1. Building Business Acumen
Acumen Learning

2. (or Key Performance Indicators (KPIs))
Important Questions
How much do you know about
Freeport McMoRan Corporation’s
Key Success Measures?
(or Key Performance Indicators (KPIs))
Let’s find out!

3. Pop Quiz For fiscal year: 2010 1 - How much Cash was on hand? $______
2 - How much Cash was generated by Operating Activities? $______
3 - What was our Total Revenues? $______
4 - What was our Operating Margin? ______%
5 - What was our Net Margin? ______%
6 – What is our Copper Reserves (billion lbs.)? ______
7 – What is our total equity ratio? ______%
8 - How much did Total Revenue change YOY? _______%
9 - How much did Net Income change YOY? _______%
10 - How much did Earnings Per Share (EPS) change YOY? _______%
11- What was FCX’s Total recordable incident rate (TRIR)? _______ 35

4. Learning Objectives
Understand the 11 key performance measures that are important to Freeport McMoRan and the Executive Team.
List and describe the five business drivers all successful businesses must focus on.
Teach specific components of Freeport McMoRan financial statements.
Better articulate company performance & strategy.
Create a personal action plan that can positively impact personal performance and company results.

5. Acumen Means? 3

6. ~Wayne Gretzky~ “What makes you so great?” When asked by a reporter,
“The Great One”
When asked by a reporter,
“What makes you so great?”
Wayne responded by saying;
“I don’t skate to where the puck is.”
“I skate to where the puck…
is going to be.”
(Hockey Acumen!)

7. Acumen Means?
…the ability to make good business decisions in a timely manner with an understanding of how the decision should impact the business. 3

8. Business can be tough!
Only 5-10% of business start-ups survive past 5 years.
16% of CEOs lose their job every year.
Booz Allen Hamilton 5th annual Study
70% of merger and acquisition activity do not live
up to expectation Wall Street Journal 2007
Why do businesses fail? 6

9. Business Acumen: Every business must focus on five business drivers.
If they do, they will be successful.
If they don’t, they’ll fail.
Let’s Start a Business! 4

10. What happens to a company who runs low on cash?
Cash is King!
“Cash is a company’s oxygen supply.”
-Ram Charan
“Cash is more important than your mother." Al Shugart Former Seagate CEO
What happens to a company who runs low on cash?

11. Cash & Cash Flow Sources of Cash Earn it Pro: No Cost -Con: Time
Cash from Operation
Sell Assets
Cash from Investing
Borrow it
Cash from Financing
Pro: No Cost -Con: Time
Pro: Immediate -Con: Reduces Assets
Pro: Immediate -Con: Cost (Interest) 9

12. Can a company have too much Cash?
More attractive in a buy-out.
Low return.
Shareholders don’t like it.
May make poor decisions. 9

13. How much cash should you have?
Companies ought to keep just enough cash to cover their interest, expenses and capital expenditures; plus they should hold a little bit more in case of emergencies.
Investopedia

14. Definition: Cash Definition Measures Cash
What is required to grow and maintain the business.
Measures
Cash – the bills and coins in the register, petty cash, and cash in the bank. Also includes cash equivalents, like CD’s and other highly liquid investments, that easily convert into cash within 90 days.
Cash
Cash Flow – The cash generation from core business activities calculated from the difference between the cash that flows into and out of the business in a given period of time (month, quarter, annual) 8

15. Freeport McMoRan Corporation
Cash
Freeport McMoRan Corporation
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
2010
2009
2008
2007
Revenues
$18,982
$15,040
$17,796
$16,939
Cash
Cash and Equivalents
$3,738
$2,656
$872
$1,626
Cash from Operating Activities
$6,273
$4,397
$3,370
$6,225
Cash and Equivalents announced July 21, 2011 = 4.4 Billion.
FCX’s consolidated operating cash flows are estimated to exceed $8 Billion for the year 2011 (page 10 of Q2 press release) 9

