-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BEG1lkWbZS2q30okagk1UIN98XQwLv3N9SFWpeW7nPTPczHNOaKR8NOX+GbBE+zj Xakn8D874X9fyaOzGrj3ng== 0000950147-97-000305.txt : 19970515 0000950147-97-000305.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950147-97-000305 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHELPS DODGE CORP CENTRAL INDEX KEY: 0000078066 STANDARD INDUSTRIAL CLASSIFICATION: PRIMARY SMELTING & REFINING OF NONFERROUS METALS [3330] IRS NUMBER: 131808503 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00082 FILM NUMBER: 97605309 BUSINESS ADDRESS: STREET 1: 2600 NORTH CENTRAL AVE CITY: PHOENIX STATE: AZ ZIP: 85004 BUSINESS PHONE: 6022348100 MAIL ADDRESS: STREET 1: 2600 NORTH CENTRAL AVENUE CITY: PHOENIX STATE: AZ ZIP: 85004-3089 10-Q 1 QUARTERLY REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1997 Commission file number 1-82 PHELPS DODGE CORPORATION (a New York corporation) 13-1808503 (I.R.S. Employer Identification No.) 2600 N. Central Avenue, Phoenix, AZ 85004-3089 Registrant's telephone number: (602) 234-8100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No . Number of Common Shares outstanding at May 9, 1997: 61,923,355 shares. ================================================================================ PHELPS DODGE CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 Table of Contents ----------------- Part I. Financial Information Item 1. Financial Statements Statement of Consolidated Income Consolidated Balance Sheet Consolidated Statement of Cash Flows Consolidated Statement of Common Shareholders' Equity Notes to Consolidated Financial Information Review by Independent Accountants Report of Independent Accountants on Review of Interim Financial Information Item 2. Management's Discussion and Analysis Results of Operations Results of Phelps Dodge Mining Company Results of Phelps Dodge Industries Other Matters Relating to the Statement of Consolidated Income Changes in Financial Condition Part II. Other Information Item 1. Legal Proceedings Item 6. Exhibits and Reports on Form 8-K Signatures Index to Exhibits PHELPS DODGE CORPORATION AND SUBSIDIARIES Part I. Financial Information Item 1. Financial Statements STATEMENT OF CONSOLIDATED INCOME (Unaudited; in millions except per share data) First Quarter ------------- 1997 1996 ---- ---- SALES AND OTHER OPERATING REVENUES $ 1,021.7 1,004.7 --------- -------- OPERATING COSTS AND EXPENSES Cost of products sold 695.9 664.5 Depreciation, depletion and amortization 68.9 61.2 Selling and general administrative expense 33.7 30.5 Exploration and research expense 17.2 18.7 --------- -------- 815.7 774.9 --------- -------- OPERATING INCOME 206.0 229.8 Interest expense (16.4) (17.2) Capitalized interest 2.5 0.2 Miscellaneous income and expense, net 9.9 15.0 --------- -------- INCOME BEFORE TAXES, MINORITY INTERESTS AND EQUITY IN NET EARNINGS OF AFFILIATED COMPANIES 202.0 227.8 Provision for taxes on income (64.6) (72.9) Minority interests in consolidated subsidiaries (2.3) (3.4) Equity in net earnings of affiliated companies 2.4 1.6 --------- -------- NET INCOME $ 137.5 153.1 ========= ======== EARNINGS PER SHARE $ 2.12 2.26 ========= ======== AVERAGE NUMBER OF SHARES OUTSTANDING 64.7 67.8 See Notes to Consolidated Financial Information. BUSINESS SEGMENTS (Unaudited; in millions) First Quarter ------------- 1997 1996 ---- ---- SALES AND OTHER OPERATING REVENUES Phelps Dodge Mining Company $ 590.3 584.6 Phelps Dodge Industries 431.4 420.1 -------- ------- $1,021.7 1,004.7 ======== ======= OPERATING INCOME (LOSS) Phelps Dodge Mining Company $ 171.8 184.6 Phelps Dodge Industries 45.3 54.4 Corporate and other (11.1) (9.2) -------- ------- $ 206.0 229.8 ======== ======= See Notes to Consolidated Financial Information. CONSOLIDATED BALANCE SHEET (Unaudited; in millions) March 31, December 31, 1997 1996 ---- ---- ASSETS Cash and short-term investments, at cost $ 422.0 470.1 Accounts receivable, net 523.6 489.1 Inventories 297.7 293.0 Supplies 119.3 117.0 Prepaid expenses 19.1 6.1 Deferred income taxes 46.2 46.2 -------- ------- Current assets 1,427.9 1,421.5 Investments and long-term accounts receivable 90.9 86.4 Property, plant and equipment, net 3,074.8 3,020.5 Other assets and deferred charges 285.0 288.0 -------- ------- $4,878.6 4,816.4 ======== ======= LIABILITIES Short-term debt $ 62.9 66.5 Current portion of long-term debt 51.7 38.2 Accounts payable and accrued expenses 581.9 564.9 Income taxes 57.8 16.3 -------- ------- Current liabilities 754.3 685.9 Long-term debt 531.8 554.6 Deferred income taxes 442.4 424.9 Other liabilities and deferred credits 307.8 309.6 -------- ------- 2,036.3 1,975.0 -------- ------- MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES 87.6 85.5 -------- ------- COMMON SHAREHOLDERS' EQUITY Common shares, 63.4 outstanding (12/31/96 - 64.7) 396.5 404.4 Retained earnings 2,475.9 2,465.0 Cumulative translation adjustments (103.6) (98.8) Other (14.1) (14.7) -------- ------- 2,754.7 2,755.9 -------- ------- $4,878.6 4,816.4 ======== ======= See Notes to Consolidated Financial Information. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited; in millions) Three months ended March 31, -------------- 1997 1996 ---- ---- OPERATING ACTIVITIES Net income $ 137.5 153.1 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 68.9 61.2 Deferred income taxes 18.2 22.8 Equity earnings net of dividends received (2.0) (1.6) Changes in current assets and liabilities: (Increase) decrease in accounts receivable (37.4) (59.7) (Increase) decrease in inventories (6.1) 16.9 (Increase) decrease in supplies (2.6) 3.2 (Increase) decrease in prepaid expenses (14.0) (7.2) (Increase) decrease in deferred income taxes (0.1) 0.7 Increase (decrease) in interest payable 3.6 4.0 Increase (decrease) in other accounts payable 15.2 (8.4) Increase (decrease) in income taxes 41.5 40.8 Increase (decrease) in other accrued expenses (0.6) (8.1) Other adjustments, net 1.3 4.2 ------- ------ Net cash provided by operating activities 223.4 221.9 ------- ------ INVESTING ACTIVITIES Capital outlays (122.7) (99.0) Capitalized interest (2.5) (0.2) Investment in subsidiaries 0.3 -- Proceeds from asset dispositions and other 1.1 0.6 ------- ------ Net cash used in investing activities (123.8) (98.6) ------- ------ FINANCING ACTIVITIES Increase in debt -- 5.0 Payment of debt (11.6) (4.3) Common dividends (32.3) (30.3) Purchase of common shares (109.3) (129.3) Other, net 5.5 10.6 ------- ------ Net cash used in financing activities (147.7) (148.3) ------- ------ DECREASE IN CASH AND SHORT-TERM INVESTMENTS (48.1) (25.0) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 470.1 608.5 ------- ------ CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 422.0 583.5 ======= ====== See Notes to Consolidated Financial Information. CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (Unaudited; in millions) Common Shares Cumulative ----------------- Translation Number Adjustments Common of At Par Retained and Shareholders' shares Value Earnings Other Equity ------ ----- -------- ----- ------- Balance at December 31, 1996 64.7 $ 404.4 $ 2,465.0 $ (113.5) $ 2,755.9 Stock options exercised 0.2 1.3 5.8 7.1 Common shares purchased (1.5) (9.2) (100.1) (109.3) Net income 137.5 137.5 Dividends on common shares (32.3) (32.3) Translation adjustment (4.8) (4.8) Other 0.6 0.6 ----- ------- --------- --------- --------- Balance at March 31, 1997 63.4 $ 396.5 $ 2,475.9 $ (117.7) $ 2,754.7 ===== ======= ========= ========= ========= See Notes to Consolidated Financial Information. NOTES TO CONSOLIDATED FINANCIAL INFORMATION (Unaudited) 1. The unaudited consolidated financial information presented herein has been prepared in accordance with the instructions to Form 10-Q and does not include all of the information and note disclosures required by generally accepted accounting principles. Therefore, this information should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation's Form 10-K for the year ended December 31, 1996. This information reflects all adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods reported. 2. The results of operations for the three-month period ended March 31, 1997, are not necessarily indicative of the results to be expected for the full year. 3. Depending on market circumstances, the Corporation may periodically purchase or liquidate various copper price protection contracts for a portion of its expected future mine production to mitigate the risk of adverse price fluctuations. The Corporation currently has no copper price protection contracts in place. Contracts covering 85 million pounds of first quarter 1997 copper cathode expired without payment. During the 1996 third quarter, the Corporation liquidated a portion of its copper price protection contracts that covered anticipated mine production in the first quarter of 1997. Consequently, a $6.8 million gain was recognized in pre-tax income during the 1997 first quarter. 