United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to

Commission file number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)

Delaware	74-2480931
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

333 North Central Avenue
Phoenix	,	AZ	85004-2189
(Address of principal executive offices)			(Zip Code)

(602) 366-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	FCX	The New York Stock Exchange

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.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 October 31, 2019, there were issued and outstanding 1,450,913,690 shares of the registrant’s common stock, par value $0.10 per share.

Freeport-McMoRan Inc.

TABLE OF CONTENTS

	Page
Part I. Financial Information	3
Item 1. Financial Statements:	3
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Operations (Unaudited)	4
Consolidated Statements of Comprehensive (Loss) Income (Unaudited)	5
Consolidated Statements of Cash Flows (Unaudited)	6
Consolidated Statements of Equity (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	9
Report of Independent Registered Public Accounting Firm	32
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	71
Item 4. Controls and Procedures	71
Part II. Other Information	71
Item 1. Legal Proceedings	71
Item 1A. Risk Factors	71
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 4. Mine Safety Disclosures	72
Item 6. Exhibits	72
Signature	S-1

2

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)

	September 30, 2019			December 31, 2018
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2,247		$	4,217
Trade accounts receivable	731			829
Income and other tax receivables	263			493
Inventories:
Materials and supplies, net	1,619			1,528
Mill and leach stockpiles	1,302			1,453
Product	1,513			1,778
Other current assets	672			422
Total current assets	8,347			10,720
Property, plant, equipment and mine development costs, net	29,330			28,010
Long-term mill and leach stockpiles	1,300			1,314
Other assets	1,966			2,172
Total assets	$	40,943		$	42,216
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,755		$	2,625
Current portion of environmental and asset retirement obligations	488			449
Dividends payable	73			73
Accrued income taxes	61			165
Current portion of debt	4			17
Total current liabilities	3,381			3,329
Long-term debt, less current portion	9,915			11,124
Deferred income taxes	4,245			4,032
Environmental and asset retirement obligations, less current portion	3,558			3,609
Other liabilities	2,302			2,230
Total liabilities	23,401			24,324
Equity:
Stockholders’ equity:
Common stock	158			158
Capital in excess of par value	25,880			26,013
Accumulated deficit	(12,289		)	(12,041		)
Accumulated other comprehensive loss	(570		)	(605		)
Common stock held in treasury	(3,735		)	(3,727		)
Total stockholders’ equity	9,444			9,798
Noncontrolling interests	8,098			8,094
Total equity	17,542			17,892
Total liabilities and equity	$	40,943		$	42,216

The accompanying notes are an integral part of these consolidated financial statements.

3

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	(In millions, except per share amounts)
Revenues	$	3,153		$	4,908		$	10,491		$	14,944
Cost of sales:
Production and delivery	2,665			3,069			8,584			8,790
Depreciation, depletion and amortization	322			458			1,021			1,351
Metals inventory adjustments	41			—			100			2
Total cost of sales	3,028			3,527			9,705			10,143
Selling, general and administrative expenses	106			101			315			341
Mining exploration and research expenses	25			27			83			72
Environmental obligations and shutdown costs	20			8			85			76
Net loss (gain) on sales of assets	12			(70		)	(13		)	(126		)
Total costs and expenses	3,191			3,593			10,175			10,506
Operating (loss) income	(38		)	1,315			316			4,438
Interest expense, net	(123		)	(143		)	(401		)	(436		)
Net (loss) gain on early extinguishment of debt	(21		)	—			(27		)	8
Other income, net	33			14			52			63
(Loss) income from continuing operations before income taxes and equity in affiliated companies’ net earnings	(149		)	1,186			(60		)	4,073
Provision for income taxes	(91		)	(522		)	(181		)	(1,543		)
Equity in affiliated companies’ net earnings	5			4			7			5
Net (loss) income from continuing operations	(235		)	668			(234		)	2,535
Net income (loss) from discontinued operations	1			(4		)	2			(19		)
Net (loss) income	(234		)	664			(232		)	2,516
Net loss (income) attributable to noncontrolling interests	27			(108		)	(16		)	(399		)
Net (loss) income attributable to common stockholders	$	(207	)	$	556		$	(248	)	$	2,117
Basic net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.15	)	$	0.38		$	(0.17	)	$	1.47
Discontinued operations	—			—			—			(0.01		)
	$	(0.15	)	$	0.38		$	(0.17	)	$	1.46
Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.15	)	$	0.38		$	(0.17	)	$	1.46
Discontinued operations	—			—			—			(0.01		)
	$	(0.15	)	$	0.38		$	(0.17	)	$	1.45
Weighted-average common shares outstanding:
Basic	1,452			1,450			1,451			1,449
Diluted	1,452			1,458			1,451			1,458
Dividends declared per share of common stock	$	0.05		$	0.05		$	0.15		$	0.15

The accompanying notes are an integral part of these consolidated financial statements.

