##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For
the quarter ended June 30, 2005
 Commission
file number 1-82
 PHELPS DODGE CORPORATION
      þ o
 þ o




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PHELPS DODGE CORPORATION
 Quarterly Report on Form 10-Q
 For the Quarter Ended June 30, 2005
 
 Table of Contents
 PagePart I. Financial InformationItem 1. Financial Statements (unaudited)Consolidated Statement of Income
    
    
    1Consolidated Balance Sheet
    
    
    2Consolidated Statement of Cash Flows
    
    
    3Consolidated Statement of Shareholders Equity
    
    
    4Financial Data by Business Segment
    
    
    5Notes to Consolidated Financial Information
    
    
    7Review by Independent Registered Public Accounting Firm
    
    
    19Report of Independent Registered Public Accounting Firm
    
    
    19Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsResults
of Operations
    
    
    20Results of Phelps Dodge Mining Company
    
    
    23Results of Phelps Dodge Industries
    
    
    43Other Matters Relating to the Consolidated Statement of Income
    
    
    45Changes in Financial Condition
    
    
    46Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    50Item 4. Controls and Procedures
    
    
    50Part II. Other InformationItem 1. Legal Proceedings
    
    
    50Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    51Item 4. Submission of Matters to a Vote of Security Holders
    
    
    52Item 6. Exhibits
    
    
    52Signatures
    
    
    52Index to Exhibits
    
    
    52Exhibit 3.2Exhibit 11Exhibit 12Exhibit 15Exhibit 31Exhibit 32




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##### Table of Contents



PHELPS DODGE CORPORATION AND SUBSIDIARIES
 
  
 Item 1. Financial Statements
 PHELPS DODGE CORPORATION
 
 CONSOLIDATED STATEMENT OF INCOME
 Six Months EndedSecond Quarter
    
    June 30,2005
    
    2004
    
    2005
    
    2004Sales and other operating revenues
    
    $
    2,151.6
    
    
    
    1,650.9
    
    
    
    4,218.1
    
    
    
    3,247.9Operating costs and expensesCost of products sold (exclusive of items shown separately
below)
    
    
    1,346.5
    
    
    
    1,133.6
    
    
    
    2,669.4
    
    
    
    2,232.0Depreciation, depletion and amortization
    
    
    127.0
    
    
    
    124.4
    
    
    
    256.4
    
    
    
    249.3Selling and general administrative expense
    
    
    40.5
    
    
    
    34.2
    
    
    
    87.8
    
    
    
    72.7Exploration and research expense
    
    
    26.7
    
    
    
    15.5
    
    
    
    45.5
    
    
    
    29.1Special items and provisions, net (see Note 3)
    
    
    437.2
    
    
    
    (11.5
    )
    
    
    436.3
    
    
    
    (4.7
    )1,977.9
    
    
    
    1,296.2
    
    
    
    3,495.4
    
    
    
    2,578.4Operating income
    
    
    173.7
    
    
    
    354.7
    
    
    
    722.7
    
    
    
    669.5Interest expense
    
    
    (23.4
    )
    
    
    (32.3
    )
    
    
    (47.1
    )
    
    
    (71.3
    )Capitalized interest
    
    
    2.1
    
    
    
    0.2
    
    
    
    2.9
    
    
    
    0.3Early debt extinguishment costs
    
    
    
    
    
    
    (15.2
    )
    
    
    
    
    
    
    (37.6
    )Gain on sale of cost-basis investment (see Note 3)
    
    
    438.4
    
    
    
    
    
    
    
    438.4
    
    
    
    Change in interest gain from Cerro Verde stock issuance (see Note 3)
    
    
    159.5
    
    
    
    
    
    
    
    159.5
    
    
    
    Miscellaneous income and expense, net
    
    
    44.4
    
    
    
    1.3
    
    
    
    62.5
    
    
    
    3.5Income before taxes, minority interests in consolidated subsidiaries
and equity in net earnings (losses) of affiliated companies
    
    
    794.7
    
    
    
    308.7
    
    
    
    1,338.9
    
    
    
    564.4Provision for taxes on income (see Note 8)
    
    
    (74.6
    )
    
    
    (40.7
    )
    
    
    (205.8
    )
    
    
    (46.9
    )Minority interests in consolidated subsidiaries
    
    
    (38.5
    )
    
    
    (42.0
    )
    
    
    (65.5
    )
    
    
    (105.6
    )Equity in net earnings (losses) of affiliated companies
    
    
    0.7
    
    
    
    0.6
    
    
    
    1.4
    
    
    
    0.4Net income
    
    
    682.3
    
    
    
    226.6
    
    
    
    1,069.0
    
    
    
    412.3Preferred stock dividends
    
    
    (3.4
    )
    
    
    (3.4
    )
    
    
    (6.8
    )
    
    
    (6.8
    )Net income applicable to common shares
    
    $
    678.9
    
    
    
    223.2
    
    
    
    1,062.2
    
    
    
    405.5Weighted
average number of common shares outstanding  basic
    
    
    96.2
    
    
    
    92.9
    
    
    
    96.0
    
    
    
    92.3Basic earnings per common share
    
    $
    7.06
    
    
    
    2.40
    
    
    
    11.07
    
    
    
    4.39Weighted
average number of common shares outstanding  diluted
    
    
    101.1
    
    
    
    98.4
    
    
    
    101.0
    
    
    
    98.2Diluted earnings per common share
    
    $
    6.75
    
    
    
    2.30
    
    
    
    10.59
    
    
    
    4.20




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##### Table of Contents



-2- PHELPS DODGE CORPORATION
 
 CONSOLIDATED BALANCE SHEET
 June 30,
    
    December 31,2005
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,595.6
    
    
    
    1,200.1Restricted cash
    
    
    168.3
    
    
    
    Accounts receivable, less allowance for doubtful
accounts (2005  $16.9; 2004  $17.4)
    
    
    982.8
    
    
    
    761.5Mill and leach stockpiles
    
    
    28.1
    
    
    
    26.2Inventories
    
    
    430.8
    
    
    
    392.1Supplies
    
    
    206.2
    
    
    
    192.7Prepaid expenses and other current assets
    
    
    73.8
    
    
    
    46.0Deferred income taxes
    
    
    54.2
    
    
    
    43.1Current assets
    
    
    4,539.8
    
    
    
    2,661.7Investments and long-term receivables
    
    
    124.6
    
    
    
    120.7Property, plant and equipment, net
    
    
    4,903.8
    
    
    
    5,318.9Long-term mill and leach stockpiles
    
    
    132.3
    
    
    
    131.0Deferred income taxes
    
    
    46.4
    
    
    
    61.8Goodwill
    
    
    110.3
    
    
    
    103.5Intangible assets, net
    
    
    5.2
    
    
    
    5.3Other assets and deferred charges
    
    
    196.5
    
    
    
    191.2$
    10,058.9
    
    
    
    8,594.1LiabilitiesCurrent liabilities:Short-term debt
    
    $
    30.3
    
    
    
    78.8Current portion of long-term debt
    
    
    43.6
    
    
    
    45.9Accounts payable and accrued expenses
    
    
    1,255.8
    
    
    
    972.1Dividends payable
    
    
    39.7
    
    
    
    3.4Accrued income taxes
    
    
    128.8
    
    
    
    67.8Current liabilities
    
    
    1,498.2
    
    
    
    1,168.0Long-term debt
    
    
    970.3
    
    
    
    972.2Deferred income taxes
    
    
    388.9
    
    
    
    448.4Other liabilities and deferred credits
    
    
    956.7
    
    
    
    1,107.33,814.1
    
    
    
    3,695.9Commitments and contingencies (see Notes 5, 6 and 8)Minority interests in consolidated subsidiaries
    
    
    844.9
    
    
    
    555.1Shareholders equityCommon shares, par value $6.25; 300.0 shares authorized;
96.9 outstanding (2004  95.9) after deducting 8.9 shares
(2004  9.9) held in treasury, at cost
    
    
    605.5
    
    
    
    599.5Cumulative preferred shares, par value $1.00; 6.0 shares authorized;
2.0 outstanding in 2005 and 2004
    
    
    2.0
    
    
    
    2.0Capital in excess of par value
    
    
    1,981.2
    
    
    
    1,906.4Retained earnings
    
    
    3,217.5
    
    
    
    2,239.9Accumulated other comprehensive loss
    
    
    (372.0
    )
    
    
    (384.2
    )Other
    
    
    (34.3
    )
    
    
    (20.5
    )5,399.9
    
    
    
    4,343.1$
    10,058.9
    
    
    
    8,594.1




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##### Table of Contents



-3- PHELPS DODGE CORPORATION
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 Six Months EndedJune 30,2005
    
    2004Operating activitiesNet income
    
    $
    1,069.0
    
    
    
    412.3Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion and amortization
    
    
    256.4
    
    
    
    249.3Deferred income tax provision (benefit)
    
    
    (54.0
    )
    
    
    (21.1
    )Equity in net earnings (losses) of affiliated companies,
net of dividends received
    
    
    0.5
    
    
    
    1.9Gain on sale of cost-basis investment
    
    
    (438.4
    )
    
    
    Change in interest gain from Cerro Verde stock issuance
    
    
    (159.5
    )
    
    
    Special items and provisions
    
    
    436.3
    
    
    
    6.2Early debt extinguishment costs
    
    
    
    
    
    
    37.6Minority interests in consolidated subsidiaries
    
    
    65.5
    
    
    
    105.6Changes in current assets and liabilities:Accounts receivable
    
    
    (144.0
    )
    
    
    (161.1
    )Repayment of securitized accounts receivable
    
    
    (85.0
    )
    
    
    Mill and leach stockpiles
    
    
    (1.8
    )
    
    
    5.5Inventories
    
    
    (41.7
    )
    
    
    (31.2
    )Supplies
    
    
    (20.3
    )
    
    
    (6.7
    )Prepaid expenses and other current assets
    
    
    (27.3
    )
    
    
    (20.7
    )Interest payable
    
    
    1.2
    
    
    
    (4.0
    )Other accounts payable
    
    
    23.0
    
    
    
    115.9Accrued income taxes
    
    
    73.8
    
    
    
    (6.6
    )Other accrued expenses
    
    
    23.9
    
    
    
    14.2Other operating, net
    
    
    (32.9
    )
    
    
    (18.0
    )Net cash provided by operating activities
    
    
    944.7
    
    
    
    679.1Investing activitiesCapital outlays
    
    
    (179.5
    )
    
    
    (96.4
    )Capitalized interest
    
    
    (2.9
    )
    
    
    (0.3
    )Investments in subsidiaries and other, net of
cash received and acquired
    
    
    (0.1
    )
    
    
    (0.2
    )Proceeds from asset dispositions
    
    
    4.6
    
    
    
    1.7Proceeds from sale of cost-basis investment
    
    
    451.6
    
    
    
    Restricted cash
    
    
    (168.3
    )
    
    
    Other investing, net
    
    
    (1.6
    )
    
    
    2.8Net cash provided by (used in) investing activities
    
    
    103.8
    
    
    
    (92.4
    )Financing activitiesProceeds from issuance of debt
    
    
    
    
    
    
    149.8Payment of debt
    
    
    (51.3
    )
    
    
    (714.1
    )Common dividends
    
    
    (48.3
    )
    
    
    Preferred dividends
    
    
    (6.8
    )
    
    
    (6.8
    )Issuance of shares, net
    
    
    33.2
    
    
    
    167.1Debt issue costs
    
    
    (0.7
    )
    
    
    (7.2
    )Proceeds from issuance of Cerro Verde stock
    
    
    441.8
    
    
    
    Other financing, net
    
    
    (28.2
    )
    
    
    (57.3
    )Net cash provided in (used in) financing activities
    
    
    339.7
    
    
    
    (468.5
    )Effect of exchange rate impact on cash and cash equivalents
    
    
    7.3
    
    
    
    0.5Increase in cash and cash equivalents
    
    
    1,395.5
    
    
    
    118.7Increase at beginning of 2004 from consolidating
El Abra and Candelaria
    
    
    
    
    
    
    28.3Cash and cash equivalents at beginning of period
    
    
    1,200.1
    
    
    
    683.8Cash and cash equivalents at end of period
    
    $
    2,595.6
    
    
    
    830.8




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##### Table of Contents



-4- PHELPS DODGE CORPORATION
 
 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 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
    
    Income (Loss)*
    
    Other
    
    EquityBalance 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
    
    
    0.8
    
    
    
    4.9
    
    
    
    
    
    
    
    
    
    
    
    58.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.2Restricted shares issued/cancelled, net
    
    
    0.2
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    18.5
    
    
    
    
    
    
    
    
    
    
    
    (13.8
    )
    
    
    6.0Common shares purchased
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    (2.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.2
    )Dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.8
    )
    
    
    
    
    
    
    
    
    
    
    (6.8
    )Dividends on common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84.6
    )
    
    
    
    
    
    
    
    
    
    
    (84.6
    )Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,069.0
    
    
    
    
    
    
    
    
    
    
    
    1,069.0Other comprehensive income (loss), net of tax:Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.6
    )
    
    
    
    
    
    
    (1.6
    )Net loss on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    (0.7
    )Other investment adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.5Unrealized gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    2.2Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.8
    
    
    
    
    
    
    
    11.8Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.2
    
    
    
    
    
    
    
    12.2Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,081.2Balance at June 30, 2005
    
    
    96.9
    
    
    $
    605.5
    
    
    
    2.0
    
    
    $
    2.0
    
    
    $
    1,981.2
    
    
    $
    3,217.5
    
    
    $
    (372.0
    )
    
    $
    (34.3
    )
    
    $
    5,399.9
 
 *
    
    As of June 30, 2005, this balance comprised $(217.8) million of cumulative minimum pension liability adjustments, $(173.4) million of cumulative translation adjustments and $(0.2) million of cumulative other investment adjustments; partially offset by $19.0 million of cumulative unrealized gains on securities and $0.4 million of cumulative unrealized gains on derivative instruments.




