FREEPORT-Mcmoran COPPER & GOLD INC. 2003 ANNUAL REPORT
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THE STRENGTH OF OUR METALS FREEPORT-McMoRan COPPER & GOLD INC. FREEPORT-McMoRan COPPER & GOLD INC. 1615 POYDRAS STREET 2003 ANNUAL REPORT NEW ORLEANS, LOUISIANA 70112 WWW.FCX.COM FREEPORT-MCMOR AN COPPER & GOLD INC. Freeport-McMoRan Copper & Gold Inc. (FCX) conducts its STOCKHOLDER INFORMATION operations through its subsidiaries, PT Freeport Indonesia, PT Puncakjaya Power, PT Irja Eastern Minerals and Atlantic Copper, S.A. PT Freeport Indonesia’s operations in the INVESTOR INQUIRIES COMMON SHARE DIVIDENDS Indonesian province of Papua include exploration and The Investor Relations Department will be pleased to There were no cash dividends paid on FCX common development, mining and milling of ore containing copper, receive any inquiries about the company's securities, stock during 2002. In February 2003, the Board of including its common stock and depositary shares, or Directors authorized a new cash dividend policy for gold and silver, and the worldwide marketing of concentrates about any phase of the company's activities. A link to FCX’s common stock with the initial $0.09 per share containing those metals. PT Puncakjaya Power supplies power our Annual Report on Form 10-K filed with the Securities quarterly dividend being paid on May 1, 2003. Below to PT Freeport Indonesia’s operations. Eastern Minerals and Exchange Commission, which includes certifications is a summary of the common stock cash dividend conducts mineral exploration activities in Papua. Atlantic of our Chief Executive Officer and Chief Financial Officer declared and paid for the quarterly periods of 2003: and the company’s Ethics and Business Conduct Policy, Copper, FCX’s wholly owned subsidiary in Huelva, Spain, is available on our web site. Additionally, copies will be Amount and PT Smelting, PT Freeport Indonesia’s 25-percent-owned furnished, without charge, to any stockholder of the per Share Record Date Payment Date smelter facility in the Indonesian province of East Java, are company entitled to vote at its annual meeting, upon First Quarter N/A N/A N/A engaged in the smelting and refining of copper. written request. The Investor Relations Department can be contacted as follows: Second Quarter $0.09 Apr. 15, 2003 May 1, 2003 Our common stock trades on the New York Stock Exchange Freeport-McMoRan Copper & Gold Inc. Third Quarter 0.09 July 15, 2003 Aug. 1, 2003 Investor Relations Department (NYSE) under the symbol “FCX.” 1615 Poydras Street Fourth Quarter 0.09 Oct. 15, 2003 Nov. 3, 2003 THE GRASBERG OPEN-PIT COPPER AND New Orleans, Louisiana 70112 GOLD MINE IN PAPUA, INDONESIA. Telephone (504) 582-4000 In October 2003, the Board of Directors authorized an www.fcx.com increase in the cash dividend policy for FCX common stock. The new policy provides for an annual dividend TRANSFER AGENT Questions about lost certificates, lost or missing of $0.80 per share, payable quarterly ($0.20 per share) dividend checks, or notifications of change of address with the increase taking effect with the February 2, 2004 should be directed to the FCX transfer agent, registrar, dividend payment. and dividend disbursement agent: TAX WITHHOLDING – NONRESIDENT ALIEN SUMMARY FINANCIAL HIGHLIGHTS Mellon Investor Services LLC STOCKHOLDERS Overpeck Centre, 85 Challenger Road Nonresident aliens who own stock in a U.S. corporation Ridgefield Park, New Jersey 07660 are generally subject to a federal withholding tax on Years Ended December 31, 2003 2002 2001 2000 1999 Telephone (800) 953-2493 100 percent of the dividends paid on that stock. (In Thousands, Except Per Share Amounts) www.melloninvestor.com However, when 80 percent or more of a corporation’s Revenues $2,212,165 $1,910,462 $1,838,866 $1,868,610 $1,887,328 income is generated outside the U.S., the withholding Operating income 823,308 640,137 542,926 492,293 578,316 NOTICE OF ANNUAL MEETING percentage is not calculated on 100 percent of the Net income applicable to common stock 154,219 127,050 76,496 39,500 100,787 The annual meeting of stockholders will be held on dividend but rather on that portion of the dividend Diluted net income per common share .97 .87 .53 .26 .61 May 6, 2004. Notice of the meeting, together with attributable to income generated in the U.S. FCX has a proxy and a proxy statement, is being sent to determined that, for quarterly dividends paid in 2003 stockholders. A post-meeting report summarizing the to nonresident alien stockholders, none of the total At December 31: proceedings of the meeting will be available on our dividend amount is subject to federal withholding tax Total assets 4,718,366 4,192,193 4,211,929 3,950,741 4,082,916 web site (www.fcx.com) within 10 days following the because