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United
States
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
one)
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☒
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For
the quarterly period ended
March 31, 2020
OR
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☐
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For
the transition period from to
Commission file
number: 001-11307-01
Freeport-McMoRan
Inc.
(Exact name of
registrant as specified in its charter)
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Delaware
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74-2480931
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(State or other jurisdiction
of
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(I.R.S. Employer Identification
No.)
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incorporation or
organization)
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333 North
Central Avenue
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Phoenix
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AZ
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85004-2189
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(Address of principal executive
offices)
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(Zip Code)
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(602)
366-8100
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which
registered
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Common Stock, par value
$0.10 per share
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FCX
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The New York Stock
Exchange
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Indicate by check
mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. ☑
Yes ☐ No
Indicate by check
mark whether the registrant has submitted electronically every
Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☑
Yes ☐ No
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
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Large accelerated
filer
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☑
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Accelerated
filer
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☐
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Non-accelerated
filer
|
☐
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Smaller reporting
company
|
☐
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|
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Emerging growth
company
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☐
|
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). ☐
Yes
☑
No
On
April 30,
2020, there
were issued and outstanding 1,451,970,774
shares of the
registrant’s common stock, par value $0.10 per share.
Freeport-McMoRan
Inc.
TABLE OF
CONTENTS
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Part
I.
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FINANCIAL
INFORMATION
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|
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Item
1.
|
Financial
Statements.
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Freeport-McMoRan
Inc.
CONSOLIDATED
BALANCE SHEETS (Unaudited)
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March 31,
2020
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December 31,
2019
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(In millions)
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ASSETS
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Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,602
|
|
|
$
|
2,020
|
|
|
Trade accounts
receivable
|
515
|
|
|
741
|
|
|
Income and other tax
receivables
|
591
|
|
|
426
|
|
|
Inventories:
|
|
|
|
|
Materials and supplies,
net
|
1,614
|
|
|
1,649
|
|
|
Mill and leach
stockpiles
|
1,106
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|
|
1,143
|
|
|
Product
|
1,134
|
|
|
1,281
|
|
|
Other current
assets
|
795
|
|
|
655
|
|
|
Total current
assets
|
7,357
|
|
|
7,915
|
|
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Property, plant, equipment and
mine development costs, net
|
29,899
|
|
|
29,584
|
|
|
Long-term mill and leach
stockpiles
|
1,272
|
|
|
1,425
|
|
|
Other assets
|
1,691
|
|
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1,885
|
|
|
Total assets
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$
|
40,219
|
|
|
$
|
40,809
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and accrued
liabilities
|
$
|
2,465
|
|
|
$
|
2,576
|
|
|
Current portion of environmental
and asset retirement obligations
|
305
|
|
|
436
|
|
|
Current portion of
debt
|
245
|
|
|
5
|
|
|
Accrued income
taxes
|
128
|
|
|
119
|
|
|
Dividends payable
|
—
|
|
|
73
|
|
|
Total current
liabilities
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3,143
|
|
|
3,209
|
|
|
Long-term debt, less current
portion
|
9,829
|
|
|
9,821
|
|
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Deferred income
taxes
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4,087
|
|
|
4,210
|
|
|
Environmental and asset
retirement obligations, less current portion
|
3,758
|
|
|
3,630
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|
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Other liabilities
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2,439
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|
|
2,491
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|
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Total liabilities
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23,256
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|
|
23,361
|
|
|
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|
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Equity:
|
|
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|
Stockholders’
equity:
|
|
|
|
|
Common stock
|
158
|
|
|
158
|
|
|
Capital in excess of par
value
|
25,875
|
|
|
25,830
|
|
|
Accumulated deficit
|
(12,771
|
)
|
|
(12,280
|
)
|
|
Accumulated other comprehensive
loss
|
(668
|
)
|
|
(676
|
)
|
|
Common stock held in
treasury
|
(3,739
|
)
|
|
(3,734
|
)
|
|
Total stockholders’
equity
|
8,855
|
|
|
9,298
|
|
|
Noncontrolling
interests
|
8,108
|
|
|
8,150
|
|
|
Total equity
|
16,963
|
|
|
17,448
|
|
|
Total liabilities and
equity
|
$
|
40,219
|
|
|
$
|
40,809
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
Freeport-McMoRan
Inc.
CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
(In millions, except per share
amounts)
|
|
|
Revenues
|
$
|
2,798
|
|
|
$
|
3,792
|
|
|
|
Cost of sales:
|
|
|
|
|
|
Production and
delivery
|
2,545
|
|
|
2,919
|
|
|
|
Depreciation, depletion and
amortization
|
341
|
|
|
347
|
|
|
|
Metals inventory
adjustments
|
222
|
|
|
57
|
|
|
|
Total cost of sales
|
3,108
|
|
|
3,323
|
|
|
|
Selling, general and
administrative expenses
|
110
|
|
|
112
|
|
|
|
Mining exploration and research
expenses
|
16
|
|
|
27
|
|
|
|
Environmental
obligations and shutdown costs
|
26
|
|
|
42
|
|
|
|
Net loss (gain) on sales of
assets
|
11
|
|
|
(33
|
)
|
|
|
Total costs and
expenses
|
3,271
|
|
|
3,471
|
|
|
|
Operating (loss)
income
|
(473
|
)
|
|
321
|
|
|
|
Interest expense,
net
|
(127
|
)
|
|
(146
|
)
|
|
|
Net loss on early
extinguishment of debt
|
(32
|
)
|
|
(6
|
)
|
|
|
Other income, net
|
20
|
|
|
14
|
|
|
|
(Loss) income from
continuing operations before income taxes and equity in affiliated
companies’ net earnings (losses)
|
(612
|
)
|
|
183
|
|
|
|
Benefit from (provision for)
income taxes
|
60
|
|
|
(105
|
)
|
|
|
Equity in affiliated companies’
net earnings (losses)
|
3
|
|
|
(3
|
)
|
|
|
Net (loss) income from
continuing operations
|
(549
|
)
|
|
75
|
|
|
|
Net gain from
discontinued operations
|
—
|
|
|
1
|
|
|
|
Net (loss) income
|
(549
|
)
|
|
76
|
|
|
|
Net loss (income)
attributable to noncontrolling interests
|
58
|
|
|
(45
|
)
|
|
|
Net (loss) income attributable
to common stockholders
|
$
|
(491
|
)
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
Basic and diluted net (loss)
income per share attributable to common stockholders:
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.34
|
)
|
|
$
|
0.02
|
|
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
|
|
$
|
(0.34
|
)
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
Basic
|
1,452
|
|
|
1,451
|
|
|
|
Diluted
|
1,452
|
|
|
1,457
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of
common stock
|
$
|
—
|
|
|
$
|
0.05
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
Freeport-McMoRan
Inc.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
(In millions)
|
|
Net (loss) income
|
$
|
(549
|
)
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income, net of taxes:
|
|
|
|
|
|
Defined benefit
plans:
|
|
|
|
|
|
Amortization of
unrecognized amounts included in net periodic benefit
costs
|
12
|
|
|
11
|
|
|
|
Foreign exchange
losses
|
(5
|
)
|
|
—
|
|
|
|
Other comprehensive
income
|
7
|
|
|
11
|
|
|
|
|
|
|
|
|
|
Total comprehensive (loss)
income
|
(542
|
)
|
|
87
|
|
|
|
Total comprehensive
loss (income) attributable to noncontrolling interests
|
59
|
|
|
(45
|
)
|
|
|
Total comprehensive
(loss) income attributable to common stockholders
|
$
|
(483
|
)
|
|
$
|
42
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
Freeport-McMoRan
Inc.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
(In millions)
|
|
|
Cash flow from operating
activities:
|
|
|
|
|
|
Net (loss) income
|
$
|
(549
|
)
|
|
$
|
76
|
|
|
|
Adjustments to reconcile net
(loss) income to net cash (used in) provided by operating
activities:
|
|
|
|
|
|
Depreciation, depletion and
amortization
|
341
|
|
|
347
|
|
|
|
Metals inventory
adjustments
|
222
|
|
|
57
|
|
|
|
Net loss (gain) on sales of
assets
|
11
|
|
|
(33
|
)
|
|
|
Stock-based
compensation
|
27
|
|
|
29
|
|
|
|
Net charges for environmental
and asset retirement obligations, including accretion
|
60
|
|
|
64
|
|
|
|
Payments for environmental and
asset retirement obligations
|
(71
|
)
|
|
(46
|
)
|
|
|
Net charges for defined pension
and postretirement plans
|
18
|
|
|
26
|
|
|
|
Pension plan
contributions
|
(26
|
)
|
|
(16
|
)
|
|
|
Net loss on early extinguishment
of debt
|
32
|
|
|
6
|
|
|
|
Deferred income
taxes
|
(118
|
)
|
|
33
|
|
|
|
Charges for Cerro
Verde royalty dispute
|
9
|
|
|
15
|
|
|
|
Payments for Cerro Verde royalty
dispute
|
(57
|
)
|
|
(10
|
)
|
|
|
Other, net
|
(56
|
)
|
|
42
|
|
|
|
Changes in working
capital and other:
|
|
|
|
|
|
Accounts receivable
|
205
|
|
|
19
|
|
|
|
Inventories
|
154
|
|
|
192
|
|
|
|
Other current
assets
|
(89
|
)
|
|
42
|
|
|
|
Accounts payable and accrued
liabilities
|
(149
|
)
|
|
(247
|
)
|
|
|
Accrued income taxes and timing
of other tax payments
|
(2
|
)
|
|
(62
|
)
|
|
|
Net cash (used in) provided by
operating activities
|
(38
|
)
|
|
534
|
|
|
|
|
|
|
|
|
|
Cash flow from investing
activities:
|
|
|
|
|
|
Capital
expenditures:
|
|
|
|
|
|
North America copper
mines
|
(184
|
)
|
|
(210
|
)
|
|
|
South America
|
(74
|
)
|
|
(61
|
)
|
|
|
Indonesia
|
(326
|
)
|
|
(319
|
)
|
|
|
Molybdenum mines
|
(7
|
)
|
|
(4
|
)
|
|
|
Other
|
(19
|
)
|
|
(28
|
)
|
|
|
Proceeds from sales of
assets
|
66
|
|
|
84
|
|
|
|
Other, net
|
(2
|
)
|
|
(8
|
)
|
|
|
Net cash used in investing
activities
|
(546
|
)
|
|
(546
|
)
|
|
|
|
|
|
|
|
|
Cash flow from financing
activities:
|
|
|
|
|
|
Proceeds from debt
|
1,478
|
|
|
114
|
|
|
|
Repayments of debt
|
(1,242
|
)
|
|
(1,356
|
)
|
|
|
Cash dividends and distributions
paid:
|
|
|
|
|
|
Common stock
|
(73
|
)
|
|
(73
|
)
|
|
|
Noncontrolling
interests
|
—
|
|
|
(9
|
)
|
|
|
Contributions from
noncontrolling interests
|
32
|
|
|
—
|
|
|
|
Stock-based awards
net payments
|
(4
|
)
|
|
(7
|
)
|
|
|
Debt financing costs and other,
net
|
(18
|
)
|
|
—
|
|
|
|
Net cash provided by (used in)
financing activities
|
173
|
|
|
(1,331
|
)
|
|
|
|
|
|
|
|
|
Net decrease in
cash, cash equivalents, restricted cash and restricted cash
equivalents
|
(411
|
)
|
|
(1,343
|
)
|
|
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents at beginning of
year
|
2,278
|
|
|
4,455
|
|
|
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents at end of
period
|
$
|
1,867
|
|
|
$
|
3,112
|
|
|
The accompanying notes are an
integral part of these consolidated financial
statements.
Freeport-McMoRan
Inc.
CONSOLIDATED
STATEMENTS OF EQUITY (Unaudited)
THREE MONTHS ENDED
MARCH 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Accum-ulated
Deficit
|
|
Accumu-
lated
Other Compre-
hensive
Loss
|
|
Common Stock
Held in Treasury
|
|
Total
Stock-holders’ Equity
|
|
|
|
|
|
|
Number
of
Shares
|
|
At Par
Value
|
|
Capital in
Excess of
Par Value
|
|
|
|
Number
of
Shares
|
|
At
Cost
|
|
|
Non-
controlling
Interests
|
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Balance at
December 31, 2019
|
1,582
|
|
|
$
|
158
|
|
|
$
|
25,830
|
|
|
$
|
(12,280
|
)
|
|
$
|
(676
|
)
|
|
131
|
|
|
$
|
(3,734
|
)
|
|
$
|
9,298
|
|
|
$
|
8,150
|
|
|
$
|
17,448
|
|
|
Exercised and issued stock-based
awards
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Stock-based compensation,
including the tender of shares
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
24
|
|
|
—
|
|
|
24
|
|
|
Contributions from
noncontrolling interests
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
17
|
|
|
32
|
|
|
Net loss attributable to common
stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(491
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(491
|
)
|
|
—
|
|
|
(491
|
)
|
|
Net loss
attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
(58
|
)
|
|
Other comprehensive income
(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
(1
|
)
|
|
7
|
|
|
Balance at
March 31, 2020
|
1,583
|
|
|
$
|
158
|
|
|
$
|
25,875
|
|
|
$
|
(12,771
|
)
|
|
$
|
(668
|
)
|
|
131
|
|
|
$
|
(3,739
|
)
|
|
$
|
8,855
|
|
|
$
|
8,108
|
|
|
$
|
16,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Accum-ulated
Deficit
|
|
Accumu-
lated
Other Compre-
hensive
Loss
|
|
Common Stock
Held in Treasury
|
|
Total
Stock-holders’ Equity
|
|
|
|
|
|
|
Number
of
Shares
|
|
At Par
Value
|
|
Capital in
Excess of
Par Value
|
|
|
|
Number
of
Shares
|
|
At
Cost
|
|
|
Non-
controlling
Interests
|
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Balance at
December 31, 2018
|
1,579
|
|
|
$
|
158
|
|
|
$
|
26,013
|
|
|
$
|
(12,041
|
)
|
|
$
|
(605
|
)
|
|
130
|
|
|
$
|
(3,727
|
)
|
|
$
|
9,798
|
|
|
$
|
8,094
|
|
|
$
|
17,892
|
|
|
Exercised and issued stock-based
awards
|
3
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Stock-based compensation,
including the tender of shares
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
(7
|
)
|
|
16
|
|
|
—
|
|
|
16
|
|
|
Dividends
|
—
|
|
|
—
|
|
|
(73
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73
|
)
|
|
(70
|
)
|
|
(143
|
)
|
|
Changes in noncontrolling
interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(11
|
)
|
|
(12
|
)
|
|
Net income attributable to
common stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
|
Net income
attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
45
|
|
|
Other comprehensive
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
Balance at
March 31, 2019
|
1,582
|
|
|
$
|
158
|
|
|
$
|
25,963
|
|
|
$
|
(12,010
|
)
|
|
$
|
(594
|
)
|
|
131
|
|
|
$
|
(3,734
|
)
|
|
$
|
9,783
|
|
|
$
|
8,058
|
|
|
$
|
17,841
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
Freeport-McMoRan
Inc.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1.
GENERAL INFORMATION
The accompanying
unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include
all information and disclosures required by generally accepted
accounting principles (GAAP) in the United States (U.S.).
Therefore, this information should be read in conjunction with
Freeport-McMoRan Inc.’s (FCX) consolidated financial statements and
notes contained in its annual report on Form 10-K for the year
ended December 31, 2019
(2019 Form 10-K).
The information furnished herein reflects all adjustments that are,
in the opinion of management, necessary for a fair statement of the
results for the interim periods reported. All such adjustments are,
in the opinion of management, of a normal recurring nature.
Operating results for the three-month period ended
March 31,
2020, are
not necessarily indicative of the results that may be expected for
the year ending December 31, 2020.
Operations
Update. Because of the significant
negative impacts of the COVID-19 pandemic on the global economy,
including the recent decline in copper and molybdenum prices, in
April 2020 FCX revised its operating plans. FCX has assessed
its near-term operating plans with a focus on maximizing cash flow
and protecting liquidity in a weak and uncertain economic
environment and to preserve asset values for anticipated improved
copper prices as economic conditions recover. A series of actions
are being implemented to significantly reduce costs and capital
spending and adjust mine plans and corresponding mining and milling
rates to maximize cash flow at lower prices. The plans also
incorporate the impact of lower input costs, principally energy and
foreign exchange rates, and higher gold prices.