16. Cash Benchmarks Business Measures and Metrics Freeport McMoRan-FCX
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
BHP Billiton-June 30,
Newmont Mining Corp
Rio Tinto-RIO
Southern Copper Corp-SCCO
2010
Revenues
$18,982
$52,798
$9,540
$60,323
$5,150
Cash
Cash and Equivalents
$3,738
$12,456
$4,056
$9,948
$2,193
Cash as % of Revenue
19.69%
23.59%
42.52%
16.49%
42.58%
Cash from Operating Activities
$6,273
$17,920
$3,167
$23,530
$1,921
Add Cash as a percent of Revenues to this slide. 9

17. 5 Business Drivers & Financial Statements
Interdependent
People
Assets
Profit
Cash
Growth
Income Statement
Balance
Sheet
Statement of Cash Flows

18. 5 Business Drivers & Financial Statements
Interdependent
People
Assets
Profit
Cash
Growth
Statement of Cash Flows

19. Freeport McMoRan Financial Statements
The Annually Reported Financial Statements
Statement of Cash Flows
Statement of Income (P&L)
Balance Sheet
What is the basic equation for each statement?
What is the purpose of the statement?
What are the key numbers and how are they trending?
How can you impact each statement? 21

20. Statement of Cash Flow Equation: Purpose: ? ?
Cash from operations + Cash from investing + Cash from financing = Net Change in Cash
Statement of Cash Flow
Purpose:
Cash Management ? ?
120
Net Change in Cash 
Started Year 
Ended Year 

21. Definition: Profit Profit Definition
What is left over after you have subtracted expenses. Can be expressed in dollars ($) or percent (%).
Measures
Operating Margin – Reflects earnings before interest and taxes.
Profit
Net Profit / Net Profit Margin – Profit after all expenses have been subtracted from sales.
Basic Presentation:
Gross Profit / Gross Profit Margin – Profit after Cost of Goods Sold (COGS) have been subtracted from sales.
Earnings Per Share (EPS)– Profit allocated to each outstanding share of Common stock. 10

22. Every business must earn a return that is greater than the cost of using other people’s money.
-Ram Charan
No Margin, No Mission.
-Stephen R. Covey
Read quotes

23. Two ways to impact PROFIT
Sales (Revenues) $ %
- Production & Delivery $ 44
- Depreciation, Depletion, & Amort. $ 5
- Selling, General, & Admin. (SG&A) $ 2
- Exploration & Research $ 1
= Operating Margin $ %
-Interest & Other Expense $ 3
-Taxes $ 16
= Net Income $ %
-N.I. attrib. to Noncontrolling interest/Div. $ 6
= Net Income Attrib. FCX Com. Sto $ %
Show and explain the basic P&L components. Since these folks will likely understand a P&L, go through this quickly. What is likely most relevant for them is to understand what the S&P averages are.
Freeport McMoRan Averages for FY 2010. 23

24. Driving Profit High and Low Profit Margins
S&P Average TTM: 11%
Who has much higher profit margins?
Coca Cola 33%
Microsoft 30%
Google 29%
Apple 21%
Why the high margins?

25. Driving Profit High and Low Profit Margins
S&P Average TTM: 11%
Who has lower profit margins?
ExxonMobil 8%
Wal-Mart 3.8%
Costco %
Why the low margins?

26. Freeport McMoRan Corporation
Profit
Freeport McMoRan Corporation
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
2010
2009
2008
2007
Revenues
$18,982
$15,040
$17,796
$16,939
Net Income
$4,273
$2,527
$(11,341)
$2,769
Profit
Operating Margin
47.8%
43.2%
-71.4%
38.7%
Net Margin
22.5%
16.8%
-63.7%
16.3%
Unit Cash Cost Copper (per lbs.)
$0.79
$0.55
$1.16
$1.31
EPS
$4.57
$2.93
$(14.86)
$3.75 11

27. Earnings Call, July 21,2011

28. Freeport McMoRan Corporation
Profit
Freeport McMoRan Corporation
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
2010
2009
2008
2007
Revenues
$18,982
$15,040
$17,796
$16,939
Net Income
$4,273
$2,527
$(11,341)
$2,769
Profit
Operating Margin
47.8%
43.2%
-71.4%
38.7%
Net Margin
22.5%
16.8%
-63.7%
16.3%
Unit Cash Cost Copper (per lbs.)
$0.79
$0.55
$1.16
$1.31
EPS
$4.57
$2.93
$(14.86)
$3.75
In Q1 reporting we actually found a higher grade of copper.
Unit net cash cost anticipated to be $1.01 in The increase is due to the impact of higher unit net cash costs at Grasberg associated with lower copper and gold volumes and higher input costs of labor, materials and energy. 11

