News Release Details

FCX Reports Second-Quarter and Six-Month 2007 Results

07/25/07

PHOENIX--(BUSINESS WIRE)--Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX):

HIGHLIGHTS
  • Net income for second-quarter 2007 (including special items discussed below) totaled $1.1 billion, $2.62 per share, compared with net income of $367 million, $1.74 per share, for the second quarter of 2006. Net income for the first six months of 2007 totaled $1.6 billion, $4.80 per share, compared with net income of $619 million, $2.97 per share, for the first six months of 2006.
  • FCXs consolidated sales from its mines totaled 1.0 billion pounds of copper, 913 thousand ounces of gold and 15 million pounds of molybdenum for second-quarter 2007 and 1.5 billion pounds of copper, 1.9 million ounces of gold and 17 million pounds of molybdenum for the first six months of 2007.
  • Full-year 2007 pro forma projected consolidated sales from FCXs mines, including pre-acquisition Phelps Dodge sales, approximate 3.9 billion pounds of copper, 2.1 million ounces of gold and 68 million pounds of molybdenum, including 900 million pounds of copper, 125 thousand ounces of gold and 16 million pounds of molybdenum for third-quarter 2007.
  • FCXs operating cash flows approximated $2.1 billion for second-quarter 2007 and $2.8 billion for the first six months of 2007, including Phelps Dodges amounts beginning March 20, 2007. Assuming average prices of $3.25 per pound for copper, $650 per ounce for gold and $25 per pound for molybdenum for the remainder of 2007, operating cash flows would exceed $6 billion for 2007, including over $3.2 billion for the second half of 2007.
  • FCX capital expenditures approximated $530 million for second-quarter 2007 and $672 million for the first six months of 2007. Capital expenditures are expected to approximate $1.8 billion for 2007.
  • Total debt approximated $9.8 billion and consolidated cash was $2.1 billion at June 30, 2007, compared with total debt of $12.0 billion and consolidated cash of $3.1 billion at March 31, 2007. Assuming average prices of $3.25 per pound for copper, $650 per ounce for gold and $25 per pound for molybdenum for the remainder of 2007, total debt at year-end 2007 would approximate $8.2 billion and cash would approximate $1.7 billion.

SUMMARY FINANCIAL AND OPERATING DATA


Second Quarter
Six Months

2007
2006
2007a
2006
Financial Data (in millions, except per share amounts)







Revenues $5,807b
$1,426
$8,110b
$2,512c
Operating income $2,399b,d


$739
$3,578b,d


$1,271c
Net income applicable to common stocke $1,104b,d,f


$367
$1,580b,d,f


$619c
Diluted net income per share of common stockg $2.62b,d,f
$1.74
$4.80b,d,f


$2.97c
Diluted average common shares outstandingg, h 446
222
346
222
Operating cash flows $2,081
$500
$2,750
$376i
Capital expenditures $530
$58
$672
$110









Operating Data Sales from Mines







Copper (millions of recoverable pounds)







FCXs consolidated share 1,010
220
1,530
445
Average realized price per pound $3.33 b $3.33
$3.32 b $3.27









Gold (thousands of recoverable ounces)







FCXs consolidated share 913
278
1,869
750
Average realized price per ounce $658.36
$613.77
$659.51
$492.73c











Molybdenum (millions of recoverable pounds)







FCXs consolidated share 15
N/A
17
N/A
Average realized price per pound $24.83
N/A
$24.68
N/A

Pro Forma Financial Data. Pro forma financial results assume that FCX acquired Phelps Dodge effective January 1, 2007, for the 2007 periods and effective January 1, 2006, for the 2006 periods. The most significant adjustments relate to the impact of fair value adjustments to inventories (including mill and leach stockpiles) and property, plant, equipment and development costs using March 19, 2007, metals prices and assumptions.


Second Quarter
Six Months

2007
2006
2007
2006
Financial Data (in millions, except per share amounts)







Revenues $5,807b
$4,418b
$10,647b
$7,729b,c


Operating income $2,371b,d


$1,246b,d


$3,950b,d


$1,654b,c,d


Net income applicable to common stocke $1,086b,d,f


$314b,d


$1,681b,d,f


$241b,c,d


Diluted net income per share of common stock $2.57b,d,f


$0.82b,d


$4.05b,d,f


$0.64b,c,d


Diluted average common shares outstanding 447
406
446
374

Note:

Disclosures of after-tax amounts throughout this release are calculated by reference to the applicable tax rate.

a.

Includes Phelps Dodge results beginning March 20, 2007.

b.

Actual amounts include charges to revenues for noncash mark-to-market accounting adjustments on Phelps Dodge's copper price protection programs totaling $130 million ($80 million to net income or $0.18 per share) and a reduction in average realized prices of $0.13 per pound of copper in second-quarter 2007 and $168 million ($103 million to net income or $0.30 per share) and a reduction in average realized prices of $0.11 per pound in the 2007 six-month period, representing the increase in the mark-to-market liability to fair value of $592 million at June 30, 2007.


Pro forma amounts totaled $130 million ($80 million to net income or $0.18 per share) in second-quarter 2007, $677 million ($515 million to net income or $1.27 per share) in second-quarter 2006, $188 million ($116 million to net income or $0.26 per share) in the 2007 six-month period and $1.1 billion ($813 million to net income or $2.17 per share) in the 2006 six-month period.

c.

Includes loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II totaling $69 million ($37 million to net income or $0.17 per share for actual and $0.10 per share for pro forma) and a reduction in average realized prices of $92.61 per ounce for the revenue adjustment relating to the redemption.

d.

Actual amounts include the purchase accounting impact of the increase in the carrying amount of Phelps Dodge's property, plant, equipment and development costs and metals inventories totaling $454 million ($285 million to net income or $0.64 per share) in second-quarter 2007 and $578 million ($364 million to net income or $1.05 per share) in the 2007 six-month period.


Pro forma amounts totaled $483 million ($304 million to net income or $0.68 per share) in second-quarter 2007, $461 million ($290 million to net income or $0.71 per share) in second-quarter 2006, $1.1 billion ($719 million to net income or $1.61 per share) in the 2007 six-month period and $1.2 billion ($733 million to net income or $1.96 per share) in the 2006 six-month period.

e.

After preferred dividends.

f.

Actual amounts include net losses on early extinguishment of debt totaling $47 million ($35 million to net income or $0.08 per share) in second-quarter 2007 and $135 million ($110 million to net income or $0.32 per share) in the 2007 six-month period for debt prepayments. Also includes gains in the 2007 periods totaling $38 million ($23 million to net income or $0.05 per share in second-quarter 2007 and $0.07 per share in the 2007 six-month period) on the sale of marketable equity securities.


Pro forma amounts include net losses on early extinguishment of debt in the 2007 periods totaling $47 million ($35 million to net income or $0.08 per share) for debt prepayments. Also includes gains in the 2007 periods totaling $38 million ($23 million to net income or $0.05 per share) on the sale of marketable equity securities.

g.

Reflects assumed conversion of FCX's 7% Convertible Senior Notes and 5 1/2% Convertible Perpetual Preferred Stock. Also reflects assumed conversion of FCX's 6 3/4% Mandatory Convertible Preferred Stock, which was issued on March 28, 2007. See Note f on page IV.

h.

