##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period___to___
 Commission file number 1-82
 PHELPS DODGE CORPORATION
  New York
(State or other jurisdiction of
incorporation or organization)
    
    13-1808503
(I.R.S. Employer
Identification No.)
 One North Central Avenue, Phoenix, AZ
(Address of principal executive offices)
    
    85004-4414
(Zip Code)
   Name of each exchangeTitle of each class
    
    on which registeredCommon Shares, $6.25 par value per share
    
    New York Stock Exchange
  þ o
 o þ
 þ o
 þ
  Large Accelerated Filer þ
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
 o þ
    Document
    
    Location in 10-KProxy Statement for 2006 Annual Meeting
    
    Part III




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##### 



PHELPS DODGE CORPORATION
Annual Report on Form 10-K
 Table of Contents
    
    PagePART I.Items 1. and 2. Business and Properties
    
    
    1Phelps Dodge Mining Company
    
    
    2Properties, Facilities and Production
    
    
    2U.S. Mines
    
    
    2South American Mines
    
    
    5Manufacturing Segment
    
    
    6Primary Molybdenum Segment
    
    
    6Worldwide Copper Production, by Source,
Other Metal Production and Sales Data,
and Manufacturing and Sales Production
    
    
    7Phelps Dodge Copper Production Data, by Source
    
    
    8Phelps Dodge Copper Sales Data, by Source
    
    
    9Phelps Dodge Other Metal Production and Sales
    
    
    10Phelps Dodge Manufacturing and Sales Production
    
    
    11Other Mining
    
    
    12Ore Reserves
    
    
    14Average Drill-Hole Spacing at Ore Reserve Properties
    
    
    16Metallurgical Recovery
    
    
    16Mill and Leach Stockpiles
    
    
    16Copper and Molybdenum Prices
    
    
    17Mineralized Material
    
    
    18Sales and Competition
    
    
    19Prices, Supply and Consumption
    
    
    19Costs
    
    
    21Environmental and Other Regulatory Matters
    
    
    21Ownership of Property
    
    
    27Phelps Dodge Industries
    
    
    27Wire and Cable Segment
    
    
    28Discontinued Operations  Columbian Chemicals
    
    
    29Environmental Matters
    
    
    30Labor Matters
    
    
    30Research and Development
    
    
    31Other Environmental Matters
    
    
    31Item 1A. Risk Factors
    
    
    33Item 3. Legal Proceedings
    
    
    36Item 4. Submission of Matters to a Vote of Security Holders
    
    
    39Executive Officers of Phelps Dodge Corporation
    
    
    40PART II.Item 5. Market for the Registrants Common Equity
and Related Stockholder Matters
    
    
    41Item 6. Selected Financial Data
    
    
    42Item 7. Managements Discussion and Analysis of Financial
Condition and Results of OperationsManagements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    45Overview of Phelps Dodge Corporations Businesses
and Managements Assessment of Key Factors and
Indicators that Could Impact Our Business, Operating
Results and Cash Flows
    
    
    45Critical Accounting Policies and Estimates
    
    
    47Results of Phelps Dodge Mining Company
    
    
    55Results of Phelps Dodge Industries
    
    
    71Discontinued Operations and Assets Held for Sale
    
    
    73Other
Matters Relating to the Consolidated Statement
of Income
    
    
    74Changes in Financial Condition; Capitalization
    
    
    77Capital Outlays
    
    
    93Inflation
    
    
    93Dividends and Market Price Ranges
    
    
    93Quarterly Financial Data
    
    
    94Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    44Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
    
    
    96Report of Management on Internal Control
Over Financial Reporting
    
    
    96Report of Independent Registered Public Accounting Firm
    
    
    97Consolidated
Statement of Income
    
    
    98Consolidated Balance Sheet
    
    
    99Consolidated Statement of Cash Flows
    
    
    100Consolidated Statement of Shareholders Equity
    
    
    101Notes to Consolidated Financial Statements
    
    
    102Financial Data by Geographic Area
    
    
    142Financial Data by Business Segment
    
    
    143Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
    
    
    44Item 9A. Controls and Procedures
    
    
    44Item 9B. Other Information
    
    
    44PART III.Item 10. Directors and Executive Officers of the Registrant
    
    
    146Item 11. Executive Compensation
    
    
    146Item 12. Security Ownership of Certain BeneficialOwners and Management
    
    
    146Item 13. Certain Relationships and Related Transactions
    
    
    146Item 14. Principal Accounting Fees and Services
    
    
    146Item 15. Exhibits, Financial Statement Schedules
    
    
    146Valuation
and Qualifying Accounts and Reserves
    
    
    151Signatures
    
    
    152Exhibit 10.10Exhibit 10.13Exhibit 10.18Exhibit 10.22Exhibit 10.26Exhibit 10.31Exhibit 10.32Exhibit 10.33Exhibit 10.34Exhibit 11Exhibit 12.1Exhibit 12.2Exhibit 21Exhibit 23Exhibit 24Exhibit 31Exhibit 32




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##### Table of Contents



1 PHELPS DODGE CORPORATION
2005 Annual Report on Form 10-K
 
 PART I
 
 Items 1. and 2. Business and Properties
   (i)
   i.e.
  (ii)
       Available Information. http://www.sec.gov.
 http://www.phelpsdodge.com http://www.sec.gov




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##### Table of Contents



2 ®
 
 PHELPS DODGE MINING COMPANY
      
 Properties, Facilities and Production
  United States Mines
 
 
 U.S. Mines
   Morenci




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##### Table of Contents



3    Bagdad
   i.e.,
 Sierrita
    Miami/Bisbee




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##### Table of Contents



4   Chino/Cobre
      Tyrone




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##### Table of Contents



5  
 South American Mines
 
 South American Mines
   Candelaria/Ojos del Salado
  El Abra
  Cerro Verde




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##### Table of Contents



6 
 Manufacturing Segment
     
 Primary Molybdenum Segment




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##### Table of Contents



7     
 Worldwide Copper Production, by Source, Other Metal Production and Sales Data,
and Manufacturing and Sales Production
  
    
    conversion of Morenci operations to mine-for-leach during
1999 and 2000, with completion in the 2001 first quarter;
concentrator was placed on care-and-maintenance status in
2001;
    
    curtailment of mill throughput at Bagdad to approximately
one-half capacity in January 2002, followed by an increase in
mill throughput to approximately 80 percent in January 2003,
and an increase in production in January 2004, reaching full
capacity in the 2004 second quarter;
    
    curtailment of mill throughput at Sierrita to
approximately one-half capacity in January 2002, followed by
an increase in production in January 2004, reaching full
capacity in the 2004 fourth quarter;
    
    temporary closure of the Miami mine and refinery in
January 2002; partial curtailment of Miamis smelter
throughput in January 2003, followed by restart at full
capacity in the 2004 second quarter; permanent closure of the
Miami refinery in the 2005 second quarter;
    
    curtailment of Chino operations beginning in the 1998
fourth quarter, followed by temporary shut-down of the
concentrator in March 2001 and temporary closure of the mine
and smelter in January 2002; a partial restart of mining for
leach material in April 2003, with a full restart of mining
for leach materials in September 2003; an increase in milling
operations to 80 percent of capacity in the 2004 third
quarter; permanent closure of the Chino smelter in the 2005
second quarter;
    
    curtailment of Cobre mining and milling operations that
have remained unchanged since its temporary shutdown in March
1999;
    
    partial curtailment at Tyrone beginning in September
2003; Tyrone mining operations were temporarily curtailed in
2004 to focus on stockpile reclamation. A combination of
mining and reclamation activities were conducted in 2005, and
are expected to continue through 2006, as Tyrone focuses on
site reclamation while mining its remaining ore reserves.
Tyrone SX/EW operations continue at a declining production
rate;
    
    restart of Ojos del Salado underground mining and milling
operations in the 2004 second quarter;
    
    completion of the run-of-mine leach project at El Abra
with production commencing January 2002;
    
    partial curtailment of Henderson operations beginning in
the 2000 second quarter to 18 million pounds, followed by an
increase in production to approximately 28 million pounds by
the end of 2004 and 32 million annual pounds in 2005.




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##### Table of Contents



8 
 Phelps Dodge Copper Production Data, by Source
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Material mined (a)Morenci
    
    
    255,887
    
    
    
    234,491
    
    
    
    237,338
    
    
    
    248,505
    
    
    
    281,474Bagdad
    
    
    64,093
    
    
    
    61,194
    
    
    
    48,935
    
    
    
    42,912
    
    
    
    63,680Sierrita
    
    
    63,358
    
    
    
    53,231
    
    
    
    35,525
    
    
    
    23,066
    
    
    
    60,869Chino
    
    
    65,060
    
    
    
    43,443
    
    
    
    12,299
    
    
    
    220
    
    
    
    59,277Tyrone
    
    
    28,840
    
    
    
    1,647
    
    
    
    16,319
    
    
    
    45,515
    
    
    
    73,990Miami
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,702Candelaria
    
    
    105,344
    
    
    
    106,585
    
    
    
    108,442
    
    
    
    109,211
    
    
    
    126,509Ojos del Salado
    
    
    2,800
    
    
    
    836
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde
    
    
    68,620
    
    
    
    75,727
    
    
    
    72,965
    
    
    
    75,982
    
    
    
    68,685El Abra
    
    
    85,140
    
    
    
    83,705
    
    
    
    87,682
    
    
    
    76,831
    
    
    
    82,737Total material mined
    
    
    739,142
    
    
    
    660,859
    
    
    
    619,505
    
    
    
    622,242
    
    
    
    849,923Less 15% undivided interest at Morenci
    
    
    38,383
    
    
    
    35,174
    
    
    
    35,601
    
    
    
    37,276
    
    
    
    42,220Material mined on a consolidated basis
    
    
    700,759
    
    
    
    625,685
    
    
    
    583,904
    
    
    
    584,966
    
    
    
    807,703Less minority participants shares previously accounted for on a pro rata basis:Chino (b)
    
    
    
    
    
    
    
    
    
    
    3,785
    
    
    
    73
    
    
    
    19,758Candelaria (c)
    
    
    21,069
    
    
    
    21,317
    
    
    
    21,688
    
    
    
    21,842
    
    
    
    25,302Ojos del Salado (d)
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde (e)
    
    
    23,810
    
    
    
    13,252
    
    
    
    12,769
    
    
    
    13,297
    
    
    
    12,020El Abra (f)
    
    
    41,719
    
    
    
    41,015
    
    
    
    42,964
    
    
    
    37,647
    
    
    
    40,541Material mined on a pro rata basis
    
    
    614,146
    
    
    
    550,101
    
    
    
    502,698
    
    
    
    512,107
    
    
    
    710,082Mill ore
processedMorenci
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,301Bagdad
    
    
    26,592
    
    
    
    27,157
    
    
    
    26,103
    
    
    
    19,783
    
    
    
    31,667Sierrita
    
    
    39,199
    
    
    
    34,885
    
    
    
    26,654
    
    
    
    21,439
    
    
    
    38,133Chino
    
    
    12,604
    
    
    
    4,895
    
    
    
    
    
    
    
    
    
    
    
    3,109Candelaria (g)
    
    
    25,064
    
    
    
    27,318
    
    
    
    26,407
    
    
    
    28,507
    
    
    
    27,365Ojos del Salado
    
    
    2,586
    
    
    
    742
    
    
    
    
    
    
    
    
    
    
    
    Total mill ore processed
    
    
    106,045
    
    
    
    94,997
    
    
    
    79,164
    
    
    
    69,729
    
    
    
    104,575Less 15% undivided interest at Morenci
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    645Mill ore processed on a consolidated basis
    
    
    106,045
    
    
    
    94,997
    
    
    
    79,164
    
    
    
    69,729
    
    
    
    103,930Less minority participants shares previously accounted for on a pro rata basis:Chino (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,036Candelaria (c)
    
    
    5,013
    
    
    
    5,464
    
    
    
    5,281
    
    
    
    5,701
    
    
    
    5,473Ojos del Salado (d)
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mill ore processed on a pro rata basis
    
    
    101,020
    
    
    
    89,533
    
    
    
    73,883
    
    
    
    64,028
    
    
    
    97,421Leach ore
placed in stockpilesMorenci
    
    
    239,052
    
    
    
    224,918
    
    
    
    228,940
    
    
    
    241,955
    
    
    
    258,202Bagdad (h)
    
    
    23,857
    
    
    
    23,627
    
    
    
    
    
    
    
    328
    
    
    
    696Sierrita
    
    
    1,888
    
    
    
    1,330
    
    
    
    375
    
    
    
    170
    
    
    
    14,347Chino (h)
    
    
    28,103
    
    
    
    30,799
    
    
    
    11,066
    
    
    
    198
    
    
    
    31,009Tyrone (h)
    
    
    20,328
    
    
    
    18,185
    
    
    
    10,722
    
    
    
    34,835
    
    
    
    27,513Miami
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,208Cerro Verde
    
    
    22,839
    
    
    
    22,628
    
    
    
    21,014
    
    
    
    24,096
    
    
    
    23,436El Abra (h)
    
    
    83,620
    
    
    
    71,361
    
    
    
    80,604
    
    
    
    71,224
    
    
    
    75,875Total leach ore placed in stockpiles
    
    
    419,687
    
    
    
    392,848
    
    
    
    352,721
    
    
    
    372,806
    
    
    
    441,286Less 15% undivided interest at Morenci
    
    
    35,858
    
    
    
    33,738
    
    
    
    34,341
    
    
    
    36,293
    
    
    
    38,729Leach ore placed in stockpiles on a consolidated basis
    
    
    383,829
    
    
    
    359,110
    
    
    
    318,380
    
    
    
    336,513
    
    
    
    402,557Less minority participants shares previously accounted for on a pro rata basis:Chino (b)
    
    
    
    
    
    
    
    
    
    
    3,376
    
    
    
    66
    
    
    
    10,336Cerro Verde (e)
    
    
    8,025
    
    
    
    3,959
    
    
    
    3,677
    
    
    
    4,217
    
    
    
    4,101El Abra (f)
    
    
    40,974
    
    
    
    34,967
    
    
    
    39,496
    
    
    
    34,900
    
    
    
    37,179Leach ore placed in stockpiles on a pro rata basis
    
    
    334,830
    
    
    
    320,184
    
    
    
    271,831
    
    
    
    297,330
    
    
    
    350,941




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##### Table of Contents



9 Phelps Dodge Copper Production Data, by Source
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Grade of
ore mined  percent copperMorenci  mill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.78Morenci  leach
    
    
    0.28
    
    
    
    0.29
    
    
    
    0.28
    
    
    
    0.28
    
    
    
    0.30Bagdad  mill
    
    
    0.40
    
    
    
    0.41
    
    
    
    0.43
    
    
    
    0.43
    
    
    
    0.43Bagdad  leach
    
    
    0.10
    
    
    
    0.09
    
    
    
    
    
    
    
    0.29
    
    
    
    0.28Sierrita  mill
    
    
    0.22
    
    
    
    0.25
    
    
    
    0.29
    
    
    
    0.32
    
    
    
    0.29Sierrita  leach
    
    
    0.20
    
    
    
    0.23
    
    
    
    0.26
    
    
    
    0.21
    
    
    
    0.22Miami  leach
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.41Chino  mill
    
    
    0.51
    
    
    
    0.81
    
    
    
    
    
    
    
    
    
    
    
    0.79Chino  leach
    
    
    0.26
    
    
    
    0.35
    
    
    
    0.80
    
    
    
    0.29
    
    
    
    0.48Tyrone  leach
    
    
    0.26
    
    
    
    0.17
    
    
    
    0.34
    
    
    
    0.35
    
    
    
    0.29Candelaria  mill
    
    
    0.79
    
    
    
    0.89
    
    
    
    0.97
    
    
    
    0.84
    
    
    
    0.96Ojos del Salado  mill
    
    
    1.35
    
    
    
    1.57
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde  mill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde  leach
    
    
    0.59
    
    
    
    0.66
    
    
    
    0.60
    
    
    
    0.55
    
    
    
    0.53El Abra  leach
    
    
    0.43
    
    
    
    0.47
    
    
    
    0.49
    
    
    
    0.50
    
    
    
    0.60Average copper grade  mill
    
    
    0.46
    
    
    
    0.52
    
    
    
    0.56
    
    
    
    0.56
    
    
    
    0.54Average copper grade  leach
    
    
    0.31
    
    
    
    0.33
    
    
    
    0.37
    
    
    
    0.35
    
    
    
    0.38Copper
productionMorenci:Concentrate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23.5Electrowon
    
    
    400.0
    
    
    
    420.3
    
    
    
    421.2
    
    
    
    412.7
    
    
    
    368.1Bagdad:Concentrate
    
    
    84.8
    
    
    
    82.1
    
    
    
    82.5
    
    
    
    68.4
    
    
    
    118.1Electrowon
    
    
    15.8
    
    
    
    28.0
    
    
    
    24.5
    
    
    
    15.6
    
    
    
    10.5Sierrita:Concentrate
    
    
    71.8
    
    
    
    73.5
    
    
    
    66.3
    
    
    
    60.0
    
    
    
    94.6Electrowon
    
    
    7.5
    
    
    
    4.0
    
    
    
    9.3
    
    
    
    16.2
    
    
    
    26.3Chino:Concentrate
    
    
    50.7
    
    
    
    29.8
    
    
    
    
    
    
    
    
    
    
    
    18.3Electrowon
    
    
    54.1
    
    
    
    61.9
    
    
    
    39.9
    
    
    
    53.8
    
    
    
    59.9Tyrone:Electrowon
    
    
    40.5
    
    
    
    43.1
    
    
    
    56.9
    
    
    
    69.9
    
    
    
    76.4Miami:Electrowon
    
    
    12.3
    
    
    
    9.8
    
    
    
    17.8
    
    
    
    10.5
    
    
    
    44.1Bisbee:Precipitate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.2Tohono:Electrowon
    
    
    2.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Candelaria:Concentrate
    
    
    179.3
    
    
    
    220.5
    
    
    
    234.5
    
    
    
    219.5
    
    
    
    243.2Ojos del Salado:Concentrate
    
    
    31.1
    
    
    
    10.4
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde:Electrowon
    
    
    103.1
    
    
    
    97.6
    
    
    
    96.3
    
    
    
    95.3
    
    
    
    84.9El Abra:Electrowon
    
    
    232.2
    
    
    
    240.3
    
    
    
    249.8
    
    
    
    248.2
    
    
    
    239.8Manufacturing (i)
    
    
    2.3
    
    
    
    2.3
    
    
    
    6.6
    
    
    
    5.4
    
    
    
    3.0Total copper production
    
    
    1,288.0
    
    
    
    1,323.6
    
    
    
    1,305.6
    
    
    
    1,275.6
    
    
    
    1,410.9Less 15% undivided interest at Morenci
    
    
    60.0
    
    
    
    63.0
    
    
    
    63.3
    
    
    
    61.9
    
    
    
    58.8Copper production on a consolidated basis
    
    
    1,228.0
    
    
    
    1,260.6
    
    
    
    1,242.3
    
    
    
    1,213.7
    
    
    
    1,352.1Less minority participants shares previously accounted for on a pro rata basis:Chino (b)
    
    
    
    
    
    
    
    
    
    
    12.5
    
    
    
    17.9
    
    
    
    26.1Candelaria (c)
    
    
    35.9
    
    
    
    44.1
    
    
    
    46.9
    
    
    
    43.9
    
    
    
    48.6Ojos del Salado (d)
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde (e)
    
    
    35.9
    
    
    
    17.1
    
    
    
    16.8
    
    
    
    16.7
    
    
    
    14.9El Abra (f)
    
    
    113.8
    
    
    
    117.7
    
    
    
    122.4
    
    
    
    121.7
    
    
    
    117.5Manufacturing (i)
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    1.4
    
    
    
    (0.2
    )Copper production on a pro rata basis
    
    
    1,042.3
    
    
    
    1,081.7
    
    
    
    1,042.5
    
    
    
    1,012.1
    
    
    
    1,145.2




---



##### Table of Contents



10 
 Phelps Dodge Copper Sales Data, by Source
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Copper sales:From own mines (j):Morenci
    
    
    400.0
    
    
    
    420.3
    
    
    
    421.2
    
    
    
    412.7
    
    
    
    391.8Bagdad
    
    
    104.4
    
    
    
    111.9
    
    
    
    111.0
    
    
    
    92.3
    
    
    
    132.9Sierrita
    
    
    82.8
    
    
    
    79.2
    
    
    
    79.3
    
    
    
    83.8
    
    
    
    125.1Chino
    
    
    104.8
    
    
    
    91.7
    
    
    
    40.7
    
    
    
    53.7
    
    
    
    78.2Tyrone
    
    
    40.5
    
    
    
    43.1
    
    
    
    56.9
    
    
    
    69.9
    
    
    
    76.4Miami
    
    
    14.5
    
    
    
    10.9
    
    
    
    20.0
    
    
    
    15.2
    
    
    
    46.6Bisbee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.3Tohono
    
    
    2.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Candelaria
    
    
    179.7
    
    
    
    223.2
    
    
    
    234.3
    
    
    
    218.3
    
    
    
    237.6Ojos del Salado
    
    
    30.9
    
    
    
    10.3
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde
    
    
    102.7
    
    
    
    98.2
    
    
    
    95.6
    
    
    
    94.9
    
    
    
    84.7El Abra
    
    
    233.3
    
    
    
    240.8
    
    
    
    251.8
    
    
    
    254.1
    
    
    
    248.4Manufacturing (i)
    
    
    2.3
    
    
    
    2.3
    
    
    
    6.6
    
    
    
    5.9
    
    
    
    4.2Total copper sales from own mines
    
    
    1,298.4
    
    
    
    1,331.9
    
    
    
    1,317.4
    
    
    
    1,300.9
    
    
    
    1,426.2Less 15% undivided interest at Morenci
    
    
    60.0
    
    
    
    63.0
    
    
    
    63.3
    
    
    
    61.9
    
    
    
    58.8Copper sales from own mines on a consolidated basis
    
    
    1,238.4
    
    
    
    1,268.9
    
    
    
    1,254.1
    
    
    
    1,239.0
    
    
    
    1,367.4Less minority participants shares previously accounted for on a pro rata basis:Chino (b)
    
    
    
    
    
    
    
    
    
    
    13.3
    
    
    
    17.9
    
    
    
    26.1Candelaria (c)
    
    
    36.0
    
    
    
    44.6
    
    
    
    46.9
    
    
    
    43.7
    
    
    
    47.5Ojos del Salado (d)
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cerro Verde (e)
    
    
    36.4
    
    
    
    17.2
    
    
    
    16.7
    
    
    
    16.6
    
    
    
    14.8El Abra (f)
    
    
    114.3
    
    
    
    118.0
    
    
    
    123.4
    
    
    
    124.5
    
    
    
    121.7Manufacturing (i)
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    1.8
    
    
    
    1.3Copper sales from own mines on a pro rata basis
    
    
    1,051.6
    
    
    
    1,089.1
    
    
    
    1,052.6
    
    
    
    1,034.5
    
    
    
    1,156.0Purchased copper:Candelaria (c)
    
    
    23.1
    
    
    
    37.1
    
    
    
    22.1
    
    
    
    35.8
    
    
    
    37.0El Abra (f)
    
    
    
    
    
    
    
    
    
    
    7.3
    
    
    
    56.5
    
    
    
    5.8Manufacturing (i)
    
    
    369.5
    
    
    
    394.0
    
    
    
    274.6
    
    
    
    267.7
    
    
    
    342.6Sales
    
    
    18.1
    
    
    
    1.9
    
    
    
    70.5
    
    
    
    83.0
    
    
    
    75.8Total purchased copper
    
    
    410.7
    
    
    
    433.0
    
    
    
    374.5
    
    
    
    443.0
    
    
    
    461.2Total copper sales on a consolidated basis (k)
    
    
    1,649.1
    
    
    
    1,701.9
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ATotal copper sales on a pro rata basis (k)
    
    
    N/A
    
    
    
    N/A
    
    
    
    1,427.1
    
    
    
    1,477.5
    
    
    
    1,617.2
 
 Phelps Dodge Other Metal Production and Sales
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Gold(thousand ounces)Total production
    
    
    134
    
    
    
    134
    
    
    
    129
    
    
    
    132
    
    
    
    140Less minority participants shares previously accounted for on a pro rata basis:
    
    
    20
    
    
    
    23
    
    
    
    26
    
    
    
    24
    
    
    
    31Net Phelps Dodge share
    
    
    114
    
    
    
    111
    
    
    
    103
    
    
    
    108
    
    
    
    109Sales (j)
    
    
    114
    
    
    
    112
    
    
    
    108
    
    
    
    136
    
    
    
    77Silver(thousand ounces)Total production
    
    
    3,090
    
    
    
    3,018
    
    
    
    2,754
    
    
    
    2,582
    
    
    
    3,773Less minority participants shares previously accounted for on a pro rata basis:
    
    
    250
    
    
    
    284
    
    
    
    265
    
    
    
    225
    
    
    
    490Net Phelps Dodge share
    
    
    2,840
    
    
    
    2,734
    
    
    
    2,489
    
    
    
    2,357
    
    
    
    3,283Sales (j)
    
    
    2,866
    
    
    
    3,249
    
    
    
    2,292
    
    
    
    3,317
    
    
    
    2,504Molybdenum(thousand pounds)Primary Molybdenum  Henderson
    
    
    32,201
    
    
    
    27,520
    
    
    
    22,247
    
    
    
    20,517
    
    
    
    18,603By-product
    
    
    30,105
    
    
    
    29,969
    
    
    
    29,747
    
    
    
    24,448
    
    
    
    36,912Total production
    
    
    62,306
    
    
    
    57,489
    
    
    
    51,994
    
    
    
    44,965
    
    
    
    55,515Less minority participants shares previously accounted for on a pro rata basis:Chino (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Net Phelps Dodge share
    
    
    62,306
    
    
    
    57,489
    
    
    
    51,994
    
    
    
    44,965
    
    
    
    55,465Sales  Net Phelps Dodge share from own mines (j)
    
    
    59,947
    
    
    
    63,108
    
    
    
    54,158
    
    
    
    46,665
    
    
    
    55,105Purchased molybdenum
    
    
    12,830
    
    
    
    12,844
    
    
    
    8,199
    
    
    
    7,393
    
    
    
    1,609Total sales
    
    
    72,777
    
    
    
    75,952
    
    
    
    62,357
    
    
    
    54,058
    
    
    
    56,714Sulfuric
acid (thousand tons)Copper smelters (l)
    
    
    726.1
    
    
    
    722.0
    
    
    
    647.6
    
    
    
    748.6
    
    
    
    1,236.7Molybdenum (l)
    
    
    130.5
    
    
    
    122.5
    
    
    
    116.5
    
    
    
    114.3
    
    
    
    97.8Total production
    
    
    856.6
    
    
    
    844.5
    
    
    
    764.1
    
    
    
    862.9
    
    
    
    1,334.5Copper smelters (l)
    
    
    98.6
    
    
    
    99.0
    
    
    
    45.5
    
    
    
    14.5
    
    
    
    15.9Molybdenum (l)
    
    
    144.8
    
    
    
    121.4
    
    
    
    117.9
    
    
    
    115.4
    
    
    
    102.3Total sales
    
    
    243.4
    
    
    
    220.4
    
    
    
    163.4
    
    
    
    129.9
    
    
    
    118.2




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##### Table of Contents



11 Prices
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001COMEX  copper price (m)
    
    $
    1.68
    
    
    
    1.29
    
    
    
    0.81
    
    
    
    0.72
    
    
    
    0.73LME  copper price (n)
    
    $
    1.67
    
    
    
    1.30
    
    
    
    0.81
    
    
    
    0.71
    
    
    
    0.72Metals
Week  molybdenum Dealer Oxide mean price (o)
    
    $
    31.73
    
    
    
    16.41
    
    
    
    5.32
    
    
    
    3.77
    
    
    
    2.36
 
 Phelps Dodge Manufacturing and Sales Production
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Smelters(p)Total copper (thousand tons)
    
    
    218.9
    
    
    
    214.4
    
    
    
    200.8
    
    
    
    243.8
    
    
    
    463.5Less minority participants shares previously
accounted for on a pro rata basis
    
    

    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    36.7Net Phelps Dodge share
    
    
    218.9
    
    
    
    214.4
    
    
    
    200.8
    
    
    
    243.3
    
    
    
    426.8Refineries(q)Copper (thousand tons)
    
    
    295.0
    
    
    
    308.4
    
    
    
    284.6
    
    
    
    319.6
    
    
    
    502.6Gold (thousand ounces) (r)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79.0
    
    
    
    86.6Silver (thousand ounces) (r)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,786.0
    
    
    
    3,719.1Rod(s)Total copper (thousand tons)
    
    
    1,008.1
    
    
    
    1,014.6
    
    
    
    825.8
    
    
    
    850.6
    
    
    
    879.8
 Footnotes to tables on pages 8 through 11:
 (a)
    
    Included material mined for leaching operations, excluded material mined from stockpiles.(b)
    
    Reflected a one-third partnership interest in Chino Mines Company from January 1, 2001 to December 18, 2003 (minority interest acquired by PDMC
on December 19, 2003).(c)
    
    Reflected a 20 percent partnership interest in Candelaria.(d)
    
    Reflected a 20 percent equity interest in Ojos del Salado beginning December 23, 2005.(e)
    
    Reflected a 17.5 percent equity interest in Cerro Verde through May 31, 2005, and a 46.4 percent equity interest beginning June 1, 2005.(f)
    
    Reflected a 49 percent partnership interest in El Abra.(g)
    
    Included mill ore from stockpiles.(h)
    
    Leach ore placed in the stockpiles included previously considered waste material that is now being leached.(i)
    
    Included smelter production from custom receipts and flux as well as tolling gains or losses.(j)
    
    Excluded sales of purchased copper, molybdenum, silver and gold.(k)
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria, 2003 and prior reflected El Abra and Candelaria on a pro rata basis (51 percent and 80 percent, respectively).(l)
    
    Sulfuric acid production resulted from smelter and molybdenum air quality control operations; sales do not include internal usage.(m)
    
    New York Commodity Exchange annual average spot price per pound  cathodes.(n)
    
    London Metal Exchange annual average spot price per pound  cathodes.(o)
    
    Annual Metals Week molybdenum Dealer Oxide mean price per pound  as quoted in Platts Metals Week.(p)
    
    Included production from purchased concentrates and copper smelted for others on a toll basis.(q)
    
    Included production from purchased material and copper refined for others on a toll basis.(r)
    
    El Paso closed its precious metals processing facility in the 2002 fourth quarter.(s)
    
    Included rod, wire, oxygen-free billets/cakes, scrap and other shapes.




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##### Table of Contents



12 
 
 Other Mining
  Exploration




---



##### Table of Contents



13   Process Technology
  
    
    a large-diameter, column-leach facility for testing
run-of-mine material, which is capable of processing up to
approximately 600 tons of ore annually;
    
    a continuous SX/EW test facility capable of producing
approximately 1.5 tons of copper cathode per day;
    
    a small-diameter, column-leach facility with a capacity
of about 250 individual tests per year for crushed material;
    
    a metallurgical laboratory for the development of
biological leaching processes and enhancements, and other
biological applications;
    
    a demonstration facility for production of new copper
products; and
    
    a state-of-the-art material characterization laboratory
with advanced mineralogy, analytical chemistry and
metallography capabilities.
  
    
    The high-temperature, concentrate pressure-leaching
demonstration plant at the Bagdad mine was converted in early
2005 to operate at medium-temperature conditions (i.e.,160oC)
to prove an alternative technology that generates
significantly less sulfuric acid and requires less oxygen than
the high-temperature process. This process has potential
application in operations and projects where excess by-product
sulfuric acid cannot be beneficially used in stockpile or
heap-leaching operations, and consequently could result in a
lower-cost option for certain applications. The facilitys
conversion at Bagdad was completed in May 2005, and the plant
was operated in this mode for approximately seven months. The
proprietary Phelps Dodge medium-temperature process
(incorporating direct electrowinning) was successfully
demonstrated during the seven-month period of operation,
producing LME Grade A cathode that was processed through
Phelps Dodge rod mills. At the conclusion of the planned
demonstration period, the facility was converted back to
operate at high temperature (i.e.,225oC) in December 2005 to
provide the Bagdad operation with a greater amount of
by-product acid necessary for low-grade stockpile leaching
operations. This technology is proprietary and is covered
under a Technology Development Agreement between Phelps Dodge
and Placer Dome, Inc.
    
    The decision was made to install concentrate leaching at
Morenci in conjunction with a re-start of the Morenci
concentrator to process chalcopyrite-containing ores from
Western Copper, Garfield and other areas of the mine. The
concentrate-leaching facility will utilize Phelps Dodges
proprietary medium-temperature pressure-leaching and
direct-electrowinning technology that has been demonstrated at
Bagdad, Arizona. The facility is expected to be in operation
by mid-2007 and copper production is projected to be
approximately 150 million pounds per year. The capital cost of
the facility is estimated to be $106 million, with
approximately $8 million spent in 2005.
    
    Construction of a Central Analytical Service Center
(CASC) to provide routine analytical services for PDMCs
operations in Arizona and New Mexico was essentially completed
and commissioning started prior to the end of 2005. The
facility, located in Safford, Arizona, will replace most
analytical functions and capabilities at Phelps Dodge mining
operations in Arizona and New Mexico, and will ensure that
high-quality, timely and cost-effective analytical capability
is provided to PDMCs operations on a consistent basis.
    
    Proprietary technology for heap and stockpile leaching of
low-grade chalcopyrite ores was advanced, including the
continued operation of a large-scale (27 million ton)
demonstration plant at Bagdad.
    
    The investigation of cost-effective, heap-leaching
options for primary sulfide material at El Abra was advanced
during the year. Biological heap leaching is expected to
provide an alternative technology to conventional milling,
flotation and smelting of bornite-rich primary sulfide ore at
El Abra in the future.
    
    Investigation and commercial demonstration of alternative
technologies to reduce the cost of copper electrowinning
continued during 2005.
    
    Investigation and commercial demonstration of alternative
sulfuric acid production techniques were advanced during 2005.
    
    The commercial demonstration of proprietary alternative
copper products and production techniques was in progress
during the second half of 2005.
    
