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Freeport McMoran Inc – ‘8-K/A’ for 1/3/95

As of:  Monday, 2/27/95   ·   For:  1/3/95   ·   Accession #:  351116-95-4   ·   File #:  1-08124

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  As Of                Filer                Filing    For·On·As Docs:Size

 2/27/95  Freeport McMoran Inc              8-K/A:7     1/03/95    1:32K

Amendment to Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K/A       Amendment to Current Report                           15±    64K 


Document Table of Contents

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11st Page   -   Filing Submission
"Item 7. Financial Statements and Exhibits
"Table of Contents


SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 3, 1995 FREEPORT-McMoRan INC. Delaware 1-8124 13-3051048 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation or Number) organization) 1615 Poydras Street, New Orleans, Louisiana 70112 Registrant's telephone number, including area code: (504) 582-4000 Freeport-McMoRan Inc. The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report on Form 8-K dated January 3, 1995, as set forth in the page(s) attached hereto: Item 7. Financial Statements and Exhibits. --------------------------------- (a) Financial statements of business acquired. The financial statements of the business acquired filed as part of this report are listed in the Financial Information Table of Contents appearing on page F-1 hereof. (b) Pro forma financial information. The pro forma financial statements of FTX filed as part of this report are listed in the Financial Information Table of Contents appearing on page F-1 hereof. (c) Exhibits. Not applicable. SIGNATURE ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FREEPORT-McMoRan INC. By: /s/ John T. Eads ---------------------------------- John T. Eads Assistant Vice President & Controller - Financial Reporting Date: February 27, 1995 Freeport-McMoRan Inc. Financial Information Table of Contents Pennzoil Assets Acquired Report of Independent Public Accountants F-2 Balance Sheets as of December 31, 1993 (Audited) and September 30, 1994 (Unaudited) F-3 Statements of Operations and Divisional Equity for the Year Ended December 31, 1993 (Audited) and for the Nine Months Ended September 30, 1994 (Unaudited) F-4 Statements of Cash Flows for the Year Ended December 31, 1993 (Audited) and for the Nine Months Ended September 30, 1994 (Unaudited) F-5 Notes to Financial Statements F-6 Freeport-McMoRan Inc. Unaudited Pro Forma Statement of Operations for the Year Ended December 31, 1993 F-10 Unaudited Pro Forma Statement of Operations for the Nine Months Ended September 30, 1994 F-11 Unaudited Pro Forma Condensed Balance Sheet as of September 30, 1994 F-12 Notes to Pro Forma Financial Statements F-13 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Pennzoil Company: We have audited the accompanying balance sheet attributable to the domestic sulphur operations of Pennzoil Company's sulphur division identified in Note 1 (the Business) as of December 31, 1993, and the related statements of operations and divisional equity and cash flows for the year then ended. These financial statements are the responsibility of the Business's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Business as of December 31, 1993, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Houston, Texas December 7, 1994 PENNZOIL DOMESTIC SULPHUR BUSINESS BALANCE SHEET (In Thousands) December 31, September 30, 1993 1994 ------------ ------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,320 $ 1,994 Accounts receivable 7,619 7,614 Sulphur inventories 18,895 17,416 Materials and supplies, at average cost 3,699 3,040 Other current assets 296 323 -------- ------- Total current assets 32,829 30,387 PROPERTY, PLANT AND EQUIPMENT, at cost 178,957 186,802 Less- Accumulated depreciation, depletion and amortization 113,860 166,910 -------- -------- Net property, plant and equipment 65,097 19,892 -------- -------- Total assets $ 97,926 $ 50,279 ======== ======== LIABILITIES AND DIVISIONAL EQUITY CURRENT LIABILITIES: Accounts payable $ 5,521 $ 3,616 Accrued taxes 254 1,758 Other current liabilities 4,953 3,826 -------- -------- Total current liabilities 10,728 9,200 DEFERRED INCOME