##### Table of Contents



UNITED
STATES 
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED SEPTEMBER
30, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD
FROM

TO
 COMMISSION FILE NUMBER: 1-82
 PHELPS DODGE CORPORATION
  New York
(State of Incorporation)
    
    13-1808503
(I.R.S. Employer Identification No.)
 
 
 
 þ o
 þ o
 o þ




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PHELPS DODGE CORPORATION
 Quarterly Report on Form 10-Q
 For the Quarter Ended September 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
    
    
    20Report of Independent Registered Public Accounting Firm
    
    
    20Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsResults of Operations
    
    
    21Results of Phelps Dodge Mining Company
    
    
    24Results of Phelps Dodge Industries
    
    
    44Other Matters Relating to the Consolidated Statement of Income
    
    
    46Changes in Financial Condition
    
    
    48Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    52Item 4. Controls and Procedures
    
    
    52Part II. Other InformationItem 1. Legal Proceedings
    
    
    52Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    53Item 5. Other Information
    
    
    54Item 6. Exhibits
    
    
    54Signatures
    
    
    54Index to Exhibits
    
    
    54Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 10.8Exhibit 10.9Exhibit 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
 Nine Months EndedThird Quarter
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Sales and other operating revenues
    
    $
    2,359.8
    
    
    
    1,846.5
    
    
    
    6,577.9
    
    
    
    5,094.4Operating costs and expensesCost of products sold (exclusive of items shown separately
below)
    
    
    1,550.6
    
    
    
    1,246.5
    
    
    
    4,220.0
    
    
    
    3,478.5Depreciation, depletion and amortization
    
    
    120.9
    
    
    
    125.9
    
    
    
    377.3
    
    
    
    375.2Selling and general administrative expense
    
    
    48.3
    
    
    
    42.0
    
    
    
    136.1
    
    
    
    114.7Exploration and research expense
    
    
    27.1
    
    
    
    15.8
    
    
    
    72.6
    
    
    
    44.9Special items and provisions, net (see Note 3)
    
    
    45.0
    
    
    
    11.1
    
    
    
    481.3
    
    
    
    6.41,791.9
    
    
    
    1,441.3
    
    
    
    5,287.3
    
    
    
    4,019.7Operating income
    
    
    567.9
    
    
    
    405.2
    
    
    
    1,290.6
    
    
    
    1,074.7Interest expense
    
    
    (19.0
    )
    
    
    (29.2
    )
    
    
    (66.1
    )
    
    
    (100.5
    )Capitalized interest
    
    
    7.0
    
    
    
    0.3
    
    
    
    9.9
    
    
    
    0.6Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    
    
    
    
    (54.0
    )
    
    
    (37.6
    )Gain on sale of cost-basis investment (see Note 3)
    
    
    
    
    
    
    
    
    
    
    438.4
    
    
    
    Change in interest gain from Cerro Verde stock issuance (see Note 3)
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    Miscellaneous income and expense, net
    
    
    24.2
    
    
    
    21.6
    
    
    
    86.7
    
    
    
    25.1Income
before taxes, minority interests in consolidated subsidiaries and equity in net earnings (losses) of affiliated companies
    
    
    526.1
    
    
    
    397.9
    
    
    
    1,865.0
    
    
    
    962.3Provision for taxes on income (see Note 8)
    
    
    (108.6
    )
    
    
    (62.2
    )
    
    
    (314.4
    )
    
    
    (109.1
    )Minority interests in consolidated subsidiaries
    
    
    (51.9
    )
    
    
    (43.4
    )
    
    
    (117.4
    )
    
    
    (149.0
    )Equity in net earnings (losses) of affiliated companies
    
    
    0.5
    
    
    
    0.6
    
    
    
    1.9
    
    
    
    1.0Net income
    
    
    366.1
    
    
    
    292.9
    
    
    
    1,435.1
    
    
    
    705.2Preferred stock dividends
    
    
    
    
    
    
    (3.3
    )
    
    
    (6.8
    )
    
    
    (10.1
    )Net income applicable to common shares
    
    $
    366.1
    
    
    
    289.6
    
    
    
    1,428.3
    
    
    
    695.1Weighted average number of common shares outstanding  basic
    
    
    98.6
    
    
    
    93.8
    
    
    
    96.8
    
    
    
    92.8Basic earnings per common share
    
    $
    3.71
    
    
    
    3.09
    
    
    
    14.75
    
    
    
    7.49Weighted average number of common shares outstanding  diluted
    
    
    101.4
    
    
    
    99.4
    
    
    
    101.1
    
    
    
    98.6Diluted earnings per common share
    
    $
    3.61
    
    
    
    2.95
    
    
    
    14.19
    
    
    
    7.15




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##### Table of Contents



2 PHELPS
DODGE CORPORATION
 
 CONSOLIDATED BALANCE SHEET
 September 30,
    
    
    December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,416.2
    
    
    
    1,200.1Restricted cash
    
    
    89.1
    
    
    
    Accounts receivable, less allowance for doubtful
accounts (2005  $15.7; 2004  $17.4)
    
    
    1,085.6
    
    
    
    761.5Mill and leach stockpiles
    
    
    25.6
    
    
    
    26.2Inventories
    
    
    461.9
    
    
    
    392.1Supplies
    
    
    212.2
    
    
    
    192.7Prepaid expenses and other current assets
    
    
    109.5
    
    
    
    46.0Deferred income taxes
    
    
    79.2
    
    
    
    43.1Current assets
    
    
    4,479.3
    
    
    
    2,661.7Investments and long-term receivables
    
    
    129.3
    
    
    
    120.7Property, plant and equipment, net
    
    
    5,019.7
    
    
    
    5,318.9Long-term mill and leach stockpiles
    
    
    140.9
    
    
    
    131.0Deferred income taxes
    
    
    45.3
    
    
    
    61.8Goodwill
    
    
    115.0
    
    
    
    103.5Intangible assets, net
    
    
    7.6
    
    
    
    5.3Other assets and deferred charges
    
    
    304.9
    
    
    
    191.2$
    10,242.0
    
    
    
    8,594.1LiabilitiesCurrent liabilities:Short-term debt
    
    $
    31.1
    
    
    
    78.8Current portion of long-term debt
    
    
    43.0
    
    
    
    45.9Accounts payable and accrued expenses
    
    
    1,292.1
    
    
    
    972.1Dividends payable
    
    
    
    
    
    
    3.4Accrued income taxes
    
    
    29.3
    
    
    
    67.8Current liabilities
    
    
    1,395.5
    
    
    
    1,168.0Long-term debt
    
    
    656.6
    
    
    
    972.2Deferred income taxes
    
    
    469.8
    
    
    
    448.4Other liabilities and deferred credits
    
    
    998.8
    
    
    
    1,107.33,520.7
    
    
    
    3,695.9Commitments and contingencies (see Notes 5, 6 and 8)Minority interests in consolidated subsidiaries
    
    
    897.0
    
    
    
    555.1Shareholders equityCommon shares, par value $6.25; 300.0 shares authorized;
101.5 outstanding (2004  95.9) after deducting 8.5 shares
(2004  9.9) held in treasury, at cost
    
    
    634.4
    
    
    
    599.5Cumulative preferred shares, par value $1.00; 6.0 shares authorized;
2.0 outstanding in 2004
    
    
    
    
    
    
    2.0Capital in excess of par value
    
    
    1,985.9
    
    
    
    1,906.4Retained earnings
    
    
    3,583.4
    
    
    
    2,239.9Accumulated other comprehensive loss
    
    
    (343.2
    )
    
    
    (384.2
    )Other
    
    
    (36.2
    )
    
    
    (20.5
    )5,824.3
    
    
    
    4,343.1$
    10,242.0
    
    
    
    8,594.1




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##### Table of Contents



3 PHELPS
DODGE CORPORATION
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 Nine Months EndedSeptember 30,2005
    
    
    2004Operating activitiesNet income
    
    $
    1,435.1
    
    
    
    705.2Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion and amortization
    
    
    377.3
    
    
    
    375.2Deferred income tax provision (benefit)
    
    
    (3.9
    )
    
    
    6.5Equity in net earnings (losses) of affiliated companies,
net of dividends received
    
    
    0.3
    
    
    
    2.2Gain on sale of cost-basis investment
    
    
    (438.4
    )
    
    
    Change in interest gain from Cerro Verde stock issuance
    
    
    (159.5
    )
    
    
    Special items and provisions
    
    
    481.3
    
    
    
    7.8Early debt extinguishment costs
    
    
    54.0
    
    
    
    37.6Minority interests in consolidated subsidiaries
    
    
    117.4
    
    
    
    149.0Changes in current assets and liabilities:Accounts receivable
    
    
    (240.1
    )
    
    
    (257.9
    )Repayment of securitized accounts receivable
    
    
    (85.0
    )
    
    
    Mill and leach stockpiles
    
    
    0.5
    
    
    
    4.8Inventories
    
    
    (69.4
    )
    
    
    (10.4
    )Supplies
    
    
    (26.1
    )
    
    
    (11.8
    )Prepaid expenses and other current assets
    
    
    (54.6
    )
    
    
    (20.6
    )Interest payable
    
    
    4.6
    
    
    
    16.4Other accounts payable
    
    
    71.3
    
    
    
    134.3Accrued income taxes
    
    
    (18.4
    )
    
    
    5.0Other accrued expenses
    
    
    164.1
    
    
    
    (8.0
    )Pension plan contributions
    
    
    (250.0
    )
    
    
    (85.4
    )Other operating, net
    
    
    (61.4
    )
    
    
    54.0Net cash provided by operating activities
    
    
    1,299.1
    
    
    
    1,103.9Investing activitiesCapital outlays
    
    
    (392.5
    )
    
    
    (160.0
    )Capitalized interest
    
    
    (9.9
    )
    
    
    (0.6
    )Investments in subsidiaries and other, net of
cash received and acquired
    
    
    (11.2
    )
    
    
    (0.2
    )Proceeds from asset dispositions
    
    
    6.2
    
    
    
    18.9Proceeds from sale of cost-basis investment
    
    
    451.6
    
    
    
    Restricted cash
    
    
    (89.1
    )
    
    
    Other investing, net
    
    
    (2.3
    )
    
    
    (0.6
    )Net cash used in investing activities
    
    
    (47.2
    )
    
    
    (142.5
    )Financing activitiesProceeds from issuance of debt
    
    
    
    
    
    
    150.0Payment of debt
    
    
    (362.5
    )
    
    
    (718.1
    )Common dividends
    
    
    (84.8
    )
    
    
    (23.6
    )Preferred dividends
    
    
    (10.1
    )
    
    
    (10.1
    )Issuance of shares, net
    
    
    52.4
    
    
    
    254.0Debt issue costs
    
    
    (5.8
    )
    
    
    (7.3
    )Proceeds from issuance of Cerro Verde stock
    
    
    441.8
    
    
    
    Other financing, net
    
    
    (84.2
    )
    
    
    (57.4
    )Net cash used in financing activities
    
    
    (53.2
    )
    
    
    (412.5
    )Effect of exchange rate impact on cash and cash equivalents
    
    
    17.4
    
    
    
    8.2Increase in cash and cash equivalents
    
    
    1,216.1
    
    
    
    557.1Increase 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
    
    $
    2,416.2
    
    
    
    1,269.2




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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
    
    
    1.2
    
    
    
    7.6
    
    
    
    
    
    
    
    
    
    
    
    83.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91.3Restricted shares issued/cancelled, net
    
    
    0.2
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    23.2
    
    
    
    
    
    
    
    
    
    
    
    (15.7
    )
    
    
    9.0Common shares purchased
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    (3.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.6
    )Preferred shares conversions
    
    
    4.2
    
    
    
    26.0
    
    
    
    (2.0
    )
    
    
    (2.0
    )
    
    
    (24.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.8
    )
    
    
    
    
    
    
    
    
    
    
    (6.8
    )Dividends on common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84.8
    )
    
    
    
    
    
    
    
    
    
    
    (84.8
    )Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,435.1
    
    
    
    
    
    
    
    
    
    
    
    1,435.1Other comprehensive income, net of tax:Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    11.0Net gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    1.8Other investment adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.5Unrealized gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.9
    
    
    
    
    
    
    
    15.9Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.8
    
    
    
    
    
    
    
    11.8Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41.0
    
    
    
    
    
    
    
    41.0Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,476.1Balance at September 30, 2005
    
    
    101.5
    
    
    $
    634.4
    
    
    $
    
    
    
    $
    
    
    
    $
    1,985.9
    
    
    $
    3,583.4
    
    
    $
    (343.2
    )
    
    $
    (36.2
    )
    
    $
    5,824.3
 
 *
    
    As of September 30, 2005, this balance comprised $(217.8) million of cumulative minimum pension liability adjustments, $(160.8) million of cumulative translation adjustments and $(0.2) million of cumulative other investment adjustments; partially offset by $32.7 million of cumulative unrealized gains on securities and $2.9 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
    
    
    MolybdenumThird Quarter 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    6.9
    
    
    
    
    
    
    
    8.2
    
    
    
    
    
    
    
    133.6
    
    
    
    14.2
    
    
    
    78.1
    
    
    
    468.0Intersegment
    
    
    283.0
    
    
    
    180.1
    
    
    
    223.4
    
    
    
    10.4
    
    
    
    79.1
    
    
    
    31.8
    
    
    
    59.5
    
    
    
    80.1
    
    
    
    80.8
    
    
    
    Depreciation, depletion and amortization
    
    
    15.7
    
    
    
    7.6
    
    
    
    3.5
    
    
    
    1.1
    
    
    
    5.1
    
    
    
    0.2
    
    
    
    9.6
    
    
    
    7.0
    
    
    
    28.6
    
    
    
    9.7Operating income (loss) before special
items and provisions
    
    
    128.2
    
    
    
    112.4
    
    
    
    153.9
    
    
    
    1.5
    
    
    
