fcx-20200930

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, 2020


☐			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

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 30, 2020, there were issued and outstanding 1,452,868,421 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			69

Item 4. Controls and Procedures			69

Part II. Other Information			69

Item 1. Legal Proceedings			69

Item 1A. Risk Factors			69

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			73

Item 4. Mine Safety Disclosures			73

Item 6. Exhibits			74

Signature			S-1

Table of Contents

Part I.FINANCIAL INFORMATION

Item 1.Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30, 2020		December 31, 2019
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2,403	$	2,020
Trade accounts receivable	893		741
Income and other tax receivables	464		426

Inventories:
Materials and supplies, net	1,610		1,649
Mill and leach stockpiles	1,004		1,143
Product	1,278		1,281
Other current assets	419		655

Total current assets	8,071		7,915
Property, plant, equipment and mine development costs, net	29,911		29,584


Long-term mill and leach stockpiles	1,463		1,425

Other assets	1,654		1,885

Total assets	$	41,099	$	40,809

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,533	$	2,576
Current portion of environmental and asset retirement obligations	397		436
Accrued income taxes	119		119
Current portion of debt	47		5
Dividends payable	—		73

Total current liabilities	3,096		3,209
Long-term debt, less current portion	9,983		9,821
Deferred income taxes	4,325		4,210
Environmental and asset retirement obligations, less current portion	3,693		3,630
Other liabilities	2,440		2,491

Total liabilities	23,537		23,361



Equity:
Stockholders’ equity:
Common stock	158		158
Capital in excess of par value	25,934		25,830
Accumulated deficit	(12,389)		(12,280)
Accumulated other comprehensive loss	(728)		(676)
Common stock held in treasury	(3,739)		(3,734)
Total stockholders’ equity	9,236		9,298
Noncontrolling interests	8,326		8,150
Total equity	17,562		17,448
Total liabilities and equity	$	41,099	$	40,809

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

Table of Contents

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(In millions, except per share amounts)
Revenues	$	3,851	$	3,153	$	9,703	$	10,491
Cost of sales:
Production and delivery	2,465		2,670		7,404		8,599
Depreciation, depletion and amortization	394		322		1,093		1,021

Metals inventory adjustments	9		41		92		100
Total cost of sales	2,868		3,033		8,589		9,720
Selling, general and administrative expenses	72		101		273		300
Mining exploration and research expenses	8		25		42		83
Environmental obligations and shutdown costs	21		20		58		85
Net loss (gain) on sales of assets	2		12		13		(13)
Total costs and expenses	2,971		3,191		8,975		10,175
Operating income (loss)	880		(38)		728		316
Interest expense, net	(120)		(123)		(362)		(401)
Net loss on early extinguishment of debt	(59)		(21)		(100)		(27)
Other income, net	22		33		62		52
Income (loss) from continuing operations before income taxes and equity in affiliated companies’ net earnings	723		(149)		328		(60)
Provision for income taxes	(297)		(91)		(333)		(181)
Equity in affiliated companies’ net earnings	6		5		12		7
Net income (loss) from continuing operations	432		(235)		7		(234)
Net gain from discontinued operations	—		1		—		2
Net income (loss)	432		(234)		7		(232)

Net (income) loss attributable to noncontrolling interests	(103)		27		(116)		(16)


Net income (loss) attributable to common stockholders	$	329	$	(207)	$	(109)	$	(248)






Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations	$	0.22	$	(0.15)	$	(0.08)	$	(0.17)
Discontinued operations	—		—		—		—
	$	0.22	$	(0.15)	$	(0.08)	$	(0.17)

Weighted-average common shares outstanding:
Basic	1,453		1,452		1,453		1,451
Diluted	1,461		1,452		1,453		1,451

Dividends declared per share of common stock	$	—	$	0.05	$	—	$	0.15

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

Table of Contents

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(In millions)
Net income (loss)	$	432	$	(234)	$	7	$	(232)

Other comprehensive (loss) income, net of taxes:

Defined benefit plans:
Actuarial losses arising during the period	(89)		—		(89)		—
Amortization or curtailment of unrecognized amounts included in net periodic benefit costs	14		11		38		35
Foreign exchange losses	(1)		—		(2)		—


Other comprehensive (loss) income	(76)		11		(53)		35

Total comprehensive income (loss)	356		(223)		(46)		(197)
Total comprehensive (income) loss attributable to noncontrolling interests	(103)		28		(115)		(16)