TAXES 7,038 - OTHER LIABILITIES 2,523 3,919 COMMITMENTS AND CONTINGENCIES (Note 5) DIVISIONAL EQUITY: Accumulated deficit (17,672) (68,161) Contributions from parent 95,309 105,321 --------- --------- Total divisional equity 77,637 37,160 --------- --------- Total liabilities and divisional equity $ 97,926 $ 50,279 ========= ========= The accompanying notes are an integral part of these financial statements. PENNZOIL DOMESTIC SULPHUR BUSINESS STATEMENTS OF OPERATIONS AND DIVISIONAL EQUITY (In Thousands) Nine Months Year Ended Ended December 31, September 30, 1993 1994 ------------ ------------- (Unaudited) REVENUES: Net sales $65,214 $39,867 Other income, net 857 2,477 ------- ------- 66,071 42,344 ------- ------- COSTS AND EXPENSES: Cost of sales 73,184 44,702 Selling, general and administrative expenses 3,566 2,341 Management fee to Pennzoil Company (Note 4) 4,230 2,327 Depreciation, depletion and amortization 7,904 3,467 Valuation adjustment (Note 1) - 50,200 Taxes other than income 2,145 1,363 ------- ------- LOSS BEFORE INCOME TAXES (24,958) (62,056) INCOME TAX BENEFIT (8,637) (11,567) ------- ------- NET LOSS (16,321) (50,489) DIVISIONAL EQUITY: Beginning of period 79,807 77,637 Contributions from parent 14,151 10,012 ------- --------- End of period $77,637 $ 37,160 ======= ========= The accompanying notes are an integral part of these financial statements. PENNZOIL DOMESTIC SULPHUR BUSINESS STATEMENT OF CASH FLOWS (In Thousands) Nine Months Year Ended Ended December 31, September 30, 1993 1994 ------------ ------------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(16,321) $(50,489) Adjustments to reconcile net loss to net cash used in operating activities- Depreciation, depletion and amortization 7,904 3,467 Valuation adjustment - 50,200 Deferred income taxes (1,482) (7,038) (Increase) decrease in accounts receivable 10,490 (99) (Increase) decrease in inventories (4,385) 1,123 Decrease in accounts payable (10,030) (1,655) Increase (decrease) in accrued taxes (11) 1,504 Other current assets and liabilities, net 2,048 845 -------- -------- Net cash used in operating activities (11,787) (2,142) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,295) (8,262) Proceeds from sale of assets 80 66 -------- -------- Net cash used in investing activities (2,215) (8,196) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Contributions from parent 14,151 10,012 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 149 (326) CASH AND CASH EQUIVALENTS, beginning of period 2,171 2,320 -------- -------- CASH AND CASH EQUIVALENTS, end of period $ 2,320 $ 1,994 ======== ======== The accompanying notes are an integral part of these financial statements. PENNZOIL DOMESTIC SULPHUR BUSINESS NOTES TO FINANCIAL STATEMENTS (Information as of and for the nine months ended September 30, 1994, is unaudited.) 1. ORGANIZATION AND OPERATIONS: In 1986, Pennzoil Sulphur Company was organized as a Nevada Corporation and received a capital contribution of all of Pennzoil Company's (Pennzoil's) sulphur operations, including properties and related assets and liabilities. All assets and liabilities contributed were recorded at historical cost. In October 1991, Pennzoil Sulphur Company was dissolved; all assets and liabilities were transferred at cost back to Pennzoil and the operations have been operated as a separate division (Pennzoil Sulphur) of Pennzoil since that time. In October 1994, Pennzoil entered into an agreement to sell substantially all of the domestic operating assets (the Business) of Pennzoil Sulphur to Freeport-McMoRan Resource Partners, Limited Partnership (Freeport-McMoRan), pursuant to the terms of the Asset Purchase Agreement (the Agreement). As consideration under the Agreement, (a) Freeport-McMoRan will assume certain liabilities relating to or arising out of the Business, including environmental and employee severance obligations, (b) Pennzoil will receive a series of quarterly installment payments from Freeport-McMoRan based on prevailing future market prices of sulphur over a period not to exceed 20 years and (c) Freeport-McMoRan will purchase any remaining dry sulphur inventory over a 30-month period to the extent such inventory is not sold in export markets. In connection with this transaction, Pennzoil Sulphur