Freeport McMoran Inc – ‘10-K’ for 12/31/93 – EX-18.1

As of:  Thursday, 3/31/94   ·   For:  12/31/93   ·   Accession #:  950103-94-1946   ·   File #:  1-08124

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         48±   197K 
 2: EX-11.1     Statement re: Computation of Earnings Per Share        1      8K 
 3: EX-12.1     Statement re: Computation of Ratios                    1      8K 
 4: EX-13.1     Annual or Quarterly Report to Security Holders        34±   158K 
 5: EX-18.1     Letter re: Change in Accounting Principles             2±    11K 
 6: EX-21.1     Subsidiaries of the Registrant                         1      5K 
 7: EX-23.1     Consent of Experts or Counsel                          1      6K 
 8: EX-24.1     Power of Attorney                                      1      6K 
 9: EX-24.2     Power of Attorney                                     10±    49K 
10: EX-99.1     Miscellaneous Exhibit                                 42±   173K 
11: EX-99.2     Miscellaneous Exhibit                                 39±   157K 

EX-18.1   —   Letter re: Change in Accounting Principles

                                Exhibit 18.1
March 25, 1994                                                                  

Freeport-McMoRan Inc.                                                           
1615 Poydras Street                                                             
New Orleans, LA  70112                                                          

RE:   FORM 10-K REPORT FOR THE YEAR ENDED DECEMBER 31, 1993                     

This  letter  is written  to  meet  the  requirements  of Regulation  S-K       
calling  for  a  letter  from  a   registrant's  independent  accountants       
whenever there has been a change in accounting principle or practice.           

We have been informed that, as of January 1, 1993, Freeport-McMoRan  Inc.       
(FTX) changed its methods of accounting for the following items:                

1.  TURNAROUNDS - the accounting  for maintenance turnarounds was changed       
from the deferral method  to the direct expense method.   Previously,   
FTX  deferred  costs  related   to  periodic  scheduled   maintenance   
(turnarounds)  when incurred  and amortized  them on  a straight-line   
basis,  generally over  six  months  to  two  years  until  the  next   
scheduled  turnaround.   According  to the  management  of FTX,  this   
change was made  to conform FTX's policy with that  which is followed   
by  IMC-Agrico Company, a joint venture to which substantially all of   
FTX's phosphate fertilizer production assets were contributed on July   
1, 1993.                                                                

2.  DEFERRED CHARGES - the accounting for deferred charges was changed to       
provide for deferral of only those  costs that directly relate to the   
acquisition,  construction  and  development  of assets  and  to  the   
issuance of debt and related  instruments.  Previously, certain other   
costs  which benefitted  future periods  were deferred  and amortized   
over the  period  benefitted.    According to  FTX  management,  they   
believe  this change provides  a better measure of operating results.   
In  addition, the administrative costs  of accounting for assets will   
be reduced by not deferring any relatively insignificant expenditures   
that do not have a material effect on measuring periodic net income.    

3.  MANAGEMENT INFORMATION SYSTEMS (MIS)  COSTS - Costs of MIS  equipment       
and software that have  a material impact on periodic  measurement of   
net  income  are  capitalized  and  amortized  over  their  estimated   
productive lives.  Other MIS costs, including equipment and purchased   
software  that  involve  relatively  immaterial   amounts  (currently   
individual expenditures  of less  than $500,000) and  short estimated   
productive lives  (currently less  than three  years) are  charged to   
expense  when  incurred.    Previously,  most  expenditures  for  MIS   
equipment and  purchased software  were capitalized.   The accounting   
for MIS  costs was changed to  recognize the rapid rate  of change in   
MIS,  which  results  in  short productive  lives  of  equipment  and   
software and a need  for continuing investments.  Generally  within a   
two-to-three year  period, if such  hardware has  not been  replaced,   
significant  upgrades will  have been  required.   Within  two years,   
maintenance  costs  on existing  equipment  often  equals or  exceeds   
replacement cost.   Software is  subject to constant  modification to   
meet the needs  of the changing hardware environment, as  well as the   
changing  business environment.    Reasonable  business judgement  is   
required  in   determining  appropriate  application   of  accounting   
principles,   including   judgement  regarding   the  cost   and  the   
materiality of the impact of accounting precision.                      

A complete  coordinated set  of  financial  and reporting  standards  for       
determining the preferability  of accounting principles  among acceptable       
alternative  principles  has  not  been  established  by  the  accounting       
profession for the  items referred  to above.   Thus, we  cannot make  an       
objective determination  of whether the  changes in accounting  described       
in the preceding paragraph  are to preferable methods.  However,  we have       
reviewed  the pertinent  factors, including  those  related to  financial       
reporting,  in these  particular  cases on  a  subjective basis,  and our       
opinion stated below is based on our determination made in this manner.         

We are of the opinion that FTX's changes in methods  of accounting are to       
acceptable  alternative methods  of  accounting,  which, based  upon  the       
reasons stated above  for the respective changes (including the costs and       
benefits of  alternative principles  and the  related materiality  of the       
application thereof)  and our discussions with  you, are  also preferable       
under  the circumstances in these particular cases.   In arriving at this       
opinion, we have relied on  the business judgement and  business planning       
of your management.                                                             

                     Very truly yours,

                         Arthur Andersen & Co.

New Orleans, Louisiana                                                          
January 25, 1994                                                                

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-K’ Filing		Date		Other Filings
Filed on:		3/31/94		10-Q,  DEF 14A
		3/25/94
		1/25/94
For Period End:		12/31/93
		7/1/93
		1/1/93
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