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##### Table of Contents



-5- 
 FINANCIAL DATA BY BUSINESS SEGMENT
 U.S. Mines
    
    South American MinesCandelaria/Miami/
    
    Chino/
    
    
    
    
    
    Ojos del
    
    Cerro
    
    
    
    
    
    PrimaryMorenci
    
    Bagdad
    
    Sierrita
    
    Bisbee
    
    Cobre
    
    Tyrone
    
    Salado
    
    Verde
    
    El Abra
    
    MolybdenumSecond Quarter 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    4.9
    
    
    
    
    
    
    
    5.8
    
    
    
    
    
    
    
    100.5
    
    
    
    16.8
    
    
    
    88.2
    
    
    
    526.1Intersegment
    
    
    263.3
    
    
    
    190.2
    
    
    
    204.0
    
    
    
    10.6
    
    
    
    78.8
    
    
    
    32.7
    
    
    
    63.6
    
    
    
    64.5
    
    
    
    72.4
    
    
    
    Depreciation, depletion and amortization
    
    
    16.1
    
    
    
    7.9
    
    
    
    3.8
    
    
    
    1.3
    
    
    
    5.1
    
    
    
    3.0
    
    
    
    9.3
    
    
    
    7.3
    
    
    
    28.1
    
    
    
    13.0Operating income (loss) before special
items and provisions
    
    
    114.5
    
    
    
    116.5
    
    
    
    135.6
    
    
    
    2.1
    
    
    
    12.9
    
    
    
    3.2
    
    
    
    64.6
    
    
    
    39.6
    
    
    
    63.8
    
    
    
    98.9Special items and provisions, net
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63.9
    )
    
    
    (211.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    114.2
    
    
    
    116.5
    
    
    
    135.6
    
    
    
    2.1
    
    
    
    (51.0
    )
    
    
    (208.3
    )
    
    
    64.6
    
    
    
    39.6
    
    
    
    63.8
    
    
    
    98.9Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    1.4
    
    
    
    1.5
    
    
    
    0.4
    
    
    
    0.1Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.2Change in interest gain from Cerro Verde stock issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.8
    )
    
    
    11.0
    
    
    
    (23.8
    )
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.8
    )
    
    
    (9.3
    )
    
    
    (18.4
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at June 30
    
    
    914.9
    
    
    
    440.6
    
    
    
    322.1
    
    
    
    99.0
    
    
    
    421.6
    
    
    
    51.1
    
    
    
    964.2
    
    
    
    884.1
    
    
    
    1,059.1
    
    
    
    904.8Expenditures for segment assets
    
    
    10.8
    
    
    
    6.2
    
    
    
    3.7
    
    
    
    0.1
    
    
    
    4.2
    
    
    
    1.3
    
    
    
    4.0
    
    
    
    41.7
    
    
    
    7.4
    
    
    
    5.3Second Quarter 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    95.3
    
    
    
    28.0
    
    
    
    97.1
    
    
    
    225.1Intersegment
    
    
    219.6
    
    
    
    72.4
    
    
    
    129.1
    
    
    
    2.6
    
    
    
    45.9
    
    
    
    25.5
    
    
    
    46.5
    
    
    
    33.5
    
    
    
    66.0
    
    
    
    Depreciation, depletion and amortization
    
    
    19.2
    
    
    
    5.4
    
    
    
    2.6
    
    
    
    1.2
    
    
    
    2.8
    
    
    
    3.0
    
    
    
    12.3
    
    
    
    8.1
    
    
    
    30.9
    
    
    
    7.9Operating income (loss) before special
items and provisions
    
    
    86.9
    
    
    
    21.3
    
    
    
    70.1
    
    
    
    (3.1
    )
    
    
    10.4
    
    
    
    8.4
    
    
    
    49.3
    
    
    
    25.1
    
    
    
    64.6
    
    
    
    29.5Special items and provisions, net
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (1.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Operating income (loss)
    
    
    86.5
    
    
    
    21.3
    
    
    
    70.1
    
    
    
    (3.1
    )
    
    
    10.0
    
    
    
    6.6
    
    
    
    49.3
    
    
    
    25.1
    
    
    
    64.6
    
    
    
    29.8Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.6
    )
    
    
    (0.4
    )
    
    
    (4.3
    )
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.5
    )
    
    
    (9.3
    )
    
    
    0.8
    
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.3
    )
    
    
    (3.0
    )
    
    
    (30.1
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at June 30
    
    
    967.0
    
    
    
    439.5
    
    
    
    303.8
    
    
    
    108.4
    
    
    
    425.8
    
    
    
    174.2
    
    
    
    728.4
    
    
    
    491.4
    
    
    
    1,080.5
    
    
    
    814.9Expenditures for segment assets
    
    
    3.4
    
    
    
    3.0
    
    
    
    4.4
    
    
    
    0.2
    
    
    
    5.2
    
    
    
    1.9
    
    
    
    5.3
    
    
    
    0.9
    
    
    
    1.2
    
    
    
    3.8
 PDMC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate,Manufac-
    
    
    
    
    
    PDMC
    
    
    
    
    
    Elimi-
    
    PDMC
    
    Specialty
    
    Wire &
    
    PDI
    
    Other &turing
    
    Sales
    
    Segments
    
    Other
    
    nations
    
    Subtotal
    
    Chemicals
    
    Cable
    
    Subtotal
    
    Eliminations
    
    TotalsSecond Quarter 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    747.4
    
    
    
    188.4
    
    
    
    1,678.1
    
    
    
    6.3
    
    
    
    
    
    
    
    1,684.4
    
    
    
    185.6
    
    
    
    281.6
    
    
    
    467.2
    
    
    
    
    
    
    
    2,151.6Intersegment
    
    
    47.9
    
    
    
    64.8
    
    
    
    1,092.8
    
    
    
    20.9
    
    
    
    (1,047.1
    )
    
    
    66.6
    
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    (66.8
    )
    
    
    Depreciation, depletion and amortization
    
    
    6.9
    
    
    
    
    
    
    
    101.8
    
    
    
    1.5
    
    
    
    
    
    
    
    103.3
    
    
    
    14.4
    
    
    
    7.6
    
    
    
    22.0
    
    
    
    1.7
    
    
    
    127.0Operating income (loss) before special
items and provisions
    
    
    6.8
    
    
    
    3.3
    
    
    
    661.8
    
    
    
    (42.1
    )
    
    
    
    
    
    
    619.7
    
    
    
    8.9
    
    
    
    7.2
    
    
    
    16.1
    
    
    
    (24.9
    )
    
    
    610.9Special items and provisions, net
    
    
    (148.7
    )
    
    
    
    
    
    
    (424.4
    )
    
    
    9.4
    
    
    
    
    
    
    
    (415.0
    )
    
    
    
    
    
    
    (1.9
    )
    
    
    (1.9
    )
    
    
    (20.3
    )
    
    
    (437.2
    )Operating income (loss)
    
    
    (141.9
    )
    
    
    3.3
    
    
    
    237.4
    
    
    
    (32.7
    )
    
    
    
    
    
    
    204.7
    
    
    
    8.9
    
    
    
    5.3
    
    
    
    14.2
    
    
    
    (45.2
    )
    
    
    173.7Interest income
    
    
    
    
    
    
    
    
    
    
    3.8
    
    
    
    1.1
    
    
    
    (0.8
    )
    
    
    4.1
    
    
    
    4.1
    
    
    
    0.5
    
    
    
    4.6
    
    
    
    7.3
    
    

    
    16.0Interest expense
    
    
    (0.7
    )
    
    
    (0.2
    )
    
    
    (3.2
    )
    
    
    (0.1
    )
    
    
    0.8
    
    
    
    (2.5
    )
    
    
    (3.6
    )
    
    
    (1.9
    )
    
    
    (5.5
    )
    
    
    (15.4
    )
    
    
    (23.4
    )Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    87.2
    
    
    
    351.2
    
    
    
    
    
    
    
    438.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    438.4Change in interest gain from Cerro Verde stock issuance
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.5Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (23.6
    )
    
    
    
    
    
    
    
    
    
    
    (23.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51.0
    )
    
    
    (74.6
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (37.5
    )
    
    
    
    
    
    
    
    
    
    
    (37.5
    )
    
    
    (0.2
    )
    
    
    (0.8
    )
    
    
    (1.0
    )
    
    
    
    
    
    
    (38.5
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.6
    
    
    
    0.7Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    0.2
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    5.9
    
    
    
    5.9
    
    
    
    24.1
    
    
    
    31.5Assets at June 30
    
    
    314.8
    
    
    
    31.4
    
    
    
    6,407.7
    
    
    
    1,341.7
    
    
    
    (1,449.5
    )
    
    
    6,299.9
    
    
    
    815.3
    
    
    
    649.9
    
    
    
    1,465.2
    
    
    
    2,293.8
    
    
    
    10,058.9Expenditures for segment assets
    
    
    4.5
    
    
    
    
    
    
    
    89.2
    
    
    
    34.0
    
    
    
    (26.5
    )
    
    
    96.7
    
    
    
    5.7
    
    
    
    4.4
    
    
    
    10.1
    
    
    
    4.5
    
    
    
    111.3Second Quarter 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    603.7
    
    
    
    199.7
    
    
    
    1,249.0
    
    
    
    5.5
    
    
    
    
    
    
    
    1,254.5
    
    
    
    165.2
    
    
    
    231.2
    
    
    
    396.4
    
    
    
    
    
    
    
    1,650.9Intersegment
    
    
    60.4
    
    
    
    50.5
    
    
    
    752.0
    
    
    
    17.3
    
    
    
    (714.6
    )
    
    
    54.7
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    (54.8
    )
    
    
    Depreciation, depletion and amortization
    
    
    5.6
    
    
    
    
    
    
    
    99.0
    
    
    
    1.1
    
    
    
    
    
    
    
    100.1
    
    
    
    11.8
    
    
    
    9.1
    
    
    
    20.9
    
    
    
    3.4
    
    
    
    124.4Operating income (loss) before special
items and provisions
    
    
    7.4
    
    
    
    1.5
    
    
    
    371.4
    
    
    
    (32.2
    )
    
    
    
    
    
    
    339.2
    
    
    
    15.9
    
    
    
    8.8
    
    
    
    24.7
    
    
    
    (20.7
    )
    
    
    343.2Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (2.5
    )
    
    
    
    
    
    
    (2.5
    )
    
    
    (2.5
    )
    
    
    16.5
    
    
    
    11.5Operating income (loss)
    
    
    7.4
    
    
    
    1.5
    
    
    
    369.1
    
    
    
    (32.4
    )
    
    
    
    
    
    
    336.7
    
    
    
    15.9
    
    
    
    6.3
    
    
    
    22.2
    
    
    
    (4.2
    )
    
    
    354.7Interest income
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    1.3
    
    
    
    (1.1
    )
    
    
    1.1
    
    
    
    2.1
    
    
    
    0.1
    
    
    
    2.2
    
    
    
    0.5
    
    
    
    3.8Interest expense
    
    
    (1.1
    )
    
    
    (0.2
    )
    
    
    (8.6
    )
    
    
    
    
    
    
    1.1
    
    
    
    (7.5
    )
    
    
    (3.9
    )
    
    
    (1.4
    )
    
    
    (5.3
    )
    
    
    (19.5
    )
    
    
    (32.3
    )Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (12.0
    )
    
    
    
    
    
    
    
    
    
    
    (12.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28.7
    )
    
    
    (40.7
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (40.4
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (40.6
    )
    
    
    (0.4
    )
    
    
    (1.0
    )
    
    
    (1.4
    )
    
    
    
    
    
    
    (42.0
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.6Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    5.6
    
    
    
    5.6
    
    
    
    24.1
    
    
    
    31.2Assets at June 30
    
    
    475.7
    
    
    
    (3.6
    )
    
    
    6,006.0
    
    
    
    1,277.1
    
    
    
    (1,384.2
    )
    
    
    5,898.9
    
    
    
    753.9
    
    
    
    582.4
    
    
    
    1,336.3
    
    
    
    826.1
    
    
    
    8,061.3Expenditures for segment assets
    
    
    3.1
    
    
    
    
    
    
    
    32.4
    
    
    
    6.5
    
    
    
    (0.4
    )
    
    
    38.5
    
    
    
    3.5
    
    
    
    7.3
    
    
    
    10.8
    
    
    
    0.6
    
    
    
    49.9
 
 *
    
    In the 2004 fourth quarter, the Company reassessed its reportable segments. The reassessment considered the significant increase in copper and molybdenum prices. Based on our assessment, we are separately disclosing Bagdad, Sierrita, Manufacturing and Sales as individual reportable segments,
whereas, in 2004 Bagdad and Sierrita, and Manufacturing and Sales were aggregated. Segment information for 2004 has been revised to conform with the 2005 presentation.