In mid-March 2020,
the Peruvian government issued a Supreme Decree and declaration of
a National Emergency in its efforts to contain the outbreak of
COVID-19, and subsequently extended this order through May 10,
2020. To comply with the government’s requirements, Cerro Verde
temporarily transitioned to a care and maintenance status and has
adjusted its operations to prioritize critical activities. Cerro
Verde has also completed construction of temporary onsite
facilities and enhanced protocols to enable critical operations to
be maintained in compliance with the Peruvian government order.
During April 2020, Cerro Verde operated at an average of
approximately one-third of planned rates. Beginning in late April
2020, operating rates increased to over 50 percent of capacity. In
early May, the Peruvian government updated its State of Emergency
to allow major mining operations to gradually increase activities.
Cerro Verde is in discussions with the Peruvian government to
clarify the requirements for gradual resumption of normal
operations. The revised operating plans reflect the continuation of
limited operations at Cerro Verde during second-quarter 2020 and
increased mining and milling rates in the second half of 2020. Idle
facility costs associated with this temporary shutdown totaled
$22
million in first-quarter 2020.
Additionally, in April 2020, FCX suspended operations at its Chino
copper mine in New Mexico to address COVID-19 concerns. The revised
operating plans take into account the impact of the currently
suspended operations at the Chino mine. FCX is currently assessing
options and future timing of restart of the Chino mine. FCX’s
revised operating plans and estimates reflect current assumptions,
and FCX will continue to closely monitor health and market
conditions and make further adjustments to its mine plans as
required.
In connection with
the decline in copper and molybdenum prices, FCX evaluated its
long-lived assets, other than indefinite-lived intangible assets,
for impairment as of March 31 2020. Indefinite-lived intangible
assets are evaluated annually as of December 31, and when it is
more likely than not that the intangible asset is impaired. FCX’s
long-lived asset impairment evaluations required FCX to make
several assumptions in determining estimates of future cash flows
of its individual mining operations, including: near- and long-term
metal price assumptions; estimates of commodity-based and other
input costs; proven and probable mineral reserves estimates,
including the timing and costs to develop and produce the reserves;
and the value of mineral resources not yet included in proven and
probable mineral reserves. Projected long-term average metal prices
represented the most significant assumption used in the cash flow
estimates.
FCX’s evaluation of
long-lived assets (other than indefinite-lived intangible assets)
did not result in the recognition of significant impairments as of
March 31, 2020. Should copper and molybdenum prices decline
further in future periods, FCX will continue to evaluate its
long-lived assets for impairment. Refer to Note 3 for adjustments
to reduce inventories to their net realizable values.
NOTE 2.
EARNINGS PER SHARE
FCX calculates its
basic net (loss) income per share of common stock under the
two-class method and calculates its diluted net (loss) income per
share of common stock using the more dilutive of the two-class
method or the treasury-stock method. Basic net (loss) income per
share of common stock was computed by dividing net (loss) income
attributable to common stockholders (after deducting accumulated
dividends and undistributed earnings to participating securities)
by the weighted-average shares of common stock outstanding during
the period. Diluted net (loss) income per share of common stock was
calculated by including the basic weighted-average shares of common
stock outstanding adjusted for the effects of all potential
dilutive shares of common stock, unless their effect would be
anti-dilutive.
Reconciliations of
net (loss) income and weighted-average shares of common stock
outstanding for purposes of calculating basic and diluted net
(loss) income per share follow (in millions, except per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
Net (loss) income from
continuing operations
|
$
|
(549
|
)
|
|
$
|
75
|
|
|
|
Net loss (income)
from continuing operations attributable to noncontrolling
interests
|
58
|
|
|
(45
|
)
|
|
|
Undistributed earnings allocated
to participating securities
|
(3
|
)
|
|
(3
|
)
|
|
|
Net (loss) income
from continuing operations attributable to common
stockholders
|
(494
|
)
|
|
27
|
|
|
|
|
|
|
|
|
|
Net income from
discontinued operations attributable to common
stockholders
|
—
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable
to common stockholders
|
$
|
(494
|
)
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
Basic
weighted-average shares of common stock outstanding
|
1,452
|
|
|
1,451
|
|
|
|
Add shares issuable
upon exercise or vesting of dilutive stock options and restricted
stock units (RSUs)a
|
—
|
|
|
6
|
|
|
|
Diluted
weighted-average shares of common stock outstanding
|
1,452
|
|
|
1,457
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net (loss) income per share attributable to common
stockholders:
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.34
|
)
|
|
$
|
0.02
|
|
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
|
|
$
|
(0.34
|
)
|
|
$
|
0.02
|
|
|
|
|
|
a.
|
Excludes approximately
10
million shares of common stock in
first-quarter
2020
and
3
million in first-quarter
2019
associated with
outstanding stock options with exercise prices less than the
average market price of FCX’s common stock and RSUs that were
anti-dilutive.
|
Outstanding stock
options with exercise prices greater than the average market price
of FCX’s common stock during the period are excluded from the
computation of diluted net (loss) income per share of common stock.
Stock options for 40 million
shares of common
stock were excluded in first-quarter
2020
and
39
million shares in first-quarter
2019.
NOTE 3.
INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH
STOCKPILES
The components of
inventories follow (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
|
Current
inventories:
|
|
|
|
|
|
Total materials and supplies,
neta
|
$
|
1,614
|
|
|
$
|
1,649
|
|
|
|
|
|
|
|
|
|
Mill stockpiles
|
$
|
158
|
|
|
$
|
220
|
|
|
|
Leach stockpiles
|
948
|
|
|
923
|
|
|
|
Total current mill and leach
stockpiles
|
$
|
1,106
|
|
|
$
|
1,143
|
|
|
|
|
|
|
|
|
|
Raw materials (primarily
concentrate)
|
$
|
209
|
|
|
$
|
318
|
|
|
|
Work-in-process
|
106
|
|
|
124
|
|
|
|
Finished goods
|
819
|
|
|
839
|
|
|
|
Total product
|
$
|
1,134
|
|
|
$
|
1,281
|
|
|
|
|
|
|
|
|
|
Long-term
inventories:
|
|
|
|
|
|
Mill stockpiles
|
$
|
193
|
|
|
$
|
181
|
|
|
|
Leach stockpiles
|
1,079
|
|
|
1,244
|
|
|
|
Total long-term mill and leach
stockpilesb
|
$
|
1,272
|
|
|
$
|
1,425
|
|
|
|
|
|
a.
|
Materials and supplies inventory
was net of obsolescence reserves totaling $25 million
at
March 31,
2020,
and $24
million at December 31,
2019.
|
|
|
|
b.
|
Estimated metals in stockpiles
not expected to be recovered within the next 12
months.
|
FCX recorded charges to adjust
metals inventory carrying values to net realizable values because
of lower market prices totaling $222
million in first-quarter
2020, associated with copper
inventories ($205
million) and molybdenum inventories
($17
million); and $57 million
in
first-quarter
2019, associated with cobalt
inventories (refer to Note 9 for metals inventory adjustments by
business segment).
NOTE 4. INCOME
TAXES
Geographic sources
of FCX’s benefit from (provision for) income taxes follow (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
U.S. operations
|
$
|
5
|
|
|
$
|
2
|
|
|
|
International
operations
|
55
|
|
|
(107
|
)
|
|
|
Total
|
$
|
60
|
|
|
$
|
(105
|
)
|
|
FCX’s consolidated
effective income tax rate was 10 percent
for
first-quarter
2020
and
57
percent for first-quarter
2019. Because FCX's U.S.
jurisdiction generated net losses in first-quarter
2020
and
2019
that will not
result in a realized tax benefit, applicable accounting rules
require FCX to adjust its estimated annual effective tax rate to
exclude the impact of U.S. net losses. Variations in the relative
proportions of jurisdictional income result in fluctuations to
FCX’s consolidated effective income tax rate.
In connection with
the negative impacts of the COVID-19 pandemic on the global
economy, governments throughout the world are announcing measures
that are intended to provide tax and other financial relief. Such
measures include the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act), signed into law by President Trump on March 27,
2020. None of these measures, including the CARES
Act, resulted in material impacts to FCX’s March 31, 2020,
provision for income taxes. Some of these measures will
provide FCX with the opportunity to accelerate the timing of cash
collections, primarily those associated with the U.S. alternative
minimum tax credit refunds. FCX continues to evaluate income tax
accounting considerations of additional measures as they develop,
including any impact on the Company’s measurement of existing
deferred tax assets and deferred tax liabilities. FCX will
recognize any impact from COVID-19 related changes to tax laws in
the period in which the new legislation is enacted.
NOTE 5. DEBT
AND EQUITY
The components of
debt follow (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
Senior notes and
debentures:
|
|
|
|
|
|
Issued by FCX
|
|
$
|
8,773
|
|
|
$
|
8,602
|
|
|
Issued by Freeport Minerals
Corporation (FMC)
|
|
357
|
|
|
357
|
|
|
Cerro Verde credit
facility
|
|
826
|
|
|
826
|
|
|
Other
|
|
118
|
|
|
41
|
|
|
Total debt
|
|
10,074
|
|
|
9,826
|
|
|
Less current portion of
debt
|
|
(245
|
)
|
|
(5
|
)
|
|
Long-term debt
|
|
$
|
9,829
|
|
|
$
|
9,821
|
|
Revolving
Credit Facility. At March 31,
2020, FCX
had no
borrowings
outstanding and $13
million in letters of credit issued
under its revolving credit facility, resulting in availability of
approximately $3.5
billion, of which approximately
$1.5
billion could be used for additional
letters of credit. Availability under FCX’s revolving credit
facility consists of $3.28
billion maturing April 2024 and
$220
million maturing April 2023. At March
31, 2020, FCX was in compliance with its revolving credit facility
covenants.
Senior
Notes. On March 4, 2020, FCX completed
the sale of $700
million of 4.125%
Senior Notes due
2028 and $600
million of 4.25%
Senior Notes due
2030 for total net proceeds of $1.29
billion. Interest on these senior
notes is payable semiannually on March 1 and September 1 of each
year. These senior notes rank equally with FCX’s other existing and
future unsecured and unsubordinated indebtedness. FCX used a
portion of the net proceeds from this offering to purchase a
portion of its 4.00%
Senior Notes due
2021 and its 3.55%
Senior Notes due
2022 and the payment of accrued and unpaid interest, premiums, fees
and expenses in connection with these transactions. As a result of
these transactions, FCX recorded a loss on early extinguishment of
debt totaling $32 million
in first-quarter
2020 as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount
|
|
Net Adjustments
|
|
Book Value
|
|
Tender Value
|
|
Loss
|
|
FCX 4.00% Senior Notes due
2021
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
42
|
|
|
$
|
2
|
|
|
FCX 3.55% Senior Notes due
2022
|
1,075
|
|
|
5
|
|
|
1,070
|
|
|
1,100
|
|
|
30
|
|
|
|
$
|
1,115
|
|
|
$
|
5
|
|
|
$
|
1,110
|
|
|
$
|
1,142
|
|
|
$
|
32
|
|
On April 3, 2020,
FCX used the remaining net proceeds from the offering to fund the
make-whole redemption of all of its remaining 4.00%
Senior Notes due
2021 (book value of $154
million as of March 31, 2020) and the
payment of accrued and unpaid interest, premiums, fees and expenses
in connection with the transaction. As a result of the redemption,
FCX expects to record a loss on early extinguishment of debt
of $9
million in second-quarter
2020.
