Freeport-McMoRan 2003 Annual Report Download - page 68

legislation required that Atlantic Copper begin funding
its contractual obligation to the retired employees
through a third party in November 2002. In August
2002, Atlantic Copper complied with the amended
Spanish legislation by agreeing to fund 7.2 million
euros annually for 15 years to an approved insurance
company for its estimated 72 million euro contractual
obligation to the retired employees. Payments of 7.2
million euros were made in both August 2002 and
2003. The insurance company invests the plan assets
in accordance with Spanish regulations and Atlantic
Copper has no control over these investments. Atlantic
Copper is amortizing the unrecognized net actuarial
loss over the remaining 13-year funding period. The
scheduled annual payments of 7.2 million euros are
not significantly more than the payments Atlantic
Copper has made directly to these retired employees
over the last several years.
Information as of December 31, 2003 and 2002
on the FCX (including FM Services Company since
FCX acquired the remaining 50 percent ownership in
FM Services Company on October 1, 2002), PT
Freeport Indonesia and Atlantic Copper plans follows
(dollars in thousands):
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
66 FREEPORT-McMoRan COPPER & GOLD INC. 2003 Annual Report
FCX (U.S. and PT Freeport Indonesia Atlantic Copper
expatriate employees) (Indonesian employees) (Spanish retirees)
2003 2002 2003 2002 2003 2002
Change in benefit obligation:
Benefit obligation at beginning of year
$(29,723) $(17,136) $(25,553) $(18,534) $(74,732) $(69,500)
Acquisition of FM Services
Company obligation
—(13,204) — — — —
Service cost
——(3,148) (2,041) — —
Interest cost
(1,085) (887) (3,366) (2,166) (4,821) (4,266)
Actuarial gains (losses)
——(1,246) (1,345) (235) 1,600
Effect of changes in law ——(5,031) — ——
Foreign exchange loss ——(1,686) (2,692) (11,595) (8,574)
Benefits paid 1,313 1,504 2,806 1,225 6,294 6,008
Benefit obligation at end of year (29,495) (29,723) (37,224) (25,553) (85,089) (74,732)
Change in plan assets:
Fair value of plan assets at
beginning of year
24,633 12,746 13,861 9,256 6,071 —
Addition of FM Services Company
assets
—12,752 — — — —
Actual return on plan assets
751 639 1,541 1,591 — —
Employer contributions
a
——3,281 2,643 8,498 12,079
Foreign exchange gain
——1,551 1,596 — —
Benefits paid (1,313) (1,504) (1,698) (1,225) (6,294) (6,008)
Fair value of plan assets at end
of year 24,071 24,633 18,536 13,861 8,275 6,071
Funded status (5,424) (5,090) (18,688) (11,692) (76,814) (68,661)
Unrecognized net actuarial loss
——6,994 5,467 8,801 9,882
Unrecognized prior service cost
——8,601 4,149 — —
Minimum liability adjustment ——(2,220) — — —
Accrued benefit cost $(5,424) $(5,090) $(5,313) $(2,076) $(68,013) $(58,779)
Accumulated benefit obligation $(29,495) $(29,723) $(23,849) $(15,737) $(85,089) $(74,732)
Weighted-average assumptions used to
determine benefit obligations (percent):
Discount rate
N/A
b
N/A
b
10.00 11.00 6.77 6.39
Rate of compensation increase
N/A
b
N/A
b
8.00 9.00 — —
Weighted-average assumptions to
determine net periodic benefit
cost (percent):
Discount rate
N/A
b
N/A
b
10.00 11.00 6.77 6.39
Expected return on plan assets
N/A
b
N/A
b
10.00 12.00 — —
Rate of compensation increase
N/A
b
N/A
b
8.00 9.00 — —
a. Employer contributions for 2004 are expected to approximate $30.4 billion rupiah for the PT Freeport Indonesia plan, 7.2 million euros for the
Atlantic Copper plan and none for the FCX plan.
b. As discussed above, FCX and FM Services Company elected to terminate their defined benefit pension plans and ceased accruing benefits on
June 30, 2000.