    We continued the operation and ramp-up of a facility at
Bisbee, Arizona, using technology owned by BioteQ (Vancouver,
Canada)




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##### Table of Contents



14 to recover copper as a sulfide precipitate from low-grade, copper-bearing solution.
  Other Ancillary Operations
  Mining Investments
    
 Ore Reserves




---



##### Table of Contents



15 Total Ore Reserves Estimated at December 31, 2005 (1)Leachable Reserves
    
    
    PhelpsMillable Reserves
    
    
    Crushed Leach
    
    
    Run-of-Mine (ROM)
    
    
    DodgeMillion
    
    
    %
    
    
    %
    
    
    Million
    
    
    %
    
    
    Million
    
    
    %
    
    
    InterestTons
    
    
    Copper
    
    
    Moly
    
    
    Tons
    
    
    Copper
    
    
    Tons
    
    
    Copper
    
    
    (%)Operating
and Curtailed OperationsMorenci (2)
    
    
    247.6
    
    
    
    0.49
    
    
    
    
    
    
    
    587.5
    
    
    
    0.54
    
    
    
    2,490.7
    
    
    
    0.19
    
    
    
    85.0Bagdad (3)
    
    
    618.9
    
    
    
    0.35
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    16.3
    
    
    
    0.31
    
    
    
    100.0Sierrita (3)
    
    
    1,061.6
    
    
    
    0.26
    
    
    
    0.03
    
    
    
    
    
    
    
    
    
    
    
    26.1
    
    
    
    0.18
    
    
    
    100.0Chino (3)
    
    
    72.6
    
    
    
    0.70
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    156.0
    
    
    
    0.40
    
    
    
    100.0Cobre (3), (4) & (8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110.3
    
    
    
    0.35
    
    
    
    100.0Tyrone (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49.3
    
    
    
    0.29
    
    
    
    100.0Miami (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112.1
    
    
    
    0.37
    
    
    
    100.0Candelaria (3), (5) & (6)
    
    
    339.0
    
    
    
    0.73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80.0Ojos del Salado (5) & (9)
    
    
    15.1
    
    
    
    1.33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80.0Cerro Verde (7) & (9)
    
    
    1,392.0
    
    
    
    0.49
    
    
    
    0.02
    
    
    
    268.1
    
    
    
    0.50
    
    
    
    97.1
    
    
    
    0.29
    
    
    
    53.6El Abra
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227.7
    
    
    
    0.47
    
    
    
    226.4
    
    
    
    0.32
    
    
    
    51.0Primary Molybdenum:Climax (4)
    
    
    156.4
    
    
    
    
    
    
    
    0.19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Henderson
    
    
    150.7
    
    
    
    
    
    
    
    0.21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Undeveloped Copper Ore Reserves  require substantial capital
investments to bring into productionSafford (8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455.3
    
    
    
    0.40
    
    
    
    82.7
    
    
    
    0.21
    
    
    
    100.0
 Total Ore Reserves Estimated at December 31, 2004  (1)Leachable Reserves
    
    
    PhelpsMillable Reserves
    
    
    Crushed Leach
    
    
    Run-of-Mine (ROM)
    
    
    DodgeMillion
    
    
    %
    
    
    %
    
    
    Million
    
    
    %
    
    
    Million
    
    
    %
    
    
    InterestTons
    
    
    Copper
    
    
    Moly
    
    
    Tons
    
    
    Copper
    
    
    Tons
    
    
    Copper
    
    
    (%)Operating and Curtailed OperationsMorenci
    
    
    224.0
    
    
    
    0.46
    
    
    
    
    
    
    
    585.7
    
    
    
    0.55
    
    
    
    2,434.1
    
    
    
    0.19
    
    
    
    85.0Bagdad
    
    
    676.3
    
    
    
    0.34
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    14.4
    
    
    
    0.29
    
    
    
    100.0Sierrita
    
    
    1,075.1
    
    
    
    0.26
    
    
    
    0.03
    
    
    
    
    
    
    
    
    
    
    
    27.1
    
    
    
    0.18
    
    
    
    100.0Chino
    
    
    111.4
    
    
    
    0.71
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    282.6
    
    
    
    0.39
    
    
    
    100.0Cobre
    
    
    57.6
    
    
    
    0.55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77.8
    
    
    
    0.26
    
    
    
    100.0Tyrone
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    274.7
    
    
    
    0.31
    
    
    
    100.0Miami
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126.4
    
    
    
    0.37
    
    
    
    100.0Candelaria
    
    
    422.0
    
    
    
    0.72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80.0Ojos del Salado
    
    
    17.9
    
    
    
    1.31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Cerro Verde
    
    
    1,428.1
    
    
    
    0.49
    
    
    
    0.02
    
    
    
    228.0
    
    
    
    0.57
    
    
    
    159.2
    
    
    
    0.27
    
    
    
    82.5El Abra
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    243.4
    
    
    
    0.49
    
    
    
    239.5
    
    
    
    0.29
    
    
    
    51.0Primary Molybdenum:Climax
    
    
    156.4
    
    
    
    
    
    
    
    0.19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Henderson
    
    
    158.7
    
    
    
    
    
    
    
    0.21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Undeveloped Copper Ore Reserves  require substantial
capital investments to bring into production
Safford
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455.3
    
    
    
    0.40
    
    
    
    82.7
    
    
    
    0.21
    
    
    
    100.0
 
 (1)
    
    Total ore reserves estimated (i) are presented on a 100% basis (i.e., included 100 percent of Morenci, Candelaria, Ojos del Salado, Cerro Verde and
El Abra), (ii) included only in-situ tonnages, and (iii) excluded stockpiled ores.(2)
    
    Morenci ore reserves increased with the inclusion of additional ore reserves in the Shannon, American Mountain and Garfield areas.(3)
    
    Bagdad, Sierrita, Chino, Cobre, Tyrone and Candelaria ore reserves reflected new pit designs based on updated slope and economic parameters. At Cobre,
most of the material previously classified as millable reserves has been reclassified as leachable reserves consistent with the current development plan,
which does not include operation of the Cobre mill.(4)
    
    Miami and Climax properties have been on care-and-maintenance status with no mining taking place; Cobre had limited activity in 2004 and 2005 to improve and
establish access to mining areas.(5)
    
    The Candelaria and Ojos del Salado deposits also contained 0.004 ounces and 0.012 ounces of gold per ton, respectively.(6)
    
    The Candelaria ore reserves included 4.6 million tons of underground ore reserves from the Candelaria Norte area.(7)
    
    Cerro Verde millable ore reserves reflect the approved development of the mill project.(8)
    
    The Safford and Hanover (Cobre) leach deposits were at various stages of the permitting process. On February 1, 2006, the Companys board of directors
conditionally approved development of the Safford mine subject to receiving certain state permits.(9)
    
    Reflects change in ownership interest in Cerro Verde and Ojos del Salado.




---



##### Table of Contents



16 
 Average Drill-Hole Spacing at Ore Reserve Properties
  As of December 31, 2005Proven
    
    Probable(average spacing-feet)
    
    (average spacing-feet)Property
    
    Mill
    
    Leach
    
    Mill
    
    LeachMorenci
    
    
    283
    
    
    
    283
    
    
    
    400
    
    
    
    400Bagdad
    
    
    190
    
    
    
    81
    
    
    
    441
    
    
    
    323Sierrita
    
    
    224
    
    
    
    143
    
    
    
    348
    
    
    
    243Chino
    
    
    141
    
    
    
    200
    
    
    
    200
    
    
    
    283Cobre
    
    
    150
    
    
    
    200
    
    
    
    200
    
    
    
    300Tyrone
    
    
    N/A
    
    
    
    283
    
    
    
    N/A
    
    
    
    283Miami
    
    
    N/A
    
    
    
    200
    
    
    
    N/A
    
    
    
    300Candelaria
    
    
    115
    
    
    
    N/A
    
    
    
    230
    
    
    
    N/AOjos del Salado
    
    
    82
    
    
    
    N/A
    
    
    
    164
    
    
    
    N/ACerro Verde
    
    
    164
    
    
    
    164
    
    
    
    328
    
    
    
    328El Abra
    
    
    N/A
    
    
    
    233
    
    
    
    N/A
    
    
    
    328Climax
    
    
    200
    
    
    
    N/A
    
    
    
    200
    
    
    
    N/AHenderson
    
    
    65
    
    
    
    N/A
    
    
    
    290
    
    
    
    N/ASafford
    
    
    N/A
    
    
    
    200
    
    
    
    N/A
    
    
    
    400
 
 Metallurgical Recovery
  As of December 31, 2005Copper
    
    MolybdenumProperty
    
    Mill % (a)
    
    Leach % (b)
    
    Mill % (c)Morenci
    
    
    79.3
    
    
    
    56.4
    
    
    
    N/ABagdad
    
    
    84.0
    
    
    
    43.3
    
    
    
    72.7Sierrita
    
    
    82.9
    
    
    
    54.0
    
    
    
    78.3Chino
    
    
    78.1
    
    
    
    64.2
    
    
    
    25.9Cobre
    
    
    N/A
    
    
    
    62.1
    
    
    
    N/ATyrone
    
    
    N/A
    
    
    
    73.5
    
    
    
    N/AMiami
    
    
    N/A
    
    
    
    64.0
    
    
    
    N/ACandelaria
    
    
    91.2
    
    
    
    N/A
    
    
    
    N/AOjos del Salado
    
    
    90.2
    
    
    
    N/A
    
    
    
    N/ACerro Verde
    
    
    85.0
    
    
    
    73.4
    
    
    
    54.5El Abra (d)
    
    
    N/A
    
    
    
    59.0
    
    
    
    N/ASafford
    
    
    N/A
    
    
    
    70.2
    
    
    
    N/AClimax
    
    
    N/A
    
    
    
    N/A
    
    
    
    85.1Henderson
    
    
    N/A
    
    
    
    N/A
    
    
    
    86.2
 
 (a)
    
    Mill recoveries include expected mill and smelter recoveries and an allowance
for concentrate transportation losses.(b)
    
    Leach recoveries are the expected total recoveries over multiple leach cycles.(c)
    
    Molybdenum recoveries include mill recoveries and roaster deductions.(d)
    
    El Abra average leach recoveries for both oxides and sulfide ores. 
 Mill and Leach Stockpiles
  (in million tons)
    
    As of December 31, 2005ContainedStockpile
    
    Copper
    
    Recovery
    
    RecoverableMaterial
    
    (%)*
    
    (%)
    
    CopperMill stockpiles:100% basis
    
    
    101
    
    
    
    0.47
    
    
    
    83.0
    
    
    
    0.4Consolidated basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Phelps Dodge pro rata basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Leach stockpiles:100% basis
    
    
    8,737
    
    
    
    0.27
    
    
    
    5.8
    
    
    
    1.4Consolidated basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3Phelps Dodge pro rata basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2
 
 *
    
    Copper grade of ore when placed. (in million tons)
    
    As of December 31, 2004ContainedStockpile
    
    Copper
    
    Recovery
    
    RecoverableMaterial
    
    (%)*
    
    (%)
    
    CopperMill stockpiles:100% basis
    
    
    96
    
    
    
    0.48
    
    
    
    83.1
    
    
    
    0.4Consolidated basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Phelps Dodge pro rata basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Leach stockpiles:100% basis
    
    
    8,331
    
    
    
    0.27
    
    
    
    6.4
    
    
    
    1.4Consolidated basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4Phelps Dodge pro rata basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
 
 *
    
    Copper grade of ore when placed.  Mill Stockpiles
   Leach Stockpiles




---



##### Table of Contents



17      December 31,2005
    
    2004Mill stockpiles:Candelaria
    
    
    0.3
    
    
    
    0.3Cerro Verde
    
    
    0.1
    
    
    
    0.10.4
    
    
    
    0.4Leach stockpiles:Morenci
    
    
    0.2
    
    
    
    0.3Bagdad
    
    
    0.1
    
    
    
    0.1Sierrita
    
    
    0.2
    
    
    
    0.1Chino
    
    
    0.6
    
    
    
    0.5Tyrone
    
    
    0.1
    
    
    
    0.1Miami
    
    
    0.0
    
    
    
    0.1Cerro Verde
    
    
    0.1
    
    
    
    0.1El Abra
    
    
    0.1
    
    
    
    0.11.4
    
    
    
    1.4Total (100% basis)
    
    
    1.8
    
    
    
    1.8Consolidated basis
    
    
    1.7
    
    
    
    1.8Phelps Dodge pro rata basis
    
    
    1.5
    
    
    
    1.6
   2005
    
    2004
    
    2003
    
    2002
    
    2001Milling reserves on a pro rata basis
(billion tons) (a)
    
    
    3.3
    
    
    
    4.2
    
    
    
    3.5
    
    
    
    3.4
    
    
    
    3.6Leaching reserves on a pro rata basis
(billion tons) (a)
    
    
    4.1
    
    
    
    4.5
    
    
    
    4.0
    
    
    
    4.3
    
    
    
    5.2Commercially recoverable copper
(million tons):Ore reserves
    
    
    17.7
    
    
    
    23.2
    
    
    
    19.5
    
    
    
    19.6
    
    
    
    22.1Stockpiles and in-process inventories
    
    
    1.5
    
    
    
    1.6
    
    
    
    1.6
    
    
    
    1.4
    
    
    
    0.9Total Phelps Dodge pro rata basis
    
    
    19.2
    
    
    
    24.8
    
    
    
    21.1
    
    
    
    21.0
    
    
    
    23.0Total consolidated basis (b)
    
    
    23.7
    
    
    
    26.1
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ACommercially recoverable molybdenum
(billion pounds)Phelps Dodge pro rata basis
    
    
    1.9
    
    
    
    2.1
    
    
    
    2.0
    
    
    
    2.1
    
    
    
    2.1Total consolidated basis
    
    
    2.0
    
    
    
    2.1
    
    
    
    2.0
    
    
    
    2.1
    
    
    
    2.1
 
 (a)
    
    Milling and leaching reserves on a 100% basis would have been 4.1 and 4.9 billion tons,
respectively, as of December 31, 2005, if El Abra, Candelaria, Cerro Verde, Morenci and Ojos
del Salado were reflected on a 100% basis.(b)
    
    Commercially recoverable copper on a 100% basis would have been 24.5 million tons of copper as of December 31,
2005, if El Abra, Candelaria, Cerro Verde, Morenci and Ojos del Salado were reflected on a
100% basis.  
 Copper and Molybdenum Prices
 Metals Week
 Cents per pound
    
    Dollars per poundof Copper
    
    of Molybdenum Dealer OxideCOMEX
    
    Platts Metals WeekYear
    
    High
    
    Low
    
    Average
    
    High
    
    Low
    
    Mean1991
    
    
    120
    
    
    
    96
    
    
    
    105
    
    
    
    2.78
    
    
    
    2.08
    
    
    
    2.381992
    
    
    116
    
    
    
    93
    
    
    
    103
    
    
    
    2.44
    
    
    
    1.82
    
    
    
    2.211993
    
    
    107
    
    
    
    72
    
    
    
    85
    
    
    
    2.80
    
    
    
    1.82
    
    
    
    2.321994
    
    
    140
    
    
    
    78
    
    
    
    107
    
    
    
    17.00
    
    
    
    2.68
    
    
    
    4.511995
    
    
    146
    
    
    
    121
    
    
    
    135
    
    
    
    17.50
    
    
    
    3.90
    
    
    
    8.081996
    
    
    131
    
    
    
    86
    
    
    
    106
    
    
    
    5.50
    
    
    
    2.90
    
    
    
    3.791997
    
    
    123
    
    
    
    76
    
    
    
    104
    
    
    
    4.90
    
    
    
    3.52
    
    
    
    4.311998
    
    
    86
    
    
    
    64
    
    
    
    75
    
    
    
    4.60
    
    
    
    2.00
    
    
    
    3.411999
    
    
    85
    
    
    
    61
    
    
    
    72
    
    
    
    2.90
    
    
    
    2.48
    
    
    
    2.652000
    
    
    93
    
    
    
    74
    
    
    
    84
    
    
    
    2.98
    
    
    
    2.15
    
    
    
    2.562001
    
    
    87
    
    
    
    60
    
    
    
    73
    
    
    
    2.65
    
    
    
    2.15
    
    
    
    2.362002
    
    
    78
    
    
    
    65
    
    
    
    72
    
    
    
    8.30
    
    
    
    2.40
    
    
    
    3.772003
    
    
    104
    
    
    
    71
    
    
    
    81
    
    
    
    7.80
    
    
    
    3.15
    
    
    
    5.322004
    
    
    154
    
    
    
    106
    
    
    
    129
    
    
    
    33.25
    
    
    
    7.20
    
    
    
    16.412005
    
    
    228
    
    
    
    140
    
    
    
    168
    
    
    
    40.00
    
    
    
    26.00
    
    
    
    31.73
 Metals Week
 Metals
Week




---



##### Table of Contents



18  Metals Week
 
 Mineralized Material
  Milling Material
    
    
    Leaching Material
    
    
    
    
    
    
    
    
    
    
    Phelps DodgeProperty/Deposit
    
    Location
    
    
    Millions of Tons
    
    
    % Copper
    
    
    Millions of Tons
    
    
    % Copper
    
    
    % Molybdenum
    
    
    % Cobalt
    
    
    Interest (%)Ajo
    
    Arizona
    
    
    205
    
    
    
    0.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Candelaria Norte & Sur (1)
    
    Chile
    
    
    10
    
    
    
    2.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80.0Climax
    
    Colorado
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.25
    
    
    
    
    
    
    
    100.0Cochise/Bisbee
    
    Arizona
    
    
    
    
    
    
    
    
    
    
    276
    
    
    
    0.47
    
    
    
    
    
    
    
    
    
    
    
    100.0El Abra (2)
    
    Chile
    
    
    300
    
    
    
    0.50
    
    
    
    500
    
    
    
    0.50
    
    
    
    
    
    
    
    
    
    
    
    51.0Lone Star
    
    Arizona
    
    
    
    
    
    
    
    
    
    
    1,600
    
    
    
    0.38
    
    
    
    
    
    
    
    
    
    
    
    100.0Safford
    
    Arizona
    
    
    330
    
    
    
    0.65
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0Sanchez
    
    Arizona
    
    
    
    
    
    
    
    
    
    
    230
    
    
    
    0.29
    
    
    
    
    
    
    
    
    
    
    
    100.0Tenke Fungurume (3)
    
    Dem. Rep. Congo
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    3.44
    
    
    
    
    
    
    
    0.34
    
    
    
    57.8Tohono
    
    Arizona
    
    
    276
    
    
    
    0.70
    
    
    
    404
    
    
    
    0.63
    
    
    
    
    
    
    
    
    
    
    
    100.0Tyrone
    
    New Mexico
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    0.34
    
    
    
    
    
    
    
    
    
    
    
    100.0
 
 (1)
    
    Candelaria Norte and Sur are potential underground mines that would utilize the existing
process facilities and infrastructure. The stated tonnage also contains 0.015 oz. gold per
ton. Approximately 4 million tons of underground ores were transferred into the stated
Candelaria reserves at year-end 2005, and development of these ores commenced in late 2005.(2)
    
    Phelps Dodge moved the leachable portion of the sulfide mill material to leachable material
at the end of 2005. The remaining millable material is mostly primary sulfides that have very
low leach recoveries.(3)
    
    Phelps Dodge exercised its option with Tenke Mining, resulting in the acquisition of 57.75%
of the Tenke Fungurume copper/cobalt project in the Democratic Republic of the Congo.




---



##### Table of Contents



19 
 Sales and Competition
 U.S. Mining Operations
  South American Mines
    Worldwide Copper Mining Operations
     Primary Molybdenum Segment
   
 Prices, Supply and Consumption
 Worldwide Copper Mining Operations




---



##### Table of Contents



20         Primary Molybdenum Segment




---



##### Table of Contents



21  Metals Week i.e. Metals Week Ryans Notes Metal Bulletin
 
 Costs
 Worldwide Copper Mining Operations
         
 Environmental and Other Regulatory Matters
 U.S. Mining Operations
 Significant Federal Environmental Programs




---



##### Table of Contents



22          Significant Arizona Environmental and Reclamation
Programs




---



##### Table of Contents



23




---



##### Table of Contents



24  Significant New Mexico Environmental and Reclamation
Programs




---



##### Table of Contents



25      Significant Colorado Reclamation Programs
  Avian Mortalities and Natural Resources Damage Claims




---



##### Table of Contents



26        Significant Changes in International Closure and
Reclamation Programs
 Sociedad Minera Cerro Verde S.A.A.
   Other
  Other




---



##### Table of Contents



27       
 Ownership of Property
 U.S. Mining Operations
  South American Mining
  Primary Molybdenum Operations
  
 PHELPS DODGE INDUSTRIES




---



##### Table of Contents



28   
 Wire and Cable Segment
           Competition and Markets




---



##### Table of Contents



Raw Materials and Energy Supplies
     Ownership of Property
    
 Discontinued OperationsColumbian Chemicals
     Competition and Markets
    Raw Materials and Energy Supplies




---



##### Table of Contents



30   Ownership of Property
  
 Environmental Matters
      
 LABOR MATTERS
  Phelps Dodge Mining CompanyNumber of UnionLocation
    
    Number of Unions
    
    Employees
    
    Expiration DateEl Abra  Chile
    
    
    2
    
    
    
    484
    
    
    Oct-08Candelaria  Chile
    
    
    2
    
    
    
    505
    
    
    Oct-09Cerro Verde  Peru
    
    
    1
    
    
    
    429
    
    
    Dec-08Chino  New Mexico
    
    
    1
    
    
    
    289
    
    
    Nov-09Rotterdam, The
Netherlands
    
    
    2
    
    
    
    41
    
    
    Dec-05Stowmarket, United
Kingdom
    
    
    1
    
    
    
    44
    
    
    May-06




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##### Table of Contents



31 Columbian ChemicalsNumber of UnionLocation
    
    Number of Unions
    
    Employees
    
    Expiration DateTrecate, Italy
    
    
    2
    
    
    
    85
    
    
    Dec-05Trecate, Italy
    
    
    1
    
    
    
    9
    
    
    Dec-08Hamilton, Ontario
    
    
    1
    
    
    
    60
    
    
    Nov-06Cubatao, Brazil
    
    
    1
    
    
    
    216
    
    
    Oct-06Sao Paulo, Brazil
    
    
    1
    
    
    
    27
    
    
    Oct-06Bristol, United Kingdom
    
    
    2
    
    
    
    51
    
    
    Apr-06Hannover, Germany
    
    
    1
    
    
    
    50
    
    
    Mar-07Yosu, South Korea
    
    
    1
    
    
    
    40
    
    
    Feb-06Santander, Spain
    
    
    1
    
    
    
    44
    
    
    Dec-05Marshall, West Virginia
    
    
    2
    
    
    
    59
    
    
    Jun-08North Bend, Louisiana
    
    
    1
    
    
    
    109
    
    
    Feb-06
  Phelps Dodge Wire and Cable OperationsNumber of UnionLocation
    
    Number of Unions
    
    Employees
    
    Expiration DateElizabeth, New Jersey
    
    
    1
    
    
    
    47
    
    
    Apr-07Luanshya, Zambia
    
    
    1
    
    
    
    75
    
    
    Jul-06Monterrey, Mexico
    
    
    1
    
    
    
    314
    
    
    Mar-06Fort Wayne, Indiana
    
    
    1
    
    
    
    172
    
    
    May-08Pocos de Caldas, Brazil
    
    
    1
    
    
    
    408
    
    
    Sep-06Sao Paulo, Brazil
    
    
    1
    
    
    
    37
    
    
    Nov-06Valencia, Venezuela
    
    
    1
    
    
    
    138
    
    
    Oct-06Valencia, Venezuela
    
    
    1
    
    
    
    113
    
    
    Dec-06Santiago, Chile
    
    
    1
    
    
    
    184
    
    
    May-07
   
 RESEARCH AND DEVELOPMENT
  
 OTHER ENVIRONMENTAL MATTERS




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##### Table of Contents



32   Pinal Creek Site
   Anniston Lead and PCB Sites
  Laurel Hill Site
   Yonkers Site




---



##### Table of Contents



33  Other
        
 Item 1A. Risk Factors
 Copper and Molybdenum Price Volatility May Reduce Our Profits and Cash Flow




---



##### Table of Contents



34   Metals Week
 Our Copper Price Protection Programs May Cause Significant Volatility in Financial Performance
  Increased Energy Costs Could Reduce Our Profitability or Result in Losses
   We Continue to Experience Pressure on Our Copper Production Costs
   Our
Business Is Subject to Complex and Evolving Laws and Regulations and Environmental
and Regulatory Compliance May Impose Substantial Costs on Us




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##### Table of Contents



35    Mine Closure Regulations May Impose Substantial Costs
      Levels of Ore Reserves and Mill and Leach Stockpiles Are Subject to Uncertainty and Our Ability
to Replenish Ore Reserves Is Important for Long-Term Viability




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##### Table of Contents



36   Operational Risks
  Our Operations Outside the United States Are Subject to the Risks of Doing Business in Foreign
Countries
   
 Item 3. Legal Proceedings
 I.
 II.
 A.
 In Re The General Adjudication of All Rights to Use Water in the Little Colorado
Water System and Source In Re The General Adjudication of All Rights to Use Water in the
Gila River System and Source




---



##### Table of Contents



37 B.
 Morenci
  Miami
 Sierrita
 Bagdad
 C.
  Safford
 Ajo
 Bisbee
 D
 1.
  2.




---



##### Table of Contents



38  E.
  1. United States v. Gila Valley Irrigation District, et al. Globe Equity No. 59
   2.
 3. United States,
et al. v. City of Tucson, et al.
 III.




---



##### Table of Contents



39 IV. Phelps Dodge Tyrone, Inc. v. New
Mexico Water Quality Control Commission Gila Resources Information Project v. New Mexico Water Quality Control
Commission
 V.
 VI. Technical Industries, Inc. v. Cabot Corporation, et
al. In Re Carbon Black
Antitrust Litigation
 Carlisle Companies Incorporated, et al. v. Cabot Corporation,
et al.
   VII.
 
 Item 4. Submission of Matters to a Vote of Security Holders




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##### Table of Contents



40 
 Executive Officers of Phelps Dodge Corporation
  Officer of theAge at
    
    
    
    CorporationName
    
    2/27/06
    
    Position
    
    SinceJ. Steven Whisler
    
    
    51
    
    
    Chairman of the Board
    
    
    1987and Chief Executive OfficerTimothy R. Snider
    
    
    55
    
    
    President and Chief Operating
    
    
    1997OfficerRamiro G. Peru
    
    
    50
    
    
    Executive Vice President
    
    
    1995and Chief Financial OfficerDavid C. Naccarati
    
    
    53
    
    
    President, Phelps DodgeMining CompanyArthur R. Miele
    
    
    64
    
    
    Senior Vice President-Marketing;
    
    
    1987President, Phelps DodgeSales CompanyKalidas V. Madhavpeddi
    
    
    50
    
    
    Senior Vice President-Asia;
    
    
    1999President, Phelps DodgeWire and Cable GroupS. David Colton
    
    
    50
    
    
    Senior Vice President and
    
    
    1998General CounselNancy Mailhot
    
    
    42
    
    
    Vice President-
    
    
    2004Human Resources




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##### Table of Contents



41 
 PART II
 
 Item 5. Market for the Registrants Common Equity and Related Stockholder Matters
    (c) Total Number of
    
    (d) Maximum Number (orShares (or Units)
    
    Approximate Dollar Value)(a) Total Number
    
    (b) Average Price
    
    Purchased as Part of
    
    of Shares (or Units) That Mayof Shares (or Units)
    
    Paid Per
    
    Publicly Announced
    
    Yet Be Purchased UnderPeriod
    
    Purchased*
    
    Share (or Unit)
    
    Plans or Programs
    
    the Plans or Programs
    
    
    
    
    
    
    
    October 1-31, 2005
    
    
    851
    
    
    $
    128.59
    
    
    
    
    
    
    
    November 1-30, 2005
    
    
    594
    
    
    
    120.94
    
    
    
    
    
    
    
    December 1-31, 2005
    
    
    489
    
    
    
    140.00
    
    
    
    
    
    
    
    Total
    
    
    1,934
    
    
    
    129.12
    
    
    
    
    
    
    
    
 
 *
    
    This category includes shares repurchased under the Companys applicable stock option
and restricted stock plans (Plans) and its non-qualified supplemental savings plan (SSP).
Through the Plans, the Company repurchases shares to satisfy tax obligations on restricted
stock awards, and in the SSP, the Company repurchases shares as a result of changes in
investment elections by plan participants.




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##### Table of Contents



42 
 Item 6. Selected Financial Data
   Year Ended December 31,*2005 (a)
    
    2004 (b)
    
    2003 (c)
    
    2002 (d)
    
    2001 (e)Statement of Operations DataSales and other operating revenues
    
    $
    8,287.1
    
    
    
    6,415.2
    
    
    
    3,498.5
    
    
    
    3,173.2
    
    
    
    3,420.4Operating income (loss)
    
    
    1,764.9
    
    
    
    1,474.9
    
    
    
    142.8
    
    
    
    (257.4
    )
    
    
    (90.6
    )Income (loss) from continuing operations before cumulative effect of accounting changes
    
    
    1,583.9
    
    
    
    1,023.6
    
    
    
    (21.1
    )
    
    
    (356.5
    )
    
    
    (377.7
    )Income (loss) from discontinued operations, net of taxes**
    
    
    (17.4
    )
    
    
    22.7
    
    
    
    39.2
    
    
    
    41.3
    
    
    
    48.2Income (loss) before cumulative effect of accounting changes
    
    
    1,566.5
    
    
    
    1,046.3
    
    
    
    18.1
    
    
    
    (315.2
    )
    
    
    (329.5
    )Net income (loss)
    
    
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8
    
    
    
    (338.1
    )
    
    
    (331.5
    )Basic earnings (loss) per common share from continuing operations***
    
    
    16.12
    
    
    
    10.82
    
    
    
    (0.39
    )
    
    
    (4.35
    )
    
    
    (4.81
    )Diluted earnings (loss) per common share from continuing operations***
    
    
    15.64
    
    
    
    10.35
    
    
    
    (0.39
    )
    
    
    (4.35
    )
    
    
    (4.81
    )Basic earnings (loss) per common share from discontinued operations, extraordinary
item and cumulative effect of accounting changes***
    
    
    (0.28
    )
    
    
    0.24
    
    
    
    1.31
    
    
    
    0.22
    
    
    
    0.59Diluted earnings (loss) per common share from discontinued operations, extraordinary
item and cumulative effect of accounting changes***
    
    
    (0.27
    )
    
    
    0.23
    
    
    
    1.31
    
    
    
    0.22
    
    
    
    0.59Basic earnings (loss) per common share***
    
    
    15.84
    
    
    
    11.06
    
    
    
    0.92
    
    
    
    (4.13
    )
    
    
    (4.22
    )Diluted earnings (loss) per common share***
    
    
    15.37
    
    
    
    10.58
    
    
    
    0.92
    
    
    
    (4.13
    )
    
    
    (4.22
    )Balance Sheet Data(at period end)Current assets
    
    $
    4,070.7
    
    
    
    2,661.7
    
    
    
    1,790.0
    
    
    
    1,428.2
    
    
    
    1,531.2Total assets
    
    
    10,358.0
    
    
    
    8,594.1
    
    
    
    7,272.9
    
    
    
    7,029.0
    
    
    
    7,584.3Total debt
    
    
    694.5
    
    
    
    1,096.9
    
    
    
    1,959.0
    
    
    
    2,110.6
    
    
    
    2,871.6Long-term debt
    
    
    677.7
    
    
    
    972.2
    
    
    
    1,703.9
    
    
    
    1,948.4
    
    
    
    2,538.3Shareholders equity
    
    
    5,601.6
    
    
    
    4,343.1
    
    
    
    3,063.8
    
    
    
    2,813.6
    
    
    
    2,730.1Cash dividends declared per common share
    
    
    6.25
    
    
    
    0.50
    
    
    
    
    
    
    
    
    
    
    
    0.75Other DataNet cash provided by operating activities
    
    $
    1,769.7
    
    
    
    1,700.1
    
    
    
    461.6
    
    
    
    359.1
    
    
    
    310.7Capital expenditures and investments
    
    
    698.2
    
    
    
    317.3
    
    
    
    102.4
    
    
    
    133.2
    
    
    
    311.0Net cash (used in) investing activities
    
    
    (368.0
    )
    
    
    (291.0
    )
    
    
    (87.7
    )
    
    
    (140.3
    )
    
    
    (266.8
    )Net cash provided by (used in) financing activities
    
    
    (685.8
    )
    
    
    (947.2
    )
    
    
    (48.8
    )
    
    
    (244.8
    )
    
    
    101.0Division ResultsPhelps Dodge Mining Company operating income (loss)
    
    $
    1,929.9
    
    
    
    1,606.7
    
    
    
    265.2
    
    
    
    (65.0
    )
    
    
    (83.6
    )Phelps Dodge Industries operating income
    
    
    14.6
    
    
    
    18.8
    
    
    
    13.7
    
    
    
    (17.5
    )
    
    
    12.2Corporate and other operating loss
    
    
    (179.6
    )
    
    
    (150.6
    )
    
    
    (136.1
    )
    
    
    (174.9
    )
    
    
    (19.2
    )$
    1,764.9
    
    
    
    1,474.9
    
    
    
    142.8
    
    
    
    (257.4
    )
    
    
    (90.6
    )CopperCopper
production  thousand short tons (h)
    
    
    1,228.0
    
    
    
    1,260.6
    
    
    
    1,042.5
    
    
    
    1,012.1
    
    
    
    1,145.2Copper sales from own mines  thousand short tons (h)
    
    
    1,238.4
    
    
    
    1,268.9
    
    
    
    1,052.6
    
    
    
    1,034.5
    
    
    
    1,156.0COMEX copper price (per pound) (f)
    
    $
    1.68
    
    
    
    1.29
    
    
    
    0.81
    
    
    
    0.72
    
    
    
    0.73LME copper price (per pound) (g)
    
    $
    1.67
    
    
    
    1.30
    
    
    
    0.81
    
    
    
    0.71
    
    
    
    0.72Commercially recoverable copper (million tons)Ore reserves (h)
    
    
    17.7
    
    
    
    23.2
    
    
    
    19.5
    
    
    
    19.6
    
    
    
    22.1Stockpiles and in-process inventories (h)
    
    
    1.5
    
    
    
    1.6
    
    
    
    1.6
    
    
    
    1.4
    
    
    
    0.919.2
    
    
    
    24.8
    
    
    
    21.1
    
    
    
    21.0
    
    
    
    23.0
 
 *
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003-2001
reflected El Abra and Candelaria on a pro rata basis (51 percent and 80 percent,
respectively). As a result of the Companys agreement to sell Columbian Chemicals Company (Columbian),
previously disclosed as our Specialty Chemicals segment, the operating results for Columbian have
been reported separately from continuing operations and shown as discontinued operations for all
periods presented.**
    
    Refer to Note 3, Discontinued Operations and Assets Held for Sale, to our Consolidated
Financial Statements contained herein for further discussion.***
    
    Basic and diluted earnings per common share do not reflect the stock split, which was
approved by the board of directors on February 1, 2006. Refer to Note 24, Stock Split, for
further discussion.