29. Global Metals and Mining Con, February 28, 2011, presentation by Richard Adkerson

30. Q1 Earnings Call, April 20, 2011

31. Q2 Earnings Call, July 21, 2011

32. Profit Benchmarks S&P 500 Averages: Net Margin = 11%
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
BHP Billiton-June 30,
Newmont Mining Corp
Rio Tinto-RIO
Southern Copper Corp-SCCO
2010
Revenues
$18,982
$52,798
$9,540
$60,323
$5,150
Net Income
$4,273
$12,722
$2,277
$14,324
$1,563
Profit
Operating Margin
47.8%
37.9%
41.9%
32.6%
50.6%
Net Margin
22.5%
24.1%
23.9%
23.7%
30.4%
Unit Cash Cost Copper (per lbs.)
$0.79 NA
$1.02
NA 
$0.17
S&P 500 Averages: Net Margin = 11% 11

33. United Parcel Services (UPS) – Avoiding left-hand turns
Profit In Action
United Parcel Services (UPS) – Avoiding left-hand turns
92,000 trucks worldwide
Saved over 28,541,472 miles
Saved 3 million gallons of fuel
Reduced insurance premiums
Reduced maintenance frequency
and costs 11

34. Freeport McMoRan Financial Statements
The Annually Reported Financial Statements
Statement of Cash Flows
Statement of Income (P&L)
Balance Sheet
What is the basic equation for each statement?
What is the purpose of the statement?
What are the key numbers and how are they trending?
How can you impact each statement? 21

35. P&L Equation: Indicates: 26% 19% 2% Gross margin = 51% 16% 19% 59% 16%
Revenues
– Expenses
= Income
P&L
Indicates:
Profitability
SG&A:
Salaries
Sales commissions
Benefits/Severance
Rental Expense
Bad debt charges
Merger integration costs
Professional services:
Attorney fees, Accounting
= Top Line
26%
(Revenue = Sales)
19% 2%
COGS
Gross margin = 51%
16%
Operating Margin
Total Revenue: ,982
Operating Expense: - 9,914
= 9,068
÷ 18,982
= 47.76%
(SG&A)
19%
59%
16%
Operating margin = 48%
= EBIT
Do not use this for HR-Too Much Info. Pick 2-3
Net Profit Margin
Net Income: ,273
Total Revenue: ÷ 18,982
= 22.5%
S&P 500 Ave. = 11%
69%
Net profit margin = 23%
= Bottom Line

36. Impairment Charges
During fourth-quarter 2008, we evaluated the carrying values of our long-lived assets, including goodwill associated with the acquisition of Phelps Dodge, for impairment.
These evaluations resulted in the recognition of impairment charges of $10.9 billion associated with long-lived assets and $6.0 billion associated with goodwill.
Refer to Notes 2 and 7 and “Critical Accounting Estimates – Asset Impairments” for further discussion of these impairment charges (pg. 65, K)

37. = Net income / Diluted # of shares

38. Statement of Income (P&L)
Increase revenue by 100K
100K
44K 5K
49K
49K
51K
51K
18K
33K 7K
26K

39. Statement of Income (P&L)
Lower costs by 100K
100K
100K
100K
100K
100K
35K
65K
22K
43K

40. What are the implications of each action?
Which is better?
Raising Revenues $100M = $26
-or-
Cutting Costs by $100M = $43
What are the implications of each action?

