Freeport-McMoRan 2004 Annual Report Download - page 69

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Notes To Consolidated Financial Statements
In฀May฀2004,฀FCX’s฀shareholders฀approved฀the฀“2004฀Director฀
Compensation฀Plan”฀(the฀2004฀Plan).฀The฀2004฀Plan฀autho-
rizes฀awards฀of฀options฀and฀restricted฀stock฀units฀for฀up฀to฀
1.0฀million฀shares฀and฀the฀one-time฀grant฀of฀66,882฀SARs.฀฀
Awards฀granted฀under฀all฀of฀the฀plans฀generally฀expire฀10฀
years฀after฀the฀date฀of฀grant฀and฀vest฀in฀25฀percent฀annual฀
increments฀beginning฀one฀year฀from฀the฀date฀of฀grant.฀
Awards฀for฀0.7฀million฀shares฀under฀the฀2004฀Plan,฀6.7฀million฀
shares฀under฀the฀2003฀Plan฀and฀0.1฀million฀shares฀under฀the฀
1999฀Plan฀were฀available฀for฀new฀grants฀as฀of฀December฀31,฀
2004.฀A฀summary฀of฀stock฀options฀outstanding,฀including฀0.3฀
million฀SARs,฀follows:
฀2004฀ 2003฀ 2002
฀ ฀ Weighted฀ ฀ Weighted฀ ฀ Weighted
฀Number฀of฀ Average฀ Number฀of฀ Average฀ Number฀of฀ Average
฀Options฀ Option฀Price฀ Options฀ Option฀Price฀ Options฀ Option฀Price
Balance฀at฀January฀1฀ 10,327,745฀ $฀19.38฀ ฀ 15,944,087฀ $฀17.82฀ ฀ 15,711,696฀ $฀18.55
฀ Granted฀ 1,472,399฀ ฀34.74฀ ฀ 1,315,172฀ ฀20.09฀ ฀ 3,706,313฀ ฀14.30
฀ Exercised฀ (4,581,273)฀ ฀18.42฀ ฀ (6,625,475)฀ ฀15.75฀ ฀ (1,051,010)฀ ฀11.18
฀ Expired/Forfeited฀ (352,066)฀ ฀21.65฀ ฀ (306,039)฀ ฀19.93฀ ฀ (2,422,912)฀ ฀20.00
Balance฀at฀December฀31฀ 6,866,805฀ ฀23.20฀ ฀ 10,327,745฀ ฀19.38฀ ฀ 15,944,087฀ ฀17.82
In฀1998,฀two฀FCX฀executive฀officers฀were฀granted฀stock฀options฀
under฀the฀1995฀Stock฀Option฀Plan฀to฀purchase฀a฀total฀of฀2.6฀
million฀shares฀of฀FCX฀stock฀at฀$19.03฀per฀share.฀The฀options฀
were฀granted฀in฀return฀for฀a฀five-year฀cap฀on฀their฀cash฀
incentive฀compensation.฀Summary฀information฀of฀stock฀options฀
outstanding฀at฀December฀31,฀2004,฀excluding฀SARs,฀follows:
฀ ฀ Options฀Outstanding฀ Options฀Exercisable
฀ ฀ ฀ Weighted฀ Weighted฀ ฀ Weighted
฀ ฀ ฀ Average฀ Average฀฀ ฀ Average
฀ ฀ Number฀of฀ Remaining฀ ฀Option฀ Number฀of฀ Option
Range฀of฀Exercise฀Prices฀ ฀ Options฀ ฀Life฀ ฀Price฀ Options฀ ฀Price
$฀ 9.09฀to฀$11.31฀ ฀ ฀ ฀ 408,875฀ 6.0฀years฀ $฀10.99฀ ฀ 180,125฀ $฀10.61
$฀13.78฀to฀$20.27฀ ฀ ฀ ฀ 3,472,663฀ 5.7฀years฀ ฀15.65฀ ฀ 988,943฀ ฀15.59
$฀26.69฀to฀$36.77฀ ฀ ฀ ฀ 2,683,425฀ 8.8฀years฀ ฀35.34฀ ฀ 1,350,425฀ ฀34.75
฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ 6,564,963฀ ฀ ฀ ฀ ฀ 2,519,493
Note 8. Income Taxes
The฀components฀of฀FCX’s฀deferred฀taxes฀follow฀(in฀thousands):
December฀31,฀ ฀ 2004฀ 2003฀฀฀฀฀
Deferred฀tax฀asset:
฀ Foreign฀tax฀credits฀ ฀ ฀ $฀417,853฀ $฀ 381,184
฀ Atlantic฀Copper฀net฀operating฀loss฀carryforwards฀ ฀ ฀ ฀148,338฀ ฀ 98,896
฀ U.S.฀alternative฀minimum฀tax฀credits฀ ฀ ฀ ฀ 91,755฀ ฀ 84,852
฀ Intercompany฀profit฀elimination฀ ฀ ฀ ฀ 27,130฀ ฀ 17,592
฀ Valuation฀allowance฀ ฀ ฀ ฀(657,946)฀ ฀(564,932)
฀ ฀ Total฀deferred฀tax฀asset฀ ฀ ฀ ฀ 27,130฀ ฀ 17,592
Deferred฀tax฀liability:
฀ Property,฀plant,฀equipment฀and฀development฀costs฀ ฀ ฀ ฀(702,586)฀ ฀(683,245)
฀ Undistributed฀earnings฀in฀PT฀Freeport฀Indonesia฀ ฀ ฀ ฀(172,491)฀ ฀(141,246)
฀ Deferred฀mining฀cost฀ ฀ ฀ ฀ (77,145)฀ ฀ (49,922)
฀ Other฀ ฀ ฀ ฀ ฀ (7,324)฀ ฀ (10,449)
฀ ฀ Total฀deferred฀tax฀liability฀ ฀ ฀ ฀(959,546)฀ ฀(884,862)
Net฀deferred฀tax฀liability฀ ฀ ฀ $฀(932,416)฀ $฀(867,270)
2004 ANNUAL REPORT |฀67