Freeport-McMoRan 2004 Annual Report Download

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Table of contents

  • Page 1
    Making the Grade FREEPORT-McMoRan COPPER & GOLD INC. 2004 ANNUAL REPORT

  • Page 2
    ...sample฀was฀presented฀฀ to฀Richard฀C.฀Adkerson,฀President฀and฀Chief฀Executive฀ Officer฀of฀Freeport-McMoRan฀Copper฀&฀Gold฀Inc.฀by฀ Armando฀Mahler,฀Executive฀Vice฀President฀and฀General฀ Manager฀of฀PT฀Freeport฀Indonesia,฀on฀one฀of฀Mr...

  • Page 3
    ...-grade ore sample on the cover of this report illustrates the dramatic mineralization in our Grasberg minerals ... businesses. We worked diligently in meeting challenges to make the grade in 2004. Our progress in 2004 and our track record of operating achievements over many years demonstrate that we...

  • Page 4
    ...reportable฀rate฀(all฀reportable฀ injuries)฀for฀2004...Freeport฀Indonesia,฀our฀Indonesian฀฀ mining฀affiliate,฀for฀2004...3Q04 4Q04 04a 05e a = Annual e = Estimate 1Q04 2Q04 3Q04 4Q04 04a 05e a = Annual e = Estimate realized฀price฀per฀...FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 5
    ...our฀acquisition฀of฀Rio฀Tinto's฀common฀shares฀ in฀Freeport-McMoRan฀Copper฀&฀Gold฀Inc.,฀R.฀Leigh฀Clifford,฀ Director฀and฀Chief...฀of฀the฀Board March฀9,฀2005 Richard฀C.฀Adkerson President฀and Chief฀Executive฀Officer 2004 ANNUAL REPORT |฀3

  • Page 6
    ...affiliate,฀PT฀Freeport฀Indonesia,฀focused฀ on฀recovery฀from฀the฀fourth-quarter฀2003฀Grasberg฀ open-pit฀slippage฀and฀debris฀flow฀events.฀By฀the฀end฀ of฀2004...100฀percent฀for฀gold฀from฀2004฀levels. 4฀| FREEPORT-McMoRan COPPER & GOLD INC. ...

  • Page 7
    ...฀and฀contractors,฀to...2004฀on฀new฀portals฀and฀tunnel฀systems฀ as฀part฀of฀common฀infrastructure฀which฀will฀provide฀for฀ future฀development฀of฀underground฀operations฀and฀enable฀ us฀to฀expand฀exploratory฀drilling฀activities. 2004 ANNUAL REPORT...

  • Page 8
    ...฀annual฀rate฀of฀$0.80฀per฀share฀to฀$1.00฀per฀share,฀ payable฀quarterly฀($0.25฀per฀share).฀In฀December฀2004,฀...฀financial฀ measures฀for฀the฀benefit฀of฀shareholders. 6฀| FREEPORT-McMoRan COPPER & GOLD INC. Background photo: ฀Concentrate฀loading...

  • Page 9
    ... 3.4 million shares purchased on the open market 1.8฀million฀dry฀metric฀tons฀of฀concentrate฀containing฀copper,฀ gold฀and฀silver฀were฀loaded฀and฀shipped฀in฀2004฀from฀the฀port฀of฀ Amamapare฀to฀smelters฀around฀the฀world. 2004 ANNUAL REPORT |฀7

  • Page 10
    ...฀commercial฀relationships฀with฀our฀Company.฀Our฀ largest฀non-affiliated฀customers฀are฀located฀in฀Asia. 8฀| FREEPORT-McMoRan COPPER & GOLD INC. Background photo: ฀Copper฀cathode฀shipping฀operations฀at฀the฀Atlantic฀Copper฀smelter฀in฀Huelva,฀Spain.

  • Page 11
    ...฀ rose฀to฀new฀highs. ฀ The฀positive฀environment฀for฀gold฀continued฀in฀ 2004฀with฀gold฀prices฀ranging฀from฀$374-$456฀per฀ ounce,฀averaging฀$410฀per฀ounce... $450 dollars per ounce $400 $350 $300 98 99 00 01 02 03 04 05 2004 ANNUAL REPORT |฀9

  • Page 12
    ... Existing Infrastructure (Ridge Camp) Portals This฀diagram฀illustrates฀the฀layout฀...2004,฀ the฀PT฀Freeport฀Indonesia฀exploration฀team฀established฀ net฀additions,฀before฀2004...production฀in฀early฀2010. 10฀| FREEPORT-McMoRan COPPER & GOLD INC. Background photo...