    18.6
    
    
    
    3.0
    
    
    
    73.1
    
    
    
    55.8
    
    
    
    52.6
    
    
    
    71.9Special items and provisions, net
    
    
    0.4
    
    
    
    
    
    
    
    (8.6
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    128.6
    
    
    
    112.4
    
    
    
    145.3
    
    
    
    1.4
    
    
    
    18.6
    
    
    
    3.0
    
    
    
    73.1
    
    
    
    55.8
    
    
    
    52.6
    
    
    
    71.9Interest income
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    2.6
    
    
    
    2.6
    
    
    
    0.8
    
    
    
    0.2Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    4.9
    
    
    
    (0.5
    )
    
    
    Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13.0
    )
    
    
    (15.7
    )
    
    
    (18.0
    )
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.5
    )
    
    
    (23.8
    )
    
    
    (16.6
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at September 30
    
    
    918.3
    
    
    
    446.0
    
    
    
    328.5
    
    
    
    97.4
    
    
    
    429.8
    
    
    
    73.2
    
    
    
    1,041.4
    
    
    
    913.8
    
    
    
    1,003.2
    
    
    
    934.9Expenditures for segment assets
    
    
    16.1
    
    
    
    10.6
    
    
    
    5.0
    
    
    
    0.1
    
    
    
    2.9
    
    
    
    2.7
    
    
    
    4.6
    
    
    
    106.7
    
    
    
    6.4
    
    
    
    18.1Third Quarter 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    5.7
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    130.4
    
    
    
    31.8
    
    
    
    88.6
    
    
    
    267.1Intersegment
    
    
    238.5
    
    
    
    123.6
    
    
    
    146.4
    
    
    
    9.7
    
    
    
    75.5
    
    
    
    29.2
    
    
    
    41.8
    
    
    
    35.2
    
    
    
    58.0
    
    
    
    Depreciation, depletion and amortization
    
    
    19.5
    
    
    
    6.7
    
    
    
    3.5
    
    
    
    1.4
    
    
    
    4.6
    
    
    
    3.0
    
    
    
    12.3
    
    
    
    8.1
    
    
    
    29.4
    
    
    
    7.7Operating income (loss) before special
items and provisions
    
    
    100.5
    
    
    
    57.6
    
    
    
    82.0
    
    
    
    (0.7
    )
    
    
    16.9
    
    
    
    8.7
    
    
    
    77.2
    
    
    
    32.5
    
    
    
    63.3
    
    
    
    17.3Special items and provisions, net
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    (1.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    100.4
    
    
    
    57.6
    
    
    
    82.0
    
    
    
    (0.8
    )
    
    
    16.7
    
    
    
    7.2
    
    
    
    77.2
    
    
    
    32.5
    
    
    
    63.3
    
    
    
    17.3Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    0.3
    
    
    
    0.1Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    (4.4
    )
    
    
    Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11.8
    )
    
    
    (11.8
    )
    
    
    (6.6
    )
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.4
    )
    
    
    (3.9
    )
    
    
    (25.6
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at September 30
    
    
    944.0
    
    
    
    435.2
    
    
    
    307.3
    
    
    
    104.8
    
    
    
    431.1
    
    
    
    176.4
    
    
    
    807.6
    
    
    
    524.0
    
    
    
    1,143.4
    
    
    
    826.3Expenditures for segment assets
    
    
    7.5
    
    
    
    6.0
    
    
    
    8.8
    
    
    
    0.8
    
    
    
    2.4
    
    
    
    4.5
    
    
    
    3.0
    
    
    
    2.2
    
    
    
    3.1
    
    
    
    3.8
 PDMC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate,Manufac-
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    Elimi-
    
    
    PDMC
    
    
    Specialty
    
    
    Wire &
    
    
    PDI
    
    
    Other &turing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    nations
    
    
    Subtotal
    
    
    Chemicals
    
    
    Cable
    
    
    Subtotal
    
    
    Eliminations
    
    
    TotalsThird Quarter 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    894.2
    
    
    
    249.2
    
    
    
    1,852.4
    
    
    
    7.3
    
    
    
    
    
    
    
    1,859.7
    
    
    
    180.8
    
    
    
    319.3
    
    
    
    500.1
    
    
    
    
    
    
    
    2,359.8Intersegment
    
    
    30.6
    
    
    
    77.3
    
    
    
    1,136.1
    
    
    
    20.3
    
    
    
    (1,077.3
    )
    
    
    79.1
    
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    (79.4
    )
    
    
    Depreciation, depletion and amortization
    
    
    11.2
    
    
    
    
    
    
    
    99.3
    
    
    
    1.5
    
    
    
    
    
    
    
    100.8
    
    
    
    11.4
    
    
    
    7.0
    
    
    
    18.4
    
    
    
    1.7
    
    
    
    120.9Operating income (loss) before special
items and provisions
    
    
    0.2
    
    
    
    2.3
    
    
    
    673.5
    
    
    
    (46.6
    )
    
    
    
    
    
    
    626.9
    
    
    
    7.6
    
    
    
    11.2
    
    
    
    18.8
    
    
    
    (32.8
    )
    
    
    612.9Special items and provisions, net
    
    
    0.1
    
    
    
    
    
    
    
    (8.2
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (8.5
    )
    
    
    
    
    
    
    (1.8
    )
    
    
    (1.8
    )
    
    
    (34.7
    )
    
    
    (45.0
    )Operating income (loss)
    
    
    0.3
    
    
    
    2.3
    
    
    
    665.3
    
    
    
    (46.9
    )
    
    
    
    
    
    
    618.4
    
    
    
    7.6
    
    
    
    9.4
    
    
    
    17.0
    
    
    
    (67.5
    )
    
    
    567.9Interest income
    
    
    
    
    
    
    0.1
    
    
    
    7.0
    
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    7.0
    
    
    
    4.4
    
    
    
    0.5
    
    
    
    4.9
    
    
    
    11.7
    
    
    
    23.6Interest expense, net
    
    
    (0.8
    )
    
    
    (0.2
    )
    
    
    3.5
    
    
    
    0.2
    
    
    
    0.7
    
    
    
    4.4
    
    
    
    (3.2
    )
    
    
    (1.9
    )
    
    
    (5.1
    )
    
    
    (11.3
    )
    
    
    (12.0
    )Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    (46.7
    )
    
    
    
    
    
    
    
    
    
    
    (46.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61.9
    )
    
    
    (108.6
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (49.9
    )
    
    
    0.1
    
    
    
    
    
    
    
    (49.8
    )
    
    
    (0.3
    )
    
    
    (1.8
    )
    
    
    (2.1
    )
    
    
    
    
    
    
    (51.9
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.5
    
    
    
    0.5Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    0.2
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    6.4
    
    
    
    6.4
    
    
    
    23.8
    
    
    
    31.6Assets at September 30
    
    
    330.6
    
    
    
    36.7
    
    
    
    6,553.8
    
    
    
    1,366.1
    
    
    
    (1,456.9
    )
    
    
    6,463.0
    
    
    
    828.5
    
    
    
    686.9
    
    
    
    1,515.4
    
    
    
    2,263.6
    
    
    
    10,242.0Expenditures for segment assets
    
    
    5.0
    
    
    
    
    
    
    
    178.2
    
    
    
    24.4
    
    
    
    (0.5
    )
    
    
    202.1
    
    
    
    12.3
    
    
    
    4.7
    
    
    
    17.0
    
    
    
    5.0
    
    
    
    224.1Third Quarter 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    657.5
    
    
    
    233.0
    
    
    
    1,414.2
    
    
    
    6.1
    
    
    
    
    
    
    
    1,420.3
    
    
    
    171.1
    
    
    
    255.1
    
    
    
    426.2
    
    
    
    
    
    
    
    1,846.5Intersegment
    
    
    50.2
    
    
    
    52.5
    
    
    
    860.6
    
    
    
    18.5
    
    
    
    (824.6
    )
    
    
    54.5
    
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    (54.8
    )
    
    
    Depreciation, depletion and amortization
    
    
    6.0
    
    
    
    
    
    
    
    102.2
    
    
    
    1.1
    
    
    
    
    
    
    
    103.3
    
    
    
    12.1
    
    
    
    8.9
    
    
    
    21.0
    
    
    
    1.6
    
    
    
    125.9Operating income (loss) before special
items and provisions
    
    
    8.6
    
    
    
    1.6
    
    
    
    465.5
    
    
    
    (34.2
    )
    
    
    
    
    
    
    431.3
    
    
    
    5.1
    
    
    
    10.7
    
    
    
    15.8
    
    
    
    (30.8
    )
    
    
    416.3Special items and provisions, net
    
    
    (3.1
    )
    
    
    
    
    
    
    (5.0
    )
    
    
    (2.9
    )
    
    
    
    
    
    
    (7.9
    )
    
    
    
    
    
    
    (3.3
    )
    
    
    (3.3
    )
    
    
    0.1
    
    
    
    (11.1
    )Operating income (loss)
    
    
    5.5
    
    
    
    1.6
    
    
    
    460.5
    
    
    
    (37.1
    )
    
    
    
    
    
    
    423.4
    
    
    
    5.1
    
    
    
    7.4
    
    
    
    12.5
    
    
    
    (30.7
    )
    
    
    405.2Interest income
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    1.1
    
    
    
    (1.0
    )
    
    
    1.3
    
    
    
    2.5
    
    
    
    0.2
    
    
    
    2.7
    
    
    
    1.5
    
    
    
    5.5Interest expense, net
    
    
    (1.0
    )
    
    
    
    
    
    
    (5.6
    )
    
    
    
    
    
    
    1.0
    
    
    
    (4.6
    )
    
    
    (3.8
    )
    
    
    (1.5
    )
    
    
    (5.3
    )
    
    
    (19.0
    )
    
    
    (28.9
    )Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    (30.2
    )
    
    
    
    
    
    
    
    
    
    
    (30.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32.0
    )
    
    
    (62.2
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (41.9
    )
    
    
    
    
    
    
    
    
    
    
    (41.9
    )
    
    
    
    
    
    
    (1.5
    )
    
    
    (1.5
    )
    
    
    
    
    
    
    (43.4
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    0.6Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    5.5
    
    
    
    5.5
    
    
    
    24.1
    
    
    
    31.1Assets at September 30
    
    
    473.5
    
    
    
    12.4
    
    
    
    6,186.0
    
    
    
    1,288.5
    
    
    
    (1,381.1
    )
    
    
    6,093.4
    
    
    
    789.8
    
    
    
    593.8
    
    
    
    1,383.6
    
    
    
    1,064.9
    
    
    
    8,541.9Expenditures for segment assets
    
    
    2.0
    
    
    
    0.1
    
    
    
    44.2
    
    
    
    5.1
    
    
    
    (0.3
    )
    
    
    49.0
    
    
    
    8.9
    
    
    
    5.2
    
    
    
    14.1
    
    
    
    0.5
    
    
    
    63.6
 
 *
    
    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



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
    
    
    MolybdenumNine Months Ended September 30, 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    12.2
    
    
    
    
    
    
    
    14.0
    
    
    
    
    
    
    
    356.0
    
    
    
    47.5
    
    
    
    238.5
    
    
    
    1,470.9Intersegment
    
    
    773.3
    
    
    
    526.8
    
    
    
    635.3
    
    
    
    30.5
    
    
    
    243.6
    
    
    
    94.6
    
    
    
    155.1
    
    
    
    196.2
    
    
    
    233.8
    
    
    
    Depreciation, depletion and amortization
    
    
    46.9
    
    
    
    23.3
    
    
    
    11.2
    
    
    
    3.3
    
    
    
    15.5
    
    
    
    7.2
    
    
    
    28.8
    
    
    
    20.2
    
    
    
    90.1
    
    
    
    31.6Operating income (loss) before special
items and provisions
    
    
    328.9
    
    
    
    313.3
    
    
    
    424.0
    
    
    
    4.7
    
    
    
    49.2
    
    
    
    7.5
    
    
    
    213.1
    
    
    
    131.4
    
    
    
    160.9
    
    
    
    257.4Special items and provisions, net
    
    
    (0.2
    )
    
    
    
    
    
    
    (8.6
    )
    
    
    (0.1
    )
    
    
    (64.5
    )
    
    
    (215.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    328.7
    
    
    
    313.3
    
    
    
    415.4
    
    
    
    4.6
    
    
    
    (15.3
    )
    
    
    (208.2
    )
    
    
    213.1
    
    
    
    131.4
    
    
    
    160.9
    
    
    
    257.4Interest income
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.6
    
    
    
    
    
    
    
    4.8
    
    
    
    4.9
    
    
    
    1.2
    
    
    
    0.4Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    6.6
    
    
    
    (5.0
    )
    
    
    Gain on sale of cost-basis investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.2Change in interest gain from Cerro Verde stock issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.5
    
    
    
    
    
    
    
    Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42.1
    )
    
    
    (11.5
    )
    
    
    (56.4
    )
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25.9
    )
    
    
    (38.8
    )
    
    
    (48.3
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at September 30
    
    
    918.3
    
    
    
    446.0
    
    
    
    328.5
    
    
    
    97.4
    
    
    
    429.8
    
    
    
    73.2
    
    
    
    1,041.4
    
    
    
    913.8
    
    
    
    1,003.2
    
    
    
    934.9Expenditures for segment assets
    
    
    23.0
    
    
    
    21.9
    
    
    
    11.6
    
    
    
    0.1
    
    
    
    11.9
    
    
    
    4.5
    
    
    
    12.5
    
    
    
    178.1
    
    
    
    15.8
    
    
    
    25.1Nine Months Ended September 30, 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    
    
    
    
    
    
    
    
    5.7
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    312.0
    
    
    
    76.4
    
    
    
    284.9
    
    
    
    642.2Intersegment
    
    
    669.0
    
    
    
    276.3
    
    
    
    366.0
    
    
    
    21.1
    
    
    
