Freeport-McMoRan 2007 Annual Report Download - page 88

FREEPORT-McMoRan COPPER & GOLD INC.
2007 Annual Report
86 Financial & Operating Information
Notes to Consolidated Financial Statements
NOTE 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The following provides additional information regarding accounts payable
and accrued liabilities.
December 31, 2007 2006
Accounts payable $ 1,195 $ 320
Salaries, wages and other compensation 278 80
Current deferred tax liability 171 –
Accrued interest 144 22
Community development contributions 118 –
Pension, postretirement, postemployment and other
employee benefitsa 108 8
Other 331 346
Total accounts payable and accrued liabilities $ 2,345 $ 776
a. See Note 10 for long-term portion and Note 12 for further discussion.
NOTE 10. OTHER LIABILITIES
The following provides additional information regarding other liabilities.
December 31, 2007 2006
Pension, postretirement, postemployment and other
employment benefits and long-term incentive
compensationa
$ 644 $ 168
Reserve for uncertain tax benefits 115 –
Accrued long-term tax liability 80 –
Atlantic Copper contractual obligation to
insurance company (see Note 12) 72 70
Other 195 30
Total other liabilities $ 1,106 $ 268
a. See Note 9 for short-term portion and Note 12 for further discussion.
NOTE 11. LONG-TERM DEBT
The following is a detail of long-term debt:
December 31, 2007 2006
Senior Credit Facility $ – $ –
Senior Notes:
8.375% Senior Notes due 2017 3,500 –
8.25% Senior Notes due 2015 1,500 –
Senior floating rate notes due 2015 1,000 –
6 7/8% Senior Notes due 2014 340 340
9 1/2% Senior Notes due 2031 239 –
8 3/4% Senior Notes due 2011 118 –
6 1/8% Senior Notes due 2034 115 –
7 1/8% Debentures due 2027 115 –
7% Convertible Senior Notes due 2011 1 7
10 1/8% Senior Notes due 2010 – 273
Other (including equipment capital leases and
short-term borrowings) 283 60
Total debt 7,211 680
Less current portion of long-term debt and
short-term borrowings (31) (19)
Long-term debt $ 7,180 $ 661
Senior Credit Facility. In connection with financing FCX’s acquisition of
Phelps Dodge, FCX used proceeds from its borrowings under its $11.5
billion senior credit facility. At the close of the Phelps Dodge acquisition,
the senior credit facility consisted of a $2.5 billion senior term loan
due March 2012, a $7.5 billion Tranche B term loan due March 2014
and $1.5 billion in revolving credit facilities due March 2012, with no
amounts drawn on the revolving credit facilities. The revolving credit
facilities are composed of (i) a $1.0 billion revolving credit facility
available to FCX and (ii) a $0.5 billion revolving credit facility available
to both FCX and PT Freeport Indonesia. The $0.5 billion revolving credit
facility represents an amendment to the FCX and PT Freeport Indonesia
revolver that was scheduled to mature in 2009. FCX used proceeds
from equity offerings, operating cash flows and asset sales to prepay
the $10 billion of term loans by December 31, 2007.
Interest on the revolving credit facilities is based on the London
Interbank Offered Rate (LIBOR) plus 0.75 percent, subject to an increase
or decrease in the interest rate margin based on the credit ratings
assigned by Standard and Poor’s Rating Services and Moody’s Investor
Services. At December 31, 2007, no amounts were outstanding under
the revolving credit facilities.
The senior credit facility also contains covenants, including
limitations on indebtedness, liens, asset sales, restricted payments and
transactions with affiliates. Financial leverage ratios must be met in
order to incur certain indebtedness and are required to be maintained
when there are amounts drawn or letters of credit outstanding under
the revolving credit facilities. The senior credit facility is guaranteed by
certain wholly owned subsidiaries of FCX and is secured by the
pledge of equity in substantially all of these subsidiary guarantors and
certain other non-guarantor subsidiaries of FCX, and intercompany
indebtedness owed to FCX. Borrowings by FCX and PT Freeport
Indonesia under the $0.5 billion revolver are also secured with a pledge
of 50.1 percent of the outstanding stock of PT Freeport Indonesia, over
90 percent of the assets of PT Freeport Indonesia and, with respect
to borrowings by PT Freeport Indonesia, a pledge of the Contract of Work.
During 2007, FCX recorded net charges totaling $154 million
($120 million to net income or $0.30 per diluted share) for early
extinguishment of debt related to the accelerated recognition of
deferred financing costs associated with the repayment of amounts
under the senior credit facility.
Senior Notes. In March 2007, in connection with financing FCX’s
acquisition of Phelps Dodge, FCX sold $3.5 billion of 8.375% Senior
Notes due April 2017, $1.5 billion of 8.25% Senior Notes due April 2015
and $1.0 billion of senior floating notes due April 2015 for total net
proceeds of $5.9 billion. Interest on the senior notes is payable
semiannually on April 1 and October 1. Interest on the senior floating
rate notes due April 2015 accrues at six-month LIBOR plus 3.25
percent. The weighted-average interest rate on these senior floating