Notes To Consolidated Financial Statements Note 12.  Segment Information 76 |  FREEPORT-McMoRan COPPER & GOLD INC. Foreign Currency Exchange Contracts.  PT Freeport  Indonesia and Atlantic Copper enter into foreign currency  forward contracts to hedge the market risks of their fore- casted costs denominated in a currency other than the U.S.  dollar, their functional currency. The primary objective of  these contracts is either to lock in an exchange rate or to  minimize the impact of adverse exchange rate changes. As  of December 31, 2004, PT Freeport Indonesia had foreign  currency contracts to hedge 450.0 billion in rupiah payments  from April 2005 through December 2005, or approximately  32 percent of aggregate projected rupiah payments for 2005,  at an average exchange rate of 10,059 rupiah to one U.S.  dollar. PT Freeport Indonesia accounts for these contracts  as cash flow hedges. As of December 31, 2004, PT Freeport  Indonesia expects to reclass $2.9 million of unrealized gains  to 2005 earnings related to its outstanding foreign currency  contracts. Debt and Interest Rate Contracts.  Atlantic Copper  entered into interest rate swaps to manage exposure to  interest rate changes on a portion of its variable-rate debt.  The primary objective of these contracts is to lock in an  interest rate considered to be favorable. Under the terms  of its swaps, Atlantic Copper will pay 3.6 percent on $36.5  million in the first quarter of 2005. Interest on comparable  floating rate debt averaged 3.6 percent in 2004, 4.4 percent  in 2003 and 1.9 percent in 2002, resulting in additional  interest costs totaling $1.4 million in 2004, $2.1 million in  2003 and $3.2 million in 2002.  Atlantic Copper is a party to letters of credit totaling $13.0  million at December 31, 2004. Fair value of these letters of  credit approximates their face value at December 31, 2004. FCX follows SFAS No. 131, “Disclosures About Segments of  an Enterprise and Related Information,” which requires that  companies disclose segment data based on how management  makes decisions about allocating resources to segments  and measuring their performance. FCX has two operating  segments: “mining and exploration” and “smelting and  refining.” The mining and exploration segment includes the  copper and gold mining operations of PT Freeport Indonesia  in Indonesia and FCX’s Indonesian exploration activities.  The smelting and refining segment includes Atlantic Copper’s  operations in Spain and PT Freeport Indonesia’s equity  investment in PT Smelting in Gresik, Indonesia. The segment  data presented below were prepared on the same basis as the  consolidated FCX financial statements.