  • Page 13
    ...gold.฀ ฀฀ PT฀Freeport฀Indonesia's฀exploration฀efforts฀in...affiliates,฀please฀ contact฀our฀Investor฀Relations฀Department,฀1615฀Poydras฀ Street,฀New฀Orleans,฀LA฀70112,฀(504)฀582-4000;฀or฀฀ access฀our฀web฀site,฀www.fcx.com. 2004 ANNUAL REPORT...

  • Page 14
    ...to฀Indonesia฀in฀2004,฀ including฀indirect฀benefits,฀was฀$3฀billion. PT฀Freeport฀Indonesia's฀apprentice฀training฀programs฀prepare฀ hundreds฀of฀qualified฀local฀Papuan฀tradesmen฀for฀the฀industrial฀ workforce.฀ 12฀| FREEPORT-McMoRan COPPER & GOLD...

  • Page 15
    ...฀provided฀scholarships,฀training฀and฀ business฀opportunities. •฀฀ In฀both฀2003฀and฀2004,฀BusinessWeek฀magazine฀published฀the฀results฀of฀its฀surveys฀ranking฀America's฀top฀฀ philanthropic฀companies,฀and฀each฀year฀named฀ Freeport-McMoRan...

  • Page 16
    ...mission...plants฀ thrive฀on฀soil฀containing฀tailings,฀the฀natural฀crushed฀rock฀from฀ our฀milling฀process,฀as฀part฀of฀PT฀Freeport฀Indonesia's฀reclamation฀ development฀program. •฀฀ Sampling฀in฀2004฀continued฀to฀demonstrate฀that฀the฀ water...

  • Page 17
    ...฀and฀Environmental฀ Report,"฀please฀see฀our฀web฀site฀(www.fcx.com),฀฀ e-mail฀us฀at฀[email protected],฀or฀contact฀ the฀Communications฀Department,฀1615฀Poydras฀Street,฀฀ New฀Orleans,฀LA฀70112,฀1-800-535-7094. 2004 ANNUAL REPORT |฀15

  • Page 18
    ...Jr.,฀2000฀(1,฀2) President R.E.฀Smith฀Interests B.฀M.฀Rankin,฀Jr.,฀1995฀(4) Vice฀Chairman฀of฀the฀Board Freeport-McMoRan฀Copper฀&฀Gold฀Inc. Private฀Investor Robert฀A.฀Day,฀1995฀(1,฀3) Chairman฀of฀the฀Board฀and Chief฀Executive฀Officer Trust...

  • Page 19
    ... Reporting Report of Independent Registered Public Accounting Firm Consolidated Statements of Income Consolidated Statements of Cash Flows Consolidated Balance Sheets Consolidated Statements of Stockholders' Equity Notes to Consolidated Financial Statements 49 50 51 52 53 54 48 47 18 20 2004 ANNUAL...

  • Page 20
    ...,฀Except฀Per฀Share฀Amounts) 2004฀ 2003฀ 2002฀ 2001฀...and฀investments฀ Property,฀plant,฀equipment฀and฀development฀costs...Cathode฀cash฀production฀cost฀per฀pound฀before฀hedgingg฀ 18฀| FREEPORT-McMoRan COPPER & GOLD INC. ฀1,393,400฀ ฀ 632,000...

  • Page 21
    ...poundg฀ $฀ 0.12฀ $฀ 0.10฀ PT FREEPORT INDONESIA, 100% AGGREGATE OPERATING DATA Ore฀milled...reported฀in฀FCX's฀consolidated฀financial฀statements฀refer฀to฀"Product฀ Revenues฀and฀Production฀Costs"฀in฀"Management's฀Discussion฀and฀Analysis." 2004 ANNUAL REPORT...

  • Page 22
    ...Freeport-McMoRan...reported...2004,฀we฀received฀a฀request฀from฀the฀Indonesian฀ wholly฀owned฀subsidiaries.฀We฀acquired฀an฀85.7฀percent฀ Department฀of฀Energy฀and฀Mineral฀Resources฀that฀we฀offer฀ ownership฀in฀Puncakjaya฀Power...฀Spain฀and...฀annual฀...