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##### Table of Contents



43  (a)
    
    Reported amounts included after-tax, net special charges of $331.8 million, or $3.28 per
common share, for asset impairment charges; tax expense of $88.1 million, or 87 cents per
common share, for foreign dividend taxes; $86.4 million, or 85 cents per common share, for
environmental provisions; $42.6 million, or 42 cents per common share, for charges associated
with discontinued operations in connection with
the pending sale of Columbian; $41.3 million, or 41 cents per common share, for early debt
extinguishment costs; $34.5 million (net of minority interest), or 35 cents per common share, for
tax on unremitted foreign earnings; $23.6 million, or 23 cents per common share, for a tax charge
associated with minimum pension liability reversal; $10.1 million, or 10 cents per common share,
for cumulative effect of accounting change; $5.9 million, or 6 cents per common share, for
transaction and employee-related costs associated with the sale of North American magnet wire
assets; partially offset by special gains of $388.0 million, or $3.83 per common share, for sale
of a cost-basis investment; $181.7 million, or $1.80 per common share, for change of interest
gains at Cerro Verde and Ojos del Salado; $15.6 million, or 16 cents per common share, for legal
matters; $11.9 million, or 12 cents per common share, for the reversal of PD Brazil deferred tax
asset valuation allowance; $8.5 million, or 8 cents per common share, for the sale of non-core
real estate; $4.0 million, or 4 cents per common share, for the reversal of U.S. deferred tax
asset valuation allowance; $0.4 million, or 1 cent per common share, for environmental insurance
recoveries; and $0.1 million for Magnet Wire restructuring activities. The after-tax, net special
charges of $42.6 million associated with discontinued operations consisted of $67.0 million (net
of minority interests), or 66 cents per common share, for a goodwill impairment charge; taxes of
$7.6 million, or 8 cents per common share, associated with the sale and dividends paid in 2005; and $5.0 million, or 5 cents per common share, for a loss on disposal of Columbian
associated with transaction and employee-related costs; partially offset by a deferred income tax
benefit of $37.0 million, or 37 cents per common share.(b)
    
    Reported amounts included after-tax, net special charges of $44.7 million, or 45 cents per
common share, for environmental provisions; $30.9 million (net of minority interests), or 31
cents per common share, for early debt extinguishment costs; $9.9 million, or 10 cents per
common share, for the write-down of two cost-basis investments; $9.6 million, or 10 cents per
common share, for taxes on anticipated foreign dividends; $9.0 million, or 9 cents per common
share, for a deferred tax asset valuation allowance at our Brazilian wire and cable operation;
$7.6 million, or 8 cents per common share, for Magnet Wire restructuring activities; $5.9
million, or 6 cents per common share, for asset impairments (included $4.5 million, or 4 cents
per common share, for discontinued operations); and $0.7 million, or 1 cent per common share,
for interest on a Texas franchise tax matter; partially offset by special gains of $30.0
million, or 31 cents per common share, for the reversal of a U.S. deferred tax asset valuation
allowance; $15.7 million (net of minority interest), or 16 cents per common share, for the
reversal of an El Abra deferred tax asset valuation allowance; $10.1 million, or 10 cents per
common share, for the gain on the sale of uranium royalty rights; $7.4 million, or 7 cents per
common share, for environmental insurance recoveries; and $4.7 million, or 5 cents per common
share, for the settlement of historical legal matters.(c)
    
    Reported amounts included after-tax, net special gains of $2.4 million, or 3 cents per common
share, for the termination of a foreign postretirement benefit plan associated with
discontinued operations; $0.5 million, or 1 cent per common share, for environmental insurance
recoveries; $0.2 million for the reassessment of prior restructuring programs; $6.4 million,
or 7 cents per common share, on the sale of a cost-basis investment; $8.4 million, or 9 cents
per common share, for cumulative effect of an accounting change; $1.0 million, or 1 cent per
common share, for the tax benefit relating to additional 2001 net operating loss carryback;
and an extraordinary gain of $68.3 million, or 76 cents per common share, on the acquisition
of our partners one-third interest in Chino Mines Company; partially offset by charges of
$27.0 million, or 30 cents per common share, for environmental provisions (included a gain of
$0.5 million, or 1 cent per common share, for discontinued operations); $8.0 million, or 9
cents per common share, for a probable Texas franchise tax matter; $2.9 million, or 3 cents
per common share, for the settlement of historical legal matters; and $2.6 million, or 3 cents
per common share, for asset and goodwill impairments.(d)
    
    Reported amounts included after-tax, net special charges of $153.5 million, or $1.82 per
common share, for Phelps Dodge Mining Company asset impairment charges and closure provisions;
$53.0 million, or 63 cents per common share, for historical lawsuit settlements; $45.0
million, or 54 cents per common share, for a historical arbitration award; $26.6 million, or
32 cents per common share, for early debt extinguishment costs; $23.0 million, or 27 cents per
common share, for Phelps Dodge Industries restructuring activities; $22.9 million, or 27 cents
per common share, for cumulative effect of an accounting change; $14.0 million, or 17 cents
per common share, for environmental provisions (included a gain of $0.6 million, or 1 cent per
common share, for discontinued operations); $1.2 million, or 1 cent per common share, for the
write-off of two cost-basis investments; $1.0 million, or 1 cent per common share, for the
settlement of legal matters; and $0.5 million, or 1 cent per common share, for the
reassessment and additional retirement benefits in connection with prior restructuring
programs; partially offset by special gains of $29.1 million, or 35 cents per common share,
for environmental insurance recoveries; $22.6 million, or 27 cents per common share, for the
gain on the sale of a non-core parcel of real estate; $13.0 million, or 15 cents per common
share, for the release of deferred taxes previously provided with regard to Plateau Mining
Corporation; and $66.6 million, or 79 cents per common share, for the tax benefit relating to
the net operating loss carryback prior to 2002 resulting from a change in U.S. tax
legislation; and $0.5 million, or 1 cent per common share, associated with discontinued
operations for the reassessment of a prior restructuring program.(e)
    
    Reported amounts included after-tax, net special gains of $61.8 million, or 79 cents per
common share, for environmental insurance recoveries; $39.9 million, or 51 cents per common
share, for the gain on the sale of Sossego; $9.0 million, or 11 cents per common share, for an
insurance settlement for potential future legal matters; offset by special charges of $57.9
million, or 74 cents per common share, to provide a deferred tax valuation allowance; $31.1
million, or 40 cents per common share, for environmental provisions (included $1.4 million, or
2 cents per common share, for discontinued operations); $29.8 million, or 38 cents per common
share, for restructuring activities; $12.9 million, or 16 cents per common share, for
investment impairments; $2.0 million, or 3 cents per common share, for cumulative effect of an
accounting change; and $3.4 million, or 4 cents per common share, for other items, net.(f)
    
    New York Commodity Exchange annual average spot price per pound  cathodes.(g)
    
    London Metal Exchange annual average spot price per pound  cathodes.(h)
    
    2005 and 2004 reflected production, sales and commercially recoverable copper on a
consolidated basis; 2003-2001 reflected that information on a pro rata basis. The decrease in
ore reserves at December 31, 2005, was primarily due to the reduction of the Companys interest
in Cerro Verde to 53.6 percent from 82.5 percent, new pit designs at Bagdad, Cerro Verde,
Chino, Cobre, Tyrone and Candelaria, as well as 2005 production.




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##### Table of Contents



44 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
   Managements Annual Report on Internal Control over Financial Reporting and Report of
Independent Registered Public Accounting Firm
  Changes in Internal Control over Financial Reporting
  
 Item 9B. Other Information




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##### Table of Contents



45 
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     
 Overview of Phelps Dodge Corporations Businesses and Managements Assessment of Key Factors
and Indicators that Could Impact Our Business, Operating Results and Cash Flows




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##### Table of Contents



46  Markets.
    Metals Week Metals Week
   Energy Costs.
   Cost Structure.




---



##### Table of Contents



47  Environmental and Mine Closure Regulatory Compliance.
 Ore Reserves.
    
 Critical Accounting Policies and Estimates
   Ore Reserves.




---



##### Table of Contents



48  Metals Week
 Asset Impairments. Metals
Week
 Metals Week
 Recoverable Copper.
   Deferred Taxes.




---



##### Table of Contents



49     Pension, Postemployment, Postretirement and Other Employee Benefit Liabilities.




---



##### Table of Contents



50     i.e.,
 Environmental Obligations.




---



##### Table of Contents



51     Reclamation.




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##### Table of Contents



52  Consolidated Financial Results
      2005*
    
    2004*
    
    2003*Sales and other operating revenues
    
    $
    8,287.1
    
    
    
    6,415.2
    
    
    
    3,498.5Operating income
    
    $
    1,764.9
    
    
    
    1,474.9
    
    
    
    142.8Minority interests in consolidated subsidiaries
    
    $
    (190.4
    )
    
    
    (201.1
    )
    
    
    (7.2
    )Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting changes
    
    $
    1,583.9
    
    
    
    1,023.6
    
    
    
    (21.1
    )Income (loss) from discontinued operations
    
    
    (17.4
    )
    
    
    22.7
    
    
    
    39.2Extraordinary gain on acquisition of partners
interest in Chino
    
    
    
    
    
    
    
    
    
    
    68.3Cumulative effect of accounting changes
    
    
    (10.1
    )
    
    
    
    
    
    
    8.4Net income
    
    $
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8
  2005*
    
    2004*
    
    2003*Basic earnings per common share:**Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting changes
    
    $
    16.12
    
    
    
    10.82
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.18
    )
    
    
    0.24
    
    
    
    0.45Extraordinary gain on acquisition of partners
interest in Chino
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Basic earnings per common share
    
    $
    15.84
    
    
    
    11.06
    
    
    
    0.92Diluted earnings per common share:**Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting changes
    
    $
    15.64
    
    
    
    10.35
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.17
    )
    
    
    0.23
    
    
    
    0.45Extraordinary gain on acquisition of partners
interest in Chino
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Diluted earnings per common share
    
    $
    15.37
    
    
    
    10.58
    
    
    
    0.92
 
 *
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003 reflected El Abra
and Candelaria on a pro rata basis (51 percent and 80 percent, respectively).**
    
    Basic and diluted earnings per common share do not reflect the stock split, which was
approved by the board of directors on February 1, 2006. Refer to Note 24, Stock Split, for
further discussion.




---



##### Table of Contents



53   Special Items and Provisions
     2005
    
    2004
    
    2003Net income
    
    $
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8Special items and provisions, net of taxes
    
    
    (54.1
    )
    
    
    (50.4
    )
    
    
    46.7Net income excluding special items
and provisions (after taxes)
    
    $
    1,610.5
    
    
    
    1,096.7
    
    
    
    48.1
    $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC (see Business Segment disclosure)
    
    $
    (447.3
    )
    
    
    (342.4
    )
    
    
    (3.38
    )PDI (see Business Segment disclosure)
    
    
    (18.6
    )
    
    
    (14.2
    )
    
    
    (0.14
    )Corporate and Other -Environmental provisions, net
    
    
    (75.4
    )
    
    
    (57.6
    )
    
    
    (0.57
    )Environmental insurance recoveries, net
    
    
    2.1
    
    
    
    1.6
    
    
    
    0.02Sale of non-core real estate
    
    
    11.2
    
    
    
    8.5
    
    
    
    0.08Historical legal matters
    
    
    4.9
    
    
    
    4.6
    
    
    
    0.05(57.2
    )
    
    
    (42.9
    )
    
    
    (0.42
    )(523.1
    )
    
    
    (399.5
    )
    
    
    (3.94
    )Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    (41.3
    )
    
    
    (0.41
    )Gain on sale of cost-basis investment
    
    
    438.4
    
    
    
    388.0
    
    
    
    3.83Change in interest gains:Cerro Verde stock issuance
    
    
    159.5
    
    
    
    172.9
    
    
    
    1.71Ojos del Salado stock issuance
    
    
    8.8
    
    
    
    8.8
    
    
    
    0.09168.3
    
    
    
    181.7
    
    
    
    1.80Provision for taxes on income:Foreign dividend taxes
    
    
    
    
    
    
    (88.1
    )
    
    
    (0.87
    )Tax on unremitted foreign earnings
    
    
    
    
    
    
    (43.1
    )
    
    
    (0.43
    )Tax charge associated with minimum
pension liability reversal
    
    
    
    
    
    
    (23.6
    )
    
    
    (0.23
    )Reversal of U.S. deferred tax asset
valuation allowance
    
    
    
    
    
    
    4.0
    
    
    
    0.04Reversal of PD Brazil deferred tax asset
valuation allowance
    
    
    
    
    
    
    11.9
    
    
    
    0.12
    
    
    
    (138.9
    )
    
    
    (1.37
    )Minority interests in consolidated subsidiaries:Tax on unremitted foreign earnings
    
    
    
    
    
    
    8.6
    
    
    
    0.08Special items and provisions, net from
continuing operations
    
    
    29.6
    
    
    
    (1.4
    )
    
    
    (0.01
    )Discontinued operations:Loss on disposal of Columbian Chemicals
    
    
    (5.8
    )
    
    
    (5.0
    )
    
    
    (0.05
    )Goodwill impairment charge
    
    
    (89.0
    )
    
    
    (67.0
    )
    
    
    (0.66
    )Transaction
and dividend taxes
    
    
    
    
    
    
    (7.6
    )
    
    
    (0.08
    )Deferred
income tax benefit
    
    
    
    
    
    
    37.0
    
    
    
    0.37(94.8
    )
    
    
    (42.6
    )
    
    
    (0.42
    )Cumulative effect of accounting change
    
    
    (13.5
    )
    
    
    (10.1
    )
    
    
    (0.10
    )$
    (78.7
    )
    
    
    (54.1
    )
    
    
    (0.53
    )




---



##### Table of Contents



54   $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC (see Business Segment disclosure)
    
    $
    (11.3
    )
    
    
    (8.3
    )
    
    
    (0.09
    )PDI (see Business Segment disclosure)
    
    
    (11.4
    )
    
    
    (8.3
    )
    
    
    (0.09
    )Corporate and Other -Environmental provisions, net
    
    
    (41.8
    )
    
    
    (31.8
    )
    
    
    (0.32
    )Environmental insurance recoveries, net
    
    
    0.2
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    2.7
    
    
    
    (0.5
    )
    
    
    (38.9
    )
    
    
    (32.2
    )
    
    
    (0.32
    )(61.6
    )
    
    
    (48.8
    )
    
    
    (0.50
    )Interest expense:Texas franchise tax matter
    
    
    (0.9
    )
    
    
    (0.7
    )
    
    
    (0.01
    )Early debt extinguishment costs
    
    
    (43.2
    )
    
    
    (34.3
    )
    
    
    (0.35
    )Miscellaneous income and expense, net:Cost-basis investment write-downs
    
    
    (11.1
    )
    
    
    (9.9
    )
    
    
    (0.10
    )Gain on sale of miscellaneous asset
    
    
    10.1
    
    
    
    10.1
    
    
    
    0.10Historical legal matters
    
    
    9.5
    
    
    
    7.2
    
    
    
    0.078.5
    
    
    
    7.4
    
    
    
    0.07Provision for taxes on income:Reversal of El Abra deferred tax asset
valuation allowance
    
    
    
    
    
    
    30.8
    
    
    
    0.31Reversal of U.S. deferred tax asset
valuation allowance
    
    
    
    
    
    
    30.0
    
    
    
    0.31PD Brazil deferred tax asset valuation
allowance
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )Foreign dividend taxes
    
    
    
    
    
    
    (9.6
    )
    
    
    (0.10
    )
    
    
    
    42.2
    
    
    
    0.43Minority interests in consolidated subsidiaries:Reversal of El Abra deferred tax asset
valuation allowance
    
    
    
    
    
    
    (15.1
    )
    
    
    (0.15
    )Candelaria early debt extinguishment costs
    
    
    
    
    
    
    2.5
    
    
    
    0.03El Abra early debt extinguishment costs
    
    
    
    
    
    
    0.9
    
    
    
    0.01
    
    
    
    (11.7
    )
    
    
    (0.11
    )Special items and provisions, net from
continuing operations
    
    
    (97.2
    )
    
    
    (45.9
    )
    
    
    (0.47
    )Discontinued operations:Asset impairment charge
    
    
    (5.9
    )
    
    
    (4.5
    )
    
    
    (0.04
    )$
    (103.1
    )
    
    
    (50.4
    )
    
    
    (0.51
    )
   $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC (see Business Segment disclosure)
    
    $
    (5.5
    )
    
    
    (5.2
    )
    
    
    (0.06
    )PDI (see Business Segment disclosure)
    
    
    (2.0
    )
    
    
    (2.0
    )
    
    
    (0.02
    )Corporate and Other Environmental provisions, net
    
    
    (23.8
    )
    
    
    (22.7
    )
    
    
    (0.26
    )Environmental insurance recoveries, net
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.01Historical Cyprus Amax legal matters
    
    
    (2.9
    )
    
    
    (2.9
    )
    
    
    (0.03
    )Potential Texas franchise tax matter
    
    
    (8.0
    )
    
    
    (8.0
    )
    
    
    (0.09
    )(34.2
    )
    
    
    (33.1
    )
    
    
    (0.37
    )(41.7
    )
    
    
    (40.3
    )
    
    
    (0.45
    )Miscellaneous income and expense, net:Gain on sale of cost-basis investment
    
    
    6.4
    
    
    
    6.4
    
    
    
    0.07Provision for taxes on income:Tax benefit for additional 2001 net
operating loss carryback
    
    
    
    
    
    
    1.0
    
    
    
    0.01Special items and provisions, net from
continuing operations
    
    
    (35.3
    )
    
    
    (32.9
    )
    
    
    (0.37
    )Discontinued operations:Environmental provisions, net
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.01Termination of a foreign postretirement
benefit plan
    
    
    3.2
    
    
    
    2.4
    
    
    
    0.023.7
    
    
    
    2.9
    
    
    
    0.03Extraordinary gain on acquisition of partners
one-third interest in Chino Mines Company
    
    
    68.3
    
    
    
    68.3
    
    
    
    0.77Cumulative effect of accounting change
    
    
    9.7
    
    
    
    8.4
    
    
    
    0.09$
    46.4
    
    
    
    46.7
    
    
    
    0.52
 Business Divisions




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##### Table of Contents



55     
 RESULTS OF PHELPS DODGE MINING COMPANY
         2005
    
    2004
    
    2003Sales and other operating revenues
to unaffiliated customers*
    
    $
    7,097.5
    
    
    
    5,443.4
    
    
    
    2,828.6Operating income*
    
    $
    1,929.9
    
    
    
    1,606.7
    
    
    
    265.2Operating income before special items
and provisions*
    
    $
    2,377.2
    
    
    
    1,618.0
    
    
    
    270.7Minority interests in consolidated subsidiaries (B)*
    
    $
    (184.9
    )
    
    
    (196.8
    )
    
    
    (3.5
    )Copper production (thousand short tons):Total copper production
    
    
    1,288.0
    
    
    
    1,323.6
    
    
    
    1,305.6Less undivided interest (A)
    
    
    60.0
    
    
    
    63.0
    
    
    
    63.3Copper production on a consolidated basis
    
    
    1,228.0
    
    
    
    1,260.6
    
    
    
    1,242.3Less minority participants shares (B)
    
    
    185.7
    
    
    
    178.9
    
    
    
    199.8Copper production on a pro rata basis
    
    
    1,042.3
    
    
    
    1,081.7
    
    
    
    1,042.5Copper sales (thousand short tons):Total copper sales from own mines
    
    
    1,298.4
    
    
    
    1,331.9
    
    
    
    1,317.4Less undivided interest (A)
    
    
    60.0
    
    
    
    63.0
    
    
    
    63.3Copper sales from own mines on a
consolidated basis
    
    
    1,238.4
    
    
    
    1,268.9
    
    
    
    1,254.1Less minority participants shares (B)
    
    
    186.8
    
    
    
    179.8
    
    
    
    201.5Copper sales from own mines on a
pro rata basis
    
    
    1,051.6
    
    
    
    1,089.1
    
    
    
    1,052.6Purchased copper
    
    
    410.7
    
    
    
    433.0
    
    
    
    374.5Total copper sales on a consolidated basis
    
    
    1,649.1
    
    
    
    1,701.9
    
    
    
    N/ATotal copper sales on a pro rata basis
    
    
    N/A
    
    
    
    N/A
    
    
    
    1,427.1LME average spot copper price
per pound  cathodes
    
    $
    1.669
    
    
    
    1.300
    
    
    
    0.807COMEX average spot copper price
per pound  cathodes
    
    $
    1.682
    
    
    
    1.290
    
    
    
    0.811Molybdenum production (million pounds)
    
    
    62.3
    
    
    
    57.5
    
    
    
    52.0Molybdenum sales (million pounds):Net Phelps Dodge share from own mines
    
    
    59.9
    
    
    
    63.1
    
    
    
    54.2Purchased molybdenum
    
    
    12.9
    
    
    
    12.9
    
    
    
    8.2Total molybdenum sales
    
    
    72.8
    
    
    
    76.0
    
    
    
    62.4Metals Week:Annual molybdenum Dealer Oxide
mean price per pound
    
    $
    31.73
    
    
    
    16.41
    
    
    
    5.32




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##### Table of Contents



56 *
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003 reflected El Abra
and Candelaria on a pro rata basis (51 percent and 80 percent, respectively).
 (A)
    
    Represents a 15 percent undivided interest in Morenci, Arizona, copper mining complex held by
Sumitomo Metal Mining Arizona, Inc.
 (B)
    
    Minority participant interests include (i) a one-third partnership interest in Chino Mines
Company in New Mexico held by Heisei Minerals Corporation through December 18, 2003, (ii) a 20
percent partnership interest in Candelaria in Chile owned by
SMMA Candelaria, Inc., Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, (iii) a 49 percent partnership
interest in the El Abra copper mining operation in Chile held by
Corporación Nacional del
Cobre de Chile (CODELCO), (iv) a 17.5 percent equity interest through May 31, 2005, and a 46.4
percent equity interest beginning June 1, 2005, in the Cerro Verde copper mining operation in
Peru held by  SMM Cerro Verde Netherlands B.V. and Compañía de Minas
Buenaventura S.A.A., and (v) a 20 percent equity interest beginning December 23, 2005, in the
Ojos del Salado copper mining operation in Chile held by SMMA Candelaria,
Inc.
 (thousand short tons)2005
    
    
    2004
    
    
    2003Minority participants share of copper production:Chino
    
    
    
    
    
    
    
    
    
    
    13.7Candelaria
    
    
    35.9
    
    
    
    44.1
    
    
    
    46.9Cerro Verde
    
    
    35.9
    
    
    
    17.1
    
    
    
    16.8El Abra
    
    
    113.8
    
    
    
    117.7
    
    
    
    122.4Ojos del Salado
    
    
    0.1
    
    
    
    
    
    
    
    185.7
    
    
    
    178.9
    
    
    
    199.8
 Total PDMC Division  Sales
   Total PDMC Division  Operating Income




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##### Table of Contents



i.e.
   2005
    
    
    2006
    
    
    2007Copper Collars:Pounds of zero-premium
copper collars purchased
(in millions) (A)
    
    
    198
    
    
    
    564
    
    
    
    486Average LME put strike price
(floor) per pound
    
    $
    0.943
    
    
    
    0.954
    
    
    
    0.950Annual average LME call strike
price (ceiling) per pound
    
    $
    1.400
    
    
    
    1.632
    
    
    
    2.002Associated pre-tax charges for
2005 (in millions) (B)
    
    $
    54
    
    
    
    164
    
    
    
    35Copper Put Options:Pounds of copper put options
purchased (in millions)
    
    
    
    
    
    
    564
    
    
    
    730Average LME put strike
price per pound
    
    $
    
    
    
    
    0.950
    
    
    
    0.950Premium cost per pound
    
    $
    
    
    
    
    0.020
    
    
    
    0.023Associated pre-tax charges for
2005 (in millions)
    
    $
    
    
    
    
    11
    
    
    
    14
 
 (A)
    
    2005 excludes El Abra; refer to the table below, which provides a summary of El Abras 2005
zero-premium copper collar program.(B)
    
    The 2005 realized pre-tax charges resulted from the 2005 LME price average of $1.671 per
pound exceeding the $1.40 per pound ceiling of our 2005 zero-premium copper collars.
Substantially all of the 2006 unrealized pre-tax charges resulted from changes in fair value
of the options based on the 2006 LME forward price average of $1.912 per pound (weighted
average call strike of $1.632 per pound). The 2007 unrealized pre-tax charges resulted from
changes in the fair value of the options based on the 2007 LME forward price average of $1.654
per pound (Note: the 2007 option fair value entirely consists of the time value component,
which includes volatility).  2005El Abra Copper Collars:Pounds of zero-premium copper
collars purchased (in millions)
    
    
    452Monthly average LME put strike
price (floor) per pound
    
    $
    1.000Annual average LME call strike
price (ceiling) per pound
    
    $
    1.376Associated pre-tax charges for
2005 (in millions) (A)
    
    $
    133
 
 (A)
    
    The realized pre-tax charges resulted from the 2005 LME price average of $1.671 per pound
exceeding the $1.376 per pound ceiling of our 2005 zero-premium copper collars (approximately
$68 million for PDs share).




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003Asset impairment charges
    
    $
    (424.6
    )
    
    
    (1.1
    )
    
    
    Environmental provisions, net
    
    
    (35.7
    )
    
    
    (16.8
    )
    
    
    (5.5
    )Environmental insurance recoveries, net
    
    
    (1.5
    )
    
    
    9.1
    
    
    
    Historical legal matters
    
    
    14.5
    
    
    
    (2.5
    )
    
    
    $
    (447.3
    )
    
    
    (11.3
    )
    
    
    (5.5
    )




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##### Table of Contents








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##### Table of Contents



60 PDMC Results By Reportable Segments
   U.S. Mines
    
    South American MinesChino/
    
    
    
    
    
    
    
    
    
    Candelaria/
    
    CerroMorenci
    
    Bagdad
    
    Sierrita
    
    Cobre
    
    Tyrone
    
    Subtotal
    
    Ojos del Salado*
    
    Verde
    
    El Abra*
    
    Subtotal2005Copper production (thousand short tons):Total production
    
    
    400.0
    
    
    
    100.6
    
    
    
    79.3
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    725.2
    
    
    
    210.4
    
    
    
    103.1
    
    
    
    232.2
    
    
    
    545.7Less undivided interest
    
    
    60.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    340.0
    
    
    
    100.6
    
    
    
    79.3
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    665.2
    
    
    
    210.4
    
    
    
    103.1
    
    
    
    232.2
    
    
    
    545.7Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.0
    
    
    
    35.9
    
    
    
    113.8
    
    
    
    185.7Copper production on a pro rata basis
    
    
    340.0
    
    
    
    100.6
    
    
    
    79.3
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    665.2
    
    
    
    174.4
    
    
    
    67.2
    
    
    
    118.4
    
    
    
    360.0Copper sales (thousand short tons):Total copper sales from own mines
    
    
    400.0
    
    
    
    104.4
    
    
    
    82.8
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    732.5
    
    
    
    210.6
    
    
    
    102.7
    
    
    
    233.3
    
    
    
    546.6Less undivided interest
    
    
    60.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a
consolidated basis
    
    
    340.0
    
    
    
    104.4
    
    
    
    82.8
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    672.5
    
    
    
    210.6
    
    
    
    102.7
    
    
    
    233.3
    
    
    
    546.6Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.1
    
    
    
    36.4
    
    
    
    114.3
    
    
    
    186.8Copper sales from own mines on a
pro rata basis
    
    
    340.0
    
    
    
    104.4
    
    
    
    82.8
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    672.5
    
    
    
    174.5
    
    
    
    66.3
    
    
    
    119.0
    
    
    
    359.8Total purchased copper (thousand short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23.1
    
    
    
    
    
    
    
    
    
    
    
    23.1Total copper sales on a consolidated basis
    
    
    340.0
    
    
    
    104.4
    
    
    
    82.8
    
    
    
    104.8
    
    
    
    40.5
    
    
    
    672.5
    
    
    
    233.7
    
    
    
    102.7
    
    
    
    233.3
    
    
    
    569.7($ in millions)Operating income (loss)
    
    $
    399.9
    
    
    
    389.8
    
    
    
    568.8
    
    
    
    (15.3
    )
    
    
    (209.1
    )
    
    
    1,134.1
    
    
    
    306.8
    
    
    
    209.8
    
    
    
    274.7
    
    
    
    791.3Special items and provisions, net
    
    
    (0.2
    )
    
    
    12.1
    
    
    
    1.2
    
    
    
    (64.5
    )
    
    
    (215.7
    )
    
    
    (267.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special
items and provisions
    
    $
    400.1
    
    
    
    377.7
    
    
    
    567.6
    
    
    
    49.2
    
    
    
    6.6
    
    
    
    1,401.2
    
    
    
    306.8
    
    
    
    209.8
    
    
    
    274.7
    
    
    
    791.32004Copper production (thousand short tons):Total production
    
    
    420.3
    
    
    
    110.1
    
    
    
    77.5
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    742.7
    
    
    
    230.9
    
    
    
    97.6
    
    
    
    240.3
    
    
    
    568.8Less undivided interest
    
    
    63.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    357.3
    
    
    
    110.1
    
    
    
    77.5
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    679.7
    
    
    
    230.9
    
    
    
    97.6
    
    
    
    240.3
    
    
    
    568.8Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.1
    
    
    
    17.1
    
    
    
    117.7
    
    
    
    178.9Copper production on a pro rata basis
    
    
    357.3
    
    
    
    110.1
    
    
    
    77.5
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    679.7
    
    
    
    186.8
    
    
    
    80.5
    
    
    
    122.6
    
    
    
    389.9Copper sales (thousand short tons):Total copper sales from own mines
    
    
    420.3
    
    
    
    111.9
    
    
    
    79.2
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    746.2
    
    
    
    233.5
    
    
    
    98.2
    
    
    
    240.8
    
    
    
    572.5Less undivided interest
    
    
    63.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a
consolidated basis
    
    
    357.3
    
    
    
    111.9
    
    
    
    79.2
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    683.2
    
    
    
    233.5
    
    
    
    98.2
    
    
    
    240.8
    
    
    
    572.5Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.6
    
    
    
    17.2
    
    
    
    118.0
    
    
    
    179.8Copper sales from own mines on a
pro rata basis
    
    
    357.3
    
    
    
    111.9
    
    
    
    79.2
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    683.2
    
    
    
    188.9
    
    
    
    81.0
    
    
    
    122.8
    
    
    
    392.7Total purchased copper (thousand short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37.1
    
    
    
    
    
    
    
    
    
    
    
    37.1Total copper sales on a consolidated basis
    
    
    357.3
    
    
    
    111.9
    
    
    
    79.2
    
    
    
    91.7
    
    
    
    43.1
    
    
    
    683.2
    
    
    
    270.6
    
    
    
    98.2
    
    
    
    240.8
    
    
    
    609.6($ in millions)Operating income (loss)
    
    $
    375.7
    
    
    
    174.9
    
    
    
    264.3
    
    
    
    57.6
    
    
    
    22.9
    
    
    
    895.4
    
    
    
    303.3
    
    
    
    130.0
    
    
    
    273.7
    
    
    
    707.0Special items and provisions, net
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    (5.8
    )
    
    
    (7.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special
items and provisions
    
    $
    376.3
    
    
    
    174.9
    
    
    
    264.3
    
    
    
    58.8
    
    
    
    28.7
    
    
    
    903.0
    
    
    
    303.3
    
    
    
    130.0
    
    
    
    273.7
    
    
    
    707.0
 
 Refer to segment discussion on pages 64 through 70.Revenues, operating costs and expenses of PDMCs segments included allocations that may not be
reflective of market conditions. Additionally, certain costs were not allocated
to the reportable segments. (Refer to page 64 for further discussion.)*
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003 reflected El Abra and
Candelaria on a pro rata basis (51 percent and 80 percent, respectively).




---



##### Table of Contents



61 PDMC Results By Reportable Segments
 U.S. Mines
    
    South American MinesChino/
    
    
    
    
    
    
    
    
    
    Candelaria/
    
    CerroMorenci
    
    Bagdad
    
    Sierrita
    
    Cobre
    
    Tyrone
    
    Subtotal
    
    Ojos del Salado*
    
    Verde
    
    El Abra*
    
    Subtotal2003Copper production (thousand short tons):Total production
    
    
    421.2
    
    
    
    107.0
    
    
    
    75.6
    
    
    
    39.9
    
    
    
    56.9
    
    
    
    700.6
    
    
    
    234.5
    
    
    
    96.3
    
    
    
    249.8
    
    
    
    580.6Less minority participants shares
    
    
    63.3
    
    
    
    
    
    
    
    
    
    
    
    12.5
    
    
    
    
    
    
    
    75.8
    
    
    
    46.9
    
    
    
    16.8
    
    
    
    122.4
    
    
    
    186.1Copper production on a pro rata basis
    
    
    357.9
    
    
    
    107.0
    
    
    
    75.6
    
    
    
    27.4
    
    
    
    56.9
    
    
    
    624.8
    
    
    
    187.6
    
    
    
    79.5
    
    
    
    127.4
    
    
    
    394.5Copper sales (thousand short tons):Total copper sales from own mines
    
    
    421.2
    
    
    
    111.0
    
    
    
    79.3
    
    
    
    40.7
    
    
    
    56.9
    
    
    
    709.1
    
    
    
    234.3
    
    
    
    95.6
    
    
    
    251.8
    
    
    
    581.7Less minority participants shares
    
    
    63.3
    
    
    
    
    
    
    
    
    
    
    
    13.3
    
    
    
    
    
    
    
    76.6
    
    
    
    46.9
    
    
    
    16.7
    
    
    
    123.4
    
    
    
    187.0Copper sales from own mines on a pro rata basis
    
    
    357.9
    
    
    
    111.0
    
    
    
    79.3
    
    
    
    27.4
    
    
    
    56.9
    
    
    
    632.5
    
    
    
    187.4
    
    
    
    78.9
    
    
    
    128.4
    
    
    
    394.7Purchased copper
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22.1
    
    
    
    
    
    
    
    7.3
    
    
    
    29.4Total copper sales on a pro rata basis
    
    
    357.9
    
    
    
    111.0
    
    
    
    79.3
    
    
    
    27.4
    
    
    
    56.9
    
    
    
    632.5
    
    
    
    209.5
    
    
    
    78.9
    
    
    
    135.7
    
    
    
    424.1($ in millions)Operating income (loss)
    
    $
    77.4
    
    
    
    30.1
    
    
    
    50.9
    
    
    
    (5.4
    )
    
    
    (17.2
    )
    
    
    135.8
    
    
    
    100.5
    
    
    
    42.7
    
    
    
    39.4
    
    
    
    182.6Special items and provisions, net
    
    
    (1.1
    )
    
    
    
    
    
    
    
    
    
    
    (1.3
    )
    
    
    (0.5
    )
    
    
    (2.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special
items and provisions
    
    $
    78.5
    
    
    
    30.1
    
    
    
    50.9
    
    
    
    (4.1
    )
    
    
    (16.7
    )
    
    
    138.7
    
    
    
    100.5
    
    
    
    42.7
    
    
    
    39.4
    
    
    
    182.6
 
 Refer to segment discussion on pages 64 through 70.
Revenues, operating costs and expenses of PDMCs segments included allocations that may not be
reflective of market conditions. Additionally, certain costs were not allocated
to the reportable segments. (Refer to page 64 for further discussion.)*
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003 reflected El Abra and
Candelaria on a pro rata basis (51 percent and 80 percent, respectively).




