust
production levels in response to market conditions.
FRP's third-quarter 1995 phosphate rock sales volumes were essentially
unchanged from the year-ago quarter. Ongoing phosphate rock sales volumes
will be negatively impacted by the expiration of a contract providing
annual sales of 1.5 million tons net to FRP. However, because of the low
margin associated with these sales, the impact to FRP's earnings is not
significant.
FRP's Main Pass and Culberson sulphur mines continued to perform well
during the quarter compared with the 1994 period when FRP had only the Main
Pass mine in operation. The 1995 quarter was hampered by the precautionary
shutting-in of Main Pass production because of a hurricane in the Gulf of
Mexico. FRP's increased production capacity, combined with continued
strong demand from the domestic phosphate fertilizer industry, resulted in
a 33 percent increase in sales volumes. FRP also benefited from the
continued strengthening in Tampa, Florida sulphur prices. 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.
Third Quarter Nine Months
-------------------- -------------------
1995 1994 1995 1994
--------- ---------- --------- ---------
Phosphate fertilizers - primarily DAP
Sales (short tons) a 891,600 840,100 2,551,900 2,368,900
Average realized price b
All phosphate
fertilizers $167.96 $145.93 $165.17 $141.65
DAP 173.50 151.25 170.69 146.65
Phosphate rock
Sales (short tons) a 1,051,500 1,062,500 3,611,700 3,073,100
Average realized price b $21.53 $19.91 $21.94 $21.59
Sulphur
Sales (long tons) c 751,300 562,900 2,284,600 1,586,500
a. Reflects FRP's 45.1 percent and 46.5 percent share of the IMC-Agrico
assets for the years ended June 30, 1995 and 1994, respectively, while FRP
received 55 percent and 58.6 percent of the cash flow generated during such
periods. FRP's share of the IMC-Agrico assets for the year ended June 30,
1996 is 43.6 percent, while it will receive 53.1 percent of the cash flow.
b. Represents average realization f.o.b. plant/mine.
c. Includes internal consumption totaling 187,100 tons and 189,700 tons
for the third quarter of 1995 and 1994, respectively, and 555,700 tons and
564,500 tons for the nine-month period of 1995 and 1994, respectively.
Oil And Gas Operations
- ----------------------
Prior to the May 1994 distribution of MOXY shares, FTX's oil and gas
operations included exploring for new reserves. These activities generated
losses of $0.7 million and $11.7 million for the third-quarter and nine-
month periods of 1994, respectively. FTX's only significant oil and gas
operations subsequent to the MOXY distribution are FRP's production of oil
at Main Pass, as follows:
Third Quarter Nine Months
------------------ ----------------------
1995 1994 1995 1994
------- ------- --------- ---------
Sales (barrels) 524,600 417,900 1,686,400 1,853,000
Average realized price $15.58 $14.94 $15.86 $13.34
Earnings (in millions) $(1.0) $.2 $1.5 $2.2
Main Pass oil operating income was impacted by $1.4 million of the
previously discussed stock option charge. Third-quarter 1995 oil
production reflects the hurricane-related shut in and certain workover
activities. Net production for 1995 is estimated to total approximately
2.3 million barrels.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operating activities increased during the first nine months
of 1995 to $314 million, compared with $274 million for the 1994 period,
primarily because of the significant increase in operating income. Cash
flow from operating activities included cash from discontinued operations
totaling $138.6 million and $162.9 million in 1995 and 1994, respectively.
Net cash used in investing activities was $307.8 million compared with
$472.6 million for the 1994 period. The 1995 period reflects lower
expenditures by discontinued operations and the 1994 period includes $110.5
million from the sale of assets. Net cash used in financing activities was
$4.3 million compared with $187.7 million provided by financing activities
in the 1994 period. During the nine-month 1995 period, FTX sold 23.9
million shares of FCX Class A common shares to RTZ for $497.2 million (net
of $3 million of expenses), while sales of FRP and FCX securities totaled
$515.4 million in the nine-month 1994 period. During the 1995 period
purchases of FTX, FCX and FRP equity securities totaled $130.7 million
compared with $82.4 million in the 1994 period under an established program
to acquire equity securities when warranted by market conditions. The 1995
period included net repayments of debt totaling $145.9 million compared
with net borrowings of $145.6 million for the 1994 period. During 1995,
FTX redeemed $280.8 million of its ABC debentures and $15 million of its
6.55% Senior notes while the 1994 period included payments of $142.9
million for the 10 7/8% Senior debentures. During 1995, FCX received
$228.9 million from the sale of certain of its infrastructure assets. After
the first quarter of 1994 and prior to the FCX spinoff, FTX had been
distributing FCX common stock in lieu of paying cash dividends.