---



##### Table of Contents



-6- FINANCIAL DATA BY BUSINESS SEGMENT
 U.S. Mines
    
    South American MinesCandelaria/Miami/
    
    Chino/
    
    
    
    
    
    Ojos del
    
    Cerro
    
    
    
    
    
    PrimaryMorenci
    
    Bagdad
    
    Sierrita
    
    Bisbee
    
    Cobre
    
    Tyrone
    
    Salado
    
    Verde
    
    El Abra
    
    MolybdenumSix Months Ended June 30, 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    5.3
    
    
    
    
    
    
    
    5.8
    
    
    
    
    
    
    
    222.4
    
    
    
    33.3
    
    
    
    160.4
    
    
    
    1,002.9Intersegment
    
    
    490.3
    
    
    
    346.7
    
    
    
    411.9
    
    
    
    20.1
    
    
    
    164.5
    
    
    
    62.8
    
    
    
    95.6
    
    
    
    116.1
    
    
    
    153.0
    
    
    
    Depreciation, depletion and amortization
    
    
    31.2
    
    
    
    15.7
    
    
    
    7.7
    
    
    
    2.2
    
    
    
    10.4
    
    
    
    7.0
    
    
    
    19.2
    
    
    
    13.2
    
    
    
    61.5
    
    
    
    21.9Operating income (loss) before special
items and provisions
    
    
    200.7
    
    
    
    200.9
    
    
    
    270.1
    
    
    
    3.2
    
    
    
    30.6
    
    
    
    4.5
    
    
    
    140.0
    
    
    
    75.6
    
    
    
    108.3
    
    
    
    185.5Special items and provisions, net
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64.5
    )
    
    
    (215.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    200.1
    
    
    
    200.9
    
    
    
    270.1
    
    
    
    3.2
    
    
    
    (33.9
    )
    
    
    (211.2
    )
    
    
    140.0
    
    
    
    75.6
    
    
    
    108.3
    
    
    
    185.5Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    2.2
    
    
    
    2.3
    
    
    
    0.4
    
    
    
    0.2Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.6
    )
    
    
    Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.2Change in interest gain from Cerro Verde stock issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29.1
    )
    
    
    4.2
    
    
    
    (38.4
    )
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16.4
    )
    
    
    (15.0
    )
    
    
    (31.7
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at June 30
    
    
    914.9
    
    
    
    440.6
    
    
    
    322.1
    
    
    
    99.0
    
    
    
    421.6
    
    
    
    51.1
    
    
    
    964.2
    
    
    
    884.1
    
    
    
    1,059.1
    
    
    
    904.8Expenditures for segment assets
    
    
    6.9
    
    
    
    11.3
    
    
    
    6.6
    
    
    
    
    
    
    
    9.0
    
    
    
    1.8
    
    
    
    7.9
    
    
    
    71.4
    
    
    
    9.4
    
    
    
    7.0Six Months Ended June 30, 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    181.6
    
    
    
    44.6
    
    
    
    196.3
    
    
    
    375.1Intersegment
    
    
    430.5
    
    
    
    152.7
    
    
    
    219.6
    
    
    
    11.4
    
    
    
    82.6
    
    
    
    53.0
    
    
    
    118.9
    
    
    
    85.1
    
    
    
    140.3
    
    
    
    Depreciation, depletion and amortization
    
    
    37.3
    
    
    
    11.3
    
    
    
    5.9
    
    
    
    2.4
    
    
    
    5.3
    
    
    
    6.0
    
    
    
    25.4
    
    
    
    16.3
    
    
    
    62.5
    
    
    
    15.2Operating income (loss) before special
items and provisions
    
    
    164.8
    
    
    
    46.2
    
    
    
    100.1
    
    
    
    (3.8
    )
    
    
    25.4
    
    
    
    10.8
    
    
    
    118.1
    
    
    
    62.9
    
    
    
    139.2
    
    
    
    45.1Special items and provisions, net
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (1.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Operating income (loss)
    
    
    164.4
    
    
    
    46.2
    
    
    
    100.1
    
    
    
    (3.8
    )
    
    
    25.0
    
    
    
    9.0
    
    
    
    118.1
    
    
    
    62.9
    
    
    
    139.2
    
    
    
    45.4Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.7
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.1Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.3
    )
    
    
    (1.8
    )
    
    
    (8.8
    )
    
    
    Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23.0
    )
    
    
    (22.6
    )
    
    
    31.7
    
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16.2
    )
    
    
    (7.9
    )
    
    
    (79.6
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at June 30
    
    
    967.0
    
    
    
    439.5
    
    
    
    303.8
    
    
    
    108.4
    
    
    
    425.8
    
    
    
    174.2
    
    
    
    728.4
    
    
    
    491.4
    
    
    
    1,080.5
    
    
    
    814.9Expenditures for segment assets
    
    
    7.0
    
    
    
    4.7
    
    
    
    7.2
    
    
    
    0.2
    
    
    
    6.1
    
    
    
    2.2
    
    
    
    10.3
    
    
    
    1.8
    
    
    
    2.6
    
    
    
    6.1
 PDMC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate,Manufac-
    
    
    
    
    
    PDMC
    
    
    
    
    
    Elimi-
    
    PDMC
    
    Specialty
    
    Wire &
    
    PDI
    
    Other &turing
    
    Sales
    
    Segments
    
    Other
    
    nations
    
    Subtotal
    
    Chemicals
    
    Cable
    
    Subtotal
    
    Eliminations
    
    TotalsSix Months Ended June 30, 2005Sales and other operating revenues:Unaffiliated customers
    $
    1,422.4
    
    
    
    438.3
    
    
    
    3,290.8
    
    
    
    11.7
    
    
    
    
    
    
    
    3,302.5
    
    
    
    365.6
    
    
    
    550.0
    
    
    
    915.6
    
    
    
    
    
    
    
    4,218.1Intersegment
    
    
    105.8
    
    
    
    118.6
    
    
    
    2,085.4
    
    
    
    40.0
    
    
    
    (2,003.6
    )
    
    
    121.8
    
    
    
    
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    (122.2
    )
    
    
    Depreciation, depletion and amortization
    
    
    12.5
    
    
    
    
    
    
    
    202.5
    
    
    
    2.8
    
    
    
    
    
    
    
    205.3
    
    
    
    32.0
    
    
    
    15.7
    
    
    
    47.7
    
    
    
    3.4
    
    
    
    256.4Operating income (loss) before special
items and provisions
    
    
    11.0
    
    
    
    (0.5
    )
    
    
    1,229.9
    
    
    
    (53.9
    )
    
    
    
    
    
    
    1,176.0
    
    
    
    22.1
    
    
    
    18.8
    
    
    
    40.9
    
    
    
    (57.9
    )
    
    
    1,159.0Special items and provisions, net
    
    
    (148.7
    )
    
    
    
    
    
    
    (429.5
    )
    
    
    8.6
    
    
    
    
    
    
    
    (420.9
    )
    
    
    
    
    
    
    (1.5
    )
    
    
    (1.5
    )
    
    
    (13.9
    )
    
    
    (436.3
    )Operating income (loss)
    
    
    (137.7
    )
    
    
    (0.5
    )
    
    
    800.4
    
    
    
    (45.3
    )
    
    
    
    
    
    
    755.1
    
    
    
    22.1
    
    
    
    17.3
    
    
    
    39.4
    
    
    
    (71.8
    )
    
    
    722.7Interest income
    
    
    
    
    
    
    
    
    
    
    6.1
    
    
    
    2.0
    
    
    
    (1.6
    )
    
    
    6.5
    
    
    
    7.6
    
    
    
    0.7
    
    
    
    8.3
    
    
    
    10.7
    
    
    
    25.5Interest expense
    
    
    (1.5
    )
    
    
    (0.5
    )
    
    
    (6.6
    )
    
    
    (0.1
    )
    
    
    1.6
    
    
    
    (5.1
    )
    
    
    (7.2
    )
    
    
    (3.9
    )
    
    
    (11.1
    )
    
    
    (30.9
    )
    
    
    (47.1
    )Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    87.2
    
    
    
    351.2
    
    
    
    
    
    
    
    438.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    438.4Change in interest gain from Cerro Verde stock issuance
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.5Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (63.3
    )
    
    
    
    
    
    
    
    
    
    
    (63.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (142.5
    )
    
    
    (205.8
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (63.1
    )
    
    
    
    
    
    
    
    
    
    
    (63.1
    )
    
    
    (0.6
    )
    
    
    (1.8
    )
    
    
    (2.4
    )
    
    
    
    
    
    
    (65.5
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    0.8
    
    
    
    0.8
    
    
    
    1.1
    
    
    
    1.4Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    0.2
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    5.9
    
    
    
    5.9
    
    
    
    24.1
    
    
    
    31.5Assets at June 30
    
    
    314.8
    
    
    
    31.4
    
    
    
    6,407.7
    
    
    
    1,341.7
    
    
    
    (1,449.5
    )
    
    
    6,299.9
    
    
    
    815.3
    
    
    
    649.9
    
    
    
    1,465.2
    
    
    
    2,293.8
    
    
    
    10,058.9Expenditures for segment assets
    
    
    9.4
    
    
    
    
    
    
    
    140.7
    
    
    
    42.9
    
    
    
    (26.6
    )
    
    
    157.0
    
    
    
    10.3
    
    
    
    7.3
    
    
    
    17.6
    
    
    
    5.0
    
    
    
    179.6Six Months Ended June 30, 2004*Sales and other operating revenues:Unaffiliated customers
    $
    1,205.8
    
    
    
    454.8
    
    
    
    2,458.4
    
    
    
    10.6
    
    
    
    
    
    
    
    2,469.0
    
    
    
    329.1
    
    
    
    449.8
    
    
    
    778.9
    
    
    
    
    
    
    
    3,247.9Intersegment
    
    
    116.3
    
    
    
    102.1
    
    
    
    1,512.5
    
    
    
    33.4
    
    
    
    (1,435.8
    )
    
    
    110.1
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    (110.2
    )
    
    
    Depreciation, depletion and amortization
    
    
    10.8
    
    
    
    
    
    
    
    198.4
    
    
    
    2.2
    
    
    
    
    
    
    
    200.6
    
    
    
    24.9
    
    
    
    18.1
    
    
    
    43.0
    
    
    
    5.7
    
    
    
    249.3Operating income (loss) before special
items and provisions
    
    
    11.5
    
    
    
    1.2
    
    
    
    721.5
    
    
    
    (52.1
    )
    
    
    
    
    
    
    669.4
    
    
    
    27.1
    
    
    
    12.9
    
    
    
    40.0
    
    
    
    (44.6
    )
    
    
    664.8Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (2.5
    )
    
    
    
    
    
    
    (4.3
    )
    
    
    (4.3
    )
    
    
    11.5
    
    
    
    4.7Operating income (loss)
    
    
    11.5
    
    
    
    1.2
    
    
    
    719.2
    
    
    
    (52.3
    )
    
    
    
    
    
    
    666.9
    
    
    
    27.1
    
    
    
    8.6
    
    
    
    35.7
    
    
    
    (33.1
    )
    
    
    669.5Interest income
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    2.6
    
    
    
    (2.1
    )
    
    
    2.2
    
    
    
    4.2
    
    
    
    0.4
    
    
    
    4.6
    
    
    
    1.2
    
    
    
    8.0Interest expense
    
    
    (2.1
    )
    
    
    (0.3
    )
    
    
    (19.3
    )
    
    
    
    
    
    
    2.1
    
    
    
    (17.2
    )
    
    
    (7.8
    )
    
    
    (2.4
    )
    
    
    (10.2
    )
    
    
    (43.9
    )
    
    
    (71.3
    )Benefit (provision) for taxes on income
    
    
    
    
    
    
    
    
    
    
    (13.9
    )
    
    
    
    
    
    
    
    
    
    
    (13.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33.0
    )
    
    
    (46.9
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (103.7
    )
    
    
    
    
    
    
    
    
    
    
    (103.7
    )
    
    
    (0.5
    )
    
    
    (1.4
    )
    
    
    (1.9
    )
    
    
    
    
    
    
    (105.6
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.9
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    1.1
    
    
    
    0.4Equity basis investments at June 30
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    5.6
    
    
    
    5.6
    
    
    
    24.1
    
    
    
    31.2Assets at June 30
    
    
    475.7
    
    
    
    (3.6
    )
    
    
    6,006.0
    
    
    
    1,277.1
    
    
    
    (1,384.2
    )
    
    
    5,898.9
    
    
    
    753.9
    
    
    
    582.4
    
    
    
    1,336.3
    
    
    
    826.1
    
    
    
    8,061.3Expenditures for segment assets
    
    
    6.2
    
    
    
    
    
    
    
    54.4
    
    
    
    13.0
    
    
    
    (0.9
    )
    
    
    66.5
    
    
    
    5.8
    
    
    
    13.9
    
    
    
    19.7
    
    
    
    10.4
    
    
    
    96.6
 
 *
    
    In the 2004 fourth quarter, the Company reassessed its reportable segments. The reassessment considered the significant increase in copper and molybdenum prices. Based on our assessment, we are separately disclosing Bagdad, Sierrita, Manufacturing and Sales as individual reportable segments,
whereas, in 2004 Bagdad and Sierrita, and Manufacturing and Sales were aggregated. Segment information for 2004 has been revised to conform with the 2005 presentation.