  • Page 23
    ...joint฀venture฀arrangements,฀Rio฀Tinto฀has฀a฀40฀ percent฀interest฀in฀PT฀Freeport฀Indonesia's฀Contract฀of฀Work฀ and฀in฀Eastern฀Minerals'฀Contract฀of฀Work...the฀global฀ copper฀markets฀to฀be฀positive฀for฀our฀company. 2004 ANNUAL REPORT |฀21

  • Page 24
    ...investor฀sentiment฀ lives฀of฀our฀straight-line฀assets฀impact฀our฀depreciation฀ toward฀gold฀continued฀during฀2004...Freeport฀Indonesia's฀mining฀ prices฀averaged฀$410฀per฀ounce฀in฀2004... the฀circumstances;฀however,฀reported฀results฀could฀differ฀...

  • Page 25
    ... estimated฀to฀be฀in฀approximately฀2015.฀This฀is฀because฀ PT฀Freeport฀Indonesia฀expects฀to฀mine฀higher฀than฀average฀ amounts฀of฀overburden฀through...฀ of฀total฀overburden฀and฀ore฀we฀expect฀to฀move฀in฀a฀given฀ 2004 ANNUAL REPORT |฀23

  • Page 26
    ...annual฀assessment.฀PT฀ Freeport฀Indonesia's฀estimated฀life-of-mine฀overburdento-ore฀ratio฀averaged฀2.3฀to฀1฀in฀2004...primarily฀involve฀treatment฀of฀acidic฀water฀(also฀known฀ as฀acid฀...฀(SFAS)฀No.฀143,฀ 24฀| FREEPORT-McMoRan COPPER & GOLD INC. "...

  • Page 27
    ... lower-grade฀ore฀and฀reduced฀mill฀throughput฀as฀PT฀Freeport฀ Indonesia฀accelerated฀the฀removal฀of฀overburden฀and฀mined฀...increased฀exploration฀drilling฀in฀Block฀A.฀Our฀2004฀drilling฀ 2004 ANNUAL REPORT |฀25 Asset฀retirement฀obligation฀at...

  • Page 28
    ...in฀2004฀and฀ $7.3฀million฀in฀2003.฀Our฀parent฀company฀charges฀PT฀Freeport฀...฀annual฀debt฀levels.฀Our฀interest฀cost฀for฀ 2005฀is฀expected฀to฀be฀about฀the฀same฀as฀2004...million฀($3.7฀million฀ 26฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 29
    ...฀and฀refining฀segment฀includes฀Atlantic฀Copper's฀ operations฀in฀Spain฀and฀PT฀Freeport฀Indonesia's฀equity฀ investment฀in฀PT฀Smelting.฀Summary฀comparative฀operating฀ income฀(loss)฀data฀by฀segment฀follow฀(in฀millions): 2004 ANNUAL REPORT |฀27

  • Page 30
    ...of฀these฀sales.฀At฀December฀31,฀2004,฀our฀deferred฀profits฀to฀be฀recognized...฀is฀ a฀measure฀intended฀to฀provide฀investors฀with฀information฀ about฀the฀cash฀generating...฀information฀differs฀from฀ 28฀| FREEPORT-McMoRan COPPER & GOLD INC. measures...

  • Page 31
    ...design฀capacity฀of฀35,000฀metric฀ tons฀of฀ore฀per฀day.฀PT฀Freeport฀Indonesia฀is฀expanding฀the฀ capacity฀of฀the฀DOZ฀underground฀operation฀to฀...charge฀ rates฀caused฀by฀higher฀copper฀prices฀and฀our฀customer฀mix. 2004 ANNUAL REPORT |฀29

  • Page 32
    ...฀2005฀royalty฀costs฀to฀increase฀compared฀with฀2004฀ royalty฀costs฀of฀$43.5฀million.฀If฀copper฀prices฀average฀$1.35฀ per฀pound฀and฀gold฀prices฀average฀$420฀per฀ounce฀in฀2005,฀ 30฀| FREEPORT-McMoRan COPPER & GOLD INC. we฀would฀expect...