41. Assets (Read from guide book p. 12)
Balancing…
i.e. cash, inventory and ratings
Asset Strength
Asset Utilization
&

42. Definition: Assets Assets Definition
What we have and how well we use what we have.
Measures
Copper Reserves (Billion Lbs.)— total estimated proven and probable copper reserves remaining
Equity Ratio— indicates what proportion of equity and debt the company is using to finance its assets 12

43. Example of Profits and Assets
“In 1912, the Model T for the first time cost less than the prevailing average annual wage in the United States.”
“Ignoring conventional wisdom, Henry Ford continually sacrificed margins to increase sales. In fact, profits per car did fall as he slashed prices from $220 in 1909 to $99 in 1914.”
“But Sales Exploded!”
“Ford demonstrated that a strategic, systematic lowering of prices could boost profits, as net income rose from…
$3 million in 1909 to $25 million in 1914.”
~Daniel Gross, Forbes Greatest Business Stories 13 43

44. Freeport McMoRan Corporation
Assets
Freeport McMoRan Corporation
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
2010
2009
2008
2007
Revenues
$18,982
$15,040
$17,796
$16,939
Net Income
$4,273
$2,527
$(11,341)
$2,769
Assets
Copper Reserves (Billion lbs)
120.50
104.20
102.00
93.20
Equity Ratio
49.5%
41.4%
30.4%
44.8%
Equity Ratio = Total Equity $14,560
Total Assets $29,386 = =
49.5%
Bought Phelps Dodge 13

45. Global Metals and Mining Conference, February 28, 2011, presentation by Richard Adkerson

46. Assets Benchmarks Business Measures and Metrics Freeport McMoRan-FCX
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
BHP Billiton-June 30,
Newmont Mining Corp
Rio Tinto-RIO
Southern Copper Corp-SCCO
2010
Revenues
$18,982
$52,798
$9,540
$60,323
$5,150
Net Income
$4,273
$12,722
$2,277
$14,324
$1,563
Assets
Copper Reserves (Billion lbs)
120.50
58.41
9.42
36.76
131.58
Equity Ratio
49.5%
55.5%
61.2%
58.1%
48.2% 13

47. Class Discussion (notes on page 13)
Best practices currently employed by companies, including ours, to improve asset strength and utilization:
Increase revenues.
Lower costs.
Getting more done with fewer employees.
Reducing inventory levels to increase inventory turnover.
Spending only on capital (equipment) upgrades that will provide a return.

48. Freeport McMoRan Financial Statements
The Annually Reported Financial Statements
Statement of Income (P&L)
Balance Sheet
Statement of Cash Flows
What is the basic equation for each statement?
What is the purpose of the statement?
What are the key numbers and how are they trending?
How can you impact each statement? 21

49. Financial (asset) Strength
Equation:
Assets = Liabilities + Equity
Indicates:
Financial (asset) Strength
Most Liquid
Snapshot in time
Becomes Cash < 1 year
Least Liquid
Due First
Current Ratio = 2.6
Due in < 1 year ?
Due Last
Balance
Equity Position: 50%

50. Do we have a strong Balance Sheet?

51. Good cash, current ratio and equity ratio
Q2 Earnings Call, July 21, 2011

52. Definition: Growth Growth Definition
The ability to increase year over year, quarter over quarter, and/or month over month.
“In today’s business world, no growth means lagging behind in a world that grows every day…”
“Investors expect it, employees are energized by it, customers are generally attracted to it and executives are measured by it.”
Growth
Measures
Revenue Growth
Net Income Growth
EPS Growth-Earnings per share increase 14

53. Business in Rapid Decline…
Best & brightest leave first.
Productivity goes down.
Morale goes down.
Costs are cut, which limits ability to grow,
company becomes less profitable.
Studies Show:
It usually takes 4 or 5 years for the company to recover. 15

54. Business in Rapid Growth…
Attracts/Retains the best & brightest!
Productivity goes up = more profit = more
cash = more ability to grow!
Morale is high.
You have the ability to grow in your career!
Growth gets more time & attention than any of the 5 elements in a public company. 15

55. Freeport McMoRan Corporation
Growth
Freeport McMoRan Corporation
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
2010
2009
2008
2007
Revenues
$18,982
$15,040
$17,796
$16,939
Net Income
$4,273
$2,527
$(11,341)
$2,769
Growth
Revenue Growth
26.2%
-15.5%
5.1%
193.0%
Net Income Growth
69.1%
122.3%
-509.6%
98.4%
EPS Growth
56.0%
119.7%
-496.3%
11.8%
Recorded Reserve Growth Copper
15.6%
2.2%
9.4%
72.2% 15

