Freeport-McMoRan 2011 Annual Report Download - page 53

2011 ANNUAL REPORT | 51
Interest Rate Risk
At December31,2011, we had total debt of $3.5 billion, of which
approximately 5 percent was variable-rate debt with interest rates
based on LIBOR or the Euro Interbank Oered Rate (EURIBOR).
e table below presents average interest rates for our scheduled
maturities of principal for our outstanding debt and the related fair
values at December31,2011 (in millions, except percentages):
10% Change
Exchange Rate per $1 in Exchange Rate
at December 31, Estimated Annual Payments (in millions)
2011 2010 2009 (in local currency) (in millions)
a
Increase Decrease
Indonesia
Rupiah 9,060 8,990 9,420 3.9 trillion $ 430 $ (39) $ 48
Australian dollar 0.98 0.98 1.12 250 million $ 255 $ (23) $ 28
South America
Chilean peso 519 468 506 260 billion $ 501 $ (46) $ 56
Peruvian nuevo sol 2.70 2.81 2.89 360 million $ 134 $ (12) $ 15
Atlantic Copper
Euro 0.77 0.75 0.69 130 million $ 168 $ (15) $ 19
Africa
South African rand 8.12 6.65 7.42 840 million $ 103 $ (9) $ 11
a. Based on December 31, 2011, exchange rates.
b. Reflects the estimated impact on annual operating costs assuming a 10 percent increase or decrease in the exchange rate reported at December 31, 2011.
b
2012 2013 2014 2015 2016 Thereafter Fair Value
Fixed-rate debt $ —
a
$ —
a
$ —
a
$ — $ — $ 3,372 $ 3,632
Average interest rate 7.2% 6.7% 6.7% N/A N/A 8.3% 8.3%
Variable-rate debt $ 4 $ — $ — $ — $ — $ 161 $ 165
Average interest rate —%
b
N/A N/A N/A N/A 4.3% 4.2%
a. Less than $1 million.
b. Less than 0.01%.
NEW ACCOUNTING STANDARDS
We do not expect the provisions of recently issued accounting
standards to have a signicant impact on our future nancial
statements and disclosures.
OFFBALANCE SHEET ARRANGEMENTS
Refer to Note 14 for discussion of o-balance sheet arrangements.
PRODUCT REVENUES AND PRODUCTION COSTS
Unit net cash costs per pound of copper and molybdenum are
measures intended to provide investors with information about
the cash-generating capacity of our mining operations expressed
on a basis relating to the primary metal product for the respective
operations. We use this measure for the same purpose and for
monitoring operating performance by our mining operations.
is information diers from measures of performance determined
in accordance with U.S. GAAP and should not be considered in
isolation or as a substitute for measures of performance determined
in accordance with U.S. GAAP. is measure is presented
by other metals mining companies, although our measure may
not be comparable to similarly titled measures reported by
other companies.
We present gross prot per pound of copper in the following
tables using both a “by-product” method and a “co-product”
method. We use the by-product method in our presentation of
gross prot per pound of copper because (i) the majority of our
revenues are copper revenues, (ii) we mine ore, which contains
copper, gold, molybdenum and other metals, (iii) it is not possible
to specically assign all of our costs to revenues from the copper,
gold, molybdenum and other metals we produce, (iv) it is the
method used to compare mining operations in certain industry
publications and (v) it is the method used by our management and
the Board to monitor operations. In the co-product method
presentation below, shared costs are allocated to the dierent
products based on their relative revenue values, which will vary to
the extent our metals sales volumes and realized prices change.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Following is a summary of estimated annual payments and
the impact of changes in foreign currency rates on our annual
operating costs: