Freeport-McMoRan 2003 Annual Report Download - page 70

2003 2002
Change in benefit obligation:
Benefit obligation at beginning of year $(4,812) $(1,754)
Acquisition of FM Services Company obligation — (3,134)
Service cost (127) (57)
Interest cost (327) (152)
Actuarial gains (losses) (455) 22
Plan amendment (400) —
Participant contributions (192) (90)
Benefits paid 503 353
Benefit obligation at end of year (5,810) (4,812)
Change in plan assets:
Fair value of plan assets at beginning of year — —
Employer/participant contributions 503 353
Benefits paid (503) (353)
Fair value of plan assets at end of year — —
Funded status (5,810) (4,812)
Unrecognized net actuarial loss
619 179
Unrecognized prior service cost (503) (631)
Accrued benefit cost $(5,694) $(5,264)
Discount rate assumption (percent) 6.25 6.75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
68 FREEPORT-McMoRan COPPER & GOLD INC. 2003 Annual Report
Expected benefit payments for these plans total
$0.4 million in 2004 and 2005, $0.5 million in
2006, 2007 and 2008, and $2.6 million in 2009
through 2013. The components of net periodic
benefit cost for FCX’s and, since October 1, 2002,
FM Services Company’s health care and life insur-
ance benefits follow (in thousands):
2003 2002 2001
Service cost $127 $57 $71
Interest cost 327 152 105
Amortization of prior service cost 273 (62) (42)
Amortization of net actuarial loss (gain) 14 (33) (56)
Net periodic benefit cost $741 $114 $ 78
FCX and FM Services Company have employee savings
plans under Section 401(k) of the Internal Revenue
Code that generally allow eligible employees to con-
tribute up to 50 percent of their pre-tax compensation,
but no more than a specified limit (currently
$13,000). FCX and FM Services Company match
100 percent of the first 5 percent of the employees’
contribution. As a result of FCX’s and FM Services
Company’s decision to terminate their defined benefit
pension plans effective July 1, 2000, FCX and FM
Services Company fully vested their matching contri-
butions for all active Section 401(k) plan participants
on June 30, 2000. Subsequently, all new plan
participants vest 100 percent in FCX’s and FM
Services Company’s matching contributions upon
three years of service.
During 2000, FCX and FM Services Company also
established additional defined contribution plans
for substantially all their employees following their
decision to terminate their defined benefit pension
plans. Under these plans, 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. The costs
charged to operations for FCX’s and, since October
1, 2002, FM Services Company’s employee savings
plans and defined contribution plans totaled $2.8
million in 2003, $1.2 million in 2002 and $1.0 mil-
lion in 2001. FCX and FM Services Company have
other employee benefit plans, certain of which are
related to FCX’s performance, which costs are recog-
nized currently in general and administrative
expense. Atlantic Copper adopted a defined contribu-
tion employee plan in 2001 and recorded charges
totaling $0.4 million in 2003 and $0.3 million in
2002 for annual service costs and $7.0 million in
2001 for past service costs related to this plan.