Freeport-McMoRan 2004 Annual Report Download - page 73

Notes To Consolidated Financial Statements
฀ PT฀Freeport฀Indonesia฀ Atlantic฀Copper
฀2004฀ 2003฀ 2002฀ 2004฀ 2003฀ 2002
Service฀cost฀ $฀3,355฀ $฀3,148฀ $฀2,041฀ $฀ —฀ $฀ —฀ $฀ —
Interest฀cost฀ ฀3,365฀ ฀3,366฀ ฀2,166฀ ฀5,035฀ ฀4,821฀ ฀4,266
Expected฀return฀on฀plan฀assets฀ ฀(1,829)฀ ฀(1,888)฀ ฀(1,217)฀ ฀ —฀ ฀ ฀—฀ ฀ —
Amortization฀of฀prior฀service฀cost฀ ฀ 969฀ ฀ 894฀ ฀ 514฀ ฀ —฀ ฀ —฀ ฀ —
Amortization฀of฀net฀actuarial฀loss฀ ฀ 243฀ ฀ 478฀ ฀ 242฀ ฀1,517฀ ฀1,316฀ ฀ 785
Net฀periodic฀benefit฀cost฀ $฀6,103฀ $฀5,998฀ $฀3,746฀ $฀6,552฀ $฀6,137฀ $฀5,051
company฀and฀Atlantic฀Copper฀is฀not฀provided฀asset฀alloca-
tions฀or฀benefit฀payment฀projections.
Other Benefits.฀FCX฀and฀FM฀Services฀Company฀also฀provide฀
certain฀health฀care฀and฀life฀insurance฀benefits฀for฀retired฀
employees.฀FCX฀and฀FM฀Services฀Company฀have฀the฀right฀to฀
modify฀or฀terminate฀these฀benefits.฀The฀initial฀health฀care฀cost฀
trend฀rate฀used฀for฀the฀other฀benefits฀was฀10฀percent฀for฀2005,฀
decreasing฀ratably฀each฀year฀until฀reaching฀5฀percent฀in฀2010.฀
A฀one-percentage-point฀increase฀or฀decrease฀in฀assumed฀health฀
care฀cost฀trend฀rates฀would฀not฀have฀a฀significant฀impact฀on฀
total฀service฀or฀interest฀cost.฀Information฀on฀the฀employee฀
health฀care฀and฀life฀insurance฀benefits฀FCX฀and฀FM฀Services฀
Company฀provide฀follows฀(in฀thousands):฀
฀ ฀ 2004฀ 2003
Change฀in฀benefit฀obligation:
Benefit฀obligation฀at฀beginning฀of฀year฀ ฀ ฀ $฀(5,410)฀ $฀(4,812)
Service฀cost฀ ฀ ฀ ฀ (137)฀ ฀ (127)
Interest฀cost฀ ฀ ฀ ฀ (335)฀ ฀ (327)
Actuarial฀gains฀(losses)฀ ฀ ฀ ฀ 148฀ ฀ (455)
Plan฀amendment฀ ฀ ฀ ฀ 118฀ ฀ —
Participant฀contributions฀ ฀ ฀ ฀ (160)฀ ฀ (192)
Benefits฀paid฀ ฀ ฀ ฀ 427฀ ฀ 503
Benefit฀obligation฀at฀end฀of฀year฀ ฀ ฀ ฀(5,349)฀ ฀(5,410)
Change฀in฀plan฀assets:
Fair฀value฀of฀plan฀assets฀at฀beginning฀of฀year฀ ฀ ฀ ฀ —฀ ฀ —
Employer/participant฀contributions฀ ฀ ฀ ฀ 427฀ ฀ 503
Benefits฀paid฀ ฀ ฀ ฀ (427)฀ ฀ (503)
Fair฀value฀of฀plan฀assets฀at฀end฀of฀year฀ ฀ ฀ ฀ —฀ ฀ —
Funded฀status฀ ฀ ฀ ฀(5,349)฀ ฀(5,410)
Unrecognized฀net฀actuarial฀loss฀ ฀ ฀ ฀ 450฀ ฀ 619
Unrecognized฀prior฀service฀cost฀ ฀ ฀ ฀ (483)฀ ฀ (503)
Accrued฀benefit฀cost฀ ฀ ฀ $฀(5,382)฀ $฀(5,294)
Discount฀rate฀assumption฀(percent)฀ ฀ ฀ ฀ 6.00฀ ฀ 6.25
The฀pension฀plan฀weighted-average฀asset฀allocations฀for฀the฀
FCX฀and฀PT฀Freeport฀Indonesia฀plans฀at฀December฀31,฀2004฀
and฀2003,฀follow:
฀ ฀฀ ฀ PT฀Freeport
฀ ฀ FCX฀฀ Indonesia
฀฀฀2004฀ 2003฀ 2004฀ 2003
Debt฀securities฀ ฀ ฀ ฀ ฀ ฀ 99%฀ ฀ 97%฀ ฀ 5%฀ 5%
Cash฀and฀bank฀deposits฀ ฀ ฀ ฀ ฀ ฀ 1฀ ฀ 3฀ ฀ 95฀ 95
฀ Total฀ ฀ ฀ ฀ ฀ ฀ ฀฀ 100%฀ ฀ 100%฀ ฀ 100%฀ 100%
The฀FCX฀and฀FM฀Services฀Company฀pension฀plans฀were฀termi-
nated฀in฀2000฀as฀discussed฀above.฀Therefore,฀the฀entire฀asset฀
balance฀of฀$16.6฀million฀at฀December฀31,฀2004,฀will฀be฀liqui-
dated฀and฀any฀unfunded฀benefits฀will฀be฀paid฀after฀Internal฀
Revenue฀Service฀and฀Pension฀Benefit฀Guaranty฀Corporation฀
approval.฀The฀expected฀benefit฀payments฀for฀FCX’s฀SERP฀and฀
director฀plan฀total฀$0.2฀million฀for฀each฀year฀in฀the฀period฀
2005฀through฀2008,฀$15.4฀million฀in฀2009฀and฀$14.4฀million฀
thereafter.฀The฀rupiah฀benefit฀payments฀that฀are฀expected฀to฀
be฀paid฀for฀PT฀Freeport฀Indonesia‘s฀pension฀plan฀(based฀on฀a฀
December฀31,฀2004,฀exchange฀rate฀of฀9,270฀Indonesian฀rupiah฀
to฀one฀U.S.฀dollar)฀total฀$3.8฀million฀in฀2005,฀$3.4฀million฀in฀
2006,฀$4.0฀million฀in฀2007,฀$5.1฀million฀in฀2008,฀$6.0฀million฀
in฀2009฀and฀$30.9฀million฀for฀2010฀through฀2014.฀Atlantic฀
Copper’s฀plan฀is฀administered฀by฀a฀third-party฀insurance฀
2004 ANNUAL REPORT |฀71