    158.1
    
    
    
    82.2
    
    
    
    158.6
    
    
    
    120.3
    
    
    
    198.3
    
    
    
    Depreciation, depletion and amortization
    
    
    56.8
    
    
    
    18.0
    
    
    
    9.4
    
    
    
    3.8
    
    
    
    9.9
    
    
    
    9.0
    
    
    
    37.7
    
    
    
    24.4
    
    
    
    91.9
    
    
    
    22.9Operating income (loss) before special
items and provisions
    
    
    265.3
    
    
    
    103.8
    
    
    
    182.1
    
    
    
    (4.5
    )
    
    
    42.3
    
    
    
    19.5
    
    
    
    195.3
    
    
    
    95.4
    
    
    
    202.5
    
    
    
    62.4Special items and provisions, net
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.6
    )
    
    
    (3.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Operating income (loss)
    
    
    264.8
    
    
    
    103.8
    
    
    
    182.1
    
    
    
    (4.6
    )
    
    
    41.7
    
    
    
    16.2
    
    
    
    195.3
    
    
    
    95.4
    
    
    
    202.5
    
    
    
    62.7Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.5
    
    
    
    0.2Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.3
    )
    
    
    (2.0
    )
    
    
    (13.2
    )
    
    
    Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.8
    )
    
    
    (34.4
    )
    
    
    25.1
    
    
    
    Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28.6
    )
    
    
    (11.8
    )
    
    
    (105.2
    )
    
    
    Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Assets at September 30
    
    
    944.0
    
    
    
    435.2
    
    
    
    307.3
    
    
    
    104.8
    
    
    
    431.1
    
    
    
    176.4
    
    
    
    807.6
    
    
    
    524.0
    
    
    
    1,143.4
    
    
    
    826.3Expenditures for segment assets
    
    
    14.5
    
    
    
    10.7
    
    
    
    16.0
    
    
    
    1.0
    
    
    
    8.5
    
    
    
    6.7
    
    
    
    13.3
    
    
    
    4.0
    
    
    
    5.7
    
    
    
    9.9
 PDMC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate,Manufac-
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    Elimi-
    
    
    PDMC
    
    
    Specialty
    
    
    Wire &
    
    
    PDI
    
    
    Other &turing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    nations
    
    
    Subtotal
    
    
    Chemicals
    
    
    Cable
    
    
    Subtotal
    
    
    Eliminations
    
    
    TotalsNine Months Ended September 30, 2005Sales and other operating revenues:Unaffiliated customers
    
    $
    2,316.6
    
    
    
    687.5
    
    
    
    5,143.2
    
    
    
    19.0
    
    
    
    
    
    
    
    5,162.2
    
    
    
    546.4
    
    
    
    869.3
    
    
    
    1,415.7
    
    
    
    
    
    
    
    6,577.9Intersegment
    
    
    136.4
    
    
    
    195.9
    
    
    
    3,221.5
    
    
    
    60.3
    
    
    
    (3,080.9
    )
    
    
    200.9
    
    
    
    
    
    
    
    0.7
    
    
    
    0.7
    
    
    
    (201.6
    )
    
    
    Depreciation, depletion and amortization
    
    
    23.7
    
    
    
    
    
    
    
    301.8
    
    
    
    4.3
    
    
    
    
    
    
    
    306.1
    
    
    
    43.4
    
    
    
    22.7
    
    
    
    66.1
    
    
    
    5.1
    
    
    
    377.3Operating income (loss) before special
items and provisions
    
    
    11.2
    
    
    
    1.8
    
    
    
    1,903.4
    
    
    
    (100.5
    )
    
    
    
    
    
    
    1,802.9
    
    
    
    29.7
    
    
    
    30.0
    
    
    
    59.7
    
    
    
    (90.7
    )
    
    
    1,771.9Special items and provisions, net
    
    
    (148.6
    )
    
    
    
    
    
    
    (437.7
    )
    
    
    8.3
    
    
    
    
    
    
    
    (429.4
    )
    
    
    
    
    
    
    (3.3
    )
    
    
    (3.3
    )
    
    
    (48.6
    )
    
    
    (481.3
    )Operating income (loss)
    
    
    (137.4
    )
    
    
    1.8
    
    
    
    1,465.7
    
    
    
    (92.2
    )
    
    
    
    
    
    
    1,373.5
    
    
    
    29.7
    
    
    
    26.7
    
    
    
    56.4
    
    
    
    (139.3
    )
    
    
    1,290.6Interest income
    
    
    
    
    
    
    0.1
    
    
    
    13.1
    
    
    
    2.7
    
    
    
    (2.3
    )
    
    
    13.5
    
    
    
    12.0
    
    
    
    1.2
    
    
    
    13.2
    
    
    
    22.4
    
    
    
    49.1Interest expense, net
    
    
    (2.3
    )
    
    
    (0.7
    )
    
    
    (1.2
    )
    
    
    0.1
    
    
    
    2.3
    
    
    
    1.2
    
    
    
    (9.9
    )
    
    
    (5.8
    )
    
    
    (15.7
    )
    
    
    (41.7
    )
    
    
    (56.2
    )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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159.5Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    (110.0
    )
    
    
    
    
    
    
    
    
    
    
    (110.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (204.4
    )
    
    
    (314.4
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (113.0
    )
    
    
    0.1
    
    
    
    
    
    
    
    (112.9
    )
    
    
    (0.9
    )
    
    
    (3.6
    )
    
    
    (4.5
    )
    
    
    
    
    
    
    (117.4
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    1.0
    
    
    
    1.0
    
    
    
    1.6
    
    
    
    1.9Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    0.2
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    6.4
    
    
    
    6.4
    
    
    
    23.8
    
    
    
    31.6Assets at September 30
    
    
    330.6
    
    
    
    36.7
    
    
    
    6,553.8
    
    
    
    1,366.1
    
    
    
    (1,456.9
    )
    
    
    6,463.0
    
    
    
    828.5
    
    
    
    686.9
    
    
    
    1,515.4
    
    
    
    2,263.6
    
    
    
    10,242.0Expenditures for segment assets
    
    
    14.4
    
    
    
    
    
    
    
    318.9
    
    
    
    67.3
    
    
    
    (27.1
    )
    
    
    359.1
    
    
    
    22.6
    
    
    
    12.0
    
    
    
    34.6
    
    
    
    10.0
    
    
    
    403.7Nine Months Ended September 30, 2004*Sales and other operating revenues:Unaffiliated customers
    
    $
    1,863.3
    
    
    
    687.8
    
    
    
    3,872.6
    
    
    
    16.7
    
    
    
    
    
    
    
    3,889.3
    
    
    
    500.2
    
    
    
    704.9
    
    
    
    1,205.1
    
    
    
    
    
    
    
    5,094.4Intersegment
    
    
    166.5
    
    
    
    154.6
    
    
    
    2,371.0
    
    
    
    51.9
    
    
    
    (2,258.3
    )
    
    
    164.6
    
    
    
    
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    (165.0
    )
    
    
    Depreciation, depletion and amortization
    
    
    16.8
    
    
    
    
    
    
    
    300.6
    
    
    
    3.3
    
    
    
    
    
    
    
    303.9
    
    
    
    37.0
    
    
    
    27.0
    
    
    
    64.0
    
    
    
    7.3
    
    
    
    375.2Operating income (loss) before special
items and provisions
    
    
    20.1
    
    
    
    2.8
    
    
    
    1,187.0
    
    
    
    (86.3
    )
    
    
    
    
    
    
    1,100.7
    
    
    
    32.2
    
    
    
    23.6
    
    
    
    55.8
    
    
    
    (75.4
    )
    
    
    1,081.1Special items and provisions, net
    
    
    (3.1
    )
    
    
    
    
    
    
    (7.3
    )
    
    
    (3.1
    )
    
    
    
    
    
    
    (10.4
    )
    
    
    
    
    
    
    (7.6
    )
    
    
    (7.6
    )
    
    
    11.6
    
    
    
    (6.4
    )Operating income (loss)
    
    
    17.0
    
    
    
    2.8
    
    
    
    1,179.7
    
    
    
    (89.4
    )
    
    
    
    
    
    
    1,090.3
    
    
    
    32.2
    
    
    
    16.0
    
    
    
    48.2
    
    
    
    (63.8
    )
    
    
    1,074.7Interest income
    
    
    
    
    
    
    
    
    
    
    2.9
    
    
    
    3.7
    
    
    
    (3.1
    )
    
    
    3.5
    
    
    
    6.7
    
    
    
    0.6
    
    
    
    7.3
    
    
    
    2.7
    
    
    
    13.5Interest expense, net
    
    
    (3.1
    )
    
    
    (0.3
    )
    
    
    (24.9
    )
    
    
    
    
    
    
    3.1
    
    
    
    (21.8
    )
    
    
    (11.3
    )
    
    
    (3.9
    )
    
    
    (15.2
    )
    
    
    (62.9
    )
    
    
    (99.9
    )Provision for taxes on income
    
    
    
    
    
    
    
    
    
    
    (44.1
    )
    
    
    
    
    
    
    
    
    
    
    (44.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65.0
    )
    
    
    (109.1
    )Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (145.6
    )
    
    
    
    
    
    
    
    
    
    
    (145.6
    )
    
    
    (0.5
    )
    
    
    (2.9
    )
    
    
    (3.4
    )
    
    
    
    
    
    
    (149.0
    )Equity in net earnings (losses) of affiliated companies
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.9
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    1.7
    
    
    
    1.0Equity basis investments at September 30
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    5.5
    
    
    
    5.5
    
    
    
    24.1
    
    
    
    31.1Assets at September 30
    
    
    473.5
    
    
    
    12.4
    
    
    
    6,186.0
    
    
    
    1,288.5
    
    
    
    (1,381.1
    )
    
    
    6,093.4
    
    
    
    789.8
    
    
    
    593.8
    
    
    
    1,383.6
    
    
    
    1,064.9
    
    
    
    8,541.9Expenditures for segment assets
    
    
    8.2
    
    
    
    0.1
    
    
    
    98.6
    
    
    
    18.1
    
    
    
    (1.2
    )
    
    
    115.5
    
    
    
    14.7
    
    
    
    19.1
    
    
    
    33.8
    
    
    
    10.9
    
    
    
    160.2
 
 *
    
    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
   Third Quarter2005
    
    
    2004Net income as reported
    
    $
    366.1
    
    
    
    292.9Deduct:Total compensation cost determined under fair value
based method for all awards, net of tax
    
    
    (0.5
    )
    
    
    (1.7
    )Pro formanet income
    
    $
    365.6
    
    
    
    291.2Earnings per common shareBasic  as reported
    
    $
    3.71
    
    
    
    3.09Basic  pro forma
    
    $
    3.71
    
    
    
    3.07Earnings per common shareDiluted  as reported
    
    $
    3.61
    
    
    
    2.95Diluted  pro forma
    
    $
    3.61
    
    
    
    2.93
  Nine Months EndedSeptember 30,2005
    
    
    2004Net income as reported
    
    $
    1,435.1
    
    
    
    705.2Deduct:Total compensation cost determined under fair value
based method for all awards, net of tax
    
    
    (2.4
    )
    
    
    (5.1
    )Pro formanet income
    
    $
    1,432.7
    
    
    
    700.1Earnings per common shareBasic  as reported
    
    $
    14.75
    
    
    
    7.49Basic  pro forma
    
    $
    14.72
    
    
    
    7.43Earnings per common shareDiluted  as reported
    
    $
    14.19
    
    
    
    7.15Diluted  pro forma
    
    $
    14.18
    
    
    
    7.11




---



##### Table of Contents



8 3. Special Items and Provisions
     2005 Third Quarter$/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:PDMC Environmental provisions, net
    
    $
    (8.7
    )
    
    
    (6.7
    )
    
    
    (0.07
    )Environmental insurance
recoveries, net
    
    
    (0.1
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    0.3
    
    
    
    0.2
    
    
    
    (8.5
    )
    
    
    (6.5
    )
    
    
    (0.07
    )PDI Environmental provisions, net
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    Wire and Cable restructuring
programs/closures
    
    
    0.3
    
    
    
    0.3
    
    
    
    Asset impairment charges
    
    
    (2.0
    )
    
    
    (1.6
    )
    
    
    (0.01
    )(1.8
    )
    
    
    (1.4
    )
    
    
    (0.01
    )Corporate
and Other Environmental provisions, net
    
    
    (34.4
    )
    
    
    (26.3
    )
    
    
    (0.26
    )Environmental insurance
recoveries, net
    
    
    0.1
    
    
    
    
    
    
    
    Historical legal matters
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (34.7
    )
    
    
    (26.6
    )
    
    
    (0.26
    )(45.0
    )
    
    
    (34.5
    )
    
    
    (0.34
    )Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    (41.3
    )
    
    
    (0.41
    )$
    (99.0
    )
    
    
    (75.8
    )
    
    
    (0.75
    )
       Nine Months EndedSeptember 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
    )
    
    
    (3.17
    )Environmental provisions, net
    
    
    (24.4
    )
    
    
    (18.6
    )
    
    
    (0.18
    )Environmental insurance
recoveries, net
    
    
    (1.2
    )
    
    
    (0.9
    )
    
    
    (0.01
    )Historical legal matters
    
    
    15.3
    
    
    
    11.6
    
    
    
    0.11(429.4
    )
    
    
    (328.8
    )
    
    
    (3.25
    )PDI Environmental provisions, net
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    Wire and Cable restructuring
programs/closures
    
    
    (0.8
    )
    
    
    
    
    
    
    Asset impairment charges
    
    
    (2.4
    )
    
    
    (1.9
    )
    
    
    (0.02
    )(3.3
    )
    
    
    (2.0
    )
    
    
    (0.02
    )Corporate
and Other Environmental provisions, net
    
    
    (54.1
    )
    
    
    (41.3
    )
    
