-----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, VURgVqDK5fbqNqwtSYodObvrxHCk/EDkNRtUqr3OONcRafjZfGdMRcizAY+5bHHz 8NmdmQ7O2p+otM9n5eQriA== /in/edgar/work/0000950153-00-001527/0000950153-00-001527.txt : 20001115 0000950153-00-001527.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950153-00-001527 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHELPS DODGE CORP CENTRAL INDEX KEY: 0000078066 STANDARD INDUSTRIAL CLASSIFICATION: [3330 ] IRS NUMBER: 131808503 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00082 FILM NUMBER: 763713 BUSINESS ADDRESS: STREET 1: 2600 NORTH CENTRAL AVE CITY: PHOENIX STATE: AZ ZIP: 85004-3089 BUSINESS PHONE: 6022348100 MAIL ADDRESS: STREET 1: 2600 NORTH CENTRAL AVENUE CITY: PHOENIX STATE: AZ ZIP: 85004-3089 10-Q 1 p64039qe10-q.htm 10-Q Phelps Dodge Corporation Form 10-Q 9-30-00
________________________________________________________________________________
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 September 30, 2000

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 November 10, 2000: 78,730,313 shares.

i

PHELPS DODGE CORPORATION

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2000

Table of Contents

             
Page
Part I. Financial Information
        
 
Item 1. Financial Statements
        
   
Statement of Consolidated Operations
     1  
   
Consolidated Balance Sheet
     2  
   
Consolidated Statement of Cash Flows
     3  
   
Consolidated Statement of Common Shareholders’ Equity
     4  
   
Financial Data by Business Segment
     5  
   
Notes to Consolidated Financial Information
     6  
   
Review by Independent Accountants
     10  
   
Report of Independent Accountants on Review of Interim Financial Information
     11  
 
Item 2. Management’s Discussion and Analysis
        
   
Results of Operations
     12  
   
Results of Phelps Dodge Mining Company
     13  
   
Results of Phelps Dodge Industries
     14  
   
Other Matters Relating to the Statement of Consolidated Operations
     15  
   
Changes in Financial Condition
     15  
Part II. Other Information
        
 
Item 6. Exhibits and Reports on Form 8-K
     16  
 
Signatures
     16  
 
Index to Exhibits
     17  

-1-

PHELPS DODGE CORPORATION AND SUBSIDIARIES

Part I. Financial Information

                                   
Item 1. Financial Statements Third Quarter First nine months
2000 1999 2000 1999
STATEMENT OF CONSOLIDATED OPERATIONS
                                
(Unaudited; in millions except per share data)
                                
Sales and other operating revenues
   $ 1,193.4       742.7       3,426.0       2,096.9  
     
     
     
     
 
Operating costs and expenses
                                
 
Cost of products sold (see Note 3)
     932.5       584.4       2,701.1       1,667.6  
 
Depreciation, depletion and amortization
     111.0       68.4       349.5       212.7  
 
Selling and general administrative expense (see Note 3)
     32.7       25.0       99.7       74.8  
 
Exploration and research expense
     12.6       12.3       39.8       33.4  
 
Non-recurring charges and provisions (see Note 6)
     3.3       1.1       49.6       84.1  
     
     
     
     
 
      1,092.1       691.2       3,239.7       2,072.6  
     
     
     
     
 
Operating income
     101.3       51.5       186.3       24.3  
 
Interest expense
     (54.4 )     (20.3 )     (163.8 )     (68.4 )
 
Capitalized interest
     2.2       -       3.5       0.1  
 
Miscellaneous income and expense, net
     4.8       2.9       16.2       (3.5 )
     
     
     
     
 
Income (loss) before taxes, minority interests, equity in net earnings (loss) of affiliated companies and cumulative effect of accounting change
     53.9       34.1       42.2       (47.5 )
 
Provision for taxes on income
     (12.0 )     (17.4 )     (17.3 )     1.3  
 
Minority interests in consolidated subsidiaries
     (2.3 )     (0.6 )     (5.2 )     (0.1 )
 
Equity in net earnings (loss) of affiliated companies
     (0.3 )     (0.7 )     1.2       4.7  
     
     
     
     
 
Income (loss) before cumulative effect of accounting change
     39.3       15.4       20.9       (41.6 )
 
Cumulative effect of accounting change (see Note 7)
     -       -       -       (3.5 )
     
     
     
     
 
Net income (loss)
   $ 39.3       15.4       20.9       (45.1 )
     
     
     
     
 
 
Average number of shares outstanding - basic
     78.4       57.8       78.4       57.8  
 
Basic earnings (loss) per share before cumulative effect of accounting change
   $ 0.50       0.27       0.27       (0.72 )
 
Cumulative effect of accounting change (see Note 7)
     -       -       -       (0.06 )
     
     
     
     
 
Basic earnings (loss) per share
   $ 0.50       0.27       0.27       (0.78 )
     
     
     
     
 
 
Average number of shares outstanding - diluted
     78.7       58.1       78.8       57.8  
 
Diluted earnings (loss) per share before cumulative effect of accounting change
   $ 0.50       0.27       0.27       (0.72 )
 
Cumulative effect of accounting change (see Note 7)
     -       -       -       (0.06 )
     
     
     
     
 
Diluted earnings (loss) per share
   $ 0.50       0.27       0.27       (0.78 )
     
     
     
     
 

See Notes to Consolidated Financial Information.

-2-

CONSOLIDATED BALANCE SHEET
(Unaudited; in millions)
                     
September 30, December 31,
2000 1999
Assets
                
 
Cash and cash equivalents
   $ 245.9       234.2  
 
Accounts receivable, net
     648.1       541.5  
 
Inventories
     441.0       498.3  
 
Supplies
     150.5       149.0  
 
Other current assets and prepaid expenses (see Note 9)
     31.3       172.4  
 
Deferred income taxes
     101.3       98.0  
     
     
 
   
Current assets
     1,618.1       1,693.4  
 
Investments and long-term accounts receivable
     106.6       136.1  
 
Property, plant and equipment, net
     5,940.2       6,037.7  
 
Non-current deferred income taxes
     16.9       16.9  
 
Other assets and deferred charges
     340.5       344.9  
     
     
 
    $ 8,022.3       8,229.0  
     
     
 
 
Liabilities
                
 
Short-term debt
   $ 473.4       451.2  
 
Current portion of long-term debt
     203.7       131.3  
 
Accounts payable and accrued expenses
     782.6       786.5  
 
Accrued income taxes
     10.1       49.3  
     
     
 
   
Current liabilities
     1,469.8       1,418.3  
 
Long-term debt
     2,031.6       2,172.5  
 
Deferred income taxes
     440.0       385.7  
 
Other liabilities and deferred credits
     836.9       879.4  
     
     
 
      4,778.3       4,855.9  
     
     
 
Minority interests in consolidated subsidiaries
     88.0       96.3  
     
     
 
Common shareholders’ equity
                
 
Common shares, 78.7 outstanding (12/31/99 - 78.7)
     492.1       491.6  
 
Capital in excess of par value
     1,019.4       1,016.4  
 
Retained earnings
     1,862.6       1,959.8  
 
Accumulated other comprehensive loss
     (206.9 )     (180.3 )
 
Other
     (11.2 )     (10.7 )
     
     
 
      3,156.0       3,276.8  
     
     
 
    $ 8,022.3       8,229.0  
     
     
 

See Notes to Consolidated Financial Information.

-3-

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited; in millions)
                         
Nine months ended
September 30,
2000 1999
Operating activities
                
 
Net income (loss)
   $ 20.9       (45.1 )
 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
   
Depreciation, depletion and amortization
     349.5       212.7  
   
Deferred income taxes
     13.2       (3.8 )
   
Equity earnings (loss) net of dividends received
     -       (4.6 )
   
Changes in current assets and liabilities:
                
     
Increase in accounts receivable
     (103.4 )     (104.0 )
     
(Increase) decrease in inventories
     39.6       (12.4 )
     
(Increase) decrease in supplies
     (2.8 )     3.5  
     
(Increase) decrease in prepaid expenses
     0.8       (1.0 )
     
Decrease in deferred income taxes
     (0.1 )     (5.2 )
     
Increase in interest payable
     20.7       9.2  
     
Increase (decrease) in other accounts payable
     6.9       (14.2 )
     
Decrease in accrued income taxes
     (38.1 )     (11.6 )
     
Decrease in other accrued expenses
     (55.5 )     (1.6 )
   
Non-recurring charges and provisions
     56.7       85.8  
   
Other adjustments, net
     4.7       8.9  
     
     
 
       
Net cash provided by operating activities
     313.1       116.6  
     
     
 
Investing activities
                
 
Capital outlays
     (277.6 )     (101.2 )
 
Capitalized interest
     (3.0 )     (0.1 )
 
Investment in subsidiaries
     (13.4 )     (75.4 )
 
Proceeds from asset dispositions and other, net (see Note 9)
     152.4       7.3  
     
     
 
       
Net cash used in investing activities
     (141.6 )     (169.4 )
     
     
 
Financing activities
                
 
Increase in debt
     69.2       136.3  
 
Payment of debt
     (112.0 )     (49.0 )
 
Common dividends
     (118.1 )     (87.0 )
 
Other, net
     1.1       (4.2 )
     
     
 
       
Net cash used in financing activities
     (159.8 )     (3.9 )
     
     
 
Increase (decrease) in cash and cash equivalents
     11.7       (56.7 )
Cash and cash equivalents at beginning of year
     234.2       221.7  
     
     
 
Cash and cash equivalents at end of period
   $ 245.9       165.0  
     
     
 

See Notes to Consolidated Financial Information.