  • Page 33
    ...19,300฀ metric฀tons฀of฀ore฀per฀day฀for฀2002. PT฀Freeport฀Indonesia฀reported฀record-low฀average฀unit฀net฀ cash฀production฀costs฀of฀a฀net฀credit฀of...฀26,฀2005,฀for฀Block฀B;฀March฀31,฀2005,฀for฀PT฀Nabire฀ 2004 ANNUAL REPORT |฀31

  • Page 34
    ...Freeport...Freeport฀Indonesia฀ generally฀sells฀approximately฀one-half฀of฀its฀concentrate฀ production฀to฀its฀affiliated...2004...FREEPORT-McMoRan COPPER & GOLD INC. cash฀production฀costs฀per฀pound฀of฀copper,฀before฀currency฀ hedging,฀averaged฀$0.25฀in฀2004...

  • Page 35
    ...in฀the฀timing฀of฀shipments฀to฀affiliated฀smelters฀and฀ metal฀prices. Atlantic...Freeport฀Indonesia฀operating฀ ฀ profits฀(deferred)฀recognized฀ $฀696.0฀ ฀ 2.0฀ ฀(13.8)฀ $฀ 510.2฀ ฀ 5.6฀ ฀ 7.0฀ $฀ 391.1 ฀ (4.2) ฀ (8.4) 2004 ANNUAL REPORT...

  • Page 36
    ...100฀metric฀ tons฀of฀concentrate฀in฀2004฀and฀824,800฀metric฀tons฀in฀2003. PT฀Smelting฀reported฀production฀of฀464.0฀million฀pounds฀ of฀...฀results,฀cash฀requirements,฀ future฀prospects฀and฀other฀factors. 34฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 37
    ...Power฀owned฀by฀affiliates฀of฀Duke฀ Energy฀Corporation฀for฀$68.1฀million฀cash,฀net฀of฀$9.9฀million฀ of฀cash฀acquired.฀PT฀Freeport฀Indonesia฀purchases฀power฀ from฀Puncakjaya฀Power...฀from฀the฀sale฀to฀purchase฀ 2004 ANNUAL REPORT |฀35

  • Page 38
    ... PT฀Freeport฀Indonesia's฀joint฀venture฀partner. As฀of฀December฀31,฀2004,฀we฀had...฀2004฀to฀an฀annual฀ rate฀of฀$1.00฀per฀share.฀In฀December฀2004,฀our...transactions฀ with฀affiliates,฀paying฀cash฀dividends... 36฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 39
    ...October฀2003,฀FCX฀and฀PT฀Freeport฀Indonesia฀entered฀ into฀an฀...2008฀ 2009฀ Thereafter Puncakjaya฀Power฀bank฀debt฀ Redeemable฀preferred...2004.฀A฀summary฀of฀these฀various฀ obligations฀follows฀(in฀millions,฀except฀concentrates): 2004 ANNUAL REPORT...

  • Page 40
    ...฀metals฀ in฀slimes.฀Atlantic฀Copper฀sold฀its฀wire฀rod฀and฀wire฀assets฀in฀ December฀2004.฀Our฀consolidated฀revenues฀and฀net฀income฀ vary฀significantly฀with฀fluctuations฀in฀the฀market฀prices฀ 38฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 41
    ...฀1.5฀billion฀ pounds฀of฀2005฀PT฀Freeport฀Indonesia฀copper฀sales.฀A฀change฀ of฀$25...Risk Our฀operations฀are฀in฀Indonesia฀and฀Spain,฀where฀our฀functional฀currency฀is฀the฀U.S.฀dollar...฀Indonesian฀rupiah,฀Australian฀ 2004 ANNUAL REPORT |฀39

  • Page 42
    ...2004,฀a฀$0.01฀ increase฀or฀decrease฀in฀the฀exchange฀rate฀would฀result฀ in฀an฀approximate฀$2฀million฀change฀in฀aggregate฀annual฀ operating฀costs. At฀times,฀PT฀Freeport...฀accounting฀for฀inventory฀costs. 40฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 43
    ...Freeport Indonesia Product Revenues and Net Cash Production Costs Net฀cash฀production฀costs฀per฀pound฀of฀copper฀is฀a฀measure฀ intended฀to฀provide฀investors...฀or฀as฀ a฀substitute฀for฀measures฀of฀performance฀determined฀in฀ 2004 ANNUAL REPORT |฀41