Total comprehensive income (loss) attributable to common stockholders	$	253	$	(195)	$	(161)	$	(213)

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

Table of Contents

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended
	September 30,
	2020		2019
	(In millions)
Cash flow from operating activities:
Net income (loss)	$	7	$	(232)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	1,093		1,021


Metals inventory adjustments	92		100

Net loss (gain) on sales of assets	13		(13)
Stock-based compensation	60		52
Net charges for environmental and asset retirement obligations, including accretion	166		160
Payments for environmental and asset retirement obligations	(162)		(164)
Net charges for defined pension and postretirement plans	59		79
Pension plan contributions	(30)		(58)
Net loss on early extinguishment of debt	100		27
Deferred income taxes	119		71

Dividends received from PT Smelting	3		33



Settlements of PT Freeport Indonesia (PT-FI) environmental and surface water tax matters	(19)		28
Payment for PT-FI environmental matter	(14)		—
Charges for Cerro Verde royalty dispute	26		40
Payments for Cerro Verde royalty dispute	(119)		(126)
Other, net	(23)		20
Changes in working capital and other:
Accounts receivable	132		210
Inventories	59		224
Other current assets	(17)		15
Accounts payable and accrued liabilities	40		(45)
Accrued income taxes and timing of other tax payments	105		(130)
Net cash provided by operating activities	1,690		1,312

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(398)		(641)
South America	(156)		(176)
Indonesia	(959)		(992)

Molybdenum mines	(14)		(11)

Other	(46)		(97)







Proceeds from sales of assets	146		102
Other, net	(6)		(10)
Net cash used in investing activities	(1,433)		(1,825)

Cash flow from financing activities:
Proceeds from debt	3,236		1,681
Repayments of debt	(3,105)		(2,917)


Cash dividends and distributions paid:
Common stock	(73)		(218)
Noncontrolling interests	—		(79)
Contributions from noncontrolling interests	115		133
Stock-based awards net payments	(2)		(7)
Debt financing costs and other, net	(51)		(23)
Net cash provided by (used in) financing activities	120		(1,430)

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	377		(1,943)

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	$	2,655	$	2,512

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

Table of Contents

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, 2020	1,583	$	158	$	25,905	$	(12,718)	$	(652)	131	$	(3,739)	$	8,954	$	8,201	$	17,155





Exercised and issued stock-based awards	1	—		1		—		—		—	—		1		—		1
Stock-based compensation, including the tender of shares	—	—		8		—		—		—	—		8		—		8






Change in ownership interests	—	—		—		—		—		—	—		—		1		1
Contributions from noncontrolling interests	—	—		20		—		—		—	—		20		21		41



Net income attributable to common stockholders	—	—		—		329		—		—	—		329		—		329
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		—		103		103
Other comprehensive loss	—	—		—		—		(76)		—	—		(76)		—		(76)
Balance at September 30, 2020	1,584	$	158	$	25,934	$	(12,389)	$	(728)	131	$	(3,739)	$	9,236	$	8,326	$	17,562


	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

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

Table of Contents

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, 2019	1,582	$	158	$	25,830	$	(12,280)	$	(676)	131	$	(3,734)	$	9,298	$	8,150	$	17,448



Exercised and issued stock-based awards	2	—		2		—		—		—	—		2		—		2
Stock-based compensation, including the tender of shares	—	—		46		—		—		—	(5)		41		1		42



Change in ownership interests	—	—		—		—		—		—	—		—		1		1
Contributions from noncontrolling interests	—	—		56		—		—		—	—		56		59		115
Net loss attributable to common stockholders	—	—		—		(109)		—		—	—		(109)		—		(109)
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		—		116		116
Other comprehensive loss	—	—		—		—		(52)		—	—		(52)		(1)		(53)
Balance at September 30, 2020	1,584	$	158	$	25,934	$	(12,389)	$	(728)	131	$	(3,739)	$	9,236	$	8,326	$	17,562


	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	—	—		42		—		—		1	(8)		34		1		35



Dividends	—	—		(218)		—		—		—	—		(218)		(70)		(288)


Change in ownership interests	—	—		(1)		—		—		—	—		(1)		(11)		(12)
Contributions from noncontrolling interests	—	—		65		—		—		—	—		65		68		133
Adjustments for deferred taxes	—	—		(22)