4. The effect of the implementation of Statement of Financial Accounting Standards No. 128, "Earnings per Share," would be immaterial on a pro forma basis for the calculation of earnings per share for the first quarter of 1997. REVIEW BY INDEPENDENT ACCOUNTANTS The financial information as of March 31, 1997, and for the three-month periods ended March 31, 1997 and 1996, included in Part I pursuant to Rule 10-01 of Regulation S-X has been reviewed by Price Waterhouse LLP (Price Waterhouse), the Corporation's independent accountants, in accordance with standards established by the American Institute of Certified Public Accountants. Price Waterhouse's report is included in this quarterly report. Price Waterhouse does not carry out any significant or additional audit tests beyond those that would have been necessary if its report had not been included in this quarterly report. Accordingly, such report is not a "report" or "part of a registration statement" within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11 of such Act do not apply. PRICE WATERHOUSE LLP REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of the Phelps Dodge Corporation We have reviewed the accompanying consolidated balance sheet of Phelps Dodge Corporation and its subsidiaries as of March 31, 1997 and the consolidated statements of income, of cash flows and of common shareholders' equity for the three-month periods ended March 31, 1997 and 1996. These financial statements are the responsibility of the Corporation's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1996, and the related consolidated statements of income, of cash flows and of common shareholders' equity for the year then ended (not presented herein), and in our report dated January 15, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 1996, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. Price Waterhouse LLP Phoenix, Arizona April 9, 1997 Item 2. Management's Discussion and Analysis RESULTS OF OPERATIONS Phelps Dodge Corporation had consolidated net income of $137.5 million, or $2.12 per common share, in the first quarter of 1997, compared with $153.1 million, or $2.26 per common share, in the 1996 first quarter. Earnings were lower in the 1997 first quarter than in the corresponding 1996 period principally as a result of lower average copper prices. Average spot prices per pound of cathode copper on the New York Commodity Exchange (COMEX) were approximately 7 cents per pound, or 6 percent, lower in the first quarter of 1997 than the average prices in the corresponding 1996 period. The effect of this price decrease was offset in part by higher volumes of copper sold from mine production. Any material change in the price the Corporation receives for copper, or in its unit production costs, has a significant effect on the Corporation's results. The Corporation's present share of annual production is approximately 1.6 billion pounds of copper. Accordingly, each 1 cent per pound change in the average annual copper price received by the Corporation, or in average annual unit production costs, causes a variation in annual operating income before taxes of approximately $16 million. The COMEX spot price per pound of copper cathode, upon which the Corporation bases its selling price, averaged $1.11 in the 1997 first quarter, compared with $1.18 in the corresponding 1996 period. From April 1 to May 9, 1997, the COMEX price averaged $1.10 per pound, closing at $1.12 on May 9, 1997. Depending on market circumstances, the Corporation may periodically purchase or liquidate various copper price protection contracts for a portion of its expected future mine production to mitigate the risk of adverse price fluctuations. For a further discussion of the Corporation's copper price protection arrangements for 1997 production, see Note 3 to the Consolidated Financial Information. Sales were $1,021.7 million in the 1997 first quarter, compared with $1,004.7 million in the corresponding 1996 period. This increase principally resulted from greater sales volumes of copper and from higher sales volumes in the wire and cable business, which were partially offset by lower average copper prices and lower sales volumes of wheels and rims and specialty chemicals. RESULTS OF PHELPS DODGE MINING COMPANY Phelps Dodge Mining Company is an international business comprising a group of companies involved