  • Page 44
    ...Year฀Ended฀December฀31,฀2004฀ (In฀Thousands)฀ By...01) 3.94 0.10 2.26 Reconciliation to Amounts Reported ฀ ฀ (In฀Thousands)฀ ฀ Revenues฀ Production฀... ฀ (224,292)฀ ฀ 9,581 $฀ 2,371,866฀ $฀ 1,450,291฀ $฀ 206,408 42฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 45
    ...segment฀ Smelting฀and฀refining฀segment฀ Eliminations฀and฀other฀ As฀reported฀in฀FCX's฀consolidated฀financial฀statements฀ $฀ 1,966,321฀ ...฀ 28,464 ฀ (442,832)฀ ฀ (453,306)฀ ฀ 11,889 $฀ 2,212,165฀ $฀ 1,071,326฀ $฀ 230,803 2004 ANNUAL REPORT |฀43

  • Page 46
    ... 2.10 0.54 0.02 2.66 0.02 2.02 Reconciliation to Amounts Reported ฀ ฀ (In฀Thousands)฀ ฀ Revenues฀ Production฀ Depreciation฀and฀ and... ฀ 27,652 ฀ (377,228)฀ ฀ (346,197)฀ ฀ 14,078 $฀ 1,910,462฀ $฀ 938,462฀ $฀ 260,446 44฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 47
    ...PT฀Smelting's฀operating฀ costs฀are฀then฀reconciled฀to฀PT฀Freeport฀Indonesia's฀equity฀ in฀PT฀Smelting฀earnings฀(losses)฀reported฀in฀FCX's฀ consolidated฀financial฀statements฀(in฀thousands,฀except฀per฀ pound฀amounts): 2004 ANNUAL REPORT |฀45

  • Page 48
    ...฀problems,฀...Officer...2004฀฀ anticipated฀or฀assumed฀in฀the฀forward-looking฀statements.฀ Form฀10-K. Important฀factors฀that฀can฀cause฀our฀actual฀results฀to฀differ฀ materially฀from฀those฀anticipated฀in฀the฀forward-looking฀ 46฀| FREEPORT-McMoRan...

  • Page 49
    ...฀Accounting฀Oversight฀Board฀(United฀ States),฀the฀effectiveness฀of฀Freeport-McMoRan฀Copper฀&฀ Gold฀Inc.'s฀internal฀control฀over฀financial฀reporting฀as฀of฀ December฀31,฀2004,฀based฀on฀criteria฀established฀in฀Internal฀ Control-Integrated...

  • Page 50
    ...in฀their฀report฀dated฀March฀9,฀2005,฀which฀ is฀included฀herein. Richard C. Adkerson President฀and฀Chief฀ Executive฀Officer฀ ฀ ฀ ฀ Kathleen L. Quirk Senior฀Vice฀President, Chief฀Financial฀Officer฀ and฀Treasurer 48฀| FREEPORT-McMoRan COPPER & GOLD...

  • Page 51
    ...฀on฀Internal฀Control฀Over฀ Financial฀Reporting,฀that฀Freeport-McMoRan฀Copper฀&฀Gold฀ Inc.฀and฀its฀subsidiaries฀maintained฀effective฀internal฀control฀ over฀financial฀reporting฀as฀of฀December฀31,฀2004,฀based฀on฀ criteria฀established฀in...

  • Page 52
    ...December฀31,฀ (In฀Thousands,฀Except฀Per฀Share฀Amounts) 2004฀ 2003฀ 2002 Revenues Cost฀of฀sales: ฀ ...฀Notes฀to฀Consolidated฀Financial฀Statements฀are฀an฀integral฀part฀of฀these฀financial฀statements. 50฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 53
    ...฀(recognition)฀of฀profit฀on฀PT฀Freeport฀Indonesia฀sales฀to฀PT฀Smelting฀฀... Other฀ ฀ ฀ Investment฀in฀PT฀Puncakjaya฀Power,฀net฀of฀cash฀acquired฀ Net฀cash฀used฀...฀an฀integral฀part฀of฀these฀financial฀statements. 2004 ANNUAL REPORT |฀51