    
    (0.41
    )Environmental insurance
recoveries, net
    
    
    1.2
    
    
    
    0.9
    
    
    
    0.01Historical legal matters
    
    
    4.3
    
    
    
    4.1
    
    
    
    0.04(48.6
    )
    
    
    (36.3
    )
    
    
    (0.36
    )(481.3
    )
    
    
    (367.1
    )
    
    
    (3.63
    )Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    (41.3
    )
    
    
    (0.41
    )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
    )
    
    
    (0.03
    )$
    62.6
    
    
    
    150.1
    
    
    
    1.48




---



##### Table of Contents



9




---



##### Table of Contents



2004 Third Quarter$/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:PDMC Environmental provisions, net
    
    $
    (11.8
    )
    
    
    (8.9
    )
    
    
    (0.09
    )Environmental insurance
recoveries, net
    
    
    7.5
    
    
    
    6.0
    
    
    
    0.06Asset impairment charges
    
    
    (1.1
    )
    
    
    (0.9
    )
    
    
    (0.01
    )Historical legal matters
    
    
    (2.5
    )
    
    
    (2.0
    )
    
    
    (0.02
    )(7.9
    )
    
    
    (5.8
    )
    
    
    (0.06
    )PDI Environmental provisions, net
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    Wire and Cable restructuring
programs/closures
    
    
    (3.1
    )
    
    
    (2.3
    )
    
    
    (0.02
    )(3.3
    )
    
    
    (2.4
    )
    
    
    (0.02
    )Corporate and Other Environmental provisions, net
    
    
    (0.7
    )
    
    
    (0.5
    )
    
    
    (0.01
    )Historical legal matters
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.010.1
    
    
    
    0.1
    
    
    
    (11.1
    )
    
    
    (8.1
    )
    
    
    (0.08
    )Miscellaneous income and expense, net:Historical legal matter
    
    
    9.5
    
    
    
    7.2
    
    
    
    0.07$
    (1.6
    )
    
    
    (0.9
    )
    
    
    (0.01
    )
  Nine Months EndedSeptember 30, 2004$/ShareConsolidated Statement of Income Line Item
    
    Pre-tax
    
    
    After-tax
    
    
    After-taxSpecial items and provisions, net:PDMC Environmental provisions, net
    
    $
    (14.1
    )
    
    
    (10.7
    )
    
    
    (0.11
    )Environmental insurance
recoveries, net
    
    
    7.3
    
    
    
    5.9
    
    
    
    0.06Asset impairment charges
    
    
    (1.1
    )
    
    
    (0.9
    )
    
    
    (0.01
    )Historical legal matters
    
    
    (2.5
    )
    
    
    (2.0
    )
    
    
    (0.02
    )(10.4
    )
    
    
    (7.7
    )
    
    
    (0.08
    )PDI Environmental provisions, net
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    Wire and Cable restructuring
programs/closures
    
    
    (6.7
    )
    
    
    (4.8
    )
    
    
    (0.05
    )Asset impairment charges
    
    
    (0.6
    )
    
    
    (0.5
    )
    
    
    (0.01
    )(7.6
    )
    
    
    (5.5
    )
    
    
    (0.06
    )Corporate and Other Environmental provisions, net
    
    
    (4.8
    )
    
    
    (3.6
    )
    
    
    (0.03
    )Environmental insurance
recoveries, net
    
    
    0.1
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    16.3
    
    
    
    13.0
    
    
    
    0.1311.6
    
    
    
    9.5
    
    
    
    0.10(6.4
    )
    
    
    (3.7
    )
    
    
    (0.04
    )Interest 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
    )Historical legal matter
    
    
    9.5
    
    
    
    7.2
    
    
    
    0.07(0.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )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
    
    
    
    0.03
    
    
    
    (12.6
    )
    
    
    (0.12
    )$
    (45.4
    )
    
    
    (27.3
    )
    
    
    (0.28
    )
 4. New Accounting Pronouncements




---



##### Table of Contents



11




---



##### Table of Contents



12 5. Environmental, and Reclamation and Closure
Matters
   2005
    
    
    Nine Months EndedThird Quarter
    
    
    September 30, 2005Balance, beginning of period
    
    $
    319.5
    
    
    
    303.6Additions to reserves
    
    
    43.8
    
    
    
    80.8Reductions in reserve estimates
    
    
    (0.6
    )
    
    
    (2.2
    )Spending against reserves
    
    
    (11.0
    )
    
    
    (30.5
    )Balance, end of period
    
    $
    351.7
    
    
    
    351.7
       
 Nine Months2005
    
    
    EndedThird Quarter
    
    
    September 30, 2005Balance, beginning of period
    
    $
    328.9
    
    
    
    275.2New liabilities during the period
    
    
    1.1
    
    
    
    2.7Accretion expense
    
    
    5.9
    
    
    
    16.8Payments
    
    
    (11.9
    )
    
    
    (27.1
    )Revisions in estimated cash flows
    
    
    17.7
    
    
    
    74.5Foreign currency translation
adjustments
    
    
    (0.1
    )
    
    
    (0.5
    )Balance, end of period
    
    $
    341.6
    
    
    
    341.6
 
 Nine Months2005
    
    
    EndedThird Quarter
    
    
    September 30, 2005Gross balance, beginning of period
    
    $
    124.7
    
    
    
    196.3New assets during the period
    
    
    1.1
    
    
    
    2.7Revisions in estimated cash flows
    
    
    17.7
    
    
    
    74.5Impairment of assets
    
    
    
    
    
    
    (129.7
    )Foreign currency translation
adjustments
    
    
    (0.1
    )
    
    
    (0.4
    )Gross balance, end of period
    
    
    143.4
    
    
    
    143.4Less accumulated depreciation,
depletion and amortization
    
    
    (80.9
    )
    
    
    (80.9
    )Balance, end of period
    
    $
    62.5
    
    
    
    62.5




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##### Table of Contents



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




---



##### Table of Contents



14    Phelps Dodge Tyrone, Inc.




---



##### Table of Contents



15  Cobre Mining Company
    Phelps Dodge Hidalgo, Inc.
  Significant Changes in International Closure and Reclamation Programs
 Sociedad Minera Cerro Verde S.A.A.
   Other




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##### Table of Contents



16  7. Earnings Per Share
    Third Quarter2005
    
    
    2004Basic Earnings Per Share ComputationNumerator:Net income
    
    $
    366.1
    
    
    
    292.9Preferred stock dividends
    
    
    
    
    
    
    (3.3
    )Net income applicable
to common shares
    
    $
    366.1
    
    
    
    289.6Denominator:Weighted average common
shares outstanding
    
    
    98.6
    
    
    
    93.8Basic earnings per common share
    
    $
    3.71
    
    
    
    3.09Diluted Earnings Per Share ComputationNumerator:Net income
    
    $
    366.1
    
    
    
    292.9Denominator:Weighted average common
shares outstanding
    
    
    98.6
    
    
    
    93.8Weighted average employee
stock options
    
    
    0.3
    
    
    
    1.1Weighted average restricted
stock issued to employees
    
    
    0.4
    
    
    
    0.3Weighted average mandatory
convertible preferred shares
    
    
    2.1
    
    
    
    4.2Total weighted average common
shares outstanding
    
    
    101.4
    
    
    
    99.4Diluted earnings per
common share
    
    $
    3.61
    
    
    
    2.95
  Nine Months EndedSeptember 30,2005
    
    
    2004Basic Earnings Per Share ComputationNumerator:Net income
    
    $
    1,435.1
    
    
    
    705.2Preferred stock dividends
    
    
    (6.8
    )
    
    
    (10.1
    )Net income applicable
to common shares
    
    $
    1,428.3
    
    
    
    695.1Denominator:Weighted average common
shares outstanding
    
    
    96.8
    
    
    
    92.8Basic earnings per common share
    
    $
    14.75
    
    
    
    7.49Diluted Earnings Per Share ComputationNumerator:Net income
    
    $
    1,435.1
    
    
    
    705.2Denominator:Weighted average common
shares outstanding
    
    
    96.8
    
    
    
    92.8Weighted average employee
stock options
    
    
    0.4
    
    
    
    1.2Weighted average restricted
stock issued to employees
    
    
    0.4
    
    
    
    0.4Weighted average mandatory
convertible preferred shares
    
    
    3.5
    
    
    
    4.2Weighted average common
shares outstanding
    
    
    101.1
    
    
    
    98.6Diluted earnings per
common share
    
    $
    14.19
    
    
    
    7.15
 8. Provision for Taxes on Income




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##### Table of Contents



17     9. Accounting for Derivative Instruments and Hedging Activities
     2005
    
    2006
    
    2007Copper Collars:Pounds of zero-premium copper
collars purchased (in millions)
    
    
    198
    (A)
    
    
    564
    
    
    
    486Average LME put strike price
(floor) per pound
    
    $
    0.943
    
    
    
    0.954
    
    
    
    0.950Annual average LME call strike
price (ceiling) per pound
    
    $
    1.400
    
    
    
    1.632
    
    
    
    2.002Unrealized pre-tax losses for the
2005 third quarter
(in millions)(B)
    
    $
    22
    
    
    
    2
    
    
    
    Unrealized pre-tax losses for the
nine months ended September 30,
2005 (in millions)(B)
    
    $
    43
    
    
    
    2
    
    
    
    Copper Put Options:Pounds of copper put options
purchased (in millions)
    
    
    
    
    
    
    564
    
    
    
    730Average LME put strike
price per pound
    
    $
    
    
    
    
    0.950
    
    
    
    0.950Premium cost per pound
    
    $
    
    
    
    
    0.020
    
    
    
    0.023
  (A)
    
    2005 excludes El Abra; refer to the table on page 18 for a summary of El Abras 2005
zero-premium copper collar program.(B)
    
    The 2005 unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617
per pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.40 per pound.
The 2006 unrealized pre-tax losses resulted from the 2006 LME forward average price of $1.555
per pound exceeding a portion of our 2006 zero-premium copper collars (weighted average of
$1.632 per pound).




---



##### Table of Contents



18   2005El Abra Copper Collars:Pounds of zero-premium copper
collars purchased (in millions)
    
    
    452Monthly average LME put strike
price (floor) per pound
    
    $
    1.000Annual average LME call strike
price (ceiling) per pound
    
    $
    1.376Unrealized pre-tax losses for the
2005 third quarter (in millions)(A)
    
    $
    51Unrealized pre-tax losses for the
nine months ended September 30,
2005 (in millions)(A)
    
    $
    108
  (A)
    
    The unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617 per
pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.376 per pound
(approximately $26 million and $55 million for PDs share for the quarter and nine months
ended September 30, 2005, respectively).
    10. Pension and Postretirement Benefits
  
 Third Quarter2005
    
    
    2004Service cost
    
    $
    7.1
    
    
    
    5.9Interest cost
    
    
    18.6
    
    
    
    18.0Expected return on plan assets
    
    
    (21.6
    )
    
    
    (21.0
    )Amortization of prior service cost
    
    
    0.9
    
    
    
    0.9Amortization of actuarial loss
    
    
    3.5
    
    
    
    0.8Curtailment and special retirement benefits
    
    
    0.1
    
    
    
    Net periodic benefit cost
    
    $
    8.6
    
    
    
    4.6
 Nine Months EndedSeptember 30,2005
    
    
    2004Service cost
    
    $
    21.1
    
    
    
    17.7Interest cost
    
    
    55.9
    
    
    
    54.0Expected return on plan assets
    
    
    (64.7
    )
    
    
    (63.1
    )Amortization of prior service cost
    
    
    2.5
    
    
    
    2.7Amortization of actuarial loss
    
    
    10.6
    
    
    
    2.4Curtailment and special retirement benefits
    
    
    0.1
    
    
    
    0.6Net periodic benefit cost
    
    $
    25.5
    
    
    
    14.3
 
 Third Quarter2005
    
    
    2004Service cost
    
    $
    1.1
    
    
    
    1.3Interest cost
    
    
    5.1
    
    
    
    5.9Expected return on plan assets
    
    
    
    
    
    
    (0.1
    )Amortization of prior service cost
    
    
    0.1
    
    
    
    0.3Amortization of actuarial loss
    
    
    0.3
    
    
    
    0.1Net periodic benefit cost
    
    $
    6.6
    
    
    
    7.5
 Nine Months EndedSeptember 30,2005
    
    
    2004Service cost
    
    $
    3.3
    
    
    
    4.0Interest cost
    
    
    14.7
    
    
    
    17.5Expected return on plan assets
    
    
    (0.1
    )
    
    
    (0.2
    )Amortization of prior service cost
    
    
    0.2
    
    
    
    0.9Amortization of actuarial loss
    
    
    0.3
    
    
    
    0.3Other
    
    
    
    
    
    
    (1.1
    )Net periodic benefit cost
    
    $
    18.4
    
    
    
    21.4




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##### Table of Contents



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




---



##### Table of Contents



20 
 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
  Third Quarter2005
    
    2004Sales and other operating revenues
    
    $
    2,359.8
    
    
    
    1,846.5Operating income
    
    $
    567.9
    
    
    
    405.2Minority interests in consolidated
subsidiaries
    
    $
    (51.9
    )
    
    
    (43.4
    )Net income
    
    $
    366.1
    
    
    
    292.9Basic earnings per common share
    
    $
    3.71
    
    
    
    3.09Diluted earnings per common share
    
    $
    3.61
    
    
    
    2.95
    Nine Months EndedSeptember 30,2005
    
    2004Sales and other operating revenues
    
    $
    6,577.9
    
    
    
    5,094.4Operating income
    
    $
    1,290.6
    
    
    
    1,074.7Minority interests in consolidated
subsidiaries
    
    $
    (117.4
    )
    
    
    (149.0
    )Net income
    
    $
    1,435.1
    
    
    
    705.2Basic earnings per common share
    
    $
    14.75
    
    
    
    7.49Diluted earnings per common share
    
    $
    14.19
    
    
    