-4-

CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS’ EQUITY

(Unaudited; in millions)
                                                               
Common Shares Accumulated
Capital in Other Common
Number At Par Excess of Retained Comprehensive Shareholders’
of Shares Value Par Value Earnings Income (loss) Other Equity
Balance at December  31, 1999
     78.7     $ 491.6     $ 1,016.4     $ 1,959.8     $ (180.3 )   $ (10.7 )   $ 3,276.8  
 
Stock options exercised
     -       0.1       1.0       -                       1.1  
 
Restricted shares issued, net
     -       0.4       2.7       -               (0.5 )     2.6  
 
Other investment adjustments
                     (0.7 )     -                       (0.7 )
 
Dividends on common shares
                             (118.1 )                     (118.1 )
 
Comprehensive income (loss):
                                                        
   
Net income
                             20.9                       20.9  
   
Other comprehensive income (loss), net of tax:
                                                        
     
Translation adjustment
                                     (27.2 )             (27.2 )
     
Unrealized gains on securities
                                     0.6               0.6  
                                     
             
 
     
Other comprehensive loss
                                     (26.6 )             (26.6 )
                                     
             
 
   
Comprehensive loss
                                                     (5.7 )
     
     
     
     
     
     
     
 
Balance at September 30, 2000
     78.7     $ 492.1     $ 1,019.4     $ 1,862.6     $ (206.9 )   $ (11.2 )   $ 3,156.0  
     
     
     
     
     
     
     
 

See Notes to Consolidated Financial Information.

-5-

FINANCIAL DATA BY BUSINESS SEGMENT

(Unaudited; in millions)
                                                             
Corporate
PD Industries Unallocated
Phelps
&
Dodge Specialty Wire & Segment Reconciling
Mining Chemicals Cable Total Subtotal Eliminations* Totals
Third Quarter 2000
                                                        
 
Sales & other operating revenues:
                                                        
   
Unaffiliated customers
   $ 825.8       148.2       219.4       367.6       1,193.4       -       1,193.4  
   
Intersegment
     61.2       -       0.4       0.4       61.6       (61.6 )     -  
 
Non-recurring charges
     0.7       -       2.6       2.6       3.3       -       3.3  
 
Operating income (loss)
     91.5       20.7       8.4       29.1       120.6       (19.3 )     101.3  
 
Assets at September 30
     6,299.1       764.7       706.0       1,470.7       7,769.8       252.5       8,022.3  
Third Quarter 1999
                                                        
 
Sales & other operating revenues:
                                                        
   
Unaffiliated customers
   $ 406.9       132.9       202.9       335.8       742.7       -       742.7  
   
Intersegment
     62.2       -       0.1       0.1       62.3       (62.3 )     -  
 
Non-recurring charges
     -       -       1.1       1.1       1.1       -       1.1  
 
Operating income (loss)
     36.2       21.9       4.9       26.8       63.0       (11.5 )     51.5  
 
Assets at September 30
     3,175.3       761.4       805.6       1,567.0       4,742.3       147.0       4,889.3  
First Nine Months 2000
                                                        
 
Sales & other operating revenues:
                                                        
   
Unaffiliated customers
   $ 2,333.1       453.3       639.6       1,092.9       3,426.0       -       3,426.0  
   
Intersegment
     180.1       -       1.5       1.5       181.6       (181.6 )     -  
 
Non-recurring charges
     5.9       -       43.7       43.7       49.6       -       49.6  
 
Operating income (loss)
     197.9       71.8       (27.3 )     44.5       242.4       (56.1 )     186.3  
 
Assets at September 30
     6,299.1       764.7       706.0       1,470.7       7,769.8       252.5       8,022.3  
First Nine Months 1999
                                                        
 
Sales & other operating revenues:
                                                        
   
Unaffiliated customers
   $ 1,102.3       398.8       595.8       994.6       2,096.9       -       2,096.9  
   
Intersegment
     170.7       -       0.2       0.2       170.9       (170.9 )     -  
 
Non-recurring charges
     34.5       19.9       29.5       49.4       83.9       0.2       84.1  
 
Operating income (loss)
     8.2       62.7       (11.0 )     51.7       59.9       (35.6 )     24.3  
 
Assets at September 30
     3,175.3       761.4       805.6       1,567.0       4,742.3       147.0       4,889.3  

*  Represents corporate, unallocated and reconciling elimination activities and assets.

-6-

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 our Form 10-K for the year ended December 31, 1999. 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 and nine-month periods ended September 30, 2000, are not necessarily indicative of the results to be expected for the full year.
 
3.  The results of operations for the three-month and nine-month periods ended September 30, 1999, reflect the reclassification of $4.8 million and $14.8  million, respectively, of operation support costs from selling and general administrative expenses to cost of products sold to conform to the current year presentation.
 
4.  Depending on market circumstances, we may periodically purchase or liquidate various copper price protection contracts for a portion of our expected future mine production to mitigate the risk of adverse price fluctuations. As of September 30, 2000, the Company had a total of approximately 110 million pounds of year 2000 copper cathode production under various price protection agreements with various financial institutions. These annual contracts effectively ensure minimum (approximately 72 cents) and maximum (approximately 95 cents) prices per pound. The minimum and maximum prices are based on the average London Metal Exchange price for the protection period.
 
5.  Cyprus Amax Acquisition

Liabilities recorded in the acquisition of Cyprus Amax included costs of $22 million associated with merging Cyprus Amax’s operations into the Company’s operations (e.g., lease and other cancellation costs and employee termination costs, primarily for duplicate administrative and management functions). Through September 30, 2000, we have paid $19 million for such costs, including approximately $11 million for employee termination and severance costs. These liabilities are expected to be substantially paid out by the end of 2000.

6.          Restructuring Charges and Non-Recurring Items

June 2000 Restructuring Plan

On June 27, 2000, we announced a plan to reduce operating costs and restructure operations at our mining and wire and cable segments. This plan comprised the following actions.

(i)  Higher-cost production was curtailed at the Miami copper mine in Arizona and production was reduced at the Henderson molybdenum mine in Colorado resulting in a total workforce reduction of 175 full-time employees beginning in the second quarter (and expected to be completed by year end). These actions resulted in a pre-tax charge of $5.2 million.

(ii)  Production ceased at two wire and cable plants in Venezuela in the second quarter due to low forecast plant utilization levels as a result of significantly reduced infrastructure spending in the Latin America region. These plant closures resulted in a total non-recurring, pre-tax charge of $25.7 million, consisting of an impairment in the carrying value of property, plant and equipment and other assets of $19.2 million, plant dismantling costs of $2.6 million, employee severance of $2.2 million and impairment of goodwill of $1.7 million. In addition, working capital write-downs of $4.2 million were recorded to cost of products sold as a result of the decision to close the plants.

(iii)  The planned closure of a telephone cable operation in El Salvador in the third quarter of 2000 was announced due to low plant utilization levels as a result of heightened global competition for telecommunication cable tenders. The planned plant closure resulted in a non-recurring, pre-tax charge of $4.6 million, including $4.0

-7-

million relating to the impairment of the carrying value of property, plant and equipment and $0.6 million associated with various other costs. In addition, working capital writedowns of $2.2 million were recorded to cost of products sold as a result of the decision to close the plant.

(iv)  A non-recurring, pre-tax charge of $5.8 million was recognized for our wire and cable operations in Austria as a result of the long-term impact of continuing extremely competitive pricing conditions in Europe. The continuing competitive pricing environment led to a determination that we should assess the recoverability of our Austrian wire and cable asset values. Our assessment of the carrying value of the property, plant and equipment of $4.2 million and the goodwill balance of $2.8 million indicated impairments of $3.0 million and $2.8 million, respectively.

(v)  A charge of $7.2 million to miscellaneous income and expense was recognized to reflect the impairment of our 40 percent equity interest in a wire and cable operation in the Philippines. The impairment was based upon an analysis of future cash flows of the operation, continuing economic uncertainty in the Philippines and the erosion of our strategic and operating influence. These factors indicate that there is little likelihood of recovery on our investment and management is evaluating available alternatives.

In total, these actions resulted in non-recurring, pre-tax charges of $41.3 million ($36.9 million, or 47 cents per share after taxes), charges to cost of products sold representing the working capital component of the above actions ($6.4 million, or 8 cents per share after taxes), and a $7.2 million charge to miscellaneous income and expense ($7.2 million, or 9 cents per share after taxes). The following table presents a roll-forward of the liabilities incurred in connection with the June 2000 Restructuring Plan, which were all reflected as current liabilities in our consolidated balance sheet.

                                     
  (in millions)
Beginning
Accrual Additions Payments 9/30/00
PD Mining:
                                
 
Employee Severance
   $ 5.2       -       (3.4 )     1.8  
 
Equipment Relocation(A)
     -       0.7       (0.7 )     -  
     
     
     
     
 
PD Mining total
     5.2       0.7       (4.1 )     1.8  
PD Industries:
                                
 
Wire and Cable
                                
   
Employee Severance
     2.2       -       (2.2 )     -  
   
Plant Removal and Dismantling
     2.8       -       (0.5 )     2.3  
     
     
     
     
 
PD Industries total
     5.0       -       (2.7 )     2.3  
     
     
     
     
 
 
Total
   $ 10.2       0.7       (6.8 )     4.1  
     
     
     
     
 
(A) Relocation costs are charged to expense as incurred.