recorded a valuation adjustment charge of $50.2 million in September 1994 to reduce Pennzoil Sulphur's carrying amounts to their net realizable value. Completion of this transaction, which is anticipated by December 31, 1994, is subject to a number of conditions, including the receipt of required governmental approvals. The Business includes only the domestic assets, liabilities, operations and cash flows of Pennzoil Sulphur. Foreign assets, liabilities, operations and cash flows of Pennzoil Sulphur are excluded as they are not included as part of the sale of operating assets to Freeport-McMoRan. Operations of the Business include the mining and marketing of sulphur produced from its Culberson County property in West Texas. Sulphur sales are made primarily to phosphate industry customers for use in the manufacture of phosphate fertilizer materials. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation - The accompanying financial statements include the accounts of the Business. All significant intradivisional accounts and transactions have been eliminated. Earnings per share data has not been provided because the Business is part of a wholly owned division of Pennzoil. Receivables - Trade receivables are presented net of an allowance for doubtful accounts of $.7 million and $.8 million at December 31, 1993, and September 30, 1994, respectively. The Business extends credit to various companies in the sulphur industry in the normal course of business. Within this industry, a concentration of credit risk exists. Because sulphur sales are primarily made to customers for use in the manufacture of phosphate fertilizer materials, changes in economic or other conditions within this industry may impact the Business's overall credit risk. At December 31, 1993, and September 30, 1994, receivables related to this group concentration were $7.5 million and $7.1 million, respectively. Decisions to extend credit and the amount of collateral required are based on management's credit evaluation of the counterparties on a case-by-case basis. Inventories - Substantially all sulphur inventories are reported at cost using the last-in, first-out (LIFO) method, which is lower than market. Inventories valued on the LIFO method totaled $18.8 million at December 31, 1993, and $17.3 million at September 30, 1994. The current cost of LIFO inventories was approximately $19.6 million and $21.2 million at December 31, 1993, and September 30, 1994, respectively. Property, Plant and Equipment - Property, plant and equipment are stated at cost. Major development expenditures at operating mines which are expected to benefit future production are capitalized and depreciated on the unit-of- production method based on estimated quantities of commercially recoverable minerals. Exploration costs associated with operating mines and development costs to maintain production of operating mines are charged to expense as incurred, as are maintenance and repair costs. Exploration costs related to specific undeveloped projects are initially capitalized. If commercially recoverable minerals are not discovered, the exploration costs are expensed. Exploration costs not identified with a specific project are charged to expense as incurred. The carrying amounts of mines are reviewed periodically, and an impairment reserve is provided as conditions warrant. Sulphur properties are generally depreciated and depleted on the unit-of- production method, except for assets having an estimated life less than the estimated life of the mineral deposits, which are depreciated on the straight- line method. The useful lives of assets being depreciated on a straight-line basis range from three to thirty-five years. Other Liabilities - Other liabilities consist of the following obligations allocated to the Business by Pennzoil (expressed in millions): December 31, September 30, 1993 1994 ------------ ------------- (Unaudited) Postretirement obligations $2.5 $2.6 Postemployment obligations - 1.3 ---- ---- $2.5 $3.9 ==== ==== Cash Flow Information - For purposes of the statement of cash flows, all highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. Income taxes either allocated by and credited to Pennzoil or paid directly to taxing authorities were $7.2 million in 1993 and $5.0 