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| 8-K/A - AMENDMENT NO. 2 TO FORM 8-K - FREEPORT-MCMORAN INC | d816895d8ka.htm |
Exhibit 99.1
Freeport-McMoRan Inc.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2013
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
| Historical(1) | ||||||||||||||||||||||||||
| PXP | Adjustments | |||||||||||||||||||||||||
| FCX | First Quarter |
April 1 to May 31 |
Conforming(2) | Pro Forma(3) |
Combined | |||||||||||||||||||||
| Revenues |
$ | 20,921 | $ | 1,232 | $ | 810 | $ | (25 | ) | $ | – | $ | 22,938 | |||||||||||||
| Cost of sales: |
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| Production and delivery |
11,840 | 248 | 158 | 26 | (18 | ) | A | 12,254 | ||||||||||||||||||
| Depreciation, depletion and amortization |
2,797 | 541 | 349 | (29 | ) | (38 | ) | B | 3,620 | |||||||||||||||||
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| Total cost of sales |
14,637 | 789 | 507 | (3 | ) | (56 | ) | 15,874 | ||||||||||||||||||
| Other operating costs and expenses |
933 | 46 | 281 | (9 | ) | (472 | ) | C | 779 | |||||||||||||||||
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| Total costs and expenses |
15,570 | 835 | 788 | (12 | ) | (528 | ) | 16,653 | ||||||||||||||||||
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| Operating income (loss) |
5,351 | 397 | 22 | (13 | ) | 528 | 6,285 | |||||||||||||||||||
| Interest expense, net |
(518 | ) | (141 | ) | (91 | ) | (12 | ) | 13 | D | (703 | ) | ||||||||||||||
| 46 | E | |||||||||||||||||||||||||
| Losses on early extinguishment of debt |
(35 | ) | (18 | ) | (119 | ) | – | 182 | F | 10 | ||||||||||||||||
| Gain on investment in McMoRan Exploration Co. |
128 | – | – | – | – | 128 | ||||||||||||||||||||
| Other (expense) income, net |
(13 | ) | (186 | ) | 191 | 25 | (30 | ) | G | (13 | ) | |||||||||||||||
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| Income before income taxes and equity in affiliated companies’ net earnings |
4,913 | 52 | 3 | – | 739 | 5,707 | ||||||||||||||||||||
| (Provision for) benefit from income taxes |
(1,475 | ) | (20 | ) | 4 | – | (451 | ) | H | (1,942 | ) | |||||||||||||||
| Equity in affiliated companies’ net earnings |
3 | – | – | – | 12 | G | 15 | |||||||||||||||||||
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| Net income |
3,441 | 32 | 7 | – | 300 | 3,780 | ||||||||||||||||||||
| Net income and preferred dividends attributable to noncontrolling interests |
(783 | ) | (9 | ) | (9 | ) | – | – | (801 | ) | ||||||||||||||||
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| Net income attributable to common stockholders |
$ | 2,658 | $ | 23 | $ | (2 | ) | $ | – | $ | 300 | $ | 2,979 | |||||||||||||
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| Net income per share attributable to common stockholders: |
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| Basic |
$ | 2.65 | $ | 2.86 | ||||||||||||||||||||||
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| Diluted |
$ | 2.64 | $ | 2.85 | ||||||||||||||||||||||
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| Weighted-average common shares outstanding: |
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| Basic |
1,002 | 1,041 | ||||||||||||||||||||||||
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| Diluted |
1,006 | 1,045 | ||||||||||||||||||||||||
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COMBINATION OF FCX AND PXP
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
| (1) | Historical Financial Information |
FCX’s historical financial information has been derived from its annual report on Form 10-K for the year ended December 31, 2013. PXP’s historical information has been derived from its quarterly report on Form 10-Q for the period ended March 31, 2013 (first quarter), and from its books and records for the April 1, 2013, to May 31, 2013, period.
| (2) | Conforming Adjustments |
Certain of PXP’s historical balances have been adjusted to conform to FCX’s presentation, including the reclassification of PXP’s gains and losses on mark-to-market oil and gas derivative contracts to revenues.
| (3) | Pro Forma Adjustments |
The following pro forma adjustments for the pro forma condensed combined statement of income for the year ended December 31, 2013, are primarily based on the estimated fair value adjustments made to the assets acquired and liabilities assumed.
| A. | Adjustments to accretion on assumed asset retirement obligations. |
| B. | Adjustments to depreciation, depletion and amortization expense primarily reflect updated reserve estimates and depletion rates for oil and gas properties subject to depletion. The pro forma depletion rate was $32.32 per barrel of oil equivalents for the year. |
| C. | Adjustment to reverse transaction costs related to the merger that were recorded in FCX’s and PXP’s historical results. |
| D. | Net adjustments to interest expense primarily relate to interest associated with the $6.5 billion of senior notes and the adjustment to fair value of the assumed PXP debt obligations. |
| E. | Adjustments reflect pro forma capitalized interest related to the interest adjustments described above in Note D, and adjustments to oil and gas properties not subject to depletion. |
| F. | Adjustment to reverse losses on early extinguishment of debt in PXP’s historical information and to reverse FCX’s losses on early extinguishment of debt associated with the termination of the bridge loan facilities for the PXP acquisition. |
| G. | PXP owned 51 million shares of MMR common stock and historically elected to measure this equity investment at fair value, with changes in fair value recognized as a component of other (expense) income, net, in the statement of income. For purposes of the Pro Forma Condensed Combined Statement of Income, FCX has recorded the equity investment in MMR under the equity method of accounting. Accordingly, adjustments were made to (i) reverse the income statement effects recorded by PXP under the fair value option and (ii) to record the equity in MMR losses under the equity method of accounting. |
| H. | The pro forma adjustment for income taxes reflects the incremental income taxes necessary to achieve an effective income tax rate of 34 percent on a combined basis. |