56. Q2 Earnings Call, July 21, 2011

57. Q1 Earnings Call, July 21, 2011

58. Sales grew because metal prices increased even though volumes were down.

59. Sales volumes 2010 and estimated for 2011

60. Growth Benchmarks Business Measures and Metrics Freeport McMoRan-FCX
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
BHP Billiton-June 30,
Newmont Mining Corp
Rio Tinto-RIO
Southern Copper Corp-SCCO
2010
Revenues
$18,982
$52,798
$9,540
$60,323
$5,150
Net Income
$4,273
$12,722
$2,277
$14,324
$1,563
Growth
Revenue Growth
26.2%
5.2%
23.8%
37.0%
37.9%
Net Income Growth
69.1%
116.5%
75.6%
194.0%
67.2%
EPS Growth
56.0%
117.1%
71.1%
164.0%
67.9%
Recorded Reserve Growth Copper
15.6%
-2.2%
3.3%
6.1%
7.8% 15

61. How can you personally impact Growth?
At your table, discuss how you individually impact Growth.
Capture your ideas on page 15 in the participant guide.
Be prepared to share one of your ideas with the class. 15

62. Definition: People People Definition
-The External Customer, Vendor/Re-seller, or Internal Customer that has the ability to impact the success of the business..
-Employees
Measures
People
Total Recordable Incident Rate (TRIR)-is a measure for the total number of incidents per 200,000 hours worked. 16

63. Exceeding? People Anticipating Customer Needs & Expectations!
What is more important than meeting customer expectations?
Exceeding?
Anticipating Customer Needs & Expectations!
“If I would have asked my customer what they wanted, they would have said a faster horse!”
~Henry Ford 17

64. Failing to Anticipate customer needs/expectation!
What companies have failed to anticipate customer expectations? What were the results?
– Unprepared for recession and required government bailout money. Ford secured line of credit prior and retained full ownership.
– decided to move to digital product line. Polaroid did not and is no longer a serious competitor.
– In 1943, the CEO said the customer need for their product was approximately 5 computers for the entire world.
– Did not move to a digital music player and lost a significant market share to innovative companies like Apple and Motorola.
GM/Ford
Kodak
IBM
Sony 17

65. Freeport McMoRan Corporation
People
Freeport McMoRan Corporation
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
2010
2009
2008
2007
Revenues
$18,982
$15,040
$17,796
$16,939
Net Income
$4,273
$2,527
$(11,341)
$2,769
People
Total Recordable Incident Rate
(TRIR-(Per 200K Man Hours
Worked)
0.65
0.74
1.25
1.18
Mine Safety & Health Admin TRIR Average:
2010= = = = 3.30 17

66. People Benchmarks Business Measures and Metrics Freeport McMoRan-FCX
(In Millions)
Business Measures and Metrics
Freeport McMoRan-FCX
BHP Billiton-June 30,
Newmont Mining Corp
Rio Tinto-RIO
Southern Copper Corp-SCCO
2010
Revenues
$18,982
$52,798
$9,540
$60,323
$5,150
Net Income
$4,273
$12,722
$2,277
$14,324
$1,563
People
Total Recordable Incident Rate (Per
200K Man Hours Worked)
0.65
1.06
.91
0.51 17

67. What are your best practices in anticipating CUSTOMERS needs
What are your best practices in anticipating CUSTOMERS needs? (Capture ideas on page 17)
Know your business and how you impact results!
Develop formal processes for listening to customers, both internal and external.
A quarterly meeting with your boss…ask, how am I doing? What could I do to improve?

