8-KRegulation FD

FREEPORT-MCMORAN INC 8-K Report, Regulation FD Disclosure (Mar 1, 2007)

Filed March 1, 2007For Securities:FCX

Summary

Freeport-McMoRan Inc. (FCX) filed an 8-K on March 1, 2007, detailing unaudited pro forma condensed combined financial statements. These statements illustrate the financial impact of Freeport-McMoRan's proposed acquisition of Phelps Dodge, assuming the transaction closed on January 1, 2006, for income statement purposes and December 31, 2006, for balance sheet purposes. The pro forma combined entity anticipates significant revenues and assets, reflecting the scale of the combined operations. Key financial figures presented include pro forma combined revenues of $17.7 billion and total assets of $40.7 billion for the year ended December 31, 2006. The acquisition is being accounted for under the purchase method, with Freeport-McMoRan identified as the accounting acquirer. The filing also outlines the estimated purchase price of approximately $26 billion, comprising cash, stock, and transaction costs.

Key Highlights

  • 1Unaudited pro forma financial statements presented for the acquisition of Phelps Dodge, assuming transaction dates of Jan 1, 2006 (income statement) and Dec 31, 2006 (balance sheet).
  • 2Freeport-McMoRan is the accounting acquirer in the transaction with Phelps Dodge.
  • 3Pro forma combined revenues for the year ended December 31, 2006, are projected at $17.7 billion.
  • 4Total pro forma combined assets as of December 31, 2006, are estimated at $40.7 billion.
  • 5The estimated purchase price for Phelps Dodge is approximately $25.96 billion, including $18 billion in cash, $7.8 billion in FCX stock, and $167 million in costs.
  • 6Significant pro forma adjustments include an increase in property, plant, equipment, and development costs by $11.6 billion and the creation of $7.75 billion in goodwill.
  • 7The filing notes that pro forma statements do not include integration costs, synergies, operating efficiencies, or future commodity price changes.

Frequently Asked Questions

This 8-K filing primarily provides unaudited pro forma condensed combined financial statements that illustrate the expected financial position and results of operations of Freeport-McMoRan Inc. and Phelps Dodge Inc. as if their proposed business combination had occurred on specific historical dates. It's to give investors a clearer picture of the combined entity's potential financial performance and state.

Freeport-McMoRan management concluded that Freeport-McMoRan is the accounting acquirer in the proposed business combination with Phelps Dodge. This determination was based on factors such as relative shareholdings, proposed board composition, executive management team structure, and the premium paid.

The pro forma statements indicate a significantly larger entity. For the year ended December 31, 2006, pro forma combined revenues are estimated at $17.7 billion, and total assets are projected at $40.7 billion. The acquisition is expected to result in substantial goodwill ($7.75 billion) and a significant increase in property, plant, equipment, and development costs ($11.6 billion).

The filing explicitly states that these pro forma statements are for illustrative purposes only and do not represent actual historical results. They do not account for integration costs, expected synergies, operating efficiencies, cost savings, benefits from growth projects, or changes in commodity prices subsequent to the reporting dates. Therefore, actual future results may differ materially.