---



##### Table of Contents



-7- 
 NOTES TO CONSOLIDATED FINANCIAL INFORMATION
 1. General Information
     2. Stock Compensation
   Second Quarter2005
    
    
    2004Net income as reported
    
    $
    682.3
    
    
    
    226.6Deduct:Total compensation cost determined under fair value
based method for all awards, net of tax
    
    
    (1.0
    )
    
    
    (1.7
    )Pro formanet income
    
    $
    681.3
    
    
    
    224.9Earnings per common shareBasic  as reported
    
    $
    7.06
    
    
    
    2.40Basic  pro forma
    
    $
    7.05
    
    
    
    2.38Earnings per common shareDiluted  as reported
    
    $
    6.75
    
    
    
    2.30Diluted  pro forma
    
    $
    6.75
    
    
    
    2.28
  Six Months EndedJune 30,2005
    
    
    2004Net income as reported
    
    $
    1,069.0
    
    
    
    412.3Deduct:Total compensation cost determined under fair value
based method for all awards, net of tax
    
    
    (1.9
    )
    
    
    (3.4
    )Pro formanet income
    
    $
    1,067.1
    
    
    
    408.9Earnings per common shareBasic  as reported
    
    $
    11.07
    
    
    
    4.39Basic  pro forma
    
    $
    11.05
    
    
    
    4.36Earnings per common shareDiluted  as reported
    
    $
    10.59
    
    
    
    4.20Diluted  pro forma
    
    $
    10.57
    
    
    
    4.17




---



##### Table of Contents



-8- 3. Special Items and Provisions
     2005 Second QuarterConsolidated Statement of Income
    
    
    
    
    
    
    
    
    
    $/ShareLine Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:PDMC Asset impairment charges
    
    $
    (419.1
    )
    
    
    (320.9
    )
    
    
    (3.18
    )Environmental provisions, net
    
    
    (10.4
    )
    
    
    (7.9
    )
    
    
    (0.08
    )Environmental insurance
recoveries, net
    
    
    (0.5
    )
    
    
    (0.4
    )
    
    
    Historical legal matters
    
    
    15.0
    
    
    
    11.4
    
    
    
    0.11(415.0
    )
    
    
    (317.8
    )
    
    
    (3.15
    )PDI Wire and Cable restructuring
programs/closures
    
    
    (1.5
    )
    
    
    (1.1
    )
    
    
    (0.01
    )Asset impairment charges
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (1.9
    )
    
    
    (1.4
    )
    
    
    (0.01
    )Corporate and Other 
Environmental provisions, net
    
    
    (20.7
    )
    
    
    (15.7
    )
    
    
    (0.15
    )Environmental insurance
recoveries, net
    
    
    0.5
    
    
    
    0.4
    
    
    
    Historical legal matters
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (20.3
    )
    
    
    (15.4
    )
    
    
    (0.15
    )(437.2
    )
    
    
    (334.6
    )
    
    
    (3.31
    )Gain on sale of cost-basis investment
    
    
    438.4
    
    
    
    388.0
    
    
    
    3.84Change in interest gain from
Cerro Verde stock issuance
    
    
    159.5
    
    
    
    172.9
    
    
    
    1.71Provision for taxes on income:Foreign dividend tax
    
    
    
    
    
    
    (0.5
    )
    
    
    (0.01
    )$
    160.7
    
    
    
    225.8
    
    
    
    2.23
  Six Months EndedJune 30, 2005Consolidated Statement of Income
    
    
    
    
    
    
    
    
    
    $/ShareLine Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:PDMC Asset impairment charges
    
    $
    (419.1
    )
    
    
    (320.9
    )
    
    
    (3.18
    )Environmental provisions, net
    
    
    (15.7
    )
    
    
    (11.9
    )
    
    
    (0.12
    )Environmental insurance
recoveries, net
    
    
    (1.1
    )
    
    
    (0.9
    )
    
    
    (0.01
    )Historical legal matters
    
    
    15.0
    
    
    
    11.4
    
    
    
    0.12(420.9
    )
    
    
    (322.3
    )
    
    
    (3.19
    )PDI Wire and Cable restructuring
programs/closures
    
    
    (1.1
    )
    
    
    (0.3
    )
    
    
    Asset impairment charges
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (1.5
    )
    
    
    (0.6
    )
    
    
    Corporate and Other Environmental provisions, net
    
    
    (19.7
    )
    
    
    (15.0
    )
    
    
    (0.15
    )Environmental insurance
recoveries, net
    
    
    1.1
    
    
    
    0.9
    
    
    
    0.01Historical legal matters
    
    
    4.7
    
    
    
    4.4
    
    
    
    0.04(13.9
    )
    
    
    (9.7
    )
    
    
    (0.10
    )(436.3
    )
    
    
    (332.6
    )
    
    
    (3.29
    )Gain on sale of cost-basis investment
    
    
    438.4
    
    
    
    388.0
    
    
    
    3.84Change in interest gain from
Cerro Verde stock issuance
    
    
    159.5
    
    
    
    172.9
    
    
    
    1.71Provision for taxes on income:Foreign dividend tax
    
    
    
    
    
    
    (2.4
    )
    
    
    (0.02
    )$
    161.6
    
    
    
    225.9
    
    
    
    2.24




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##### Table of Contents








---



##### Table of Contents



2004 Second QuarterConsolidated Statement of Income
    
    
    
    
    
    
    
    
    
    $/ShareLine Item
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC Environmental provisions, net
    
    $
    (2.3
    )
    
    
    (1.8
    )
    
    
    (0.02
    )Environmental insurance
recoveries, net
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    (2.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )PDI Wire and Cable restructuring
programs/closures
    
    
    (1.9
    )
    
    
    (1.4
    )
    
    
    (0.01
    )Asset impairment charges
    
    
    (0.6
    )
    
    
    (0.5
    )
    
    
    (0.01
    )(2.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )Corporate and Other Environmental provisions, net
    
    
    0.5
    
    
    
    0.4
    
    
    
    Environmental insurance
recoveries, net
    
    
    0.1
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    15.9
    
    
    
    12.8
    
    
    
    0.1316.5
    
    
    
    13.3
    
    
    
    0.1311.5
    
    
    
    9.5
    
    
    
    0.09Early debt extinguishment costs
    
    
    (15.2
    )
    
    
    (12.6
    )
    
    
    (0.13
    )Miscellaneous income and expense, net:Cost-basis investment
write-down
    
    
    (6.4
    )
    
    
    (6.4
    )
    
    
    (0.06
    )Provision for taxes on income:PD Brazil deferred tax asset
valuation allowance
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )Minority interests in consolidated subsidiaries:Candelaria early debt
extinguishment costs
    
    
    
    
    
    
    2.5
    
    
    
    0.03$
    (10.1
    )
    
    
    (16.0
    )
    
    
    (0.16
    )
  Six Months EndedJune 30, 2004Consolidated Statement of Income
    
    
    
    
    
    
    
    
    
    $/ShareLine Item
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC Environmental provisions, net
    
    $
    (2.3
    )
    
    
    (1.8
    )
    
    
    (0.02
    )Environmental insurance
recoveries, net
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    (2.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )PDI Wire and Cable restructuring
programs/closures
    
    
    (3.6
    )
    
    
    (2.5
    )
    
    
    (0.02
    )Environmental provisions, net
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    Asset impairment charges
    
    
    (0.6
    )
    
    
    (0.5
    )
    
    
    (0.01
    )(4.3
    )
    
    
    (3.1
    )
    
    
    (0.03
    )Corporate and Other Environmental provisions, net
    
    
    (4.1
    )
    
    
    (3.1
    )
    
    
    (0.03
    )Environmental insurance
recoveries, net
    
    
    0.1
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    15.5
    
    
    
    12.4
    
    
    
    0.1311.5
    
    
    
    9.4
    
    
    
    0.104.7
    
    
    
    4.4
    
    
    
    0.05Interest expense:Texas franchise tax matter
    
    
    (0.9
    )
    
    
    (0.7
    )
    
    
    (0.01
    )Early debt extinguishment costs
    
    
    (37.6
    )
    
    
    (30.2
    )
    
    
    (0.31
    )Miscellaneous income and expense, net:Cost-basis investment
write-downs
    
    
    (10.0
    )
    
    
    (9.1
    )
    
    
    (0.09
    )Provision for taxes on income:Reversal of El Abra deferred tax
asset valuation allowance
    
    
    
    
    
    
    30.8
    
    
    
    0.31PD Brazil deferred tax asset
valuation allowance
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )
    
    
    
    21.8
    
    
    
    0.22Minority interests in consolidated subsidiaries:Reversal of El Abra deferred tax
asset valuation allowance
    
    
    
    
    
    
    (15.1
    )
    
    
    (0.15
    )Candelaria early debt
extinguishment costs
    
    
    
    
    
    
    2.5
    
    
    
    0.02
    
    
    
    (12.6
    )
    
    
    (0.13
    )$
    (43.8
    )
    
    
    (26.4
    )
    
    
    (0.27
    )
 4. New Accounting Pronouncements




---



##### Table of Contents



5. Environmental, and Reclamation and Closure Matters
   Six Months2005
    
    EndedSecond Quarter
    
    June 30, 2005Balance, beginning of period
    
    $
    297.8
    
    
    
    303.6Additions to reserves
    
    
    31.1
    
    
    
    37.0Reductions in reserve estimates
    
    
    
    
    
    
    (1.6
    )Spending against reserves
    
    
    (9.4
    )
    
    
    (19.5
    )Balance, end of period
    
    $
    319.5
    
    
    
    319.5




---



##### Table of Contents



Six Months2005
    
    EndedSecond Quarter
    
    June 30, 2005Balance, beginning of period
    
    $
    292.6
    
    
    
    275.2New liabilities during the period
    
    
    0.7
    
    
    
    1.6Accretion expense
    
    
    5.5
    
    
    
    10.9Payments
    
    
    (8.6
    )
    
    
    (15.2
    )Revisions in estimated cash flows
    
    
    38.9
    
    
    
    56.8Foreign currency translation
adjustments
    
    
    (0.2
    )
    
    
    (0.4
    )Balance, end of period
    
    $
    328.9
    
    
    
    328.9
 
 Six Months2005
    
    EndedSecond Quarter
    
    June 30, 2005Gross balance,
beginning of period
    
    $
    214.9
    
    
    
    196.3New assets during the period
    
    
    0.7
    
    
    
    1.6Revisions in estimated cash flows
    
    
    38.9
    
    
    
    56.8Impairment of assets
    
    
    (129.7
    )
    
    
    (129.7
    )Foreign currency translation
adjustments
    
    
    (0.1
    )
    
    
    (0.3
    )Gross balance, end of period
    
    
    124.7
    
    
    
    124.7Less accumulated depreciation,
depletion and amortization
    
    
    80.0
    
    
    
    80.0Balance, end of period
    
    $
    44.7
    
    
    
    44.7




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##### Table of Contents



6. Contingencies
 Significant New Mexico Closure and Reclamation
Programs
 Background
      Chino Mines Company




---



##### Table of Contents



Phelps Dodge Tyrone, Inc.
      Cobre Mining Company




---



##### Table of Contents



Phelps Dodge Hidalgo, Inc.
  7. Earnings Per Share
    Second Quarter2005
    
    2004Basic Earnings Per Share ComputationNumerator:Net income
    
    $
    682.3
    
    
    
    226.6Preferred stock dividends
    
    
    (3.4
    )
    
    
    (3.4
    )Net income applicable
to common shares
    
    $
    678.9
    
    
    
    223.2Denominator:Weighted average common
shares outstanding
    
    
    96.2
    
    
    
    92.9Basic earnings per common share
    
    $
    7.06
    
    
    
    2.40Diluted Earnings Per Share ComputationNumerator:Net income
    
    $
    682.3
    
    
    
    226.6Denominator:Weighted average common
shares outstanding
    
    
    96.2
    
    
    
    92.9Weighted average employee
stock options
    
    
    0.3
    
    
    
    1.0Weighted average restricted
stock issued to employees
    
    
    0.4
    
    
    
    0.3Weighted average mandatory
convertible preferred shares
    
    
    4.2
    
    
    
    4.2Total weighted average common
shares outstanding
    
    
    101.1
    
    
    
    98.4Diluted earnings per
common share
    
    $
    6.75
    
    
    
    2.30
   Six Months EndedJune 30,2005
    
    2004Basic Earnings Per Share ComputationNumerator:Net income
    
    $
    1,069.0
    
    
    
    412.3Preferred stock dividends
    
    
    (6.8
    )
    
    
    (6.8
    )Net income applicable
to common shares
    
    $
    1,062.2
    
    
    
    405.5Denominator:Weighted average common
shares outstanding
    
    
    96.0
    
    
    
    92.3Basic earnings per common share
    
    $
    11.07
    
    
    
    4.39Diluted Earnings Per Share ComputationNumerator:Net income
    
    $
    1,069.0
    
    
    
    412.3Denominator:Weighted average common
shares outstanding
    
    
    96.0
    
    
    
    92.3Weighted average employee
stock options
    
    
    0.4
    
    
    
    1.4Weighted average restricted
stock issued to employees
    
    
    0.4
    
    
    
    0.3Weighted average mandatory
convertible preferred shares
    
    
    4.2
    
    
    
    4.2Weighted average common
shares outstanding
    
    
    101.0
    
    
    
    98.2Diluted earnings per
common share
    
    $
    10.59
    
    
    
    4.20




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##### Table of Contents



8. Provision for Taxes on Income
        9. Accounting for Derivative Instruments and Hedging Activities




---



##### Table of Contents



10. Pension and Postretirement Benefits
  
 Second Quarter2005
    
    2004Service cost
    
    $
    7.0
    
    
    
    5.9Interest cost
    
    
    18.6
    
    
    
    18.1Expected return on plan assets
    
    
    (21.5
    )
    
    
    (21.2
    )Amortization of prior service cost
    
    
    0.8
    
    
    
    0.9Amortization of actuarial loss
    
    
    3.5
    
    
    
    0.8Curtailment and special retirement benefits
    
    
    
    
    
    
    0.1Net periodic benefit cost
    
    $
    8.4
    
    
    
    4.6
 Six Months EndedJune 30,2005
    
    2004Service cost
    
    $
    14.0
    
    
    
    11.8Interest cost
    
    
    37.3
    
    
    
    36.0Expected return on plan assets
    
    
    (43.1
    )
    
    
    (42.1
    )Amortization of prior service cost
    
    
    1.6
    
    
    
    1.8Amortization of actuarial loss
    
    
    7.1
    
    
    
    1.6Curtailment and special retirement benefits
    
    
    
    
    
