Freeport-McMoRan 2005 Annual Report Download - page 15

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Cash Flow
Freeport-McMoRan Copper & Gold Inc. generated record operating
cash flow of $1.55 billion in 2005, more than four times the 2004
operating cash flow of $341 million. The significant improvement in
2005 reflects significantly higher production and sales, higher copper
and gold prices and a decrease in working capital requirements.
Operating activities are expected to generate positive cash flows
for the foreseeable future based on anticipated operating results and
the current outlook for metals prices. Using estimated sales volumes
for 2006 of 1.3 billion pounds of copper and 1.7 million ounces
of gold and assuming average 2006 prices of $2.00 per pound of
copper and $550 per ounce of gold, we would generate operating
cash flows of approximately $1.1 billion in 2006.
Capital Expenditures
Because of the fully developed nature of our currently producing
mines and associated infrastructure, capital expenditures in recent
years have been low. Capital spending totaled $143 million in 2005,
including costs to maintain our production capacity, to develop the
Common Infrastructure Project, and to expand our underground
DOZ mine. Capital expenditures for 2006 are currently estimated at
approximately $250 million and to average $200 million per year for
the five-year period 2006–2010.
Debt Reduction
We reduced total debt in 2005 by almost $700 million. Total debt at
December 31, 2005, approximated $1.26 billion, $492 million net
of $764 million of cash. We continue to assess opportunities to repay
debt in advance of scheduled maturities.
Dividends and Share Purchases
During 2005, our Board of Directors authorized three supplemental
common stock dividends totaling $1.50 per share, and increased our
current regular annual common stock dividend to $1.25 per share,
which is payable quarterly beginning February 1, 2006, at a rate of
$0.3125 per share. Our Board of Directors regularly reviews our
dividend policy. In January 2006, our Board authorized an additional
$0.50 per share supplemental dividend payable March 31, 2006. We
purchased 2.4 million shares of our common stock for $80.2 million
($33.83 per share average) during 2005 and have purchased a
total of 5.8 million shares for $179.7 million ($31.22 per share average)
under a 20-million-share open market purchase program authorized
by our Board of Directors. As of February 28, 2006, 14.2 million
shares remain available under this open market purchase program.
$1.2 Billion In Financial
Transactions In 2005
Debt Reduction
Dividends
Share Purchases
$1,000
$2,000
0504030201
Operating Cash Flow
in millions of dollars
1 | 005 ANNUAL REPORT OPERATIONS OVERVIEW