million in the nine months ended September 30, 1994. Interim Financial Data - The financial statements and related information of the Business as of and for the period ended September 30, 1994, have been prepared by management of the Business in accordance with the Securities and Exchange Commission's rules and regulations for interim financial reporting. Accordingly, these financial statements and related information have been prepared without audit, and certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of management, these financial statements include all adjustments, consisting of normal recurring entries, which are necessary for a fair presentation of the financial position and results of operations of the Business for the periods presented, and the disclosures are adequate to make the information presented not misleading. 3. FEDERAL AND STATE INCOME TAXES: The Business is allocated an amount of federal income taxes equal to the amount of federal income taxes that it would pay if it was a separate corporate entity filing a separate return. Federal and state income tax benefits consisted of the following (expressed in millions): December 31, September 30, 1993 1994 ------------ ------------- (Unaudited) Current- Federal $(6.9) $(4.6) State (.2) - Deferred (1.5) (7.0) ----- ------ Total tax benefit $(8.6) $(11.6) ===== ====== The Business s deferred tax asset and liabilities are as follows (expressed in millions): December 31, September 30, 1993 1994 ------------ ------------- (Unaudited) Deferred tax liability $7.0 $ 7.4 Deferred tax asset - (17.6) Valuation allowance - 10.2 Net deferred tax asset - (7.4) ---- ----- Net deferred tax liability $7.0 $ - ==== ===== The deferred tax asset resulted from the financial statement write-down of sulphur assets to their net realizable value in connection with the sale of substantially all of the Business s domestic operating assets (see Note 1), which created a tax basis in excess of that reported for financial reporting purposes. The valuation allowance of $10.2 million at September 30, 1994, was provided based on the likelihood that the Business s deferred tax asset will only be realized to the extent that existing taxable temporary differences reverse in future periods. Deferred tax liabilities result primarily from temporary differences in the tax versus financial reporting recognition of mine exploration and development costs and depreciation, and depletion and amortization of property, plant and equipment. 4. RELATED-PARTY TRANSACTIONS: The Business has engaged in various transactions with Pennzoil and its affiliates that are characteristic of entities under common control. As such, excess cash generated by the Business is transferred to Pennzoil on a regular basis. In addition, Pennzoil directly funds the Business s operations. Contributions from Pennzoil have no defined repayment terms, are noninterest- bearing and are included in divisional equity in the accompanying balance sheet. Pennzoil allocates costs and expenses to the Business for various costs incurred by Pennzoil directly associated with the Business s operations. The Business was charged $22.9 million and $11.7 million during 1993 and the nine months ended September 30, 1994, respectively, for salaries, wages, retirement and postretirement benefits provided by Pennzoil. Of this amount, $20.7 million and $9.7 million, respectively, are reflected in cost of sales, and $2.2 million and $2.0 million, respectively, are reflected in selling, general and administrative expenses in the accompanying statement of operations. The Business was also charged $1.3 million in 1993 and $.7 million in the nine months ended September 30, 1994, for legal and administrative services and computer rentals. These charges are included in selling, general and administrative expenses in the accompanying statement of operations. In addition to general and administrative costs directly associated with the Business s operations, Pennzoil has furnished to the Business certain financial, administrative, legal and other staff functions and services. The costs of providing such functions and services have been allocated to the Business using a method based on total assets, revenues and number of employees. Management believes such charges are equal to or less than what the Business would have incurred to obtain such services on its own. Such charges were $4.2 million in 1993 and $2.3 million in the nine months ended September 30, 1994, and are reflected as management fees in the accompanying statement of operations. 