Freeport-McMoRan 2004 Annual Report Download - page 72

Notes To Consolidated Financial Statements
The฀components฀of฀net฀periodic฀benefit฀cost฀for฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
FCX’s,฀including฀the฀SERP฀and฀director฀plan,฀and,฀since฀
October฀1,฀2002,฀FM฀Services฀Company’s฀pension฀plans฀follow฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
(in฀thousands):
฀ FCX฀(U.S.฀and฀ PT฀Freeport฀Indonesia฀ Atlantic฀Copper
฀ expatriate฀employees)฀ (Indonesian฀employees)฀ (Spanish฀retirees)
฀2004฀ 2003฀ 2004฀ 2003฀ 2004฀ 2003
Change฀in฀benefit฀obligation:
Benefit฀obligation฀at฀beginning฀of฀year฀ $฀(29,495)฀ $฀(29,723)฀ $฀(37,224)฀ $฀(25,553)฀ $฀(85,089)฀ $฀(74,732)
SERP฀and฀director฀plan฀additions฀ ฀(21,300)฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ —
Service฀cost฀ ฀ (731)฀ ฀ —฀ ฀ (3,355)฀ ฀ (3,148)฀ ฀ —฀ ฀ —
Interest฀cost฀ ฀ (2,633)฀ ฀ (1,085)฀ ฀ (3,365)฀ ฀ (3,366)฀ ฀ (5,035)฀ ฀ (4,821)
Actuarial฀gains฀(losses)฀ ฀ 888฀ ฀ —฀ ฀ (3,819)฀ ฀ (1,246)฀ ฀ (608)฀ ฀ (235)
Effect฀of฀changes฀in฀law฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ (5,031)฀ ฀ —฀ ฀ —
Foreign฀exchange฀gain฀(loss)฀ ฀ —฀ ฀ —฀ ฀ 3,632฀ ฀ (1,686)฀ ฀ (4,572)฀ ฀(11,595)
Benefits฀paid฀ ฀ 8,077฀ ฀ 1,313฀ ฀ 3,243฀ ฀ 2,806฀ ฀ 7,805฀ ฀ 6,294
Benefit฀obligation฀at฀end฀of฀year฀ ฀(45,194)฀ ฀(29,495)฀ ฀(40,888)฀ ฀(37,224)฀ ฀(87,499)฀ ฀(85,089)
Change฀in฀plan฀assets:
Fair฀value฀of฀plan฀assets฀at฀beginning฀of฀year฀ ฀24,071฀ ฀24,633฀ ฀18,536฀ ฀13,861฀ ฀ 8,275฀ ฀ 6,071
Actual฀return฀on฀plan฀assets฀ ฀ 481฀ ฀ 751฀ ฀ 3,084฀ ฀ 1,541฀ ฀ —฀ ฀ —
Employer฀contributionsa฀ ฀ 135฀ ฀ —฀ ฀ 3,694฀ ฀ 3,281฀ ฀ 9,370฀ ฀ 8,498
Foreign฀exchange฀(loss)฀gain฀ ฀ —฀ ฀ —฀ ฀ (4,260)฀ ฀ 1,551฀ ฀ —฀ ฀ —
Benefits฀paid฀ ฀ (8,077)฀ ฀ (1,313)฀ ฀ (2,098)฀ ฀ (1,698)฀ ฀ (7,805)฀ ฀ (6,294)
Fair฀value฀of฀plan฀assets฀at฀end฀of฀year฀ ฀16,610฀ ฀24,071฀ ฀18,956฀ ฀18,536฀ ฀ 9,840฀ ฀ 8,275
Funded฀status฀ ฀(28,584)฀ ฀ (5,424)฀ ฀(21,932)฀ ฀(18,688)฀ ฀(77,659)฀ ฀(76,814)
Unrecognized฀net฀actuarial฀(gain)฀loss฀ ฀ (651)฀ ฀ —฀ ฀12,075฀ ฀ 6,994฀ ฀ 7,892฀ ฀ 8,801
Unrecognized฀prior฀service฀cost฀ ฀15,647฀ ฀ —฀ ฀ 6,897฀ ฀ 8,601฀ ฀ —฀ ฀ —
Intangible฀asset/minimum฀liability฀adjustment฀ ฀(14,135)฀ ฀ —฀ ฀ (4,643)฀ ฀ (2,220)฀ ฀ —฀ ฀ —
Accrued฀benefit฀cost฀ $฀(27,723)฀ $฀ (5,424)฀ $฀ (7,603)฀ $฀ (5,313)฀ $฀(69,767)฀ $฀(68,013)
Accumulated฀benefit฀obligation฀ $฀(45,194)฀ $฀(29,495)฀ $฀(25,166)฀ $฀(23,849)฀ $฀(87,499)฀ $฀(85,089)
Weighted-average฀assumptions฀used฀to฀determine฀benefit฀obligations฀(percent):
Discount฀rate฀ ฀ 6.00b฀ ฀ N/A ฀ ฀ 10.00฀ ฀ 10.00฀ ฀ 6.77฀ ฀ 6.77
Rate฀of฀compensation฀increase฀ ฀ N/Ab ฀ ฀ N/A ฀ ฀ 8.00c฀ ฀ 8.00฀ ฀ —฀ ฀ —
Weighted-average฀assumptions฀to฀determine฀net฀periodic฀benefit฀cost฀(percent):
Discount฀rate฀ ฀ 6.25b฀ ฀ N/A฀ ฀ 10.00 ฀ ฀ 10.00฀ ฀ 6.77 ฀ ฀ 6.77
Expected฀return฀on฀plan฀assets฀ ฀ N/Ab฀฀N/A฀ ฀ 7.50 ฀ ฀ 10.00฀ ฀ — ฀฀—
Rate฀of฀compensation฀increase฀ ฀ N/Ab฀ ฀ N/A฀ ฀ 8.00c฀ ฀ 8.00฀ ฀ — ฀฀—
a.฀ Employer฀contributions฀for฀2005฀are฀expected฀to฀approximate฀$3.8฀million฀for฀the฀PT฀Freeport฀Indonesia฀plan฀(based฀on฀a฀December฀31,฀2004,฀exchange฀rate฀of฀9,270฀
Indonesian฀rupiah฀to฀one฀U.S.฀dollar),฀$9.8฀million฀for฀the฀Atlantic฀Copper฀plan฀(based฀on฀a฀December฀31,฀2004,฀exchange฀rate฀of฀$1.36฀per฀euro)฀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.฀The฀assumptions฀
shown฀only฀relate฀to฀the฀SERP.
c.฀ Rate฀of฀compensation฀increase฀assumption฀for฀2005฀is฀10.0฀percent฀for฀staff฀employees฀and฀14.0฀percent฀for฀non-staff฀employees฀and฀8.0฀percent฀for฀all฀years฀thereafter.
The฀components฀of฀net฀periodic฀benefit฀cost฀for฀PT฀฀
Freeport฀Indonesia’s฀and฀Atlantic฀Copper’s฀pension฀plans฀
follow฀(in฀thousands):
฀2004฀ 2003฀ 2002
Service฀cost฀ $฀ 731฀ $฀ —฀ $฀ —
Amortization฀of฀prior฀service฀cost฀ ฀5,416฀ ฀ —฀ ฀ —
Interest฀cost฀ ฀2,633฀ ฀1,085฀ ฀887
Actual฀return฀on฀plan฀assets฀ ฀ (481)฀ ฀ (751)฀ ฀(639)
Net฀periodic฀benefit฀cost฀ $฀8,299฀ $฀ 334฀ $฀248
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