Freeport-McMoRan 2014 Annual Report Download - page 127

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 16. BUSINESS SEGMENT INFORMATION
Product Revenue. FCX revenues attributable to the products it
produced for the years ended December 31 follow:
2014 2013 2012
Refined copper products $ 9,451 $ 9,178 $ 9,699
Copper in concentrates
a
3,366 5,328 4,589
Gold 1,584 1,656 1,741
Molybdenum
1,207 1,110 1,187
Oil 4,233 2,310 —
Other 1,597 1,339 794
Total $ 21, 4 3 8 $ 2 0 , 9 2 1 $ 18 , 0 10
a. Amounts are net of treatment and refining charges totaling $374 million for 2014, $400
million for 2013 and $311 million for 2012.
Geographic Area. Information concerning financial data by
geographic area follows:
December 31, 2014 2013 2012
Long-lived assets:
a
United States $ 2 9,468 $ 32,969
b
$ 8,689
Indonesia 6,961 5,799 5,127
Peru 6,848 5,181 3,933
Democratic Republic of Congo 4,071 3,994 3,926
Chile 1,542
c
2,699 2,587
Other 522 562 327
Total $ 49,412 $ 51,20 4 $ 24,589
a. Long-lived assets exclude deferred tax assets, intangible assets and goodwill.
b. Increased from 2012 primarily because of the PXP and MMR acquisitions.
c. Decreased from 2013 primarily because of the sale of Candelaria/Ojos.
Years Ended December 31, 2014 2013 2012
Revenues:
a
United States $ 10,311 $ 9,418 $ 6,285
Indonesia 1,792 1,651 2,054
Japan 1,573 2,141 2,181
Spain 1,208 1,223 1,581
China 968 1,078 579
Switzerland 800 1,098 731
Chile 687 754 704
Turkey 484 341 345
Korea 383 297 525
Other 3,232 2,920 3,025
Total $ 2 1, 4 3 8 $ 20,921 $ 18,010
a. Revenues are attributed to countries based on the location of the customer.
Major Customers. Copper concentrate sales to PT Smelting totaled
$1.8 billion (8 percent of FCX’s consolidated revenues) in 2014,
$1.7 billion (8 percent of FCX’s consolidated revenues) in 2013 and
$2.1 billion (11 percent of FCX’s consolidated revenues) in 2012.
Additionally, oil and gas sales to Phillips 66 Company totaled
$2.5 billion (12 percent of FCX’s consolidated revenues) in 2014.
No other customer accounted for 10 percent or more of FCX’s
consolidated revenues. Refer to Note 6 for further discussion of
FCX’s investment in PT Smelting.
Labor Matters. As of December 31, 2014, 48 percent of FCX’s
labor force was covered by collective bargaining agreements, and
28 percent of FCX’s labor force is covered by agreements that will
expire within one year.
Business Segments. FCX has organized its operations into six
primary divisions — North America copper mines, South America
mining, Indonesia mining, Africa mining, Molybdenum mines and
U.S. oil and gas operations. FCX’s U.S. oil and gas operations
reflect the results of FM O&G beginning June 1, 2013. Operating
segments that meet certain thresholds are reportable segments,
which are disclosed separately in the following tables, and include
the Morenci (included in North America copper mines), Cerro
Verde (included in South America mining), Grasberg (Indonesia
mining) and Tenke (Africa mining) copper mines, the Rod &
Refining operations and the U.S. oil & gas operations.
Intersegment sales between FCX’s mining operations are based
on similar arm’s-length transactions with third parties at the
time of the sale. Intersegment sales may not be reflective of the
actual prices ultimately realized because of a variety of factors,
including additional processing, timing of sales to unaffiliated
customers and transportation premiums.
FCX defers recognizing profits on sales from its mines to other
divisions, including Atlantic Copper and on 25 percent of PT-FI’s
sales to PT Smelting, until final sales to third parties occur.
Quarterly variations in ore grades, the timing of intercompany
shipments and changes in product prices result in variability in
FCX’s net deferred profits and quarterly earnings.
FCX allocates certain operating costs, expenses and capital
expenditures to its operating divisions and individual segments.
However, not all costs and expenses applicable to an operation
are allocated. U.S. federal and state income taxes are recorded and
managed at the corporate level (included in corporate, other
and eliminations), whereas foreign income taxes are recorded and
managed at the applicable country level. In addition, most
mining exploration and research activities are managed on a
consolidated basis, and those costs along with some selling,
general and administrative costs are not allocated to the operating
divisions or individual segments. Accordingly, the following
segment information reflects management determinations that
may not be indicative of what the actual financial performance
of each operating division or segment would be if it was an
independent entity.
North America Copper Mines. FCX has seven operating copper
mines in North America — Morenci, Bagdad, Safford, Sierrita and
Miami in Arizona, and Tyrone and Chino in New Mexico. The
North America copper mines include open-pit mining, sulfide ore
concentrating, leaching and SX/EW operations. A majority of the
copper produced at the North America copper mines is cast into
copper rod by FCX’s Rod & Refining operations. In addition to
copper, certain of FCX’s North America copper mines also produce
molybdenum concentrates and silver.