Interest
Expense, Net. Consolidated interest costs
(before capitalization) totaled $171
million in first-quarter
2020
and
$178
million in first-quarter
2019. Capitalized interest added to
property, plant, equipment and mine development costs, net,
totaled $44 million
in
first-quarter
2020
and
$32
million in first-quarter
2019.
Common
Stock.
In March 2020, in response to the COVID-19 pandemic and resulting
global economic uncertainties, the FCX Board of Directors (the
Board) suspended FCX’s quarterly cash dividend of
$0.05
per share
previously planned for May 1, 2020. Under current market and
economic conditions, the Board does not expect to declare common
stock dividends during 2020. The declaration and payment of future
dividends is at the discretion of the Board and will be assessed on
an ongoing basis, taking into account FCX’s financial results, cash
requirements, future prospects, global economic conditions and
other factors deemed relevant by the Board.
NOTE 6.
FINANCIAL INSTRUMENTS
FCX does not
purchase, hold or sell derivative financial instruments unless
there is an existing asset or obligation, or it anticipates a
future activity that is likely to occur and will result in exposure
to market risks, which FCX intends to offset or mitigate. FCX does
not enter into any derivative financial instruments for speculative
purposes, but has entered into derivative financial instruments in
limited instances to achieve specific objectives. These objectives
principally relate to managing risks associated with commodity
price changes, foreign currency exchange rates and interest
rates.
Commodity
Contracts. From time to time, FCX
has entered into derivative contracts to hedge the market risk
associated with fluctuations in the prices of commodities it
purchases and sells. Derivative financial instruments used by FCX
to manage its risks do not contain credit risk-related contingent
provisions.
In April 2020, FCX entered into
forward sales contracts for 150 million
pounds of copper
for settlement in May and June of 2020. The forward sales provide
for fixed pricing of $2.34
per pound of copper
on approximately 60 percent of North America's projected sales
volumes for May and June 2020.
A discussion of FCX’s other
derivative contracts and programs follow.
Derivatives
Designated as Hedging Instruments – Fair Value Hedges
Copper
Futures and Swap Contracts. Some of FCX’s U.S. copper rod
customers request a fixed market price instead of the Commodity
Exchange Inc. (COMEX) average copper price in the month of
shipment. FCX hedges this price exposure in a manner that allows it
to receive the COMEX average price in the month of shipment while
the customers pay the fixed price they requested. FCX accomplishes
this by entering into copper futures or swap contracts. Hedging
gains or losses from these copper futures and swap contracts are
recorded in revenues. FCX did not have any significant gains or
losses resulting from hedge ineffectiveness during the
three-month periods ended
March 31,
2020 and 2019. At March 31,
2020, FCX
held copper futures and swap contracts that qualified for hedge
accounting for 84 million
pounds at an
average contract price of $2.56 per
pound, with maturities through September
2021.
A summary of
(losses) gains recognized in revenues for derivative financial
instruments related to commodity contracts that are designated and
qualify as fair value hedge transactions, including the unrealized
gains (losses) on the related hedged item follows (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2020
|
|
2019
|
|
Copper futures and swap
contracts:
|
|
|
|
|
Unrealized (losses)
gains:
|
|
|
|
|
Derivative financial
instruments
|
$
|
(33
|
)
|
|
$
|
18
|
|
|
Hedged item – firm sales
commitments
|
33
|
|
|
(18
|
)
|
|
|
|
|
|
|
Realized (losses)
gains:
|
|
|
|
|
Matured derivative financial
instruments
|
(9
|
)
|
|
2
|
|
Derivatives
Not Designated as Hedging Instruments
Embedded
Derivatives. Certain FCX concentrate, copper
cathode and gold sales contracts provide for provisional pricing
primarily based on the London Metal Exchange (LME) copper price or
the COMEX copper price and the London Bullion Market Association
(LBMA) gold price at the time of shipment as specified in the
contract. FCX receives market prices based on prices in the
specified future month, which results in price fluctuations
recorded in revenues until the date of settlement. FCX records
revenues and invoices customers at the time of shipment based on
then-current LME or COMEX copper prices and the LBMA gold prices as
specified in the contracts, which results in an embedded derivative
(i.e.,
a pricing mechanism that is finalized after the time of delivery)
that is required to be bifurcated from the host contract. The host
contract is the sale of the metals contained in the concentrate or
cathode at the then-current LME or COMEX copper price, and the LBMA
gold price. FCX applies the normal purchases and normal sales scope
exception in accordance with derivatives and hedge accounting
guidance to the host contract in its concentrate or cathode sales
agreements since these contracts do not allow for net settlement
and always result in physical delivery. The embedded derivative
does not qualify for hedge accounting and is adjusted to fair value
through earnings each period, using the period-end LME or COMEX
copper forward prices
and the adjusted
LBMA gold prices, until the date of final pricing. Similarly, FCX
purchases copper under contracts that provide for provisional
pricing. Mark-to-market price fluctuations from these embedded
derivatives are recorded through the settlement date and are
reflected in revenues for sales contracts and in inventory for
purchase contracts.