    7.15
   Special Items and Provisions




---



##### Table of Contents



22     Third Quarter2005
    
    
    2004Net income
    
    $
    366.1
    
    
    
    292.9Special items and provisions,
net of taxes
    
    
    (75.8
    )
    
    
    (0.9
    )Earnings excluding special items
and provisions (after taxes)
    
    $
    441.9
    
    
    
    293.8
  Nine Months EndedSeptember 30,2005
    
    
    2004Net income
    
    $
    1,435.1
    
    
    
    705.2Special items and provisions,
net of taxes
    
    
    150.1
    
    
    
    (27.3
    )Earnings excluding special items
and provisions (after taxes)
    
    $
    1,285.0
    
    
    
    732.5




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##### Table of Contents



23    2005 Third Quarter
    
    
    2004 Third 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)
    
    $
    (8.5
    )
    
    
    (6.5
    )
    
    
    (0.07
    )
    
    
    (7.9
    )
    
    
    (5.8
    )
    
    
    (0.06
    )PDI (see Business Segment disclosure)
    
    
    (1.8
    )
    
    
    (1.4
    )
    
    
    (0.01
    )
    
    
    (3.3
    )
    
    
    (2.4
    )
    
    
    (0.02
    )Corporate and Other Environmental provisions, net
    
    
    (34.4
    )
    
    
    (26.3
    )
    
    
    (0.26
    )
    
    
    (0.7
    )
    
    
    (0.5
    )
    
    
    (0.01
    )Environmental insurance recoveries, net
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Historical legal matters
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.01(34.7
    )
    
    
    (26.6
    )
    
    
    (0.26
    )
    
    
    0.1
    
    
    
    0.1
    
    
    
    (45.0
    )
    
    
    (34.5
    )
    
    
    (0.34
    )
    
    
    (11.1
    )
    
    
    (8.1
    )
    
    
    (0.08
    )Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    (41.3
    )
    
    
    (0.41
    )
    
    
    
    
    
    
    
    
    
    
    Miscellaneous income and expense, net:Historical legal matter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.5
    
    
    
    7.2
    
    
    
    0.07$
    (99.0
    )
    
    
    (75.8
    )
    
    
    (0.75
    )
    
    
    (1.6
    )
    
    
    (0.9
    )
    
    
    (0.01
    )




---



##### Table of Contents



24  Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 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)
    
    $
    (429.4
    )
    
    
    (328.8
    )
    
    
    (3.25
    )
    
    
    (10.4
    )
    
    
    (7.7
    )
    
    
    (0.08
    )PDI (see
Business Segment disclosure)
    
    
    (3.3
    )
    
    
    (2.0
    )
    
    
    (0.02
    )
    
    
    (7.6
    )
    
    
    (5.5
    )
    
    
    (0.06
    )Corporate and Other Environmental provisions, net
    
    
    (54.1
    )
    
    
    (41.3
    )
    
    
    (0.41
    )
    
    
    (4.8
    )
    
    
    (3.6
    )
    
    
    (0.03
    )Environmental insurance recoveries, net
    
    
    1.2
    
    
    
    0.9
    
    
    
    0.01
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    Historical legal matters
    
    
    4.3
    
    
    
    4.1
    
    
    
    0.04
    
    
    
    16.3
    
    
    
    13.0
    
    
    
    0.13(48.6
    )
    
    
    (36.3
    )
    
    
    (0.36
    )
    
    
    11.6
    
    
    
    9.5
    
    
    
    0.10(481.3
    )
    
    
    (367.1
    )
    
    
    (3.63
    )
    
    
    (6.4
    )
    
    
    (3.7
    )
    
    
    (0.04
    )Interest expense:Texas franchise tax matter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.9
    )
    
    
    (0.7
    )
    
    
    (0.01
    )Early debt extinguishment costs
    
    
    (54.0
    )
    
    
    (41.3
    )
    
    
    (0.41
    )
    
    
    (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
    )Historical legal matter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.5
    
    
    
    7.2
    
    
    
    0.07
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    (1.9
    )
    
    
    (0.02
    )Provision for taxes on income:Foreign dividend tax
    
    
    
    
    
    
    (2.4
    )
    
    
    (0.03
    )
    
    
    
    
    
    
    
    
    
    
    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
    )
    
    
    (0.03
    )
    
    
    
    
    
    
    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
    
    
    
    0.03
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.6
    )
    
    
    (0.12
    )$
    62.6
    
    
    
    150.1
    
    
    
    1.48
    
    
    
    (45.4
    )
    
    
    (27.3
    )
    
    
    (0.28
    )
 Business Divisions
   
 RESULTS OF PHELPS DODGE MINING COMPANY




---



##### Table of Contents



25       Third Quarter2005
    
    
    2004Sales and other operating revenues
to unaffiliated customers
    
    $
    1,859.7
    
    
    
    1,420.3Operating income
    
    $
    618.4
    
    
    
    423.4Operating income before special
items and provisions
    
    $
    626.9
    
    
    
    431.3Minority interests in consolidated
subsidiaries
    
    $
    (49.8
    )
    
    
    (41.9
    )Copper production (thousand short tons):Total copper production
    
    
    319.5
    
    
    
    337.6Less undivided interest (A)
    
    
    15.3
    
    
    
    16.1Copper production on a
consolidated basis
    
    
    304.2
    
    
    
    321.5Less minority participants shares (B)
    
    
    48.0
    
    
    
    42.9Copper production on a pro rata basis
    
    
    256.2
    
    
    
    278.6Copper sales (thousand short tons):Total copper sales from own mines
    
    
    318.7
    
    
    
    341.6Less undivided interest (A)
    
    
    15.3
    
    
    
    16.1Copper sales from own mines on
a consolidated basis
    
    
    303.4
    
    
    
    325.5Less minority participants shares (B)
    
    
    48.3
    
    
    
    41.0Copper sales from own mines on
a pro rata basis
    
    
    255.1
    
    
    
    284.5Purchased copper (thousand short tons)
    
    
    123.8
    
    
    
    103.8Total copper sales on a consolidated basis
    
    
    427.2
    
    
    
    429.3LME average spot copper price
per pound  cathodes
    
    $
    1.704
    
    
    
    1.293COMEX average spot copper price
per pound  cathodes
    
    $
    1.701
    
    
    
    1.287Molybdenum production (million pounds)
    
    
    16.4
    
    
    
    15.1Molybdenum sales (million pounds):Net Phelps Dodge share from own mines
    
    
    14.8
    
    
    
    15.4Purchased molybdenum
    
    
    2.9
    
    
    
    3.3Total molybdenum sales
    
    
    17.7
    
    
    
    18.7Metals Week:Molybdenum Dealer Oxide mean
price per pound
    
    $
    30.74
    
    
    
    16.90




---



##### Table of Contents



26  Nine Months EndedSeptember 30,2005
    
    
    2004Sales and other operating revenues
to unaffiliated customers
    
    $
    5,162.2
    
    
    
    3,889.3Operating income
    
    $
    1,373.5
    
    
    
    1,090.3Operating income before special
items and provisions
    
    $
    1,802.9
    
    
    
    1,100.7Minority interests in consolidated
subsidiaries
    
    $
    (112.9
    )
    
    
    (145.6
    )Copper production (thousand short tons):Total copper production
    
    
    966.2
    
    
    
    976.6Less undivided interest (A)
    
    
    44.6
    
    
    
    47.2Copper production on a
consolidated basis
    
    
    921.6
    
    
    
    929.4Less minority participants shares (B)
    
    
    134.0
    
    
    
    133.8Copper production on a pro rata basis
    
    
    787.6
    
    
    
    795.6Copper sales (thousand short tons):Total copper sales from own mines
    
    
    971.7
    
    
    
    986.7Less undivided interest (A)
    
    
    44.6
    
    
    
    47.2Copper sales from own mines on
a consolidated basis
    
    
    927.1
    
    
    
    939.5Less minority participants shares (B)
    
    
    136.1
    
    
    
    134.7Copper sales from own mines on
a pro rata basis
    
    
    791.0
    
    
    
    804.8Purchased copper (thousand short tons)
    
    
    295.0
    
    
    
    335.6Total copper sales on a consolidated basis
    
    
    1,222.1
    
    
    
    1,275.1LME average spot copper price
per pound  cathodes
    
    $
    1.575
    
    
    
    1.266COMEX average spot copper price
per pound  cathodes
    
    $
    1.567
    
    
    
    1.251Molybdenum production (million pounds)
    
    
    47.8
    
    
    
    43.4Molybdenum sales (million pounds):Net Phelps Dodge share from own mines
    
    
    45.2
    
    
    
    46.6Purchased molybdenum
    
    
    9.8
    
    
    
    9.8Total molybdenum sales
    
    
    55.0
    
    
    
    56.4Metals Week:Molybdenum Dealer Oxide mean
price per pound
    
    $
    32.44
    
    
    
    13.25
  (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 equity
interest through May 31, 2005, and a 46.4 percent equity interest beginning June 1, 2005, in the Cerro Verde
copper mining operation in Peru held primarily by Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, and Compañia de Minas Buenaventura S.A.A.
  Third Quarter2005
    
    2004Minority participants share of copper production:Candelaria
    
    
    8.3
    
    
    
    10.1Cerro Verde
    
    
    12.3
    
    
    
    4.3El Abra
    
    
    27.4
    
    
    
    28.548.0
    
    
    
    42.9
  Nine Months EndedSeptember 30,2005
    
    2004Minority participants share of copper production:Candelaria
    
    
    27.2
    
    
    
    31.5Cerro Verde
    
    
    23.6
    
    
    
    13.0El Abra
    
    
    83.2
    
    
    
    89.3134.0
    
    
    
    133.8
 Total PDMC Division  Sales
   Total PDMC  Operating Income




---



##### Table of Contents



27      i.e.
    2005
    
    2006
    
    2007Copper Collars:Pounds of zero-premium copper
collars purchased (in millions)
    
    
    198
    (A)
    
    
    564
    
    
    
    486Average LME put strike price
(floor) per pound
    
    $
    0.943
    
    
    
    0.954
    
    
    
    0.950Annual average LME call strike
price (ceiling) per pound
    
    $
    1.400
    
    
    
    1.632
    
    
    
    2.002Unrealized pre-tax losses for the
2005 third quarter
(in millions)(B)
    
    $
    22
    
    
    
    2
    
    
    
    Unrealized pre-tax losses for the
nine months ended September 30,
2005 (in millions)(B)
    
    $
    43
    
    
    
    2
    
    
    
    Copper Put Options:Pounds of copper put options
purchased (in millions)
    
    
    
    
    
    
    564
    
    
    
    730Average LME put strike
price per pound
    
    $
    
    
    
    
    0.950
    
    
    
    0.950Premium cost per pound
    
    $
    
    
    
    
    0.020
    
    
    
    0.023
  (A)
    
    2005 excludes El Abra; refer to the table on page 28 for a summary of El Abras 2005
zero-premium copper collar program.(B)
    
    The 2005 unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617
per pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.40 per pound.
The 2006 unrealized pre-tax losses resulted from the 2006 LME forward average price of $1.555
per pound exceeding a portion of our 2006 zero-premium copper collars (weighted average of
$1.632 per pound).




---



##### Table of Contents



28   2005El Abra Copper Collars:Pounds of zero-premium copper
collars purchased (in millions)
    
    
    452Monthly average LME put strike
price (floor) per pound
    
    $
    1.000Annual average LME call strike
price (ceiling) per pound
    
    $
    1.376Unrealized pre-tax losses for the
2005 third quarter (in millions)(A)
    
    $
    51Unrealized pre-tax losses for the
nine months ended September 30,
2005 (in millions)(A)
    
    $
    108
  (A)
    
    The unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617 per
pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.376 per pound
(approximately $26 million and $55 million for PDs share for the quarter and nine months
ended September 30, 2005, respectively).
      2005 Third QuarterU.S.
    
    
    South
    
    
    PrimaryMining
    
    
    American
    
    
    Molyb-Operations
    
    
    Mines
    
    
    denumEnvironmental provisions, net
    
    
    (8.7
    )
    
    
    
    
    
    
    Environmental insurance recoveries, net
    
    
    (0.1
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    0.3
    
    
    
    
    
    
    
    $
    (8.5
    )
    
    
    
    
    
    
    
  Nine Months EndedSeptember 30, 2005U.S.
    
    
    South
    
    
    PrimaryMining
    
    
    American
    
    
    Molyb-Operations
    
    
    Mines
    
    
    denumAsset impairment charges
    
    $
    (419.1
    )
    
    
    
    
    
    
    Environmental provisions, net
    
    
    (24.4
    )
    
    
    
    
    
    
    Environmental insurance recoveries, net
    
    
    (1.2
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    15.3
    
    
    
    
    
    
    
    $
    (429.4
    )
    
    
    
    
    
    
    
  2004 Third QuarterU.S.
    
    
    South
    
    
    PrimaryMining
    
    
    American
    
    
    Molyb-Operations
    
    
    Mines
    
    
    denumEnvironmental provisions, net
    
    $
    (11.8
    )
    
    
    
    
    
    
    Environmental insurance recoveries, net
    
    
    7.5
    
    
    
    
    
    
    
    Asset impairment charges
    
    
    (1.1
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    (2.5
    )
    
    
    
    
    
    
    $
    (7.9
    )
    
    
    
    
    
    
    
  Nine Months EndedSeptember 30, 2004U.S.
    