    
    0.6Net periodic benefit cost
    
    $
    16.9
    
    
    
    9.7
 
 Second Quarter2005
    
    2004Service cost
    
    $
    1.1
    
    
    
    1.3Interest cost
    
    
    4.8
    
    
    
    5.8Expected return on plan assets
    
    
    (0.1
    )
    
    
    Amortization of prior service cost
    
    
    0.1
    
    
    
    0.3Amortization of actuarial loss
    
    
    
    
    
    
    0.3Other
    
    
    
    
    
    
    (1.1
    )Net periodic benefit cost
    
    $
    5.9
    
    
    
    6.6
 Six Months EndedJune 30,2005
    
    2004Service cost
    
    $
    2.2
    
    
    
    2.7Interest cost
    
    
    9.6
    
    
    
    11.6Expected return on plan assets
    
    
    (0.1
    )
    
    
    (0.1
    )Amortization of prior service cost
    
    
    0.1
    
    
    
    0.6Amortization of actuarial loss
    
    
    
    
    
    
    0.2Other
    
    
    
    
    
    
    (1.1
    )Net periodic benefit cost
    
    $
    11.8
    
    
    
    13.9




---



##### Table of Contents



11. Debt and Other Financing
     12. Shareholders Equity
 Series A Mandatory Convertible Preferred Stock
  Stock Options Exercised




---



##### Table of Contents



REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
 RESULTS OF OPERATIONS
 Consolidated Financial Results
  Second Quarter2005
    
    
    2004Sales and other operating revenues
    
    $
    2,151.6
    
    
    
    1,650.9Operating income
    
    $
    173.7
    
    
    
    354.7Minority interests in consolidated
subsidiaries
    
    $
    (38.5
    )
    
    
    (42.0
    )Net income
    
    $
    682.3
    
    
    
    226.6Basic earnings per common share
    
    $
    7.06
    
    
    
    2.40Diluted earnings per common share
    
    $
    6.75
    
    
    
    2.30
    Six Months EndedJune 30,2005
    
    
    2004Sales and other operating revenues
    
    $
    4,218.1
    
    
    
    3,247.9Operating income
    
    $
    722.7
    
    
    
    669.5Minority interests in consolidated
subsidiaries
    
    $
    (65.5
    )
    
    
    (105.6
    )Net income
    
    $
    1,069.0
    
    
    
    412.3Basic earnings per common share
    
    $
    11.07
    
    
    
    4.39Diluted earnings per common share
    
    $
    10.59
    
    
    
    4.20
   Special Items and Provisions




---



##### Table of Contents



Second Quarter2005
    
    2004Net Income
    
    $
    682.3
    
    
    
    226.6Special items and provisions,
net of taxes
    
    
    225.8
    
    
    
    (16.0
    )Earnings excluding special items
and provisions (after taxes)
    
    $
    456.5
    
    
    
    242.6
  Six Months EndedJune 30,2005
    
    2004Net Income
    
    $
    1,069.0
    
    
    
    412.3Special items and provisions,
net of taxes
    
    
    225.9
    
    
    
    (26.4
    )Earnings excluding special items
and provisions (after taxes)
    
    $
    843.1
    
    
    
    438.7




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##### Table of Contents



2005 Second Quarter
    
    2004 Second Quarter$/Share
    
    
    
    
    
    
    
    
    
    $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    After-tax
    
    After-tax
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC (see Business Segment disclosure)
    
    $
    (415.0
    )
    
    
    (317.8
    )
    
    
    (3.15
    )
    
    
    (2.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )PDI (see Business Segment disclosure)
    
    
    (1.9
    )
    
    
    (1.4
    )
    
    
    (0.01
    )
    
    
    (2.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )Corporate and Other -Environmental provisions, net
    
    
    (20.7
    )
    
    
    (15.7
    )
    
    
    (0.15
    )
    
    
    0.5
    
    
    
    0.4
    
    
    
    Environmental insurance recoveries, net
    
    
    0.5
    
    
    
    0.4
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    15.9
    
    
    
    12.8
    
    
    
    0.13(20.3
    )
    
    
    (15.4
    )
    
    
    (0.15
    )
    
    
    16.5
    
    
    
    13.3
    
    
    
    0.13(437.2
    )
    
    
    (334.6
    )
    
    
    (3.31
    )
    
    
    11.5
    
    
    
    9.5
    
    
    
    0.09Early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15.2
    )
    
    
    (12.6
    )
    
    
    (0.13
    )Gain on sale of cost-basis investment
    
    
    438.4
    
    
    
    388.0
    
    
    
    3.84
    
    
    
    
    
    
    
    
    
    
    
    Change in interest gain from Cerro Verde stock issuance
    
    
    159.5
    
    
    
    172.9
    
    
    
    1.71
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous income and expense, net:Cost-basis investment write-down
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.4
    )
    
    
    (6.4
    )
    
    
    (0.06
    )Provision for taxes on income:Foreign dividend tax
    
    
    
    
    
    
    (0.5
    )
    
    
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    PD Brazil deferred tax asset valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )
    
    
    
    (0.5
    )
    
    
    (0.01
    )
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )Minority interests in consolidated subsidiaries:Candelaria early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    0.03$
    160.7
    
    
    
    225.8
    
    
    
    2.23
    
    
    
    (10.1
    )
    
    
    (16.0
    )
    
    
    (0.16
    )




---



##### Table of Contents



Six Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004$/Share
    
    
    
    
    
    
    
    
    
    $/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    After-tax
    
    After-tax
    
    Pre-tax
    
    After-tax
    
    After-taxSpecial items and provisions, net:PDMC (see Business Segment disclosure)
    
    $
    (420.9
    )
    
    
    (322.3
    )
    
    
    (3.19
    )
    
    
    (2.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )PDI (see Business Segment disclosure)
    
    
    (1.5
    )
    
    
    (0.6
    )
    
    
    
    
    
    
    (4.3
    )
    
    
    (3.1
    )
    
    
    (0.03
    )Corporate
and Other Environmental provisions, net
    
    
    (19.7
    )
    
    
    (15.0
    )
    
    
    (0.15
    )
    
    
    (4.1
    )
    
    
    (3.1
    )
    
    
    (0.03
    )Environmental insurance recoveries, net
    
    
    1.1
    
    
    
    0.9
    
    
    
    0.01
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    4.7
    
    
    
    4.4
    
    
    
    0.04
    
    
    
    15.5
    
    
    
    12.4
    
    
    
    0.13(13.9
    )
    
    
    (9.7
    )
    
    
    (0.10
    )
    
    
    11.5
    
    
    
    9.4
    
    
    
    0.10(436.3
    )
    
    
    (332.6
    )
    
    
    (3.29
    )
    
    
    4.7
    
    
    
    4.4
    
    
    
    0.05Interest expense:Texas franchise tax matter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.9
    )
    
    
    (0.7
    )
    
    
    (0.01
    )Early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37.6
    )
    
    
    (30.2
    )
    
    
    (0.31
    )Gain on sale of cost-basis investment
    
    
    438.4
    
    
    
    388.0
    
    
    
    3.84
    
    
    
    
    
    
    
    
    
    
    
    Change in interest gain from Cerro Verde stock issuance
    
    
    159.5
    
    
    
    172.9
    
    
    
    1.71
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous income and expense, net:Cost-basis investment write-downs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.0
    )
    
    
    (9.1
    )
    
    
    (0.09
    )Provision for taxes on income:Foreign dividend tax
    
    
    
    
    
    
    (2.4
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    
    
    
    
    Reversal of El Abra deferred tax asset valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30.8
    
    
    
    0.31PD Brazil deferred tax asset valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.0
    )
    
    
    (0.09
    )
    
    
    
    (2.4
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    21.8
    
    
    
    0.22Minority interests in consolidated subsidiaries:Reversal of El Abra deferred tax asset valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15.1
    )
    
    
    (0.15
    )Candelaria early debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.6
    )
    
    
    (0.13
    )$
    161.6
    
    
    
    225.9
    
    
    
    2.24
    
    
    
    (43.8
    )
    
    
    (26.4
    )
    
    
    (0.27
    )
 Business Divisions
   
 RESULTS
OF PHELPS DODGE MINING COMPANY




---



##### Table of Contents



Second Quarter2005
    
    2004Sales and other operating revenues
to unaffiliated customers
    
    $
    1,684.4
    
    
    
    1,254.5Operating income
    
    $
    204.7
    
    
    
    336.7Operating income before special
items and provisions
    
    $
    619.7
    
    
    
    339.2Minority interests in consolidated
subsidiaries
    
    $
    (37.5
    )
    
    
    (40.6
    )Copper production (thousand short tons):Total copper production
    
    
    321.7
    
    
    
    321.4Less undivided interest (A)
    
    
    15.5
    
    
    
    15.7Copper production on a
consolidated basis
    
    
    306.2
    
    
    
    305.7Less minority participants shares (B)
    
    
    42.5
    
    
    
    44.6Copper production on a pro rata basis
    
    
    263.7
    
    
    
    261.1Copper sales (thousand short tons):Total copper sales from own mines
    
    
    328.0
    
    
    
    321.8Less undivided interest (A)
    
    
    15.5
    
    
    
    15.7Copper sales from own mines on
a consolidated basis
    
    
    312.5
    
    
    
    306.1Less minority participants shares (B)
    
    
    44.0
    
    
    
    47.4Copper sales from own mines on
a pro rata basis
    
    
    268.5
    
    
    
    258.7Purchased copper (thousand short tons)
    
    
    78.6
    
    
    
    116.7Total copper sales on a consolidated basis
    
    
    391.1
    
    
    
    422.8LME average spot copper price
per pound  cathodes
    
    $
    1.537
    
    
    
    1.265COMEX average spot copper price
per pound  cathodes
    
    $
    1.532
    
    
    
    1.234Molybdenum production (million pounds)
    
    
    16.7
    
    
    
    14.8Molybdenum sales (million pounds):Net Phelps Dodge share
from own mines
    
    
    15.5
    
    
    
    16.0Purchased molybdenum
    
    
    3.2
    
    
    
    3.1Total molybdenum sales
    
    
    18.7
    
    
    
    19.1Metals
Week:Molybdenum Dealer Oxide mean
price per pound
    
    $
    35.27
    
    
    
    14.57




---



##### Table of Contents



Six Months EndedJune 30,2005
    
    2004Sales and other operating revenues
to unaffiliated customers
    
    $
    3,302.5
    
    
    
    2,469.0Operating income
    
    $
    755.1
    
    
    
    666.9Operating income before special
items and provisions
    
    $
    1,176.0
    
    
    
    669.4Minority interests in consolidated
subsidiaries
    
    $
    (63.1
    )
    
    
    (103.7
    )Copper production (thousand short tons):Total copper production
    
    
    646.7
    
    
    
    639.0Less undivided interest (A)
    
    
    29.3
    
    
    
    31.1Copper production on a
consolidated basis
    
    
    617.4
    
    
    
    607.9Less minority participants shares (B)
    
    
    86.0
    
    
    
    90.9Copper production on a pro rata basis
    
    
    531.4
    
    
    
    517.0Copper sales (thousand short tons):Total copper sales from own mines
    
    
    653.0
    
    
    
    645.1Less undivided interest (A)
    
    
    29.3
    
    
    
    31.1Copper sales from own mines on
a consolidated basis
    
    
    623.7
    
    
    
    614.0Less minority participants shares (B)
    
    
    87.8
    
    
    
    93.7Copper sales from own mines on
a pro rata basis
    
    
    535.9
    
    
    
    520.3Purchased copper (thousand short tons)
    
    
    171.2
    
    
    
    231.8Total copper sales on a consolidated basis
    
    
    794.9
    
    
    
    845.8LME average spot copper price
per pound  cathodes
    
    $
    1.510
    
    
    
    1.252COMEX average spot copper price
per pound  cathodes
    
    $
    1.500
    
    
    
    1.233Molybdenum production (million pounds)
    
    
    31.4
    
    
    
    28.3Molybdenum sales (million pounds):Net Phelps Dodge share from own mines
    
    
    30.4
    
    
    
    31.2Purchased molybdenum
    
    
    6.9
    
    
    
    6.5Total molybdenum sales
    
    
    37.3
    
    
    
    37.7Metals Week:Molybdenum Dealer Oxide mean
price per pound
    
    $
    33.29
    
    
    
    11.42
 
 (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 20 percent partnership interest in
Candelaria in Chile held by SMMA Candelaria, Inc., a jointly owned indirect
subsidiary of Sumitomo Metal Mining Co., Ltd., and Sumitomo Corporation, (ii) a
49 percent partnership interest in the El Abra copper mining operation in Chile
held by Corporación Nacional del Cobre de Chile (CODELCO), and (iii) a 17.5
percent partnership interest through May 31, 2005, and a 46.4 percent
partnership interest in the Cerro Verde copper mining operation in Peru held
primarily by Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, and
Compañia de Minas Buenaventura S.A.A.  Second Quarter2005
    
    2004Minority participants share of copper production:Candelaria
    
    
    8.6
    
    
    
    10.3Cerro Verde
    
    
    7.1
    
    
    
    4.3El Abra
    
    
    26.8
    
    
    
    30.042.5
    
    
    
    44.6
 Six Months EndedJune 30,2005
    
    2004Minority participants share of copper production:Candelaria
    
    
    18.9
    
    
    
    21.4Cerro Verde
    
    
    11.3
    
    
    
    8.7El Abra
    
    
    55.8
    
    
    
    60.886.0
    
    
    
    90.9
 Total PDMC Division  Sales
   Total PDMC  Operating Income




---



##### Table of Contents



i.e.