On March 19, 2007, FCX issued 136.9 million common shares to acquire Phelps Dodge. On March 28, 2007, FCX sold 47.15 million common shares. Common shares outstanding on June 30, 2007, totaled 382 million. Assuming conversion of the instruments discussed in Note g above, total potential common shares outstanding would be 444 million at June 30, 2007.

i.

Includes working capital uses of $519 million.

The following table summarizes the estimated impacts of fair value adjustments on 2007 production costs and depreciation, depletion and amortization expense resulting from the acquisition of Phelps Dodge. These amounts do not affect cash flows and are based on the preliminary purchase price allocations and projected sales volumes. Changes to fair value estimates of inventories (including mill and leach stockpiles) and/or property, plant and equipment, as well as changes in the timing of quarterly sales volumes, could result in actual amounts differing significantly from those shown below. Additionally, inventories (including mill and leach stockpiles) are subject to lower of cost or market assessments, and significant declines in metals prices could result in future impairment charges.


2007

First
Second
Third
Fourth


Quarter
Quarter
Quarter
Quarter
Total
(In millions) Actual
Actual
Estimate
Estimate
Estimate
Production costs $ 96
$ 268
$ 100
$ 40
$ 504
Depreciation, depletion and amortization
28

186

200

210

624
Total $ 124
$ 454
$ 300
$ 250
$ 1,128















Impact on net income $ 79
$ 285
$ 189
$ 158
$ 711















Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported second-quarter 2007 net income applicable to common stock of $1.1 billion, $2.62 per share, compared with net income of $367 million, $1.74 per share, for the second quarter of 2006. For the six months ended June 30, 2007, FCX reported net income of $1.6 billion, $4.80 per share, compared with $619 million, $2.97 per share, in the 2006 period. FCXs six-month 2007 financial and operating results include its wholly owned subsidiary Phelps Dodges results following its acquisition by FCX on March 19, 2007.

FCX recorded its preliminary allocation of the approximate $26 billion purchase price to Phelps Dodges assets and liabilities based on estimated fair values as of March 19, 2007. The increases to property, plant, equipment and development costs and metals inventories (including mill and leach stockpiles) resulting from this preliminary purchase price allocation resulted in higher cost of sales of $454 million ($285 million to net income or $0.64 per share) for the second quarter of 2007 and $578 million ($364 million to net income or $1.05 per share) for the first six months of 2007. (See table on page 3.) These items do not affect operating cash flows.

Second-quarter 2007 results also included (1) charges for noncash mark-to-market accounting adjustments on Phelps Dodges copper price protection programs totaling $130 million ($80 million to net income or $0.18 per share), (2) net losses on debt reductions totaling $47 million ($35 million to net income or $0.08 per share), including $30 million ($25 million to net income or $0.06 per share) for partial prepayment of borrowings related to the acquisition of Phelps Dodge and $17 million ($10 million to net income or $0.02 per share) for FCXs redemption of its 10?% Senior Notes and (3) gains totaling $38 million ($23 million to net income or $0.05 per share) for the sale of marketable equity securities. For the first six months of 2007, charges for noncash mark-to-market accounting adjustments on Phelps Dodges copper price protection programs totaled $168 million ($103 million to net income or $0.30 per share) and net losses on debt reductions totaled $135 million ($110 million to net income or $0.32 per share) primarily for partial prepayment of borrowings related to the acquisition of Phelps Dodge.

Results for the first six months of 2006 included net losses totaling $71 million ($38 million to net income or $0.17 per share), including a $69 million ($37 million to net income or $0.17 per share) loss on the redemption of FCXs Gold-Denominated Preferred Stock, Series II and $2 million ($1 million to net income or $0.01 per share) for conversion of FCXs 7% Convertible Senior Notes due 2011 and purchases of 10?% Senior Notes.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, Chief Executive Officer, said, Our second-quarter financial performance reflects strong results in our North American, South American and Indonesian operations, and a continuation of positive market conditions for copper, gold and molybdenum. The outlook for our business is strong and we anticipate continuing to generate strong cash flows which will be used to enhance shareholder value through investments in attractive growth projects, debt reduction and cash returns to shareholders.

SUMMARY CONTRIBUTION ANALYSIS

FCXs operating performance, including Phelps Dodges results beginning March 20, 2007, and the impact of purchase accounting adjustments, is shown below for the 2007 periods (in millions):




Operating
Net

Revenues
Income
Income
Three Months Ended June 30, 2007








FCX, excluding Phelps Dodge $ 2,035
$ 1,269
$ 471a
Phelps Dodge resultsb
3,772

1,573

935
Purchase accounting:








Inventories and stockpiles
-

(268)

(168)
Property, plant and equipment
-

(186)

(117)
Other
-

11

(17)
Consolidated $ 5,807
$ 2,399
$ 1,104










Six Months Ended June 30, 2007








FCX, excluding Phelps Dodge $ 3,822
$ 2,355
$ 923a
Phelps Dodge resultsb
4,288

1,790

1,038
Purchase accounting:








Inventories and stockpiles
-

(364)

(229)
Property, plant and equipment
-

(214)

(135)
Other
-

11

(17)
Consolidated $ 8,110
$ 3,578
$ 1,580

a.

Includes net losses on early extinguishment of debt totaling $47 million ($35 million to net income or $0.08 per share) in second-quarter 2007 and $135 million ($110 million to net income or $0.32 per share) in the 2007 six-month period for debt prepayments. Also includes net interest expense totaling $155 million ($132 million to net income or $0.30 per share) in second-quarter 2007 and $190 million ($162 million to net income or $0.47 per share) in the 2007 six-month period for new debt used to acquire Phelps Dodge.

b.

Includes charges to revenues for noncash mark-to-market accounting adjustments on Phelps Dodge's 2007 copper price protection programs totaling $130 million ($80 million to net income or $0.18 per share) in second-quarter 2007 and $168 million ($103 million to net income or $0.30 per share) in the 2007 six-month period, representing the increase in the mark-to-market liability to fair value of $592 million at June 30, 2007. With the acquisition of Phelps Dodge, FCX assumed Phelps Dodge's copper hedging contracts for which the price of 486 million pounds of copper to be sold in 2007 is capped at $2.00 per pound. These copper price protection programs will mature at December 31, 2007, and settle in the first quarter of 2008 based on the average LME price for 2007. FCX does not currently intend to enter into similar hedging programs in the future.

OPERATIONS

FCXs operating results, including the results of PT-FIs mining operations and the smelting and refining operations of Atlantic Copper and PT-FIs 25%-owned affiliate PT Smelting, together with pro forma Phelps Dodge results, follow. Second-quarter 2007 reflects actual results. Pro forma results for the 2007 six-month period and the 2006 periods assume inclusion of the Phelps Dodge operations effective January 1, 2006.


Second Quarter
Six Months

2007
2006
2007
2006

Actual
Pro forma
Pro forma
Pro forma
Consolidated Operating Data







Copper (millions of recoverable pounds)







Production 971
854
2,047
1,684
Salesa 1,010
843
2,035
1,677
Average realized price per pound, excluding hedging $3.46
$3.24
$3.26
$2.93
Average realized price per pound, including hedging $3.33
$2.44
$3.21
$2.29
Unit net cash costsb $0.53
$0.74
$0.47
$0.65
Gold (thousands of recoverable ounces)







Production 825
340
1,927
838
Salesa 913
311
1,890
818
Average realized price per ounce $658.36
$611.61
$657.96
$494.15c
Molybdenum (millions of recoverable pounds)







Production 18
18
35
35
Salesa 15
18
34
35
Average realized price per pound $24.83
$21.04
$23.83
$21.11

a.