---



##### Table of Contents



62 PDMC Results By Reportable Segments
 Primary
    
    
    
    
    
    
    
    
    
    PDMCMolybdenum
    
    Manufacturing
    
    Sales
    
    Segments
    
    Other
    
    Total PDMC2005Copper production (thousand short tons):Total production
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,273.2
    
    
    
    14.8
    
    
    
    1,288.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60.0
    
    
    
    
    
    
    
    60.0Copper production on a consolidated basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,213.2
    
    
    
    14.8
    
    
    
    1,228.0Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185.7
    
    
    
    
    
    
    
    185.7Copper production on a pro rata basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,027.5
    
    
    
    14.8
    
    
    
    1,042.3Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,281.4
    
    
    
    17.0
    
    
    
    1,298.4Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60.0
    
    
    
    
    
    
    
    60.0Copper sales from own mines on a consolidated basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,221.4
    
    
    
    17.0
    
    
    
    1,238.4Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186.8
    
    
    
    
    
    
    
    186.8Copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,034.6
    
    
    
    17.0
    
    
    
    1,051.6Total purchased copper (thousand short tons)
    
    
    
    
    
    
    369.5
    
    
    
    18.1
    
    
    
    410.7
    
    
    
    
    
    
    
    410.7Total copper sales on a consolidated basis
    
    
    
    
    
    
    371.8
    
    
    
    18.1
    
    
    
    1,632.1
    
    
    
    17.0
    
    
    
    1,649.1Molybdenum production (thousand pounds):Primary  Henderson
    
    
    32,201
    
    
    
    
    
    
    
    
    
    
    
    32,201
    
    
    
    
    
    
    
    32,201By-product
    
    
    30,105
    
    
    
    
    
    
    
    
    
    
    
    30,105
    
    
    
    
    
    
    
    30,105Total production
    
    
    62,306
    
    
    
    
    
    
    
    
    
    
    
    62,306
    
    
    
    
    
    
    
    62,306Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    59,947
    
    
    
    
    
    
    
    
    
    
    
    59,947
    
    
    
    
    
    
    
    59,947Purchased molybdenum
    
    
    12,830
    
    
    
    
    
    
    
    
    
    
    
    12,830
    
    
    
    
    
    
    
    12,830Total molybdenum sales
    
    
    72,777
    
    
    
    
    
    
    
    
    
    
    
    72,777
    
    
    
    
    
    
    
    72,777($ in millions)Operating income (loss)
    
    $
    324.3
    
    
    
    (148.1
    )
    
    
    1.7
    
    
    
    2,103.3
    
    
    
    (173.4
    )
    
    
    1,929.9Special items and provisions, net
    
    
    (0.8
    )
    
    
    (154.0
    )
    
    
    
    
    
    
    (421.9
    )
    
    
    (25.4
    )
    
    
    (447.3
    )Operating income (loss) excluding special items and provisions
    
    $
    325.1
    
    
    
    5.9
    
    
    
    1.7
    
    
    
    2,525.2
    
    
    
    (148.0
    )
    
    
    2,377.22004Copper production (thousand short tons):Total production
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,313.8
    
    
    
    9.8
    
    
    
    1,323.6Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.0
    
    
    
    
    
    
    
    63.0Copper production on a consolidated basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,250.8
    
    
    
    9.8
    
    
    
    1,260.6Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178.9
    
    
    
    
    
    
    
    178.9Copper production on a pro rata basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,071.9
    
    
    
    9.8
    
    
    
    1,081.7Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,321.0
    
    
    
    10.9
    
    
    
    1,331.9Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.0
    
    
    
    
    
    
    
    63.0Copper sales from own mines on a consolidated basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,258.0
    
    
    
    10.9
    
    
    
    1,268.9Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179.8
    
    
    
    
    
    
    
    179.8Copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    1,078.2
    
    
    
    10.9
    
    
    
    1,089.1Total purchased copper (thousand short tons)
    
    
    
    
    
    
    394.0
    
    
    
    1.9
    
    
    
    433.0
    
    
    
    
    
    
    
    433.0Total copper sales on a consolidated basis
    
    
    
    
    
    
    396.3
    
    
    
    1.9
    
    
    
    1,691.0
    
    
    
    10.9
    
    
    
    1,701.9Molybdenum production (thousand pounds):Primary  Henderson
    
    
    27,520
    
    
    
    
    
    
    
    
    
    
    
    27,520
    
    
    
    
    
    
    
    27,520By-product
    
    
    29,969
    
    
    
    
    
    
    
    
    
    
    
    29,969
    
    
    
    
    
    
    
    29,969Total production
    
    
    57,489
    
    
    
    
    
    
    
    
    
    
    
    57,489
    
    
    
    
    
    
    
    57,489Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    63,108
    
    
    
    
    
    
    
    
    
    
    
    63,108
    
    
    
    
    
    
    
    63,108Purchased molybdenum
    
    
    12,844
    
    
    
    
    
    
    
    
    
    
    
    12,844
    
    
    
    
    
    
    
    12,844Total molybdenum sales
    
    
    75,952
    
    
    
    
    
    
    
    
    
    
    
    75,952
    
    
    
    
    
    
    
    75,952($ in millions)Operating income (loss)
    
    $
    103.3
    
    
    
    29.1
    
    
    
    4.1
    
    
    
    1,738.9
    
    
    
    (132.2
    )
    
    
    1,606.7Special items and provisions, net
    
    
    0.3
    
    
    
    (3.2
    )
    
    
    
    
    
    
    (10.5
    )
    
    
    (0.8
    )
    
    
    (11.3
    )Operating income (loss) excluding special items and provisions
    
    $
    103.0
    
    
    
    32.3
    
    
    
    4.1
    
    
    
    1,749.4
    
    
    
    (131.4
    )
    
    
    1,618.0
 
 Refer to segment discussion on pages 64 through 70.Revenues, operating costs and expenses of PDMCs segments included allocations that may not be
reflective of market conditions. Additionally, certain costs were not allocated
to the reportable segments. (Refer to page 64 for further discussion.)




---



##### Table of Contents



63 PDMC Results By Reportable Segments
 Primary
    
    
    
    
    
    
    
    
    
    PDMCMolybdenum
    
    Manufacturing
    
    Sales
    
    Segments
    
    Other
    
    Total PDMC2003Copper production (thousand short tons):Total production
    
    
    
    
    
    
    6.6
    
    
    
    
    
    
    
    1,287.8
    
    
    
    17.8
    
    
    
    1,305.6Less minority participants shares
    
    
    
    
    
    
    1.2
    
    
    
    
    
    
    
    263.1
    
    
    
    
    
    
    
    263.1Copper production on a pro rata basis
    
    
    
    
    
    
    5.4
    
    
    
    
    
    
    
    1,024.7
    
    
    
    17.8
    
    
    
    1,042.5Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    6.6
    
    
    
    
    
    
    
    1,297.4
    
    
    
    20.0
    
    
    
    1,317.4Less minority participants shares
    
    
    
    
    
    
    1.2
    
    
    
    
    
    
    
    264.8
    
    
    
    
    
    
    
    264.8Total copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    5.4
    
    
    
    
    
    
    
    1,032.6
    
    
    
    20.0
    
    
    
    1,052.6Purchased copper
    
    
    
    
    
    
    274.6
    
    
    
    70.5
    
    
    
    374.5
    
    
    
    
    
    
    
    374.5Total copper sales on a pro rata basis
    
    
    
    
    
    
    280.0
    
    
    
    70.5
    
    
    
    1,407.1
    
    
    
    20.0
    
    
    
    1,427.1Molybdenum production (thousand pounds):Primary  Henderson
    
    
    22,247
    
    
    
    
    
    
    
    
    
    
    
    22,247
    
    
    
    
    
    
    
    22,247By-product
    
    
    29,747
    
    
    
    
    
    
    
    
    
    
    
    29,747
    
    
    
    
    
    
    
    29,747Total production
    
    
    51,994
    
    
    
    
    
    
    
    
    
    
    
    51,994
    
    
    
    
    
    
    
    51,994Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    54,158
    
    
    
    
    
    
    
    
    
    
    
    54,158
    
    
    
    
    
    
    
    54,158Purchased molybdenum
    
    
    8,199
    
    
    
    
    
    
    
    
    
    
    
    8,199
    
    
    
    
    
    
    
    8,199Total molybdenum sales
    
    
    62,357
    
    
    
    
    
    
    
    
    
    
    
    62,357
    
    
    
    
    
    
    
    62,357($ in millions)Operating income (loss)
    
    $
    8.6
    
    
    
    26.4
    
    
    
    5.5
    
    
    
    358.9
    
    
    
    (93.7
    )
    
    
    265.2Special
items and provisions, net
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (3.0
    )
    
    
    (2.5
    )
    
    
    (5.5
    )Operating income (loss) excluding special items and provisions
    
    $
    8.6
    
    
    
    26.5
    
    
    
    5.5
    
    
    
    361.9
    
    
    
    (91.2
    )
    
    
    270.7
 
 Refer to segment discussion on pages 64 through 70.Revenues, operating costs and expenses of PDMCs segments included allocations that may not be
reflective of market conditions. Additionally, certain costs were not allocated
to the reportable segments. (Refer to page 64 for further discussion.)




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##### Table of Contents



64 Sales of Copper (U.S. and South America)  and Molybdenum
   2005
    
    2004
    
    2003U.S. Mining Operations*Unaffiliated customers
    
    $
    4,182.3
    
    
    
    3,518.5
    
    
    
    2,048.9Intersegment elimination
    
    
    (814.8
    )
    
    
    (663.7
    )
    
    
    (309.9
    )3,367.5
    
    
    
    2,854.8
    
    
    
    1,739.0South American Mines**Unaffiliated customers
    
    
    977.1
    
    
    
    939.6
    
    
    
    396.1Intersegment
    
    
    814.8
    
    
    
    663.7
    
    
    
    309.91,791.9
    
    
    
    1,603.3
    
    
    
    706.0Primary MolybdenumUnaffiliated customers
    
    
    1,938.1
    
    
    
    985.3
    
    
    
    383.6Intersegment
    
    
    
    
    
    
    
    
    
    
    1,938.1
    
    
    
    985.3
    
    
    
    383.6Total PDMCUnaffiliated customers
    
    $
    7,097.5
    
    
    
    5,443.4
    
    
    
    2,828.6
 
 *
    
    U.S. Mining Operations comprised the following reportable segments: Morenci, Bagdad,
Sierrita, Chino/Cobre, Tyrone, Manufacturing and Sales, along with other mining activities.**
    
    South American Mines comprised the following segments: Candelaria/Ojos del Salado, Cerro
Verde and El Abra. 2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003
reflected El Abra and Candelaria on a pro rata basis (51 percent and 80 percent,
respectively).
 U.S. Mining Operations  Sales
   South American Mines Segments  Sales
   Primary Molybdenum Segment  Sales
   Operating Income for Copper (U.S. and South America) and Molybdenum




---



##### Table of Contents



2005
    
    2004
    
    2003Segment operating income:U.S. Mining Operations*
    
    $
    814.3
    
    
    
    796.4
    
    
    
    74.0South American Mines**
    
    
    791.3
    
    
    
    707.0
    
    
    
    182.6Primary Molybdenum
    
    
    324.3
    
    
    
    103.3
    
    
    
    8.6$
    1,929.9
    
    
    
    1,606.7
    
    
    
    265.2Special, pre-tax items and provisions:U.S. Mining Operations*
    
    $
    (446.5
    )
    
    
    (11.6
    )
    
    
    (5.5
    )South American Mines**
    
    
    
    
    
    
    
    
    
    
    Primary Molybdenum
    
    
    (0.8
    )
    
    
    0.3
    
    
    
    $
    (447.3
    )
    
    
    (11.3
    )
    
    
    (5.5
    )Segment operating income excluding
special items and provisions:U.S. Mining Operations*
    
    $
    1,260.8
    
    
    
    808.0
    
    
    
    79.5South American Mines**
    
    
    791.3
    
    
    
    707.0
    
    
    
    182.6Primary Molybdenum
    
    
    325.1
    
    
    
    103.0
    
    
    
    8.6$
    2,377.2
    
    
    
    1,618.0
    
    
    
    270.7
 
 *
    
    U.S. Mining Operations comprised the following reportable segments: Morenci, Bagdad,
Sierrita, Chino/Cobre, Tyrone, Manufacturing and Sales, along with other mining activities.**
    
    South American Mines comprised the following segments: Candelaria/Ojos del Salado, Cerro
Verde and El Abra. 2005 and 2004 reflected the full consolidation of El Abra and Candelaria;
2003 reflected El Abra and Candelaria on a pro rata basis (51 percent and 80 percent,
respectively).
  U.S. Mining Operations  Operating Income
  Curtailed Properties and Recommencement of Previously Curtailed Properties
       
    
    Our Bagdad mine in Arizona began increasing production in
January 2004 and resumed producing at full capacity in the
2004 second quarter.
    
    Our Sierrita mine in Arizona began increasing production
in January 2004 and resumed producing at full capacity in the
2004 fourth quarter.
    
    Our Chino mine in New Mexico began increasing production
in the 2003 fourth quarter as it resumed full mine-for-leach
operation. The Chino milling operation increased to
approximately 80 percent of capacity in the 2004 third
quarter, which better balances our concentrate and acid
production in the southwest.
    
    Our Ojos del Salado mine in Chile, which had been
curtailed since 1998, resumed underground mining and milling
operations in the 2004 second quarter.
    
    Our Miami smelter in Arizona resumed operating at full
capacity in the 2004 second quarter.




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##### Table of Contents



66    
    
    Tyrone mining operations were temporarily curtailed in
2004 to focus on stockpile reclamation. During 2005, a
combination of mining and reclamation activities was
conducted. These activities are expected to continue through
2006 as Tyrone focuses on site reclamation while mining its
remaining ore reserves. The Tyrone SX/EW operations continue
at a declining production rate.
    
    Cobre mining and milling operations have remained
curtailed since its temporary shutdown in March 1999.
Permitting was initiated in 2005 to optimize future production
with Chinos mining operations.
    
    The Chino smelter was temporarily curtailed in January
2002. This action followed temporary suspension of the
concentrator operation in 2001 and was taken due to continuing
depressed copper market conditions and the need to balance
smelter feed and sulfuric acid production and consumption.
    
    The Miami refinery was temporarily curtailed in January
2002. This action was taken due to continuing depressed copper
market conditions and to balance refinery feed within PDMC.
    
    On June 1, 2005, the Companys board of directors
approved expenditures of $210 million to construct a
concentrate-leaching, direct-electrowinning facility at the
Morenci copper mine to restart its concentrator. The new
facility is expected to begin operations in 2007. With future
Morenci copper concentrate production being fed into the
concentrate-leach facility, the Company reassessed its
operating capacity, flexibility, efficiencies and costs at its
Chino smelter and Miami refinery. Accordingly, the Chino
smelter and Miami refinery, which have been on
care-and-maintenance status since 2002, were closed.
Demolition of the Chino smelter has been initiated. Completion
of this project is expected in 2007.
  Morenci Segment  Operating Income




---



##### Table of Contents



67 Bagdad Segment  Operating Income
    Sierrita Segment  Operating Income
    Chino/Cobre Segment  Operating Income (Loss)




---



##### Table of Contents



68  Tyrone Segment  Operating Income (Loss)
    Manufacturing Segment  Operating Income (Loss)
    South American Mines  Operating Income
   Candelaria/Ojos del Salado Segment  Operating Income




---



##### Table of Contents



69  Cerro Verde Segment  Operating Income
     El Abra Segment  Operating Income
    Primary Molybdenum  Operating Income




---



##### Table of Contents



70 Metals Week
 i.e Metals
Week Ryans Notes Metal Bulletin i.e.,
   PDMC  Other Matters




---



##### Table of Contents



71      
 RESULTS OF PHELPS DODGE INDUSTRIES
      2005
    
    2004
    
    2003Sales and other operating revenues to
unaffiliated customers
    
    $
    1,189.6
    
    
    
    971.8
    
    
    
    669.9Operating income
    
    $
    14.6
    
    
    
    18.8
    
    
    
    13.7Special items and provisions, net
    
    $
    (18.6
    )
    
    
    (11.4
    )
    
    
    (2.0
    )Operating income before special items
and provisions, net
    
    $
    33.2
    
    
    
    30.2
    
    
    
    15.7Minority interests in consolidated subsidiaries
    
    $
    (5.5
    )
    
    
    (4.3
    )
    
    
    (3.7
    )
 Wire and Cable  Sales




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##### Table of Contents



72  Wire and Cable  Operating Income
        2005
    
    2004
    
    2003Environmental provisions, net
    
    $
    (2.2
    )
    
    
    (0.3
    )
    
    
    0.4Restructuring programs/closures
    
    
    (0.7
    )
    
    
    (10.5
    )
    
    
    0.2Asset impairment charges
    
    
    (7.9
    )
    
    
    (0.6
    )
    
    
    (1.7
    )Employee and
transaction costs  sale of
North American magnet wire assets
    
    
    (7.8
    )
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    (0.9
    )Special, pre-tax items
    
    $
    (18.6
    )
    
    
    (11.4
    )
    
    
    (2.0
    )




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##### Table of Contents



73 
 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
 Discontinued Operations
     2005
    
    2004
    
    2003Sales and other operating revenues
    
    $
    743.3
    
    
    
    674.1
    
    
    
    644.2Operating income (loss)
    
    $
    (60.1
    )
    
    
    28.7
    
    
    
    54.8Operating income before special items
and provisions, net
    
    $
    34.7
    
    
    
    34.6
    
    
    
    51.1Benefit (provision) for taxes on income
    
    $
    37.0
    
    
    
    (11.0
    )
    
    
    (20.7
    )Income (loss) from discontinued operations
    
    $
    (17.4
    )
    
    
    22.7
    
    
    
    39.2
    Current assets:Cash and cash equivalents
    
    $
    11.0Accounts receivable, net
    
    
    163.9Inventories
    
    
    70.9Supplies
    
    
    15.7Prepaid expenses and other current assets
    
    
    12.1$
    273.6Property, plant and equipment, net
    
    $
    367.2Deferred income taxes
    
    
    4.7Goodwill
    
    
    2.0Other assets and deferred charges
    
    
    2.9$
    376.8Current liabilities:Short-term debt
    
    $
    4.3Accounts payable and accrued expenses
    
    
    96.9Accrued income taxes
    
    
    12.7$
    113.9Deferred income taxes
    
    $
    35.4Other liabilities and deferred credits
    
    
    25.7$
    61.1
  Assets Held for Sale




---



##### Table of Contents



74   Current assets:Accounts receivable, net
    
    $
    57.1Inventories
    
    
    36.4Supplies
    
    
    4.2Prepaid expenses and other current assets
    
    
    2.5$
    100.2Property, plant and equipment, net
    
    $
    54.6Current liabilities:Accounts payable and accrued expenses
    
    $
    7.9Accrued income taxes
    
    
    1.4$
    9.3Other liabilities and deferred credits
    
    $
    0.2
 
 OTHER
MATTERS RELATING TO THE CONSOLIDATED STATEMENT OF INCOME
 Cost of Products Sold
   Depreciation, Depletion and Amortization Expense
   Selling and General Administrative Expense
   Exploration and Research Expense
   Interest Expense, Net




---



##### Table of Contents



75   Early Debt Extinguishment Costs
        Gain on Sale of Cost-Basis Investment
  Change in Interest Gains




---



##### Table of Contents



76  Miscellaneous Income and Expense, Net
   Provision for Taxes on Income
        Cumulative Effect of Accounting Changes




---



##### Table of Contents



77   Pensions and Other Postretirement Benefits
       
 CHANGES IN FINANCIAL CONDITION; CAPITALIZATION
 Cash and Cash Equivalents
     2005
    
    2004U.S. operations:Phelps Dodge*
    
    $
    1,104.3
    
    
    
    678.4International operations:Phelps Dodge*
    
    
    570.9
    
    
    
    453.3Minority participants shares*
    
    
    262.3
    
    
    
    68.4833.2
    
    
    
    521.7Total consolidated cash
    
    $
    1,937.5
    
    
    
    1,200.1
 
 *
    
    2005 included restricted cash of $9.4 million in U.S. operations, $11.4 million in
international operations and $5.0 million associated with minority participants shares.




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##### Table of Contents



78   2005*
    
    2004*
    
    2003*Cash provided by:Operating activities:Cash flow from operations
    
    $
    2,332.9
    
    
    
    1,842.7
    
    
    
    478.8Changes in working capital
    
    
    (142.5
    )
    
    
    (127.3
    )
    
    
    26.2Pension plan
and VEBA trusts contributions
    
    
    (450.0
    )
    
    
    (85.4
    )
    
    
    Other operating, net
    
    
    29.3
    
    
    
    70.1
    
    
    
    (43.4
    )Investing activities:Capital expenditures
    
    
    (686.0
    )
    
    
    (303.6
    )
    
    
    (151.4
    )Investments in subsidiaries**
    
    
    (12.2
    )
    
    
    (13.7
    )
    
    
    49.0Global environmental trust contributions
    
    
    (100.0
    )
    
    
    
    
    
    
    Proceeds from the sale of SPCC
    
    
    451.6
    
    
    
    
    
    
    
    Other investing activities, net
    
    
    (21.4
    )
    
    
    26.3
    
    
    
    14.7Financing activities:Payment of debt, net of proceeds
    
    
    (394.4
    )
    
    
    (1,107.1
    )
    
    
    (147.3
    )Dividends
    
    
    (739.3
    )
    
    
    (71.5
    )
    
    
    (16.0
    )Proceeds from issuance of stock
    
    
    466.6
    
    
    
    
    
    
    
    Issuance of shares, net
    
    
    55.9
    
    
    
    291.0
    
    
    
    80.4Other financing, net
    
    
    (74.6
    )
    
    
    (59.6
    )
    
    
    34.1Cash included in assets held for sale
    
    
    (11.0
    )
    
    
    
    
    
    
    Exchange rate impact
    
    
    11.7
    
    
    
    26.1
    
    
    
    8.9Net increase in cash and cash equivalents
    
    $
    716.6
    
    
    
    488.0
    
    
    
    334.0
 
 *
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003 reflected El Abra
and Candelaria on a pro rata basis (51 percent and 80 percent, respectively).**
    
    2003 included $50 million of cash received and $0.9 million of cash acquired from Heisei in
connection with our acquisition of its one-third partnership interest in Chino. Chino Mines Company Acquisition
    Working Capital
  
    
    a $266.5 million increase in accounts receivable
primarily due to copper receivables resulting from higher
copper prices (approximately $314 million), higher molybdenum
receivables resulting from higher molybdenum prices
(approximately $29 million), repayment of an accounts
receivable securitization program (approximately $85 million)
and higher taxes receivable (approximately $53 million);
partially offset by reclassification of receivable amounts to
assets held for sale ($221.0 million);
    
    a net increase of $250.6 million in assets held for sale
and liabilities related to assets held for sale associated
with the reclassification of amounts associated with the
pending sale of Columbian ($159.7 million) and Magnet Wire
North America ($90.9 million);
    
    a $37.6 million increase in prepaid expenses and other
current assets primarily due to fair value adjustments
associated with derivatives (approximately $24 million), the
reclassification of the current portion of long-term
investments (approximately $6 million) and higher prepaid
foreign income taxes (approximately $9 million); and
    
    a $38.9 million increase in current deferred tax assets
primarily due to reclassification from non-current deferred
income taxes (approximately $48 million); partially offset by
the reclassification of amounts to assets held for sale ($10.5
million); partially offset by
    
    a $473.6 million increase in accounts payable and accrued
expenses mostly due to (i) higher accruals for hedging and
price protection programs (approximately $361 million) mostly
associated with mark-to-market adjustments on copper collars,
of which approximately $187 million was associated with
realized 2005 copper price protection programs, (ii) higher
balances for copper cathode and concentrate purchases
(approximately $86 million),




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##### Table of Contents



79 (iii) net increases in asset
retirement obligations (approximately $47 million) and
environmental reserves
(approximately $18 million) primarily resulting from the reclassification of
the current portions for the acceleration of certain environmental and
reclamation projects, (iv) higher accruals associated with capital spending
(approximately $35 million) and (v) timing of payments (approximately $20
million); partially offset by reclassification of amounts to liabilities
related to assets held for sale ($104.8 million) and lower postretirement
liabilities (approximately $29 million) due to funding the VEBA trusts in
December 2005; and
 
    
    a decrease of $62.6 million in inventories
primarily due to the reclassification of amounts to
assets held for sale ($107.3 million); partially
offset by increases due to lower molybdenum sales
(approximately $38 million).
 Investing Activities
   Financing Activities and Liquidity




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80




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##### Table of Contents



81 Contractual Obligations, Commercial Commitments and Other Items that May Affect Liquidity
  
 Less Than
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsShort-term debt
    
    $
    14.3
    
    
    
    14.3
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    680.2
    
    
    
    2.5
    
    
    
    65.7
    
    
    
    30.2
    
    
    
    581.8Scheduled interest payment obligations*
    
    
    982.8
    
    
    
    52.7
    
    
    
    97.5
    
    
    
    93.2
    
    
    
    739.4Asset retirement obligations**
    
    
    62.2
    
    
    
    26.1
    
    
    
    26.2
    
    
    
    8.8
    
    
    
    1.1Take-or-pay contracts***
    
    
    1,469.1
    
    
    
    863.5
    
    
    
    259.2
    
    
    
    128.8
    
    
    
    217.6Operating lease obligations***
    
    
    95.0
    
    
    
    18.2
    
    
    
    33.2
    
    
    
    23.9
    
    
    
    19.7Mineral royalty obligations
    
    
    20.0
    
    
    
    1.9
    
    
    
    3.8
    
    
    
    3.6
    
    
    
    10.7Total contractual cash obligations****
    
    $
    3,323.6
    
    
    
    979.2
    
    
    
    485.6
    
    
    
    288.5
    
    
    
    1,570.3
 
 *
    
    Scheduled interest payment obligations were calculated using stated coupon rates for fixed
debt and interest rates applicable at December 31, 2005, for variable rate debt.**
    
    Asset retirement obligations only include our estimated contractual cash payments associated
with reclamation activities at certain sites for which our costs are estimable and the timing
of payments is reasonably determinable as of December 31, 2005. The timing and the amount of
these payments could change as a result of changes in regulatory requirements, changes in
scope of reclamation activities and as actual reclamation spending occurs. The table excludes
remaining cash payments of approximately $81 million that are expected to be incurred in
connection with accelerating certain closure projects, which are in the Companys discretion.
(Refer to Other Items that May Affect Liquidity on pages 82 through 84 for further discussion
of the Accelerated Projects.) Additionally, we have also excluded payments for reclamation
activities that are expected to occur after five years that are either not estimable and/or
for which the timing is not determinable because the majority of these cash flows are expected
to occur over an extended period of time commencing near the end of the mine life.***
    
    Included in our take-or-pay contracts and operating leases are obligations of approximately
$392 million and $7 million, respectively, associated with discontinued operations.****
    
    This table excludes certain other obligations that we have reflected in our Consolidated
Balance Sheet, including: (i) estimated funding for pension obligations as the funding may
vary from year-to-year based on changes in the fair value of plan assets and actuarial
assumptions. For 2006, there is no minimum funding requirement for the Phelps Dodge Retirement
Plan or for our U.S. pension plans for bargained employees, but we expect to provide funding
of approximately $4 million for our international subsidiaries and supplemental retirement
plan; and (ii) environmental obligations and contingencies for which the timing of payments is
not determinable.




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##### Table of Contents



Less Than
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsStandby letters of credit
    
    $
    75.3
    
    
    
    74.6
    
    
    
    0.7
    
    
    
    
    
    
    
    Corporate guarantees
    
    
    370.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370.0Sales performance guarantees
    
    
    39.4
    
    
    
    28.4
    
    
    
    10.9
    
    
    
    0.1
    
    
    
    Surety bonds
    
    
    165.0
    
    
    
    0.3
    
    
    
    2.6
    
    
    
    
    
    
    
    162.1Asset pledges
    
    
    27.6
    
    
    
    27.6
    
    
    
    
    
    
    
    
    
    
    
    Total commercial commitments
    
    $
    677.3
    
    
    
    130.9
    
    
    
    14.2
    
    
    
    0.1
    
    
    
    532.1
        Other Items that May Affect Liquidity




---



##### Table of Contents



83




---



##### Table of Contents



84        Hedging Programs
  Copper Fixed-Price Hedging.




---



##### Table of Contents



85  Copper Price Protection Programs.
    Copper COMEX-LME Arbitrage Program.
  Metal Purchase Hedging.
  Gold and Silver Price Protection Program.




---



##### Table of Contents



86   Copper Quotational Period Swap Program.
  Diesel Fuel/Natural Gas Price Protection Program.
     Feedstock Oil Price Protection Program.
  Interest Rate Hedging.




---



##### Table of Contents



87  Foreign Currency Hedging.
  Environmental Matters
      2005
    
    2004
    
    2003Balance, beginning of year
    
    $
    303.6
    
    
    
    317.2
    
    
    
    305.9Additions to reserves
    
    
    116.0
    
    
    
    63.6
    
    
    
    54.6Reductions in reserve estimates
    
    
    (2.6
    )
    
    
    (4.7
    )
    
    
    (12.7
    )Spending against reserves
    
    
    (49.1
    )
    
    
    (72.5
    )
    
    
    (24.1
    )Reclassification to asset retirement obligations*
    
    
    
    
    
    
    
    
    
    
    (6.5
    )Balance, end of year
    
    $
    367.9
    
    
    
    303.6
    
    
    
    317.2
 
 *
    
    Upon adoption of SFAS No. 143, reserves for certain matters ($6.5 million) required by
reclamation rules or laws were reclassified to asset retirement obligations (previously
classified as environmental reserves).




---



##### Table of Contents



88      Asset Retirement Obligations




---



##### Table of Contents



2005
    
    2004
    
    2003Balance, beginning of year
    
    $
    275.2
    
    
    
    225.3
    
    
    
    138.6Liability recorded upon adoption of
SFAS No. 143*
    
    
    
    
    
    
    
    
    
    
    10.4Liability recorded upon adoption of FIN 47**
    
    
    17.9
    
    
    
    
    
    
    
    Additional liabilities from fully consolidating
El Abra and Candelaria**
    
    
    
    
    
    
    5.6
    
    
    
    New liabilities during the period
    
    
    1.5
    
    
    
    1.8
    
    
    
    16.8Accretion expense
    
    
    22.8
    
    
    
    19.6
    
    
    
    14.7Payments
    
    
    (39.2
    )
    
    
    (28.9
    )
    
    
    (1.8
    )Revisions in estimated cash flows
    
    
    127.0
    
    
    
    51.6
    
    
    
    46.4Foreign currency translation adjustments
    
    
    (0.6
    )
    
    
    0.2
    
    
    
    0.2Transfer to long-term liabilities related
to assets held for sale
    
    
    (6.2
    )
    
    
    
    
    
    
    Balance, end of year
    
    $
    398.4
    
    
    
    275.2
    
    
    
    225.3
 
 *
    
    Amount includes $7.9 million of reclassifications from environmental reserves ($6.5 million)
and other liabilities ($1.4 million). Refer to Note 1, Summary of Significant Accounting
Policies, for further discussion.**
    
    Refer to Note 1, Summary of Significant Accounting Policies, for further discussion.
 
 2005
    
    2004
    
    2003Gross balance, beginning of year
    
    $
    196.3
    
    
    
    138.9
    
    
    
    Asset recorded upon adoption of
SFAS No. 143*
    
    
    
    
    
    
    
    
    
    
    91.5Asset recorded upon adoption of FIN 47*
    
    
    8.4
    
    
    
    
    
    
    
    Additional assets from fully consolidating
El Abra and Candelaria*
    
    
    
    
    
    
    3.8
    
    
    
    New assets during the period
    
    
    1.5
    
    
    
    1.8
    
    
    
    1.0Revisions in estimated cash flows
    
    
    127.0
    
    
    
    51.6
    
    
    
    46.4Impairment of assets
    
    
    (129.7
    )
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    (0.4
    )
    
    
    0.2
    
    
    
    Transfer to long-term assets held for sale
    
    
    (3.9
    )
    
    
    
    
    
    
    Gross balance, end of year
    
    
    199.2
    
    
    
    196.3
    
    
    
    138.9Less accumulated depreciation,
depletion and amortization **
    
    
    (86.4
    )
    
    
    (71.2
    )
    
    
    (60.7
    )Net balance, end of year
    
    $
    112.8
    
    
    
    125.1
    
    
    
    78.2
 
 *
    
    Refer to Note 1, Summary of Significant Accounting Policies, for further
discussion.**
    
    In 2005, accumulated depreciation, depletion and amortization included adjustments for the
adoption of FIN 47 ($4.0 million) and the transfer to long-term assets held for sale ($2.0
million); in 2004, adjustments included $1.4 million from fully consolidating El Abra and
Candelaria.




---



##### Table of Contents



90  Significant Arizona Environmental and Reclamation Programs
         Significant New Mexico Environmental and Reclamation Programs




---



##### Table of Contents



91       Significant Colorado Reclamation Programs
  Significant Changes in International Closure and
Reclamation Programs
 Sociedad Minera Cerro Verde S.A.A.
   Other
  Other




---



##### Table of Contents



92        Other Matters
 New Accounting Pronouncements




---



##### Table of Contents



93        
 CAPITAL OUTLAYS
   2005*
    
    2004*
    
    2003*PDMC:Copper  United States
    
    $
    231.4
    
    
    
    168.7
    
    
    
    58.8Copper  South America
    
    
    352.1
    
    
    
    49.0
    
    
    
    11.1Primary Molybdenum
    
    
    27.3
    
    
    
    16.0
    
    
    
    13.4610.8
    
    
    
    233.7
    
    
    
    83.3PDI:Specialty Chemicals  Discontinued Operations
    
    
    40.4
    
    
    
    31.0
    
    
    
    23.9Wire and Cable
    
    
    19.5
    
    
    
    25.2
    
    
    
    17.159.9
    
    
    
    56.2
    
    
    
    41.0Corporate and Other
    
    
    15.3
    
    
    
    13.7
    
    
    
    27.1$
    686.0
    
    
    
    303.6
    
    
    
    151.4
 
 *
    
    2005 and 2004 reflected full consolidation of El Abra and Candelaria; 2003 reflected El Abra
and Candelaria on a pro rata basis (51 percent and 80 percent, respectively).
 
 INFLATION
  
 DIVIDENDS AND MARKET PRICE RANGES




---



##### Table of Contents



94     
 QUARTERLY FINANCIAL DATA
  Quarter
    
    First
    
    Second
    
    Third
    
    Fourth2005Sales and other operating revenues
    
    $
    1,886.5
    
    
    
    1,966.0
    
    
    
    2,179.0
    
    
    
    2,255.6Operating income
    
    
    535.8
    
    
    
    164.8
    
    
    
    560.3
    
    
    
    504.0Operating income before special items
and provisions
    
    
    534.9
    
    
    
    602.0
    
    
    
    605.3
    
    
    
    545.8Minority interests in consolidated
subsidiaries
    
    
    (26.6
    )
    
    
    (38.3
    )
    
    
    (51.6
    )
    
    
    (73.9
    )Income from continuing operations
before cumulative effect of
accounting change
    
    
    377.4
    
    
    
    675.1
    
    
    
    360.1
    
    
    
    171.3Income (loss) from discontinued
operations
    
    
    9.3
    
    
    
    7.2
    
    
    
    6.0
    
    
    
    (39.9
    )Net income
    
    
    386.7
    
    
    
    682.3
    
    
    
    366.1
    
    
    
    121.3Income from continuing operations,
excluding special items and
provisions (after taxes)
    
    
    377.3
    
    
    
    449.3
    
    
    
    435.9
    
    
    
    322.8Basic earnings per common share
from continuing operations before
cumulative effect of accounting
change
    
    
    3.91
    
    
    
    6.98
    
    
    
    3.65
    
    
    
    1.70Basic earnings (loss) per common share
from discontinued operations
    
    
    0.09
    
    
    
    0.08
    
    
    
    0.06
    
    
    
    (0.40
    )Basic earnings per common share
    
    
    4.00
    
    
    
    7.06
    
    
    
    3.71
    
    
    
    1.20Diluted earnings per common share
from continuing operations before
cumulative effect of accounting
change
    
    
    3.74
    
    
    
    6.68
    
    
    
    3.55
    
    
    
    1.69Diluted earnings (loss) per common share
from discontinued operations
    
    
    0.09
    
    
    
    0.07
    
    
    
    0.06
    
    
    
    (0.40
    )Diluted earnings per common share
    
    
    3.83
    
    
    
    6.75
    
    
    
    3.61
    
    
    
    1.19Stock prices*High
    
    
    109.12
    
    
    
    103.44
    
    
    
    132.45
    
    
    
    149.25Low
    
    
    90.02
    
    
    
    78.20
    
    
    
    91.75
    
    
    
    114.20Close
    
    
    101.73
    
    
    
    92.50
    
    
    
    129.93
    
    
    
    143.87
 
 *
    
    As reported in the Wall Street Journal.