68. Business Drivers (Page 18)
Cash On hand Generation
Assets -Strength Utilization
Growth -Top Line Bottom Line
Profit Revenue Expenses
People
-Customers
-Employees

69. 1
3,738 2 3
9,068
18,982 4
47.77 5 6 7 8 9 10 11

70. 3,738
6,273
18,982
9,068
18,982
47.77
4,273
18,982
22.51
120.50
14,560
29,386
49.55
18,982
15,040
26.21
4,273
2,527
69.09
4.57
2.93
55.97
.65

71. Freeport McMoRan Corporation’
Key Success Measures
1 ½
SCORING:
Right answer = point
Somewhat close = ½ point (within: $2B, $2, 2%)
Missed it by a ways = 0 point 35

72. 5 Business Driver Review (Pages 8-17)
Cash On hand Generation
Assets -Strength Utilization
Growth -Top Line Bottom Line
Profit Revenue Expenses
People
-Customers
-Employees

73. Review and Teaching (page 30)
1) Assign one of the business drivers to each person at your table.
2) Take a few minutes to answer the questions below:
How would you describe this business driver?
Why is it important to our organization?
How is it measured?
How can I impact this business driver in my role?
This is a good activity, don’t be shy about using it.
3) Review with your group the answers you found.

74. When you think of a company
rich in Cash,
who comes to mind?
(Page 20)

75. Demystifying the Annual Report (page 21)
What is the Purpose of the Annual Report?
General Communication
Marketing
Compliance

76. Getting to Know Your Company
Which of the 5 “drivers” does your CEO & Chairman emphasize? Why? As table groups, grade Mr. Moffett’s and Mr. Adkerson’s top 2 focus areas.
What other key initiatives are also being talked about?
Was this a good year or bad year? How can you tell?
Chairman of the Board- James R. Moffett
President and CEO-Richard C. Adkerson
CFO-Kathleen L. Quirk

77. Finding our performance around the 5 Business Drivers
Cash On hand Generation
Assets -Strength Utilization
Growth -Top Line Bottom Line
Profit Revenue Expenses
People
-Customers
-Employees

78. External Factors (page 40)
How does the situation affect:
People
Cash
Growth
Profit
Assets
Heads Up!

79. Google And Reuters
Commodity Producers Slump
The S&P 500 fell 1.7 percent this month, as gauges of energy and raw-materials producers slumped at least 4.2 percent. Indexes of companies less-tied to economic growth, including health care, utilities, phone and consumer staples, outperformed the benchmark. The S&P 500 is still up 6.6 percent this year amid government stimulus measures and higher-than-estimated corporate profits.
Global stocks and commodities prices fell as figures showed inflation in China stayed above the government’s target, stoking concern about further monetary tightening that may curb demand. Chinese inflation remained higher than 5 percent in April and lending exceeded analysts’ estimates. The central bank in China, the world’s biggest copper consumer, has raised interest rates four times since mid-October.
The pound rose as Bank of England Governor Mervyn King said inflation remains “uncomfortably high” and officials signaled they may raise rates later this year. Reports showed growth in prices in Germany topped estimates and Poland unexpectedly increased its benchmark rate.
The MSCI All-Country World Index of shares in 45 nations fell 0.9 percent. The Thomson Reuters/Jefferies CRB Index of commodities slumped 2.7 percent.

80. BHP Billiton Newmont Mining Rio Tinto Southern Cooper
Competitor Reports
BHP Billiton
Newmont Mining
Rio Tinto
Southern Cooper
Keep your friends close, and your enemies closer Lao Tzu

81. Finding Competitors Performance Around:
Cash On hand Generation
Assets -Strength Utilization
Growth -Top Line Bottom Line
Profit Revenue Expenses
People
-Customers
-Employees

82. Getting to Know a Company (pages 36)
Use these sources:
1) CEO letter
2) Financial analysis (fill out the NTF)
3) Recent quarterly earnings release
4) One year stock performance
To answer these questions on page 36:
Was this a good year or bad year? How can you tell?
Which of the 5 business drivers are most important to them? Why?
What does this company do that you were not aware of?

83. What does this mean for FCX?
U.S. Government
Banks, Insur. Co’s
Federal Reserve
Pushing more loans. Little over-sight.
Over leveraged. Did not understand sub-prime risk.
Aggressive rate cuts after 9/11 to spur spending.
What does this mean for FCX?
FNMA & FHLMC
Credit Crisis
Who is involved?
Home Builders
Over leveraged with implied government backing.
increase supply of homes to meet demand.
State, “our second element is Margin”
Rating Agencies
Home Buyers
Mortgage Companies
Buying more home than they can afford.
Did not rate sub-prime loan risk well.
Aggressive Sub-prime lending. 83

84. The Role of the Stock Market
1) What role does the stock market play?
2) Who cares about your stock price and why?
a. Investors
b. Analysts

85. Analyst Recommendations
Updated July 23, 2010
September 19, 2011

86. The Role of the Stock Market
1) What role does the stock market play?
2) Who cares about your stock price and why?
a. Investors
b. Analysts
c. Your CEO
d. Employees
3) What are the benefits of a higher stock price?