Excludes sales of purchased metal.

b.

Reflects weighted average unit net cash costs, net of by-product credits, for all FCX mines. For reconciliations of unit net cash costs per pound by geographic region to production and delivery costs applicable to sales reported in FCX's consolidated financial statements and pro forma consolidated financial results refer to the schedule, "Product Revenues and Production Costs," available on our web site, "www.fcx.com."

c.

Includes a reduction of approximately $85 per ounce for a loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II.

North American Mining. FCX operates five open-pit copper mining complexes in North America (Morenci, Bagdad and Sierrita in Arizona and Chino and Tyrone in New Mexico) and conducts molybdenum mining operations at the Henderson mine in Colorado. By-product molybdenum is produced at Sierrita, Bagdad, Chino and Morenci. In addition, a new copper mining complex is under construction at Safford, Arizona, and FCX is assessing the restart of the Climax primary molybdenum mine in Colorado. All of these mining operations are wholly owned, except for Morenci. FCX records its 85 percent joint venture interest in Morenci using the proportionate consolidation method. The North American copper mining operations are operated in an integrated fashion and have long-lived reserves with significant additional development potential.



Second Quarter
Six Months
Consolidated
2007
2006
2007
2006
North American Mining Operations
Actual
Pro forma
Pro forma
Pro forma









Copper (millions of recoverable pounds)







Production
335
334
636
654
Salesa
333
333
640
667
Average realized price per pound:







Excluding hedging
$3.41
$3.27
$3.02
$2.78
Including hedgingb
$3.02
$1.24
$2.88
$1.18









Molybdenum (millions of recoverable pounds)







Production
18
18
35
35
Salesa
15
18
34
35
Average realized price per pound
$24.83
$21.04
$23.83
$21.11

a.

Excludes sales of purchased metal.

b.

Includes impact of hedging losses related to Phelps Dodge's copper price protection programs (see footnote b on page 5).

Consolidated copper sales from North American operations totaled 1.3 billion pounds in 2006 and are expected to approximate 1.3 billion pounds for the full year 2007. Consolidated copper sales from North American operations are expected to approximate 685 million pounds in the second half of 2007.

FCX is the worlds largest producer of molybdenum through the Henderson molybdenum mine and as a by-product at several of its copper mines. The Henderson block-cave underground mining complex produces high-purity, chemical-grade molybdenum concentrates, which are further processed into value-added molybdenum chemical products. A feasibility study is nearing completion for reopening the Climax open-pit molybdenum mine, which has been on care-and-maintenance status since 1995. The Climax mine could resume operation by 2010. The feasibility study is expected to confirm the restart as an attractive economic project. Consequently, FCX began ordering certain long lead-time equipment in the second quarter of 2007.

Consolidated molybdenum sales from the primary and by-product mines totaled 69 million pounds in 2006 and are expected to approximate 68 million pounds for the full year 2007. Consolidated molybdenum sales are expected to approximate 34 million pounds in the second half of 2007.

Approximately 60 percent of FCXs expected 2007 and approximately 75 percent of expected 2008 molybdenum production is committed for sale throughout the world pursuant to annual or quarterly agreements based primarily on prevailing market prices one month prior to the time of sale. The Metals Week Dealer Oxide closing price for molybdenum on July 23, 2007, was $31.25 per pound.

Unit Net Cash Costs for North American Copper Mines. The following table summarizes second-quarter 2007 actual unit net cash costs at the North American copper mines and pro forma unit net cash costs for the second quarter of 2006 and the first six months of 2007 and 2006.


Second Quarter
Six Months

2007
2006
2007
2006

Actual
Pro forma
Pro forma
Pro forma
Per pound of copper:











Site production and delivery, after adjustments $ 1.46
$ 1.05
$ 1.39
$ 1.02
By-product credits, primarily molybdenum
(0.74)

(0.58)

(0.64)

(0.58)
Treatment charges
0.09

0.06

0.08

0.07
Unit net cash costsa $ 0.81
$ 0.53
$ 0.83
$ 0.51

a.

For a reconciliation of actual and pro forma unit net cash costs per pound to production and delivery costs applicable to actual and pro forma sales disclosed in FCX's consolidated financial statements and pro forma consolidated financial results refer to the attached schedule, "Product Revenues and Production Costs," available on our web site, "www.fcx.com."

North American unit net cash costs were higher in the second quarter of 2007 compared with the second quarter of 2006 primarily because of higher maintenance, labor and other input costs at Morenci and Bagdad and higher milling costs at Chino.

Assuming an average copper price of $3.25 per pound and an average molybdenum price of $25 per pound for the remainder of 2007 and achievement of current 2007 sales estimates, FCX estimates that its pro forma 2007 average unit net cash costs for its North American mines, including molybdenum credits, would approximate $0.84 per pound of copper. Average unit net cash costs for 2007 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the remainder of 2007.

Unit Net Cash Costs for Primary Molybdenum Mine. Second-quarter 2007 unit net cash costs of $4.15 per pound of molybdenum at the Henderson primary molybdenum mine were higher, compared with pro forma unit net cash costs of $3.31 per pound for the 2006 quarter, primarily because of higher input costs, including labor, supplies and service costs, and higher taxes. Assuming achievement of current 2007 sales estimates, FCX estimates that its pro forma 2007 average unit net cash costs for its Henderson mine would approximate $4.20 per pound of molybdenum.

South American Mining. FCX operates four copper mines in South America Candelaria, Ojos del Salado and El Abra in Chile and Cerro Verde in Peru. These operations are consolidated in FCXs financial statements, with outside ownership reported as minority interests.

FCX owns 80 percent of the Candelaria and Ojos del Salado mining complexes, which include the Candelaria open-pit and underground mines and the Ojos del Salado underground mines. These mines use certain common processing facilities to produce copper concentrates. FCX owns a 51 percent interest in El Abra, an open-pit mine producing electrowon copper cathodes. FCX owns a 53.6 percent equity interest in Cerro Verde, an open-pit mine producing both electrowon copper cathodes and copper concentrates. Cerro Verde recently completed a $900 million expansion project to process sulfide ore reserves through a new concentrator.



Second Quarter
Six Months
Consolidated
2007
2006
2007
2006
South American Mining Operations
Actual
Pro forma
Pro forma
Pro forma









Copper (millions of recoverable pounds):







Production
338
283
645
572
Sales
343
290
644
565
Average realized price per pound
$3.54
$3.14
$3.33
$2.83









Gold (thousands of recoverable ounces):







Production
28
29
52
59
Sales
28
29
53
58
Average realized price per ounce
$673.92
$583.44

$608.71


$464.85

Consolidated copper sales in the second quarter of 2007 were higher than in the second quarter of 2006 primarily reflecting the start up of expanded production at Cerro Verde and lower production at El Abra. Consolidated copper sales totaled 1.1 billion pounds from South American operations in 2006 and are expected to approximate 1.4 billion pounds for the full year 2007. Consolidated copper sales volumes from South American operations are expected to total 775 million pounds in the second half of 2007. The projected increases for full-year 2007, compared with full-year 2006, include incremental production from the new Cerro Verde concentrator.