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##### Table of Contents



95   Quarter
    
    First
    
    Second
    
    Third
    
    Fourth2004Sales and other operating revenues
    
    $
    1,433.1
    
    
    
    1,485.7
    
    
    
    1,675.4
    
    
    
    1,821.0Operating income
    
    
    303.6
    
    
    
    338.8
    
    
    
    400.1
    
    
    
    432.4Operating income before special items
and provisions
    
    
    310.4
    
    
    
    327.3
    
    
    
    411.2
    
    
    
    487.6Minority interests in consolidated
subsidiaries
    
    
    (63.5
    )
    
    
    (41.6
    )
    
    
    (43.4
    )
    
    
    (52.6
    )Income from continuing operations
    
    
    176.7
    
    
    
    213.8
    
    
    
    288.6
    
    
    
    344.5Income (loss) from discontinued
operations
    
    
    9.0
    
    
    
    12.8
    
    
    
    4.3
    
    
    
    (3.4
    )Net income
    
    
    185.7
    
    
    
    226.6
    
    
    
    292.9
    
    
    
    341.1Income from continuing operations
excluding special items and
provisions (after taxes)
    
    
    187.1
    
    
    
    229.8
    
    
    
    289.5
    
    
    
    363.1Basic earnings per common share
from continuing operations
    
    
    1.89
    
    
    
    2.26
    
    
    
    3.04
    
    
    
    3.58Basic earnings (loss) per common share
from discontinued operations
    
    
    0.10
    
    
    
    0.14
    
    
    
    0.05
    
    
    
    (0.03
    )Basic earnings per common share
    
    
    1.99
    
    
    
    2.40
    
    
    
    3.09
    
    
    
    3.55Diluted earnings per common share
from continuing operations
    
    
    1.81
    
    
    
    2.17
    
    
    
    2.90
    
    
    
    3.43Diluted earnings (loss) per common share
from discontinued operations
    
    
    0.09
    
    
    
    0.13
    
    
    
    0.05
    
    
    
    (0.03
    )Diluted earnings per common share
    
    
    1.90
    
    
    
    2.30
    
    
    
    2.95
    
    
    
    3.40Stock prices*High
    
    
    90.52
    
    
    
    84.80
    
    
    
    93.73
    
    
    
    101.55Low
    
    
    70.86
    
    
    
    59.80
    
    
    
    69.80
    
    
    
    80.52Close
    
    
    81.66
    
    
    
    77.51
    
    
    
    92.03
    
    
    
    98.92
 
 *
    
    As reported in the Wall Street Journal.




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##### Table of Contents



96 PHELPS DODGE CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
   
 
 REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of Phelps Dodge;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and directors of the
Company; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of Phelps Dodges assets that could have a material effect
on the financial statements.
  Internal
Control-Integrated Framework




---



##### Table of Contents



97 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Consolidated financial statements and financial statement schedule
   Internal control over financial reporting
 Internal Control  Integrated Framework Internal
Control  Integrated Framework




---



##### Table of Contents



Phelps
Dodge Corporation
 
 Consolidated Statement of Income
 For the years ended December 31,2005
    
    2004
    
    2003(see Note 1)Sales and other operating revenues
    
    $
    8,287.1
    
    
    
    6,415.2
    
    
    
    3,498.5Operating costs and expensesCost of products sold (exclusive of items shown separately below)
    
    
    5,281.8
    
    
    
    4,226.7
    
    
    
    2,766.1Depreciation, depletion and amortization
    
    
    441.8
    
    
    
    455.5
    
    
    
    376.7Selling and general administrative expense
    
    
    158.5
    
    
    
    140.1
    
    
    
    126.9Exploration and research expense
    
    
    117.0
    
    
    
    56.4
    
    
    
    44.3Special items and provisions, net (see Note 4)
    
    
    523.1
    
    
    
    61.6
    
    
    
    41.76,522.2
    
    
    
    4,940.3
    
    
    
    3,355.7Operating income
    
    
    1,764.9
    
    
    
    1,474.9
    
    
    
    142.8Interest expense
    
    
    (78.6
    )
    
    
    (123.2
    )
    
    
    (141.8
    )Capitalized interest
    
    
    16.3
    
    
    
    0.3
    
    
    
    Early debt extinguishment costs (see Note 14)
    
    
    (54.0
    )
    
    
    (43.2
    )
    
    
    Gain on sale of cost-basis investment (see Note 4)
    
    
    438.4
    
    
    
    
    
    
    
    Change in interest gains (see Note 4)
    
    
    168.3
    
    
    
    
    
    
    
    Miscellaneous income and expense, net
    
    
    93.3
    
    
    
    45.3
    
    
    
    10.0Income from continuing operations before taxes, minority interests in consolidated subsidiaries,
equity in net earnings (losses) of affiliated companies, extraordinary item and cumulative
effect of accounting changes
    
    
    2,348.6
    
    
    
    1,354.1
    
    
    
    11.0Provision for taxes on income
    
    
    (577.0
    )
    
    
    (131.3
    )
    
    
    (27.6
    )Minority interests in consolidated subsidiaries
    
    
    (190.4
    )
    
    
    (201.1
    )
    
    
    (7.2
    )Equity in net earnings (losses) of affiliated companies
    
    
    2.7
    
    
    
    1.9
    
    
    
    2.7Income (loss) from continuing operations before extraordinary item and cumulative effect of
accounting changes
    
    
    1,583.9
    
    
    
    1,023.6
    
    
    
    (21.1
    )Discontinued operations:Income (loss) from discontinued operations, net of taxes of $37.0, $(11.0) and $(20.7)
(including
loss on disposal of $5.0, net of taxes in 2005)
    
    
    (17.4
    )
    
    
    22.7
    
    
    
    39.2Income before extraordinary item and cumulative effect of accounting changes
    
    
    1,566.5
    
    
    
    1,046.3
    
    
    
    18.1Extraordinary gain on acquisition of partners interest in Chino, net of taxes of $0 in 2003 (see Note 2)
    
    
    
    
    
    
    
    
    
    
    68.3Cumulative effect of accounting changes, net of taxes of $3.4 and $(1.3) in 2005 and 2003, respectively
    
    
    (10.1
    )
    
    
    
    
    
    
    8.4Net income
    
    
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8Preferred stock dividends
    
    
    (6.8
    )
    
    
    (13.5
    )
    
    
    (13.5
    )Net income applicable to common shares
    
    $
    1,549.6
    
    
    
    1,032.8
    
    
    
    81.3Weighted average number of common shares outstanding  basic
    
    
    97.9
    
    
    
    93.4
    
    
    
    88.8Basic earnings per common share:Income (loss) from continuing operations
    
    $
    16.12
    
    
    
    10.82
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.18
    )
    
    
    0.24
    
    
    
    0.45Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Basic earnings per common share
    
    $
    15.84
    
    
    
    11.06
    
    
    
    0.92Weighted average number of common shares outstanding  diluted *
    
    
    101.3
    
    
    
    98.9
    
    
    
    88.8Diluted earnings per common share:Income (loss) from continuing operations
    
    $
    15.64
    
    
    
    10.35
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.17
    )
    
    
    0.23
    
    
    
    0.45Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Diluted earnings per common share
    
    $
    15.37
    
    
    
    10.58
    
    
    
    0.92
 
 *
    
    Diluted earnings (loss) per common share from continuing operations would have been anti-dilutive for the year ended December 31, 2003, if based on fully diluted shares
adjusted to reflect the conversion of mandatory convertible preferred shares to common shares, stock options exercised and restricted stock released.




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##### Table of Contents





99 Phelps Dodge Corporation
 
 Consolidated Balance Sheet
 (in millions except per share prices)December 31,
    
    December 31,2005
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,916.7
    
    
    
    1,200.1Restricted cash
    
    
    20.8
    
    
    
    Accounts
receivable, less allowance for doubtful accounts (2005-$6.9; 2004-$17.4)
    
    
    1,028.0
    
    
    
    761.5Mill and leach stockpiles
    
    
    36.6
    
    
    
    26.2Inventories
    
    
    329.5
    
    
    
    392.1Supplies
    
    
    199.7
    
    
    
    192.7Prepaid expenses and other current assets
    
    
    83.6
    
    
    
    46.0Deferred income taxes
    
    
    82.0
    
    
    
    43.1Assets held for sale
    
    
    373.8
    
    
    
    Current assets
    
    
    4,070.7
    
    
    
    2,661.7Investments and long-term receivables
    
    
    142.6
    
    
    
    120.7Property, plant and equipment, net
    
    
    4,830.9
    
    
    
    5,318.9Long-term mill and leach stockpiles
    
    
    133.3
    
    
    
    131.0Deferred income taxes
    
    
    99.6
    
    
    
    61.8Goodwill
    
    
    22.3
    
    
    
    103.5Intangible assets, net
    
    
    7.5
    
    
    
    5.3Long-term assets held for sale
    
    
    431.4
    
    
    
    Other assets and deferred charges
    
    
    619.7
    
    
    
    191.2$
    10,358.0
    
    
    
    8,594.1LiabilitiesCurrent liabilities:Short-term debt
    
    $
    14.3
    
    
    
    78.8Current portion of long-term debt
    
    
    2.5
    
    
    
    45.9Accounts payable and accrued expenses
    
    
    1,445.7
    
    
    
    972.1Dividends payable
    
    
    
    
    
    
    3.4Accrued income taxes
    
    
    23.6
    
    
    
    67.8Liabilities related to assets held for sale
    
    
    123.2
    
    
    
    Current liabilities
    
    
    1,609.3
    
    
    
    1,168.0Long-term debt
    
    
    677.7
    
    
    
    972.2Deferred income taxes
    
    
    558.0
    
    
    
    448.4Long-term liabilities related to assets held for sale
    
    
    61.3
    
    
    
    Other liabilities and deferred credits
    
    
    934.2
    
    
    
    1,107.33,840.5
    
    
    
    3,695.9Commitments and contingencies (see Notes 7, 19, 20 and 21)Minority interests in consolidated subsidiaries
    
    
    915.9
    
    
    
    555.1Shareholders equityCommon
shares, par value $6.25; 300.0 shares authorized; 101.6 outstanding
(2004 - 95.9) after deducting 8.4 shares (2004 - 9.9) held in treasury, at cost
    
    
    635.1
    
    
    
    599.5Cumulative
preferred shares, par value $1.00; 6.0 shares authorized; 2.0 outstanding in 2004
    
    
    
    
    
    
    2.0Capital in excess of par value
    
    
    1,998.8
    
    
    
    1,906.4Retained earnings
    
    
    3,158.8
    
    
    
    2,239.9Accumulated other comprehensive loss
    
    
    (154.5
    )
    
    
    (384.2
    )Other
    
    
    (36.6
    )
    
    
    (20.5
    )5,601.6
    
    
    
    4,343.1$
    10,358.0
    
    
    
    8,594.1




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##### Table of Contents



100 Phelps Dodge Corporation
 
 Consolidated Statement of Cash Flows
 (in millions)For the years ended December 31,2005
    
    2004
    
    2003(see Note 1)Operating activitiesNet income
    
    $
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, depletion and amortization
    
    
    490.9
    
    
    
    507.1
    
    
    
    422.6Deferred income tax provision (benefit)
    
    
    16.4
    
    
    
    (17.8
    )
    
    
    0.3Equity in net earnings (losses) of affiliated companies, net of dividends received
    
    
    (0.1
    )
    
    
    2.2
    
    
    
    (0.2
    )Gain on sale of cost-basis investment
    
    
    (438.4
    )
    
    
    
    
    
    
    Change in interest gains
    
    
    (168.3
    )
    
    
    
    
    
    
    Special items and provisions
    
    
    612.1
    
    
    
    59.9
    
    
    
    31.6Early debt extinguishment costs
    
    
    54.0
    
    
    
    43.2
    
    
    
    Minority interests in consolidated subsidiaries
    
    
    190.6
    
    
    
    201.8
    
    
    
    7.7Loss on disposition of discontinued operations
    
    
    5.8
    
    
    
    
    
    
    
    Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    (68.3
    )Cumulative effect of accounting changes
    
    
    13.5
    
    
    
    
    
    
    
    (9.7
    )Changes in current assets and liabilities:Accounts receivable
    
    
    (399.0
    )
    
    
    (276.2
    )
    
    
    (76.4
    )(Repayment of) proceeds from sale of accounts receivable
    
    
    (85.0
    )
    
    
    
    
    
    
    16.9Mill and leach stockpiles
    
    
    (10.5
    )
    
    
    1.0
    
    
    
    28.3Inventories
    
    
    (46.5
    )
    
    
    (0.4
    )
    
    
    29.5Supplies
    
    
    (33.8
    )
    
    
    (23.6
    )
    
    
    (0.9
    )Prepaid expenses and other current assets
    
    
    (35.2
    )
    
    
    (6.7
    )
    
    
    (10.1
    )Interest payable
    
    
    (3.8
    )
    
    
    (8.2
    )
    
    
    (0.2
    )Other accounts payable
    
    
    159.6
    
    
    
    212.1
    
    
    
    25.7Accrued income taxes
    
    
    (0.9
    )
    
    
    17.5
    
    
    
    37.1Other accrued expenses
    
    
    312.6
    
    
    
    (42.8
    )
    
    
    (23.7
    )Pension plan contributions
    
    
    (250.0
    )
    
    
    (85.4
    )
    
    
    VEBA trusts contributions
    
    
    (200.0
    )
    
    
    
    
    
    
    Other operating, net
    
    
    29.3
    
    
    
    70.1
    
    
    
    (43.4
    )Net cash provided by operating activities
    
    
    1,769.7
    
    
    
    1,700.1
    
    
    
    461.6Investing activitiesCapital outlays
    
    
    (686.0
    )
    
    
    (303.6
    )
    
    
    (151.4
    )Capitalized interest
    
    
    (17.6
    )
    
    
    (1.0
    )
    
    
    (0.6
    )Investment in subsidiaries and other, net of cash received and acquired
    
    
    (12.2
    )
    
    
    (13.7
    )
    
    
    49.0Proceeds from asset dispositions
    
    
    18.2
    
    
    
    26.9
    
    
    
    17.8Proceeds from sale of cost-basis investment
    
    
    451.6
    
    
    
    
    
    
    
    Restricted cash
    
    
    (20.8
    )
    
    
    
    
    
    
    Global environmental trust contribution
    
    
    (100.0
    )
    
    
    
    
    
    
    Other investing, net
    
    
    (1.2
    )
    
    
    0.4
    
    
    
    (2.5
    )Net cash used in investing activities
    
    
    (368.0
    )
    
    
    (291.0
    )
    
    
    (87.7
    )Financing activitiesProceeds from issuance of debt
    
    
    21.6
    
    
    
    150.0
    
    
    
    10.3Payment of debt
    
    
    (416.0
    )
    
    
    (1,257.1
    )
    
    
    (157.6
    )Common dividends
    
    
    (630.7
    )
    
    
    (47.5
    )
    
    
    Preferred dividends
    
    
    (10.1
    )
    
    
    (13.5
    )
    
    
    (13.5
    )Minority interests dividends
    
    
    (98.5
    )
    
    
    (10.5
    )
    
    
    (2.5
    )Issuance of shares, net
    
    
    55.9
    
    
    
    291.0
    
    
    
    80.4Debt issue costs
    
    
    (18.8
    )
    
    
    (7.0
    )
    
    
    Proceeds from issuance of Cerro Verde and Ojos del Salado stock
    
    
    466.6
    
    
    
    
    
    
    
    Other financing, net
    
    
    (55.8
    )
    
    
    (52.6
    )
    
    
    34.1Net cash used in financing activities
    
    
    (685.8
    )
    
    
    (947.2
    )
    
    
    (48.8
    )Cash included in assets held for sale
    
    
    (11.0
    )
    
    
    
    
    
    
    Effect of exchange rate impact on cash and cash equivalents
    
    
    11.7
    
    
    
    26.1
    
    
    
    8.9Increase in cash and cash equivalents
    
    
    716.6
    
    
    
    488.0
    
    
    
    334.0Increase at beginning of 2004 from fully consolidating El Abra and Candelaria
    
    
    
    
    
    
    28.3
    
    
    
    Cash and cash equivalents at beginning of year
    
    
    1,200.1
    
    
    
    683.8
    
    
    
    349.8Cash and cash equivalents at end of year
    
    $
    1,916.7
    
    
    
    1,200.1
    
    
    
    683.8




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##### Table of Contents



101 Phelps Dodge Corporation
 
 Consolidated Statement of Shareholders Equity
 (in millions)AccumulatedCommon Shares
    
    Preferred Shares
    
    Capital in
    
    
    
    
    
    OtherNumber
    
    At Par
    
    Number
    
    At Par
    
    Excess of
    
    Retained
    
    Comprehensive
    
    
    
    
    
    Shareholdersof Shares
    
    Value
    
    of Shares
    
    Value
    
    Par Value
    
    Earnings
    
    Loss*
    
    Other
    
    EquityBalance at January 1, 2003
    
    
    88.9
    
    
    $
    555.6
    
    
    
    2.0
    
    
    $
    2.0
    
    
    $
    1,552.1
    
    
    $
    1,173.3
    
    
    $
    (458.5
    )
    
    $
    (10.9
    )
    
    $
    2,813.6Stock options exercised including tax benefit
    
    
    2.0
    
    
    
    12.2
    
    
    
    
    
    
    
    
    
    
    
    87.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99.8Restricted shares issued/cancelled, net
    
    
    0.1
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    4.5Common shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )Dividends on common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13.5
    )
    
    
    
    
    
    
    
    
    
    
    (13.5
    )Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94.8
    
    
    
    
    
    
    
    
    
    
    
    94.8Other comprehensive income (loss), net of tax:Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.0
    
    
    
    
    
    
    
    63.0Net gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.7
    
    
    
    
    
    
    
    10.7Other investment adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Unrealized loss on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.0
    
    
    
    
    
    
    
    9.0Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17.6
    )
    
    
    
    
    
    
    (17.6
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65.0
    
    
    
    
    
    
    
    65.0Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.8Balance at December 31, 2003
    
    
    91.0
    
    
    
    568.5
    
    
    
    2.0
    
    
    
    2.0
    
    
    
    1,642.5
    
    
    
    1,254.6
    
    
    
    (393.5
    )
    
    
    (10.3
    )
    
    
    3,063.8Stock options exercised including tax benefit
    
    
    4.7
    
    
    
    29.6
    
    
    
    
    
    
    
    
    
    
    
    248.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278.4Restricted shares issued/cancelled, net
    
    
    0.2
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    16.8
    
    
    
    
    
    
    
    
    
    
    
    (10.2
    )
    
    
    8.1Directors stock compensation
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2Common shares purchased
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    (2.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.0
    )Dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13.5
    )
    
    
    
    
    
    
    
    
    
    
    (13.5
    )Dividends on common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47.5
    )
    
    
    
    
    
    
    
    
    
    
    (47.5
    )Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,046.3
    
    
    
    
    
    
    
    
    
    
    
    1,046.3Other comprehensive income (loss), net of tax:Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57.9
    
    
    
    
    
    
    
    57.9Net gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.9
    
    
    
    
    
    
    
    9.9Other investment adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.1
    
    
    
    
    
    
    
    7.1Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65.7
    )
    
    
    
    
    
    
    (65.7
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.3
    
    
    
    
    
    
    
    9.3Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,055.6Balance at December 31, 2004
    
    
    95.9
    
    
    
    599.5
    
    
    
    2.0
    
    
    
    2.0
    
    
    
    1,906.4
    
    
    
    2,239.9
    
    
    
    (384.2
    )
    
    
    (20.5
    )
    
    
    4,343.1Stock options exercised including tax benefit
    
    
    1.3
    
    
    
    8.1
    
    
    
    
    
    
    
    
    
    
    
    96.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104.3Restricted shares issued/cancelled, net
    
    
    0.3
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    26.6
    
    
    
    
    
    
    
    
    
    
    
    (16.1
    )
    
    
    12.2Common shares purchased
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    (3.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.7
    )Conversion of preferred shares
    
    
    4.2
    
    
    
    26.0
    
    
    
    (2.0
    )
    
    
    (2.0
    )
    
    
    (24.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.8
    )
    
    
    
    
    
    
    
    
    
    
    (6.8
    )Dividends on common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (630.7
    )
    
    
    
    
    
    
    
    
    
    
    (630.7
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.9
    )Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,556.4
    
    
    
    
    
    
    
    
    
    
    
    1,556.4Other comprehensive income (loss), net of tax:Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Net gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.2
    
    
    
    
    
    
    
    21.2Other investment adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.5Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.7
    
    
    
    
    
    
    
    4.7Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203.4
    
    
    
    
    
    
    
    203.4Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    229.7
    
    
    
    
    
    
    
    229.7Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,786.1Balance at December 31, 2005
    
    
    101.6
    
    
    $
    635.1
    
    
    
    
    
    
    $
    
    
    
    $
    1,998.8
    
    
    $
    3,158.8
    
    
    $
    (154.5
    )
    
    $
    (36.6
    )
    
    $
    5,601.6
 
 *
    
    As of December 31, 2005, this balance comprised $171.9 million of cumulative translation adjustments, $26.2 million of cumulative minimum pension liability adjustments and
$0.2 million of cumulative other investment adjustments; partially offset by $38.0 million of cumulative unrealized gains on securities and $5.8 million of cumulative unrealized
gains on derivative instruments.




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##### Table of Contents



102 
 NOTES TO CONSOLIDATED
 FINANCIAL STATEMENTS
  1.
Summary of Significant Accounting Policies
 Basis of Consolidation.
    Managements Estimates and Assumptions.
 Foreign Currency Translation.
 Statement of Cash Flows.
 Sale of Eligible Trade Accounts Receivable.




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##### Table of Contents



103  Mill Stockpiles, Leach Stockpiles, Inventories and Supplies.
     Mill stockpiles
    Leach stockpiles
      Work-in-process




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##### Table of Contents



104  Finished goods
   Raw materials
  Property, Plant and Equipment.
        Environmental Expenditures.
 Asset Retirement Obligations.




---



##### Table of Contents



105     Goodwill.
 Intangible Assets.
 Impairments.
 Revenue Recognition.
  i.e. Metals Week Ryans Notes Metal Bulletin i.e.
 Shipping and Handling Fees and Costs.
 Issuances of Subsidiary Stock.
 Hedging Programs.




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##### Table of Contents



106    Stock Compensation.
 2005
    
    2004
    
    2003Net income as reported
    
    $
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8Deduct:Total compensation cost determined under fair
value based method for all awards, net of tax
    
    
    (2.9
    )
    
    
    (5.2
    )
    
    
    (11.2
    )Pro forma net income
    
    $
    1,553.5
    
    
    
    1,041.1
    
    
    
    83.6Earnings per shareBasic  as reported
    
    $
    15.84
    
    
    
    11.06
    
    
    
    0.92Basic  pro forma
    
    $
    15.81
    
    
    
    11.01
    
    
    
    0.79Earnings per shareDiluted  as reported
    
    $
    15.37
    
    
    
    10.58
    
    
    
    0.92Diluted  pro forma
    
    $
    15.35
    
    
    
    10.54
    
    
    
    0.79
 Income Taxes.
  Pension Plans.
 Postretirement Benefits Other Than Pensions.
 Postemployment Benefits.




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##### Table of Contents



107 Earnings Per Share.
 2005
    
    2004
    
    2003Basic Earnings Per Share ComputationNumerator:Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting changes
    
    $
    1,583.9
    
    
    
    1,023.6
    
    
    
    (21.1
    )Income (loss) from discontinued operations
    
    
    (17.4
    )
    
    
    22.7
    
    
    
    39.2Extraordinary item
    
    
    
    
    
    
    
    
    
    
    68.3Cumulative effect of accounting changes
    
    
    (10.1
    )
    
    
    
    
    
    
    8.4Net income
    
    
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8Preferred stock dividends
    
    
    (6.8
    )
    
    
    (13.5
    )
    
    
    (13.5
    )Net income applicable to common shares
    
    $
    1,549.6
    
    
    
    1,032.8
    
    
    
    81.3Denominator:Weighted average common shares outstanding
    
    
    97.9
    
    
    
    93.4
    
    
    
    88.8Basic
earnings per common shareIncome (loss) from continuing operations
    
    $
    16.12
    
    
    
    10.82
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.18
    )
    
    
    0.24
    
    
    
    0.45Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Basic earnings per common share
    
    $
    15.84
    
    
    
    11.06
    
    
    
    0.92Diluted Earnings Per Share Computation*Numerator:Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting changes
    
    $
    1,583.9
    
    
    
    1,023.6
    
    
    
    (21.1
    )Income (loss) from discontinued operations
    
    
    (17.4
    )
    
    
    22.7
    
    
    
    39.2Extraordinary item
    
    
    
    
    
    
    
    
    
    
    68.3Cumulative effect of accounting changes
    
    
    (10.1
    )
    
    
    
    
    
    
    8.4Net income
    
    
    1,556.4
    
    
    
    1,046.3
    
    
    
    94.8Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (13.5
    )Net income applicable to common shares
    
    $
    1,556.4
    
    
    
    1,046.3
    
    
    
    81.3Denominator:Weighted average common shares
outstanding
    
    
    97.9
    
    
    
    93.4
    
    
    
    88.8Weighted average employee
stock options**
    
    
    0.4
    
    
    
    0.9
    
    
    
    Weighted average restricted stock
issued to employees**
    
    
    0.4
    
    
    
    0.4
    
    
    
    Weighted average mandatory
convertible preferred shares***
    
    
    2.6
    
    
    
    4.2
    
    
    
    Total weighted average common
shares outstanding
    
    
    101.3
    
    
    
    98.9
    
    
    
    88.8Diluted earnings per common shareIncome (loss) from continuing operations
    
    $
    15.64
    
    
    
    10.35
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.17
    )
    
    
    0.23
    
    
    
    0.45Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Diluted earnings per common share
    
    $
    15.37
    
    
    
    10.58
    
    
    
    0.92
 
 *
    
    As a result of the Companys agreement to sell Columbian, diluted earnings per common share
were computed based on income from continuing operations, which was anti-dilutive for the year
ended December 31, 2003. Therefore, diluted earnings per common share were based on the basic
average number of shares outstanding and preferred dividends were included in the numerator.**
    
    Additional common shares of 0.6 million in 2003 were anti-dilutive.***
    
    The conversion of mandatory convertible preferred shares to common shares of 4.7 million
shares for the year ended December 31, 2003, was anti-dilutive.  2005
    
    2004
    
    2003Outstanding options
    
    
    
    
    
    
    0.1
    
    
    
    6.3Average option exercise price
    

$
    
    
    
    
    76.44
    
    
    
    61.27
 New Accounting Pronouncements.




---



##### Table of Contents



108




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##### Table of Contents



109   Reclassification.
 2. Acquisitions and Divestitures
 Chino Mines Company Acquisition.
  Cash and cash equivalents
    
    $
    50.9Other current assets
    
    
    7.8Trust assets
    
    
    64.0Total assets acquired
    
    
    122.7Current liabilities
    
    
    10.6Other liabilities and deferred credits
    
    
    43.8Total liabilities assumed
    
    
    54.4Extraordinary gain
    
    $
    68.3
  2003Sales and other operating revenues
    
    $
    3,523.9Loss from continuing operations before extraordinary
item and cumulative effect of accounting changes
    
    $
    (25.4
    )Loss per common share:Basic and diluted  as reported
    
    $
    (0.39
    )Basic and diluted  pro forma
    
    $
    (0.44
    )Net income*
    
    $
    20.7Earnings per common share:Basic and diluted  as reported
    
    $
    0.92Basic and diluted  pro forma*
    
    $
    0.08
 
 *
    
    The 2003 pro forma net income and earnings per common share amounts excluded the
extraordinary gain of $68.3 million.
 3. Discontinued Operations and Assets Held for Sale
 Discontinued
Operations




---



##### Table of Contents



110  2005
    
    
    2004
    
    
    2003Sales and other operating revenues
    
    $
    743.3
    
    
    
    674.1
    
    
    
    644.2Operating income (loss)
    
    $
    (60.1
    )
    
    
    28.7
    
    
    
    54.8Operating income before special items
and provisions, net
    
    $
    34.7
    
    
    
    34.6
    
    
    
    51.1Benefit (provision) for taxes on income
    
    $
    37.0
    
    
    
    (11.0
    )
    
    
    (20.7
    )Income (loss) from discontinued operations
    
    $
    (17.4
    )
    
    
    22.7
    
    
    
    39.2
   Current assets:Cash and cash equivalents
    
    $
    11.0Accounts receivable, net
    
    
    163.9Inventories
    
    
    70.9Supplies
    
    
    15.7Prepaid expenses and other current assets
    
    
    12.1$
    273.6Property, plant and equipment, net
    
    $
    367.2Deferred income taxes
    
    
    4.7Goodwill
    
    
    2.0Other assets and deferred charges
    
    
    2.9$
    376.8Current liabilities:Short-term debt
    
    $
    4.3Accounts payable and accrued expenses
    
    
    96.9Accrued income taxes
    
    
    12.7$
    113.9Deferred income taxes
    
    $
    35.4Other liabilities and deferred credits
    
    
    25.7$
    61.1
 .
 Assets Held for Sale
     Current assets:Accounts receivable, net
    
    $
    57.1Inventories
    
    
    36.4Supplies
    
    
    4.2Prepaid expenses and other current assets
    
    
    2.5$
    100.2Property, plant and equipment, net
    
    $
    54.6Current liabilities:Accounts payable and accrued expenses
    
    $
    7.9Accrued income taxes
    
    
    1.4$
    9.3Other liabilities and deferred credits
    
    $
    0.2
 4. Special Items and Provisions




---



##### Table of Contents



111   $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:*PDMC Asset impairment charges
    
    $
    (424.6
    )
    
    
    (325.1
    )
    
    
    (3.21
    )Environmental provisions, net
    
    
    (35.7
    )
    
    
    (27.1
    )
    
    
    (0.27
    )Environmental insurance recoveries, net
    
    
    (1.5
    )
    
    
    (1.2
    )
    
    
    (0.01
    )Historical legal matters
    
    
    14.5
    
    
    
    11.0
    
    
    
    0.11(447.3
    )
    
    
    (342.4
    )
    
    
    (3.38
    )PDI Environmental provisions, net
    
    
    (2.2
    )
    
    
    (1.7
    )
    
    
    (0.01
    )Restructuring programs/closures
    
    
    (0.7
    )
    
    
    0.1
    
    
    
    Asset impairment charges
    
    
    (7.9
    )
    
    
    (6.7
    )
    
    
    (0.07
    )Employee and
transaction costs  sale of North American magnet wire assets
    
    
    (7.8
    )
    
    
    (5.9
    )
    
    
    (0.06
    )(18.6
    )
    
    
    (14.2
    )
    
    
    (0.14
    )Corporate and Other Environmental provisions, net
    
    
    (75.4
    )
    
    
    (57.6
    )
    
    
    (0.57
    )Environmental insurance recoveries, net
    
    
    2.1
    
    
    
    1.6
    
    
    
    0.02Sale of non-core real estate
    
    
    11.2
    
    
    
    8.5
    
    
    
    0.08Historical legal matters
    
    
    4.9
    
    
    
    4.6
    
    
    
    0.05(57.2
    )
    
    
    (42.9
    )
    
    
    (0.42
    )(523.1
    )
    
    
    (399.5
    )
    
    
    (3.94
    )Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    (41.3
    )
    
    
    (0.41
    )Gain on sale of cost-basis investment
    
    
    438.4
    
    
    
    388.0
    
    
    
    3.83Change in interest gains:Cerro Verde stock issuance
    
    
    159.5
    
    
    
    172.9
    
    
    
    1.71Ojos del Salado stock issuance
    
    
    8.8
    
    
    
    8.8
    
    
    
    0.09168.3
    
    
    
    181.7
    
    
    
    1.80Provision for taxes on income:Foreign dividend taxes
    
    
    
    
    
    
    (88.1
    )
    
    
    (0.87
    )Tax on unremitted foreign earnings
    
    
    
    
    
    
    (43.1
    )
    
    
    (0.43
    )Tax charge
associated with minimum pension liability reversal
    
    
    
    
    
    
    (23.6
    )
    
    
    (0.23
    )Reversal of
U.S. deferred tax asset valuation allowance
    
    
    
    
    
    
    4.0
    
    
    
    0.04Reversal of
PD Brazil deferred tax asset valuation allowance
    
    
    
    
    
    
    11.9
    
    
    
    0.12
    
    
    
    (138.9
    )
    
    
    (1.37
    )Minority interests in consolidated subsidiaries:Tax on unremitted foreign earnings
    
    
    
    
    
    
    8.6
    
    
    
    0.08Special
items and provisions, net from continuing operations
    
    
    29.6
    
    
    
    (1.4
    )
    
    
    (0.01
    )Discontinued operations:Loss on disposal of Columbian Chemicals
    
    
    (5.8
    )
    
    
    (5.0
    )
    
    
    (0.05
    )Goodwill impairment charge
    
    
    (89.0
    )
    
    
    (67.0
    )
    
    
    (0.66
    )Transaction and dividend taxes
    
    
    
    
    
    
    (7.6
    )
    
    
    (0.08
    )Deferred income tax benefit
    
    
    
    
    
    
    37.0
    
    
    
    0.37(94.8
    )
    
    
    (42.6
    )
    
    
    (0.42
    )Cumulative effect of accounting change
    
    
    (13.5
    )
    
    
    (10.1
    )
    
    
    (0.10
    )$
    (78.7
    )
    
    
    (54.1
    )
    
    
    (0.53
    )
 
 *
    
    Refer to Note 23, Business Segment Data, for special items and provisions by segment.




---



##### Table of Contents



112




---



##### Table of Contents



113       $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:*PDMC Environmental provisions, net
    
    $
    (16.8
    )
    
    
    (12.7
    )
    
    
    (0.13
    )Environmental insurance recoveries, net
    
    
    9.1
    
    
    
    7.3
    
    
    
    0.07Hidalgo asset impairment
    
    
    (1.1
    )
    
    
    (0.9
    )
    
    
    (0.01
    )Historical legal matters
    
    
    (2.5
    )
    
    
    (2.0
    )
    
    
    (0.02
    )(11.3
    )
    
    
    (8.3
    )
    
    
    (0.09
    )PDI Environmental provisions, net
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    Restructuring programs
    
    
    (10.5
    )
    
    
    (7.6
    )
    
    
    (0.08
    )Asset impairment charges
    
    
    (0.6
    )
    
    
    (0.5
    )
    
    
    (0.01
    )(11.4
    )
    
    
    (8.3
    )
    
    
    (0.09
    )Corporate
and Other Environmental provisions, net
    
    
    (41.8
    )
    
    
    (31.8
    )
    
    
    (0.32
    )Environmental insurance recoveries, net
    
    
    0.2
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    2.7
    
    
    
    (0.5
    )
    
    
    (38.9
    )
    
    
    (32.2
    )
    
    
    (0.32
    )(61.6
    )
    
    
    (48.8
    )
    
    
    (0.50
    )Interest expense:Texas franchise tax matter
    
    
    (0.9
    )
    
    
    (0.7
    )
    
    
    (0.01
    )Early debt extinguishment costs
    
    
    (43.2
    )
    
    
    (34.3
    )
    
    
    (0.35
    )Miscellaneous income and expense, net:Cost-basis investment write-downs
    
    
    (11.1
    )
    
    
    (9.9
    )
    
    
    (0.10
    )Gain on sale of miscellaneous asset
    
    
    10.1
    
    
    
    10.1
    
    
    
    0.10Historical legal matter
    
    
    9.5
    
    
    
    7.2
    
    
    
    0.078.5
    
    
    
    7.4
    
    
    
    0.07Provision for taxes on income:Reversal of El Abra deferred tax asset valuation allowance
    
    
    
    
    
    
    30.8
    
    
    
    0.31Reversal of U.S. deferred tax asset valuation allowance
    
    
    
    
    
    
    30.0
    
    
    
    0.31PD Brazil deferred tax asset valuation allowance
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )Foreign dividend taxes
    
    
    
    
    
    
    (9.6
    )
    
    
    (0.10
    )
    
    
    
    42.2
    
    
    
    0.43Minority interests in consolidated subsidiaries:Reversal of El Abra deferred tax asset valuation allowance
    
    
    
    
    
    
    (15.1
    )
    
    
    (0.15
    )Candelaria early debt extinguishment costs
    
    
    
    
    
    
    2.5
    
    
    
    0.03El Abra early debt extinguishment costs
    
    
    
    
    
    
    0.9
    
    
    
    0.01
    
    
    
    (11.7
    )
    
    
    (0.11
    )Special items and provisions, net from continuing operations
    
    
    (97.2
    )
    
    
    (45.9
    )
    
    
    (0.47
    )Discontinued operations:Asset impairment charge
    
    
    (5.9
    )
    
    
    (4.5
    )
    
    
    (0.04
    )$
    (103.1
    )
    
    
    (50.4
    )
    
    
    (0.51
    )
 
 *
    
    Refer to Note 23, Business Segment Data, for special items and provisions by segment.




