Freeport-McMoRan 2011 Annual Report Download - page 90

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88 | FREEPORT-McMoRan COPPER & GOLD INC.
Information on the postretirement benet plans as of
December31 follows:
2011 2010
Change in benefit obligation:
Benefit obligation at beginning of year $ 240 $ 265
Service cost 1 1
Interest cost 11 13
Actuarial gains (7) (13)
Benefits paid, net of employee and partner
contributions, and Medicare Part D subsidy (22) (26)
Benefit obligation at end of year 223 240
Change in plan assets:
Fair value of plan assets at beginning of year — —
Employer and partner contributions 25 30
Employee contributions 12 11
Benefits paid (37) (41)
Fair value of plan assets at end of year — —
Funded status $ (223 ) $ (240)
Discount rate assumption 4.20% 4.90%
Balance sheet classification of funded status:
Accounts payable and accrued liabilities $ (23) $ (26)
Other liabilities (200) (214)
Total $ (223 ) $ (240)
Included in accumulated other comprehensive income (loss) are
amounts not recognized in net periodic benet cost for
unrecognized actuarial losses of $4 million ($3 million net of
tax and noncontrolling interests) at December31,2011, and
$3 million ($2 million net of tax and noncontrolling interests) at
December31,2010. No amount is expected to be recognized in net
periodic benet cost in 2012 for unrecognized actuarial losses.
Expected benet payments for these plans total $23 million for
2012, $21 million for 2013, $20 million for 2014, $19 million for
2015, $18 million for 2016 and $82 million for 2017 through 2021.
e weighted-average assumptions used to determine net
periodic benet cost and the components of net periodic benet
cost for FCX’s postretirement benets for the years ended
December 31 follow:
2011 2010 2009
Weighted-average assumptions:
Discount rate 4.90% 5.20% 6.30%
Service cost $ 1 $ 1 $ 1
Interest cost 11 13 15
Curtailments and special retirement benefits — — (1)
Net periodic benefit cost $ 12 $ 14 $ 15
e assumed medical-care trend rates at December 31 follow:
2011 2010
Medical-care cost trend rate assumed for
the next year 8.00% 8.25%
Rate to which the cost trend rate is assumed
to decline (the ultimate trend rate) 4.50% 4.75%
Year that the rate reaches the ultimate trend rate 2026 2025
e eect of a one-percent increase or decrease in the medical-
care cost trend rates assumed for postretirement medical benets
would result in increases or decreases of less than $1 million
in the aggregate service and interest cost components; for the
postretirement benet obligation, the eect of a one-percent
increase is approximately $8 million and the eect of a one-percent
decrease is approximately $7 million.
FCX has a number of postemployment plans covering severance,
long-term disability income, continuation of health and life
insurance coverage for disabled employees or other welfare
benets. e accumulated postemployment benet consisted of a
current portion of $7 million (included in accounts payable and
accrued liabilities) and a long-term portion of $57 million
(included in other liabilities) at December31,2011, and a current
portion of $8 million (included in accounts payable and accrued
liabilities) and a long-term portion of $53 million (included in
other liabilities) at December31,2010.
FCX also sponsors savings plans for the majority of its U.S.
employees. e plans allow employees to contribute a portion of
their pre-tax income in accordance with specied guidelines.
ese savings plans are principally qualied 401(k) plans for all
U.S. salaried and non-bargained hourly employees. In these
plans, participants exercise control and direct the investment of
their contributions and account balances among various
investment options. FCX matches a percentage of employee pre-tax
deferral contributions up to certain limits, which vary by plan.
During 2000, FCX and FM Services Company enhanced their
primary savings plan for substantially all their employees following
their decision to terminate their dened benet pension plans.
Subsequent to the enhancement, FCX and FM Services Company
contribute amounts to individual accounts totaling either 4 percent
or 10 percent of each employee’s pay, depending on a combination
of each employee’s age and years of service as of June 30, 2000. For
employees whose eligible compensation exceeds certain levels,
FCX provides an unfunded dened contribution plan. e balance
of this liability totaled $56 million on December31,2011, and
$49 million on December31,2010.
FMC had a dened contribution plan for its eligible employees
hired on or aer January1, 2007, which was merged into the FCX
savings plan eective January1,2009. Subsequent to
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS