-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Y6YWngxkEYdqCecabslInY96d0RPowZ8v/jPPRc8BjzUzp3QVoL2OrKje3C59Hun IiuW7D4PfntF6PPGyb3egQ== 0000793421-95-000009.txt : 19950814 0000793421-95-000009.hdr.sgml : 19950814 ACCESSION NUMBER: 0000793421-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FREEPORT MCMORAN RESOURCE PARTNERS LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000793421 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 721067072 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09164 FILM NUMBER: 95561871 BUSINESS ADDRESS: STREET 1: 1615 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045824000 FORMER COMPANY: FORMER CONFORMED NAME: FREEPORT MCMORAN RESOURCE PARTNERS LP DATE OF NAME CHANGE: 19860618 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 1995 Commission File Number: 1-9164 Freeport-McMoRan Resource Partners, Limited Partnership Organized in Delaware 72-1067072 (IRS Employer Identification No.) 1615 Poydras Street, New Orleans, Louisiana 70112 Registrant's telephone number, including area code: (504) 582-4000 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 X No --- --- FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP TABLE OF CONTENTS Page Part I. Financial Information Financial Statements: Condensed Balance Sheets 3 Statements of Income 4 Statements of Cash Flow 5 Notes to Financial Statements 6 Remarks 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information 10 Signature 11 Exhibit Index E-1 FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP Part I. FINANCIAL INFORMATION Item 1. Financial Statements. --------------------- FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS (Unaudited) June 30, December 31, 1995 1994 ---------- ------------ (In Thousands) ASSETS Current assets: Cash and short-term investments $ 14,461 $ 9,859 Accounts receivable 54,873 58,265 Inventories 105,800 109,677 Prepaid expenses and other 1,911 1,350 ---------- ---------- Total current assets 177,045 179,151 Property, plant and equipment, net 937,485 910,469 Other assets 57,681 57,311 ---------- ---------- Total assets $1,172,211 $1,146,931 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Accounts payable and accrued liabilities $ 98,892 $ 84,888 Long-term debt, less current portion 344,409 368,637 Reclamation and mine shutdown reserves 117,097 96,445 Accrued postretirement benefits and other liabilities 188,301 149,301 Partners' capital 423,512 447,660 ---------- ---------- Total liabilities and partners' capital $1,172,211 $1,146,931 ========== ========== The accompanying notes are an integral part of these financial statements. FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 1995 1994 1995 1994 -------- -------- -------- -------- (In Thousands, Except Per Unit Amounts) Revenues $233,203 $185,444 $487,468 $367,517 Cost of sales: Production and delivery 166,418 135,259 338,368 267,100 Depreciation and amortization 6,673 9,475 20,614 24,986 -------- -------- -------- -------- Total cost of sales 173,091 144,734 358,982 292,086 General and administrative expenses 11,156 11,948 25,215 23,218 -------- -------- -------- -------- Total costs and expenses 184,247 156,682 384,197 315,304 -------- -------- -------- -------- Operating income 48,956 28,762 103,271 52,213 Interest expense, net (7,723) (8,551) (15,577) (15,866) Other income, net (307) 325 (436) (2,398) -------- -------- -------- -------- Net income $ 40,926 $ 20,536 $ 87,258 $ 33,949 ======== ======== ======== ======== Net income per unit $.40 $.20 $.84 $.33 ==== ==== ==== ==== Average units outstanding 103,466 103,698 103,509 103,698 ======= ======= ======= ======= Distributions paid per publicly held unit $.615 $.60 $1.215 $1.20 ===== ==== ====== ===== The accompanying notes are an integral part of these financial statements. FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOW (Unaudited) Six Months Ended June 30, ---------------------- 1995 1994 -------- -------- (In Thousands) Cash flow from operating activities: Net income $ 87,258 $ 33,949 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,614 24,986 Cash distribution from IMC-Agrico in excess of interest in capital 21,347 25,457 Reclamation and mine shutdown expenditures (4,928) (7,385) (Increase) decrease in working capital, net of effects of acquisition: Accounts receivable 3,175 2,807 Inventories 9,400 14,318 Prepaid expenses and other (562) 1,278 Accounts payable and accrued liabilities 6,990 3,020 Other 7,772 2,617 -------- -------- Net cash provided by operating activities 151,066 101,047 -------- -------- Cash flow from investing activities: Capital expenditures (15,484) (11,914) Sale of assets and other 375 45,265 -------- -------- Net cash provided by (used in) investing activities (15,109) 33,351 -------- -------- Cash flow from financing activities: Distributions to partners (109,345) (66,775) Repayments of debt, net (19,949) (229,107) Purchase of Partnership units (2,061) - Proceeds from 8 3/4% Senior subordinated notes - 146,125 -------- -------- Net cash used in financing activities (131,355) (149,757) -------- -------- Net increase (decrease) in cash and short-term investments 4,602 (15,359) Cash and short-term investments at beginning of year 9,859 24,448 -------- -------- Cash and short-term investments at end of period $ 14,461 $ 9,089 ======== ======== The accompanying notes are an integral part of these financial statements. FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS 1. ACQUISITION In January 1995, Freeport-McMoRan Resource Partners, Limited Partnership (FRP) acquired essentially all of the domestic assets of Pennzoil Co.'s sulphur division. Pennzoil will receive quarterly payments from FRP over 20 years based on the prevailing price of sulphur. The installment payments may be terminated earlier by FRP through the exercise of a $65 million call option or by Pennzoil through a $10 million put option. Neither option may be exercised prior to 1999. The purchase price allocation follows (in thousands): Current assets $ 5,635 Current liabilities (9,522) Property, plant and equipment 60,159 Accrued long-term liabilities (56,272) ------- Net cash investment $ - ======= Accrued long-term liabilities include the estimated future installment payments based on the prevailing sulphur price upon acquisition and estimated future reclamation and mine shutdown costs. 2. NEW CREDIT FACILITY In July 1995, Freeport-McMoRan Inc. (FTX) obtained a new credit facility. The facility provides $400 million of credit, all of which is available to FRP and $75 million of which is available to FTX as the holding company. The new variable rate facility matures July 2000 and has covenants and security requirements which are similar to the previous credit agreement. 3. RATIO OF EARNINGS TO FIXED CHARGES The ratio of earnings to fixed charges for the first six months of 1995 and 1994 was 6 to 1 and 3.1 to 1, respectively. For this calculation, earnings are income from continuing operations before fixed charges. Fixed charges include interest and that portion of rent deemed representative of interest. ------------------- Remarks The information furnished herein should be read in conjunction with FRP's financial statements contained in its 1994 Annual Report to unitholders and incorporated by reference in its Annual Report on Form 10-K. The information furnished herein reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the periods. All such adjustments are, in the opinion of management, of a normal recurring nature. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS Second Quarter Six Months ------------------- -------------------- 1995 1994 1995 1994 ------ ------ ------ ------ (In Millions, Except Per Unit Amounts) Revenues $233.2 $185.4 $487.5 $367.5 Operating income 49.0 28.8 103.3 52.2 Net income 40.9 20.5 87.3 33.9 Net income per unit .40 .20 .84 .33 Freeport-McMoRan Resource Partners, Limited Partnership (FRP) benefited from significantly higher operating results from its agricultural minerals segment during the 1995 periods, reflecting the strengthening in the phosphate fertilizer markets which began in mid-1993 and has continued into 1995. General and administrative expenses during the six-month 1995 period include a $1.2 million charge for the reorganization of IMC-Agrico Company's marketing function, whereas the six-month 1994 period benefited from a $2.2 million reduction in the estimated cost of excess office space. Based upon current market prices for Freeport-McMoRan Inc. (FTX) common stock, third quarter general and administrative expenses for FRP are expected to reflect a charge of approximately $10 million for stock option costs allocated to FRP under the management services agreement because of the rise in the price of FTX's common stock subsequent to June 30, 1995. The six-month 1994 period was also impacted by a $2.9 million charge to other income on the prepayment of certain notes receivable. Agricultural Minerals Operations - FRP's agricultural minerals segment, which includes its fertilizer and phosphate rock operations (conducted through