    
    South
    
    
    PrimaryMining
    
    
    American
    
    
    Molyb-Operations
    
    
    Mines
    
    
    denumEnvironmental provisions, net
    
    $
    (14.4
    )
    
    
    
    
    
    
    0.3Environmental insurance recoveries, net
    
    
    7.3
    
    
    
    
    
    
    
    Asset impairment charges
    
    
    (1.1
    )
    
    
    
    
    
    
    Historical legal matters
    
    
    (2.5
    )
    
    
    
    
    
    
    $
    (10.7
    )
    
    
    
    
    
    
    0.3




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
  U.S. MinesMiami/
    
    
    Chino/Morenci
    
    
    Bagdad
    
    
    Sierrita
    
    
    Bisbee
    
    
    Cobre
    
    
    Tyrone
    
    
    SubtotalThird Quarter 2005Copper production (thousand short tons):Total production
    
    
    102.1
    
    
    
    25.3
    
    
    
    18.7
    
    
    
    3.2
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    184.5Less undivided interest
    
    
    15.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3Copper production on a consolidated basis
    
    
    86.8
    
    
    
    25.3
    
    
    
    18.7
    
    
    
    3.2
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    169.2Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    86.8
    
    
    
    25.3
    
    
    
    18.7
    
    
    
    3.2
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    169.2Copper sales (thousand short tons):Total copper sales from own mines
    
    
    102.1
    
    
    
    25.3
    
    
    
    18.6
    
    
    
    3.1
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    184.3Less undivided interest
    
    
    15.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3Copper sales from own mines on a
consolidated basis
    
    
    86.8
    
    
    
    25.3
    
    
    
    18.6
    
    
    
    3.1
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    169.0Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata
basis
    
    
    86.8
    
    
    
    25.3
    
    
    
    18.6
    
    
    
    3.1
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    169.0Total purchased copper (thousand short
tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    86.8
    
    
    
    25.3
    
    
    
    18.6
    
    
    
    3.1
    
    
    
    25.6
    
    
    
    9.6
    
    
    
    169.0($ in millions)Operating income (loss)
    
    $
    128.6
    
    
    
    112.4
    
    
    
    145.3
    
    
    
    1.4
    
    
    
    18.6
    
    
    
    3.0
    
    
    
    409.3Special items and provisions, net
    
    
    0.4
    
    
    
    
    
    
    
    (8.6
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (8.3
    )Operating income (loss) excluding special
items and provisions
    
    $
    128.2
    
    
    
    112.4
    
    
    
    153.9
    
    
    
    1.5
    
    
    
    18.6
    
    
    
    3.0
    
    
    
    417.6Third Quarter 2004Copper production (thousand short tons):Total production
    
    
    107.6
    
    
    
    30.4
    
    
    
    19.9
    
    
    
    2.4
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    200.4Less undivided interest
    
    
    16.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.1Copper production on a consolidated basis
    
    
    91.5
    
    
    
    30.4
    
    
    
    19.9
    
    
    
    2.4
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    184.3Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    91.5
    
    
    
    30.4
    
    
    
    19.9
    
    
    
    2.4
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    184.3Copper sales (thousand short tons):Total copper sales from own mines
    
    
    107.9
    
    
    
    32.9
    
    
    
    22.1
    
    
    
    3.8
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    206.8Less undivided interest
    
    
    16.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.1Copper sales from own mines on a
consolidated basis
    
    
    91.8
    
    
    
    32.9
    
    
    
    22.1
    
    
    
    3.8
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    190.7Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata
basis
    
    
    91.8
    
    
    
    32.9
    
    
    
    22.1
    
    
    
    3.8
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    190.7Total purchased copper (thousand short
tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    91.8
    
    
    
    32.9
    
    
    
    22.1
    
    
    
    3.8
    
    
    
    29.0
    
    
    
    11.1
    
    
    
    190.7($ in millions)Operating income (loss)
    
    $
    100.4
    
    
    
    57.6
    
    
    
    82.0
    
    
    
    (0.8
    )
    
    
    16.7
    
    
    
    7.2
    
    
    
    263.1Special items and provisions, net
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    (1.5
    )
    
    
    (1.9
    )Operating income (loss) excluding special
items and provisions
    
    $
    100.5
    
    
    
    57.6
    
    
    
    82.0
    
    
    
    (0.7
    )
    
    
    16.9
    
    
    
    8.7
    
    
    
    265.0




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 South American MinesCandelaria/Ojos delSalado
    
    
    Cerro Verde
    
    
    El Abra
    
    
    SubtotalThird Quarter 2005Copper production (thousand short tons):Total production
    
    
    52.1
    
    
    
    26.6
    
    
    
    55.8
    
    
    
    134.5Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    52.1
    
    
    
    26.6
    
    
    
    55.8
    
    
    
    134.5Less minority participants shares
    
    
    8.3
    
    
    
    12.3
    
    
    
    27.4
    
    
    
    48.0Copper production on a pro rata basis
    
    
    43.8
    
    
    
    14.3
    
    
    
    28.4
    
    
    
    86.5Copper sales (thousand short tons):Total copper sales from own mines
    
    
    49.9
    
    
    
    26.2
    
    
    
    57.8
    
    
    
    133.9Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    49.9
    
    
    
    26.2
    
    
    
    57.8
    
    
    
    133.9Less minority participants shares
    
    
    7.9
    
    
    
    12.1
    
    
    
    28.3
    
    
    
    48.3Copper sales from own mines on a pro rata basis
    
    
    42.0
    
    
    
    14.1
    
    
    
    29.5
    
    
    
    85.6Total purchased copper (thousand short tons)
    
    
    9.1
    
    
    
    
    
    
    
    
    
    
    
    9.1Total copper sales on a consolidated basis
    
    
    59.0
    
    
    
    26.2
    
    
    
    57.8
    
    
    
    143.0($ in millions)Operating income (loss)
    
    $
    73.1
    
    
    
    55.8
    
    
    
    52.6
    
    
    
    181.5Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    
    $
    73.1
    
    
    
    55.8
    
    
    
    52.6
    
    
    
    181.5Third Quarter 2004Copper production (thousand short tons):Total production
    
    
    54.1
    
    
    
    24.5
    
    
    
    58.0
    
    
    
    136.6Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    54.1
    
    
    
    24.5
    
    
    
    58.0
    
    
    
    136.6Less minority participants shares
    
    
    10.1
    
    
    
    4.3
    
    
    
    28.5
    
    
    
    42.9Copper production on a pro rata basis
    
    
    44.0
    
    
    
    20.2
    
    
    
    29.5
    
    
    
    93.7Copper sales (thousand short tons):Total copper sales from own mines
    
    
    56.2
    
    
    
    24.5
    
    
    
    53.5
    
    
    
    134.2Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    56.2
    
    
    
    24.5
    
    
    
    53.5
    
    
    
    134.2Less minority participants shares
    
    
    10.5
    
    
    
    4.3
    
    
    
    26.2
    
    
    
    41.0Copper sales from own mines on a pro rata basis
    
    
    45.7
    
    
    
    20.2
    
    
    
    27.3
    
    
    
    93.2Total purchased copper (thousand short tons)
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    
    5.0Total copper sales on a consolidated basis
    
    
    61.2
    
    
    
    24.5
    
    
    
    53.5
    
    
    
    139.2($ in millions)Operating income (loss)
    
    $
    77.2
    
    
    
    32.5
    
    
    
    63.3
    
    
    
    173.0Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    
    $
    77.2
    
    
    
    32.5
    
    
    
    63.3
    
    
    
    173.0




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    TotalMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    PDMCThird Quarter 2005Copper production (thousand short tons):Total production
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    318.9
    
    
    
    0.6
    
    
    
    319.5Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3
    
    
    
    
    
    
    
    15.3Copper production on a consolidated basis
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    303.6
    
    
    
    0.6
    
    
    
    304.2Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48.0
    
    
    
    
    
    
    
    48.0Copper production on a pro rata basis
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    255.6
    
    
    
    0.6
    
    
    
    256.2Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    318.1
    
    
    
    0.6
    
    
    
    318.7Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3
    
    
    
    
    
    
    
    15.3Copper sales from own mines on a
consolidated basis
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    302.8
    
    
    
    0.6
    
    
    
    303.4Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48.3
    
    
    
    
    
    
    
    48.3Copper sales from own mines on a pro rata
basis
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    254.5
    
    
    
    0.6
    
    
    
    255.1Total purchased copper (thousand short tons)
    
    
    
    
    
    
    108.5
    
    
    
    6.2
    
    
    
    123.8
    
    
    
    
    
    
    
    123.8Total copper sales on a consolidated basis
    
    
    
    
    
    
    108.4
    
    
    
    6.2
    
    
    
    426.6
    
    
    
    0.6
    
    
    
    427.2Molybdenum production (thousand pounds):Primary  Henderson
    
    
    8,386
    
    
    
    
    
    
    
    
    
    
    
    8,386
    
    
    
    
    
    
    
    8,386By-product
    
    
    7,996
    
    
    
    
    
    
    
    
    
    
    
    7,996
    
    
    
    
    
    
    
    7,996Total production
    
    
    16,382
    
    
    
    
    
    
    
    
    
    
    
    16,382
    
    
    
    
    
    
    
    16,382Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    14,754
    
    
    
    
    
    
    
    
    
    
    
    14,754
    
    
    
    
    
    
    
    14,754Purchased molybdenum
    
    
    2,953
    
    
    
    
    
    
    
    
    
    
    
    2,953
    
    
    
    
    
    
    
    2,953Total molybdenum sales
    
    
    17,707
    
    
    
    
    
    
    
    
    
    
    
    17,707
    
    
    
    
    
    
    
    17,707($ in millions)Operating income (loss)
    
    $
    71.9
    
    
    
    0.3
    
    
    
    2.3
    
    
    
    665.3
    
    
    
    (46.9
    )
    
    
    618.4Special items and provisions, net
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (8.2
    )
    
    
    (0.3
    )
    
    
    (8.5
    )Operating income (loss) excluding special
items and provisions
    
    $
    71.9
    
    
    
    0.2
    
    
    
    2.3
    
    
    
    673.5
    
    
    
    (46.6
    )
    
    
    626.9




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    TotalMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    PDMCThird Quarter 2004Copper production (thousand short tons):Total production
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    337.6
    
    
    
    
    
    
    
    337.6Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.1
    
    
    
    
    
    
    
    16.1Copper production on a consolidated basis
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    321.5
    
    
    
    
    
    
    
    321.5Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42.9
    
    
    
    
    
    
    
    42.9Copper production on a pro rata basis
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    278.6
    
    
    
    
    
    
    
    278.6Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    341.6
    
    
    
    
    
    
    
    341.6Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.1
    
    
    
    
    
    
    
    16.1Copper sales from own mines on a
consolidated basis
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    325.5
    
    
    
    
    
    
    
    325.5Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41.0
    
    
    
    
    
    
    
    41.0Copper sales from own mines on a pro rata
basis
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    284.5
    
    
    
    
    
    
    
    284.5Total purchased copper (thousand short
tons)
    
    
    
    
    
    
    98.3
    
    
    
    0.5
    
    
    
    103.8
    
    
    
    
    
    
    
    103.8Total copper sales on a consolidated basis
    
    
    
    
    
    
    98.9
    
    
    
    0.5
    
    
    
    429.3
    
    
    
    
    
    
    
    429.3Molybdenum production (thousand pounds):Primary  Henderson
    
    
    6,794
    
    
    
    
    
    
    
    
    
    
    
    6,794
    
    
    
    
    
    
    
    6,794By-product
    
    
    8,277
    
    
    
    
    
    
    
    
    
    
    
    8,277
    
    
    
    
    
    
    
    8,277Total production
    
    
    15,071
    
    
    
    
    
    
    
    
    
    
    
    15,071
    
    
    
    
    
    
    
    15,071Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    15,466
    
    
    
    
    
    
    
    
    
    
    
    15,466
    
    
    
    
    
    
    
    15,466Purchased molybdenum
    
    
    3,264
    
    
    
    
    
    
    
    
    
    
    
    3,264
    
    
    
    
    
    
    
    3,264Total molybdenum sales
    
    
    18,730
    
    
    
    
    
    
    
    
    
    
    
    18,730
    
    
    
    
    
    
    
    18,730($ in millions)Operating income (loss)
    
    $
    17.3
    
    
    
    5.5
    
    
    
    1.6
    
    
    
    460.5
    
    
    
    (37.1
    )
    
    
    423.4Special items and provisions, net
    
    
    
    
    
    
    (3.1
    )
    
    
    
    
    
    
    (5.0
    )
    
    
    (2.9
    )
    
    
    (7.9
    )Operating income (loss) excluding special
items and provisions
    
    $
    17.3
    
    
    
    8.6
    
    
    
    1.6
    
    
    
    465.5
    
    
    
    (34.2
    )
    
    
    431.3




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
  U.S. MinesMiami/
    
    
    Chino/Morenci
    
    
    Bagdad
    
    
    Sierrita
    
    
    Bisbee
    
    
    Cobre
    
    
    Tyrone
    
    
    SubtotalNine Months Ended September 30, 2005Copper production (thousand short tons):Total production
    
    
    297.2
    
    
    
    80.3
    
    
    
    60.1
    
    
    
    9.2
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    556.7Less undivided interest
    
    
    44.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.6Copper production on a consolidated basis
    
    
    252.6
    
    
    
    80.3
    
    
    
    60.1
    
    
    
    9.2
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    512.1Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    252.6
    
    
    
    80.3
    
    
    
    60.1
    
    
    
    9.2
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    512.1Copper sales (thousand short tons):Total copper sales from own mines
    
    
    297.2
    
    
    
    81.6
    
    
    
    61.3
    
    
    
    9.9
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    559.9Less undivided interest
    
    
    44.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.6Copper sales from own mines on a
consolidated basis
    
    
    252.6
    
    
    
    81.6
    
    
    
    61.3
    
    
    
    9.9
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    515.3Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata
basis
    
    
    252.6
    
    
    
    81.6
    
    
    
    61.3
    
    
    
    9.9
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    515.3Total purchased copper (thousand short
tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    252.6
    
    
    
    81.6
    
    
    
    61.3
    
    
    
    9.9
    
    
    
    79.0
    
    
    
    30.9
    
    
    
    515.3($ in millions)Operating income (loss)
    
