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TheStreet Open House

Freeport-McMoRan Copper & Gold Inc. Reports Third-Quarter And Nine-Month 2012 Results

Stocks in this article: FCX

At June 30, 2012, FCX had provisionally priced copper sales at its copper mining operations, primarily South America and Indonesia, totaling 329 million pounds (net of intercompany sales and noncontrolling interests) recorded at an average price of $3.49 per pound. Adjustments to these provisionally priced copper sales favorably impacted third-quarter 2012 consolidated revenues by $24 million ($12 million to net income attributable to common stock or $0.01 per share), compared with adjustments to the June 30, 2011, provisionally priced copper sales that unfavorably impacted third-quarter 2011 consolidated revenues by $213 million ($100 million to net income attributable to common stock or $0.11 per share). Adjustments to the December 31, 2011, provisionally priced copper sales favorably impacted consolidated revenues by $101 million ($43 million to net income attributable to common stock or $0.05 per share) for the first nine months of 2012, compared with adjustments to the December 31, 2010, provisionally priced copper sales that unfavorably impacted consolidated revenues by $12 million ($5 million to net income attributable to common stock or $0.01 per share) for the first nine months of 2011.

At September 30, 2012, FCX had provisionally priced copper sales at its copper mining operations, primarily South America and Indonesia, totaling 325 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.72 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the September 30, 2012, provisional price recorded would have an approximate $23 million effect on its 2012 consolidated revenues ($11 million to net income attributable to common stock). The LME spot copper price closed at $3.68 per pound on October 19, 2012.

FCX defers recognizing profits on sales from its mining operations to Atlantic Copper and on 25 percent of Indonesia mining's sales to PT Smelting (PT Freeport Indonesia's 25 percent-owned Indonesian smelting unit) until final sales to third parties occur. FCX's net deferred profits on its inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $105 million at September 30, 2012. Refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings.

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