5. COMMITMENTS AND CONTINGENCIES: Total operating lease rental expense was $2.4 million in 1993 and $1.5 million in the nine months ended September 30, 1994. Aggregate minimum rental obligations subsequent to December 31, 1993, under noncancelable leases for the years ending December 31, 1994, 1995, 1996, 1997 and 1998, are estimated to be $2.1 million, $.4 million, $.4 million, $.4 million and $.4 million, respectively. Pennzoil has been notified by the state of Texas that royalty payments for sulphur produced from its Culberson mine from 1974 to 1986 have been underpaid. Pennzoil management believes that the state s claim for additional royalties is without merit. As such, Pennzoil management believes that the ultimate resolution of this matter will not have a material effect on the financial statements of the Business. This claim is not included as part of the liabilities to be assumed by Freeport-McMoRan in the sale discussed in Note 1. [Enlarge/Download Table] Freeport-McMoRan Inc. Unaudited Pro Forma Statement of Operations Year Ended December 31, 1993 Pro Forma Adjustments ------------------------ Pennzoil Fertiberia Historical (Note 1) (Note 2) Pro Forma ---------- --------- ---------- ---------- (In Thousands, Except Per Share Amounts) Revenues $1,610,581 $ 65,214 $258,073 $1,933,868 Cost of sales: Production and delivery 1,141,705 73,717 279,673 1,495,095 Depreciation and amortization 191,938 3,636 (6,612) 188,962 ---------- -------- -------- ---------- Total cost of sales 1,333,643 77,353 273,061 1,684,057 Exploration expenses 65,080 - - 65,080 Provision for restructuring charges 67,145 - - 67,145 Loss on valuation and sale of assets, net 64,114 - - 64,114 General and administrative 169,059 7,796 30,518 207,373 ---------- -------- -------- ---------- Total costs and expenses 1,699,041 85,149 303,579 2,087,769 ---------- -------- -------- ---------- Operating loss (88,460) (19,935) (45,506) (153,901) Interest expense, net (79,882) - - (79,882) Gain on conversion/distribution of FCX securities 44,116 - - 44,116 Other expense, net (2,727) (1,288) (856) (4,871) ---------- -------- -------- ---------- Loss before income taxes and minority interests (126,953) (21,223) (46,362) (194,538) Provision for income taxes (17,854) 3,810 - (14,044) Minority interests in net loss of consolidated subsidiaries 61,689 10,336 22,578 94,603 ---------- -------- -------- ---------- Loss before changes in accounting principle (83,118) (7,077) (23,784) (113,979) Cumulative effect of changes in accounting principle (20,717) - - (20,717) ---------- -------- -------- ---------- Net loss (103,835) (7,077) (23,784) (134,696) Preferred dividends (22,368) - - (22,368) ---------- -------- -------- ---------- Net loss applicable to common stock $ (126,203) $ (7,077) $(23,784) $ (157,064) ========== ======== ======== ========== Net loss per primary share: Before changes in accounting principle $(.74) $(.96) Cumulative effect of changes in accounting principle (.15) (.15) ----- ------ $(.89) $(1.11) ===== ====== Average shares outstanding 141,595 141,595 ======= ======= The accompanying notes are an integral part of these pro forma financial statements. [Enlarge/Download Table] Freeport-McMoRan Inc. Unaudited Pro Forma Statement of Operations Nine Months Ended September 30, 1994 Pro Forma Adjustments --------------------------- Pennzoil Fertiberia Historical (Note 1) (Note 2) Pro Forma ---------- -------- ---------- ---------- (In Thousands, Except Per Share Amounts) Revenues $1,421,179 $ 39,867 $271,489 $1,732,535 Cost of sales: Production and delivery 943,732 44,597 250,156 1,238,485 Depreciation and amortization 92,050 2,727 (4,959) 89,818 ---------- -------- -------- ---------- Total cost of sales 1,035,782 47,324 245,197 1,328,303 Exploration expenses 35,389 - - 35,389 General and administrative 123,893 4,668 16,815 145,376 ---------- -------- -------- ---------- Total costs and expenses 1,195,064 51,992 262,012 1,509,068 ---------- -------- -------- ---------- Operating