Unit Net Cash Costs. The following table summarizes second-quarter 2007 actual unit net cash costs at the South American copper mines and pro forma unit net cash costs for the second quarter of 2006 and the first six months of 2007 and 2006.


Second Quarter
Six Months

2007
2006
2007
2006

Actual
Pro forma
Pro forma
Pro forma
Per pound of copper:











Site production and delivery, after adjustments $ 0.82
$ 0.68
$ 0.83
$ 0.71
By-product credits, primarily gold
(0.07)

(0.09)

(0.07)

(0.09)
Treatment charges
0.21

0.20

0.19

0.18
Unit net cash costsa $ 0.96
$ 0.79
$ 0.95
$ 0.80

a.

For a reconciliation of actual and pro forma unit net cash costs per pound to production and delivery costs applicable to actual and pro forma sales disclosed in FCX's consolidated financial statements and pro forma consolidated financial results refer to the schedule, "Product Revenues and Production Costs," available on our web site, "www.fcx.com."

South American unit net cash costs were higher in the second quarter of 2007 compared with the second quarter of 2006 primarily because of Cerro Verde mill ramp-up activities, higher employee-related costs at Cerro Verde and Candelaria and additional costs associated with the voluntary contribution program, and higher equipment maintenance and longer hauls at Candelaria.

Assuming achievement of current 2007 sales estimates, FCX estimates that its pro forma annual 2007 average unit net cash costs for its South American mines, including gold credits, would approximate $0.90 per pound of copper.

Indonesian Mining. Through its 90.6 percent owned subsidiary PT-FI, FCX operates the worlds largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia. PT-FI reported higher second-quarter 2007 sales volumes compared with the second quarter of 2006, primarily because of higher ore grades. PT-FIs share of sales totaled 334 million pounds of copper and 880 thousand ounces of gold. Gold sales were approximately 300 thousand ounces higher than previous estimates because of higher ore grades.

Consolidated
Second Quarter
Six Months
Indonesian Mining Operations
2007
2006
2007
2006










Copper (millions of recoverable pounds):








Production
298
237
766
458
Sales
334
220
751
445
Average realized price per pound
$3.43
$3.33
$3.40
$3.27










Gold (thousands of recoverable ounces):








Production
795
307
1,869
769
Sales
880
278
1,827
750
Average realized price per ounce
$657.91
$613.77
$659.43
$492.73a

a.

Amount was $585.34 before a loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II.

FCXs consolidated share of annual sales from Indonesia in 2007 is projected to approximate 1.1 billion pounds of copper and 2.0 million ounces of gold. PT-FIs estimated 2007 gold sales are higher than the 1.8 million ounces previously estimated primarily because of higher ore grades. At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production, resulting in varying quarterly and annual sales of copper and gold. PT-FI will be mining in a relatively low-grade section of the Grasberg open pit in the second half of 2007. As a result, second-half 2007 sales volumes, totaling approximately 365 million pounds of copper and 170 thousand ounces of gold, are expected to be significantly lower than the first-half volumes. PT-FI recently reached agreement for a new two-year labor agreement that expires in September 2009.

Unit Net Cash Costs. PT-FIs unit net cash (credits) costs, including gold and silver credits, averaged a net credit of $0.18 per pound of copper during the second quarter of 2007, compared with a net cost of $0.98 per pound in the 2006 quarter. The lower unit net cash costs in the 2007 quarter compared with the 2006 quarter primarily reflect higher copper and gold volumes and higher gold prices. Unit site production and delivery costs will vary with fluctuations in production volumes because of the primarily fixed nature of PT-FIs cost structure.


Second Quarter
Six Months

2007
2006
2007
2006
Per pound of copper:











Site production and delivery, after adjustments

$ 1.14
$ 1.23
$ 0.92
$ 1.23
Gold and silver credits
(1.79)

(0.85)

(1.65)

(1.07)
Treatment charges
0.33

0.49

0.35

0.43
Royalties
0.14

0.11

0.13

0.09
Unit net cash (credits) costsa $ (0.18)
$ 0.98
$ (0.25)
$ 0.68

a.

For a reconciliation of unit net cash (credits) costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements refer to the schedule, "Product Revenues and Production Costs," available on our web site, "www.fcx.com."

Assuming average copper prices of $3.25 per pound and average gold prices of $650 per ounce for the remainder of 2007 and achievement of current 2007 sales estimates, PT-FI estimates that its annual 2007 unit net cash costs, including gold and silver credits, would approximate $0.44 per pound. Because the majority of PT-FIs costs are fixed, unit costs vary with the volumes sold and the price of gold, and are therefore currently projected to be significantly higher during the second half of 2007 than in the first half of 2007. Unit net cash costs for 2007 would change by less than $0.01 per pound for each $25 per ounce change in the average price of gold for the remainder of 2007. The London P.M. gold fixing price closed at $684.30 per ounce on July 24, 2007.

OTHER ITEMS

At June 30, 2007, FCXs consolidated copper sales included 490 million pounds of copper, priced at an average of $3.45 per pound, subject to final pricing over the next several months. Each $0.05 change in the price realized from the June 30, 2007, price would result in an approximate $15 million effect on FCXs 2007 net income. The LME closing spot price for copper on July 24, 2007 was $3.66 per pound. Second-quarter 2007 adjustments to concentrate sales recognized in prior quarters increased revenues by $180 million ($95 million to net income or $0.21 per share) compared with an increase of $147 million ($78 million to net income or $0.35 per share) in the second quarter of 2006.

FCXs international wire and cable business, Phelps Dodge International Corporation (PDIC), which operates factories in nine countries throughout Latin America, Asia and Africa, is engaged in the manufacturing of energy cables for various industries. PDIC had revenues of $364 million and record operating income of $45 million in the second quarter of 2007. FCX may consider a sale of its international wire and cable business.

Atlantic Copper, FCXs wholly owned Spanish smelting unit, reported an operating loss of $4 million in the second-quarter 2007, compared with operating income of $22 million in the 2006 period. In June 2007, Atlantic Copper successfully completed its scheduled 23-day maintenance turnaround which impacted operating results by $16 million in the second quarter of 2007 and is expected to impact third-quarter 2007 operating results by $10 million, including a $7 million impact from lower volumes. Major maintenance turnarounds typically occur approximately every nine years for Atlantic Copper, with significantly shorter term maintenance turnarounds occurring in the interim.

FCX defers recognizing profits on PT-FIs sales to Atlantic Copper and on 25 percent of PT-FIs sales to PT Smelting, PT-FIs 25 percent-owned Indonesian smelting unit, until the final sales to third parties occur. Changes in these net deferrals resulted in an addition to FCXs net income totaling $7 million, $0.02 per share, in the second quarter of 2007, and a reduction to net income of $103 million, $0.30 per share, in the first six months of 2007. For the 2006 periods, changes in these net deferrals resulted in additions to FCXs net income totaling $18 million, $0.08 per share, in the second quarter and $57 million, $0.26 per share, in the first six months. At June 30, 2007, FCXs net deferred profits on PT-FI concentrate inventories at Atlantic Copper and PT Smelting to be recognized in future periods net income after taxes and minority interest sharing totaled $203 million. Based on copper prices of $3.25 per pound and gold prices of $650 per ounce for the third quarter of 2007 and current shipping schedules, FCX estimates that the net change in these deferred profits on intercompany sales will result in an increase to net income of approximately $100 million in the third quarter of 2007. The actual change in deferred intercompany profits may differ substantially from this estimate because of changes in the timing of shipments to affiliated smelters and metal prices.

DEVELOPMENT and EXPLORATION ACTIVITIES

Development Activities. FCX has significant development activities under way to expand its copper production capacity, extend its mine lives and develop large-scale underground ore bodies. Current major projects include the recent expansion of Cerro Verde; construction of a major new mining complex at Safford, Arizona; the concentrate-leach, direct-electrowinning facility being constructed at Morenci; a sulfide leach project to extend the mine life at El Abra; various projects to develop the large-scale, high-grade underground ore bodies in the Grasberg district and development of the highly prospective Tenke Fungurume project in the Democratic Republic of Congo.

The mill restart at Morenci is ramping-up with the achievement of operating capacity expected in the third quarter of 2007. This project, which includes construction of a concentrate-leach, direct-electrowinning facility, is expected to provide an incremental 115 million pounds of copper per year. The concentrate-leach project uses Phelps Dodges proprietary medium-temperature, pressure-leaching and direct electrowinning technology which will enhance cost savings by processing concentrate on-site instead of shipping concentrate to smelters for treatment and by providing acid for leaching operations. Mill restart and construction of the concentrate-leach, direct-electrowinning facility required a total capital investment of approximately $250 million.

The Safford copper mine is expected to produce ore from two open-pit copper mines located in southeastern Arizona and includes a solution extraction/electrowinning facility which is scheduled for start-up in early 2008. Construction commenced in August 2006 and the project is expected to be completed in late 2007, with ramp-up to full production of approximately 240 million pounds per year in the first half of 2008. The Safford mining complex will require a total capital investment of approximately $580 million. FCX believes there is significant additional exploration and development potential in this district, including the large Lone Star project.

Cerro Verde has recently completed an approximate $900 million mill expansion project to process sulfide ore reserves through a new concentrator. Processing of the sulfide ore began in the fourth quarter of 2006 and in June 2007, the mill reached design capacity of 108,000 metric tons of ore per day. With the completion of the expansion, copper production at Cerro Verde initially is expected to approximate 650 million pounds per year (approximately 348 million pounds per year for FCXs share). In addition, the expansion is expected to produce an average of approximately 8 million pounds of molybdenum per year (approximately 4 million pounds per year for FCXs share) for the next five years. Cerro Verde also has a long-term contract that provides for fixed treatment and refining charges through 2011 on approximately 50 percent of its projected copper concentrate production.

At the end of 2006, a feasibility study was completed to evaluate the development of the large sulfide deposit at El Abra. This project would extend the mine life by nine years and copper production from the sulfides is targeted to begin in 2010. The existing facilities at El Abra will be used to process the additional reserves, minimizing capital spending requirements. Total initial capital for the project is approximately $350 million, the majority of which will be spent between 2008 and 2011. In March 2007, an environmental impact study associated with the sulfide project was submitted to Chilean authorities.

Indonesia. PT-FI has several projects in progress throughout the Grasberg District, including developing its large-scale underground ore bodies located beneath and adjacent to the Grasberg open pit. In the second quarter of 2007, PT-FI completed the expansion of the DOZ mine to 50,000 metric tons of ore per day and is working towards a further expansion to 80,000 metric tons per day. Other projects in progress include the development of the high-grade Big Gossan mine, expected to ramp-up to full production of 7,000 metric tons per day in late 2010; and the continued development of the Common Infrastructure project, which will provide access to the Grasberg underground ore body, the Kucing Liar ore body and future development of the area containing the DOZ mine.

Africa. FCX holds an effective 57.75 percent interest in the Tenke Fungurume copper/cobalt mining concessions in the Katanga province of the Democratic Republic of Congo. FCX is the operator of the project. The initial project at Tenke Fungurume is based on ore reserves of 103 million metric tons with ore grades of 2.1 percent copper and 0.3 percent cobalt. Based on the current mine plan, ore grades for the first ten years are expected to average 4.6 percent copper and 0.4 percent cobalt. During the second quarter of 2007, FCX advanced earthworks activities and completed an arrangement for electrical power to be supplied for the Tenke Fungurume project.

Operations are targeted to commence in 2009, with initial production of approximately 250 million pounds of copper and approximately 18 million pounds of cobalt per year for the first 10 years. Based on the recent feasibility study, which assumes a long-term cobalt price of $12 per pound, life-of-mine unit net cash costs after by-product credits are estimated to be a net credit of $0.19 per pound of copper.

FCX is responsible for funding 70 percent of project development costs. The Tenke Fungurume project will require a capital investment of approximately $650 million, of which approximately $115 million has been spent as of June 30, 2007, including amounts spent prior to the acquisition of Phelps Dodge. For the remainder of 2007, FCX expects to spend approximately $250 million.

Exploration Activities. FCX is conducting exploration activities near its existing mines and in other high potential areas around the world. Aggregate exploration expenditures in 2007 are expected to approximate $125 million.

FCXs exploration efforts in North America include drilling within the Safford district of the Lone Star deposit, located approximately four miles from the ore body currently under development, and targets in the Morenci district. FCX is also conducting exploration activities near the Henderson ore body. In Africa, FCX is actively pursuing targets outside of the area of initial development at Tenke Fungurume and is completing a pre-feasibility study on the separate Kisanfu project.

PT-FIs 2007 exploration efforts in Indonesia will continue to test extensions of the Deep Grasberg and Kucing Liar mine complex. PT-FI also continues to evaluate targets in the area between the Ertsberg and Grasberg mineral systems from the new Common Infrastructure tunnels, possible extensions of the Deep Mill Level Zone deposit, the Ertsberg open-pit resource through surface drilling programs and the open-pit potential of the Wanagon gold prospect. During 2007, FCX resumed exploration activities suspended in recent years in certain prospective areas outside Block A (the Grasberg contract area) including the Kamopa prospect, the Ular Merah copper/gold prospect and the Wabu gold prospect.

OUTLOOK

FCXs pro forma consolidated sales volumes for 2007, including pre-acquisition Phelps Dodge sales, are currently projected to approximate 3.9 billion pounds of copper, 2.1 million ounces of gold and 68 million pounds of molybdenum. Projected sales volumes for the third quarter of 2007 approximate 900 million pounds of copper, 125 thousand ounces of gold and 16 million pounds of molybdenum. The achievement of FCXs sales estimates will be dependent, among other factors, on the achievement of targeted mining rates and expansion plans, the successful operation of production facilities, the impact of weather conditions and other factors.

Using estimated sales volumes for the remainder of 2007 and assuming average prices of $3.25 per pound of copper, $650 per ounce of gold and $25 per pound of molybdenum in the balance of the year, FCXs consolidated operating cash flows would exceed $6 billion in 2007, including over $3.2 billion projected in the second half of 2007. Each $0.20 per pound change in copper prices in the second half would affect 2007 cash flows by approximately $300 million. Each $50 per ounce change in gold prices in the second half would affect 2007 cash flows by approximately $10 million, and each $2 per pound change in molybdenum prices would affect 2007 cash flows by approximately $30 million. FCXs capital expenditures for 2007 are currently estimated to approximate $1.8 billion.