in vertically integrated copper operations including mining, concentrating, electrowinning, smelting and refining, rod production, marketing and sales, and related activities. Copper is sold primarily to others as rod, cathode or concentrates, and as rod to the Phelps Dodge Industries segment. In addition, Phelps Dodge Mining Company at times smelts and refines copper and produces copper rod for others on a toll basis. Phelps Dodge Mining Company also produces gold, silver, molybdenum and copper chemicals as by-products, and sulfuric acid from its air quality control facilities. This segment also includes the Corporation's other mining operations and investments (including fluorspar, silver, lead and zinc operations) and its worldwide mineral exploration and development programs. ================================================================================ First Quarter ------------- 1997 1996 ---- ---- Copper production (short tons): Total production 235,300 231,400 Less minority participants' shares * 40,700 41,200 ------- ------- Net Phelps Dodge share 194,600 190,200 ======= ======= Copper sales (short tons): Net Phelps Dodge share from own mines 192,800 190,400 Purchased copper 73,100 62,100 ------- ------- Total copper sales 265,900 252,500 ======= ======= New York Commodity Exchange average spot price per pound - copper cathodes 1.11 1.18 (in millions) Sales and other operating revenues 590.3 584.6 Operating income 171.8 184.6 - --------------------- * Minority participant interests include (i) a 15 percent undivided interest in the Morenci, Arizona, copper mining complex held by Sumitomo Metal Mining Arizona, Inc., (ii) a one-third partnership interest in Chino Mines Company in New Mexico held by Heisei Minerals Corporation, and (iii) a 20 percent interest in Candelaria held by SMMA Candelaria, Inc., a jointly owned subsidiary of Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation. ================================================================================ Phelps Dodge Mining Company's sales of copper in the first quarter of 1997 increased by 13,400 tons, or 5 percent, compared with the corresponding 1996 period. This sales volume increase, which principally consisted of copper purchased for resale, was offset for the most part by a 7 cents per pound decrease in average copper prices in the 1997 first quarter compared with the year-earlier period. Resulting sales and other operating revenues in the first quarter of 1997 were $590.3 million, or 1 percent higher than those in the corresponding 1996 period. Phelps Dodge Mining Company recorded operating income of $171.8 million in the 1997 first quarter, compared with $184.6 million in the corresponding 1996 period. This decrease primarily reflected the lower average copper prices and modestly higher copper production costs, which were partially offset by slightly higher volumes of copper sold from mine production. Copper sold from mine production increased by 2,400 tons, or 1 percent, over that sold in the corresponding 1996 period. Higher 1997 copper production costs resulted principally from increased depreciation rates, slightly higher energy costs and lower by-product credits from precious metals. The collective bargaining agreements covering approximately 625 employees at Phelps Dodge Mining Company's Chino operations in New Mexico expired on June 30, 1996. As of May 9, 1997, employees who were covered by the agreements have continued to work without a contract. On May 7, 1997, the Corporation announced plans to resume production at its Ajo copper mine in southern Arizona where mining operations have been suspended since 1984. Construction of a $238 million modernization of the facility is scheduled to begin in early 1998, pending completion of environmental permitting, with commercial production expected to begin as soon as late 1999. When operating at full capacity, Ajo is expected to add 135 million pounds of copper to the Corporation's annual production. On May 6, 1997, the Corporation acquired an indirect 40 percent voting interest, representing an indirect 26.67 percent economic interest, in Compania San Ignacio de Morococha S.A., a leading Peruvian zinc mining company that annually produces approximately 130 million pounds of zinc. RESULTS OF PHELPS DODGE INDUSTRIES Phelps Dodge Industries is a business segment comprising a group of companies that manufacture engineered products principally