On October 17, 1995, IMC-Agrico acquired the animal feed ingredients
business of Mallinckrodt Group Inc. for $110 million cash. Mallinckrodt's
animal feed ingredients business is one of the world's largest producers of
phosphate-based animal feed ingredients with an annual capacity in excess
of 700,000 tons. This business is IMC-Agrico's largest phosphoric acid
customer, consuming nearly 300,000 tons per year or about seven percent of
IMC-Agrico's phosphoric acid capacity. This acquisition provides high
quality diversification and growth for IMC-Agrico and enhances the joint
venture's flexibility in maximizing returns from its core phosphate
production.
Publicly owned FRP units have cumulative rights to receive quarterly
distributions of 60 cents per unit through the distribution for the quarter
ending December 31, 1996 (the Preference Period) before any distributions
may be made to FTX. On October 20, 1995, FRP declared a distribution of 60
cents per publicly held unit ($30.2 million) and 34 cents per FTX-owned
unit ($18.3 million), payable November 15, 1995, bringing the total unpaid
distribution due FTX to $382.4 million. As a result, an additional $6.6
million minority interest charge will be recognized by FTX during the
fourth quarter of 1995. Unpaid distributions due FTX will be recoverable
from one-half of the excess of future quarterly FRP distributions over 60
cents per unit for all units. The October 1995 distributable cash included
$49.2 million from IMC-Agrico. FRP's future distributions will be
dependent on the distributions received from IMC-Agrico and future cash
flow from FRP's sulphur and oil operations. In future periods, FTX's share
of the reported financial results of FRP will depend on the extent to which
FTX receives its proportionate share of FRP distributions. To the extent
that public unitholders receive a disproportionately large share of FRP
distributions, FTX will recognize a smaller share of FRP's reported
earnings than would be represented by its percentage ownership of FRP.
Because of the recapitalization and restructuring activities discussed
above, FTX's parent company obligations have been significantly reduced.
However, FTX will have certain cash requirements relating to its past
business activities including income tax settlements, oil and gas payments
and employee benefit liabilities. It potentially could also have future
cash requirements relating to its guarantee of the debt of FM Properties
Inc. (Note 5). FTX anticipates that its cash distributions from FRP and
amounts available to it under the new credit facility (Note 5) will be
sufficient to meet these obligations. The new credit facility provides
$400 million of credit available to FTX/FRP ($227 million available at
October 20, 1995), and $75 million of which is available to FTX as the
holding company ($75 million available at October 20, 1995). In August
1995, the FTX Board of Directors established a new dividend policy for FTX
common stock and declared a regular quarterly cash dividend of $0.09 per
common share. The new dividend policy will allow FTX to use additional
available funds to purchase FTX stock, purchase FRP units and/or invest in
new growth opportunities.
--------------------------------
The results of operations reported and summarized above are not necessarily
indicative of future operating results.
FREEPORT-McMoRan INC.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
- -----------------------------------------
(a) The list of exhibits appearing on page E-1 hereof and the
exhibits immediately following said page are incorporated herein by
reference.
(b) Reports on Form 8-K.
One report on Form 8-K was filed by the registrant during the quarter
for which this report is filed. The Form 8-K was executed and filed on
July 11, 1995, reported information under Items 2 and 7, and contained the
following financial statements for Freeport-McMoRan Inc.: Unaudited Pro
Forma Statement of Income for the Year Ended December 31, 1994, Unaudited
Pro Forma Statement of Income for the Three Months Ended March 31, 1995,
and Unaudited Pro Forma Condensed Balance Sheet as of March 31, 1995.
FREEPORT-McMoRan INC.
SIGNATURE
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FREEPORT-McMoRan INC.
By: /s/ John T. Eads
---------------------------
John T. Eads
Controller - Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: October 25, 1995
FREEPORT-McMoRan INC.
EXHIBIT INDEX
Sequentially
Numbered
Number Description Page
- ------ ----------- ------------
2.1 Distribution Agreement dated as of July 5, 1995,
between Freeport-McMoRan Inc. ("FTX") and
Freeport-McMoRan Copper & Gold Inc. ("FCX")
4.1 Credit Agreement dated as of June 30, 1995, among
FTX, Freeport-McMoRan Resource Partners, Limited
Partnership, certain banks, Chemical Bank
("Chemical"), as Administrative Agent and
Collateral Agent, and The Chase Manhattan Bank
(National Association) ("Chase"), as Documentary
Agent
4.2 Credit Agreement dated as of June 30, 1995, among
FTX, FCX, FM Properties Operating Co. ("FMPOC"),
certain banks, Chemical, as Administrative Agent,
and Chase, as Documentation Agent
4.3 FTX Guaranty Agreement dated as of July 17, 1995
4.4 Second Amended and Restated Note Agreement dated
as of June 30, 1995, among FTX, FCX, FMPOC,
Chemical, and Hibernia National Bank,
individually and as Agent
11.1 Freeport-McMoRan Inc. Computation of Net Income
per Common and Common Equivalent Share
27.1 Freeport-McMoRan Inc. Financial Data Schedule