           Other Non-Recurring Items

In addition to the above items, we received in the 2000 second quarter a tax refund of $6.5 million and related interest income of $5.8  million ($3.6 million, or 4 cents per share after taxes) resulting from the settlement of the Company’s 1990 and 1991 income tax audits.

June 1999 Restructuring Plan

On June 30, 1999, we announced a plan to reduce costs and improve operating performance at all three of our business segments. This plan comprised the following actions.

(i)  Higher-cost copper production was curtailed by temporarily closing our Hidalgo smelter in New Mexico and the smaller of two concentrators at our Morenci mining operations in Arizona, as well as curtailing production by 50 percent at our copper refinery in El Paso, Texas.

(ii)  We sold a non-core South African fluorspar mining unit.

(iii)  Certain wire and cable assets were restructured to respond to changing market conditions.

(iv)  We suspended operations at Columbian Chemicals Company’s carbon black plant in the Philippines.

These actions resulted in a total non-recurring, pre-tax charge of $84.7  million ($58.7 million, or $1.01 per share after

-8-

taxes) in the 1999 second quarter. The following table presents a roll-forward of the liabilities incurred in connection with the June 1999 Restructuring Plan.
                                     
  (in millions)
12/31/99 Additions Payments 9/30/00
PD Mining:
                                
 
Employee Severance
   $ 1.4       -       (1.0 )     0.4  
 
Mothballing/ Take or Pay Contracts
     3.5       -       (1.0 )     2.5  
 
Environmental Clean-up
     5.9       -       (3.2 )     2.7  
     
     
     
     
 
PD Mining total
     10.8       -       (5.2 )     5.6  
PD Industries:
                                
 
Wire and Cable
                                
   
Employee Severance and Relocation(A)
     3.2       1.8       (3.8 )     1.2  
   
Plant Removal and Dismantling
     1.0       5.5       (5.5 )     1.0  
     
     
     
     
 
      4.2       7.3       (9.3 )     2.2  
 
Specialty Chemicals
                                
   
Employee Severance
     0.3       -       (0.3 )     -  
   
Disposal and Dismantling
     1.8       -       (0.5 )     1.3  
   
Environmental
     0.8       -       -       0.8  
     
     
     
     
 
      2.9       -       (0.8 )     2.1  
     
     
     
     
 
PD Industries total
     7.1       7.3       (10.1 )     4.3  
     
     
     
     
 
Total
   $ 17.9       7.3       (15.3 )     9.9  
     
     
     
     
 
(A) Relocation costs are charged to expense as incurred.

           The balance of cash outlays are expected to be made during the remainder of 2000, except for those associated with pension and post-retirement obligations and environmental clean-up.

7.  Accounting Standards

The Financial Accounting Standards Board issued SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” (as amended by SFAS 137) and SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities.” These statements require recognition of all derivatives as either assets or liabilities on the balance sheet and measurement of those instruments at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income (loss). Proper accounting for changes in fair value of derivatives held is dependent on whether the derivative transaction qualifies as an accounting hedge and on the classification of the hedge transaction. The statement is required to be adopted by the Company on January 1, 2001. We are in the process of evaluating the effect this statement will have on our financial reporting and disclosures as well as on our ongoing derivative and hedging activities and are developing systems and procedures to effect its implementation.

In the 1999 first quarter, we adopted SOP 98-5, “Reporting on the Costs of Start-Up Activities.” The adoption resulted in a $3.5 million after-tax charge, or 6  cents per common share, representing the write-off of previously unamortized start-up costs at our Candelaria mining operation in Chile and our magnet wire operation in Monterrey, Mexico.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, “Revenue Recognition in Financial Statements” (as amended by SAB 101A and 101B) that provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. The implementation date of SAB 101 for the Company is no later than the fourth fiscal quarter of 2000. Based upon current SEC guidance and discussion, we believe that the Company is in substantial compliance with SAB 101 and that there would not be a material impact upon implementation.

The Emerging Issues Task Force issued Topic No. D-88, “Planned Major Maintenance Activities” in March 2000. Topic D-88 requires companies to disclose in their 2000 Form 10-Qs their accounting policy for repair and maintenance costs incurred in connection with planned major maintenance activities. Our policy for repair and maintenance costs incurred in connection with planned major maintenance activities is to charge to operations such costs equally over the period (generally 12 months) in which the major maintenance activities are incurred.

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8.          Environmental Matters

As of December 31, 1999, we had a reserve balance of $336.1 million for estimated future costs associated with environmental matters. During the first nine months of 2000, net spending against that reserve totaled $23.0 million resulting in a reserve balance of $313.1 million at September 30, 2000.

The Company has received notice of an agreement to perform a Remedial Investigation/ Feasibility Study (RI/ FS) at a site for which it may have an indemnity obligation. The cost of the RI/ FS is not considered to be material. It is not possible to reasonably estimate the potential liability concerning the site until the RI/ FS is complete.

The Company has contingencies regarding environmental, closure and other matters. For a further discussion of these contingencies please see Note 19 to the Consolidated Financial Statements in the Company’s 1999 Form 10-K.

9.          Asset Sales

On March 30, 2000, we sold Cyprus Australia Coal Company, a wholly owned subsidiary, to Glencore Coal Australia Pty. Ltd., a subsidiary of Switzerland-based Glencore International AG, for US$150 million in cash. We acquired Cyprus Australia Coal Company as part of our acquisition of Cyprus Amax Minerals Company on October 16, 1999. Cyprus Australia Coal Company owned 48  percent of Oakbridge Pty. Ltd. and 50  percent of the Springvale Mine in Australia.

10.        Debt

An agreement on a new, unsecured revolving credit facility was entered into by the Company and several lenders on May 10, 2000. The facility is to be used for general corporate purposes, primarily as a commercial paper backstop. This facility, which replaces the June 1997 agreement, permits borrowings of up to $1 billion until its maturity on May  10, 2005. It allows for one-year extensions beyond the maturity date under certain circumstances. Interest is payable at a fluctuating rate based on the agent bank’s base rate or a fixed rate based on the London Interbank Offered Rate (LIBOR), or at fixed rates offered independently by the several lenders, for maturities of from one month to twelve months. This agreement provides for an annual facility fee of 15 basis points (0.15  percent) on total commitments. The agreement requires the Company to maintain minimum consolidated tangible net worth of $1.5 billion and limits indebtedness to 60 percent of total consolidated capitalization.

11.        Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares were issued. The average number of diluted common shares outstanding includes 0.3 million for the dilutive impact of restricted stock issued to employees for both the three- and nine-month periods ended September 30, 2000. The average number of diluted common shares outstanding for the third quarter ended September 30, 1999, includes 0.2 million for the dilutive impact of restricted stock issued to employees and 0.1 million for the dilutive impact of employee stock options. These shares were not included in the nine-month period ended September 30, 1999, determination as the effect of these shares was anti-dilutive. Stock options excluded from the computation of diluted earnings per share because option prices exceeded fair market value were as follows:

                                 
(in millions, except for option price)
First Nine
Third Quarter Months
2000 1999 2000 1999
Outstanding options
     6.7       2.6       6.5       3.0  
Average option price
   $ 41.81       59.69       47.59       56.03  

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REVIEW BY INDEPENDENT ACCOUNTANTS

         The financial information as of September 30, 2000, and for the three-month and nine-month periods ended September 30, 2000 and 1999, included in Part I pursuant to Rule 10-01 of Regulation S-X has been reviewed by PricewaterhouseCoopers LLP (PricewaterhouseCoopers), the Company’s independent accountants, in accordance with standards established by the American Institute of Certified Public Accountants. PricewaterhouseCoopers’ report is included in this quarterly report.

         PricewaterhouseCoopers 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.

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[PRICEWATERHOUSECOOPERS Logo]

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 September 30, 2000, and the related consolidated statement of operations, for each of the three-month and nine-month periods ended September 30, 2000 and 1999, the consolidated statement of cash flows for the nine-month periods ended September 30, 2000 and 1999 and the consolidated statement of common shareholders’ equity for the nine-month period ended September 30, 2000. This financial information is 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 accompanying consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 1999, and the related consolidated statements of operations, of cash flows and of common shareholders’ equity for the year then ended (not presented herein), and in our report dated January 26, 2000, 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, 1999, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Phoenix, Arizona
October 16, 2000

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Item 2.  Management’s Discussion and Analysis

         The U.S. securities laws provide a “safe harbor” for certain forward-looking statements. This quarterly report contains “forward-looking statements” that express expectations of future events or results. All statements based on future expectations rather than historical facts are forward-looking statements that involve a number of risks and uncertainties, and Phelps Dodge Corporation (the Company, which may be referred to as Phelps Dodge, we, us or ours) cannot give assurance that such statements will prove to be correct. Please refer to the Management’s Discussion and Analysis sections of the Company’s report on Form 10-K for the year ended December 31, 1999.