A summary of FCX’s
embedded derivatives at March 31,
2020,
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Open Positions
|
|
Average Price
Per Unit
|
|
Maturities Through
|
|
|
|
Contract
|
|
Market
|
|
|
Embedded derivatives in
provisional sales contracts:
|
|
|
|
|
|
|
|
|
Copper (millions of
pounds)
|
333
|
|
|
$
|
2.59
|
|
|
$
|
2.24
|
|
|
July 2020
|
|
Gold (thousands of
ounces)
|
92
|
|
|
1,601
|
|
|
1,614
|
|
|
May 2020
|
|
Embedded derivatives in
provisional purchase contracts:
|
|
|
|
|
|
|
|
|
Copper (millions of
pounds)
|
87
|
|
|
2.58
|
|
|
2.24
|
|
|
July 2020
|
Copper
Forward Contracts. Atlantic Copper, FCX’s wholly
owned smelting and refining unit in Spain, enters into copper
forward contracts designed to hedge its copper price risk whenever
its physical purchases and sales pricing periods do not match.
These economic hedge transactions are intended to hedge against
changes in copper prices, with the mark-to-market hedging gains or
losses recorded in cost of sales. At March 31,
2020,
Atlantic Copper held net copper forward purchase contracts
for 34
million pounds at an average
contract price of $2.35
per pound, with
maturities through May 2020.
Summary of
(Losses) Gains. A summary of the realized and
unrealized (losses) gains recognized in operating income for
commodity contracts that do not qualify as hedge transactions,
including embedded derivatives, follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
Embedded derivatives in
provisional sales contracts:a
|
|
|
|
|
|
Copper
|
|
$
|
(238
|
)
|
|
$
|
122
|
|
|
Gold and other
metals
|
|
7
|
|
|
(2
|
)
|
|
Copper forward
contractsb
|
|
24
|
|
|
1
|
|
|
|
|
a.
|
Amounts recorded in
revenues.
|
|
|
|
b.
|
Amounts recorded in cost of
sales as production and delivery costs.
|
Unsettled
Derivative Financial Instruments
A summary of the
fair values of unsettled commodity derivative financial instruments
follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
Commodity
Derivative Assets:
|
|
|
|
|
|
Derivatives
designated as hedging instruments:
|
|
|
|
|
|
Copper futures and swap
contracts
|
|
$
|
4
|
|
|
$
|
6
|
|
|
Derivatives
not designated as hedging instruments:
|
|
|
|
|
|
Embedded derivatives in
provisional
|
|
|
|
|
|
sales/purchase
contracts
|
|
34
|
|
|
68
|
|
|
Total derivative
assets
|
|
$
|
38
|
|
|
$
|
74
|
|
|
|
|
|
|
|
|
Commodity
Derivative Liabilities:
|
|
|
|
|
|
Derivatives
designated as hedging instruments:
|
|
|
|
|
|
Copper futures and swap
contracts
|
|
$
|
28
|
|
|
$
|
—
|
|
|
Derivatives
not designated as hedging instruments:
|
|
|
|
|
|
Embedded derivatives in
provisional
|
|
|
|
|
|
sales/purchase
contracts
|
|
119
|
|
|
20
|
|
|
Copper forward
contracts
|
|
—
|
|
|
1
|
|
|
Total derivative
liabilities
|
|
$
|
147
|
|
|
$
|
21
|
|
FCX’s commodity contracts have
netting arrangements with counterparties with which the right of
offset exists, and it is FCX’s policy to generally offset balances
by contract on its balance sheet. FCX’s embedded derivatives on
provisional sales/purchase contracts are netted with the
corresponding outstanding receivable/payable balances.
A summary of these unsettled
commodity contracts that are offset in the balance sheets follows
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Liabilities
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
March 31,
2020
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
|
|
|
Gross amounts
recognized:
|
|
|
|
|
|
|
|
|
|
Embedded derivatives in
provisional
|
|
|
|
|
|
|
|
|
|
sales/purchase
contracts
|
|
$
|
34
|
|
|
$
|
68
|
|
|
$
|
119
|
|
|
$
|
20
|
|
|
Copper derivatives
|
|
4
|
|
|
6
|
|
|
28
|
|
|
1
|
|
|
|
|
38
|
|
|
74
|
|
|
147
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Less gross amounts of
offset:
|
|
|
|
|
|
|
|
|
|
Embedded derivatives in
provisional
|
|
|
|
|
|
|
|
|
|
sales/purchase
contracts
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Copper derivatives
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amounts presented in balance
sheet:
|
|
|
|
|
|
|
|
|
|
Embedded derivatives in
provisional
|
|
|
|
|
|
|
|
|
|
sales/purchase
contracts
|
|
33
|
|
|
68
|
|
|
118
|
|
|
20
|
|
|
Copper derivatives
|
|
3
|
|
|
6
|
|
|
27
|
|
|
1
|
|
|
|
|
$
|
36
|
|
|
$
|
74
|
|
|
$
|
145
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
classification:
|
|
|
|
|
|
|
|
|
|
Trade accounts
receivable
|
|
$
|
13
|
|
|
$
|
66
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
Other current
assets
|
|
3
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
Accounts payable and accrued
liabilities
|
|
20
|
|
|
2
|
|
|
91
|
|
|
21
|
|
|
|
|
$
|
36
|
|
|
$
|
74
|
|
|
$
|
145
|
|
|
$
|
21
|
|
Credit
Risk. FCX is exposed to credit
loss when financial institutions with which it has entered into
derivative transactions (commodity, foreign exchange and interest
rate swaps) are unable to pay. To minimize the risk of such losses,
FCX uses counterparties that meet certain credit requirements and
periodically reviews the creditworthiness of these counterparties.