  • Page 54
    ...Thousands,฀Except฀Par฀Value)฀ ฀ 2004฀ 2003 ASSETS Current฀assets:... ฀ Total฀current฀assets฀ Property,฀plant,฀equipment฀and฀development฀costs,฀net฀ Deferred...฀ 1,163,649฀ ฀ 775,984 $฀ 5,086,995฀ $฀ 4,718,366 52฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 55
    ... ฀ ฀ Balance฀at฀end฀of฀year฀representing฀284,964฀shares฀in฀2004,฀260,001฀shares฀ ฀ in฀2003฀and฀220,083฀shares฀in฀2002...฀to฀Consolidated฀Financial฀Statements฀are฀an฀integral฀part฀of฀these฀financial฀statements. 2004 ANNUAL REPORT |฀53

  • Page 56
    ...Freeport฀ Indonesia฀and฀its฀85.7฀percent-owned฀subsidiary฀ PT฀Puncakjaya฀Power฀(Puncakjaya฀Power...the฀amounts฀ reported฀in฀these฀...54฀| FREEPORT-McMoRan COPPER & GOLD INC. 2004,฀and฀$10...Property, Plant, Equipment and Development Costs. Property,฀plant,฀equipment...

  • Page 57
    ...฀$30.6฀million฀in฀2002.฀PT฀Freeport฀ Indonesia฀evaluates฀the฀recoverability฀of฀these฀deferred฀ mining฀costs฀in฀conjunction฀with฀its฀evaluation฀of฀the฀ recoverability฀of฀its฀mining฀assets฀as฀described฀in฀FCX's฀ 2004 ANNUAL REPORT |฀55

  • Page 58
    ...open-pit฀mine฀at฀least฀annually,฀and฀any฀changes฀in฀...mining฀costs฀calculation฀averaged฀2.3฀to฀1฀in฀2004,฀ 2.0฀to฀1฀in฀2003฀and฀1.8฀...฀which฀multiple฀ 56฀| FREEPORT-McMoRan COPPER & GOLD INC....฀and฀their฀reported฀amounts฀in฀the฀...

  • Page 59
    ...after฀July฀1฀of฀original฀ issuance฀costs. Revenue Recognition.฀PT฀Freeport฀Indonesia's฀sales฀of฀ copper฀concentrates,฀which฀also฀contain฀significant฀...either฀fixed฀or฀in฀ certain฀cases฀vary฀with฀the฀price฀of฀copper. 2004 ANNUAL REPORT |฀57

  • Page 60
    ...2004,฀$3.0฀million฀in฀2003฀and฀$3.5฀million฀in฀2002. Comprehensive Income.฀FCX฀follows฀SFAS฀No.฀130,฀ "Reporting฀Comprehensive฀Income,"฀for฀the฀reporting... income฀for฀2004,฀2003฀and฀2002฀follows฀(in฀thousands): 58฀| FREEPORT-McMoRan COPPER & ...

  • Page 61
    ...฀fair฀values฀and฀weighted-average฀assumptions฀used฀ to฀determine฀the฀fair฀value฀of฀FCX's฀stock฀option฀grants฀under฀ SFAS฀No.฀123฀during฀the฀periods฀presented. 2004 ANNUAL REPORT |฀59

  • Page 62
    ...฀of฀these฀instruments฀would฀ have฀increased฀reported฀diluted฀net฀income฀per฀share.฀A฀ recap฀of...July฀2004฀(see฀Note฀5). d.฀ FCX's฀Step-Up฀Convertible฀Preferred฀Stock฀was฀redeemed฀in฀December฀2003฀(see฀Note฀7). 60฀| FREEPORT-McMoRan ...

  • Page 63
    ...with฀fixed฀fee฀terms฀plus฀reimbursements฀for฀special฀projects฀and฀out-of-pocket฀expenses.฀ The฀costs฀billed฀to฀FCX฀and฀PT฀Freeport฀Indonesia,฀which฀ include฀related฀overhead,฀totaled฀$34.6฀million฀in฀2004,฀$33.4฀ 2004 ANNUAL REPORT |฀61

  • Page 64
    ...฀2004,฀$3.6฀...Power฀owned฀by฀affiliates฀of฀Duke฀ Energy฀Corporation฀for฀$78฀million฀cash.฀Puncakjaya฀Power฀ is฀the฀owner฀of฀assets฀supplying฀power฀to฀PT฀Freeport...฀ ฀ Total฀inventories฀ 62฀| FREEPORT-McMoRan COPPER & GOLD INC. $฀...