---



##### Table of Contents



2005 Second QuarterU.S.
    
    South
    
    PrimaryMining
    
    American
    
    Molyb-Operations
    
    Mines
    
    denumAsset impairment charges
    
    $
    (419.1
    )
    
    
    
    
    
    
    Environmental provisions, net
    
    
    (10.4
    )
    
    
    
    
    
    
    Environmental insurance
recoveries, net
    
    
    (0.5
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    15.0
    
    
    
    
    
    
    
    $
    (415.0
    )
    
    
    
    
    
    
    
 (Unaudited; $ in millions) Six Months EndedJune
30, 2005U.S.
    
    South
    
    PrimaryMining
    
    American
    
    Molyb-Operations
    
    Mines
    
    denumAsset impairment charges
    
    $
    (419.1
    )
    
    
    
    
    
    
    Environmental provisions, net
    
    
    (15.7
    )
    
    
    
    
    
    
    Environmental insurance
recoveries, net
    
    
    (1.1
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    15.0
    
    
    
    
    
    
    
    $
    (420.9
    )
    
    
    
    
    
    
    
  Second Quarter andSix Months EndedJune 30, 2004U.S.
    
    South
    
    PrimaryMining
    
    American
    
    Molyb-Operations
    
    Mines
    
    denumEnvironmental
provisions, net
    
    $
    (2.6
    )
    
    
    
    
    
    
    0.3Environmental insurance
recoveries, net
    
    
    (0.2
    )
    
    
    
    
    
    
    $
    (2.8
    )
    
    
    
    
    
    
    0.3
 Note:
    
    Our non-GAAP measure of special items may not be comparable to similarly titled measures
reported by other companies.




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
  U.S. MinesMiami/
    
    
    Chino/Morenci
    
    
    Bagdad
    
    
    Sierrita
    
    
    Bisbee
    
    
    Cobre
    
    
    Tyrone
    
    
    SubtotalSecond Quarter 2005Copper production (thousand short tons):Total production
    
    
    103.0
    
    
    
    27.1
    
    
    
    19.9
    
    
    
    3.4
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    189.0Less undivided interest
    
    
    15.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.5Copper production on a consolidated basis
    
    
    87.5
    
    
    
    27.1
    
    
    
    19.9
    
    
    
    3.4
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    173.5Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    87.5
    
    
    
    27.1
    
    
    
    19.9
    
    
    
    3.4
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    173.5Copper sales (thousand short tons):Total copper sales from own mines
    
    
    103.0
    
    
    
    27.2
    
    
    
    20.1
    
    
    
    3.5
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    189.4Less undivided interest
    
    
    15.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.5Copper sales from own mines on a consolidated basis
    
    
    87.5
    
    
    
    27.2
    
    
    
    20.1
    
    
    
    3.5
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    173.9Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata basis
    
    
    87.5
    
    
    
    27.2
    
    
    
    20.1
    
    
    
    3.5
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    173.9Total purchased copper (thousand short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    87.5
    
    
    
    27.2
    
    
    
    20.1
    
    
    
    3.5
    
    
    
    24.7
    
    
    
    10.9
    
    
    
    173.9($ in millions)Operating income (loss)
    
    $
    114.2
    
    
    
    116.5
    
    
    
    135.6
    
    
    
    2.1
    
    
    
    (51.0
    )
    
    
    (208.3
    )
    
    
    109.1Special items and provisions, net
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63.9
    )
    
    
    (211.5
    )
    
    
    (275.7
    )Operating income (loss) excluding special items and provisions
    
    $
    114.5
    
    
    
    116.5
    
    
    
    135.6
    
    
    
    2.1
    
    
    
    12.9
    
    
    
    3.2
    
    
    
    384.8Second Quarter 2004Copper production (thousand short tons):Total production
    
    
    105.0
    
    
    
    26.8
    
    
    
    18.6
    
    
    
    2.4
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    181.8Less undivided interest
    
    
    15.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.7Copper production on a consolidated basis
    
    
    89.3
    
    
    
    26.8
    
    
    
    18.6
    
    
    
    2.4
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    166.1Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    89.3
    
    
    
    26.8
    
    
    
    18.6
    
    
    
    2.4
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    166.1Copper sales (thousand short tons):Total copper sales from own mines
    
    
    104.7
    
    
    
    24.4
    
    
    
    16.4
    
    
    
    1.0
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    175.5Less undivided interest
    
    
    15.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.7Copper sales from own mines on a consolidated basis
    
    
    89.0
    
    
    
    24.4
    
    
    
    16.4
    
    
    
    1.0
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    159.8Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata basis
    
    
    89.0
    
    
    
    24.4
    
    
    
    16.4
    
    
    
    1.0
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    159.8Total purchased copper (thousand short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    89.0
    
    
    
    24.4
    
    
    
    16.4
    
    
    
    1.0
    
    
    
    18.5
    
    
    
    10.5
    
    
    
    159.8($ in millions)Operating income (loss)
    
    $
    86.5
    
    
    
    21.3
    
    
    
    70.1
    
    
    
    (3.1
    )
    
    
    10.0
    
    
    
    6.6
    
    
    
    191.4Special items and provisions, net
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (1.8
    )
    
    
    (2.6
    )Operating income (loss) excluding special items and provisions
    
    $
    86.9
    
    
    
    21.3
    
    
    
    70.1
    
    
    
    (3.1
    )
    
    
    10.4
    
    
    
    8.4
    
    
    
    194.0




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 South American MinesCandelaria/Ojos delSalado
    
    
    Cerro Verde
    
    
    El Abra
    
    
    SubtotalSecond Quarter 2005Copper production (thousand short tons):Total production
    
    
    50.2
    
    
    
    26.1
    
    
    
    54.8
    
    
    
    131.1Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    50.2
    
    
    
    26.1
    
    
    
    54.8
    
    
    
    131.1Less minority participants shares
    
    
    8.6
    
    
    
    7.1
    
    
    
    26.8
    
    
    
    42.5Copper production on a pro rata basis
    
    
    41.6
    
    
    
    19.0
    
    
    
    28.0
    
    
    
    88.6Copper sales (thousand short tons):Total copper sales from own mines
    
    
    55.9
    
    
    
    25.8
    
    
    
    55.3
    
    
    
    137.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    55.9
    
    
    
    25.8
    
    
    
    55.3
    
    
    
    137.0Less minority participants shares
    
    
    9.7
    
    
    
    7.2
    
    
    
    27.1
    
    
    
    44.0Copper sales from own mines on a pro rata basis
    
    
    46.2
    
    
    
    18.6
    
    
    
    28.2
    
    
    
    93.0Total purchased copper (thousand short tons)
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    
    3.2Total copper sales on a consolidated basis
    
    
    59.1
    
    
    
    25.8
    
    
    
    55.3
    
    
    
    140.2($ in millions)Operating income (loss)
    
    $
    64.6
    
    
    
    39.6
    
    
    
    63.8
    
    
    
    168.0Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    
    $
    64.6
    
    
    
    39.6
    
    
    
    63.8
    
    
    
    168.0Second Quarter 2004Copper production (thousand short tons):Total production
    
    
    53.0
    
    
    
    24.5
    
    
    
    61.3
    
    
    
    138.8Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    53.0
    
    
    
    24.5
    
    
    
    61.3
    
    
    
    138.8Less minority participants shares
    
    
    10.3
    
    
    
    4.3
    
    
    
    30.0
    
    
    
    44.6Copper production on a pro rata basis
    
    
    42.7
    
    
    
    20.2
    
    
    
    31.3
    
    
    
    94.2Copper sales (thousand short tons):Total copper sales from own mines
    
    
    53.7
    
    
    
    25.5
    
    
    
    66.3
    
    
    
    145.5Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    53.7
    
    
    
    25.5
    
    
    
    66.3
    
    
    
    145.5Less minority participants shares
    
    
    10.5
    
    
    
    4.4
    
    
    
    32.5
    
    
    
    47.4Copper sales from own mines on a pro rata basis
    
    
    43.2
    
    
    
    21.1
    
    
    
    33.8
    
    
    
    98.1Total purchased copper (thousand short tons)
    
    
    9.2
    
    
    
    
    
    
    
    
    
    
    
    9.2Total copper sales on a consolidated basis
    
    
    62.9
    
    
    
    25.5
    
    
    
    66.3
    
    
    
    154.7($ in millions)Operating income (loss)
    
    $
    49.3
    
    
    
    25.1
    
    
    
    64.6
    
    
    
    139.0Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    
    $
    49.3
    
    
    
    25.1
    
    
    
    64.6
    
    
    
    139.0




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMCMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    Total PDMCSecond Quarter 2005Copper production (thousand short tons):Total production
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    321.0
    
    
    
    0.7
    
    
    
    321.7Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.5
    
    
    
    
    
    
    
    15.5Copper production on a consolidated basis
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    305.5
    
    
    
    0.7
    
    
    
    306.2Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42.5
    
    
    
    
    
    
    
    42.5Copper production on a pro rata basis
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    263.0
    
    
    
    0.7
    
    
    
    263.7Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    327.3
    
    
    
    0.7
    
    
    
    328.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.5
    
    
    
    
    
    
    
    15.5Copper sales from own mines on a consolidated basis
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    311.8
    
    
    
    0.7
    
    
    
    312.5Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.0
    
    
    
    
    
    
    
    44.0Copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    267.8
    
    
    
    0.7
    
    
    
    268.5Total purchased copper (thousand short tons)
    
    
    
    
    
    
    75.2
    
    
    
    0.2
    
    
    
    78.6
    
    
    
    
    
    
    
    78.6Total copper sales on a consolidated basis
    
    
    
    
    
    
    76.1
    
    
    
    0.2
    
    
    
    390.4
    
    
    
    0.7
    
    
    
    391.1Molybdenum production (thousand pounds):Primary  Henderson
    
    
    9,040
    
    
    
    
    
    
    
    
    
    
    
    9,040
    
    
    
    
    
    
    
    9,040By-product
    
    
    7,624
    
    
    
    
    
    
    
    
    
    
    
    7,624
    
    
    
    
    
    
    
    7,624Total production
    
    
    16,664
    
    
    
    
    
    
    
    
    
    
    
    16,664
    
    
    
    
    
    
    
    16,664Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    15,497
    
    
    
    
    
    
    
    
    
    
    
    15,497
    
    
    
    
    
    
    
    15,497Purchased molybdenum
    
    
    3,169
    
    
    
    
    
    
    
    
    
    
    
    3,169
    
    
    
    
    
    
    
    3,169Total molybdenum sales
    
    
    18,666
    
    
    
    
    
    
    
    
    
    
    
    18,666
    
    
    
    
    
    
    
    18,666($ in millions)Operating income (loss)
    
    $
    98.9
    
    
    
    (141.9
    )
    
    
    3.3
    
    
    
    237.4
    
    
    
    (32.7
    )
    
    
    204.7Special items and provisions, net
    
    
    
    
    
    
    (148.7
    )
    
    
    
    
    
    
    (424.4
    )
    
    
    9.4
    
    
    
    (415.0
    )Operating income (loss) excluding special items and provisions
    
    $
    98.9
    
    
    
    6.8
    
    
    
    3.3
    
    
    
    661.8
    
    
    
    (42.1
    )
    
    
    619.7




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    TotalMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    PDMCSecond Quarter 2004Copper production (thousand short tons):Total production
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    321.4
    
    
    
    
    
    
    
    321.4Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.7
    
    
    
    
    
    
    
    15.7Copper production on a consolidated basis
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    305.7
    
    
    
    
    
    
    
    305.7Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.6
    
    
    
    
    
    
    
    44.6Copper production on a pro rata basis
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    261.1
    
    
    
    
    
    
    
    261.1Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    321.8
    
    
    
    
    
    
    
    321.8Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.7
    
    
    
    
    
    
    
    15.7Copper sales from own mines on a consolidated basis
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    306.1
    
    
    
    
    
    
    
    306.1Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.4
    
    
    
    
    
    
    
    47.4Copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    258.7
    
    
    
    
    
    
    
    258.7Total purchased copper (thousand short tons)
    
    
    
    
    
    
    106.9
    
    
    
    0.6
    
    
    
    116.7
    
    
    
    
    
    
    
    116.7Total copper sales on a consolidated basis
    
    
    
    
    
    
    107.7
    
    
    
    0.6
    
    
    
    422.8
    
    
    
    
    
    
    
    422.8Molybdenum production (thousand pounds):Primary  Henderson
    
    
    7,057
    
    
    
    
    
    
    
    
    
    
    
    7,057
    
    
    
    
    
    
    
    7,057By-product
    
    
    7,779
    
    
    
    
    
    
    
    
    
    
    
    7,779
    
    
    
    
    
    
    
    7,779Total production
    
    
    14,836
    
    
    
    
    
    
    
    
    
    
    
    14,836
    
    
    
    
    
    
    
    14,836Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    15,991
    
    
    
    
    
    
    
    
    
    
    
    15,991
    
    
    
    
    
    
    
    15,991Purchased molybdenum
    
    
    3,108
    
    
    
    
    
    
    
    
    
    
    
    3,108
    
    
    
    
    
    
    
    3,108Total molybdenum sales
    
    
    19,099
    
    
    
    
    
    
    
    
    
    
    
    19,099
    
    
    
    
    
    
    
    19,099($ in millions)Operating income (loss)
    
    $
    29.8
    
    
    
    7.4
    
    
    
    1.5
    
    
    
    369.1
    
    
    
    (32.4
    )
    
    
    336.7Special items and provisions, net
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (0.2
    )
    
    
    (2.5
    )Operating income (loss) excluding special items and provisions
    
    $
    29.5
    
    
    
    7.4
    
    
    
    1.5
    
    
    
    371.4
    
    
    
    (32.2
    )
    
