Freeport-McMoRan 2010 Annual Report Download - page 91

FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total grant-date fair value of restricted stock awards was
$5 million at the acquisition date. The total fair value of shares
released or vested was $3 million during 2010 and less than
$1 million during 2009 and 2008. As of December 31, 2010, FCX
had less than $1 million of total unrecognized compensation cost
related to the unvested cash portion, which resulted from the
conversion of restricted stock awards at the acquisition date, expected
to be recognized over a weighted-average period of less than one year.
NOTE 12. Income Taxes
Geographic sources of income (loss) before income taxes and
equity in affiliated companies’ net earnings for the years ended
December 31 consist of the following:
2010 2009 2008
United States $ 1,307 $ 98 $ (13,850)
Foreign
7,205 5,718 541
Total
$ 8,512 $ 5,816 $ (13,309)
2010 2009 2008
Amount Percent Amount Percent Amount Percent
U.S. federal statutory tax rate $ 2,979 35% $ 2,036 35% $ (4,658) 35%
Foreign tax credit limitation 93 1 112 2 95 (1)
Percentage depletion (263) (3) (168) (3) (336) 3
Withholding taxes 174 2 228 4 4 —
Valuation allowance on minimum tax credits 18 — 104 2 359 (3)
Goodwill impairment — — — — 2,095 (16)
State income taxes 17 — (2) — (437) 3
Other items, net (35) — (3) — 34 —
Provision for (benefit from)
income taxes $ 2,983 35% $ 2,307 40% $ (2,844) 21%
FCX’s provision for (benefit from) income taxes for the years ended
December 31 consists of the following:
2010 2009 2008
Current income taxes:
Federal
$ 207 $ 19 $ 536
State
27 7 14
Foreign
2,500 2,172 1,261
Total current
2,734 2,198 1,811
Deferred income taxes (benefits):
Federal
20 (70) (3,635)
State
(10) 79 (686)
Foreign
239 100 (657)
Total deferred
249 109 (4,978)
Valuation allowance on prior year deferred
tax asset
— — 323
Provision for (benefit from) income taxes
$ 2,983 $ 2,307 $ (2,844)
A reconciliation of the U.S. federal statutory tax rate to FCX’s
effective income tax rate for the years ended December 31 follows:
At December 31, 2010, FCX had U.S. foreign tax credit carryforwards
of $1.8 billion that will expire between 2011 and 2020, and U.S.
minimum tax credits carryforwards of $413 million that can be
carried forward indefinitely, but may be used only to the extent that
regular tax exceeds the alternative minimum tax in any given year.
At December 31, 2010, FCX had (i) Congolese net operating loss
carryforwards of $898 million that can be carried forward indefinitely,
(ii) U.S. net state operating loss carryforwards of $669 million
that expire between 2011 and 2030, and (iii) Spanish net operating
loss carryforwards of $455 million that expire between 2011
and 2025.
On the basis of available information at December 31, 2010, FCX
has provided valuation allowances for certain of its deferred tax
assets where FCX believes it is more likely than not that some portion
or all of such assets will not be realized. At December 31, 2010,
valuation allowances totaled $2.2 billion and covered all of FCX’s
U.S. foreign tax credit carryforwards, and a portion of its
foreign net operating loss carryforwards, U.S. state net operating
loss carryforwards and U.S. minimum tax credit carryforwards.
This valuation allowance includes $59 million relating to
tax benefits that, if recognized, would be credited directly to other
comprehensive income.
FCX paid federal, state, local and foreign income taxes totaling
$2.6 billion in 2010, $1.6 billion in 2009 and $2.7 billion in 2008.
FCX received refunds of federal, state, local and foreign income taxes
of $26 million in 2010, $193 million in 2009 and $123 million
in 2008.
The components of deferred taxes follow:
December 31, 2010 2009
Deferred tax assets:
Foreign tax credits
$ 1,837 $ 1,664
Net operating loss carryforwards
442 521
Minimum tax credits
413 509
Accrued expenses
931 882
Employee benefit plans
215 234
Inventory
164 74
Other
224 136
Deferred tax assets
4,226 4,020
Valuation allowances
(2,226) (2,157)
Net deferred tax assets
2,000 1,863
Deferred tax liabilities:
Property, plant, equipment and development costs
(3,874) (3,609)
Undistributed earnings
(917) (766)
Other
(28) (66)
Total deferred tax liabilities
(4,819) (4,441)
Net deferred tax liabilities
$ (2,819) $ (2,578)