income (loss) 226,115 (12,125) 9,477 223,467 Interest expense, net (67,626) - - (67,626) Gain on conversion/distribution of FCX securities 95,723 - - 95,723 Other income (expense), net (2,685) 1,114 (1,662) (3,233) ---------- -------- -------- ---------- Income (loss) before income taxes and minority interests 251,527 (11,011) 7,815 248,331 Provision for income taxes (98,548) 1,977 - (96,571) Minority interests in net income of consolidated subsidiaries (104,257) 5,362 (3,806) (102,701) ---------- -------- -------- ---------- Income before extraordinary item 48,722 (3,672) 4,009 49,059 Extraordinary loss on early extinguishment of debt, net (9,108) - - (9,108) ---------- -------- -------- ---------- Net income (loss) 39,614 (3,672) 4,009 39,951 Preferred dividends (16,563) - - (16,563) ---------- -------- -------- ---------- Net income (loss) applicable to common stock $ 23,051 $ (3,672) $ 4,009 $ 23,388 ========== ======== ======== ========== Net income (loss) per primary share: Before extraordinary item $.23 $.23 Extraordinary loss on early extinguishment of debt (.06) (.06) ---- ---- $.17 $.17 ==== ==== Average shares outstanding 139,538 139,538 ======= ======= The accompanying notes are an integral part of these pro forma financial statements. [Enlarge/Download Table] Freeport-McMoRan Inc. Unaudited Pro Forma Condensed Balance Sheet September 30, 1994 Pro Forma Adjustments ----------------------- Pennzoil Fertiberia Historical (Note 1) (Note 2) Pro Forma ---------- -------- ---------- ---------- (In Thousands) Cash and short-term investments $ 28,794 $ - $ 60,516 $ 89,310 Accounts receivable 263,319 - 97,032 360,351 Inventories 387,540 5,635 102,820 495,995 Prepaid expenses and other 16,429 - - 16,429 ---------- ------- -------- ---------- Total current assets 696,082 5,635 260,368 962,085 Property, plant and equipment, net 3,243,457 59,538 - 3,302,995 Other assets 198,818 - 428 199,246 ---------- ------- -------- ---------- Total assets $4,138,357 $65,173 $260,796 $4,464,326 ========== ======= ======== ========== Accounts payable and accrued liabilities $ 502,721 $17,400 $ 94,002 $ 614,123 Current portion of long-term debt and short-term borrowings 102,487 - - 102,487 ---------- ------- -------- ---------- Total current liabilities 605,208 17,400 94,002 716,610 Long-term debt, less current portion 1,437,129 - - 1,437,129 Reclamation and mine shutdown reserves 124,719 16,000 89,165 229,884 Accrued postretirement benefits and other liabilities 418,612 31,773 77,629 528,014 Deferred income taxes 244,122 - - 244,122 Minority interests in consolidated subsidiaries 1,497,289 - - 1,497,289 Stockholders' equity (deficit) (188,722) - - (188,722) ---------- ------- -------- ---------- Total liabilities and stockholders' equity $4,138,357 $65,173 $260,796 $4,464,326 ========== ======= ======== ========== The accompanying notes are an integral part of these pro forma financial statements. Freeport-McMoRan Inc. Notes to Pro Forma Financial Statements The accompanying Pro Forma Statements of Operations have been prepared assuming the transactions discussed below occurred on January 1, 1993, whereas the Pro Forma Condensed Balance Sheet assumes the transactions occurred on September 30, 1994. The pro forma financial statements are not necessarily indicative of the actual results that would have been achieved nor are they indicative of future results. Both acquisitions afford Freeport-McMoRan Resource Partners, Limited Partnership (FRP) the opportunity to generate significant cost savings through operating synergies; however, for purposes of these pro forma financial statements no anticipated cost reductions or efficiencies have been reflected. 