Freeport-McMoRan 2005 Annual Report Download - page 83

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฀80฀|฀FREEPORT-McMoRan฀COPPER฀&฀GOLD฀INC.฀฀฀FINANCIAL฀&฀OPERATING฀INFORMATION฀80฀|฀FREEPORT-McMoRan฀COPPER฀&฀GOLD฀INC.฀฀฀FINANCIAL฀&฀OPERATING฀INFORMATION
to฀reduce฀exposure฀to฀equity฀market฀volatility.฀All฀of฀฀
the฀FCX฀plan฀assets฀shown฀in฀the฀table฀below฀relate฀to฀these฀
plans฀and฀the฀unfunded฀liability฀totaled฀$2.8฀million฀at฀
December฀31,฀2005.
฀ In฀February฀2004,฀FCX฀established฀an฀unfunded฀
Supplemental฀Executive฀Retirement฀Plan฀(SERP)฀for฀its฀two฀
most฀senior฀executive฀officers.฀The฀SERP฀provides฀for฀
retirement฀benefits฀payable฀in฀the฀form฀of฀a฀joint฀and฀survivor฀
annuity฀or฀an฀equivalent฀lump฀sum.฀The฀annuity฀will฀equal฀฀฀฀฀฀฀฀฀
a฀percentage฀of฀the฀executive’s฀highest฀average฀compensation฀
for฀any฀consecutive฀three-year฀period฀during฀the฀five฀years฀
immediately฀preceding฀the฀earlier฀of฀the฀executive’s฀
retirement฀or฀completion฀of฀25฀years฀of฀credited฀service.฀The฀
SERP฀benefit฀will฀be฀reduced฀by฀the฀value฀of฀all฀benefits฀due฀
under฀FCX’s฀cash-balance฀pension฀plan฀and฀all฀other฀benefit฀
plans฀sponsored฀by฀FCX฀or฀any฀other฀predecessor฀employer.฀
Unrecognized฀prior฀service฀cost฀at฀inception฀of฀the฀SERP฀
totaled฀$18.9฀million฀and฀is฀being฀amortized฀over฀the฀five-year฀
term฀of฀the฀executive฀officers’฀current฀employment฀agreements.฀
FCX฀also฀has฀an฀unfunded฀pension฀plan฀for฀its฀directors.
฀ PT฀Freeport฀Indonesia฀has฀a฀defined฀benefit฀pension฀plan฀
denominated฀in฀Indonesian฀rupiahs฀covering฀substantially฀all฀
of฀its฀Indonesian฀national฀employees.฀PT฀Freeport฀Indonesia฀
funds฀the฀plan฀and฀invests฀the฀assets฀in฀accordance฀with฀
Indonesian฀pension฀guidelines.฀The฀pension฀obligation฀was฀
valued฀at฀an฀exchange฀rate฀of฀9,825฀rupiah฀to฀one฀U.S.฀dollar฀
on฀December฀31,฀2005,฀and฀9,270฀rupiah฀to฀one฀U.S.฀dollar฀
on฀December฀31,฀2004.฀Labor฀laws฀enacted฀in฀2003,฀which฀
replace฀labor฀laws฀enacted฀in฀2001,฀in฀Indonesia฀require฀that฀
companies฀provide฀a฀minimum฀level฀of฀benefits฀to฀employees฀
upon฀employment฀termination฀based฀on฀the฀reason฀for฀
termination฀and฀the฀employee’s฀years฀of฀service.฀PT฀Freeport฀
Indonesia’s฀pension฀benefit฀disclosures฀include฀the฀impact฀฀฀฀฀฀฀฀
of฀this฀law.
฀ Atlantic฀Copper฀has฀a฀contractual฀obligation฀denominated฀
in฀euros฀to฀supplement฀amounts฀paid฀to฀certain฀retired฀
Spanish฀national฀employees.฀Amended฀Spanish฀legislation฀
required฀that฀Atlantic฀Copper฀begin฀funding฀its฀contractual฀
obligation฀to฀the฀retired฀employees฀through฀a฀third฀party฀in฀
November฀2002.฀In฀August฀2002,฀Atlantic฀Copper฀complied฀
with฀the฀amended฀Spanish฀legislation฀by฀agreeing฀to฀฀฀฀฀฀฀฀
fund฀7.2฀million฀euros฀annually฀for฀15฀years฀to฀an฀approved฀
insurance฀company฀for฀its฀estimated฀72฀million฀euro฀
contractual฀obligation฀to฀the฀retired฀employees.฀The฀
insurance฀company฀invests฀the฀plan฀assets฀in฀accordance฀
with฀Spanish฀regulations฀and฀Atlantic฀Copper฀has฀no฀control฀
over฀these฀investments.฀Atlantic฀Copper฀is฀amortizing฀the฀
unrecognized฀net฀actuarial฀loss฀over฀the฀remaining฀11-year฀
funding฀period.
฀ Information฀as฀of฀December฀31,฀2005฀and฀2004,฀on฀the฀
FCX฀(including฀FM฀Services฀Company’s฀plan,฀FCX’s฀SERP฀and฀
director฀plans),฀PT฀Freeport฀Indonesia฀and฀Atlantic฀Copper฀
plans฀follows฀(dollars฀in฀thousands):
Notes to Consolidated Financial Statements