87. 6 Benefits of a Higher Stock Price: (Page 41)
1) Treasury stock is worth more.
2) Secondary offering brings more cash.
3) Better credit ratings = more access to cash at a cheaper rate.
4) More acquisition power.
5) Can attract talented people.
6) More expensive in a buy-out.
1. Holding for

88. Market Cap = shares outstanding X stock price
Element
FCX
BHP
NEM
RIO
SCCO
Market Cap.
38 Billion
166 Billion
33 Billion
106 Billion
26 Billion
FCX--50 Billion April 20th, billion
BHP—279 billion April 20th, May 11, 2011
NEM—32 billion April 20th, 26 billion May 11th
Rio—140 billion April 20th, May 11th
SCCO—32 billion April 20th, 30 billion May 11th

89. The P/E Ratio-FCX (Page 42, 43)
Price (of one share of stock)
Earnings Per Share (for last 12 months)
Price $ 40.22
EPS $ 5.86
= P/E ratio

90. P/E Ratios
Element
FCX
BHP
NEM
RIO
SCCO
P/E Ratio 7 9 14 13
“The P/E ratio tells you what people who have a dispassionate view of your company think of its future ability to make money. It reveals how much of their money they are willing to bet on your success in the quarters and years to come.” Ram Charan

91. Freeport McMoRan Stock Chart

92. Boosting Stock Price
In December 2010, our Board of Directors authorized a $0.50 per share supplemental common stock dividend paid on December 30, 2010, and a two-for-one common stock split effected on February 1, (Page K)

93. Freeport McMoRan and S&P 500

94. Freeport McMoRan and Benchmark Companies

95. CEO Urgency Continuum (Page 49)
URGENT
NEAR TERM
LONG TERM
CASH
PROFIT
GROWTH
ASSETS
PEOPLE

96. Retaining Content over Time
Content Retention
Review
Apply
Teach
15% 52

97. Review and Action Plan (Page 52 & 53)
What new insights did you gain (today) as a result of attending?
How will this material impact your daily activities?
Action Plan: List 1-2 Actions You Will Commit to do.

98. Changing Behavior 95% “That’s a good idea”… 10%
Page 4.8
*Based on a 1993 Brigham Young University Study
When a Person Says …
Chances of the idea being incorporated into their life is...
“That’s a good idea”… 10%
“I’ll do it!” and commits %
Says when they’ll do it… %
Plans how to do it… %
Commits to another… 60%
Sets a future specific appointment with the
person they committed to...
95%
Good Management Technique!

99. Accountability Conversations
Find a Partner now and:
Set up a specific date and time in 30 days to report your progress on your action plan.
Exchange s
Exchange phone numbers
Decide who will initiate the call
Determine a back-up plan
Transfer this information to your
planner or PDA now. 53

100. Post Course Action Items:
7 days: Teach one of the principals learned in class today, to someone in your department.
7 days: Discuss your action items with your manager in the next 7 days.
30 days: Read the first 90 pages of:
“What The CEO Wants You to Know“
4. 30 days: Get with your class partner and give an account of your progress on your action item(s).
Start now:
Build and practice your new business acumen skills.
When making decisions, determine how the outcome will impact Cash, Profit, Assets, Growth, People…

101. Where to Find Information
(page 55)
* nasdaq.com * finance.google.com
* reuters.com * hoovers.com
* yahoo.com * smartmoney.com
Glossary: page 58

102. Learning Objectives
Understand the 11 key performance measures that are important to Freeport McMoRan and the Executive Team.
List and describe the five business drivers all successful businesses must focus on.
Teach specific components of Freeport McMoRan financial statements.
Better articulate company performance & strategy.
Create a personal action plan that can positively impact personal performance and company results.