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##### Table of Contents



114                $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:*PDMC Environmental provisions, net
    
    $
    (5.5
    )
    
    
    (5.2
    )
    
    
    (0.06
    )PDI Environmental provisions, net
    
    
    0.4
    
    
    
    0.4
    
    
    
    0.01Goodwill impairment charge
    
    
    (0.9
    )
    
    
    (0.9
    )
    
    
    (0.01
    )Asset impairment charges
    
    
    (1.7
    )
    
    
    (1.7
    )
    
    
    (0.02
    )Reassessment of prior restructuring
programs
    
    
    0.2
    
    
    
    0.2
    
    
    
    (2.0
    )
    
    
    (2.0
    )
    
    
    (0.02
    )Corporate and Other Environmental provisions, net
    
    
    (23.8
    )
    
    
    (22.7
    )
    
    
    (0.26
    )Environmental insurance recoveries, net
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.01Historical Cyprus Amax legal matters
    
    
    (2.9
    )
    
    
    (2.9
    )
    
    
    (0.03
    )Potential Texas franchise tax matter
    
    
    (8.0
    )
    
    
    (8.0
    )
    
    
    (0.09
    )(34.2
    )
    
    
    (33.1
    )
    
    
    (0.37
    )(41.7
    )
    
    
    (40.3
    )
    
    
    (0.45
    )Miscellaneous income and expense, netGain on sale of cost-basis investment
    
    
    6.4
    
    
    
    6.4
    
    
    
    0.07Provision for taxes on income:Tax benefit for additional 2001 net
operating loss carryback
    
    
    
    
    
    
    1.0
    
    
    
    0.01Special items and provisions, net from
continuing operations
    
    
    (35.3
    )
    
    
    (32.9
    )
    
    
    (0.37
    )Discontinued operations:Environmental provisions, net
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.01Termination of foreign postretirement
benefit plan
    
    
    3.2
    
    
    
    2.4
    
    
    
    0.023.7
    
    
    
    2.9
    
    
    
    0.03Extraordinary gain on acquisition of partners
one-third interest in Chino Mines Company
    
    
    68.3
    
    
    
    68.3
    
    
    
    0.77Cumulative effect of accounting change
    
    
    9.7
    
    
    
    8.4
    
    
    
    0.09$
    46.4
    
    
    
    46.7
    
    
    
    0.52
 
 *
    
    Refer to Note 23, Business Segment Data, for special items and provisions by segment.




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##### Table of Contents



115           5. Investments and Long-Term Receivables
  2005
    
    
    2004Equity basis:International wire and cable manufacturers
    
    $
    6.3
    
    
    
    5.9Port Carteret (50%)
    
    
    19.0
    
    
    
    19.7Duke Energy Luna, LLC (33%)*
    
    
    0.2
    
    
    
    13.3Other
    
    
    6.4
    
    
    
    5.8Cost basis investments, available-for-sale
securities and notes receivable:Southern Peru Copper Corporation**
    
    
    
    
    
    
    13.2Dynatec Corporation
    
    
    14.2
    
    
    
    First Quantum Minerals Ltd.
    
    
    44.8
    
    
    
    21.8Long-term bond investments***
    
    
    17.9
    
    
    
    25.0Other investments
    
    
    10.6
    
    
    
    4.8Notes receivable and other
    
    
    23.2
    
    
    
    11.2$
    142.6
    
    
    
    120.7
 
 *
    
    During 2005, $13.1 million of plant assets were distributed to PD from Duke Energy Luna, LLC (Luna). At December 31, 2005, our $0.2 million investment in Luna represented certain
undistributed intangible assets.**
    
    On June 15, 2005, PD sold its 14.0 percent interest in Southern Peru Copper Corporation. Refer to Note
4, Special Items and Provisions, for further discussion.***
    
    Long-term bond investments included $0.8 million and $12.4 million to secure a letter of
credit at December 31, 2005 and 2004, respectively. In addition, $8.0 million was secured by a
trust at December 31, 2005.
    2005
    
    
    2004
    
    
    2003Sales
    
    $
    172.4
    
    
    
    155.0
    
    
    
    123.1Net income
    
    $
    10.0
    
    
    
    9.1
    
    
    
    7.5Net current assets
    
    $
    25.2
    
    
    
    19.4
    
    
    
    25.6Property, plant and equipment, net
    
    
    86.2
    
    
    
    127.6
    
    
    
    87.6Long-term debt
    
    
    (28.5
    )
    
    
    (28.4
    )
    
    
    (29.1
    )Other assets and liabilities, net
    
    
    3.5
    
    
    
    5.3
    
    
    
    (1.4
    )Net assets
    
    $
    86.4
    
    
    
    123.9
    
    
    
    82.7




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##### Table of Contents



116 6. Miscellaneous Income and Expense, Net
  2005
    
    
    2004
    
    
    2003Interest income
    
    $
    59.2
    
    
    
    11.7
    
    
    
    9.1Southern Peru Copper Corporation dividend*
    
    
    40.5
    
    
    
    26.7
    
    
    
    6.3Trust assets mark-to-market:Financial assurance assets
    
    
    1.4
    
    
    
    3.2
    
    
    
    Non-qualified retirement benefit plan trust assets
    
    
    2.2
    
    
    
    2.8
    
    
    
    4.6Royalties and rental income
    
    
    1.2
    
    
    
    1.7
    
    
    
    1.5Foreign currency exchange gain (loss)
    
    
    (0.1
    )
    
    
    2.8
    
    
    
    (1.9
    )Miscellaneous non-operating expenses
    
    
    (17.0
    )
    
    
    (13.5
    )
    
    
    (18.0
    )Deferred proceeds from sale of Kisault townsite
    
    
    2.5
    
    
    
    
    
    
    
    Gain on sale of Kansanshi investment
    
    
    1.7
    
    
    
    
    
    
    
    Cost-basis investment impairments
    
    
    
    
    
    
    (11.1
    )
    
    
    Equatorial lawsuit settlement
    
    
    
    
    
    
    9.5
    
    
    
    Gain on sale of uranium royalty rights
    
    
    
    
    
    
    10.1
    
    
    
    Gain on sale of Viohalco investment
    
    
    
    
    
    
    
    
    
    
    6.4Other
    
    
    1.7
    
    
    
    1.4
    
    
    
    2.0$
    93.3
    
    
    
    45.3
    
    
    
    10.0
 
 *
    
    On June 15, 2005, PD sold its 14.0 percent interest in Southern Peru Copper Corporation.
 7. Income Taxes
  2005
    
    
    2004
    
    
    2003United States
    
    $
    1,322.3
    
    
    
    662.7
    
    
    
    (146.5
    )Foreign
    
    
    1,026.3
    
    
    
    691.4
    
    
    
    157.5$
    2,348.6
    
    
    
    1,354.1
    
    
    
    11.0
  2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    (288.2
    )
    
    
    (15.1
    )
    
    
    10.6State
    
    
    (7.8
    )
    
    
    (7.2
    )
    
    
    0.5Foreign
    
    
    (201.1
    )
    
    
    (124.2
    )
    
    
    (48.2
    )(497.1
    )
    
    
    (146.5
    )
    
    
    (37.1
    )Deferred:Federal
    
    
    55.1
    
    
    
    (43.5
    )
    
    
    (1.6
    )State
    
    
    (13.0
    )
    
    
    34.0
    
    
    
    Foreign
    
    
    (122.0
    )
    
    
    24.7
    
    
    
    11.1(79.9
    )
    
    
    15.2
    
    
    
    9.5$
    (577.0
    )
    
    
    (131.3
    )
    
    
    (27.6
    )
  Expense (benefit)2005
    
    
    2004
    
    
    2003U.S. federal statutory tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Candelaria dividends and unremitted earnings
    
    
    5.2
    
    
    
    
    
    
    
    Percentage depletion
    
    
    (9.5
    )
    
    
    (7.8
    )
    
    
    (177.4
    )Peruvian reinvestment deductions
    
    
    (3.7
    )
    
    
    
    
    
    
    Change in interest gains
    
    
    (3.1
    )
    
    
    
    
    
    
    International tax rate differential
    
    
    (0.1
    )
    
    
    (1.7
    )
    
    
    (43.0
    )State and local income taxes
    
    
    0.6
    
    
    
    1.7
    
    
    
    (38.5
    )Valuation allowance adjustments
    
    
    0.3
    
    
    
    (19.3
    )
    
    
    436.9Other items, net
    
    
    (0.1
    )
    
    
    1.8
    
    
    
    37.924.6
    %
    
    
    9.7
    %
    
    
    250.9
    %




---



##### Table of Contents



117  2005*
    
    
    2004Minimum tax credits
    
    $
    566.1
    
    
    
    344.8Peruvian reinvestment deductions
    
    
    41.8
    
    
    
    Employee benefit plans
    
    
    
    
    
    
    188.7Reserves
    
    
    351.1
    
    
    
    247.7Mining costs
    
    
    67.5
    
    
    
    27.0Net operating loss carryforwards
    
    
    68.7
    
    
    
    472.1Stock basis differences
    
    
    52.5
    
    
    
    Capital loss carryforwards
    
    
    8.0
    
    
    
    Hedging losses
    
    
    81.8
    
    
    
    Other
    
    
    11.4
    
    
    
    14.7Deferred tax assets
    
    
    1,248.9
    
    
    
    1,295.0Valuation allowances
    
    
    (363.5
    )
    
    
    (282.8
    )Net deferred tax assets
    
    
    885.4
    
    
    
    1,012.2Goodwill
    
    
    
    
    
    
    (12.9
    )Capitalized interest and financing costs
    
    
    (36.0
    )
    
    
    (63.2
    )Depreciation
    
    
    (800.7
    )
    
    
    (863.3
    )Mining properties
    
    
    (264.6
    )
    
    
    (242.2
    )Intangible mining assets
    
    
    (79.1
    )
    
    
    (174.1
    )Employee benefit plans
    
    
    (81.4
    )
    
    
    Deferred tax liabilities
    
    
    (1,261.8
    )
    
    
    (1,355.7
    )$
    (376.4
    )
    
    
    (343.5
    )
 
 *
    
    Excluded deferred tax assets (liabilities) associated with discontinued operations.
   1-5
    
    
    6-10
    
    
    Over 10Years
    
    
    Years
    
    
    YearsNet operating loss carryforwards:U.S.  state
    
    $
    134
    
    
    
    40
    
    
    
    658




---



##### Table of Contents



118    8. Mill and Leach Stockpiles, Inventories and Supplies
  PDMC
    
    
    PDI
    
    
    TotalMill and Leach Stockpiles Current:Mill stockpiles
    
    $
    9.6
    
    
    
    
    
    
    
    9.6Leach stockpiles
    
    
    27.0
    
    
    
    
    
    
    
    27.0$
    36.6
    
    
    
    
    
    
    
    36.6Long-term:*Mill stockpiles
    
    $
    45.3
    
    
    
    
    
    
    
    45.3Leach stockpiles
    
    
    88.0
    
    
    
    
    
    
    
    88.0$
    133.3
    
    
    
    
    
    
    
    133.3Inventories Raw materials
    
    $
    1.4
    
    
    
    47.0
    
    
    
    48.4Work-in-process
    
    
    27.4
    
    
    
    11.7
    
    
    
    39.1Finished goods
    
    
    202.6
    
    
    
    39.4
    
    
    
    242.0$
    231.4
    
    
    
    98.1
    
    
    
    329.5Supplies
    
    $
    192.0
    
    
    
    7.7
    
    
    
    199.7
 
 *
    
    Stockpiles not expected to be processed within the next 12 months are classified as
long-term.
  PDMC
    
    
    PDI
    
    
    TotalMill and Leach Stockpiles Current:Leach stockpiles
    
    $
    26.2
    
    
    
    
    
    
    
    26.2Long-term:*Mill stockpiles
    
    $
    56.5
    
    
    
    
    
    
    
    56.5Leach stockpiles
    
    
    74.5
    
    
    
    
    
    
    
    74.5$
    131.0
    
    
    
    
    
    
    
    131.0Inventories Raw materials
    
    $
    0.5
    
    
    
    73.5
    
    
    
    74.0Work-in-process
    
    
    24.4
    
    
    
    12.3
    
    
    
    36.7Finished goods
    
    
    206.0
    
    
    
    75.4
    
    
    
    281.4$
    230.9
    
    
    
    161.2
    
    
    
    392.1Supplies
    
    $
    165.0
    
    
    
    27.7
    
    
    
    192.7
 
 *
    
    Stockpiles not expected to be processed within the next 12 months are classified as
long-term.




---



##### Table of Contents



119  9. Property, Plant and Equipment
  2005
    
    
    2004Buildings, machinery and equipment
    
    $
    7,028.8
    
    
    
    7,786.2Mining properties
    
    
    1,604.5
    
    
    
    1,656.7Capitalized mine development
    
    
    221.2
    
    
    
    216.2Land and water rights
    
    
    126.0
    
    
    
    147.98,980.5
    
    
    
    9,807.0Less accumulated depreciation, depletion and amortization
    
    
    4,149.6
    
    
    
    4,488.1$
    4,830.9
    
    
    
    5,318.9
 
  10. Goodwill
  Primary
    
    
    WireMolyb-
    
    
    anddenum
    
    
    Cable
    
    
    Colum-Segment
    
    
    Segment
    
    
    bian
    
    
    TotalBalance as of December 31, 2003
    
    $
    
    
    
    
    20.7
    
    
    
    77.7
    
    
    
    98.4Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    5.1
    
    
    
    5.1Balance as of December 31, 2004
    
    $
    
    
    
    
    20.7
    
    
    
    82.8
    
    
    
    103.5Foreign currency translation adjustments
    
    
    
    
    
    
    0.1
    
    
    
    8.2
    
    
    
    8.3Additions
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5Impairment losses
    
    
    
    
    
    
    
    
    
    
    (89.0
    )
    
    
    (89.0
    )Disposition of Columbian Chemicals*
    
    
    
    
    
    
    
    
    
    
    (2.0
    )
    
    
    (2.0
    )Balance as of December 31, 2005
    
    $
    1.5
    
    
    
    20.8
    
    
    
    
    
    
    
    22.3
 
 *
    
    Included in long-term assets held for sale in our Consolidated Balance Sheet.
  11. Other Assets and Deferred Charges
  2005
    
    
    2004Employee benefit plans*
    
    $
    316.9
    
    
    
    36.3Debt issue costs
    
    
    28.1
    
    
    
    12.7Financial assurance trust assets**
    
    
    90.9
    
    
    
    85.3Global environmental trust assets***
    
    
    100.0
    
    
    
    Non-qualified retirement benefits trust assets
    
    
    67.3
    
    
    
    48.6Other
    
    
    16.5
    
    
    
    8.3$
    619.7
    
    
    
    191.2
 
 *
    
    Refer to Note 12, Accounts Payable and Accrued Expenses, for short-term liability; Note 13,
Other Liabilities and Deferred Credits, for long-term liability; Note 17, Pension Plans; and
Note 18, Postretirement and Other Employee Benefits Other Than Pensions, for further
discussion.**
    
    Legally restricted funds for the use of asset retirement obligation activities at Chino,
Tyrone and Cobre at December 31, 2005, and at Chino and Tyrone at December 31, 2004.***
    
    Trust assets designated for reclamation and remediation activities. Refer to Note 21,
Contingencies, for further discussion.
 12. Accounts Payable and Accrued Expenses
  2005
    
    
    2004Accounts payable
    
    $
    602.5
    
    
    
    513.7Accrued copper hedges*
    
    
    382.7
    
    
    
    21.9Salaries, wages and other compensation
    
    
    63.2
    
    
    
    69.6Pension, postretirement, postemployment
and other employee benefit plans**
    
    
    66.5
    
    
    
    88.3Insurance claims reserves***
    
    
    11.9
    
    
    
    10.6Environmental reserves***
    
    
    82.3
    
    
    
    64.1Asset retirement obligations***
    
    
    81.4
    
    
    
    34.3Smelting, refining and freight
    
    
    8.7
    
    
    
    9.3Other accrued taxes
    
    
    40.0
    
    
    
    38.6Accrued utilities
    
    
    15.7
    
    
    
    17.7Interest****
    
    
    11.3
    
    
    
    15.1Professional fees
    
    
    13.9
    
    
    
    11.9Legal matters
    
    
    1.5
    
    
    
    16.2Maintenance contracts/contractor accruals
    
    
    31.7
    
    
    
    30.0Other
    
    
    32.4
    
    
    
    30.8$
    1,445.7
    
    
    
    972.1
 
 *
    
    Accrued copper hedges included realized pre-tax charges of $187.2 million associated with the
2005 copper price protection programs and unrealized pre-tax charges of $164.0 million
associated with the 2006 copper price protection program at December 31, 2005.**
    
    Refer to Note 13, Other Liabilities and Deferred Credits, for long-term portion; Note 17,
Pension Plans; and Note 18, Postretirement and Other Employee Benefits Other Than Pensions,
for further discussion.***
    
    Short-term portion of these reserves. Refer to Note 13, Other Liabilities and Deferred
Credits, for long-term portion of reserves and Note 21, Contingencies, for further discussion.****
    
    Third-party interest paid by the Company in 2005 was $88.0 million, compared with $134.6
million in 2004 and $154.2 million in 2003.




---



##### Table of Contents



120 13. Other Liabilities and Deferred Credits
  2005
    
    
    
2004Pension, postretirement, postemployment
and other employee benefit plans*
    
    $
    245.0
    
    
    
    586.6Environmental reserves**
    
    
    285.6
    
    
    
    239.5Asset retirement obligations**
    
    
    317.0
    
    
    
    240.9Insurance claims reserves**
    
    
    47.1
    
    
    
    32.8Other***
    
    
    39.5
    
    
    
    7.5$
    934.2
    
    
    
    1,107.3
 
 *
    
    Refer to Note 12, Accounts Payable and Accrued Expenses, for short-term portion; Note 17,
Pension Plans; and Note 18, Postretirement and Other Employee Benefits Other Than Pensions,
for further discussion.**
    
    Refer to Note 12, Accounts Payable and Accrued Expenses, for short-term portion of reserves
and Note 21, Contingencies, for further discussion.***
    
    Other included unrealized pre-tax charges of $34.6 million associated with the 2007 copper
price protection program at December 31, 2005.
 14. Debt and Other Financing
  2005
    
    
    
    20046.625% Notes due 2005
    
    $
    
    
    
    
    41.17.375% Notes due 2007
    
    
    61.8
    
    
    
    63.08.75% Notes due 2011
    
    
    109.0
    
    
    
    388.89.50% Notes due 2031
    
    
    196.9
    
    
    
    196.96.125% Notes due 2034
    
    
    149.8
    
    
    
    149.87.125% Debentures due 2027
    
    
    115.0
    
    
    
    115.0Capital Lease Obligations
    
    
    
    
    
    
    0.1Columbian Chemicals Korea
    
    
    
    
    
    
    2.0Cerro Verde Project Financing
    
    
    20.0
    
    
    
    El Abra Subordinated Debt
    
    
    
    
    
    
    34.3Electroconductores de Honduras, S.A. de C.V.
    
    
    1.5
    
    
    
    Phelps Dodge Brazil, Ltda.
    
    
    0.2
    
    
    
    0.1Various Pollution Control and Industrial
Development Revenue Bonds due through 2009
    
    
    26.0
    
    
    
    27.0Long-term debt and capital lease obligations, including
current portion
    
    
    680.2
    
    
    
    1,018.1Less current portion
    
    
    2.5
    
    
    
    45.9Long-term debt and capital lease obligations, excluding
current portion
    
    $
    677.7
    
    
    
    972.2
 
   Project andSubsidiaryCorporate
    
    
    Debt Financing
    
    
    Total2006
    
    $
    2.4
    
    
    
    0.1
    
    
    
    2.52007
    
    
    62.9
    
    
    
    
    
    
    
    62.92008
    
    
    0.2
    
    
    
    2.6
    
    
    
    2.82009
    
    
    23.4
    
    
    
    2.5
    
    
    
    25.92010
    
    
    0.3
    
    
    
    4.0
    
    
    
    4.3Thereafter
    
    
    569.3
    
    
    
    12.5
    
    
    
    581.8$
    658.5
    
    
    
    21.7
    
    
    
    680.2




---



##### Table of Contents



121            15. Shareholders Equity




---



##### Table of Contents



122    16. Stock Option Plans; Restricted Stock
        Average OptionShares
    
    
    Price Per ShareOutstanding at December 31, 2002
    
    
    8,934,601
    
    
    $
    55.36Granted
    
    
    15,500
    
    
    
    43.23Exercised
    
    
    (1,958,523
    )
    
    
    50.82Expired or terminated
    
    
    (501,536
    )
    
    
    74.32Outstanding at December 31, 2003
    
    
    6,490,042
    
    
    
    55.23Granted
    
    
    101,300
    
    
    
    74.61Exercised
    
    
    (4,729,866
    )
    
    
    58.31Expired or terminated
    
    
    (133,150
    )
    
    
    73.72Outstanding at December 31, 2004
    
    
    1,728,326
    
    
    
    46.52Granted
    
    
    133,900
    
    
    
    96.19Exercised
    
    
    (1,293,320
    )
    
    
    45.73Expired or terminated
    
    
    (13,319
    )
    
    
    76.07Outstanding at December 31, 2005
    
    
    555,587
    
    
    
    59.64Exercisable at December 31, 2003
    
    
    5,564,676
    
    
    
    58.12Exercisable at December 31, 2004
    
    
    1,372,169
    
    
    
    45.62Exercisable at December 31, 2005
    
    
    351,141
    
    
    
    43.21




---



##### Table of Contents



123  Weighted AverageRange of
    
    Options
    
    
    Weighted Average
    
    
    OutstandingExercise Prices
    
    Outstanding
    
    
    Remaining Term
    
    
    Option Price$27-40
    
    
    70,848
    
    
    6 years
    
    $
    34.5140-60
    
    
    265,047
    
    
    6 years
    
    
    43.3660-80
    
    
    86,692
    
    
    8 years
    
    
    73.8980-100
    
    
    133,000
    
    
    9 years
    
    
    96.19555,587
  Weighted AverageOption PriceShares
    
    
    Per SharePD Plans2003 Plan
    
    
    11,265
    
    
    $
    74.611998 Plan
    
    
    323,595
    
    
    
    41.411993 Plan
    
    
    8,000
    
    
    
    66.941989 Directors Stock Option Plan
    
    
    8,036
    
    
    
    48.28Cyprus Amax Plans
    
    
    245
    
    
    
    44.46351,141
  Options
    
    
    Weighted AverageRange of
    
    Exercisable
    
    
    OutstandingExercise Prices
    
    at 12/31/05
    
    
    Option Price$27-40
    
    
    68,181
    
    
    $
    34.5840-60
    
    
    262,547
    
    
    
    43.2560-80
    
    
    20,413
    
    
    
    71.57351,141
  (a)
    
    
    (b)
    
    
    (c)Plan Category
    
    Number of
    
    
    Weighted-
    
    
    Number of securitiessecurities to
    
    
    average
    
    
    remaining for futurebe issued upon
    
    
    exercise price
    
    
    issuance underexercise of
    
    
    of outstanding
    
    
    equity compensationoutstanding
    
    
    options,
    
    
    plans (excludingoptions, warrants
    
    
    warrants
    
    
    securities reflectedand rights
    
    
    and rights
    
    
    in column (a))Equity compensation
    
    
    555,587
    
    
    $
    59.64
    
    
    
    3,823,602plans approved bysecurity holdersEquity compensation
    
    
    *
    
    
    
    *
    
    
    
    *plans not approvedby security holders*Total
    
    
    
    
    
    
    
    
    
    
    3,823,602
 
 *
    
    Two plans in which members of the board of directors may participate and that have not been
approved by security holders include provisions that authorize, under certain circumstances,
the issuance of equity shares. The Phelps Dodge Corporation Directors Stock Unit Plan,
effective as of January 1, 1997, provided for an annual grant of 450 units in each of 1998,
1999, and 2000. Commencing in 2001 and continuing through 2004, the grants were equal in value
to $50,000, increasing to $75,000 for awards on and after January 1, 2005, with pro rated
awards permitted with respect to services to be performed in 2006. Commencing in 2001, these
grants were based upon the fair market value of a share of PD stock on the day preceding the
date of grant. Participants in this plan may elect to receive distributions from this plan in
a lump sum or installments, in the form of PD common shares or cash following termination from
service as a director. This plan terminates in accordance with its terms on December 31, 2006.
Directors may elect, in accordance with the provisions of the Deferred Compensation Plan for
the Directors of Phelps Dodge Corporation, effective as of January 1, 1999, to defer the
payment of their directors fees, and if they so elected, to receive in the future the payment
of those fees in PD common shares or cash. Participating directors may elect to receive a
distribution from this plan, no later than the plan year in which the director reaches age 75,
either in cash or in shares of PD common stock or in a specified combination thereof. Based on
the nature of these plans, (1) column (b) is not applicable, as there is no exercise price
related to the units, and (2) it is not possible to determine the exact number of equity
securities that remain for future issuance under these plans, although the number of shares
already issued under these plans since their inception is not material.




---



##### Table of Contents



SharesOutstanding at December 31, 2002
    
    
    359,184Granted
    
    
    118,000Terminated
    
    
    (6,200
    )Released
    
    
    (19,078
    )Outstanding at December 31, 2003
    
    
    451,906Granted
    
    
    256,135Terminated
    
    
    (12,150
    )Released
    
    
    (85,296
    )Outstanding at December 31, 2004
    
    
    610,595Granted
    
    
    290,700Terminated
    
    
    (18,850
    )Released
    
    
    (108,078
    )Outstanding at December 31, 2005
    
    
    774,367
  2005
    
    2004
    
    2003Expected dividend yield
    
    
    1.04
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected stock price volatility
    
    
    39.8
    %
    
    
    41.3
    %
    
    
    43.4
    %Risk-free interest rate
    
    
    3.8
    %
    
    
    3.3
    %
    
    
    2.9
    %Expected life of options
    
    5 years
    
    5 years
    
    5 years
  17. Pension Plans
    2005
    
    2004Projected benefit obligation
    
    $
    133
    
    
    
    1,343Accumulated benefit obligation
    
    $
    123
    
    
    
    1,235Fair value of plan assets
    
    $
    51
    
    
    
    1,007
   2005
    
    2004Asset category:Equity securities
    
    
    58
    %
    
    
    56
    %Fixed income
    
    
    34
    
    
    
    34Real estate
    
    
    5
    
    
    
    6Other
    
    
    3
    
    
    
    4100
    %
    
    
    100
    %




---



##### Table of Contents



125        2005
    
    2004Weighted-average assumptions:Discount rate
    
    
    5.63
    %
    
    
    5.75
    %Rate of increase in salary levels
    
    
    4.00
    %
    
    
    4.00
    %Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    1,351
    
    
    
    1,197Service cost  benefits earned during the period
    
    
    28
    
    
    
    24Interest cost on benefit obligation
    
    
    74
    
    
    
    72Plan amendments
    
    
    2
    
    
    
    1Actuarial (gain) loss
    
    
    (15
    )
    
    
    126Benefits paid
    
    
    (84
    )
    
    
    (76
    )Special retirement benefits
    
    
    4
    
    
    
    1Currency translation adjustments
    
    
    (9
    )
    
    
    6Benefit obligation at end of year
    
    $
    1,351
    
    
    
    1,351Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    1,019
    
    
    
    893Actual return on plan assets
    
    
    129
    
    
    
    106Employer contributions
    
    
    257
    
    
    
    92Currency translation adjustments
    
    
    (5
    )
    
    
    4Benefits paid
    
    
    (84
    )
    
    
    (76
    )Fair value of plan assets at end of year
    
    $
    1,316
    
    
    
    1,019Funded status
    
    $
    (35
    )
    
    
    (332
    )Unrecognized actuarial loss
    
    
    302
    
    
    
    377Unrecognized prior service cost
    
    
    12
    
    
    
    16Net amount recognized
    
    $
    279
    
    
    
    61Amounts recognized in the balance sheet consist of:Prepaid benefit cost
    
    $
    314
    
    
    
    7Accrued benefit liability
    
    
    (72
    )
    
    
    (228
    )Intangible asset
    
    
    1
    
    
    
    18Deferred tax benefit
    
    
    10
    
    
    
    34Accumulated other comprehensive loss
    
    
    26
    
    
    
    230Net amount recognized
    
    $
    279
    
    
    
    61
  2005
    
    2004
    
    2003Weighted-average assumptions:Discount rate
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.75
    %Expected long-term rate of return
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.75
    %Rate of increase in salary levels
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Components of net periodic benefit cost:Service cost  benefits earned during the period
    
    $
    28.1
    
    
    
    23.6
    
    
    
    20.9Interest cost on benefit obligation
    
    
    74.3
    
    
    
    72.0
    
    
    
    72.1Expected return on plan assets
    
    
    (86.1
    )
    
    
    (84.1
    )
    
    
    (86.4
    )Amortization of transition obligation
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Amortization of prior service cost
    
    
    3.6
    
    
    
    3.4
    
    
    
    3.5Amortization of actuarial loss
    
    
    14.0
    
    
    
    3.2
    
    
    
    2.8Curtailments and special retirement benefits
    
    
    5.3
    
    
    
    0.8
    
    
    
    2.0Recognized prior service cost
    
    
    
    
    
    
    
    
    
    
    0.2Net periodic benefit cost
    
    $
    39.3
    
    
    
    19.0
    
    
    
    15.2




---



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126  18. Postretirement and Other Employee Benefits
Other Than Pensions
      2005
    
    2004Asset category:Core U.S. fixed income
    
    
    98
    %
    
    
    60
    %Growth equity
    
    
    2
    
    
    
    40100
    %
    
    
    100
    %




---



##### Table of Contents



127  2005
    
    2004Weighted-average assumptions:Discount rate  medical retiree
    
    
    5.37
    %
    
    
    5.75
    %Discount rate  life retiree
    
    
    5.41
    %
    
    
    6.00
    %Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    363
    
    
    
    389Service cost  benefits earned during the year
    
    
    4
    
    
    
    5Interest cost on benefit obligation
    
    
    20
    
    
    
    23Plan amendments
    
    
    (30
    )
    
    
    Actuarial (gain) loss
    
    
    (41
    )
    
    
    (22
    )Benefits paid, net of employee contributions
    
    
    (30
    )
    
    
    (32
    )Curtailments
    
    
    (6
    )
    
    
    Special retirement benefits
    
    
    1
    
    
    
    Benefit obligation at end of year
    
    $
    281
    
    
    
    363Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    3
    
    
    
    5Employer contributions
    
    
    228
    
    
    
    30Benefits paid, net of employee contributions
    
    
    (30
    )
    
    
    (32
    )Fair value of plan assets at end of year
    
    $
    201
    
    
    
    3Unfunded status
    
    $
    (80
    )
    
    
    (360
    )Unrecognized actuarial (gain) loss
    
    
    (28
    )
    
    
    19Unrecognized prior service (benefit) cost
    
    
    (22
    )
    
    
    8Net amount recognized  accrued liability
    
    $
    (130
    )
    
    
    (333
    )
  2005
    
    2004
    
    2003Weighted-average assumptions:Discount rate  medical retiree
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.75
    %Discount rate  life retiree
    
    
    6.00
    %
    
    
    6.25
    %
    
    
    6.75
    %Expected long-term rate of return on plan assets
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    8.00
    %Components of net periodic benefit cost:Service cost  benefits earned during the year
    
    $
    4.3
    
    
    
    5.4
    
    
    
    4.4Interest cost on benefit obligation
    
    
    19.6
    
    
    
    23.3
    
    
    
    23.4Expected return on plan assets
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    (0.6
    )Amortization of prior service cost
    
    
    0.3
    
    
    
    1.3
    
    
    
    1.3Recognized net actuarial loss (gain)
    
    
    0.5
    
    
    
    0.4
    
    
    
    (0.4
    )Curtailments and special retirement benefits
    
    
    0.8
    
    
    
    
    
    
    
    12.5Net periodic benefit cost
    
    $
    25.4
    
    
    
    30.1
    
    
    
    40.6
  2005
    
    2004Medical care cost trend rate assumed for major medical
plan for the next year
    
    
    10
    %
    
    
    11
    %Medical care cost trend rate assumed for basic only
plan for the next year
    
    
    8
    %
    
    
    8
    %Rate to which the cost trend rate is assumed to decline
(the ultimate trend rate)
    
    
    5
    %
    
    
    5
    %Year that the rate reaches the ultimate trend rate
    
    
    2012
    
    
    
    2011
  1 Percentage-PointIncrease
    
    DecreaseEffect on total of service and interest cost components
    
    $
    0.8
    
    
    
    (0.7
    )Effect on postretirement benefit obligation
    
    $
    13.5
    
    
    
    (11.8
    )




---



##### Table of Contents



128  19. Commitments
   Operating
    
    MineralLeases*
    
    Royalties2006
    
    $
    18.2
    
    
    
    1.92007
    
    
    17.3
    
    
    
    1.92008
    
    
    15.9
    
    
    
    1.92009
    
    
    12.3
    
    
    
    1.92010
    
    
    11.6
    
    
    
    1.7After 2010
    
    
    19.7
    
    
    
    10.7Total payments
    
    $
    95.0
    
    
    
    20.0
 
 *
    
    Included $6.9 million of non-cancelable leases associated with discontinued operations.  Sub-leaseIncome2006
    
    $
    0.52007
    
    
    0.52008
    
    
    0.52009
    
    
    0.52010
    
    
    0.5After 2010
    
    
    0.8$
    3.3
  2005
    
    2004
    
    2003Rental expense
    
    $
    32.7
    
    
    
    33.8
    
    
    
    23.0Mineral royalty expense
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.3$
    34.0
    
    
    
    35.1
    
    
    
    24.3
   20. Guarantees




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##### Table of Contents



129   21. Contingencies
 Letters of Credit and Surety Bonds
   Insurance
   Environmental




---



##### Table of Contents



130   Pinal Creek Site
     Anniston Lead and PCB Sites
  Laurel Hill Site




---



##### Table of Contents



131  Yonkers Site
  Other
      2005
    
    2004
    
    2003Balance, beginning of year
    
    $
    303.6
    
    
    
    317.2
    
    
    
    305.9Additions to reserves
    
    
    116.0
    
    
    
    63.6
    
    
    
    54.6Reductions in reserve estimates
    
    
    (2.6
    )
    
    
    (4.7
    )
    
    
    (12.7
    )Spending against reserves
    
    
    (49.1
    )
    
    
    (72.5
    )
    
    
    (24.1
    )Reclassification to asset
retirement obligations*
    
    
    
    
    
    
    
    
    
    
    (6.5
    )Balance, end of year
    
    $
    367.9
    
    
    
    303.6
    
    
    
    317.2
 
 *
    
    Upon adoption of SFAS No. 143, reserves for certain matters ($6.5 million) required by
reclamation rules or laws were reclassified to asset retirement obligations (previously
classified as environmental reserves). Asset Retirement Obligations




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##### Table of Contents



132  Asset Retirement Obligations2005
    
    2004
    
    2003Balance, beginning of year
    
    $
    275.2
    
    
    
    225.3
    
    
    
    138.6Liability recorded upon adoption of
SFAS No. 143*
    
    
    
    
    
    
    
    
    
    
    10.4Liability recorded upon adoption of FIN 47**
    
    
    17.9
    
    
    
    
    
    
    
    Additional liabilities from fully consolidating
El Abra and Candelaria**
    
    
    
    
    
    
    5.6
    
    
    
    New liabilities during the period
    
    
    1.5
    
    
    
    1.8
    
    
    
    16.8Accretion expense
    
    
    22.8
    
    
    
    19.6
    
    
    
    14.7Payments
    
    
    (39.2
    )
    
    
    (28.9
    )
    
    
    (1.8
    )Revisions in estimated cash flows
    
    
    127.0
    
    
    
    51.6
    
    
    
    46.4Foreign currency translation adjustments
    
    
    (0.6
    )
    
    
    0.2
    
    
    
    0.2Transfer to long-term liabilities related to
assets held for sale
    
    
    (6.2
    )
    
    
    
    
    
    
    Balance, end of year
    
    $
    398.4
    
    
    
    275.2
    
    
    
    225.3
 
 *
    
    Amount includes $7.9 million of reclassifications from environmental reserves ($6.5 million)
and other liabilities ($1.4 million). Refer to Note 1, Summary of Significant Accounting
Policies, for further discussion.**
    
    Refer to Note 1, Summary of Significant Accounting Policies, for further
discussion. Asset Retirement Costs2005
    
    2004
    
    2003Gross balance, beginning of year
    
    $
    196.3
    
    
    
    138.9
    
    
    
    Asset recorded upon adoption of
SFAS No. 143*
    
    
    
    
    
    
    
    
    
    
    91.5Asset recorded upon adoption of FIN 47*
    
    
    8.4
    
    
    
    
    
    
    
    Additional assets from fully consolidating
El Abra and Candelaria*
    
    
    
    
    
    
    3.8
    
    
    
    New assets during the period
    
    
    1.5
    
    
    
    1.8
    
    
    
    1.0Revisions in estimated cash flows
    
    
    127.0
    
    
    
    51.6
    
    
    
    46.4Impairment of assets
    
    
    (129.7
    )
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    (0.4
    )
    
    
    0.2
    
    
    
    Transfer to long-term assets held for sale
    
    
    (3.9
    )
    
    
    
    
    
    
    Gross balance, end of year
    
    
    199.2
    
    
    
    196.3
    
    
    
    138.9Less accumulated depreciation, depletion
and amortization**
    
    
    (86.4
    )
    
    
    (71.2
    )
    
    
    (60.7
    )Net balance, end of year
    
    $
    112.8
    
    
    
    125.1
    
    
    
    78.2
 
 *
    
    Refer to Note 1, Summary of Significant Accounting Policies, for further
discussion.**
    
    In 2005, accumulated depreciation, depletion and amortization included adjustments for the
adoption of FIN 47 ($4.0 million) and the transfer to long-term assets held for sale ($2.0
million); in 2004, adjustments included $1.4 million from fully consolidating El Abra and
Candelaria.