IMC- Agrico) and its sulphur business, reported second-quarter 1995 operating income of $48.8 million on revenues of $224.2 million compared with operating income of $30.4 million on revenues of $176.5 million for the 1994 period. Operating income for the first six months of 1995 was $104.2 million on revenues of $468.9 million compared with operating income of $51.4 million on revenues of $349 million for the year-ago period. Significant items impacting operating income follow (in millions): Second Six Quarter Months ------- ------ Agricultural minerals operating income - 1994 $30.4 $ 51.4 ----- ------ Increases (decreases): Sales volumes 19.7 53.0 Realizations 29.2 68.1 Other (1.2) (1.2) ----- ------ Revenue variance 47.7 119.9 Cost of sales (30.3)* (67.7)* General and administrative and other 1.0 .6 ----- ------ 18.4 52.8 ----- ------ Agricultural minerals operating income - 1995 $48.8 $104.2 ===== ====== * Includes a reduction to depreciation and amortization of $11.3 million and $6.3 million for the second quarter of 1995 and 1994, respectively, and $16.1 million and $7.2 million for the six-month period of 1995 and 1994, respectively, caused by FRP's disproportionate interest in IMC-Agrico cash distributions. FRP's second-quarter 1995 phosphate fertilizer sales volumes were slightly higher than those of the year-ago quarter, with IMC-Agrico experiencing improved export sales for diammonium phosphate (DAP), its principal fertilizer product. Domestic fertilizer demand was hampered by wet field conditions which delayed the planting of a significant portion of this season's crop and prevented certain acreage from being planted. Despite continued strong export shipments, lower spring domestic demand, coupled with industry operating rates over 100 percent, caused a modest build-up in domestic phosphate fertilizer producers' stocks in the second quarter and contributed to about a 10 percent decline in market prices from their high point. In response to the weakened market, IMC-Agrico temporarily closed its Taft, Louisiana facility in May 1995 and resumed production on August 7, 1995, and accelerated planned maintenance turnarounds at three other fertilizer facilities. FRP's average DAP realization increased 14 percent from the year- ago period (virtually unchanged from the previous quarter). FRP's 1995 DAP realizations include a large first-half 1995 forward sale to China contracted in November 1994 at then current market prices. Unit production costs benefited from ongoing cost savings achieved at IMC-Agrico, somewhat offset by higher raw material costs for ammonia, although down from their market highs, and increased maintenance costs. During the second half of 1995, FRP will benefit from a significant forward sales agreement reached between China and IMC-Agrico. IMC-Agrico is committed to maintaining a reasonable balance between supply and demand and will continue to monitor market conditions and make production level adjustments as necessary. FRP's second-quarter 1995 phosphate rock sales volumes increased 22 percent from the 1994 period, reflecting increased demand and the addition of a long-term supply contract in October 1994. Main Pass sulphur production averaged 6,000 tons per day (TPD) during the second quarter of 1995, while FRP's Culberson mine, acquired in January 1995 as part of the Pennzoil sulphur asset purchase (Note 1), produced an average of 2,250 TPD. FRP's increased production capacity, combined with continued strong demand from the domestic phosphate fertilizer industry, resulted in a 52 percent increase in sales volumes. FRP also benefited from the continued strengthening in Tampa, Florida sulphur prices. To the extent U.S. phosphate fertilizer production remains strong, improved sulphur demand is expected to continue, although the availability of Canadian sulphur limits the potential for significant price increases. Second Quarter Six Months --------------------- ---------------------- 1995 1994 1995 1994 --------- --------- --------- --------- Phosphate fertilizers - primarily DAP Sales (short tons)a 760,400 734,700 1,660,300 1,528,800 Average realized priceb All phosphate fertilizers $163.53 $144.30 $163.68 $139.30 DAP 169.01 148.43 169.10 144.03 Phosphate rock Sales (short tons)a 1,221,500 1,004,100 2,560,200 2,010,600 Average realized priceb $23.18 $23.24 $22.10 $22.47 Sulphur Sales (long tons)c 772,700 508,100 1,533,300 1,023,600 a. Reflects FRP's 45.1 percent and 46.5 percent share of the IMC-Agrico assets for the years ended June 30, 1995 and 1994, respectively, while