4

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	(In millions)
Net (loss) income	$	(234	)	$	664		$	(232	)	$	2,516
Other comprehensive income, net of taxes:
Defined benefit plans:
Amortization of unrecognized amounts included in net periodic benefit costs	11			13			35			36
Foreign exchange losses	—			(1		)	—			(2		)
Other comprehensive income	11			12			35			34
Total comprehensive (loss) income	(223		)	676			(197		)	2,550
Total comprehensive loss (income) attributable to noncontrolling interests	28			(109		)	(16		)	(399		)
Total comprehensive (loss) income attributable to common stockholders	$	(195	)	$	567		$	(213	)	$	2,151

The accompanying notes are an integral part of these consolidated financial statements.

5

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended
	September 30,
	2019			2018
	(In millions)
Cash flow from operating activities:
Net (loss) income	$	(232	)	$	2,516
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, depletion and amortization	1,021			1,351
Metals inventory adjustments	100			2
Net gain on sales of assets	(13		)	(126		)
Stock-based compensation	52			70
Net charges for environmental and asset retirement obligations, including accretion	160			206
Payments for environmental and asset retirement obligations	(164		)	(179		)
Net charges for defined pension and postretirement plans	79			59
Pension plan contributions	(58		)	(60		)
Net loss (gain) on early extinguishment of debt	27			(8		)
Deferred income taxes	71			202
(Income) loss on disposal of discontinued operations	(2		)	19
Dividends received from PT Smelting	33			—
Change in long-term mill and leach stockpiles	(5		)	54
Charges for PT Freeport Indonesia (PT-FI) surface water tax settlement	28			—
Charges for PT-FI export duty matter	155			—
Charges for Cerro Verde royalty dispute	40			—
Payments for Cerro Verde royalty dispute	(126		)	(32		)
Other, net	22			5
Changes in working capital and other tax payments:
Accounts receivable	210			321
Inventories	229			(326		)
Other current assets	15			(16		)
Accounts payable and accrued liabilities	(45		)	(2		)
Accrued income taxes and timing of other tax payments	(285		)	(131		)
Net cash provided by operating activities	1,312			3,925
Cash flow from investing activities:
Capital expenditures:
North America copper mines	(641		)	(413		)
South America	(176		)	(188		)
Indonesia	(992		)	(695		)
Molybdenum mines	(11		)	(6		)
Other	(97		)	(89		)
Proceeds from sales of assets	102			10
Intangible water rights and other, net	(10		)	(91		)
Net cash used in investing activities	(1,825		)	(1,472		)
Cash flow from financing activities:
Proceeds from debt	1,681			475
Repayments of debt	(2,917		)	(2,410		)
Cash dividends and distributions paid:
Common stock	(218		)	(145		)
Noncontrolling interests	(79		)	(241		)
Contributions from noncontrolling interests	133			—
Stock-based awards net (payments) proceeds	(7		)	4
Debt financing costs and other, net	(23		)	(23		)
Net cash used in financing activities	(1,430		)	(2,340		)
Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents	(1,943		)	113
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year	4,455			4,710
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	2,512		$	4,823

The accompanying notes are an integral part of these consolidated financial statements.

6

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30

	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 June 30, 2019	1,582	$	158	$	25,949		$	(12,082	)	$	(582	)	131	$	(3,734	)	$	9,709		$	8,108		$	17,817
Stock-based compensation, including the tender of shares	—	—		9			—			—			—	(1		)	8			1			9
Dividends	—	—		(72		)	—			—			—	—			(72		)	—			(72		)
Contributions from noncontrolling interests	—	—		16			—			—			—	—			16			17			33
Adjustment for deferred taxes	—	—		(22		)	—			—			—	—			(22		)	—			(22		)
Net loss attributable to common stockholders	—	—		—			(207		)	—			—	—			(207		)	—			(207		)
Net loss attributable to noncontrolling interests	—	—		—			—			—			—	—			—			(27		)	(27		)
Other comprehensive income (loss)	—	—		—			—			12			—	—			12			(1		)	11
Balance at September 30, 2019	1,582	$	158	$	25,880		$	(12,289	)	$	(570	)	131	$	(3,735	)	$	9,444		$	8,098		$	17,542

	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 June 30, 2018	1,579	$	158	$	26,667		$	(13,161	)	$	(464	)	130	$	(3,726	)	$	9,474		$	3,368	$	12,842
Stock-based compensation, including the tender of shares	—	—		9			—			—			—	—			9			—		9
Dividends	—	—		(73		)	—			—			—	—			(73		)	—		(73		)
Adoption of new accounting standard for reclassification of income taxes	—	—		—			79			(79		)	—	—			—			—		—
Net income attributable to common stockholders	—	—		—			556			—			—	—			556			—		556
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			108		108
Other comprehensive income	—	—		—			—			11			—	—			11			1		12
Balance at September 30, 2018	1,579	$	158	$	26,603		$	(12,526	)	$	(532	)	130	$	(3,726	)	$	9,977		$	3,477	$	13,454

7

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

NINE MONTHS ENDED SEPTEMBER 30

	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