RESULTS OF OPERATIONS

         Earnings

         The Company had consolidated earnings in the 2000 third quarter of $41.5 million, or 53 cents per common share, before after-tax, non-recurring charges of $2.2 million, or 3 cents per common share, from the Company’s restructuring plans (see Note 6 to the Consolidated Financial Information for a description of the restructuring plans and the non-recurring items). By comparison, earnings for the third quarter of 1999 were $16.1 million, or 28 cents per common share, before after-tax, non-recurring charges of $0.7 million, or 1 cent per common share. After non-recurring items, 2000 third quarter net income was $39.3 million, or 50 cents per share, compared with 1999 third quarter net income of $15.4 million or 27 cents per common share.

         Consolidated earnings for the nine months ended September 30, 2000, were $66.7 million, or 85 cents per common share, before after-tax, non-recurring charges of $45.8 million, or 58 cents per common share. Earnings for the nine months ended September 30, 1999, were $17.8 million, or 31 cents per common share, before after-tax, non-recurring charges of $59.4 million, or $1.03 per share, as a result of the June 1999 Restructuring Plan, and an after-tax charge of $3.5 million, or 6 cents per common share, for the cumulative effect of an accounting change (see Note 7 to the Consolidated Financial Information).

         Earnings before non-recurring items were higher in the third quarter and the first nine months of 2000 than in the corresponding 1999 periods principally as a result of higher average copper prices and the associated benefits of a lower effective income tax rate, as well as the addition of production from the properties acquired in the October 16, 1999, Cyprus Amax Minerals Company (Cyprus Amax) acquisition. These increases were partially offset by higher copper production costs primarily resulting from increased electric power and diesel fuel costs.

         The New York Commodity Exchange (COMEX) spot price per pound of copper cathode, upon which we base our selling price, averaged 87 cents in the third quarter and 83 cents for the first nine months of 2000 compared with 78 and 70 cents in the corresponding 1999 periods. From October 2 through November 10, 2000, the COMEX price averaged 86 cents per pound, closing at 84 cents on November 10, 2000.

         A change in the price we receive for copper, or in our unit production costs, may have a significant effect on our results. Our share of current annual production is approximately 2.4 billion pounds of copper. Accordingly, each 1-cent per pound change in our average annual realized copper price, or in our average annual unit production costs, results in a variation in annual pre-tax operating income levels of approximately $24 million.

         Depending on market circumstances, we may periodically purchase or liquidate various copper price protection contracts for a portion of our expected future mine production to mitigate the risk of adverse price fluctuations. See Note 4 to the Consolidated Financial Information for a discussion of such contracts as of September 30, 2000.

         Sales

         Sales were $1,193.4 million in the 2000 third quarter and $3,426.0 million in the nine months ended September 30, 2000, compared with $742.7 million and $2,096.9 million in the corresponding 1999 periods. These increases principally resulted from higher average copper and carbon black prices, combined with higher sales volumes of copper and molybdenum, due largely to the Cyprus Amax acquisition.

         Business Segments

         Results for 2000 and 1999 can be meaningfully compared by separate reference to our reporting divisions, Phelps Dodge Mining Company and Phelps Dodge Industries.

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RESULTS OF PHELPS DODGE MINING COMPANY

         Phelps Dodge Mining Company (PD Mining) is an international business comprising a group of companies involved in vertically integrated copper operations including mining, concentrating, electrowinning, smelting, refining, rod production, marketing and sales, and related activities. Copper is sold primarily to others as rod, cathode or concentrates, and as rod to our wire and cable segment. PD Mining at times smelts and refines copper and produces copper rod for others on a toll basis. PD Mining also is an integrated producer of molybdenum, with mining, roasting and processing facilities producing molybdenum concentrate as well as metallurgical and chemical products. PD Mining also produces gold, silver, molybdenum and copper chemicals as by-products, and sulfuric acid from our air quality control facilities. This business segment also includes our worldwide mineral exploration programs.

                   
Third Quarter
2000 1999
Copper production (thousand short tons):
                
 
Total production
     364.9       227.8  
 
Less minority participants’ shares(A)
     64.0       40.2  
     
     
 
 
Net Phelps Dodge share
     300.9       187.6  
     
     
 
Copper sales (thousand short tons):
                
 
Net Phelps Dodge share from own mines
     294.9       193.0  
 
Purchased copper
     112.2       71.3  
     
     
 
 
Total copper sales
     407.1       264.3  
     
     
 
COMEX
                
 
Average spot price per pound - copper cathodes
   $ 0.87       0.78  
Molybdenum production (million pounds)
     12.9       0.1  
Molybdenum sales (million pounds)
     13.0       -  
 
Metals Week
                
 
Average dealer oxide price per pound - molybdenum
   $ 2.62       2.68  
    (in  millions)
 
PD Mining
                
 
Sales and other operating revenues - Unaffiliated customers
   $ 825.8       406.9  
Operating income(B)
   $ 91.5       36.2  
                   
First Six Months
2000 1999
Copper production (thousand short tons):
                
 
Total production
     1,104.1       720.6  
 
Less minority participants’ shares(A)
     196.3       125.0  
     
     
 
 
Net Phelps Dodge share
     907.8       595.6  
     
     
 
Copper sales (thousand short tons):
                
 
Net Phelps Dodge share from own mines
     918.1       595.3  
 
Purchased copper
     318.0       205.6  
     
     
 
 
Total copper sales
     1,236.1       800.9  
     
     
 
COMEX
                
 
Average spot price per pound - copper cathodes
   $ 0.83       0.70  
Molybdenum production (million pounds)
     38.1       0.5  
Molybdenum sales (million pounds)
     44.9       0.4  
Metals Week
                
 
Average dealer oxide price per pound - molybdenum
   $ 2.68       2.68  
    (in millions)
 
PD Mining
                
 
Sales and other operating revenues - Unaffiliated customers
   $ 2,333.1       1,102.3  
Operating income(B)
   $ 197.9       8.2  
(A) 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, (iii) a 20 percent interest in Candelaria in Chile held by SMMA Candelaria, Inc., a jointly owned indirect subsidiary of Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, and (iv) a 49 percent interest in the El Abra copper mining operation in Chile held by Corporacion Nacional del Cobre de Chile (Codelco).

(B) Includes pre-tax charges of $5.9 million in the 2000 nine months and $0.7 million in the 2000 third quarter for the curtailment of copper and molybdenum mining activities. The 1999 nine months includes a pre-tax charge of $34.5 million for the sale of a fluorspar mine, the suspension of operations of a smelter and the curtailment of a copper mining and refining operation. See Note 6 to the Consolidated Financial Information.

         Sales

         PD Mining sales and other operating revenues to unaffiliated customers increased by $418.9 million, or 103 percent, in the 2000 third quarter and by $1,230.8 million, or 112 percent, in the first nine months of 2000 compared with the corresponding 1999 periods. The increase for the third quarter was a result of increased copper sales volumes, primarily as a result of the acquisition of Cyprus Amax (approxi-

-14-

mately $223 million), increased average selling prices for copper (approximately $73 million) and increased molybdenum sales revenue (approximately $61 million.) as a result of the properties acquired as part of the Cyprus Amax acquisition. In addition, increased rod premiums resulted in an approximate $12 million increase in sales and other operating revenues in the third quarter of 2000 relative to the corresponding period in the prior year. The increase for the nine-month period was a result of increased copper sales volumes, primarily as a result of the acquisition of Cyprus Amax (approximately $609 million), increased average selling prices for copper (approximately $321 million) and increased molybdenum sales revenue (approximately $190 million) as a result of the properties acquired as a result of the Cyprus Amax acquisition.

         Operating Income

         PD Mining reported operating income of $92.2 million in the 2000 third quarter before pre-tax, non-recurring charges of $0.7 million. This compares with operating income of $36.2 million in the corresponding 1999 period. The increase primarily reflected the higher average copper sales price realization of PD-mined copper (approximately $35 million) and higher sales volumes of PD-mined copper (approximately $31 million). These increases were partially offset by higher copper production costs (approximately $14 million). Compared with the 1999 third quarter, the combination of high diesel fuel and natural gas costs, plus the impact of high spot electric power costs and sporadic power curtailments, reduced operating earnings of PD Mining by approximately $22 million. For the nine-month period ended September 30, 2000, PD Mining reported operating income of $203.8 million before non-recurring, pre-tax charges of $5.9 million compared to $42.7 million before non-recurring, pre-tax charges of $34.5 million. The year-to-date increase reflected the higher average copper sales price realization of PD-mined copper (approximately $154 million) and higher sales volumes of PD-mined copper (approximately $72 million). These increases were partially offset by higher copper production costs (approximately $65 million).

RESULTS OF PHELPS DODGE INDUSTRIES

         Phelps Dodge Industries (PD Industries), our manufacturing division, produces engineered products principally for the global energy, telecommunications, transportation and specialty chemicals sectors. Its operations are characterized by products with significant market share, internationally competitive cost and quality, and specialized engineering capabilities. The manufacturing division includes our specialty chemicals segment and our wire and cable segment. Our specialty chemicals segment includes Columbian Chemicals Company and its subsidiaries (Columbian Chemicals or Columbian). Our wire and cable segment consists of three worldwide product line businesses including magnet wire, energy and telecommunications cables, and specialty conductors.

