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FREEPORT-McMoRan COPPER & GOLD INC.
2007 Annual Report
18
FREEPORT-McMoRan COPPER & GOLD INC.
OPERATING CASH FLOW
AND CASH POSITION
We generated operating cash
flows totaling $6.2 billion for 2007,
including $1.1 billion from working
capital sources, compared with $1.9
billion for 2006, net of $114 million used
for working capital. Operating cash flows
for 2007 benefited from Phelps Dodge’s
operations beginning March 20, 2007,
and also benefited from higher metals
prices. At December 31, 2007,
FCX had consolidated cash of $1.6 billion
and net cash available of $1.1 billion.
INVESTING ACTIVITIES
On March 19, 2007, we issued 136.9
million shares of common stock and
paid $13.9 billion to acquire
Phelps Dodge. Capital expenditures
totaled $1.8 billion for 2007, compared
with $251 million for 2006. The increase
in capital expenditures for 2007,
compared with 2006, primarily resulted
from the addition of $1.3 billion for
Phelps Dodge capital spending beginning
March 20, 2007, including $345 million
associated with the Safford project in
Arizona and $218 million associated with
the Tenke Fungurume project in the DRC.
Also included in capital expenditures for
2007 was $101 million for development
expenditures at Big Gossan and $58
million for infrastructure required for
the development of the underground
Grasberg ore body.
Capital expenditures are expected to
approximate $2.4 billion for 2008, and
average approximately $1.8 billion per
year over the next three years.
FINANCIAL TRANSACTIONS
At December 31, 2007, we had $7.2
billion in debt, including $6.0 billion
in acquisition debt, $0.8 billion of
debt assumed in the Phelps Dodge
acquisition and $0.4 billion of
previously existing debt. In connection
with financing the acquisition of
Phelps Dodge, we used $2.5 billion of
available cash (including cash acquired
from Phelps Dodge) and funded the
remainder with term loan borrowings
totaling $10.0 billion under a new $11.5
billion senior credit facility and from the
offering of $6.0 billion in senior notes.
Following the close of the acquisition
and in accordance with our plan to
reduce debt, during 2007 we fully repaid
the $10.0 billion in term loans using
a combination of equity proceeds and
internally generated cash flows. The
equity transactions included the sale of
47.15 million shares of common stock at
$61.25 per share for net proceeds of $2.8
billion and 28.75 million shares of 6 3/4%
Mandatory Convertible Preferred Stock for
net proceeds of $2.8 billion. In addition to
repaying the term loans, during 2007 we
had net repayments of other debt totaling
$325 million.
We have structured our business to use our significant cash flows to invest in
attractive development projects, maintain a strong balance sheet and provide
returns to shareholders.
Financial Performance & Outlook
Financial Performance & Outlook
Our exploration teams are working
around the globe to add to our
recoverable reserves base. We take
a long-term view on managing the
business to maximize the value of
our minerals deposits.
Capital Expenditures
$ in billions
$2.5
$2.0
$1.5
$1.0
$0.5
2007 2008E 2009E 2010E
Major Projects
All Others
E = estimate