    $
    328.7
    
    
    
    313.3
    
    
    
    415.4
    
    
    
    4.6
    
    
    
    (15.3
    )
    
    
    (208.2
    )
    
    
    838.5Special items and provisions, net
    
    
    (0.2
    )
    
    
    
    
    
    
    (8.6
    )
    
    
    (0.1
    )
    
    
    (64.5
    )
    
    
    (215.7
    )
    
    
    (289.1
    )Operating income (loss) excluding special
items and provisions
    
    $
    328.9
    
    
    
    313.3
    
    
    
    424.0
    
    
    
    4.7
    
    
    
    49.2
    
    
    
    7.5
    
    
    
    1,127.6Nine Months Ended September 30, 2004Copper production (thousand short tons):Total production
    
    
    314.9
    
    
    
    81.9
    
    
    
    56.5
    
    
    
    7.1
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    555.9Less undivided interest
    
    
    47.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.2Copper production on a consolidated basis
    
    
    267.7
    
    
    
    81.9
    
    
    
    56.5
    
    
    
    7.1
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    508.7Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a pro rata basis
    
    
    267.7
    
    
    
    81.9
    
    
    
    56.5
    
    
    
    7.1
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    508.7Copper sales (thousand short tons):Total copper sales from own mines
    
    
    314.9
    
    
    
    84.3
    
    
    
    58.6
    
    
    
    8.5
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    561.8Less undivided interest
    
    
    47.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.2Copper sales from own mines on a
consolidated basis
    
    
    267.7
    
    
    
    84.3
    
    
    
    58.6
    
    
    
    8.5
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    514.6Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a pro rata
basis
    
    
    267.7
    
    
    
    84.3
    
    
    
    58.6
    
    
    
    8.5
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    514.6Total purchased copper (thousand short
tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total copper sales on a consolidated basis
    
    
    267.7
    
    
    
    84.3
    
    
    
    58.6
    
    
    
    8.5
    
    
    
    62.7
    
    
    
    32.8
    
    
    
    514.6($ in millions)Operating income (loss)
    
    $
    264.8
    
    
    
    103.8
    
    
    
    182.1
    
    
    
    (4.6
    )
    
    
    41.7
    
    
    
    16.2
    
    
    
    604.0Special items and provisions, net
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.6
    )
    
    
    (3.3
    )
    
    
    (4.5
    )Operating income (loss) excluding special
items and provisions
    
    $
    265.3
    
    
    
    103.8
    
    
    
    182.1
    
    
    
    (4.5
    )
    
    
    42.3
    
    
    
    19.5
    
    
    
    608.5




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 South American MinesCandelaria/Ojos delSalado
    
    
    Cerro Verde
    
    
    El Abra
    
    
    SubtotalNine Months Ended September 30, 2005Copper production (thousand short tons):Total production
    
    
    159.6
    
    
    
    76.6
    
    
    
    169.7
    
    
    
    405.9Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    159.6
    
    
    
    76.6
    
    
    
    169.7
    
    
    
    405.9Less minority participants shares
    
    
    27.2
    
    
    
    23.6
    
    
    
    83.2
    
    
    
    134.0Copper production on a pro rata basis
    
    
    132.4
    
    
    
    53.0
    
    
    
    86.5
    
    
    
    271.9Copper sales (thousand short tons):Total copper sales from own mines
    
    
    158.6
    
    
    
    74.3
    
    
    
    175.3
    
    
    
    408.2Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    158.6
    
    
    
    74.3
    
    
    
    175.3
    
    
    
    408.2Less minority participants shares
    
    
    27.0
    
    
    
    23.2
    
    
    
    85.9
    
    
    
    136.1Copper sales from own mines on a pro rata basis
    
    
    131.6
    
    
    
    51.1
    
    
    
    89.4
    
    
    
    272.1Total purchased copper (thousand short tons)
    
    
    15.5
    
    
    
    
    
    
    
    
    
    
    
    15.5Total copper sales on a consolidated basis
    
    
    174.1
    
    
    
    74.3
    
    
    
    175.3
    
    
    
    423.7($ in millions)Operating income (loss)
    
    $
    213.1
    
    
    
    131.4
    
    
    
    160.9
    
    
    
    505.4Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    
    $
    213.1
    
    
    
    131.4
    
    
    
    160.9
    
    
    
    505.4Nine Months Ended September 30, 2004Copper production (thousand short tons):Total production
    
    
    162.6
    
    
    
    74.2
    
    
    
    182.2
    
    
    
    419.0Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper production on a consolidated basis
    
    
    162.6
    
    
    
    74.2
    
    
    
    182.2
    
    
    
    419.0Less minority participants shares
    
    
    31.5
    
    
    
    13.0
    
    
    
    89.3
    
    
    
    133.8Copper production on a pro rata basis
    
    
    131.1
    
    
    
    61.2
    
    
    
    92.9
    
    
    
    285.2Copper sales (thousand short tons):Total copper sales from own mines
    
    
    164.7
    
    
    
    75.6
    
    
    
    182.9
    
    
    
    423.2Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Copper sales from own mines on a consolidated basis
    
    
    164.7
    
    
    
    75.6
    
    
    
    182.9
    
    
    
    423.2Less minority participants shares
    
    
    31.9
    
    
    
    13.2
    
    
    
    89.6
    
    
    
    134.7Copper sales from own mines on a pro rata basis
    
    
    132.8
    
    
    
    62.4
    
    
    
    93.3
    
    
    
    288.5Total purchased copper (thousand short tons)
    
    
    25.1
    
    
    
    
    
    
    
    
    
    
    
    25.1Total copper sales on a consolidated basis
    
    
    189.8
    
    
    
    75.6
    
    
    
    182.9
    
    
    
    448.3($ in millions)Operating income (loss)
    
    $
    195.3
    
    
    
    95.4
    
    
    
    202.5
    
    
    
    493.2Special items and provisions, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss) excluding special items and provisions
    
    $
    195.3
    
    
    
    95.4
    
    
    
    202.5
    
    
    
    493.2




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMC
    
    
    
    
    
    
    TotalMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    PDMCNine Months Ended September 30, 2005Copper production (thousand short tons):Total production
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    964.3
    
    
    
    1.9
    
    
    
    966.2Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.6
    
    
    
    
    
    
    
    44.6Copper production on a consolidated basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    919.7
    
    
    
    1.9
    
    
    
    921.6Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134.0
    
    
    
    
    
    
    
    134.0Copper production on a pro rata basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    785.7
    
    
    
    1.9
    
    
    
    787.6Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    969.8
    
    
    
    1.9
    
    
    
    971.7Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.6
    
    
    
    
    
    
    
    44.6Copper sales from own mines on a
consolidated basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    925.2
    
    
    
    1.9
    
    
    
    927.1Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136.1
    
    
    
    
    
    
    
    136.1Copper sales from own mines on a pro rata
basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    789.1
    
    
    
    1.9
    
    
    
    791.0Total purchased copper (thousand short tons)
    
    
    
    
    
    
    266.1
    
    
    
    13.4
    
    
    
    295.0
    
    
    
    
    
    
    
    295.0Total copper sales on a consolidated basis
    
    
    
    
    
    
    267.8
    
    
    
    13.4
    
    
    
    1,220.2
    
    
    
    1.9
    
    
    
    1,222.1Molybdenum production (thousand pounds):Primary  Henderson
    
    
    25,279
    
    
    
    
    
    
    
    
    
    
    
    25,279
    
    
    
    
    
    
    
    25,279By-product
    
    
    22,482
    
    
    
    
    
    
    
    
    
    
    
    22,482
    
    
    
    
    
    
    
    22,482Total production
    
    
    47,761
    
    
    
    
    
    
    
    
    
    
    
    47,761
    
    
    
    
    
    
    
    47,761Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    45,184
    
    
    
    
    
    
    
    
    
    
    
    45,184
    
    
    
    
    
    
    
    45,184Purchased molybdenum
    
    
    9,784
    
    
    
    
    
    
    
    
    
    
    
    9,784
    
    
    
    
    
    
    
    9,784Total molybdenum sales
    
    
    54,968
    
    
    
    
    
    
    
    
    
    
    
    54,968
    
    
    
    
    
    
    
    54,968($ in millions)Operating income (loss)
    
    $
    257.4
    
    
    
    (137.4
    )
    
    
    1.8
    
    
    
    1,465.7
    
    
    
    (92.2
    )
    
    
    1,373.5Special items and provisions, net
    
    
    
    
    
    
    (148.6
    )
    
    
    
    
    
    
    (437.7
    )
    
    
    8.3
    
    
    
    (429.4
    )Operating income (loss) excluding special
items and provisions
    
    $
    257.4
    
    
    
    11.2
    
    
    
    1.8
    
    
    
    1,903.4
    
    
    
    (100.5
    )
    
    
    1,802.9




---



##### Table of Contents



PDMC RESULTS BY REPORTABLE SEGMENTS
 Primary
    
    
    
    
    
    
    
    
    
    
    PDMCMolybdenum
    
    
    Manufacturing
    
    
    Sales
    
    
    Segments
    
    
    Other
    
    
    Total PDMCNine Months Ended September 30, 2004Copper production (thousand short tons):Total production
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    976.6
    
    
    
    
    
    
    
    976.6Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.2
    
    
    
    
    
    
    
    47.2Copper production on a consolidated basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    929.4
    
    
    
    
    
    
    
    929.4Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133.8
    
    
    
    
    
    
    
    133.8Copper production on a pro rata basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    795.6
    
    
    
    
    
    
    
    795.6Copper sales (thousand short tons):Total copper sales from own mines
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    986.7
    
    
    
    
    
    
    
    986.7Less undivided interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.2
    
    
    
    
    
    
    
    47.2Copper sales from own mines on a
consolidated basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    939.5
    
    
    
    
    
    
    
    939.5Less minority participants shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134.7
    
    
    
    
    
    
    
    134.7Copper sales from own mines on a pro rata
basis
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    804.8
    
    
    
    
    
    
    
    804.8Total purchased copper (thousand short tons)
    
    
    
    
    
    
    308.9
    
    
    
    1.6
    
    
    
    335.6
    
    
    
    
    
    
    
    335.6Total copper sales on a consolidated basis
    
    
    
    
    
    
    310.6
    
    
    
    1.6
    
    
    
    1,275.1
    
    
    
    
    
    
    
    1,275.1Molybdenum production (thousand pounds):Primary  Henderson
    
    
    20,307
    
    
    
    
    
    
    
    
    
    
    
    20,307
    
    
    
    
    
    
    
    20,307By-product
    
    
    23,075
    
    
    
    
    
    
    
    
    
    
    
    23,075
    
    
    
    
    
    
    
    23,075Total production
    
    
    43,382
    
    
    
    
    
    
    
    
    
    
    
    43,382
    
    
    
    
    
    
    
    43,382Molybdenum sales (thousand pounds):Net Phelps Dodge share from own mines
    
    
    46,614
    
    
    
    
    
    
    
    
    
    
    
    46,614
    
    
    
    
    
    
    
    46,614Purchased molybdenum
    
    
    9,796
    
    
    
    
    
    
    
    
    
    
    
    9,796
    
    
    
    
    
    
    
    9,796Total molybdenum sales
    
    
    56,410
    
    
    
    
    
    
    
    
    
    
    
    56,410
    
    
    
    
    
    
    
    56,410($ in millions)Operating income (loss)
    
    $
    62.7
    
    
    
    17.0
    
    
    
    2.8
    
    
    
    1,179.7
    
    
    
    (89.4
    )
    
    
    1,090.3Special items and provisions, net
    
    
    0.3
    
    
    
    (3.1
    )
    
    
    
    
    
    
    (7.3
    )
    
    
    (3.1
    )
    
    
    (10.4
    )Operating income (loss) excluding special
items and provisions
    
    $
    62.4
    
    
    
    20.1
    
    
    
    2.8
    
    
    
    1,187.0
    
    
    
    (86.3
    )
    
    
    1,100.7




---



##### Table of Contents



Sales of Copper (U.S. and South America) and Molybdenum
   Third Quarter2005
    
    
    2004U.S. Mining Operations*Unaffiliated customers
    
    $
    1,165.8
    
    
    
    902.4Intersegment elimination
    
    
    (220.4
    )
    
    
    (135.0
    )945.4
    
    
    
    767.4South American Mines**Unaffiliated customers
    
    
    225.9
    
    
    
    250.8Intersegment
    
    
    220.4
    
    
    
    135.0446.3
    
    
    
    385.8Primary MolybdenumUnaffiliated customers
    
    
    468.0
    
    
    
    267.1Intersegment
    
    
    
    
    
    
    468.0
    
    
    
    267.1Total PDMCUnaffiliated customers
    
    $
    1,859.7
    
    
    
    1,420.3
  Nine Months EndedSeptember 30,2005
    
    
    2004U.S. Mining Operations*Unaffiliated customers
    
    $
    3,049.3
    
    
    
    2,573.8Intersegment elimination
    
    
    (585.1
    )
    
    
    (477.2
    )2,464.2
    
    
    
    2,096.6South American Mines**Unaffiliated customers
    
    
    642.0
    
    
    
    673.3Intersegment
    
    
    585.1
    
    
    
    477.21,227.1
    
    
    
    1,150.5Primary MolybdenumUnaffiliated customers
    
    
    1,470.9
    
    
    
    642.2Intersegment
    
    
    
    
    
    
    1,470.9
    
    
    
    642.2Total PDMCUnaffiliated customers
    
    $
    5,162.2
    
    
    
    3,889.3
 
 *
    
    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  Sales
   South American Mines Segment  Sales




---



##### Table of Contents



Primary Molybdenum Segment  Sales
   Operating Income for Copper (U.S. and South America) and Molybdenum
     Third Quarter2005
    
    
    2004Segment operating income:U.S. Mining Operations*
    
    $
    365.0
    
    
    
    233.1South American Mines**
    
    
    181.5
    
    
    