FCX expects to generate cash flows during 2007 significantly greater than its capital expenditures, minority interests distributions, dividends and other cash requirements. Assuming average prices of $3.25 per pound of copper, $650 per ounce of gold and $25 per pound of molybdenum in the balance of the year, and assuming excess cash is applied to reduce debt, total debt at year-end 2007 would approximate $8.2 billion and consolidated cash would approximate $1.7 billion.

CASH and DEBT

At June 30, 2007, FCX had consolidated cash of $2.1 billion and net cash available to the parent company of $1.4 billion as shown below (in billions):


June 30,

2007
Cash from United States operations $ 0.1
Cash from international operations
2.0
Total consolidated cash
2.1
Less minority interests share
(0.5)
Cash, net of minority interests share
1.6
Withholding tax if distributed
(0.2)
Net cash available to parent company $ 1.4

At June 30, 2007, FCX had $9.8 billion in debt, including $8.5 billion in acquisition debt, $0.9 billion in Phelps Dodge debt assumed in the transaction and $0.4 billion of previously existing FCX debt. The following table summarizes FCXs debt transactions in the second quarter of 2007 (in billions):

Total debt at March 31, 2007 $ 12.0
Borrowings
0.1
Repayments:


10?% Senior Notes due 2010
(0.3)
Term loan
(1.9)
Phelps Dodge notes
(0.1)
Total debt at June 30, 2007 $ 9.8

In the second quarter of 2007, FCX prepaid $1.9 billion of term debt and redeemed its 10?% Senior Notes due 2010 ($272 million) for $286 million. In July 2007, FCX refinanced its term debt to achieve interest cost savings and improved terms. FCX established a new $2.45 billion Term Loan A and used the proceeds to repay fully amounts borrowed under its $7.5 billion senior term loan (Term Loan B). Interest cost savings associated with this transaction approximate 0.75 percent per annum. FCX expects to record a charge of approximately $31 million to net income in the third quarter of 2007 for the early extinguishment of Term Loan B.

FINANCIAL POLICY

FCX has a long track record for maximizing shareholder values through pursuing development projects with high rates of return and returning cash to shareholders through common stock dividends and share purchases. FCXs common stock annual dividend of $1.25 per share totals approximately $475 million per year. Preferred dividends total approximately $255 million per year.

Following the significant increase in debt associated with the acquisition of Phelps Dodge, FCX placed a high priority on debt reduction. As a result of the $5.6 billion of net proceeds from the issuance of common stock and 6¾% mandatory convertible preferred stock in March 2007 and positive performance of its operations, FCX has achieved meaningful debt reduction since the Phelps Dodge acquisition. The continuation of the positive performance of FCXs operations would enable the company to reduce its debt further and to consider additional returns to shareholders. FCXs management and its Board of Directors review the companys financial policy on an ongoing basis. There are 12.2 million shares remaining under FCXs Board-authorized 20-million share open market purchase program.

FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX has a dynamic portfolio of operating, expansion and growth projects in the copper industry and is the worlds largest producer of molybdenum. The Grasberg mining complex, the worlds largest copper and gold mine in terms of reserves, is the companys key asset. FCX also operates significant mining operations in North and South America and is developing the potential world-class Tenke Fungurume project in the Democratic Republic of Congo. Additional information about FCX is available on our website at www.fcx.com.

Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which we discuss factors we believe may affect our performance in the future. Forward-looking statements are all statements other than historical facts, such as statements regarding projected ore grades and milling rates, projected sales volumes, projected unit net cash costs, projected operating cash flows, projected capital expenditures, the impact of copper, gold and molybdenum price changes, the impact of changes in deferred intercompany profits on earnings, projected debt and cash balances, and the impact of purchase accounting, including on production costs and depreciation, depletion and amortization expenses. Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments. FCX cautions readers that it assumes no obligation to update or publicly release any revisions to the forward-looking statements in this press release and, except to the extent required by applicable law, does not intend to update or otherwise revise the forward-looking statements more frequently than quarterly. Additionally, important factors that might cause future results to differ from these projections include mine sequencing, production rates, industry risks, commodity prices, political risks, weather-related risks, labor relations, currency translation risks and other factors described in FCX's Quarterly Report on Form 10-Q for the three months ended March 31, 2007, filed with the Securities and Exchange Commission (SEC).

This press release also contains certain financial measures such as unit net cash costs (credits) per pound of copper and unit net cash costs per pound of molybdenum. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCXs consolidated financial statements are available on our web site, www.fcx.com.

A copy of this press release is available on our web site, www.fcx.com. A conference call with securities analysts about second-quarter 2007 results is scheduled for today at 10:00 a.m. EDT. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the webcast live and view the slides by accessing www.fcx.com. A replay of the webcast will be available through Friday, August 17, 2007.


FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA








Three Months Ended June 30,
COPPER, Pro Formaa
Production
Sales
(millions of recoverable pounds)
2007
2006
2007
2006














MINED COPPER (FCX's net interest in %)












North America












Morenci (85%)
183b

179b


180b


179b

Bagdad (100%)
51

40


47


40

Sierrita (100%)
35

39


36


38

Chino (100%)
44

50


45


50

Tyrone (100%)
11

17


13


17

Miami (100%)
6

4


5


4

Tohono (100%)
1

1


1


1

Manufacturing and other (100%)
4

4


6


4

Total North America
335

334


333


333















South America












Candelaria/Ojos del Salado (80%)
108

108


108


107

Cerro Verde (53.6%)
142

52


132


62

El Abra (51%)
88

123


103


121

Total South America
338

283


343


290















Indonesia












Grasberg (90.6%)
298c

237c


334c


220c
Consolidated
971

854


1,010


843















Less minority participants share
159

128


164


130
Net
812

726


846


713















Consolidated sales from mines







1,010


843

Purchased copper







180


219
Total consolidated sales







1,190


1,062















Average realized price per pound












Excluding hedging






$ 3.46

$ 3.24

Including hedging






$ 3.33d

$ 2.44d














GOLD, Pro Formaa











(thousands of recoverable ounces)

























MINED GOLD (FCX's net interest in %)


























North America (100%)
2b

4b


5b


4b

South America (80%)
28

29


28


29

Indonesia (90.6%)
795c

307c


880c


278c
Consolidated
825

340


913


311















Less minority participants shares
80

35


88


32
Net
745

305


825


279















Consolidated sales from mines







913


311

Purchased gold







-


7
Total consolidated sales







913


318















Average realized price per ounce






$ 658.36

$ 611.61














MOLYBDENUM, Pro Formaa











(millions of recoverable pounds)

























MINED MOLYBDENUM (FCX's net interest in %)


























North America












Henderson (100%)
10

10


N/A


N/A

By-product (100%)
8

8


N/A


N/A
Consolidated
18

18


15


18















Purchased molybdenum







3


2
Total consolidated sales







18


20















Average realized price per pound






$ 24.83

$ 21.04














a.

The second-quarter 2006 data include Phelps Dodge's pre-acquisition results for comparative purposes only.

b.