                   
Third Quarter
2000 1999
(in millions)
Sales and other operating revenues - Unaffiliated customers:
                
 
Specialty chemicals
   $ 148.2       132.9  
 
Wire and cable
     219.4       202.9  
     
     
 
    $ 367.6       335.8  
     
     
 
Operating income:
                
 
Specialty chemicals
   $ 20.7       21.9  
 
Wire and cable(A)
     8.4       4.9  
     
     
 
    $ 29.1       26.8  
     
     
 
                   
First Nine Months
2000 1999
(in millions)
Sales and other operating revenues -
                
 
Unaffiliated customers:
                
 
Specialty chemicals
   $ 453.3       398.8  
 
Wire and cable
     639.6       595.8  
     
     
 
    $ 1,092.9       994.6  
     
     
 
Operating income (loss):
                
 
Specialty chemicals(B)
   $ 71.8       62.7  
 
Wire and cable(A)(C)(D)
     (27.3 )     (11.0 )
     
     
 
    $ 44.5       51.7  
     
     
 
(A) Includes pre-tax charges of $2.6 million in the 2000 third quarter for costs associated with the June 1999 Restructuring Plan (see Note 6 to the Consolidated Financial Information).

(B) Includes a pre-tax charge of $19.9 million in the 1999 second quarter for costs associated with the suspension of operations at a carbon black facility in the Philippines (see Note 6 to the Consolidated Financial Information).

(C) Includes a pre-tax charge of $45.4 million in the 2000 second quarter associated with the June 2000 Restructuring Plan and $2.1 million in the 2000 first quarter for costs associated with the June 1999 Restructuring Plan (see Note 6 to the Consolidated Financial Information).
 
(D) Includes a pre-tax charge of $28.4 million in the 1999 second quarter and $1.1 million in the 1999 third quarter for costs associated with the restructuring of certain wire and cable operations (see Note 6 to the Consolidated Financial Information).

-15-

         Sales

         PD Industries reported sales to unaffiliated customers of $367.6 million in the third quarter and $1,092.9 million for the first nine months of 2000, compared with $335.8 million and $994.6 million in the corresponding 1999 periods. The increases principally reflect higher sales in both the specialty chemicals and wire and cable segments. Increases of 12 percent and 14 percent in specialty chemicals sales for the three- and nine-month periods, respectively, are the result of higher average selling prices following an increase in feedstock costs. Increases of 8 percent and 7 percent in wire and cable sales were primarily the result of increased copper prices and higher sales volumes to the aerospace and geophysical markets.

         Operating Income

         PD Industries reported 2000 third quarter operating income of $31.7 million before pre-tax, non-recurring charges of $2.6 million for wire and cable restructuring activities. Operating income in the 1999 third quarter was $27.9 million before pre-tax, non-recurring charges of $1.1 million. The increase is due to higher sales levels in both the specialty chemicals and wire and cable segments partially offset by an increase in feedstock costs.

OTHER MATTERS RELATING TO THE STATEMENT OF CONSOLIDATED OPERATIONS

         Depreciation, Depletion and Amortization

         Depreciation, depletion and amortization expense was $111.0 million in the third quarter and $349.5 million for the first nine months of 2000, compared with $68.4 million and $212.7 million in the corresponding 1999 periods. The 2000 depreciation expense includes depreciation at the acquired Cyprus Amax properties.

         Selling and General Administrative Expense

         Selling and general administrative expense was $32.7 million in the third quarter and $99.7 million for the first nine months of 2000, compared with $25.0 million and $74.8 million in the corresponding 1999 periods. The increases are primarily related to the addition of administrative functions to support the Cyprus Amax acquired properties and the inclusion of molybdenum selling expenses for production from the Cyprus Amax properties. (Also, see Note 3 to the Consolidated Financial Information for a brief discussion of a reclassification of certain 1999 expenses.)

         Exploration and Research and Development Expense

         Our 2000 third quarter exploration and research expense was $12.6 million, an increase of $0.3 million from that in the 1999 third quarter, reflecting higher exploration spending in Brazil and Canada, partially offset by the receipt of a payment on an optioned exploration property. Exploration and research expense for the nine months period ended September 30, 2000 was $39.8 million, an increase of $6.4 million over the corresponding 1999 period. This increase is a result of increased spending in Brazil and in the Safford District, partially offset by the receipt of a payment on an optioned exploration property in the third quarter.

         Interest Expense

         Interest expense was $54.4 million in the 2000 third quarter bringing the nine-month total to $163.8 million. This compares to $20.3 million in the 1999 third quarter and $68.4 million in the nine-month period. The increases primarily reflected the assumption of Cyprus Amax’s debt.

         Miscellaneous Income and Expense, Net

         Miscellaneous income and expense, net, increased by $1.9 million in the third quarter and $19.7 million for the first nine months of 2000 compared with the corresponding 1999 periods. These changes principally reflect higher interest income and higher currency exchange gains as compared to the corresponding 1999 periods.

         Provision for Taxes on Income

         The effective tax rate of 22 percent for the three-month period ended September 30, 2000, varies from the customary effective tax rate of 37 percent primarily as a result of the net year-to-date effect of a decrease in projected foreign exploration expenditures and a higher copper price. Improved copper prices have increased the proportion of our earnings from mining operations. The mining division generally attracts a lower tax rate than the rest of our operations due to the percentage depletion allowance in the United States, which varies in relation to copper prices, and a relatively low tax rate in Chile.

CHANGES IN FINANCIAL CONDITION

         Debt

         At September 30, 2000, our total debt was $2,708.7 million, compared with $2,755.0 million at December 31, 1999. Our ratio of debt to total capitalization was 45.5 percent at September 30,

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2000, compared with 45.0 percent at December 31, 1999.

         An agreement on a new, unsecured revolving credit facility was entered into by the Company and several lenders on May 10, 2000. (For a discussion of this agreement, please see Note 10 to the Consolidated Financial Information.)

         Capital Expenditures and Investments

         Capital expenditures and investments during the first nine months of 2000 were $222.7 million for PD Mining (including $112.5 million for the Company’s share of the Morenci mine-for-leach project), $62.5 million for PD Industries (including $19.0 million for the purchase of the remaining 40 percent minority interest in our Hungarian carbon black facility), and $5.8 million for other Corporate-related activities. Capital expenditures and investments in the corresponding 1999 period were $55.4 million for PD Mining and $118.9 million for PD Industries (including $76.1 million for the acquisition of an 85 percent interest in the Korean carbon black manufacturing business of Korea Kumho Petrochemical Co. Ltd.). The Company expects capital expenditures and investments for the year 2000 to be approximately $300 million for PD Mining (including $139 million for the Company’s share of the Morenci mine-for-leach project) and approximately $100 million for PD Industries.

         Dividends

         On September 8, 2000, we paid a regular quarterly dividend of 50 cents per share on our common shares for the 2000 third quarter; the total amount paid was $39.4 million. On November 1, 2000, the Board of Directors declared a regular dividend in the 2000 fourth quarter of 50 cents per common share. The dividend is to be paid on December 8, 2000, to shareholders of record at the close of business on November 17, 2000.

         Other Matters

         For a discussion of incurred costs associated with merging Cyprus Amax’s operations into our operations, please refer to Note 5 of the Consolidated Financial Information. For a discussion of the status of the liability components of the 2000 and 1999 restructuring charges, please refer to Note 6 of the Consolidated Financial Information. For a discussion of new accounting standards, please refer to Note 7 of the Consolidated Financial Information.

         During the third quarter, we received informal notification from Alcoa, Inc. that they believe Cyprus Amax Minerals Company owes their subsidiary, Alumax, Inc., additional sums under a Tax Disaffiliation Agreement dated May 24, 1993. We intend to dispute this claim.

Part II.  Other Information

Item 1.  Legal Proceedings

      On September 6, 2000, the Environmental Protection Agency issued a second Notice of Violation (NOV) to Phelps Dodge Sierrita, Inc. The NOV claims that the Sierrita facility failed to obtain proper Prevention of Significant Deterioration permits and failed to comply with New Source Performance Standards. The Corporation is preparing a response to the NOV.

Item 5.  Other Information

         At a meeting on November 1, 2000, the Board of Directors authorized amendments to Sections 1, 2, 5 and 7 of Article II of the Bylaws, which are reflected in the restated Bylaws attached as an exhibit to this Form 10-Q.

Item 6.  Exhibits and Reports on Form 8-K

  (a) Any exhibits required to be filed by the Company are listed in the Index to Exhibits.
 
  (b) No reports on Form 8-K were filed by us during the quarter ended September 30, 2000.