---



##### Table of Contents



133  Significant Arizona Environmental and Reclamation Programs




---



##### Table of Contents



134   Significant New Mexico Environmental and Reclamation Programs




---



##### Table of Contents



135      Significant Colorado Reclamation Programs




---



##### Table of Contents



136 Avian Mortalities and Natural Resources Damage Claims
        Significant Changes in International Closure and Reclamation Programs
 Sociedad Minera Cerro Verde S.A.A.
   Other




---



##### Table of Contents



137 Other
     Legal
 Technical Industries, Inc. v. Cabot Corporation, et
al. In Re Carbon Black
Antitrust Litigation
 Carlisle Companies Incorporated, et al. v. Cabot Corporation,
et al.




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##### Table of Contents



138 22. Derivative Financial Instruments and Fair Value of Financial Instruments
  (Units in millions)12/31/05
    
    12/31/04Fair Value HedgesCopper fixed-price (lbs.)
    
    
    13
    
    
    
    11Foreign currency (USD)
    
    $
    6
    
    
    
    37Cash Flow HedgesMetal purchase (lbs.)
    
    
    38
    
    
    
    30Diesel fuel price protection (gallons)
    
    
    9
    
    
    
    11Natural gas price protection (decatherms)
    
    
    
    
    
    
    2Other Price Protection Programs
Not Qualifying for Hedge AccountingCopper fixed-price rod sales (lbs.)
    
    
    72
    
    
    
    51Copper price protection (lbs.)
    
    
    2,344
    
    
    
    650Copper COMEX-LME arbitrage (lbs.)
    
    
    36
    
    
    
    76Gold price protection (ounces)
    
    
    0.1
    
    
    
    0.1Silver price protection (ounces)
    
    
    1.2
    
    
    
    0.7Copper quotational period swaps (lbs.)
    
    
    92
    
    
    
    130Other diesel fuel price protection (gallons)
    
    
    5
    
    
    
    6Foreign currency (USD)
    
    
    75
    
    
    
    
  Metals Hedging
 Fair Value Hedges
 Copper Fixed-Price Hedging.
  Cash Flow Hedges
 Metal Purchase Hedging.
  Foreign Currency Hedging
 Fair Value Hedges
   Interest Rate Hedging
 Fair Value Hedges
 Fixed-to-Floating Interest Rate Swaps.




---



##### Table of Contents





139 Cash Flow Hedges
 Floating-to-Fixed Interest Rate Swaps.
 Energy Price Protection Programs
 Cash Flow Hedges
 Diesel Fuel Price Protection Program.
  Natural Gas Price Protection Program.
  Feedstock Oil Price Protection Program.
  Other Protection Programs
  Copper Fixed-Price Rod Sales Program.




---



##### Table of Contents



140  Copper Price Protection Program.
  Copper COMEX-LME Arbitrage Program.
  Gold and Silver Price Protection Programs.
  Copper Quotational Period Swap Program.
  Foreign Currency Swap.
  Other Diesel Fuel Price Protection Programs.
  Credit Risk




---



##### Table of Contents



141  Other Financial Instruments
  Cash and Cash Equivalents.
 Investments and Long-Term Receivables.
 Trust Assets.
 Long-Term Debt.
  Carrying
    
    FairAmount
    
    ValueCash and cash equivalents
    
    $
    1,916.7
    
    
    
    1,916.7Investments and long-term receivables
(excluding $31.9 million of equity investments
for which it is not practicable to estimate fair value)
    
    $
    110.8
    
    
    
    93.7Trust assets (including financial assurance of $90.9 million
and global environmental of $100.0 million)
    
    $
    190.9
    
    
    
    190.9Long-term debt (including amounts due within one year)
    
    $
    680.2
    
    
    
    773.9
 23. Business Segment Data




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##### Table of Contents



142       
 FINANCIAL
DATA BY GEOGRAPHIC AREA
  2005
    
    2004
    
    2003Sales and other operating revenues:Unaffiliated customersUnited States
    
    $
    5,769.8
    
    
    
    4,243.5
    
    
    
    2,414.6Latin America*
    
    
    2,234.1
    
    
    
    1,952.5
    
    
    
    932.8Other
    
    
    283.2
    
    
    
    219.2
    
    
    
    151.1$
    8,287.1
    
    
    
    6,415.2
    
    
    
    3,498.5Long-lived assets at December 31:United States
    
    $
    3,868.3
    
    
    
    3,556.2
    
    
    
    3,654.9Latin America**
    
    
    2,052.1
    
    
    
    1,910.4
    
    
    
    1,538.7Other
    
    
    262.6
    
    
    
    404.0
    
    
    
    281.7$
    6,183.0
    
    
    
    5,870.6
    
    
    
    5,475.3
 
 *
    
    Sales and other operating revenues in Chile
    
    $
    1,502.0
    
    
    
    1,398.4
    
    
    
    584.9**
    
    Long-lived assets in Chile
    
    $
    1,278.3
    
    
    
    1,370.7
    
    
    
    984.0Long-lived assets in Peru
    
    $
    646.0
    
    
    
    370.5
    
    
    
    387.7Revenue is attributed to countries based on the origin of the material sold.




---



##### Table of Contents



143 
 Financial Data By Business Segment
 U.S. Mines
    
    South American MinesChino/
    
    
    
    
    
    Candelaria/
    
    Cerro
    
    
    
    
    
    PrimaryMorenci
    
    Bagdad
    
    Sierrita
    
    Cobre
    
    Tyrone
    
    Ojos del Salado*
    
    Verde
    
    El Abra*
    
    Molybdenum2005Sales and other operating revenues:Unaffiliated customers
    
    
    
    
    
    
    
    
    
    
    15.6
    
    
    
    15.5
    
    
    
    
    
    
    
    543.1
    
    
    
    71.2
    
    
    
    362.8
    
    
    
    1,938.1Intersegment
    
    
    1,012.7
    
    
    
    665.6
    
    
    
    858.6
    
    
    
    321.0
    
    
    
    120.7
    
    
    
    191.4
    
    
    
    292.7
    
    
    
    330.7
    
    
    
    Depreciation, depletion and amortization
    
    
    61.6
    
    
    
    29.1
    
    
    
    15.0
    
    
    
    21.1
    
    
    
    8.8
    
    
    
    37.6
    
    
    
    27.3
    
    
    
    122.1
    
    
    
    39.9Operating income (loss) before special
items and provisions
    
    
    400.1
    
    
    
    377.7
    
    
    
    567.6
    
    
    
    49.2
    
    
    
    6.6
    
    
    
    306.8
    
    
    
    209.8
    
    
    
    274.7
    
    
    
    325.1Special items and provisions, net
    
    
    (0.2
    )
    
    
    12.1
    
    
    
    1.2
    
    
    
    (64.5
    )
    
    
    (215.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )Operating income (loss)
    
    
    399.9
    
    
    
    389.8
    
    
    
    568.8
    
    
    
    (15.3
    )
    
    
    (209.1
    )
    
    
    306.8
    
    
    
    209.8
    
    
    
    274.7
    
    
    
    324.3Interest income
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    2.1
    
    
    
    
    
    
    
    7.4
    
    
    
    7.1
    
    
    
    2.7
    
    
    
    0.6Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    11.7
    
    
    
    (4.7
    )
    
    
    Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.2Change in
interest gains from stock issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.8
    
    
    
    159.5
    
    
    
    
    
    
    
    Early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226.3
    )
    
    
    17.5
    
    
    
    (123.0
    )
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20.9
    )
    
    
    (92.7
    )
    
    
    (71.4
    )
    
    
    Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity in net earnings (losses) of affiliated
companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative
effect of accounting changes
    
    
    (3.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )Equity basis investments at December 31
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    Assets at December 31
    
    
    953.6
    
    
    
    443.1
    
    
    
    323.4
    
    
    
    445.5
    
    
    
    107.2
    
    
    
    825.3
    
    
    
    1,060.1
    
    
    
    1,135.3
    
    
    
    924.4Expenditures for segment assets
    
    
    66.7
    
    
    
    36.2
    
    
    
    18.6
    
    
    
    17.9
    
    
    
    13.3
    
    
    
    14.7
    
    
    
    309.6
    
    
    
    23.2
    
    
    
    38.32004Sales and other operating revenues:Unaffiliated customers
    
    
    
    
    
    
    
    
    
    
    9.0
    
    
    
    8.6
    
    
    
    
    
    
    
    456.8
    
    
    
    99.4
    
    
    
    383.4
    
    
    
    985.3Intersegment
    
    
    922.8
    
    
    
    410.9
    
    
    
    512.1
    
    
    
    232.5
    
    
    
    111.7
    
    
    
    234.0
    
    
    
    162.6
    
    
    
    267.1
    
    
    
    Depreciation, depletion and amortization
    
    
    75.3
    
    
    
    24.9
    
    
    
    13.0
    
    
    
    15.4
    
    
    
    13.1
    
    
    
    52.2
    
    
    
    32.2
    
    
    
    121.3
    
    
    
    31.0Operating income (loss) before special
items and provisions
    
    
    376.3
    
    
    
    174.9
    
    
    
    264.3
    
    
    
    58.8
    
    
    
    28.7
    
    
    
    303.3
    
    
    
    130.0
    
    
    
    273.7
    
    
    
    103.0Special items and provisions, net
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    (5.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Operating income (loss)
    
    
    375.7
    
    
    
    174.9
    
    
    
    264.3
    
    
    
    57.6
    
    
    
    22.9
    
    
    
    303.3
    
    
    
    130.0
    
    
    
    273.7
    
    
    
    103.3Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    1.0
    
    
    
    1.1
    
    
    
    1.0
    
    
    
    0.3Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.3
    )
    
    
    (2.0
    )
    
    
    (16.8
    )
    
    
    Early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15.2
    )
    
    
    
    
    
    
    (2.8
    )
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53.3
    )
    
    
    (45.2
    )
    
    
    22.8
    
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46.0
    )
    
    
    (16.0
    )
    
    
    (134.8
    )
    
    
    Equity in net earnings (losses) of affiliated
companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at December 31
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at December 31
    
    
    933.3
    
    
    
    440.8
    
    
    
    320.6
    
    
    
    456.0
    
    
    
    213.9
    
    
    
    889.1
    
    
    
    560.0
    
    
    
    958.8
    
    
    
    835.4Expenditures for segment assets
    
    
    28.2
    
    
    
    24.1
    
    
    
    32.5
    
    
    
    18.6
    
    
    
    16.1
    
    
    
    17.5
    
    
    
    16.4
    
    
    
    12.9
    
    
    
    16.02003Sales and other operating revenues:Unaffiliated customers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    218.5
    
    
    
    41.4
    
    
    
    136.2
    
    
    
    383.6Intersegment
    
    
    587.8
    
    
    
    222.2
    
    
    
    247.0
    
    
    
    45.9
    
    
    
    93.4
    
    
    
    101.4
    
    
    
    115.3
    
    
    
    93.2
    
    
    
    Depreciation, depletion and amortization
    
    
    76.1
    
    
    
    20.5
    
    
    
    13.4
    
    
    
    9.0
    
    
    
    13.0
    
    
    
    43.5
    
    
    
    28.7
    
    
    
    67.7
    
    
    
    25.5Operating income (loss) before special
items and provisions
    
    
    78.5
    
    
    
    30.1
    
    
    
    50.9
    
    
    
    (4.1
    )
    
    
    (16.7
    )
    
    
    100.5
    
    
    
    42.7
    
    
    
    39.4
    
    
    
    8.6Special items and provisions, net
    
    
    (1.1
    )
    
    
    
    
    
    
    
    
    
    
    (1.3
    )
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    77.4
    
    
    
    30.1
    
    
    
    50.9
    
    
    
    (5.4
    )
    
    
    (17.2
    )
    
    
    100.5
    
    
    
    42.7
    
    
    
    39.4
    
    
    
    8.6Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    0.2
    
    
    
    
    
    
    
    0.3Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14.2
    )
    
    
    (1.8
    )
    
    
    (14.8
    )
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14.9
    )
    
    
    (15.6
    )
    
    
    1.1
    
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.1
    )
    
    
    
    
    
    
    Equity in net earnings (losses) of affiliated
companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative
effect of accounting changes
    
    
    3.6
    
    
    
    1.5
    
    
    
    1.1
    
    
    
    (4.3
    )
    
    
    2.7
    
    
    
    
    
    
    
    0.9
    
    
    
    (0.4
    )
    
    
    1.4Equity basis investments at December 31
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at December 31
    
    
    1,008.9
    
    
    
    439.0
    
    
    
    300.5
    
    
    
    413.2
    
    
    
    168.3
    
    
    
    684.5
    
    
    
    440.8
    
    
    
    532.9
    
    
    
    787.6Expenditures for segment assets**
    
    
    16.5
    
    
    
    10.4
    
    
    
    8.1
    
    
    
    (46.7
    )
    
    
    2.0
    
    
    
    4.6
    
    
    
    5.1
    
    
    
    1.0
    
    
    
    13.4
 
 *
    
    2005 and 2004 reflected full consolidation of Candelaria and El Abra; 2003 reflected Candelaria
and El Abra on a pro rata basis (80 percent and 51 percent, respectively).**
    
    2003 expenditures for segment assets included $50 million of cash received and $0.9 million of
cash acquired from Heisei in connection with the acquisition of their one-third partnership
interest in Chino Mines Company. (Refer to Note 2, Acquisitions and Divestitures, for further
discussion.)




---



##### Table of Contents



144 Financial Data By Business Segment
 PDMC
    
    
    
    
    
    PDI -
    
    Corporate,
    
    Discon-Manufac-
    
    
    
    
    
    PDMC
    
    Other &
    
    PDMC
    
    Wire &
    
    Other &
    
    tinuedturing
    
    Sales
    
    Segments
    
    Eliminations
    
    Subtotal
    
    Cable
    
    Eliminations
    
    Operations
    
    Total2005Sales and other operating revenues:Unaffiliated customers
    
    
    3,336.4
    
    
    
    789.1
    
    
    
    7,071.8
    
    
    
    25.7
    
    
    
    7,097.5
    
    
    
    1,189.6
    
    
    
    
    
    
    
    
    
    
    
    8,287.1Intersegment
    
    
    176.8
    
    
    
    278.4
    
    
    
    4,248.6
    
    
    
    (3,964.0
    )
    
    
    284.6
    
    
    
    0.9
    
    
    
    (285.5
    )
    
    
    
    
    
    
    Depreciation, depletion and amortization
    
    
    30.6
    
    
    
    0.1
    
    
    
    393.2
    
    
    
    10.7
    
    
    
    403.9
    
    
    
    28.8
    
    
    
    9.1
    
    
    
    
    
    
    
    441.8Operating income (loss) before special
items and provisions
    
    
    5.9
    
    
    
    1.7
    
    
    
    2,525.2
    
    
    
    (148.0
    )
    
    
    2,377.2
    
    
    
    33.2
    
    
    
    (122.4
    )
    
    
    
    
    
    
    2,288.0Special items and provisions, net
    
    
    (154.0
    )
    
    
    
    
    
    
    (421.9
    )
    
    
    (25.4
    )
    
    
    (447.3
    )
    
    
    (18.6
    )
    
    
    (57.2
    )
    
    
    
    
    
    
    (523.1
    )Operating income (loss)
    
    
    (148.1
    )
    
    
    1.7
    
    
    
    2,103.3
    
    
    
    (173.4
    )
    
    
    1,929.9
    
    
    
    14.6
    
    
    
    (179.6
    )
    
    
    
    
    
    
    1,764.9Interest income
    
    
    
    
    
    
    0.1
    
    
    
    20.1
    
    
    
    0.8
    
    
    
    20.9
    
    
    
    2.0
    
    
    
    36.3
    
    
    
    
    
    
    
    59.2Interest expense, net
    
    
    (3.1
    )
    
    
    (1.0
    )
    
    
    2.4
    
    
    
    3.3
    
    
    
    5.7
    
    
    
    (7.9
    )
    
    
    (60.1
    )
    
    
    
    
    
    
    (62.3
    )Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    87.2
    
    
    
    351.2
    
    
    
    438.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    438.4Change in
interest gains from stock issuance
    
    
    
    
    
    
    
    
    
    
    168.3
    
    
    
    
    
    
    
    168.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168.3Early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54.0
    )
    
    
    
    
    
    
    (54.0
    )Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (331.8
    )
    
    
    
    
    
    
    (331.8
    )
    
    
    
    
    
    
    (245.2
    )
    
    
    
    
    
    
    (577.0
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (185.0
    )
    
    
    0.1
    
    
    
    (184.9
    )
    
    
    (5.5
    )
    
    
    
    
    
    
    
    
    
    
    (190.4
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.6
    )
    
    
    1.3
    
    
    
    2.0
    
    
    
    
    
    
    
    2.7Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17.4
    )
    
    
    (17.4
    )Cumulative
effect of accounting changes
    
    
    (1.9
    )
    
    
    
    
    
    
    (6.9
    )
    
    
    (1.6
    )
    
    
    (8.5
    )
    
    
    (0.8
    )
    
    
    
    
    
    
    (0.8
    )
    
    
    (10.1
    )Equity basis investments at December 31
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    1.0
    
    
    
    1.8
    
    
    
    6.3
    
    
    
    23.8
    
    
    
    
    
    
    
    31.9Assets at December 31
    
    
    602.8
    
    
    
    94.6
    
    
    
    6,915.3
    
    
    
    34.0
    
    
    
    6,949.3
    
    
    
    702.6
    
    
    
    2,055.7
    
    
    
    650.4
    
    
    
    10,358.0Expenditures for segment assets
    
    
    22.4
    
    
    
    
    
    
    
    560.9
    
    
    
    61.4
    
    
    
    622.3
    
    
    
    19.5
    
    
    
    15.8
    
    
    
    40.6
    
    
    
    698.22004Sales and other operating revenues:Unaffiliated customers
    
    
    2,519.4
    
    
    
    959.0
    
    
    
    5,420.9
    
    
    
    22.5
    
    
    
    5,443.4
    
    
    
    971.8
    
    
    
    
    
    
    
    
    
    
    
    6,415.2Intersegment
    
    
    228.4
    
    
    
    204.3
    
    
    
    3,286.4
    
    
    
    (3,071.1
    )
    
    
    215.3
    
    
    
    0.5
    
    
    
    (215.8
    )
    
    
    
    
    
    
    Depreciation, depletion and amortization
    
    
    22.5
    
    
    
    
    
    
    
    400.9
    
    
    
    9.8
    
    
    
    410.7
    
    
    
    35.1
    
    
    
    9.7
    
    
    
    
    
    
    
    455.5Operating
income (loss) before special items and provisions
    
    
    32.3
    
    
    
    4.1
    
    
    
    1,749.4
    
    
    
    (131.4
    )
    
    
    1,618.0
    
    
    
    30.2
    
    
    
    (111.7
    )
    
    
    
    
    
    
    1,536.5Special items and provisions, net
    
    
    (3.2
    )
    
    
    
    
    
    
    (10.5
    )
    
    
    (0.8
    )
    
    
    (11.3
    )
    
    
    (11.4
    )
    
    
    (38.9
    )
    
    
    
    
    
    
    (61.6
    )Operating income (loss)
    
    
    29.1
    
    
    
    4.1
    
    
    
    1,738.9
    
    
    
    (132.2
    )
    
    
    1,606.7
    
    
    
    18.8
    
    
    
    (150.6
    )
    
    
    
    
    
    
    1,474.9Interest income
    
    
    
    
    
    
    
    
    
    
    4.5
    
    
    
    0.5
    
    
    
    5.0
    
    
    
    0.7
    
    
    
    6.0
    
    
    
    
    
    
    
    11.7Interest expense, net
    
    
    (4.1
    )
    
    
    (0.5
    )
    
    
    (29.7
    )
    
    
    4.2
    
    
    
    (25.5
    )
    
    
    (6.0
    )
    
    
    (91.4
    )
    
    
    
    
    
    
    (122.9
    )Early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    (18.0
    )
    
    
    
    
    
    
    (18.0
    )
    
    
    
    
    
    
    (25.2
    )
    
    
    
    
    
    
    (43.2
    )Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (75.7
    )
    
    
    
    
    
    
    (75.7
    )
    
    
    
    
    
    
    (55.6
    )
    
    
    
    
    
    
    (131.3
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (196.8
    )
    
    
    
    
    
    
    (196.8
    )
    
    
    (4.3
    )
    
    
    
    
    
    
    
    
    
    
    (201.1
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.8
    )
    
    
    (0.9
    )
    
    
    0.5
    
    
    
    2.3
    
    
    
    
    
    
    
    1.9Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22.7
    
    
    
    22.7Equity basis investments at December 31
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    14.4
    
    
    
    14.9
    
    
    
    5.9
    
    
    
    23.9
    
    
    
    
    
    
    
    44.7Assets at December 31
    
    
    466.9
    
    
    
    37.5
    
    
    
    6,112.3
    
    
    
    (9.9
    )
    
    
    6,102.4
    
    
    
    614.2
    
    
    
    1,212.1
    
    
    
    665.4
    
    
    
    8,594.1Expenditures for segment assets
    
    
    24.1
    
    
    
    0.1
    
    
    
    206.5
    
    
    
    40.7
    
    
    
    247.2
    
    
    
    25.2
    
    
    
    13.9
    
    
    
    31.0
    
    
    
    317.32003Sales and other operating revenues:Unaffiliated customers
    
    
    1,384.6
    
    
    
    642.2
    
    
    
    2,806.8
    
    
    
    21.8
    
    
    
    2,828.6
    
    
    
    669.9
    
    
    
    
    
    
    
    
    
    
    
    3,498.5Intersegment
    
    
    180.7
    
    
    
    121.8
    
    
    
    1,808.7
    
    
    
    (1,681.5
    )
    
    
    127.2
    
    
    
    0.3
    
    
    
    (127.5
    )
    
    
    
    
    
    
    Depreciation, depletion and amortization
    
    
    16.9
    
    
    
    
    
    
    
    314.3
    
    
    
    13.7
    
    
    
    328.0
    
    
    
    35.5
    
    
    
    13.2
    
    
    
    
    
    
    
    376.7Operating income (loss) before special
items and provisions
    
    
    26.5
    
    
    
    5.5
    
    
    
    361.9
    
    
    
    (91.2
    )
    
    
    270.7
    
    
    
    15.7
    
    
    
    (101.9
    )
    
    
    
    
    
    
    184.5Special items and provisions, net
    
    
    (0.1
    )
    
    
    
    
    
    
    (3.0
    )
    
    
    (2.5
    )
    
    
    (5.5
    )
    
    
    (2.0
    )
    
    
    (34.2
    )
    
    
    
    
    
    
    (41.7
    )Operating income (loss)
    
    
    26.4
    
    
    
    5.5
    
    
    
    358.9
    
    
    
    (93.7
    )
    
    
    265.2
    
    
    
    13.7
    
    
    
    (136.1
    )
    
    
    
    
    
    
    142.8Interest income
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    0.5
    
    
    
    2.0
    
    
    
    0.9
    
    
    
    6.2
    
    
    
    
    
    
    
    9.1Interest expense, net
    
    
    (4.1
    )
    
    
    (0.2
    )
    
    
    (35.1
    )
    
    
    4.0
    
    
    
    (31.1
    )
    
    
    (5.1
    )
    
    
    (105.6
    )
    
    
    
    
    
    
    (141.8
    )Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (29.4
    )
    
    
    
    
    
    
    (29.4
    )
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    (27.6
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (5.1
    )
    
    
    1.6
    
    
    
    (3.5
    )
    
    
    (3.7
    )
    
    
    
    
    
    
    
    
    
    
    (7.2
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    2.1
    
    
    
    
    
    
    
    2.7Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39.2
    
    
    
    39.2Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    68.3
    
    
    
    
    
    
    
    68.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68.3Cumulative
effect of accounting changes
    
    
    
    
    
    
    
    
    
    
    6.5
    
    
    
    2.0
    
    
    
    8.5
    
    
    
    
    
    
    
    (0.6
    )
    
    
    0.5
    
    
    
    8.4Equity basis investments at December 31
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    0.9
    
    
    
    1.6
    
    
    
    5.9
    
    
    
    25.5
    
    
    
    
    
    
    
    33.0Assets at December 31
    
    
    465.2
    
    
    
    2.4
    
    
    
    5,243.3
    
    
    
    (5.4
    )
    
    
    5,237.9
    
    
    
    521.6
    
    
    
    870.2
    
    
    
    643.2
    
    
    
    7,272.9Expenditures for segment assets**
    
    
    9.9
    
    
    
    
    
    
    
    24.3
    
    
    
    9.0
    
    
    
    33.3
    
    
    
    17.1
    
    
    
    28.1
    
    
    
    23.9
    
    
    
    102.4
 
 **
    
    2003 expenditures for segment assets included $50 million of cash received and $0.9 million of
cash acquired from Heisei in connection with the acquisition of their
one-third partnership
interest in Chino Mines Company. (Refer to Note 2, Acquisitions and Divestitures, for further
discussion.)




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##### Table of Contents



145 24. Stock Split
    (Unaudited)2005
    
    2004
    
    2003Basic earnings per common share 
as reported (pre-stock split)Income (loss) from continuing operations
    
    $
    16.12
    
    
    
    10.82
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.18
    )
    
    
    0.24
    
    
    
    0.45Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Basic earnings per common share
    
    $
    15.84
    
    
    
    11.06
    
    
    
    0.92Basic earnings per common share 
pro forma (post-stock split)Income (loss) from continuing operations
    
    $
    8.06
    
    
    
    5.41
    
    
    
    (0.19
    )Income (loss) from discontinued operations
    
    
    (0.09
    )
    
    
    0.12
    
    
    
    0.22Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.38Cumulative effect of accounting changes
    
    
    (0.05
    )
    
    
    
    
    
    
    0.05Basic earnings per common share
    
    $
    7.92
    
    
    
    5.53
    
    
    
    0.46Diluted earnings per common share 
as reported (pre-stock split)Income (loss) from continuing operations
    
    $
    15.64
    
    
    
    10.35
    
    
    
    (0.39
    )Income (loss) from discontinued operations
    
    
    (0.17
    )
    
    
    0.23
    
    
    
    0.45Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.77Cumulative effect of accounting changes
    
    
    (0.10
    )
    
    
    
    
    
    
    0.09Diluted earnings per common share
    
    $
    15.37
    
    
    
    10.58
    
    
    
    0.92Diluted earnings per common share 
pro forma (post-stock split)Income (loss) from continuing operations
    
    $
    7.82
    
    
    
    5.18
    
    
    
    (0.19
    )Income (loss) from discontinued operations
    
    
    (0.08
    )
    
    
    0.11
    
    
    
    0.22Extraordinary item
    
    
    
    
    
    
    
    
    
    
    0.38Cumulative effect of accounting changes
    
    
    (0.05
    )
    
    
    
    
    
    
    0.05Diluted earnings per common share
    
    $
    7.69
    
    
    
    5.29
    
    
    
    0.46







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##### Table of Contents



PART III
 
 Items 10, 11, 12, 13 and 14.
   PART IV
 
  (a)
    1.

    Financial Statements:Consolidated Statement of Income, page 98.Consolidated Balance Sheet, page 99.Consolidated Statement of Cash Flows, page 100.Consolidated Statement of Shareholders Equity, page 101.2.

    Financial Statement Schedule:Valuation and Qualifying Accounts and Reserves,
page 151.3.

