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 June 30, 2020

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 July 31, 2020, there were issued and outstanding 1,452,218,624 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 Income (Loss) (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	26
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	68
Item 4. Controls and Procedures	68
Part II. Other Information	68
Item 1. Legal Proceedings	68
Item 1A. Risk Factors	68
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 4. Mine Safety Disclosures	72
Item 5. Other Information	73
Item 6. Exhibits	73
Signature	S-1

2

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30, 2020			December 31, 2019
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	1,465		$	2,020
Trade accounts receivable	717			741
Income and other tax receivables	646			426
Inventories:
Materials and supplies, net	1,604			1,649
Mill and leach stockpiles	1,030			1,143
Product	1,176			1,281
Other current assets	517			655
Total current assets	7,155			7,915
Property, plant, equipment and mine development costs, net	29,936			29,584
Long-term mill and leach stockpiles	1,446			1,425
Other assets	1,693			1,885
Total assets	$	40,230		$	40,809
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,471		$	2,576
Current portion of environmental and asset retirement obligations	298			436
Current portion of debt	90			5
Accrued income taxes	47			119
Dividends payable	—			73
Total current liabilities	2,906			3,209
Long-term debt, less current portion	9,824			9,821
Deferred income taxes	4,180			4,210
Environmental and asset retirement obligations, less current portion	3,767			3,630
Other liabilities	2,398			2,491
Total liabilities	23,075			23,361
Equity:
Stockholders’ equity:
Common stock	158			158
Capital in excess of par value	25,905			25,830
Accumulated deficit	(12,718		)	(12,280		)
Accumulated other comprehensive loss	(652		)	(676		)
Common stock held in treasury	(3,739		)	(3,734		)
Total stockholders’ equity	8,954			9,298
Noncontrolling interests	8,201			8,150
Total equity	17,155			17,448
Total liabilities and equity	$	40,230		$	40,809

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

3

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(In millions, except per share amounts)
Revenues	$	3,054		$	3,546		$	5,852		$	7,338
Cost of sales:
Production and delivery	2,394			3,005			4,939			5,929
Depreciation, depletion and amortization	358			352			699			699
Metals inventory adjustments	(139		)	2			83			59
Total cost of sales	2,613			3,359			5,721			6,687
Selling, general and administrative expenses	91			92			201			199
Mining exploration and research expenses	18			31			34			58
Environmental obligations and shutdown costs	11			23			37			65
Net loss (gain) on sales of assets	—			8			11			(25		)
Total costs and expenses	2,733			3,513			6,004			6,984
Operating income (loss)	321			33			(152		)	354
Interest expense, net	(115		)	(132		)	(242		)	(278		)
Net loss on early extinguishment of debt	(9		)	—			(41		)	(6		)
Other income, net	20			5			40			19
Income (loss) from continuing operations before income taxes and equity in affiliated companies’ net earnings	217			(94		)	(395		)	89
(Provision for) benefit from income taxes	(96		)	15			(36		)	(90		)
Equity in affiliated companies’ net earnings	3			5			6			2
Net income (loss) from continuing operations	124			(74		)	(425		)	1
Net gain from discontinued operations	—			—			—			1
Net income (loss)	124			(74		)	(425		)	2
Net (income) loss attributable to noncontrolling interests	(71		)	2			(13		)	(43		)
Net income (loss) attributable to common stockholders	$	53		$	(72	)	$	(438	)	$	(41	)
Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations	$	0.03		$	(0.05	)	$	(0.30	)	$	(0.03	)
Discontinued operations	—			—			—			—
	$	0.03		$	(0.05	)	$	(0.30	)	$	(0.03	)
Weighted-average common shares outstanding:
Basic	1,453			1,451			1,453			1,451
Diluted	1,458			1,451			1,453			1,451
Dividends declared per share of common stock	$	—		$	0.05		$	—		$	0.10

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

4

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(In millions)
Net income (loss)	$	124		$	(74	)	$	(425	)	$	2
Other comprehensive income, net of taxes:
Defined benefit plans:
Amortization of unrecognized amounts included in net periodic benefit costs	12			13			24			24
Foreign exchange gains (losses)	4			—			(1		)	—
Other comprehensive income	16			13			23			24
Total comprehensive income (loss)	140			(61		)	(402		)	26
Total comprehensive (income) loss attributable to noncontrolling interests	(71		)	1			(12		)	(44		)
Total comprehensive income (loss) attributable to common stockholders	$	69		$	(60	)	$	(414	)	$	(18	)