Amounts are net of Morenci's joint venture partner's 15 percent interest.

c.

Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.


d.

Includes reductions of $0.13 per pound for second-quarter 2007 and $0.80 per pound for second-quarter 2006 for mark-to-market accounting adjustments on Phelps Dodge's copper price protection programs.



FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA

(continued)








Six Months Ended June 30,
COPPER, Pro Formaa
Production
Sales
(millions of recoverable pounds)
2007
2006
2007
2006














MINED COPPER (FCX's net interest in %)












North America












Morenci (85%)
341b

339b


332b


339b

Bagdad (100%)
93

78


93


83

Sierrita (100%)
72

82


77


87

Chino (100%)
85

103


86


103

Tyrone (100%)
24

32


25


32

Miami (100%)
9

10


13


13

Tohono (100%)
2

3


2


3

Manufacturing and other (100%)
10

7


12


7

Total North America
636c

654


640c


667















South America












Candelaria/Ojos del Salado (80%)
208

225


212


220

Cerro Verde (53.6%)
254

102


245


101

El Abra (51%)
183

245


187


244

Total South America
645c

572


644c


565















Indonesia












Grasberg (90.6%)
766d

458d


751d


445d
Consolidated
2,047

1,684


2,035


1,677















Less minority participants share
321

255


318


252
Net
1,726

1,429


1,717


1,425















Consolidated sales from mines







2,035


1,677

Purchased copper







357


414
Total consolidated sales







2,392


2,091















Average realized price per pound












Excluding hedging






$ 3.26

$ 2.93

Including hedging






$ 3.21e

$ 2.29e














GOLD, Pro Formaa











(thousands of recoverable ounces)

























MINED GOLD (FCX's net interest in %)












North America (100%)
6b

10b


10b


10b

South America (80%)
52f

59


53f


58

Indonesia (90.6%)
1,869d

769d


1,827d


750d
Consolidated
1,927

838


1,890


818















Less minority participants shares
185

84


182


82
Net
1,742

754


1,708


736















Consolidated sales from mines







1,890


818

Purchased gold







4


8
Total consolidated sales







1,894


826















Average realized price per ounce






$ 657.96

$ 494.15g














MOLYBDENUM, Pro Formaa











(millions of recoverable pounds)

























MINED MOLYBDENUM (FCX's net interest in %)












North America












Henderson (100%)
20

19


N/A


N/A

By-product (100%)
15

16


N/A


N/A
Consolidated
35h

35


34h


35















Purchased molybdenum







5


4
Total consolidated sales







39


39















Average realized price per pound






$ 23.83

$ 21.11














a.

Includes Phelps Dodge's pre-acquisition results for comparative purposes only.

b.

Amounts are net of Morenci's joint venture partner's 15 percent interest.

c.

Includes North American copper production of 258 million pounds and sales of 283 million pounds and South American copper production of 259 million pounds and sales of 222 million pounds for Phelps Dodge's pre-acquisition results.

d.

Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.

e.

Includes reductions of $0.09 per pound for the 2007 six-month period and $0.66 per pound for the 2006 six-month period for mark-to- market accounting adjustments on Phelps Dodge's copper price protection programs.

f.

Includes gold production of 21 thousand ounces and sales of 18 thousand ounces for Phelps Dodge's pre-acquisition results.

g.

Includes a reduction of approximately $85 per ounce for a loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II.

h.

Includes molybdenum production of 14 million pounds and sales of 17 million pounds for Phelps Dodge's pre-acquisition results.


FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA

(continued)










Three Months
Six Months



Ended June 30,
Ended June 30,
Statistical Data from Mining Operations, 100%a
2007
2006
2007
2006










North America (copper and molybdenum mines)

















Copper Mines


















Solution Extraction/Electrowinning (SX/EW) Operations








Leach ore placed in stockpiles (metric tons per day)
743,100
822,000
710,400
839,400

Average copper ore grade (%)
0.25
0.32
0.27
0.31

Copper production (millions of recoverable pounds)
219
233
421
452











Mill Operations








Ore milled (metric tons per day)
227,300
190,700
218,200
190,600

Average ore grade (%)








Copper
0.34
0.34
0.32
0.33

Molybdenum
0.03
0.03
0.02
0.03

Production (millions of recoverable pounds)








Copper
116
101
215
202

Molybdenum
8
8
15
16










Primary Molybdenum Mine


















Ore milled (metric tons per day)
25,400
23,300
25,000
23,300

Average molybdenum ore grade (%)
0.22
0.24
0.22
0.23

Molybdenum production (millions of recoverable pounds)
10
10
20
19










South America (copper mines)

















SX/EW Operations








Leach ore placed in stockpiles (metric tons per day)
305,200
256,000
290,700
253,300

Average copper ore grade (%)
0.42
0.47
0.40
0.46

Copper production (millions of recoverable pounds)
142
176
291
347










Mill Operations








Ore milled (metric tons per day)
168,000
62,300
154,700
61,700

Average copper ore grade (%)
0.72
0.95
0.70
1.01

Copper production (millions of recoverable pounds)
196
107
354
225










Indonesia (copper mine)

















Mill Operations








Ore milled (metric tons per day)
215,000
223,700
221,700
220,200











Average ore grade








Copper (%)
0.82
0.72
1.02
0.72

Gold (grams per metric ton)
1.63
0.67
1.82
0.79

Recovery rates (%)








Copper
91.8
84.1
91.3
83.3

Gold
88.6
76.4
88.1
78.8

Copper (millions of recoverable pounds)








Production
310
259
790
505

Sales
347
240
775
491

Gold (thousand of recoverable ounces)








Production
889
326
2,035
796

Sales
978
294
1,988
780










a.

Includes Phelps Dodge pre-acquisition results for comparative purposes only.


FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)









Three Months Ended
Six Months Ended


June 30,
June 30,


2007
2006

2007a


2006


(In Millions, Except Per Share Amounts)
Revenuesb $
5,807
$
1,426
$
8,110
$
2,512
Cost of sales:












Production and delivery

2,850c


605


3,802c


1,083

Depreciation, depletion and amortization

379c


44


495c


87

Total cost of sales

3,229


649


4,297


1,170
Exploration and research expenses

40


3


47


5
Selling, general and administrative expenses

139d


35


188d


66

Total costs and expenses

3,408


687


4,532


1,241
Operating income

2,399


739


3,578


1,271
Interest expense, net

(182)


(21)


(234)


(44)
Losses on early extinguishment and conversion of debt, net

(47)


-


(135)


(2)
Gains on sales of assets

38e


9


38e


9
Other income, net

43


6


66


11
Equity in affiliated companies net earnings

7


1


12


5
Income before income taxes and minority interests

2,258


734


3,325


1,250
Provision for income taxes

(777)


(310)


(1,237)


(532)
Minority interests in net income of consolidated subsidiaries

(313)


(42)


(427)


(69)
Net income

1,168


382


1,661


649
Preferred dividends

(64)


(15)


(81)


(30)
Net income applicable to common stock $
1,104
$
367
$
1,580
$
619














Net income per share of common stock:












Basic
$ 2.90

$ 1.95

$ 5.27

$ 3.29

Dilutedf
$ 2.62

$ 1.74

$ 4.80

$ 2.97














Average common shares outstanding:












Basic

381 g

188


300 g

188

Dilutedf

446


222


346


222














Dividends paid per share of common stock
$ 0.3125

$ 1.0625

$ 0.625

$ 1.875














a.