    Exhibits:
 3.1
    
    Restated Certificate of Incorporation of the Company (incorporated by reference to
Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
1999).3.2
    
    Amendment to the Restated Certificate of Incorporation of Phelps Dodge Corporation
(incorporated by reference to Exhibit 2.3 of the Companys Registration Statement on Form
8-A, filed with the SEC on June 10, 2002 (SEC File No. 1-82)).3.3
    
    Amendment to the Restated Certificate of Incorporation of Phelps Dodge Corporation
(incorporated by reference to Appendix B of the Companys 2005 definitive Proxy Statement
filed April 15, 2005 (SEC File No. 1-82)).3.4
    
    Complete composite copy of the Certificate of Incorporation of the Company as
amended to date (incorporated by reference to Exhibit 3.2 of the Companys Form 10-Q for
the quarter ended June 30, 2005 (SEC File No. 1-82)).3.5
    
    Amended and Restated By-Laws of the Company, effective as of September 5, 2001
(incorporated by reference to Exhibit 3.2 of the Companys Form 10-Q for the quarter
ended September 30, 2001 (SEC File No. 1-82)).4.1
    
    Credit Agreement, effective April 20, 2004, among the Company, the Lenders parties
thereto, the book manager and syndication agents named therein, and Citibank, N.A., as
administrative agent for the Lenders (incorporated by reference to Exhibit 4.1 of the
Companys Form 10-Q for the quarter ended March 31, 2004 (SEC File No. 1-82)).4.2
    
    Amendment No. 1 to the Credit Agreements dated April 1, 2005 among the Company, the
Lenders parties thereto, the book manager and syndication agents named therein, and
Citibank, N.A., as administrative agent for the Lenders (incorporated by reference to
Exhibit 4.1 of the Companys Form 10-Q for the quarter ended March 31, 2005 (SEC File No.
1-82)).4.3
    
    Rights Agreement, dated as of February 5, 1998 between the Company and The Chase
Manhattan Bank (which replaces the Rights Agreement dated as of July 29, 1988 as amended
and restated as of December 6, 1989, the rights issued thereunder having been redeemed by
the Company), which includes the form of Certificate of Amendment setting forth the terms
of the Junior Participating Cumulative Preferred Shares, par value $1.00 per share, as
Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C (incorporated by reference to Exhibit 1 of the
Companys Current Report on Form 8-K and in the Companys Form 8-A, both filed on
February 6, 1998 (SEC File No. 1-82)).
  4.4
    
    Form of Indenture, dated as of September 22, 1997, between the Company and The
Chase Manhattan Bank, as Trustee (incorporated by reference to the Companys
Registration Statement and Post-Effective




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##### Table of Contents



Amendment No. 1 on Form S-3 (Registration Nos. 333-36415 and 33-44380)) filed with
the Securities and Exchange Commission on September 25, 1997 (incorporated by reference to
Exhibit 4.3 of the Companys Form 10-Q for the quarter ended September 30, 1997 (SEC File
No. 1-82)).4.5
    
    Form of 7.125 percent Debenture, due November 1, 2027, of the Company issued on
November 5, 1997, pursuant to the Indenture, dated as of September 22, 1997, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to the
Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on
November 3, 1997 and Exhibit 4.5 of the Companys Form 10-Q for the quarter ended
September 30, 1997 (SEC File No. 1-82)).4.6
    
    Tripartite/Conversion Agreement, dated as of August 8, 2000, among Chase Manhattan
Bank and First Union National Bank, and acknowledged by the Company, pursuant to which
First Union National Bank succeeded Chase Manhattan Bank as trustee under the Indenture,
dated as of September 22, 1997 (incorporated by reference to the Companys Registration
Statement on Form S-3 (Reg. No. 333-43890) filed with the Securities and Exchange
Commission on August 16, 2000).4.7
    
    Form of 8.75 percent Note due June 1, 2011, of the Company issued on May 30, 2001,
pursuant to the Indenture dated September 22, 1997, between the Company and First Union
National Bank, as successor Trustee (incorporated by reference to the Current Report on
Form 8-K filed with the Securities and Exchange Commission on May 30, 2001 (SEC File No.
1-82)).4.8
    
    Form of 9.5 percent Note due June 1, 2031, of the Company issued on May 30, 2001,
pursuant to the Indenture, dated as of September 22, 1997, between the Company and First
Union National Bank, as successor Trustee (incorporated by reference to the Current
Report on Form 8-K filed with the Securities and Exchange Commission May 30, 2001 (SEC
File No. 1-82)).4.9
    
    Form of Common Share Certificate of the Company (incorporated by reference to
Exhibit 4.9 of the Companys Form 10-Q for the quarter ended June 30, 2002 (SEC File No.
1-82)).4.10
    
    Form of 6.75 percent Series A Mandatory Convertible Preferred Share Certificate of
the Company (incorporated by reference to Exhibit 4.10 of the Companys Form 10-Q for the
quarter ended June 30, 2002 (SEC File No. 1-82)).4.11
    
    Form of 6.125 percent Note due March 15, 2034, of the Company issued on March 4,
2004, pursuant to the Indenture, dated as of September 22, 1997, between the Company and
First Union National Bank, as successor Trustee.10
    
    Management contracts and compensatory plans and agreements.10.1
    
    The Companys 1989 Directors Stock Option Plan (the 1989 Directors Plan), as
amended to and including June 3, 1992, suspended effective November 6, 1996 (incorporated
by reference to Exhibit 10.3 of the Companys Form 10-Q for the quarter ended June 30,
1992 (SEC File No. 1-82)). Form of Stock Option Agreement under the 1989 Directors Plan
(incorporated by reference to the Companys Registration Statement on Form S-8 (Reg. No.
33-34362)).10.2
    
    The Companys 1993 Stock Option and Restricted Stock Plan (the 1993 Plan), as
amended through December 1, 1993, and form of Restricted Stock letter under the 1993 Plan
(incorporated by reference to Exhibit 10.4 of the Companys 1993 Form 10-K (SEC File No.
1-82)). Amendment to 1993 Plan effective May 7, 1997 (incorporated by reference to
Exhibit 10.15 of the Companys Form 10-Q for the quarter ended June 30, 1997 (SEC File
No. 1-82)). Amended and restated form of Stock Option Agreement, amended through February
5, 1997 (incorporated by reference to Exhibit 10.3 of the Companys 1997 Form 10-K (SEC
File No. 1-82)).
  10.3
    
    Description of the Companys Annual Incentive Compensation Plan (incorporated by
reference to the Companys Current Report on Form 8-K filed with the Securities and
Exchange Commission on February 6, 2006 (SEC File No. 1-82)).10.4
    
    Amended and restated Deferred Compensation Plan for the Directors of the Company,
dated as of December 3, 1998, effective January 1, 1999 (incorporated by reference to
Exhibit 10.5 of the Companys 1998 Form 10-K (SEC File No. 1-82)).10.5
    
    Form of Change of Control Agreement between the Company and certain executives
(incorporated by reference to Exhibit 10.5 of the Companys 2002 Form 10-K (SEC File No.
1-82)).10.6
    
    Amended and restated form of Severance Agreement between the Company and certain
executives (incorporated by reference to Exhibit 10.7 of the Companys 1997 Form 10-K
(SEC File No. 1-82)).10.7
    
    The Companys Retirement Plan for Directors, effective January 1, 1988, terminated
for active directors effective December 31, 1997 (incorporated by
reference to Exhibit 10.13 of the Companys 1987 Form 10-K (SEC File No. 1-82)).10.8
    
    The Companys Supplemental Retirement Plan (which amends and restates the provisions of the Companys




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##### Table of Contents



Supplemental Retirement Plan, which was effective (except as otherwise noted therein) as
of January 1, 1997), effective (except as otherwise provided therein) as of January 1, 2001
(incorporated by reference to Exhibit 10.8 of the Companys 2003 Form 10-K (SEC File No.
1-82)).10.9
    
    The Companys Supplemental Savings Plan (which amends and restates the provisions
of the Companys Supplemental Savings Plan, which was effective (except as otherwise
noted therein) as of January 1, 1997), effective (except as otherwise noted therein) as
of January 1, 2003 (incorporated by reference to Exhibit 10.9 of the Companys 2003 Form
10-K (SEC File No. 1-82)).10.10
    
    The Companys Directors Stock Unit Plan effective January 1, 1997 (incorporated by
reference to Exhibit 10.10 of the Companys 1996 Form 10-K (SEC File No. 1-82)) as
amended and restated, effective January 1, 1998 (incorporated by reference to Exhibit
10.11 of the Companys 1997 Form 10-K (SEC File No. 1-82)). First Amendment to Plan,
effective as of January 1, 2001 (incorporated by reference to Exhibit 10.11 of the
Companys Form 10-Q for the quarter ended June 30, 2000 (SEC File No. 1-82)). Second
Amendment to Plan, effective for awards as of January 1, 2005 (incorporated by reference
to Exhibit 10.10 of the Companys 2004 Form 10-K (SEC File No. 1-82)). Third Amendment to
Plan, dated February 1, 2006 (filed herewith).10.11
    
    The Companys 1998 Stock Option and Restricted Stock Plan (the 1998 Plan) and
forms Restricted Stock Agreement under the 1998 Plan, effective March 4, 1998
(incorporated by reference to Exhibit 10.12 of the Companys Form 10-Q for the quarter
ended June 30, 1998 (SEC File No. 1-82)), and amended form of Stock Option Agreement,
effective June 22, 1999 (incorporated by reference to the Companys Form 10-Q for the
quarter ended June 30, 1999 (SEC File No. 1-82)) and amended Form of Restricted Stock
Letter Agreement, effective as of July 8, 2002 (incorporated by reference to the
Companys Form 10-Q for the quarter ended September 30, 2002 (SEC File No. 1-82)). First
Amendment to the 1998 Plan, effective as of May 4, 2000 (incorporated by reference to
Exhibit 10.12 of the Companys Form 10-Q for the quarter ended June 30, 2000 (SEC File
No. 1-82)).
  10.12
    
    The Companys 2003 Stock Option and Restricted
Stock Plan (the 2003 Plan), and forms of: (i) Stock Option Agreement; (ii) Supplement A to
Stock Option Agreement; (iii) Supplement B to Stock Option Agreement; (iv) Restricted
Stock Letter Agreement; (v) Restricted Stock Letter Agreement (cliff vesting), each
effective May 23, 2003 (incorporated by reference to Exhibit 10.14 of the Companys Form
10-Q for the quarter ended June 30, 2003 (SEC File
No. 1-82)); form of Restricted Stock
Letter (graduated vesting) (incorporated by reference to Exhibit 10.14 of the Companys
Form 10-Q for the quarter ended September 30, 2003 (SEC File No. 1-82)); and form of
amended Restricted Stock letters (graduated and cliff vesting), effective February 3, 2004
(incorporated by reference to Exhibit 10.12 of the Companys 2003 Form 10-K (SEC File No.
1-82)).
  10.13
    
    Letter of employment by and between Phelps Dodge Corporation and James P. Berresse
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K
filed with the Securities and Exchange Commission on February 22, 2005 (SEC File No.
1-82)). Amendment dated February 6, 2006 (filed herewith).10.14
    
    Amended and restated form of Change of Control Agreement adopted by the Company on
February 1, 2005, for agreements entered into between the Company and its named executive
officers and other members of its senior management team on or after this adoption date.10.15
    
    Amended and restated form of Change of Control Agreement adopted by the Company on
February 1, 2005, for agreements entered into between the Company and a second group of
the Companys key management personnel on or after this adoption date.10.16
    
    Amended and restated form of Severance Agreement adopted by the Company on
February 1, 2005, for agreements entered into between the Company and certain of its
executives on or after this adoption date.10.17
    
    Phelps Dodge Corporation 2006 Executive Performance Incentive Plan (incorporated
by reference to Appendix A of the Companys 2005 definitive Proxy Statement filed April
15, 2005 (SEC File No. 1-82)).10.18
    
    Agreement and General Release dated as of December 31, 2005, between the
Corporation and David L. Pulatie (filed herewith).10.19
    
    Participation Agreement, dated as of March 16, 2005, among Phelps Dodge
Corporation, Cyprus Amax Minerals Company, a Delaware corporation, Cyprus
Metals Company, a Delaware corporation, Cyprus Climax Metals Company, a Delaware
corporation, Sumitomo Corporation, a Japanese corporation, Summit Global Management, B.V. a
Dutch corporation, Sumitomo Metal Mining Co., Ltd., a Japanese corporation, Compañía de
Minas Buenaventura S.A.A., a Peruvian sociedad anonima abierta, and Sociedad Minera Cerro




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##### Table of Contents



Verde S.A.A., a Peruvian sociedad anonima abierta (incorporated by reference to Exhibit
10.1 of the Companys Form 8-K filed March 22, 2005 (SEC File No. 1-82)).10.20
    
    Guarantee, dated as of March 16, 2005, among the Company, Sumitomo Corporation, a
Japanese corporation, and Sumitomo Metal Mining Co., Ltd., a Japanese corporation
(incorporated by reference to Exhibit 10.2 of the Companys Form 8-K filed March 22, 2005
(SEC File No. 1-82)).10.21
    
    Shareholders Agreement, dated as of June 1, 2005, among Phelps Dodge Corporation,
Cyprus Climax Metals Company, a Delaware corporation, Sumitomo Corporation, a Japanese
corporation, Sumitomo Metal Mining Co., Ltd., a Japanese corporation, Summit Global
Management B.V., a Dutch corporation, SMM Cerro Verde Netherlands, B.V., a Dutch
corporation, Compañía de Minas Buenaventura S.A.A., a Peruvian sociedad anonima abierta,
and Sociedad Minera Cerro Verde S.A.A., a Peruvian sociedad anonima abierta (incorporated
by reference to Exhibit 10.1 of the Companys Form 8-K filed June 7, 2005 (SEC File No.
1-82)).10.22
    
    Master Participation Agreement, dated as of September 30, 2005, among Sociedad
Minera Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui
Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The
Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate
Bank, Ltd. and
Calyon New York Branch (as Administrative Agent) (incorporated by reference to Exhibit
10.1 of the Companys Form 10-Q for the quarter ended September 30, 2005). First
Amendment to Master Participation Agreement, dated as of December 16, 2005 (filed
herewith).10.23
    
    Completion Guarantee, dated as of September 30, 2005, among Sumitomo Metal Mining
Co., Ltd., Sumitomo Corporation, Compañía de Minas Buenaventura S.A.A., Phelps Dodge
Corporation, Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal
Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and Calyon New
York Branch (as Administrative Agent) (incorporated by reference to Exhibit 10.2 of the
Companys Form 10-Q for the quarter ended September 30, 2005).10.24
    
    Master Security Agreement, dated as of September 30, 2005, among Sociedad Minera
Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal
Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Calyon New
York Branch (as Administrative Agent), Citibank, N.A. and Citibank del Peru S.A.
(incorporated by reference to Exhibit 10.3 of the Companys Form 10-Q for the quarter
ended September 30, 2005).10.25
    
    Transfer Restrictions Agreement, dated as of September 30, 2005, among SMM Cerro
Verde Netherlands, B.V., Compañía de Minas Buenaventura S.A.A., Cyprus Climax Metals
Company, Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Phelps Dodge Corporation,
Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank
of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc,
The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., and Calyon New York Branch (as
Administrative Agent) (incorporated by reference to Exhibit 10.4 of the Companys Form
10-Q for the quarter ended September 30, 2005).10.26
    
    JBIC Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro
Verde S.A.A., Japan Bank of International Cooperation, and Sumitomo Mitsui Banking
Corporation (as JBIC Agent) (incorporated by reference to Exhibit 10.5 of the Companys
Form 10-Q for the quarter ended September 30, 2005). First Amendment to JBIC Loan
Agreement, dated as of December 19, 2005 (filed herewith).10.27
    
    KfW Loan Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro
Verde S.A.A. and KfW (incorporated by reference to Exhibit 10.6 of the Companys Form
10-Q for the quarter ended September 30, 2005).10.28
    
    Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde
S.A.A., Calyon New York Branch (as Administrative Agent), Calyon New York Branch, Mizuho
Corporate Bank, Ltd., The Bank of Nova Scotia, and The Royal Bank of Scotland plc
(incorporated by reference to Exhibit 10.7 of the Companys Form 10-Q for the quarter
ended September 30, 2005).10.29
    
    Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge
Corporation and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to the
Operators Agreement dated June 1, 2005, between Sociedad Minera Cerro Verde S.A.A. and
Minera Phelps Dodge del Peru S.A.C.) (incorporated by reference to Exhibit 10.8 of the
Companys Form 10-Q for the quarter ended September 30, 2005).10.30
    
    Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge
Corporation and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to (i)
the Concentrate Sales Agreement, dated as of September 30, 2005, between Sociedad Minera
Cerro Verde S.A.A. and Phelps Dodge Sales Company Incorporated, and (ii) the Cathodes
Sales Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro Verde
S.A.A. and Phelps Dodge Sales Company Incorporated) (incorporated by




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##### Table of Contents



reference to Exhibit 10.9 of the Companys Form 10-Q for the quarter ended September 30,
2005).10.31
    
    Master Agreement and Plan of Merger between Columbian Chemicals Company, Columbian
Chemicals Acquisition LLC and Columbian Chemicals Merger Sub, Inc. dated November 15,
2005 (filed herewith).10.32
    
    Asset and Stock Purchase Agreement between Phelps Dodge Corporation, Phelps Dodge
Industries, Inc. and Rea Magnet Wire Company, Inc., dated November 15, 2005 (filed
herewith).10.33
    
    Phelps Dodge Corporation Retiree Medical Plan Welfare Benefit Trust Agreement
between Phelps Dodge Corporation and The Northern Trust Company dated December 15, 2005
(filed herewith).10.34
    
    Reclamation and Remediation Trust Agreement between Phelps Dodge Corporation and
Wells Fargo Delaware Trust Company dated December 22, 2005 (filed herewith).11
    
    Computation of per share earnings.12.1
    
    Computation of ratios of earnings to fixed charges.12.2
    
    Computation of ratios of total debt to total capitalization.21
    
    List of Subsidiaries and Investments.23
    
    Consent of PricewaterhouseCoopers LLP.24
    
    Powers of Attorney executed by certain officers and
directors who signed this Annual Report on Form 10-K.
  31
    
    Certifications of J. Steven Whisler, Chairman and Chief Executive Officer of the
Company, and Ramiro G. Peru, Executive Vice President and Chief Financial Officer of the
Company, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the
Sarbanes-Oxley Act of 2002.32
    
    Certifications of J. Steven Whisler, Chairman and Chief Executive Officer of the
Company, and Ramiro G. Peru, Executive Vice President and Chief Financial Officer of the
Company, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the
Sarbanes-Oxley Act of 2002.




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##### Table of Contents



Phelps
Dodge Corporation and Consolidated Subsidiaries
 
 Valuation and Qualifying Accounts and Reserves
 AdditionsBalance at
    
    Charged to
    
    
    
    
    
    
    
    
    
    Balancebeginning
    
    costs and
    
    
    
    
    
    
    
    
    
    at endof period
    
    expenses
    
    Other
    
    Deductions
    
    of periodReserve deducted in balance sheet
from the asset to which applicable:Accounts Receivable:December 31, 2005
    
    $
    17.4
    
    
    
    0.2
    
    
    
    (8.0
    )(A)
    
    
    2.7
    
    
    
    6.9December 31, 2004
    
    $
    10.1
    
    
    
    6.4
    
    
    
    2.2
    
    
    
    1.3
    
    
    
    17.4December 31, 2003
    
    $
    14.1
    
    
    
    0.9
    
    
    
    (1.4
    )
    
    
    3.5
    
    
    
    10.1Supplies:December 31, 2005
    
    $
    33.0
    
    
    
    3.3
    
    
    
    4.2
    (B)
    
    
    11.5
    
    
    
    29.0December 31, 2004
    
    $
    31.8
    
    
    
    4.1
    
    
    
    1.8
    
    
    
    4.7
    
    
    
    33.0December 31, 2003
    
    $
    28.4
    
    
    
    8.1
    
    
    
    0.2
    
    
    
    4.9
    
    
    
    31.8Deferred Tax Assets:December 31, 2005
    
    $
    282.8
    
    
    
    118.0
    
    
    
    
    
    
    
    37.3
    
    
    
    363.5December 31, 2004
    
    $
    461.3
    
    
    
    (232.8
    )
    
    
    54.3
    (C)
    
    
    
    
    
    
    282.8December 31, 2003
    
    $
    508.4
    
    
    
    47.0
    
    
    
    
    
    
    
    94.1
    
    
    
    461.3
 
 (A)
    
    Consists primarily of the transfer to current assets held for sale ($8.3 million).(B)
    
    Consists primarily of impairment charges ($6.2 million); net of the transfer to current assets held for sale ($1.8 million).(C)
    
    Valuation allowance relating to El Abras net deferred tax assets recorded in conjunction with the implementation of Financial Accounting Standards Boards
Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, and the revised Interpretation.




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##### Table of Contents



Signatures
  PHELPS DODGE CORPORATION(Registrant)February 27, 2006
    
    By:
    
    /s/ Ramiro G. PeruRamiro G. PeruExecutive Vice Presidentand Chief Financial Officer
  Chairman, Chief Executive Officer
and Director/s/ J. Steven Whisler
    
    (Principal Executive Officer)
    
    February 27, 2006J. Steven WhislerExecutive Vice President
and Chief Financial Officer/s/ Ramiro G. Peru
    
    (Principal Financial Officer)
    
    February 27, 2006Ramiro G. PeruVice President and Controller/s/ Denise R. Danner
    
    (Principal Accounting Officer)
    
    February 27, 2006Denise R. Danner(Robert N. Burt, Archie W. Dunham, William A. Franke, Robert D.
Johnson, Marie L. Knowles, Robert D. Krebs,
Charles C. Krulak, Jon C. Madonna, Gordon R. Parker, William J.
Post, Jack E. Thompson, Directors)
    
    February 27, 2006
 By:
    
    /s/ Ramiro G. PeruRamiro G. PeruAttorney-in-fact




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##### Table of Contents



Index
to Exhibits
 3.
    
    Exhibits:3.1
    
    Restated Certificate of Incorporation of the Company (incorporated by reference to
Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
1999).3.2
    
    Amendment to the Restated Certificate of Incorporation of Phelps Dodge Corporation
(incorporated by reference to Exhibit 2.3 of the Companys Registration Statement on Form
8-A, filed with the SEC on June 10, 2002 (SEC File No. 1-82)).3.3
    
    Amendment to the Restated Certificate of Incorporation of Phelps Dodge Corporation
(incorporated by reference to Appendix B of the Companys 2005 definitive Proxy Statement
filed April 15, 2005 (SEC File No. 1-82)).3.4
    
    Complete composite copy of the Certificate of Incorporation of the Company as
amended to date (incorporated by reference to Exhibit 3.2 of the Companys Form 10-Q for
the quarter ended June 30, 2005 (SEC File No. 1-82)).3.5
    
    Amended and Restated By-Laws of the Company, effective as of September 5, 2001
(incorporated by reference to Exhibit 3.2 of the Companys Form 10-Q for the quarter
ended September 30, 2001 (SEC File No. 1-82)).4.1
    
    Credit Agreement, effective April 20, 2004, among the Company, the Lenders parties
thereto, the book manager and syndication agents named therein, and Citibank, N.A., as
administrative agent for the Lenders (incorporated by reference to Exhibit 4.1 of the
Companys Form 10-Q for the quarter ended March 31, 2004 (SEC File No. 1-82)).4.2
    
    Amendment No. 1 to the Credit Agreements dated April 1, 2005 among the Company, the
Lenders parties thereto, the book manager and syndication agents named therein, and
Citibank, N.A., as administrative agent for the Lenders (incorporated by reference to
Exhibit 4.1 of the Companys Form 10-Q for the quarter ended March 31, 2005 (SEC File No.
1-82)).4.3
    
    Rights Agreement, dated as of February 5, 1998 between the Company and The Chase
Manhattan Bank (which replaces the Rights Agreement dated as of July 29, 1988 as amended
and restated as of December 6, 1989, the rights issued thereunder having been redeemed by
the Company), which includes the form of Certificate of Amendment setting forth the terms
of the Junior Participating Cumulative Preferred Shares, par value $1.00 per share, as
Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C (incorporated by reference to Exhibit 1 of the
Companys Current Report on Form 8-K and in the Companys Form 8-A, both filed on
February 6, 1998 (SEC File No. 1-82)).
  4.4
    
    Form of Indenture, dated as of September 22, 1997, between the Company and The
Chase Manhattan Bank, as Trustee (incorporated by reference to the Companys Registration
Statement and Post-Effective




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##### Table of Contents



Amendment No. 1 on Form S-3 (Registration Nos. 333-36415 and 33-44380)) filed with the
Securities and Exchange Commission on September 25, 1997 (incorporated by reference to
Exhibit 4.3 of the Companys Form 10-Q for the quarter ended September 30, 1997 (SEC File
No. 1-82)).4.5
    
    Form of 7.125 percent Debenture, due November 1, 2027, of the Company issued on
November 5, 1997, pursuant to the Indenture, dated as of September 22, 1997, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated by reference to the
Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on
November 3, 1997 and Exhibit 4.5 of the Companys Form 10-Q for the quarter ended
September 30, 1997 (SEC File No. 1-82)).4.6
    
    Tripartite/Conversion Agreement, dated as of August 8, 2000, among Chase Manhattan
Bank and First Union National Bank, and acknowledged by the Company, pursuant to which
First Union National Bank succeeded Chase Manhattan Bank as trustee under the Indenture,
dated as of September 22, 1997 (incorporated by reference to the Companys Registration
Statement on Form S-3 (Reg. No. 333-43890) filed with the Securities and Exchange
Commission on August 16, 2000).4.7
    
    Form of 8.75 percent Note due June 1, 2011, of the Company issued on May 30, 2001,
pursuant to the Indenture dated September 22, 1997, between the Company and First Union
National Bank, as successor Trustee (incorporated by reference to the Current Report on
Form 8-K filed with the Securities and Exchange Commission on May 30, 2001 (SEC File No.
1-82)).4.8
    
    Form of 9.5 percent Note due June 1, 2031, of the Company issued on May 30, 2001,
pursuant to the Indenture, dated as of September 22, 1997, between the Company and First
Union National Bank, as successor Trustee (incorporated by reference to the Current
Report on Form 8-K filed with the Securities and Exchange Commission May 30, 2001 (SEC
File No. 1-82)).4.9
    
    Form of Common Share Certificate of the Company (incorporated by reference to
Exhibit 4.9 of the
Companys Form 10-Q for the quarter ended June 30, 2002 (SEC File No. 1-82)).4.10
    
    Form of 6.75 percent Series A Mandatory Convertible Preferred Share Certificate of
the Company (incorporated by reference to Exhibit 4.10 of the Companys Form 10-Q for the
quarter ended June 30, 2002 (SEC File No. 1-82)).4.11
    
    Form of 6.125 percent Note due March 15, 2034, of the Company issued on March 4,
2004, pursuant to the Indenture, dated as of September 22, 1997, between the Company and
First Union National Bank, as successor Trustee.10
    
    Management contracts and compensatory plans and agreements.10.1
    
    The Companys 1989 Directors Stock Option Plan (the 1989 Directors Plan), as
amended to and including June 3, 1992, suspended effective November 6, 1996 (incorporated
by reference to Exhibit 10.3 of the Companys Form 10-Q for the quarter ended June 30,
1992 (SEC File No. 1-82)). Form of Stock Option Agreement under the 1989 Directors Plan
(incorporated by reference to the Companys Registration Statement on Form S-8 (Reg. No.
33-34362)).10.2
    
    The Companys 1993 Stock Option and Restricted Stock Plan (the 1993 Plan), as
amended through December 1, 1993, and form of Restricted Stock letter under the 1993 Plan
(incorporated by reference to Exhibit 10.4 of the Companys 1993 Form 10-K (SEC File No.
1-82)). Amendment to 1993 Plan effective May 7, 1997 (incorporated by reference to
Exhibit 10.15 of the Companys Form 10-Q for the quarter ended June 30, 1997 (SEC File
No. 1-82)). Amended and restated form of Stock Option Agreement, amended through February
5, 1997 (incorporated by reference to Exhibit 10.3 of the Companys 1997 Form 10-K (SEC
File No. 1-82)).
  10.3
    
    Description of the Companys Annual Incentive Compensation Plan (incorporated by
reference to the Companys Current Report on Form 8-K filed with the Securities and
Exchange Commission on February 6, 2006 (SEC File No. 1-82)).10.4
    
    Amended and restated Deferred Compensation Plan for the Directors of the Company,
dated as of December 3, 1998, effective January 1, 1999 (incorporated by reference to
Exhibit 10.5 of the Companys 1998 Form 10-K (SEC File No. 1-82)).10.5
    
    Form of Change of Control Agreement between the Company and certain executives
(incorporated by reference to Exhibit 10.5 of the Companys 2002 Form 10-K (SEC File No.
1-82)).10.6
    
    Amended and restated form of Severance Agreement between the Company and certain
executives (incorporated by reference to Exhibit 10.7 of the Companys 1997 Form 10-K
(SEC File No. 1-82)).10.7
    
    The Companys Retirement Plan for Directors, effective January 1, 1988, terminated
for active directors effective December 31, 1997 (incorporated by reference to Exhibit
10.13 of the Companys 1987 Form 10-K (SEC File No. 1-82)).10.8
    
    The Companys Supplemental Retirement Plan (which amends and restates the
provisions of the Companys




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##### Table of Contents



Supplemental Retirement Plan, which was effective (except as otherwise noted therein) as of
January 1, 1997), effective (except as otherwise provided therein) as of January 1, 2001
(incorporated by reference to Exhibit 10.8 of the Companys 2003 Form 10-K (SEC File No.
1-82)).10.9
    
    The Companys Supplemental Savings Plan (which amends and restates the provisions
of the Companys Supplemental Savings Plan, which was effective (except as otherwise
noted therein) as of January 1, 1997), effective (except as otherwise noted therein) as
of January 1, 2003 (incorporated by reference to Exhibit 10.9 of the Companys 2003 Form
10-K (SEC File No. 1-82)).10.10
    
    The Companys Directors Stock Unit Plan effective January 1, 1997 (incorporated by
reference to Exhibit 10.10 of the Companys 1996 Form 10-K (SEC File No. 1-82)) as
amended and restated, effective January 1, 1998 (incorporated by reference to Exhibit
10.11 of the Companys 1997 Form 10-K (SEC File No. 1-82)). First Amendment to Plan,
effective as of January 1, 2001 (incorporated by reference to Exhibit 10.11 of the
Companys Form 10-Q for the quarter ended June 30, 2000 (SEC File No. 1-82)). Second
Amendment to Plan, effective for awards as of January 1, 2005 (incorporated by reference
to Exhibit 10.10 of the Companys 2004 Form 10-K (SEC File No. 1-82)). Third Amendment to
Plan, dated February 1, 2006 (filed herewith).10.11
    
    The Companys 1998 Stock Option and Restricted Stock Plan (the 1998 Plan) and
forms Restricted Stock Agreement under the 1998 Plan, effective March 4, 1998
(incorporated by reference to Exhibit 10.12 of the Companys Form 10-Q for the quarter
ended June 30, 1998 (SEC File No. 1-82)), and amended form of Stock Option Agreement,
effective June 22, 1999 (incorporated by reference to the Companys Form 10-Q for the
quarter ended June 30, 1999 (SEC File No. 1-82)) and amended Form of Restricted Stock
Letter Agreement, effective as of July 8, 2002 (incorporated
by reference to the Companys Form 10-Q for the quarter ended September 30, 2002 (SEC File
No. 1-82)). First Amendment to the 1998 Plan, effective as of May 4, 2000 (incorporated by
reference to Exhibit 10.12 of the Companys Form 10-Q for the quarter ended June 30, 2000
(SEC File No. 1-82)).
  10.12
    
    The Companys 2003 Stock Option and Restricted
Stock Plan (the 2003 Plan), and forms of: (i) Stock Option Agreement; (ii) Supplement A to
Stock Option Agreement; (iii) Supplement B to Stock Option Agreement; (iv) Restricted
Stock Letter Agreement; (v) Restricted Stock Letter Agreement (cliff vesting), each
effective May 23, 2003 (incorporated by reference to Exhibit 10.14 of the Companys Form
10-Q for the quarter ended June 30, 2003 (SEC File
No. 1-82)); form of Restricted Stock
Letter (graduated vesting) (incorporated by reference to Exhibit 10.14 of the Companys
Form 10-Q for the quarter ended September 30, 2003 (SEC File No. 1-82)); and form of
amended Restricted Stock letters (graduated and cliff vesting), effective February 3, 2004
(incorporated by reference to Exhibit 10.12 of the Companys 2003 Form 10-K (SEC File No.
1-82)).
  10.13
    
    Letter of employment by and between Phelps Dodge Corporation and James P. Berresse
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K
filed with the Securities and Exchange Commission on February 22, 2005 (SEC File No.
1-82)). Amendment dated February 6, 2006 (filed herewith).10.14
    
    Amended and restated form of Change of Control Agreement adopted by the Company on
February 1, 2005, for agreements entered into between the Company and its named executive
officers and other members of its senior management team on or after this adoption date.10.15
    
    Amended and restated form of Change of Control Agreement adopted by the Company on
February 1, 2005, for agreements entered into between the Company and a second group of
the Companys key management personnel on or after this adoption date.10.16
    
    Amended and restated form of Severance Agreement adopted by the Company on
February 1, 2005, for agreements entered into between the Company and certain of its
executives on or after this adoption date.10.17
    
    Phelps Dodge Corporation 2006 Executive Performance Incentive Plan (incorporated
by reference to Appendix A of the Companys 2005 definitive Proxy Statement filed April
15, 2005 (SEC File No. 1-82)).10.18
    
    Agreement and General Release dated as of December 31, 2005, between the
Corporation and David L. Pulatie (filed herewith).10.19
    
    Participation Agreement, dated as of March 16, 2005, among Phelps Dodge
Corporation, Cyprus Amax Minerals Company, a Delaware corporation, Cyprus Metals Company,
a Delaware corporation, Cyprus Climax Metals Company, a Delaware corporation, Sumitomo
Corporation, a Japanese corporation, Summit Global Management, B.V. a Dutch corporation,
Sumitomo Metal Mining Co., Ltd., a Japanese corporation, Compañía de Minas Buenaventura
S.A.A., a Peruvian sociedad anonima abierta, and Sociedad Minera Cerro




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##### Table of Contents



Verde S.A.A., a Peruvian sociedad anonima abierta (incorporated by reference to Exhibit
10.1 of the Companys Form 8-K filed March 22, 2005 (SEC File No. 1-82)).10.20
    
    Guarantee, dated as of March 16, 2005, among the Company, Sumitomo Corporation, a
Japanese corporation, and Sumitomo Metal Mining Co., Ltd., a Japanese corporation
(incorporated by reference to Exhibit 10.2 of the Companys Form 8-K filed March 22, 2005
(SEC File No. 1-82)).10.21
    
    Shareholders Agreement, dated as of June 1, 2005, among Phelps Dodge Corporation,
Cyprus Climax Metals Company, a Delaware corporation, Sumitomo Corporation, a Japanese
corporation, Sumitomo Metal Mining Co., Ltd., a Japanese corporation, Summit Global
Management B.V., a Dutch corporation, SMM Cerro Verde Netherlands, B.V., a Dutch
corporation, Compañía de Minas Buenaventura S.A.A., a Peruvian sociedad anonima abierta,
and Sociedad Minera Cerro Verde S.A.A., a Peruvian sociedad anonima abierta (incorporated
by reference to Exhibit 10.1 of the Companys Form 8-K filed June 7, 2005 (SEC File No.
1-82)).10.22
    
    Master Participation Agreement, dated as of September 30, 2005, among Sociedad
Minera Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui
Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The
Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate
Bank, Ltd. and
Calyon New York Branch (as Administrative Agent) (incorporated by reference to Exhibit
10.1 of the Companys Form 10-Q for the quarter ended September 30, 2005). First
Amendment to Master Participation Agreement, dated as of December 16, 2005 (filed
herewith).10.23
    
    Completion Guarantee, dated as of September 30, 2005, among Sumitomo Metal Mining
Co., Ltd.,
Sumitomo Corporation, Compañía de Minas Buenaventura S.A.A., Phelps Dodge Corporation,
Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc The
Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and Calyon New York Branch (as
Administrative Agent) (incorporated by reference to Exhibit 10.2 of the Companys Form
10-Q for the quarter ended September 30, 2005).10.24
    
    Master Security Agreement, dated as of September 30, 2005, among Sociedad Minera
Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal
Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Calyon New
York Branch (as Administrative Agent), Citibank, N.A. and Citibank del Peru S.A.
(incorporated by reference to Exhibit 10.3 of the Companys Form 10-Q for the quarter
ended September 30, 2005).10.25
    
    Transfer Restrictions Agreement, dated as of September 30, 2005, among SMM Cerro
Verde Netherlands, B.V., Compañía de Minas Buenaventura S.A.A., Cyprus Climax Metals
Company, Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Phelps Dodge Corporation,
Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank
of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc,
The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., and Calyon New York Branch (as
Administrative Agent) (incorporated by reference to Exhibit 10.4 of the Companys Form
10-Q for the quarter ended September 30, 2005).10.26
    
    JBIC Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro
Verde S.A.A., Japan Bank of International Cooperation, and Sumitomo Mitsui Banking
Corporation (as JBIC Agent) (incorporated by reference to Exhibit 10.5 of the Companys
Form 10-Q for the quarter ended September 30, 2005). First Amendment to JBIC Loan
Agreement, dated as of December 19, 2005 (filed herewith).10.27
    
    KfW Loan Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro
Verde S.A.A. and KfW (incorporated by reference to Exhibit 10.6 of the Companys Form
10-Q for the quarter ended September 30, 2005).10.28
    
    Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde
S.A.A., Calyon New York Branch (as Administrative Agent), Calyon New York Branch, Mizuho
Corporate Bank, Ltd., The Bank of Nova Scotia, and The Royal Bank of Scotland plc
(incorporated by reference to Exhibit 10.7 of the Companys Form 10-Q for the quarter
ended September 30, 2005).10.29
    
    Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge
Corporation and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to the
Operators Agreement dated June 1, 2005, between Sociedad Minera Cerro Verde S.A.A. and
Minera Phelps Dodge del Peru S.A.C.) (incorporated by reference to Exhibit 10.8 of the
Companys Form 10-Q for the quarter ended September 30, 2005).10.30
    
    Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge
Corporation and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to (i)
the Concentrate Sales Agreement, dated as of September 30, 2005, between Sociedad Minera
Cerro Verde S.A.A. and Phelps Dodge Sales Company Incorporated, and (ii) the Cathodes
Sales Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro Verde
S.A.A. and Phelps Dodge Sales Company Incorporated) (incorporated by




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##### Table of Contents



reference to Exhibit 10.9 of the Companys Form 10-Q for the quarter ended September 30,
2005).10.31
    
    Master Agreement and Plan of Merger between Columbian Chemicals Company, Columbian
Chemicals Acquisition LLC and Columbian Chemicals Merger Sub, Inc. dated November 15,
2005 (filed herewith).10.32
    
    Asset and Stock Purchase Agreement between Phelps Dodge Corporation, Phelps Dodge
Industries, Inc. and Rea Magnet Wire Company, Inc., dated November 15, 2005 (filed
herewith).10.33
    
    Phelps Dodge Corporation Retiree Medical Plan Welfare Benefit Trust Agreement
between Phelps Dodge Corporation and The Northern Trust Company dated December 15, 2005
(filed herewith).10.34
    
    Reclamation and Remediation Trust Agreement between Phelps Dodge Corporation and
Wells Fargo Delaware Trust Company dated December 22, 2005 (filed herewith).11
    
    Computation of per share earnings.12.1
    
    Computation of ratios of earnings to fixed charges.12.2
    
    Computation of ratios of total debt to total capitalization.21
    
    List of Subsidiaries and Investments.23
    
    Consent of PricewaterhouseCoopers LLP.24
    
    Powers of Attorney executed by certain officers and
directors who signed this Annual Report on Form 10-K.
  31
    
    Certifications of J. Steven Whisler, Chairman and Chief Executive Officer of the
Company, and Ramiro G. Peru, Executive Vice President and Chief Financial Officer of the
Company, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the
Sarbanes-Oxley Act of 2002.32
    
    Certifications of J. Steven Whisler, Chairman and Chief Executive Officer of the
Company, and Ramiro G. Peru, Executive Vice President and Chief Financial Officer of the
Company, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the
Sarbanes-Oxley Act of 2002.