for the transportation, energy and telecommunications sectors worldwide. Its operations are characterized by products with significant market share, internationally competitive cost and quality, and specialized engineering capabilities. This business segment includes the Corporation's specialty chemicals operations through Columbian Chemicals Company and its subsidiaries; its wheel and rim operations through Accuride Corporation and its subsidiaries; and its wire and cable and specialty conductor operations through Phelps Dodge International Corporation and Phelps Dodge Magnet Wire Company and their subsidiaries and affiliates. ================================================================================ First Quarter -------------- 1997 1996 ---- ---- (in millions) Sales and other operating revenues: Specialty chemicals $ 108.7 112.4 Wheels and rims 81.5 82.8 Wire and cable 241.2 224.9 ------- ------ $ 431.4 420.1 ======= ====== Operating income: Specialty chemicals $ 17.2 21.2 Wheels and rims 6.1 11.0 Wire and cable 22.0 22.2 ------- ------ $ 45.3 54.4 ======= ====== ================================================================================ Phelps Dodge Industries' sales of $431.4 million in the first quarter of 1997 were slightly higher than those in the corresponding 1996 period. Higher sales volumes in the wire and cable and North American specialty chemicals businesses were offset in part by lower sales volumes in the wheel and rim and European specialty chemicals businesses. Phelps Dodge Industries reported 1997 first quarter operating income of $45.3 million compared with $54.4 million in the corresponding 1996 period. The decrease primarily was due to lower sales volumes of specialty chemicals in the European market and the effects of a recently settled strike at the Corporation's London, Ontario, wheel and rim plant. The strike, which began on January 21, 1997, was settled on March 15, 1997. On May 1, 1997, Accuride Corporation and Kaiser Aluminum and Chemical Corporation (Kaiser) formed a joint venture company to produce aluminum wheels for the commercial transportation industry. Accuride and Kaiser each own 50 percent of the new company. The collective bargaining agreement covering approximately 360 employees at Phelps Dodge Magnet Wire Company's Hopkinsville, Kentucky, plant expired on October 11, 1996. As of May 9, 1997, employees who were covered by the agreement have continued to work without a contract. OTHER MATTERS RELATING TO THE STATEMENT OF CONSOLIDATED INCOME Miscellaneous income and expense, net, decreased by $5.1 million, or 34 percent, in the 1997 first quarter compared with the corresponding 1996 period. This change principally reflected decreased interest income from lower short-term investments and less dividend income from the Corporation's 13.9 percent minority interest in Southern Peru Copper Corporation. CHANGES IN FINANCIAL CONDITION Capital outlays during the 1997 first quarter were $94.5 million for Phelps Dodge Mining Company, including $47.3 million for the expansion of the Corporation's Candelaria mining operations in Chile. Capital outlays were $27.3 million for Phelps Dodge Industries. Capital outlays in the corresponding 1996 period were $65.4 million for Phelps Dodge Mining Company and $33.2 million for Phelps Dodge Industries. The Corporation expects capital outlays for the year 1997 to be approximately $500 million for Phelps Dodge Mining Company (including approximately $175 million for the Candelaria expansion project). Phelps Dodge Industries is expected to spend approximately $200 million during the year. At March 31, 1997, the Corporation's total debt was $646.4 million, compared with $659.3 million at year-end 1996. The Corporation's ratio of debt to total capitalization was 18.5 percent at March 31, 1997, compared with 18.8 percent at December 31, 1996. On March 10, 1997, the Corporation paid a regular quarterly dividend of 50 cents per share on its common shares for the 1997 first quarter; the total amount paid was $32.3 million. On May 7, 1997, the Board of Directors declared a 1997 second quarter regular dividend of 50 cents per common share. The dividend is to be paid on June 10, 1997, to shareholders of record at the close of business on May 20, 1997. There were 63,438,000 common shares outstanding at March 31, 1997. In 1997 through May 6, the Corporation purchased a total of 2,948,000 of its common shares at a total cost of $218.6 million. These purchases were made under a 5 million share purchase program that was initiated in 1995 and extended to 10 million shares in 1996. Under that program, a total of 9.9 million shares were purchased by the Corporation. On May 7, 1997, the Corporation announced that its Board of Directors had authorized the purchase of up to an additional 6 million of its common shares. The Corporation will make purchases in the open market as circumstances warrant and will also consider purchasing shares in privately negotiated transactions. Part II. Other Information Item 1. Legal Proceedings I. Reference is made to Paragraph II, section A.2.