    
    339.2




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
  U.S. MinesMiami/
    
    
    Chino/Morenci
    
    
    Bagdad
    
    
    Sierrita
    
    
    Bisbee
    
    
    Cobre
    
    
    Tyrone
    
    
    SubtotalSix Months Ended June 30, 2005Copper production (thousand short tons):Total production
    
    
    195.1
    
    
    
    55.0
    
    
    
    41.4
    
    
    
    6.0
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    372.2Less undivided interest
    
    
    29.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29.3Copper production on a consolidated basis
    
    
    165.8
    
    
    
    55.0
    
    
    
    41.4
    
    
    
    6.0
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    342.9Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    165.8
    
    
    
    55.0
    
    
    
    41.4
    
    
    
    6.0
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    342.9Copper sales (thousand short tons):Total copper sales from own mines
    
    
    195.1
    
    
    
    56.3
    
    
    
    42.7
    
    
    
    6.8
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    375.6Less undivided interest
    
    
    29.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29.3Copper sales from own mines on a consolidated basis
    
    
    165.8
    
    
    
    56.3
    
    
    
    42.7
    
    
    
    6.8
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    346.3Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata basis
    
    
    165.8
    
    
    
    56.3
    
    
    
    42.7
    
    
    
    6.8
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    346.3Total purchased copper (thousand short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    165.8
    
    
    
    56.3
    
    
    
    42.7
    
    
    
    6.8
    
    
    
    53.4
    
    
    
    21.3
    
    
    
    346.3($ in millions)Operating income (loss)
    $
    
    200.1
    
    
    
    200.9
    
    
    
    270.1
    
    
    
    3.2
    
    
    
    (33.9
    )
    
    
    (211.2
    )
    
    
    429.2Special items and provisions, net
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64.5
    )
    
    
    (215.7
    )
    
    
    (280.8
    )Operating income (loss) excluding special items and provisions
    $
    
    200.7
    
    
    
    200.9
    
    
    
    270.1
    
    
    
    3.2
    
    
    
    30.6
    
    
    
    4.5
    
    
    
    710.0Six Months Ended June 30, 2004Copper production (thousand short tons):Total production
    
    
    207.3
    
    
    
    51.5
    
    
    
    36.6
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    355.5Less undivided interest
    
    
    31.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31.1Copper production on a consolidated basis
    
    
    176.2
    
    
    
    51.5
    
    
    
    36.6
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    324.4Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    176.2
    
    
    
    51.5
    
    
    
    36.6
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    324.4Copper sales (thousand short tons):Total copper sales from own mines
    
    
    207.0
    
    
    
    51.4
    
    
    
    36.5
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    355.0Less undivided interest
    
    
    31.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31.1Copper sales from own mines on a consolidated basis
    
    
    175.9
    
    
    
    51.4
    
    
    
    36.5
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    323.9Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata basis
    
    
    175.9
    
    
    
    51.4
    
    
    
    36.5
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    323.9Total purchased copper (thousand short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    175.9
    
    
    
    51.4
    
    
    
    36.5
    
    
    
    4.7
    
    
    
    33.7
    
    
    
    21.7
    
    
    
    323.9($ in millions)Operating income (loss)
    $
    
    164.4
    
    
    
    46.2
    
    
    
    100.1
    
    
    
    (3.8
    )
    
    
    25.0
    
    
    
    9.0
    
    
    
    340.9Special items and provisions, net
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (1.8
    )
    
    
    (2.6
    )Operating income (loss) excluding special items and provisions
    $
    
    164.8
    
    
    
    46.2
    
    
    
    100.1
    
    
    
    (3.8
    )
    
    
    25.4
    
    
    
    10.8
    
    
    
    343.5




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 South American MinesCandelaria/Ojos delSalado
    
    
    Cerro Verde
    
    
    El Abra
    
    
    SubtotalSix Months Ended June 30, 2005Copper production (thousand short tons):Total production
    
    
    107.5
    
    
    
    50.0
    
    
    
    113.9
    
    
    
    271.4Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    107.5
    
    
    
    50.0
    
    
    
    113.9
    
    
    
    271.4Less minority participants shares
    
    
    18.9
    
    
    
    11.3
    
    
    
    55.8
    
    
    
    86.0Copper production on a pro rata basis
    
    
    88.6
    
    
    
    38.7
    
    
    
    58.1
    
    
    
    185.4Copper sales (thousand short tons):Total copper sales from own mines
    
    
    108.7
    
    
    
    48.1
    
    
    
    117.5
    
    
    
    274.3Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    108.7
    
    
    
    48.1
    
    
    
    117.5
    
    
    
    274.3Less minority participants shares
    
    
    19.1
    
    
    
    11.1
    
    
    
    57.6
    
    
    
    87.8Copper sales from own mines on a pro rata basis
    
    
    89.6
    
    
    
    37.0
    
    
    
    59.9
    
    
    
    186.5Total purchased copper (thousand short tons)
    
    
    6.4
    
    
    
    
    
    
    
    
    
    
    
    6.4Total copper sales on a consolidated basis
    
    
    115.1
    
    
    
    48.1
    
    
    
    117.5
    
    
    
    280.7($ in millions)Operating income (loss)
    $
    

    140.0
    
    
    
    75.6
    
    
    
    108.3
    
    
    
    323.9Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions

    $
    
    140.0
    
    
    
    75.6
    
    
    
    108.3
    
    
    
    323.9Six Months Ended June 30, 2004Copper production (thousand short tons):Total production
    
    
    108.5
    
    
    
    49.7
    
    
    
    124.2
    
    
    
    282.4Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    108.5
    
    
    
    49.7
    
    
    
    124.2
    
    
    
    282.4Less minority participants shares
    
    
    21.4
    
    
    
    8.7
    
    
    
    60.8
    
    
    
    90.9Copper production on a pro rata basis
    
    
    87.1
    
    
    
    41.0
    
    
    
    63.4
    
    
    
    191.5Copper sales (thousand short tons):Total copper sales from own mines
    
    
    108.5
    
    
    
    51.1
    
    
    
    129.4
    
    
    
    289.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    108.5
    
    
    
    51.1
    
    
    
    129.4
    
    
    
    289.0Less minority participants shares
    
    
    21.4
    
    
    
    8.9
    
    
    
    63.4
    
    
    
    93.7Copper sales from own mines on a pro rata basis
    
    
    87.1
    
    
    
    42.2
    
    
    
    66.0
    
    
    
    195.3Total purchased copper (thousand short tons)
    
    
    20.1
    
    
    
    
    
    
    
    
    
    
    
    20.1Total copper sales on a consolidated basis
    
    
    128.6
    
    
    
    51.1
    
    
    
    129.4
    
    
    
    309.1($ in millions)Operating income (loss)
    $
    

    118.1
    
    
    
    62.9
    
    
    
    139.2
    
    
    
    320.2Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    $
    

    118.1
    
    
    
    62.9
    
    
    
    139.2
    
    
    
    320.2




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMCMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    Total PDMCSix Months Ended June 30, 2005Copper production (thousand short tons):Total production
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    645.4
    
    
    
    1.3
    
    
    
    646.7Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29.3
    
    
    
    
    
    
    
    29.3Copper production on a consolidated basis
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    616.1
    
    
    
    1.3
    
    
    
    617.4Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86.0
    
    
    
    
    
    
    
    86.0Copper production on a pro rata basis
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    530.1
    
    
    
    1.3
    
    
    
    531.4Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    651.7
    
    
    
    1.3
    
    
    
    653.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29.3
    
    
    
    
    
    
    
    29.3Copper sales from own mines on a consolidated basis
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    622.4
    
    
    
    1.3
    
    
    
    623.7Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.8
    
    
    
    
    
    
    
    87.8Copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    534.6
    
    
    
    1.3
    
    
    
    535.9Total purchased copper (thousand short tons)
    
    
    
    
    
    
    157.6
    
    
    
    7.2
    
    
    
    171.2
    
    
    
    
    
    
    
    171.2Total copper sales on a consolidated basis
    
    
    
    
    
    
    159.4
    
    
    
    7.2
    
    
    
    793.6
    
    
    
    1.3
    
    
    
    794.9Molybdenum production (thousand pounds):Primary  Henderson
    
    
    16,893
    
    
    
    
    
    
    
    
    
    
    
    16,893
    
    
    
    
    
    
    
    16,893By-product
    
    
    14,486
    
    
    
    
    
    
    
    
    
    
    
    14,486
    
    
    
    
    
    
    
    14,486Total production
    
    
    31,379
    
    
    
    
    
    
    
    
    
    
    
    31,379
    
    
    
    
    
    
    
    31,379Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    30,430
    
    
    
    
    
    
    
    
    
    
    
    30,430
    
    
    
    
    
    
    
    30,430Purchased molybdenum
    
    
    6,831
    
    
    
    
    
    
    
    
    
    
    
    6,831
    
    
    
    
    
    
    
    6,831Total molybdenum sales
    
    
    37,261
    
    
    
    
    
    
    
    
    
    
    
    37,261
    
    
    
    
    
    
    
    37,261($ in millions)Operating income (loss)
    $
    
    185.5
    
    
    
    (137.7
    )
    
    
    (0.5
    )
    
    
    800.4
    
    
    
    (45.3
    )
    
    
    755.1Special items and provisions, net
    
    
    
    
    
    
    (148.7
    )
    
    
    
    
    
    
    (429.5
    )
    
    
    8.6
    
    
    
    (420.9
    )Operating income (loss) excluding special items and provisions
    $
    
    185.5
    
    
    
    11.0
    
    
    
    (0.5
    )
    
    
    1,229.9
    
    
    
    (53.9
    )
    
    
    1,176.0




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    TotalMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    PDMCSix Months Ended June 30, 2004Copper production (thousand short tons):Total production
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    639.0
    
    
    
    
    
    
    
    639.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31.1
    
    
    
    
    
    
    
    31.1Copper production on a consolidated basis
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    607.9
    
    
    
    
    
    
    
    607.9Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90.9
    
    
    
    
    
    
    
    90.9Copper production on a pro rata basis
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    517.0
    
    
    
    
    
    
    
    517.0Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    645.1
    
    
    
    
    
    
    
    645.1Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31.1
    
    
    
    
    
    
    
    31.1Copper sales from own mines on a consolidated basis
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    614.0
    
    
    
    
    
    
    
    614.0Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93.7
    
    
    
    
    
    
    
    93.7Copper sales from own mines on a pro rata basis
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    520.3
    
    
    
    
    
    
    
    520.3Total purchased copper (thousand short tons)
    
    
    
    
    
    
    210.6
    
    
    
    1.1
    
    
    
    231.8
    
    
    
    
    
    
    
    231.8Total copper sales on a consolidated basis
    
    
    
    
    
    
    211.7
    
    
    
    1.1
    
    
    
    845.8
    
    
    
    
    
    
    
    845.8Molybdenum production (thousand pounds):Primary  Henderson
    
    
    13,513
    
    
    
    
    
    
    
    
    
    
    
    13,513
    
    
    
    
    
    
    
    13,513By-product
    
    
    14,798
    
    
    
    
    
    
    
    
    
    
    
    14,798
    
    
    
    
    
    
    
    14,798Total production
    
    
    28,311
    
    
    
    
    
    
    
    
    
    
    
    28,311
    
    
    
    
    
    
    
    28,311Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    31,148
    
    
    
    
    
    
    
    
    
    
    
    31,148
    
    
    
    
    
    
    
    31,148Purchased molybdenum
    
    
    6,532
    
    
    
    
    
    
    
    
    
    
    
    6,532
    
    
    
    
    
    
    
    6,532Total molybdenum sales
    
    
    37,680
    
    
    
    
    
    
    
    
    
    
    
    37,680
    
    
    
    
    
    
    
    37,680($ in millions)Operating income (loss)
    
    $
    45.4
    
    
    
    11.5
    
    
    
    1.2
    
    
    
    719.2
    
    
    
    (52.3
    )
    
    
    666.9Special items and provisions, net
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (0.2
    )
    
    
    (2.5
    )Operating income (loss) excluding special items and provisions
    
    $
    45.1
    
    
    
    11.5
    
    
    
    1.2
    
    
    
    721.5
    
    
    
    (52.1
    )
    
    
    669.4




---



##### Table of Contents



Sales of Copper (U.S. and South America) and Molybdenum
   Second Quarter2005
    
    2004U.S. Mining Operations*Unaffiliated customers
    
    $
    952.8
    
    
    
    809.0Intersegment elimination
    
    
    (200.5
    )
    
    
    (146.0
    )
    
    
    
    752.3
    
    
    
    663.0
    
    
    
    South American Mines**Unaffiliated customers
    
    
    205.5
    
    
    
    220.4Intersegment
    
    
    200.5
    
    
    
    146.0
    
    
    
    406.0
    
    
    
    366.4
    
    
    
    Primary MolybdenumUnaffiliated customers
    
    
    526.1
    
    
    
    225.1Intersegment
    
    
    
    
    
    
    
    
    
    
    526.1
    
    
    
    225.1
    
    
    
    Total PDMCUnaffiliated customers
    
    $
    1,684.4
    
    
    
    1,254.5
  Six Months EndedJune 30,2005
    
    2004U.S. Mining Operations*Unaffiliated customers
    
    $
    1,883.5
    
    
    
    1,671.4Intersegment elimination
    
    
    (364.7
    )
    
    
    (344.3
    )
    
    
    
    1,518.8
    
    
    
    1,327.1
    
    
    
    South American Mines**Unaffiliated customers
    
    
    416.1
    
    
    
    422.5Intersegment
    
    
    364.7
    
    
    
    344.3
    
    
    
    780.8
    
    
    
    766.8
    
    
    
    Primary MolybdenumUnaffiliated customers
    
    
    1,002.9
    
    
    
    375.1Intersegment
    
    
    