FCX does not anticipate that any of the counterparties it deals
with will default on their obligations. As of March 31,
2020, the
maximum amount of credit exposure associated with derivative
transactions was $34
million.
Other
Financial Instruments. Other financial
instruments include cash and cash equivalents, restricted cash,
restricted cash equivalents, accounts receivable, investment
securities, legally restricted funds, accounts payable and accrued
liabilities, dividends payable and long-term debt. The carrying
value for cash and cash equivalents (which included time deposits
of $0.4
billion at March 31,
2020,
and $1.3
billion at December 31,
2019),
restricted cash, restricted cash equivalents, accounts receivable,
accounts payable and accrued liabilities, and dividends payable
approximates fair value because of their short-term nature and
generally negligible credit losses (refer to Note 7 for the fair
values of investment securities, legally restricted funds and
long-term debt).
In addition, as of
March 31, 2020, FCX has contingent consideration assets
related to the sales of certain oil and gas properties (refer to
Note 7 for the related fair values).
Cash, Cash
Equivalents, Restricted Cash and Restricted Cash
Equivalents. The following table provides a
reconciliation of total cash, cash equivalents, restricted cash and
restricted cash equivalents presented in the consolidated
statements of cash flows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
Balance sheet
components:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,602
|
|
|
$
|
2,020
|
|
|
Restricted cash and restricted
cash equivalents included in:
|
|
|
|
|
|
Other current
assets
|
|
113
|
|
|
100
|
|
|
Other assets
|
|
152
|
|
|
158
|
|
|
Total cash, cash
equivalents, restricted cash and restricted cash equivalents
presented in the consolidated statements of cash flows
|
|
$
|
1,867
|
|
|
$
|
2,278
|
|
NOTE 7. FAIR
VALUE MEASUREMENT
Fair value
accounting guidance includes a hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1) and
the lowest priority to unobservable inputs (Level 3). FCX did not
have any significant transfers in or out of Level 3 during
first-quarter
2020.
FCX’s financial instruments are
recorded on the consolidated balance sheets at fair value except
for contingent consideration associated with the sale of the
Deepwater Gulf of Mexico (GOM) oil and gas properties (which was
recorded under the loss recovery approach) and debt. A summary of
the carrying amount and fair value of FCX’s financial instruments
(including those measured at net asset value (NAV) as a practical
expedient), other than cash and cash equivalents, restricted cash,
restricted cash equivalents, accounts receivable, accounts payable
and accrued liabilities, and dividends payable (refer to Note 6)
follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2020
|
|
|
Carrying
|
|
Fair Value
|
|
|
Amount
|
|
Total
|
|
NAV
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
securities:a,b
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. core fixed income
fund
|
$
|
28
|
|
|
$
|
28
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Equity securities
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
Total
|
31
|
|
|
31
|
|
|
28
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legally restricted
funds:a
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. core fixed income
fund
|
60
|
|
|
60
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Government mortgage-backed
securities
|
55
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
Corporate bonds
|
39
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
Government bonds and
notes
|
22
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
Asset-backed
securities
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
Money market funds
|
8
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
Collateralized mortgage-backed
securities
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
Municipal bonds
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Total
|
200
|
|
|
200
|
|
|
60
|
|
|
8
|
|
|
132
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivatives
in provisional sales/purchase contracts in a gross asset
positionc
|
34
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
Copper forward
contractsc
|
4
|
|
|
4
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
Total
|
38
|
|
|
38
|
|
|
—
|
|
|
1
|
|
|
37
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration for the
sale of the
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater GOM oil and gas
propertiesa
|
119
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:c
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivatives
in provisional sales/purchase contracts in a gross liability
position
|
(119
|
)
|
|
(119
|
)
|
|
—
|
|
|
—
|
|
|
(119
|
)
|
|
—
|
|
|
Copper futures and swap
contractsc
|
(28
|
)
|
|
(28
|
)
|
|
—
|
|
|
(25
|
)
|
|
(3
|
)
|
|
—
|
|
|
Total
|
(147
|
)
|
|
(147
|
)
|
|
—
|
|
|
(25
|
)
|
|
(122
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, including
current portiond
|
10,074
|
|
|
9,530
|
|
|
—
|
|
|
—
|
|
|
9,530
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
2019
|
|
|
Carrying
|
|
Fair Value
|
|
|
Amount
|
|
Total
|
|
NAV
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
securities:a,b
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. core fixed income
fund
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Equity securities
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
Total
|
31
|
|
|
31
|
|
|
27
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legally restricted
funds:a
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. core fixed income
fund
|
59
|
|
|
59
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Government mortgage-backed
securities
|
43
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
Government bonds and
notes
|
36
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
Corporate bonds
|
33
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
Asset-backed
securities
|
14
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
Collateralized mortgage-backed
securities
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
Money market funds
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
Municipal bonds
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Total
|
196
|
|
|
196
|
|
|
59
|
|
|
3
|
|
|
134
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivatives
in provisional sales/purchase contracts in a gross asset
positionc
|
68
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
Copper futures and swap
contractsc
|
6
|
|
|
6
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
—
|
|
|
Contingent consideration for the
sale of onshore
|
|
|
|
|
|
|
|
|
|
|
|
|
California oil
and gas propertiesa
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
Total
|
85
|
|
|
85
|
|
|
—
|
|
|
5
|
|
|
80
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration for the
sale of the
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater GOM
oil and gas propertiesa
|
122
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|