    173.0Primary Molybdenum
    
    
    71.9
    
    
    
    17.3$
    618.4
    
    
    
    423.4Special, pre-tax items and provisions:U.S. Mining Operations*
    
    $
    (8.5
    )
    
    
    (7.9
    )South American Mines**
    
    
    
    
    
    
    Primary Molybdenum
    
    
    
    
    
    
    $
    (8.5
    )
    
    
    (7.9
    )Segment operating income
excluding special items and provisions:U.S. Mining Operations*
    
    $
    373.5
    
    
    
    241.0South American Mines**
    
    
    181.5
    
    
    
    173.0Primary Molybdenum
    
    
    71.9
    
    
    
    17.3$
    626.9
    
    
    
    431.3
  Nine Months EndedSeptember 30,2005
    
    
    2004Segment operating income:U.S. Mining Operations*
    
    $
    610.7
    
    
    
    534.4South American Mines**
    
    
    505.4
    
    
    
    493.2Primary Molybdenum
    
    
    257.4
    
    
    
    62.7$
    1,373.5
    
    
    
    1,090.3Special, pre-tax items and provisions:U.S. Mining Operations*
    
    $
    (429.4
    )
    
    
    (10.7
    )South American Mines**
    
    
    
    
    
    
    Primary Molybdenum
    
    
    
    
    
    
    0.3$
    (429.4
    )
    
    
    (10.4
    )Segment operating income
excluding special items and provisions:U.S. Mining Operations*
    
    $
    1,040.1
    
    
    
    545.1South American Mines**
    
    
    505.4
    
    
    
    493.2Primary Molybdenum
    
    
    257.4
    
    
    
    62.4$
    1,802.9
    
    
    
    1,100.7
 
 *
    
    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
   Morenci Segment  Operating Income




---



##### Table of Contents



Bagdad Segment  Operating Income
    Sierrita Segment  Operating Income
    Miami/Bisbee Segment  Operating Income (Loss)
    Chino/Cobre Segment  Operating Income (Loss)




---



##### Table of Contents



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




---



##### Table of Contents



Cerro Verde Segment  Operating Income
     El Abra Segment  Operating Income
    Primary Molybdenum  Operating Income
  i.e. Platts Metals Week Ryans Notes Metal Bulletin i.e.




---



##### Table of Contents



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.
     PDMC  Other Matters




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##### Table of Contents



Significant New Mexico Environmental and
Reclamation Programs




---



##### Table of Contents



RESULTS OF PHELPS DODGE INDUSTRIES
    Third Quarter2005
    
    
    2004Sales and other operating revenues
to unaffiliated customers:Specialty Chemicals
    
    $
    180.8
    
    
    
    171.1Wire and Cable
    
    
    319.3
    
    
    
    255.1$
    500.1
    
    
    
    426.2Operating income:Specialty Chemicals
    
    $
    7.6
    
    
    
    5.1Wire and Cable
    
    
    9.4
    
    
    
    7.4$
    17.0
    
    
    
    12.5
  Nine Months EndedSeptember 30,2005
    
    
    2004Sales and other operating revenues
to unaffiliated customers:Specialty Chemicals
    
    $
    546.4
    
    
    
    500.2Wire and Cable
    
    
    869.3
    
    
    
    704.9$
    1,415.7
    
    
    
    1,205.1Operating income:Specialty Chemicals
    
    $
    29.7
    
    
    
    32.2Wire and Cable
    
    
    26.7
    
    
    
    16.0$
    56.4
    
    
    
    48.2
 PDI  Sales




---



##### Table of Contents



PDI  Operating Income
      Third Quarter2005
    
    
    2004Operating income
    
    $
    17.0
    
    
    
    12.5Special, pre-tax items and provisions
    
    
    (1.8
    )
    
    
    (3.3
    )Segment operating income excluding
special items and provisions
    
    $
    18.8
    
    
    
    15.8
  Nine Months EndedSeptember 30,2005
    
    
    2004Operating income
    
    $
    56.4
    
    
    
    48.2Special, pre-tax items and provisions
    
    
    (3.3
    )
    
    
    (7.6
    )Segment operating income excluding
special items and provisions
    
    $
    59.7
    
    
    
    55.8
     Third Quarter2005
    
    
    2004Environmental provisions, net
    
    $
    (0.1
    )
    
    
    (0.2
    )Wire and Cable restructuring
programs/closures
    
    
    0.3
    
    
    
    (3.1
    )Asset impairment charges
    
    
    (2.0
    )
    
    
    $
    (1.8
    )
    
    
    (3.3
    )
  Nine Months EndedSeptember 30,2005
    
    
    2004Environmental provisions, net
    
    $
    (0.1
    )
    
    
    (0.3
    )Wire and Cable restructuring
programs/closures
    
    
    (0.8
    )
    
    
    (6.7
    )Asset impairment charges
    
    
    (2.4
    )
    
    
    (0.6
    )$
    (3.3
    )
    
    
    (7.6
    )
 Specialty Chemicals  Operating Income
    Wire and Cable  Operating Income




---



##### Table of Contents



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




---



##### Table of Contents



Gain on Sale of Cost-Basis Investment
  Change in Interest Gain from Cerro Verde Stock Issuance
   Miscellaneous Income and Expense, Net
   Provision for Taxes on Income




---



##### Table of Contents



CHANGES IN FINANCIAL CONDITION
 Working Capital
  
    
    a $324.1 million increase in accounts receivable primarily due to
copper receivables resulting from higher copper prices and sales volumes (approximately $188
million), repayment of securitization program (approximately $85
million) and molybdenum receivables resulting from higher molybdenum prices (approximately $52 million);
    
    a $69.8 million increase in inventories primarily due to lower
molybdenum sales (approximately $42 million) and higher purchases
at Wire and Cable mostly in anticipation of increased sales
volumes (approximately $29 million);
    
    a $63.5 million increase in prepaid expenses and other current
assets primarily due to higher prepaid taxes (approximately $39
million) that will be factored into our 2005 fourth quarter
estimated tax payment, fair value adjustments associated with
derivatives (approximately $9 million), the reclassification of the
current portion of long-term investments (approximately $8
million) and timing of payments for insurance (approximately $3
million);
    
    a $38.5 million decrease in accrued income taxes primarily due to
payments, net of refunds (approximately $356 million) and a tax
benefit associated with stock options (approximately $36 million);
partially offset by higher foreign, federal and state income tax
provisions (approximately $318 million) and the reclassification
of prepaid income taxes (approximately $39 million);
    
    a $36.1 million increase in current deferred tax assets primarily
due to reclassification from non-current deferred income taxes;
and
    
    a $19.5 million increase in supplies due to a build-up primarily
associated with anticipated longer lead times for certain supplies
and parts and production increases (approximately $16 million) and
higher prices for acid (approximately $5 million); partially
offset by
    
    a $320.0 million increase in accounts payable and accrued expenses
mostly due to higher mark-to-market adjustments on copper collars
(approximately $153 million), higher cathode and concentrate
purchase (approximately $58 million), net increases in asset
retirement obligation costs (approximately $60 million) and
environmental reserves (approximately $17 million) primarily
resulting from the reclassification of the current portions for the
acceleration of certain environmental and reclamation projects, and
timing of payments (approximately $19 million).
 Cash and Cash Equivalents
    September 30,
    
    
    December 31,2005
    
    
    2004U.S. operations:Phelps Dodge
    
    $
    1,426.0
    
    
    
    678.4International operations:Phelps Dodge
    
    
    810.1
    
    
    
    453.3Minority participants shares
    
    
    269.2
    
    
    
    68.41,079.3
    
    
    
    521.7Total consolidated cash
    
    $
    2,505.3
    
    
    
    1,200.1
  Capital Expenditures and Investments
  Debt




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Dividends




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Contractual Obligations
   Less Than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsShort-term debt
    
    $
    31.1
    
    
    
    31.1
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    699.6
    
    
    
    43.0
    
    
    
    63.6
    
    
    
    23.7
    
    
    
    569.3Scheduled interest payment obligations*
    
    
    994.7
    
    
    
    51.7
    
    
    
    96.3
    
    
    
    91.4
    
    
    
    755.3Asset retirement obligations**
    
    
    70.0
    
    
    
    33.4
    
    
    
    20.6
    
    
    
    10.0
    
    
    
    6.0Take-or-pay contracts
    
    
    853.5
    
    
    
    364.9
    
    
    
    202.5
    
    
    
    91.7
    
    
    
    194.4
 
 *
    
    Scheduled interest payment obligations were calculated using stated coupon rates for fixed
debt and interest rates applicable at September 30, 2005, for variable rate debt.**
    
    Asset retirement obligations only include our estimated contractual cash payments associated
with reclamation activities at certain sites for which our costs are estimable
and the timing of payments is reasonably determinable as of September 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. The table excludes cash payments of approximately $84
million that are expected to be incurred in connection with
accelerating certain closure projects (refer to Others Items that
May Affect Liquidity on pages 50 through 52 for further discussion of
the Accelarated Projects).
Additionally, we have also excluded payments for reclamation activities that are expected to occur
after five years that are either not estimable and/or for which the timing is not determinable
because the majority of these cash flows are expected to occur over an extended period of time
commencing near the end of the mine life.  Guarantees
  Other Items that May Affect Liquidity




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Other
  Diesel Fuel and Natural Gas Price Protection Programs
   .
  
 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



Carlisle Companies Incorporated, et al. v. Cabot Corporation,
et al.
    
 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 ProgramsJuly 1-31, 2005
    
    
    7,621
    
    
    $
    93.63
    
    
    
    
    
    
    
    August 1-31, 2005
    
    
    575
    
    
    
    107.58
    
    
    
    
    
    
    
    September 1-30, 2005
    
    
    5,141
    
    
    
    117.82
    
    
    
    
    
    
    
    Total
    
    
    13,337
    
    
    $
    103.56
    
    
    
    
    
    
    
    
 
 *
    
    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.




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##### Table of Contents



Item 5. Other Information
 (b)
    
    The purpose of this disclosure is to clarify the proper dates under which shareholder
proposals will be considered for the Companys annual meeting of shareholders to be held May
26, 2006. The Company will review for inclusion in next years proxy statement shareholder
proposals received by December 15, 2005. Proposals should be sent to the Assistant General
Counsel and Secretary, Phelps Dodge Corporation, One North Central Avenue, Phoenix, Arizona
85004. Shareholder proposals not included in next years proxy statement may be brought
before the May 26, 2006 annual meeting of shareholders by a shareholder of the Company who is
entitled to vote at the meeting, who has given a written notice to the Assistant General
Counsel and Secretary of the Company containing certain information specified in the By-Laws
and who was a shareholder of record at the time such notice was given. Such notice must be
delivered to or mailed and received at the One North Central Avenue address noted above no
earlier than the close of business on January 26, 2006, and no later than the close of
business on February 25, 2006 (or, for shareholder proposals nominating directors, no earlier
than the close of business on January 25, 2006, and no later than the close of business on
February 24, 2006), except that if the date of the 2006 annual meeting of shareholders is
changed, and the meeting is held before April 26, 2006, or after July 26, 2006, such notice
must be delivered or mailed and received at the One North Central Avenue address specified
above no earlier than the close of business 120 days prior to the new date of such annual
meeting and no later than the close of business on the later of
(i) the 90th day prior to the new
date of such meeting, and (ii) the 10th day following the day on which a public announcement of the
new date of such annual meeting is first made.
 
 Item 6. Exhibits
  
 Signatures
  PHELPS DODGE CORPORATION
  Date: October 27, 2005
    
    By:
    
    /s/ Denise R. Danner

Denise R. DannerVice President and Controller(Principal Accounting Officer)
 
 Index to Exhibits
 10.1
    
    Master Participation Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro
Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and Calyon New York Branch (as
Administrative Agent).10.2
    
    Completion Guarantee, dated as of September 30, 2005, among Sumitomo Metal Mining Co., Ltd.,
Sumitomo Corporation, Compañia de Minas Buenaventura S.A.A., Phelps Dodge Corporation, Japan
Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank
of Nova Scotia, Mizuho Corporate Bank, Ltd. and Calyon New York Branch (as Administrative
Agent).10.3
    
    Master Security Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde
S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The
Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc,
The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Calyon New York Branch (as
Administrative Agent), Citibank, N.A. and Citibank del Perú S.A.10.4
    
    Transfer Restrictions Agreement, dated as of September 30, 2005, among SMM Cerro Verde
Netherlands, B.V., Compañia de Minas Buenaventura S.A.A., Cyprus Climax Metals Company,
Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Phelps Dodge Corporation, Japan Bank
for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank
of Nova Scotia, Mizuho Corporate Bank, Ltd., and Calyon New York Branch (as Administrative
Agent).10.5
    
    JBIC Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde
S.A.A., Japan Bank for International Cooperation, and Sumitomo Mitsui Banking Corporation (as
JBIC Agent).10.6
    
    KfW Loan Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro Verde
S.A.A. and KfW.10.7
    
    Commercial Banks Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro
Verde S.A.A., Calyon New York Branch (as Administrative Agent), Calyon New York Branch, Mizuho
Corporate Bank, Ltd., The Bank of Nova Scotia, and The Royal Bank of Scotland plc.10.8
    
    PD Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge Corporation
and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to the Operators
Agreement dated June 1, 2005, between Sociedad Minera Cerro Verde S.A.A. and Minera Phelps
Dodge del Perú S.A.C.).




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##### Table of Contents



10.9
    
    PD Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge Corporation
and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to (i) the Concentrate
Sales Agreement, dated as of September 30, 2005, between
Sociedad Minera Cerro Verde S.A.A. and
Phelps Dodge Sales Company Incorporated, and (ii) the Cathodes Sales Agreement, dated as of
September 30, 2005, between Sociedad Minera Cerro Verde S.A.A. and Phelps Dodge Sales Company
Incorporated).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.