1. Pennzoil Acquisition On January 4, 1995, FRP, a Delaware limited partnership and a 51.4 percent owned affiliate of Freeport-McMoRan Inc. (FTX), acquired essentially all of the domestic assets of Pennzoil Sulphur Company (Pennzoil Sulphur), a division of Pennzoil Company, effective January 1, 1995. Pennzoil Company will receive quarterly payments from FRP over 20 years based on the prevailing price of sulphur. The installment payments may be terminated earlier by FRP through the exercise of a $65 million call option, or by Pennzoil Company through a $10 million put option. Neither option may be exercised prior to 1999. The historical financial statements of the acquired Pennzoil Sulphur assets adjusted to reflect the pro forma impact of the acquisition by FRP follow: Year Ended December 31, 1993 ------------------------------------ Historical Adjustments Pro Forma ---------- ----------- --------- (In Thousands) Revenues $ 65,214 $ - $ 65,214 Production and delivery 73,184 533 a 73,717 Depreciation and amortization 7,904 (4,268)b 3,636 General and administrative 7,796 - 7,796 -------- ------ -------- Operating loss (23,670) 3,735 (19,935) Other expense (1,288) - (1,288) -------- ------ -------- Net loss $(24,958) $3,735 $(21,223) ======== ====== ======== Nine Months Ended September 30, 1994 ------------------------------------ Historical Adjustments Pro Forma ---------- ----------- --------- (In Thousands) Revenues $ 39,867 $ - $ 39,867 Production and delivery 44,702 (105)a 44,597 Depreciation and amortization 3,467 (740)b 2,727 Loss on valuation of assets 50,200 (50,200)c - General and administrative 4,668 - 4,668 -------- ------- -------- Operating loss (63,170) 51,045 (12,125) Other income 1,114 - 1,114 -------- ------- -------- Net loss $(62,056) $51,045 $(11,011) ======== ======= ======== a. Represents the payments that would have been made to Pennzoil, based on historical sulphur price levels, less the liability which would have been recognized at the acquisition date. b. Represents the adjustment to reflect depreciation and amortization using FRP's purchase price. c. Represents the elimination of the historical valuation expense. No valuation expense would have been recorded using FRP's purchase price. As of September 30, 1994 ------------------------------------- Historical Adjustments Pro Forma* ---------- ----------- ---------- (In Thousands) Cash and short-term investments $ 1,994 $(1,994) $ - Accounts receivable 7,614 (7,614) - Inventories 20,456 (14,821) 5,635 Prepaid expenses and other 323 (323) - ------- ------- ------- Total current assets 30,387 (24,752) 5,635 Property, plant and equipment, net 19,892 39,646 59,538 ------- ------- ------- Total assets $50,279 $14,894 $65,173 ======= ======= ======= Accounts payable and accrued liabilities $ 9,200 $ 8,200 $17,400 Reclamation and mine shutdown reserves - 16,000 16,000 Other liabilities 3,919 27,854 31,773 Equity 37,160 (37,160) - ------- ------- ------- Total liabilities and equity $50,279 $14,894 $65,173 ======= ======= ======= * Represents the allocation of the purchase price. "Other liabilities" represents the net present value of the estimated future payments to Pennzoil based on current sulphur prices. 2. Fertiberia Acquisition FRP has agreed in principle to acquire Fertiberia, S.L., the restructured nitrogen and phosphate fertilizer business of Ercros, S.A., a Spanish conglomerate. Since September 1993, FRP has managed this company with the goal of establishing Fertiberia as a financially viable concern. FRP intends to continue to work with the Spanish authorities in improving the operations of Fertiberia and eventually to acquire essentially all of the company's capital stock, in return for agreeing to make a capital contribution of $11.5 million upon closing and a further contingent payment of $10 million in January 1998. As part of the agreement, $38.5 million of nonrecourse financing has been arranged at Fertiberia with payment terms dependent upon its financial performance. The acquisition of Fertiberia, one of the largest fertilizer manufacturers in Europe, is conditioned upon satisfaction of a number of issues. Under the current terms of the preliminary purchase agreement, FRP would record a significant amount of negative goodwill (shown as "other liabilities" in the Pro Forma Condensed Balance Sheet) associated with the Fertiberia purchase. This negative goodwill is being amortized based on Fertiberia's historical depreciable lives and results in a decrease to depreciation and amortization expense.

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K/A’ Filing    Date    Other Filings
12/31/98
12/31/97
12/31/9610-K405,  10-K405/A
12/31/9510-K405
Filed on:2/27/95
1/4/95
For Period End:1/3/958-K
1/1/95
12/31/9410-K405
12/7/94
9/30/9410-Q
12/31/9310-K
1/1/93
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