  • Page 65
    ...plant,฀equipment฀and฀ development฀costs฀follow฀(in฀thousands): December฀31,฀ ฀ 2004... related฀to฀PT฀Freeport฀Indonesia's฀issuance฀of...2004฀ 2003 Notes฀Payable: ฀ Puncakjaya฀Power฀bank฀debt,฀average฀rate฀3.2%฀in฀2004...,934 2004 ANNUAL REPORT |฀63

  • Page 66
    ...Power฀owned฀ by฀affiliates฀of฀Duke฀Energy฀Corporation฀in฀July฀2003.฀ Puncakjaya฀Power's฀bank฀debt฀is฀secured฀by฀the฀power-related฀ assets฀operated฀by฀Puncakjaya฀Power. At฀December฀31,฀2003,฀FCX฀and฀PT฀Freeport...฀August฀1,฀2004.฀ FCX...

  • Page 67
    ...gain฀or฀loss.฀ On฀August฀1,฀2004,฀FCX฀made฀the฀sixth฀of฀eight฀scheduled฀ annual฀redemption฀payments฀on฀its฀Silver-Denominated... ฀ 12,694฀ $฀ 200,228฀ $฀ 68,013 ฀ 53,641 ฀ 26,486 ฀ 19,000 ฀ 12,697 $฀ 179,837 ฀฀ 2004 ANNUAL REPORT |฀65

  • Page 68
    ...$0.20฀per฀share.฀In฀October฀2004,฀FCX's฀Board฀of฀Directors฀ increased฀the฀annual฀common฀stock฀dividend฀rate฀to฀$1....฀of฀certain฀stock฀awards฀to฀ employees,฀officers฀and฀directors฀of฀Freeport-McMoRan฀Inc.฀ (FTX),฀the฀former฀parent฀of...

  • Page 69
    ...087฀ ฀17.82 In฀1998,฀two฀FCX฀executive฀officers฀were฀granted฀stock฀options฀ were฀granted฀in฀return...plant,฀equipment฀and฀development฀costs฀ ฀ Undistributed฀earnings฀in฀PT฀Freeport...) ฀ (10,449) ฀ (884,862) $฀ (867,270) 2004 ANNUAL REPORT |฀67

  • Page 70
    ...is฀subject฀to฀taxation฀in฀Spain฀and฀has฀not฀ generated฀...1998฀until฀April฀2004,฀when฀it฀ PT฀Freeport฀Indonesia,฀Mitsubishi฀Materials...annual฀ of฀the฀outstanding฀PT฀Smelting฀common฀stock.฀PT฀Freeport... 68฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 71
    ...฀as฀of฀December฀31,฀2004฀and฀2003,฀on฀the฀FCX฀ (including฀FM฀Services฀Company's฀plan฀and฀FCX's฀SERP฀and฀ director฀plans),฀PT฀Freeport฀Indonesia฀and฀Atlantic฀Copper฀ plans฀follows฀(dollars฀in฀thousands): 2004 ANNUAL REPORT |฀69

  • Page 72
    ...2004฀ 2003฀ PT฀Freeport฀Indonesia฀ (Indonesian฀employees)฀ 2004฀ 2003฀ Atlantic฀Copper (Spanish฀retirees) 2004...฀cost฀for฀PT฀฀ Freeport฀Indonesia's฀and฀Atlantic฀Copper's฀pension฀plans฀ follow฀(in฀thousands): 70฀| FREEPORT-McMoRan COPPER & GOLD INC...

  • Page 73
    ...Freeport฀Indonesia฀plans฀at฀December฀31,฀2004฀ ฀ ฀ ฀ and฀2003,฀follow: FCX฀฀ 2004฀ 2003฀ PT฀Freeport Indonesia 2004... (503 5,349)฀ ฀ (5,410) ฀ 450฀ ฀ 619 ฀ (483)฀ ฀ (503) $฀ (5,382)฀ $฀ (5,294) ฀ 6.00฀ ฀ 6.25 2004 ANNUAL REPORT |฀71

  • Page 74
    ...fatalities...annual฀sales฀and฀delivery฀commitments.฀In฀ December฀2004,฀PT฀Freeport...Freeport฀Indonesia฀ in฀the฀third฀quarter฀2004,฀in฀connection฀with฀its฀claims.฀ Through฀December฀31,฀2004,฀the฀insurers฀had฀paid฀$94.5฀ 72฀| FREEPORT-McMoRan...