Includes Phelps Dodge results beginning March 20, 2007.

b.

Includes adjustments to prior period concentrate sales totaling $180 million in the 2007 quarter, $147 million in the 2006 quarter, $93 million in the 2007 six-month period and $138 million in the 2006 six-month period. In addition, charges for mark-to-market accounting adjustments for losses on Phelps Dodge's 2007 copper price protection programs totaled $130 million in the 2007 quarter and $168 million in the 2007 six-month period. The 2006 six-month period also includes a $69 million loss on the mandatory redemption of FCX's Gold- Denominated Preferred Stock, Series II.

c.

Includes impact of purchase accounting adjustments related to the Phelps Dodge acquisition, which increased production costs by $268 million in the 2007 quarter and $364 million in the 2007 six-month period and increased depreciation, depletion and amortization by $186 million in the 2007 quarter and $214 million in the 2007 six-month period.

d.

Includes approximately $60 million of additional costs relating to the acquisition of Phelps Dodge and approximately $25 million of stock-based compensation costs related to second-quarter 2007 stock option grants.

e.

Represents gains on the sale of marketable equity securities.

f.

Reflects assumed conversion of FCX's 7% Convertible Senior Notes and 5 1/2% Convertible Perpetual Preferred Stock, resulting in the exclusion of interest expense totaling less than $0.1 million in the 2007 quarter, $5 million in the 2006 quarter, $0.1 million in the 2007 six-month period and $10 million in the 2006 six-month period and dividends totaling $15 million in each of the second quarters of 2007 and 2006 and $30 million in each of the six-month periods of 2007 and 2006. The 2007 periods also include assumed conversion of FCX's 6 3/4% Mandatory Convertible Preferred Stock, of which FCX sold 28.75 million shares on March 28, 2007, reflecting exclusion of dividends totaling $49 million for the 2007 quarter and $51 million for the 2007 six-month period. The assumed conversions reflect the inclusion of 62 million common shares in the 2007 quarter, 32 million common shares in the 2006 quarter, 44 million common shares in the 2007 six-month period and 32 million common shares in the 2006 six- month period.

g.

On March 19, 2007, FCX issued 136.9 million shares to acquire Phelps Dodge; and on March 28, 2007, FCX sold 47.15 million common shares in a public offering.


FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)












June 30,

December 31,



2007

2006



(In Millions)
ASSETS







Current assets:








Cash and cash equivalents
$ 2,078

$ 907

Accounts receivable

2,455


486

Inventories

2,387


724

Mill and leach stockpiles

320


-

Prepaid expenses, restricted cash and other

215


34

Total current assets

7,455


2,151
Property, plant, equipment and development costs, net

24,302


3,099
Other assets

743


140
Trust assets

612


-
Long-term mill and leach stockpiles

530


-
Goodwill

6,992a


-
Total assets
$ 40,634

$ 5,390










LIABILITIES AND STOCKHOLDERS EQUITY







Current liabilities:








Accounts payable and accrued liabilities
$ 2,647

$ 789

Accrued income taxes

629


165

Copper price protection programs

592


-

Current portion of long-term debt and short-term borrowings

152


19

Total current liabilities

4,020


973
Long-term debt, less current portion:








Senior notes

6,951


620

Term loan

2,450


-

Project financing, equipment loans and other

236


41

Total long-term debt, less current portion

9,637


661
Other liabilities and deferred credits

1,230


298
Deferred income taxes

6,856


800

Total liabilities

21,743


2,732
Minority interests

1,524


213
Stockholders equity:








5½% Convertible perpetual preferred stock

1,100


1,100

6¾% Mandatory convertible preferred stock

2,875


-

Common stock

50


31

Capital in excess of par value

13,331


2,668

Retained earnings

2,818


1,415

Accumulated other comprehensive income (loss)

16


(20)

Common stock held in treasury

(2,823)


(2,749)

Total stockholders equity

17,367


2,445
Total liabilities and stockholders equity
$ 40,634

$ 5,390










a.

Second-quarter 2007 adjustments to the preliminary fair values assigned to assets and liabilities acquired from Phelps Dodge and adjustments to the purchase price resulted in a $387 million reduction in goodwill during the second quarter of 2007. Additional adjustments, which could be significant, are expected in future periods until FCX finalizes its evaluation of the fair value of assets and liabilities acquired.


FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)









Six Months Ended



June 30,



2007(a)


2006



(In Millions)
Cash flow from operating activities:








Net income
$ 1,661

$ 649

Adjustments to reconcile net income to net cash provided by








operating activities:








Unrealized losses on copper price protection programs

168


-

Depreciation, depletion and amortization

495


87

Minority interests in net income of consolidated subsidiaries

427


69

Noncash compensation and benefits

104


36

Losses on early extinguishment and conversion of debt, net

135


2

Gains on sales of assets

(38)


(9)

Deferred income taxes

(102)


63

Elimination (recognition) of profit on PT Freeport Indonesia sales








to PT Smelting

36


(13)

Increase in long-term mill and leach stockpiles

(101)


-

Other

46


11

(Increases) decreases in working capital, excluding amounts








acquired from Phelps Dodge:








Accounts receivable

(557)


(2)

Inventories

298


(218)

Prepaid expenses, restricted cash and other

16


(3)

Accounts payable and accrued liabilities

182


(70)

Accrued income taxes

(20)


(226)

Increase in working capital

(81)


(519

Net cash provided by operating activities

2,750


376
Cash flow from investing activities:








Acquisition of Phelps Dodge, net of cash acquired

(13,906)


-

Phelps Dodge capital expenditures

(476)


-

PT Freeport Indonesia capital expenditures

(175)


(104)

Other capital expenditures

(21)


(6)

Sale of assets and other

90


1

Net cash used in investing activities

(14,488)


(109)
Cash flow from financing activities:








Proceeds from term loans under bank credit facility

10,000


-

Repayments of term loans under bank credit facility

(7,550)


-

Net proceeds from sales of senior notes

5,880


-

Net proceeds from sale of 6¾% mandatory convertible preferred stock

2,803


-

Net proceeds from sale of common stock

2,816


-

Proceeds from other debt

227


53

Repayments of other debt

(481)


(223)

Purchases of FCX common shares

-


(100)

Cash dividends paid:








Common stock

(182)


(352)

Preferred stock

(30)


(30)

Minority interests

(314)b


(57)b

Net (payments for) proceeds from exercised stock options

(24)


14

Excess tax benefit from exercised stock options

7


22

Bank credit facilities fees and other

(243)


-

Net cash provided by (used in) financing activities

12,909


(673)
Net increase (decrease) in cash and cash equivalents

1,171


(406)
Cash and cash equivalents at beginning of year

907


764
Cash and cash equivalents at end of period
$ 2,078

$ 358










a.

Includes Phelps Dodge results beginning March 20, 2007.

b.

Represents minority interests' share of dividends.

Contacts

Freeport-McMoRan Copper & Gold Inc.
Kathleen L. Quirk, 602-366-8016
or
David P. Joint, 504-582-4203
or
Media Relations:
William L. Collier, 504-582-1750

Categories: Press Releases