(a) of Item 3, Legal Proceedings of the Corporation's Form 10-K for the year ended December 31, 1996, regarding In re the General Adjudication of All Rights to Use Water in the Gila River System and Source, Nos. W-1 (Salt River), W-2 (Verde River), W-3 (Gila River) and W-4 (San Pedro River) (Superior Court of Arizona, Maricopa County). On April 29, 1997, the Committee on Indian Affairs of the United States Senate held a hearing concerning possible extension of the federal legislation authorizing settlement of the San Carlos Apache Tribe's water rights claims with the Corporation and the other parties to the proceeding. Such legislation is currently scheduled to expire on June 30, 1997. The Tribe refused to attend the hearing. It has been publicly reported that the Tribe has filed a suit in tribal court seeking both eviction of the Corporation from the reservation and substantial monetary damages. The Corporation believes that it holds valid rights sufficient to allow for its current use of the reservation lands and that its right of way for the Black River pump station may be terminated only by the Secretary of the Interior for cause. Nonetheless, the Corporation is working to develop alternative water resources for Morenci and is examining the difficult technical and legal issues relating to the feasibility of implementing and constructing alternative water transportation systems. Item 6. Exhibits and Reports on Form 8-K (a) Any exhibits required to be filed by the Corporation are listed in the Index to Exhibits. (b) No reports on Form 8-K were filed by the Corporation during the quarter ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PHELPS DODGE CORPORATION ------------------------ (Corporation or Registrant) Date: May 12, 1997 By: Gregory W. Stevens ------------------ Gregory W. Stevens Vice President and Controller (Principal Accounting Officer) PHELPS DODGE CORPORATION AND SUBSIDIARIES Index to Exhibits 12 Computation of ratios of total debt to total capitalization. 15 Letter from Price Waterhouse LLP with respect to unaudited interim financial information. EX-12 2 COMPUTATION OF TOTAL DEBT - TOTAL CAPITALIZATION PHELPS DODGE CORPORATION AND SUBSIDIARIES Exhibit 12 COMPUTATION OF TOTAL DEBT TO TOTAL CAPITALIZATION (Unaudited; dollars in thousands) March 31, December 31, 1997 1996 ---- ---- Short-term debt $ 62,900 66,500 Current portion of long-term debt 51,700 38,200 Long-term debt 531,800 554,600 ---------- ---------- Total debt 646,400 659,300 Minority interests in subsidiaries 87,600 85,500 Common shareholders' equity 2,754,700 2,755,900 ---------- ---------- Total capitalization $3,488,700 3,500,700 ========== ========== Ratio of total debt to total capitalization 18.5% 18.8% ========== ========== EX-15 3 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION Exhibit 15 May 12, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: We are aware that Phelps Dodge Corporation has incorporated by reference our report dated April 9, 1997 (issued pursuant to the provisions of Statements on Auditing Standards Nos. 71) in the Prospectus constituting part of its Registration Statements on Form S-3 (No. 33-44380) and Form S-8 (Nos. 33-26442, 33-6141, 33-26443, 33-29144, 33-19012, 2-67317, 33-34363, 33-34362, 33-62648). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, Price Waterhouse LLP Phoenix, Arizona EX-27 4 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 OF PHELPS DODGE CORPORATION AND ITS SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1 422,000 0 523,600 0 297,700 1,427,900 3,074,800 0 4,878,600 754,300 531,800 0 0 396,500 2,358,200 4,878,600 1,021,700 1,021,700 695,900 695,900 86,100 0 13,900 202,000 64,600 137,500 0 0 0 137,500 2.12 2.12
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