FRP received 55 percent and 58.6 percent of the cash flow generated during such periods. FRP's share of the IMC-Agrico assets for the year ended June 30, 1996 is 43.6 percent, while it will receive 53.1 percent of the cash flow. b. Represents average realization f.o.b. plant/mine. c. Includes 189,700 tons and 187,700 tons for the second quarter of 1995 and 1994, respectively, and 368,600 tons and 374,800 tons for the six- month periods of 1995 and 1994, respectively, which represent internal consumption that are not included in sales for accounting purposes. Oil Operation - Second Quarter Six Months ------------------- ---------------------- 1995 1994 1995 1994 ------- ------- --------- --------- Sales (barrels) 541,000 611,900 1,161,800 1,435,100 Average realized price $16.71 $14.52 $15.99 $12.88 Operating income (in millions) $1.4 $1.0 $2.5 $2.0 Main Pass oil production was below the year-ago quarter level, as expected. Net production for 1995 is estimated to total approximately 2.3 million barrels, as the benefits of a 1994 redevelopment program are expected to partially offset declining reservoir production. CAPITAL RESOURCES AND LIQUIDITY Net cash provided by operating activities during the first six months of 1995 increased to $151.1 million, compared with $101 million in the 1994 period, caused primarily by the improvement in FRP's earnings. Net cash used in investing activities was $15.1 million in 1995, consisting of capital expenditures, compared with $33.4 million generated during the 1994 period as a result of asset sales. Total capital expenditures for 1995 are expected to approximate $40 million. Net cash used in financing activities during the 1995 period totaled $131.4 million, compared with $149.8 million in the 1994 period. In early 1994, FRP issued $150 million of 8 3/4% Senior Subordinated Notes, using the proceeds to reduce other indebtedness. Publicly owned FRP units have cumulative rights to receive quarterly distributions of 60 cents per unit through the distribution for the quarter ending December 31, 1996 (the Preference Period) before any distributions may be made to FTX. On July 21, 1995, FRP declared a distribution of 60 cents per publicly held unit ($30.2 million) and 27 cents per FTX-owned unit ($14.6 million), payable August 15, 1995, bringing the total unpaid distribution due FTX to $368.8 million. Unpaid distributions due FTX will be recoverable from one-half of the excess of future quarterly FRP distributions over 60 cents per unit for all units. The July 1995 distributable cash included $38.1 million from IMC-Agrico. FRP's future distributions will be dependent on the distributions received from IMC-Agrico and future cash flow from FRP's sulphur and oil operations. On July 5, 1995, FTX completed a plan to separate its two principal businesses, copper/gold and agricultural minerals, into two independent financial and operating entities. In connection with this restructuring plan, the existing FTX revolving credit agreement in which FRP participated was replaced with a new facility for FRP and FTX which will provide greater access to credit markets and reduce financing costs (Notes 2). FRP believes that its short-term cash requirements will be met from internally generated funds and borrowings under this new credit facility ($216 million available as of July 31, 1995). ------------------------------- The results of operations reported and summarized above are not necessarily indicative of future operating results. FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) The exhibits to this report are listed in the Exhibit Index appearing on page E-1 hereof. (b) No reports on Form 8-K were filed by the registrant during the quarter for which this report is filed. FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP (A Limited Partnership) By: /s/ Nancy D. Bonner ------------------------ Nancy D. Bonner Vice President and Controller (Authorized signatory and Principal Accounting Officer) Date: August 11, 1995 FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP EXHIBIT INDEX ------------- Sequentially Numbered Number Description Page - ------ ----------- ------------ 27.1 Freeport-McMoRan Resource Partners, Limited Partnership Financial Data Schedule EX-27 2
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 14,461 0 38,622 0 105,800 177,045 1,804,570 867,085 1,172,211 98,892 344,409 423,512 0 0 0 1,172,211 487,468 487,468 358,982 358,982 0 0 15,577 87,258 0 87,258 0 0 0 87,258 .84 0
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