none of our income is from U.S. sources. Long-term debt, including current portion meeting. A copy of the report will be mailed at no and short-term borrowings and redeemable preferred stock 2,228,330 2,488,393 2,801,104 2,665,030 2,635,766 charge to any stockholder requesting it. For quarterly dividends paid in 2004, FCX estimates Cash and restricted cash and investments 498,616 115,782 149,475 7,968 6,698 that none of the total dividend amount is subject to Stockholders’ equity 775,984 266,826 104,444 37,931 196,880 FCX CLASS B COMMON SHARES federal withholding tax. Our Class B common shares trade on the New York Stock Exchange (NYSE) under the symbol “FCX.” The For additional information, please contact the Investor FCX share price is reported daily in the financial press Relations Department. under “FMCG” in most listings of NYSE securities. At TABLE OF CONTENTS year-end 2003, the number of holders of record of our FCX BENEFICIAL OWNERS Class B common shares was 9,937. As reflected in our 2004 proxy statement, the beneficial Letter To Shareholders 2 owners of more than five percent of our outstanding Operations Overview 4 NYSE composite tape Class B common share price Class B common stock as of December 31, 2003, are Economic, Environmental and Social Overview 12 ranges during 2003 and 2002 were: Rio Tinto International Holdings Limited (13.1 percent), 2003 2002 FMR Corp. (11.1 percent) and Capital Research and Board of Directors and Management 16 Management (9.7 percent). Financial and Operating Information 17 High Low High Low Stockholder Information 77 First Quarter $19.30 $16.01 $17.84 $13.06 Second Quarter 25.70 16.72 20.83 16.60 Third Quarter 34.57 23.45 18.50 11.75 Fourth Quarter 46.74 32.73 16.96 9.95 Stockholder Information FREEPORT-McMoRan COPPER & GOLD INC. 77 APPRENTICE TRAINEES IN PT FREEPORT INDONESIA’S DEEP ORE ZONE (DOZ) underground mine, part of the Grasberg minerals complex, develop skills for careers in one of the world’s largest mining operations. THE STRENGTH OF OUR METALS COPPER AND GOLD – THE METALS FOR WHICH WE EXPLORE, MINE, MILL, SHIP AND REFINE – ARE PART OF OUR COMPANY’S NAME AND PART OF OUR STRENGTH. AS THE WORLD’S INDUSTRY-LEADING LOW-COST PRODUCER OF COPPER AND GOLD, WE REMAIN POISED TO SUCCEED IN A GLOBAL MARKETPLACE THAT IN 2003 PLACED INCREASING VALUE ON THESE IMPORTANT METALS. THE METALS ALONE, HOWEVER, DO NOT MAKE A COMPANY.WE ARE PRIMARILY A COMPANY OF PEOPLE: PEOPLE DRIVEN TO EXPLORE AND MINE IN ONE OF THE WORLD’S REMOTE CORNERS; PEOPLE WHO ARE MOTIVATED TO SUCCEED, AND TO CARE FOR ONE ANOTHER, FOR THE COMMUNITIES AND THE ENVIRONMENT IN OUR AREAS OF OPERATIONS. THUS, IT WAS THE STRENGTH OF OUR “METTLE”– THE PEOPLE OF FREEPORT-MCMORAN COPPER & GOLD INC. (FCX) AND ITS OPERATING AFFILIATES – THAT LED US IN 2003 AMID BOTH PROSPERITY AND ADVERSITY. THE STRENGTH OF OUR METALS TO OUR SHAREHOLDERS: In many ways, 2003 was a record year for the company Even though we have always placed a high priority and our shareholders. We sold 1.3 billion pounds of on safety and our safety record compares very favorably copper and 2.5 million ounces of gold net to the to U.S. and international statistics for the mining interests of PT Freeport Indonesia, our Indonesian industry, our safety performance in 2003 was mining affiliate. We reported revenues of $2.2 billion, unacceptable. We have taken significant steps toward the highest total ever, and record-low average annual improving our safety and management efforts going unit cash production costs – a credit of ($0.02) per into 2004. pound of copper, net of gold and silver credits. Our outlook for 2004 and 2005 is very promising Our operating cash flows were $572 million, the for two reasons: the strength of our employees’ fifth consecutive year of cash flows in excess of commitment and the strength of our metals. Our $500 million. We successfully completed a series of workforce in Indonesia is a close-knit family. In the wake transactions to reduce debt, inclusive of cash and of tragedy, we pulled together and faced the challenge restricted investments, by $643 million – more than with determination. For example, with the ore from the 27 percent – to improve our balance sheet and pit reduced, our underground mine team set numerous enhance our financial flexibility. Our Board initiated a operating records, including a new daily production common stock dividend in February and later increased record of over 58,000 metric tons. We are proud of it to $0.80 cents per share annually. The value of our our workforce and our management team and consider common stock increased 150 percent during the year. them to be among the best in the world. The year also included challenges and sadness for “The Strength of our Metals” is the theme for our our Freeport family.