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

5

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30,
	2020			2019
	(In millions)
Cash flow from operating activities:
Net (loss) income	$	(425	)	$	2
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, depletion and amortization	699			699
Metals inventory adjustments	83			59
Net loss (gain) on sales of assets	11			(25		)
Stock-based compensation	43			40
Net charges for environmental and asset retirement obligations, including accretion	112			109
Payments for environmental and asset retirement obligations	(119		)	(100		)
Net charges for defined pension and postretirement plans	45			53
Pension plan contributions	(29		)	(33		)
Net loss on early extinguishment of debt	41			6
Deferred income taxes	(28		)	20
PT Freeport Indonesia (PT-FI) surface water tax settlement	—			28
Charges for Cerro Verde royalty dispute	15			28
Payments for Cerro Verde royalty dispute	(90		)	(86		)
Other, net	(46		)	40
Changes in working capital and other:
Accounts receivable	83			256
Inventories	168			254
Other current assets	(4		)	(26		)
Accounts payable and accrued liabilities	(73		)	9
Accrued income taxes and timing of other tax payments	(33		)	(245		)
Net cash provided by operating activities	453			1,088
Cash flow from investing activities:
Capital expenditures:
North America copper mines	(332		)	(417		)
South America	(125		)	(108		)
Indonesia	(634		)	(658		)
Molybdenum mines	(11		)	(6		)
Other	(35		)	(62		)
Proceeds from sales of assets	116			94
Other, net	(5		)	(10		)
Net cash used in investing activities	(1,026		)	(1,167		)
Cash flow from financing activities:
Proceeds from debt	1,585			328
Repayments of debt	(1,527		)	(1,563		)
Cash dividends and distributions paid:
Common stock	(73		)	(146		)
Noncontrolling interests	—			(79		)
Contributions from noncontrolling interests	74			100
Stock-based awards net payments	(4		)	(6		)
Debt financing costs and other, net	(31		)	(4		)
Net cash provided by (used in) financing activities	24			(1,370		)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(549		)	(1,449		)
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	$	1,729		$	3,006

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

6

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED JUNE 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 March 31, 2020	1,583	$	158	$	25,875	$	(12,771	)	$	(668	)	131	$	(3,739	)	$	8,855	$	8,108	$	16,963
Stock-based compensation, including the tender of shares	—	—		9		—			—			—	—			9		1		10
Contributions from noncontrolling interests	—	—		21		—			—			—	—			21		21		42
Net income attributable to common stockholders	—	—		—		53			—			—	—			53		—		53
Net income attributable to noncontrolling interests	—	—		—		—			—			—	—			—		71		71
Other comprehensive income	—	—		—		—			16			—	—			16		—		16
Balance at June 30, 2020	1,583	$	158	$	25,905	$	(12,718	)	$	(652	)	131	$	(3,739	)	$	8,954	$	8,201	$	17,155

	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 March 31, 2019	1,582	$	158	$	25,963		$	(12,010	)	$	(594	)	131	$	(3,734	)	$	9,783		$	8,058		$	17,841
Stock-based compensation, including the tender of shares	—	—		10			—			—			—	—			10			—			10
Dividends	—	—		(73		)	—			—			—	—			(73		)	—			(73		)
Contributions from noncontrolling interests	—	—		49			—			—			—	—			49			51			100
Net loss attributable to common stockholders	—	—		—			(72		)	—			—	—			(72		)	—			(72		)
Net loss attributable to noncontrolling interests	—	—		—			—			—			—	—			—			(2		)	(2		)
Other comprehensive income	—	—		—			—			12			—	—			12			1			13
Balance at June 30, 2019	1,582	$	158	$	25,949		$	(12,082	)	$	(582	)	131	$	(3,734	)	$	9,709		$	8,108		$	17,817

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

7

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

SIX MONTHS ENDED JUNE 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, 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	—	—		38		—			—			—	(5		)	33			1			34
Contributions from noncontrolling interests	—	—		36		—			—			—	—			36			38			74
Net loss attributable to common stockholders	—	—		—		(438		)	—			—	—			(438		)	—			(438		)
Net income attributable to noncontrolling interests	—	—		—		—			—			—	—			—			13			13
Other comprehensive income (loss)	—	—		—		—			24			—	—			24			(1		)	23
Balance at June 30, 2020	1,583	$	158	$	25,905	$	(12,718	)	$	(652	)	131	$	(3,739	)	$	8,954		$	8,201		$	17,155

	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	$