  • Page 75
    ...,฀which฀cannot฀be฀withheld฀ or฀delayed฀unreasonably.฀Given฀the฀importance฀of฀contracts฀ of฀work฀under฀the฀Indonesian฀legal฀system฀and฀PT฀Freeport฀ Indonesia's฀over฀35฀years฀of฀working฀with฀the฀Indonesian฀ 2004 ANNUAL REPORT |฀73

  • Page 76
    ...annual฀revenue฀for฀the฀development฀of฀ the฀local฀people฀through฀the฀Freeport฀Partnership฀Fund฀for฀ Community฀Development.฀PT฀Freeport฀Indonesia฀charged฀ $17.5฀million฀in฀2004...as฀ value-added,฀withholding,฀payroll,฀local฀and฀other฀taxes฀...

  • Page 77
    ...฀recorded฀at฀fair฀value.฀PT฀Freeport฀Indonesia฀adjusts฀its฀ revenues฀for...2004,฀Atlantic฀Copper฀held฀forward฀copper฀sales฀contracts฀for฀ 12.7฀million฀pounds฀at฀an฀average฀price฀of฀$1.40฀per฀pound฀ through฀March฀2005. 2004 ANNUAL REPORT...

  • Page 78
    ...฀adverse฀exchange฀rate฀changes.฀As฀ of฀December฀31,฀2004,฀PT฀Freeport฀Indonesia฀had฀foreign฀ currency฀contracts฀to฀hedge฀450.0฀...฀includes฀Atlantic฀Copper's฀ operations฀in฀Spain฀and฀PT฀Freeport฀Indonesia's฀equity฀ investment฀in฀PT...

  • Page 79
    ... December฀31,฀2002. e.฀ Includes฀PT฀Freeport฀Indonesia's฀equity฀investment฀in฀PT฀Smelting฀totaling฀$47.8฀million฀at฀December฀31,฀2004,฀$58.2฀million฀at฀December฀31,฀2003,฀and฀$44.6฀million฀at฀ December฀31,฀2002. 2004 ANNUAL REPORT |฀77

  • Page 80
    ...฀on฀ the฀location฀of฀the฀customer฀follow฀(in฀thousands): 2004฀ 2003฀ 2002 Indonesia฀(PT฀Smelting)฀ Spain฀ ฀ ฀ Japan฀ ฀ ฀ Korea฀ ฀ ฀ Switzerland...between฀ points฀of฀observation. Information (Unaudited) 78฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 81
    ...฀as฀specified฀by฀the฀ contractual฀arrangements.฀PT฀Freeport฀Indonesia's฀estimated฀ net฀share฀of฀recoverable฀reserves฀...฀ownership฀interest฀through฀2000฀and฀90.6฀percent฀ownership฀interest฀thereafter฀(see฀Note฀2). 2004 ANNUAL REPORT |฀79

  • Page 82
    ...฀฀ Common฀Stock฀ Net฀Income฀฀ (Loss)฀Per฀Share฀฀ Basic฀฀ Diluted 2004 1st฀Quarter฀ 2nd฀Quarter฀ 3rd฀Quarter฀ 4th฀Quarter 2003 1st฀Quarter...of฀SFAS฀ No.฀150฀effective฀July฀1,฀2003฀(see฀Note฀1). 80฀| FREEPORT-McMoRan COPPER & GOLD INC.

  • Page 83
    ...฀S.p.A.฀(6.2฀percent). NYSE฀ANNUAL฀CEO฀CERTIFICATION฀ Our฀Chief฀Executive฀Officer฀(CEO),฀Richard฀C.฀Adkerson,฀submitted฀the฀ Annual฀CEO฀Certification฀to฀the฀NYSE฀as฀required฀under฀the฀NYSE฀Listed฀ Company฀rules. 2004 ANNUAL REPORT |฀81

  • Page 84
    FREEPORT-McMoRan COPPER & GOLD INC. 1615 POYDRAS STREET NEW ORLEANS, LOUISIANA 70112 WWW.FCX.COM FREEPORT-McMoRan COPPER & GOLD INC. 2004 ANNUAL REPORT