    
    
    
    
    
    
    
    1,002.9
    
    
    
    375.1
    
    
    
    Total PDMCUnaffiliated customers
    
    $
    3,302.5
    
    
    
    2,469.0
 
 *
    
    U.S. Mining Operations comprised the following reportable segments: Morenci, Bagdad,
Sierrita, Miami/Bisbee, 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. U.S. Mines, Manufacturing, Sales Segments and Other  Sales
   South American Mines Segment  Sales




---



##### Table of Contents



Primary Molybdenum Segment  Sales
   Operating Income (Loss) for Copper (U.S. and South America) and Molybdenum
     Second Quarter2005
    
    2004Segment operating income (loss):U.S. Mining Operations*
    
    $
    (62.2
    )
    
    
    167.9South American Mines**
    
    
    168.0
    
    
    
    139.0Primary Molybdenum
    
    
    98.9
    
    
    
    29.8$
    204.7
    
    
    
    336.7Special, pre-tax items and provisions:U.S. Mining Operations*
    
    $
    (415.0
    )
    
    
    (2.8
    )South American Mines**
    
    
    
    
    
    
    Primary Molybdenum
    
    
    
    
    
    
    0.3$
    (415.0
    )
    
    
    (2.5
    )Segment operating incomeexcluding special items and provisions:U.S. Mining Operations*
    
    $
    352.8
    
    
    
    170.7South American Mines**
    
    
    168.0
    
    
    
    139.0Primary Molybdenum
    
    
    98.9
    
    
    
    29.5$
    619.7
    
    
    
    339.2
  Six Months EndedJune 30,2005
    
    2004Segment operating income:U.S. Mining Operations*
    
    $
    245.7
    
    
    
    301.3South American Mines**
    
    
    323.9
    
    
    
    320.2Primary Molybdenum
    
    
    185.5
    
    
    
    45.4$
    755.1
    
    
    
    666.9Special, pre-tax items and provisions:U.S. Mining Operations*
    
    $
    (420.9
    )
    
    
    (2.8
    )South American Mines**
    
    
    
    
    
    
    Primary Molybdenum
    
    
    
    
    
    
    0.3$
    (420.9
    )
    
    
    (2.5
    )Segment operating incomeexcluding special items and provisions:U.S. Mining Operations*
    
    $
    666.6
    
    
    
    304.1South American Mines**
    
    
    323.9
    
    
    
    320.2Primary Molybdenum
    
    
    185.5
    
    
    
    45.1$
    1,176.0
    
    
    
    669.4
 
 *
    
    U.S. Mining Operations comprised the following reportable segments: Morenci, Bagdad,
Sierrita, Miami/Bisbee, 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.  U.S. Mining Operations  Operating Income (Loss)
   Morenci Segment  Operating Income




---



##### Table of Contents



Bagdad Segment  Operating Income
    Sierrita
Segment  Operating Income
    Miami/Bisbee Segment  Operating Income (Loss)




---



##### Table of Contents



Chino/Cobre Segment  Operating Income (Loss)
    Tyrone Segment  Operating Income (Loss)
    Manufacturing Segment  Operating Income (Loss)
    South American Mines  Operating Income




---



##### Table of Contents



Candelaria/Ojos del Salado Segment  Operating Income
    Cerro Verde Segment  Operating Income
     El Abra Segment  Operating Income
    Primary Molybdenum  Operating Income




---



##### Table of Contents



i.e. Platts Metals Week Ryans Notes Metal Bulletin i.e.
    2004 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 operations.
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 during the
2004 second quarter.
    
    Our Miami smelter in Arizona resumed operating at full capacity in
the 2004 second quarter.




---



##### Table of Contents



42   PDMC
 Other Matters
         Significant New Mexico Environmental and
Reclamation Programs




---



##### Table of Contents



43     
 RESULTS OF PHELPS DODGE INDUSTRIES
   (Unaudited; $ in millions)Second Quarter2005
    
    2004Sales and other operating revenues
to unaffiliated customers:Specialty Chemicals
    
    $
    185.6
    
    
    
    165.2Wire and Cable
    
    
    281.6
    
    
    
    231.2$
    467.2
    
    
    
    396.4Operating income:Specialty Chemicals
    
    $
    8.9
    
    
    
    15.9Wire and Cable
    
    
    5.3
    
    
    
    6.3$
    14.2
    
    
    
    22.2
 (Unaudited; $ in millions)Six Months EndedJune 30,2005
    
    2004Sales and other operating revenues
to unaffiliated customers:Specialty Chemicals
    
    $
    365.6
    
    
    
    329.1Wire and Cable
    
    
    550.0
    
    
    
    449.8$
    915.6
    
    
    
    778.9Operating income:Specialty Chemicals
    
    $
    22.1
    
    
    
    27.1Wire and Cable
    
    
    17.3
    
    
    
    8.6$
    39.4
    
    
    
    35.7
 PDI
 Sales




---



##### Table of Contents



44 PDI
 Operating Income
     (Unaudited; $ in millions)Second Quarter2005
    
    2004Operating income
    
    $
    14.2
    
    
    
    22.2Special, pre-tax items and provisions
    
    
    (1.9
    )
    
    
    (2.5
    )Segment operating income excluding
special items and provisions
    
    $
    16.1
    
    
    
    24.7
 (Unaudited; $ in millions)Six Months EndedJune 30,2005
    
    2004Operating income
    
    $
    39.4
    
    
    
    35.7Special, pre-tax items and provisions
    
    
    (1.5
    )
    
    
    (4.3
    )Segment operating income excluding
special items and provisions
    
    $
    40.9
    
    
    
    40.0
    (Unaudited; $ in millions)Second Quarter2005
    
    2004Wire and Cable restructuring
programs/closures
    
    $
    (1.5
    )
    
    
    (1.9
    )Asset impairment charges
    
    
    (0.4
    )
    
    
    (0.6
    )$
    (1.9
    )
    
    
    (2.5
    )
 (Unaudited; $ in millions)Six Months EndedJune 30,2005
    
    2004Wire and Cable restructuring
programs/closures
    
    $
    (1.1
    )
    
    
    (3.6
    )Environmental provisions, net
    
    
    
    
    
    
    (0.1
    )Asset impairment charges
    
    
    (0.4
    )
    
    
    (0.6
    )$
    (1.5
    )
    
    
    (4.3
    )
 Specialty
Chemicals  Operating Income
   Wire
and Cable  Operating Income




---



##### Table of Contents



45 
 OTHER MATTERS RELATING TO THE CONSOLIDATED STATEMENT OF INCOME
 Cost of Products Sold
   Selling and General Administrative Expense
   Exploration and Research Expense
   Interest Expense
   Early Debt Extinguishment Costs
    Gain on Sale of Cost-Basis Investment




---



##### Table of Contents



46 Change in Interest Gain from Cerro Verde Stock Issuance
   Miscellaneous Income and Expense, Net
   Provision for Taxes on Income
       
 CHANGES IN FINANCIAL CONDITION
 Working Capital
  
    
    a $283.7 million increase in accounts payable and accrued expenses
mostly due to the reclassification of pension accruals associated
with current year funding of our U.S. qualified defined benefit
pension plans (approximately $155 million), higher mark-to-market
adjustments on copper collars (approximately $78 million), net
increases in asset retirement obligation costs (approximately $46
million) primarily resulting from reclassification of the current
portion and higher cathode and concentrate purchases
(approximately $28 million); partially offset by net reductions in
employee incentive and variable compensation plans (approximately
$31 million) primarily due to current year payments;
    
    a $61.0 million increase in accrued income taxes primarily due to
higher foreign, federal and state income tax provisions
(approximately $260 million); partially offset by payments, net of
refunds (approximately $163 million) and a tax benefit associated
with stock options (approximately $28 million); and
    
    a $36.3 million increase in dividends payable associated with
common stock dividends; partially offset by
    
    a $221.3 million increase in accounts receivable primarily due to
higher copper prices and sales volumes (approximately $95
million), repayment of securitization program (approximately $85




---



##### Table of Contents



47 million), higher molybdenum prices (approximately $54 million) and a receivable
due for the settlement of legal matters (approximately $10 million); partially
offset by decreases associated with the impact of forward prices on
provisionally priced copper sales (approximately $28 million);
    
    a $38.7 million increase in inventories primarily due
to higher purchases at Wire and Cable in anticipation
of increased sales volumes (approximately $31
million);
    
    a $27.8 million increase in prepaid expenses and
other current assets primarily due to the timing of
major activities associated with the Cerro Verde
sulfide project (approximately $19 million) and
timing of payments for insurance (approximately $9
million);
    
    a $13.5 million increase in supplies due to a
build-up primarily associated with anticipated market
shortages for certain supplies and parts and
production increases (approximately $8 million), and
higher prices for acid (approximately $3 million);
and
    
    an $11.1 million increase in current deferred tax
assets primarily due to reclassification from
non-current deferred income taxes.
 Cash and Cash Equivalents
  Capital Expenditures and Investments
  Debt
     Dividends




---



##### Table of Contents



48 Contractual Obligations
  (Unaudited; $ in millions)Less Than
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsShort-term debt
    
    $
    30.3
    
    
    
    30.3
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    1,013.9
    
    
    
    43.6
    
    
    
    99.1
    
    
    
    24.6
    
    
    
    846.6Scheduled interest payment obligations*
    
    
    1,151.2
    
    
    
    75.9
    
    
    
    151.5
    
    
    
    139.7
    
    
    
    784.1Asset retirement obligations**
    
    
    176.1
    
    
    
    53.1
    
    
    
    75.1
    
    
    
    28.8
    
    
    
    19.1Take-or-pay contracts
    
    
    627.6
    
    
    
    297.9
    
    
    
    200.1
    
    
    
    51.1
    
    
    
    78.5
 
 *
    
    Scheduled interest payment obligations were calculated using stated coupon rates for fixed
debt and interest rates applicable at June 30, 2005, for variable rate debt.**
    
    Asset retirement obligations only included our estimated contractual cash payments associated
with accelerating reclamation activities at certain sites for which our costs are estimable
and the timing of payments is reasonably determinable as of June 30, 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.
Additionally, we have 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.  Guarantees
  Other Items that May Affect Liquidity




---



##### Table of Contents



49          Diesel Fuel and Natural Gas Price Protection Programs




---



##### Table of Contents



50 .
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
  
 Item 4. Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  
 Part II. Other Information
 
 Item 1. Legal Proceedings




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##### Table of Contents



51 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   (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 ProgramsApril 1-30, 2005
    
    
    13,067
    
    
    $
    87.96
    
    
    
    
    
    
    
    May 1-31, 2005
    
    
    1,031
    
    
    
    86.50
    
    
    
    
    
    
    
    June 1-30, 2005
    
    
    287
    
    
    
    90.29
    
    
    
    
    
    
    
    Total
    
    
    14,385
    
    
    $
    87.91
    
    
    
    
    
    
    
    
 
 *
    
    The shares shown have been repurchased under the Companys applicable restricted stock plans
(Plans) and its non-qualified supplemental savings plan (SSP). Through the Plans, certain
employees may elect to satisfy their tax obligations on restricted stock awards by having the
Company withhold a portion of their shares of restricted stock. Additionally, the Company
repurchases shares in the SSP as a result of changes in investment elections by plan
participants.




---



##### Table of Contents



52 
 Item 4. Submission of Matters to a Vote of Security Holders
  For
    
    WithheldElection of Directors:Archie W. Dunham
    
    
    79,060,094
    
    
    
    5,034,046William A. Franke
    
    
    78,328,887
    
    
    
    5,765,253Robert D. Johnson
    
    
    79,066,069
    
    
    
    5,028,071J. Steven Whisler
    
    
    81,906,030
    
    
    
    2,188,110
 For
    
    Against
    
    AbstainShareholder Proposals:Approval of the Phelps Dodge
Corporation 2006 Executive
Performance Incentive Plan
    
    
    58,270,166
    
    
    
    15,503,232
    
    
    
    565,927Authorization to increase the
authorized number of
common shares
    
    
    80,691,164
    
    
    
    2,836,250
    
    
    
    566,726Ratification of the appointment
of independent registered
public accountants
    
    
    82,434,838
    
    
    
    1,149,838
    
    
    
    509,936
   
 Item 6. Exhibits
  
 Signatures
  PHELPS DODGE CORPORATION
 Date: July 28, 2005
    
    By:
    
    /s/ Denise R. DannerDenise R. DannerVice President and Controller(Principal Accounting Officer)
 
 Index to Exhibits
 3.1
    
    Amendment to 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)).3.2
    
    Complete composite copy of the Certificate of Incorporation of the Company as amended to
date (filed herewith).10.1
    
    Underwriting Agreement, dated June 9, 2005, between Southern Peru Copper Corporation,
Cerro Trading Company, Inc., SPC Inventors, L.L.C., Phelps Dodge Overseas Capital
Corporation, Climax Molybdenum B.V., Citigroup Global Markets Inc. and UBS Securities L.L.C.
(incorporated by reference to Exhibit 10.1 of the Companys Form 8-K filed June 15, 2005
(SEC File No. 1-82)).10.2
    
    Shareholders Agreement, dated as of June 1, 2005, among Phelps Dodge Corporation, Cyprus
Climax Metals Company, a Delaware corporation, Sumitomo Corporation, a Japanese corporation,
Summit Global Management B.V., a Dutch corporation, SMM Cerro Verde Netherlands B.V., a
Dutch corporation, Compañia 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)).10.3
    
    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)).11
    
    Computation of per share earnings.12
    
    Computation of ratios of total debt to total capitalization.15
    
    Letter from PricewaterhouseCoopers LLP with respect to unaudited interim financial
information.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 906 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.