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:  November 13, 2000

By:       Stanton K. Rideout

     Stanton K. Rideout
Vice President and Controller
(Principal Accounting Officer)

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Index to Exhibits

     
3.2
   Amended and Restated Bylaws of the Corporation (marked to show changes from the current version), effective as of November 1, 2000 (except Section 7 of Article II which is effective as of May 2, 2001) (SEC File No. 1-82).
12
   Computation of ratios of total debt to total capitalization.
15
   Letter from PricewaterhouseCoopers LLP with respect to unaudited interim financial information.
27
   Financial Data Schedule
EX-3.2 2 p64039qex3-2.txt EX-3.2 1 Exhibit 3.2 Amended Effective November 1, 2000 B Y - L A W S PHELPS DODGE CORPORATION ARTICLE I. NAME, LOCATION and CORPORATE SEAL Sec. 1. The name of this Corporation is PHELPS DODGE CORPORATION. Sec. 2. The principal office of the Company shall be in the City of Phoenix, County of Maricopa, State of Arizona. The Company shall also have such other offices, either within or without the United States, and may transact its business at such other places, as the Board of Directors may appoint. Sec. 3. The corporate seal of the Company shall have inscribed thereon the name of the corporation, and the year of its creation. It shall be of the form impressed upon the margin hereof. It shall be in charge of the Secretary. A duplicate of the seal may be kept and used by the Treasurer or by any Assistant Secretary or Assistant Treasurer, when so ordered by the Board of Directors. (Imprint of corporate seal) ARTICLE II. SHAREHOLDERS Sec. 1. Annual Meeting. The annual meeting of shareholders shall be held at 12:00 noon on the first Wednesday in May of each year, or at such other time on that day or at such time on such other day as the Board of Directors shall from time to time determine, at the principal office of the Company in the City of Phoenix, County of Maricopa, State of Arizona, or at such other place within or without the State of New York as the Board of Directors shall from time to time determine, for the purpose of electing Directors and for the transaction of such other business as may properly be brought before the meeting. The Secretary shall cause to be sent by first class mail or electronically not less than 10 nor more than 60 days before the date of such meeting, a notice thereof addressed to each shareholder of record entitled to vote at such meeting at his or her mailing or electronic address as it appears on the books of the Company. Notice may also be sent by third class mail not less than 24 nor more than 60 days before the date of such meeting. Any previously scheduled annual meeting of shareholders may be postponed by resolution of the Board of Directors upon public announcement of the postponement on or prior to the date previously scheduled for such annual meeting of shareholders. 2 Sec. 2. Special Meetings. Special meetings of the shareholders may be held at the principal office of the Company in the City of Phoenix, County of Maricopa, State of Arizona, or at such other place within or without the State of New York as the Board of Directors or the Chairman of the Board shall from time to time determine, and may be called by vote of a majority of the Board of Directors, or by the Chairman of the Board. Special meetings of the shareholders, or of the holders of a particular class or series of shares, shall also be called when required by the Certificate of Incorporation at the times and in the manner therein set forth. Notice of the time, place and purposes of any such special meeting shall be served personally ,sent by first class mail or electronically to each shareholder of record entitled to vote at such meeting, not less than 10 nor more than 60 days before the date of such meeting, at his or her mailing or electronic address as it appears on the books of the Company. Notice may also be sent by third class mail not less than 24 nor more than 60 days before the date of such meeting. A written waiver of notice of any meeting may be made by any shareholder. Any previously scheduled special meeting of the shareholders may be postponed by resolution of the Board of Directors upon public announcement of the postponement on or prior to the date previously scheduled for such special meeting of shareholders. Sec. 3. Quorum. At any meeting of shareholders, unless otherwise provided by law or by the Certificate of Incorporation, the holders of shares (of any class) aggregating a majority of the total number of shares of all classes of the Company then issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum, provided that, unless otherwise provided by law or by the Certificate of Incorporation, when a specified item of business is required to be voted on by any one or more of a particular class or series of shares, voting as a separate class, the holders of a majority of the shares so eligible to vote as a separate class shall constitute a quorum for the transaction of such specified item of business. The shareholders present at any duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of sufficient shareholders to constitute the remaining shareholders less than a quorum. Whether or not a quorum is present at a meeting, the person presiding at the meeting or the holders of a majority of the shares of all classes of the Company entitled to vote at the meeting so present or represented may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. Sec. 4. Chairman and Secretary. Meetings of shareholders shall be presided over by the Chairman of the Board or, if he is not present, by the President or, if neither of them is present, by a Vice Chairman, or if none of them is present, by a Vice President or, if neither the Chairman of the Board, the President, a Vice Chairman nor a Vice President is present, by a person to be chosen at the meeting. The Secretary of the Company shall act as Secretary at all meetings of the shareholders, but in the absence of the Secretary the presiding officer may appoint any person to act as Secretary of the meeting. -2- 3 Sec. 5. Voting. Except as otherwise provided by law or by the Certificate of Incorporation, each shareholder entitled to vote at a meeting of shareholders shall be entitled to one vote, in person or by proxy, for each share having voting power held by him or her on the record date for such meeting, as appears on the books of the Company. Only the person in whose name shares stand on the books of the Company at the time of closing of the transfer books for such meeting shall be entitled to vote, in person or by proxy, the shares so standing in his or her name. The Board of Directors shall have the power and authority to fix a day not less than 10 nor more than 60 days prior to the day of holding any meeting of shareholders, as the day as of which shareholders entitled to notice of and to vote at such meeting shall be determined; and all persons who are holders of record of shares with voting rights on such day, and no others, shall be entitled to notice of and to vote at such meeting. Sec. 6. Inspectors of Election. The Board of Directors, in advance of any shareholders' meeting, may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at a shareholders' meeting may, and on the request of any shareholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability. Thereafter each inspector shall have at such meeting all of the powers and duties provided by law. Sec. 7. Business Conducted at Meetings. At an annual meeting of shareholders, only such business may be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting business must be (a) specified in the notice of meeting (including any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a shareholder of the Company who was a shareholder of record at the time of giving of notice provided for in this Section 7, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 7. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal office of the Company not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that the date of the annual meeting is scheduled for a day other than the first Wednesday in May in such year and less than 70 days' notice or prior public announcement of the new date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day -3- 4 following the day on which such notice of the new date of the annual meeting was mailed or such public announcement was made.(1) A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address of the shareholder proposing such business, as they appear on the Company's books, and of the beneficial owner, if any, on whose behalf such notice is being given, (c) the class and number of shares of the Company which are owned beneficially and of record by such shareholder and by such beneficial owner, and (d) any material interest in such business of such shareholder or of such beneficial owner. At a special meeting of shareholders, only such business may be conducted as shall have been properly brought before the meeting. To be properly brought before a special meeting, business must be related to the purpose or purposes set forth in the notice of the meeting (including any supplement thereto) given by or at the direction of the Board of Directors or the Chairman of the Board. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at a meeting of shareholders except in accordance with the procedures set forth in this Section 7. The chairman of a meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 7, - ------------------------ (1) Effective as of the close of business on the day of the May 2001 annual meeting of shareholders of the Company, this sentence shall be amended to read as follows: To be timely, a shareholder's notice must be delivered to or mailed and received at the principal office of the Company not later than the close of business on the 90th day and not earlier than the close of business on the 120th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so received not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder's notice as described above. -4- 5 and if the chairman should so determine, he or she shall declare to the meeting that any such business not properly brought before the meeting shall not be transacted. In addition to the provisions of this Section 7, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in these By-Laws shall be deemed to affect any rights of shareholders to request inclusion of proposals in the Company's proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act") and to put before such meeting any proposals so included in the Company's proxy statement at his or her request. Sec. 8. Nomination of Directors. Only persons who are nominated in accordance with the procedures set forth in this Section 8 shall be eligible for election as Directors at any meeting of shareholders held for the election of Directors (an "Election Meeting"). Nominations of persons for election to the Board of Directors of the Company may be made at an Election Meeting by or at the direction of the Board of Directors or by a shareholder of the Company who was a shareholder of record at the time of giving of notice provided for in this Section 8, who is entitled to vote for the election of Directors at such Election Meeting and who complies with the notice procedures set forth in this Section 8. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Company. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal office of the Company not less than 60 days nor more than 90 days prior to such Election Meeting; provided, however, that in the event the date of the Election Meeting is scheduled for a day other than the first Wednesday in May and less than 70 days' notice or prior public announcement of the date of such Election Meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of such Election Meeting was mailed or such public announcement was made. Notwithstanding anything in the foregoing sentence to the contrary, in the event that the number of Directors to be elected to the Board of Directors of the Company at such Election Meeting is increased or there is a vacancy to be filled at such Election Meeting in a class of Directors whose terms do not expire at such Election Meeting and there is no public announcement at least 70 days prior to such Election Meeting naming all of the nominees for Director or specifying the size of the increased Board of Directors or the number of Directors to be elected, a shareholder's notice required by this Section 8 shall also be considered timely, but only with respect to nominees for any positions created by such increase or vacancy, if it shall be delivered to or mailed and received at the principal office of the Company not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company. Such shareholder's notice to the Secretary shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a Director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Company which are owned beneficially by such person and (iv) any other information concerning such person that is required to be disclosed in connection with the solicitation of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including without limitation such person's written consent to being named in the proxy statement as a nominee and to -5- 6 serving as a Director if elected); and (b) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, (i) the name and address of such shareholder, as they appear on the Company's books, and of such beneficial owner and (ii) the class and number of shares of the Company which are owned beneficially and of record by such shareholder and by such beneficial owner. At the request of the Board of Directors any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary of the Company that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a Director of the Company unless nominated in accordance with the procedures set forth in this Section 8. In the event that a person is validly designated as a nominee in accordance with the foregoing and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the shareholder who proposed such nominee, as the case may be, may designate a substitute nominee. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the provisions of this Section 8, and if the chairman should so determine, he or she shall declare to the meeting that the defective nomination shall be disregarded. In addition to the provisions of this Section 8, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Sec. 9. Public Announcement. For purposes of this Article II, "public announcement" shall mean disclosure in a communication sent by first class mail to shareholders, in a press release reported by the Dow Jones News Service, Reuters Information Services, Inc., Associated Press or comparable national news service or in a document filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. ARTICLE III. DIRECTORS Sec. 1. Number; Classification of Board; Newly Created Directorships and Vacancies. The business of the Company shall be managed under the direction of its Board of Directors, which shall consist of not less than nine nor more than twelve Directors, provided that whenever the holders of any one or more series of Preferred Shares of the Company become entitled to elect one or more Directors to the Board of Directors in accordance with any applicable provisions of the Certificate of Incorporation, such maximum number of Directors shall be increased automatically by the number of Directors such holders are so entitled to elect. Such increase shall remain in effect until the right of such holders to elect such Director or Directors shall cease and until the Director or Directors elected by such holders shall no longer hold office. The exact number of Directors within the foregoing minimum and maximum limitations shall be determined from time to time by resolution adopted by the affirmative vote of a majority of the entire Board. Except as otherwise provided in any applicable provisions of the Certificate of Incorporation relating to Preferred Shares of the Company, the Directors shall be divided into three -6- 7 classes, designated Class I, Class II and Class III. All classes shall be as nearly equal in number as possible. The terms of office of the Directors initially classified shall be as follows: at the 1988 annual meeting of shareholders, Class I Directors shall be elected for a one-year term expiring at the 1989 annual meeting of shareholders, Class II Directors for a two-year term expiring at the 1990 annual meeting of shareholders, and Class III Directors for a three-year term expiring at the 1991 annual meeting of shareholders. At each annual meeting of shareholders after the 1988 annual meeting, Directors so classified who are elected to replace those whose terms expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting. Each Director so classified shall hold office until the expiration of his term and until his successor has been elected and qualified. Except as otherwise provided in any applicable provisions of the Certificate of Incorporation relating to Preferred Shares of the Company, (a) newly created directorships resulting from an increase in the number of Directors and vacancies occurring on the Board of Directors for any reason may be filled by vote of the Directors (including a majority of Directors then in office if less than a quorum exists), and (b) if the number of Directors is changed, (i) any newly created directorships or any decrease in directorships shall be apportioned by the Board among the classes so as to make all classes as nearly equal as possible, and (ii) when the number of Directors is increased by the Board and any newly created directorships are filled by the Board, there shall be no classification of the additional Directors until the next annual meeting of shareholders. Any Director elected by the Board to fill a newly created directorship or a vacancy shall hold office until the next annual meeting of shareholders and until his successor, classified in accordance with these By-Laws, has been elected and qualified. No decrease in the number of Directors constituting the Board shall shorten the term of any incumbent Director. Sec. 2. Quorum. One-third, but in any event not fewer than five (5) members of the Board of Directors, shall constitute a quorum for transacting business at all meetings. In the event of a quorum not being present, a lesser number may adjourn the meeting to a time not more than twenty (20) days later. Sec. 3. Place of Meetings. The Directors may hold their meetings either within or without the State of New York. Sec. 4. Meetings. Regular and special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board, any Vice Chairman, the President, any Executive Vice President or Senior Vice President, or any member of the Executive Committee of the Board and shall be held at such time and place as the notice of the meeting shall specify. Notice of any such meeting shall be given to each Director (a) personally (either orally or in writing) not less than 12 hours in advance of such meeting, (b) by telex or similar method of communication dispatched to his usual place of business not less than 24 hours in advance of such meeting, or (c) by mail or telegram dispatched to his address on file at the Company for such purpose not less than two days in advance of such meeting. Such notice shall be given by the Secretary or, if the Secretary is not available, by the individual calling the meeting and, in the case of special meetings, shall also specify the object of the meeting. At any such meeting held without notice at which every member -7- 8 of the Board shall be present or shall waive notice in writing before or after the meeting, any business may be transacted which might have been transacted if notice of the meeting had been duly given. Regular meetings may also be held at such times and places as the Board may designate from time to time, and no notice shall be required for any such regular meeting when held as so designated. Any one or more members of the Board may participate in a meeting of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. Sec. 5. Removal. Any officer elected or appointed by the Board of Directors, may be removed at any time by the affirmative vote of a majority of the whole Board. Sec. 6. Compensation. Each Director of the Company who is neither an officer or employee of the Company or of a subsidiary of the Company nor a Chairman of a Committee of the Board of Directors of the Company shall receive an annual retainer of Thirty Six Thousand Dollars ($36,000). Each Director of the Company who is not an officer or employee of the Company or of a subsidiary of the Company and who is a Chairman of a Committee of the Board of Directors of the Company shall receive an annual retainer of Thirty Nine Thousand Dollars ($39,000). In addition, each Director of the Company who is not an officer or employee of the Company or of a subsidiary of the Company shall receive: (i) a fee of One Thousand Dollars ($1,000) per meeting for attendance at any regular or special meeting of the Board or as a member or by invitation at any regular or special meeting of any Committee of the Board and (ii) a fee of One Thousand Dollars ($1,000) for each day (prorated for part of a day) that such Director renders service to the Company in excess of that required by such Director's usual responsibilities either as a member of the Board of Directors of the Company or as a member of a Committee thereof. Sec. 7. Indemnification--Third Party and Derivative Actions. (a) The Company shall indemnify any person made, or threatened to be made, a party to an action or proceeding other than one by or in the right of the Company to procure a judgment in its favor, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any Director or officer of the Company served in any capacity at the request of the Company, by reason of the fact that he, his testator or intestate, is or was a Director or officer of the Company, or is or was serving such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and expenses (including attorneys' fees) incurred in connection with such action or proceeding, or any appeal therein, provided that no indemnification may be made to or on behalf of such person if (i) his acts were committed in bad faith or were the result of his active and deliberate dishonesty and were material to such action or proceeding or (ii) -8- 9 he personally gained in fact a financial profit or other advantage to which he was not legally entitled. (b) The Company shall indemnify any person made, or threatened to be made, a party to an action by or in the right of the Company to procure a judgment in its favor by reason of the fact that he, his testator or intestate, is or was a Director or officer of the Company, or is or was serving at the request of the Company as a Director or officer of any other corporation of any type or kind, domestic or foreign, or of any partnership, joint venture, trust, employee benefit plan or other enterprise, against judgments, amounts paid in settlement and expenses (including attorneys' fees) incurred in connection with such action, or any appeal therein, provided that no indemnification may be made to or on behalf of such person if (i) his acts were committed in bad faith or were the result of his active and deliberate dishonesty and were material to such action or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. (c) For the purpose of this Section 7, the Company shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the Company also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered fines. (d) The termination of any civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such Director or officer has not met the standard of conduct set forth in this Section 7. However, no Director or officer shall be entitled to indemnification under this Section 7 if a judgment or other final adjudication adverse to the Director or officer establishes (i) that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or (ii) that he personally gained in fact a financial profit or other advantage to which he was not legally entitled. Sec. 8. Payment of Indemnification; Repayment. (a) A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in Section 7 of this Article shall be entitled to indemnification as authorized in such Section. (b) Except as provided in Section 8(a), any indemnification under Section 7 of this Article, unless ordered by a court, shall be made by the Company only if authorized in the specific case: (1) by the Board of Directors acting by a quorum consisting of Directors who are not parties to the action or proceeding giving rise to the indemnity claim upon a finding that the Director or officer has met the standard of conduct set forth in Section 7 of this Article; or -9- 10 (2) if a quorum under the foregoing clause (1) is not obtainable or, even if obtainable, a quorum of disinterested Directors so directs: (i) by the Board of Directors upon the opinion in writing of independent legal counsel (i.e., a reputable lawyer or law firm not under regular retainer from the Company or any subsidiary corporation) that indemnification is proper in the circumstances because the standard of conduct set forth in Section 7 of this Article has been met by such Director or officer, or (ii) by the holders of the Common Shares of the Company upon a finding that the Director or officer has met such standard of conduct. (c) Expenses incurred by a Director or officer in defending a civil or criminal action or proceeding shall be paid by the Company in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of such Director or officer to repay such amount in case he is ultimately found, in accordance with this Article, not to be entitled to indemnification or, where indemnity is granted, to the extent the expenses so paid exceed the indemnification to which he is entitled. (d) Any indemnification of a Director or officer of the Company under Section 7 of this Article, or advance of expenses under Section 8(c) of this Article, shall be made promptly, and in any event within 60 days, upon the written request of the Director or officer. Sec. 9. Enforcement; Defenses. The right to indemnification or advances as granted by this Article shall be enforceable by the Director or officer in any court of competent jurisdiction if the Company denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such person's expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Company. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses under Section 8(c) of this Article where the required undertaking, if any, has been received by the Company) that the claimant has not met the standard of conduct set forth in Section 7 of this Article, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including its Board of Directors, its independent legal counsel, and the holders of its Common Shares), to have made a determination that indemnification of the claimant is proper in the circumstances nor the fact that there has been an actual determination by the Company (including its Board of Directors, its independent legal counsel, and the holders of its Common Shares) that indemnification of the claimant is not proper in the circumstances, shall be a defense to the action or create a presumption that the claimant is not entitled to indemnification. Sec. 10. Contract; Savings Clause; Preservation of Other Rights. (a) The foregoing indemnification provisions shall be deemed to be a contract between the Company and each Director and officer who serves in such capacity at any time while these provisions as well as the relevant provisions of the New York Business Corporation Law are -10- 11 in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a contract right may not be modified retroactively without the consent of such Director or officer. (b) If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify each Director or officer of the Company against judgments, fines, amounts paid in settlement and expenses (including attorneys' fees) incurred in connection with any actual or threatened action or proceeding, whether civil or criminal, including an actual or threatened action by or in the right of the Company, or any appeal therein, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. (c) The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of shareholders or Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. The Company is hereby authorized to provide further indemnification if it deems it advisable by resolution of shareholders or Directors or by agreement. Sec. 11. Indemnification of Persons Not Directors or Officers of the Company. The Company may, by resolution adopted by the Board of Directors of the Company, indemnify any person not a Director or officer of the Company, who is made, or threatened to be made, a party to an action or proceeding, whether civil or criminal, by reason of the fact that he, his testator or intestate, is or was an employee or other agent of the Company, against judgments, fines, amounts paid in settlement and expenses (including attorneys' fees) incurred in connection with such action or proceeding, or any appeal therein, provided that no indemnification may be made to or on behalf of such person if (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to such action or proceeding, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. ARTICLE IV. EXECUTIVE AND OTHER COMMITTEES Sec. 1. The Board of Directors shall, by an affirmative vote of a majority of the whole Board, appoint from the Directors an Executive Committee not more than nine and not less than three, of which one-third (but not less than two) shall constitute a quorum. Should it be impracticable at any time, due to absence or illness of members or other cause, to obtain a quorum of the members so appointed for any desired meeting, the Secretary, or, if the Secretary is not available, the member calling the meeting, may call upon any other Director or Directors, not members of such Executive Committee but who have been designated by the Board as alternate members of the Executive Committee, to make up a quorum for that particular meeting, which other Director or Directors shall for the time being be members of said Executive Committee, and the acts and proceedings of the Committee as so constituted for such meeting shall have the same -11- 12 force and effect as the acts and proceedings of meetings where a quorum of the regular committee is in attendance. The Board of Directors may from among their number also, by a similar vote, appoint any other committees. The Board of Directors shall fill vacancies in the Executive Committee by election from Directors; and at all times it shall be the duty of the Board of Directors to keep the membership of the Executive Committee up to the required number. Any member of the Executive Committee who shall cease to be a Director shall ipso facto cease to be a member of the Committee. All action by the Executive Committee, or by other committees appointed by the Board of Directors, shall be reported to said Board at its meeting next succeeding such action, and, except to the extent stated in the second sentence of the first paragraph of Section 2 of this Article, shall be subject to revision, alteration, or approval by the Board of Directors. The Executive and other committees shall each fix its own rules of procedure and arrange its own place of meeting; but in every case (except in the case of the Executive Committee) a majority of such committee shall be necessary to constitute a quorum, and in every case (except in the case of the Executive Committee) the affirmative vote of a majority of the members of each of such committees shall be necessary for its adoption of any resolution. Any one or more members of the Executive or any other committee may participate in a meeting of such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. Meetings of the Executive Committee shall be held whenever called by the Chairman of the Board, any Vice Chairman, the President, any Executive Vice President or Senior Vice President or any member of that Committee, and shall be held at such time and place as the notice of the meeting shall specify. Notice of any such meeting shall be given to each member of the Committee (a) personally (either orally or in writing) not less than 12 hours in advance of such meeting, (b) by telex or similar method of communication dispatched to his usual place of business not less than 24 hours in advance of such meeting, or (c) by mail or telegram dispatched to his address on file at the Company for such purpose not less than two days in advance of such meeting. Such notice shall be given by the Secretary or, if the Secretary is not available, by the individual calling the meeting and shall also specify the object of the meeting. The Executive Committee shall keep regular minutes and cause them to be recorded in a book to be kept in the principal office of the Company for that purpose. Sec. 2. Powers of Committees. The Executive Committee shall, whenever the Board of Directors is not in session, direct the management of the affairs of the Company in all cases in -12- 13 which specific directions to the contrary shall not have been given, or specific action of the Board of Directors is required by law. Notwithstanding anything to the contrary stated in the fifth paragraph of Section 1 of this Article, the rights of third persons acquired in reliance on an Executive Committee resolution prior to receiving notice of action by the Board of Directors shall not be prejudiced by action by the Board of Directors. Other committees appointed by the Board of Directors shall have such powers as the Board may delegate by resolution. Sec. 3. Compensation. The members of the Executive Committee and the members of any other committee appointed by the Board of Directors shall receive such compensation for their services as from time to time shall be fixed by the Board of Directors. ARTICLE V. OFFICERS AND THEIR DUTIES Sec. 1. Officers. The officers of the Company shall be: Chairman of the Board of Directors, President, Treasurer, Secretary, and Controller, and such Vice Chairmen, such Vice Presidents (one or more of whom may be designated Executive Vice President or Senior Vice President), and such Assistant Vice Presidents, Assistant Treasurers, Assistant Secretaries, and Assistant Controllers as the Board of Directors in its discretion may elect or appoint. No officer other than the Chairman of the Board need be a member of the Board of Directors. Any number of offices may be held by the same person, except that the same person shall not be (i) Treasurer and Controller or (ii) Chairman of the Board or President and Secretary. Officers shall be elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders, subject to the power of the Board of Directors to fill vacancies at any time. All officers shall serve at the pleasure of the Board of Directors and may be removed as provided in Article III, Section 5 of these By-Laws. Sec. 2. Chairman of the Board. The Chairman of the Board of Directors shall be the chief executive officer of the Company and shall be responsible to the Board of Directors for the administration and operations of the Company. He shall preside at all meetings of the Board of Directors and at all meetings of shareholders. By virtue of his office he shall be a member of the Executive Committee of the Board of Directors and shall preside at meetings of the Executive Committee. He shall have such other powers and perform such other duties as from time to time may be assigned to him by, and shall be responsible solely to, the Board of Directors. He may sign, with the Treasurer, all promissory notes of the Company and any guarantees of the Company in respect of borrowed money, and, with the Secretary when the corporate seal is to be affixed, all share certificates, bonds, mortgages and other contracts of the Company. Sec. 2-A. Vice Chairmen. Each Vice Chairman shall have such powers and perform such duties as from time to time may be assigned to him by the Board of Directors or the Chairman of the Board. Any Vice Chairman may sign, with the Treasurer, all promissory notes of the Company -13- 14 and any guarantees of the Company in respect of borrowed money, and, with the Secretary when the corporate seal is to be affixed, all share certificates, bonds, mortgages, and other contracts of the Company. Sec. 3. President. The President shall have such powers and perform such duties as from time to time may be assigned to him by the Board of Directors or by the Chairman of the Board. He may sign, with the Treasurer, all promissory notes of the Company and any guarantees of the Company in respect of borrowed money, and, with the Secretary when the corporate seal is to be affixed, all share certificates, bonds, mortgages, and other contracts of the Company. Sec. 3-A. Vice Presidents. Each Vice President shall have such powers and perform such duties as from time to time may be assigned to him by the Board of Directors, the Chairman of the Board, any Vice Chairman, or the President. Any Vice President may sign, with the Treasurer, all promissory notes of the Company and any guarantees of the Company in respect of borrowed money, and, with the Secretary when the corporate seal is to be affixed, all share certificates, bonds, mortgages, and other contracts of the Company. Sec. 4. Assistant Vice Presidents. The Board of Directors may elect or appoint one or more Assistant Vice Presidents, each of whom shall have such powers and perform such duties as from time to time may be assigned to him by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President, or any Vice President. Sec. 5. Secretary. The Secretary shall keep a record of all proceedings of the Board of Directors, and of all meetings of the shareholders, and of the Executive Committee and of all other committees, in books provided for that purpose, and he shall attend to giving and serving all notices of the Company. The Secretary shall keep in safe custody the seal of the Company and he shall affix such seal on all share certificates, bonds, mortgages, and other contracts of the Company executed under such seal. He shall have charge of the records of shareholders of the Company, including transfer books, and share ledgers, and such other books and papers as the Board of Directors shall direct, and in general shall perform all the duties incident to the office of Secretary. Sec. 6. Assistant Secretaries. The Board of Directors may appoint one or more Assistant Secretaries, who shall have power to sign, with the Chairman of the Board, any Vice Chairman, the President, or any Vice President, share certificates of the Company. In the absence of the Secretary, the Assistant Secretaries shall be vested with the powers of, and any one of them may perform the duties of, the Secretary. Each Assistant Secretary shall perform such other duties as from time to time may be assigned to him by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President, or any Vice President. Sec. 7. Treasurer. The Treasurer shall have in his charge all the funds and securities of the Company. When necessary or proper, he, or such other officer or officers of the Company as may be so duly authorized by the Board of Directors, shall endorse on behalf of the Company for collection checks, notes or other obligations and shall deposit the same to the credit of the Company in such bank or banks or depositories as the Board of Directors may designate or as may be -14- 15 designated by persons authorized by the Board of Directors to make such designations. He, or such other officers or employees of the Company or any of its subsidiaries, acting individually unless otherwise provided, as may from time to time be designated by the Board of Directors or be designated in writing by any officer or officers of the Company duly authorized by the Board of Directors to make such designations, shall sign all receipts and vouchers for payments made to the Company, and shall sign all checks, drafts or bills of exchange, provided that the Board of Directors from time to time may designate other persons as authorized signatories of the Company or authorize other persons to make such designations on behalf of the Company. The Treasurer jointly with the Chairman of the Board, any Vice Chairman, the President, or any Vice President shall sign all promissory notes of the Company and any guarantees of the Company in respect of borrowed money, and shall pay out and dispose of the same under the direction of the Board; he shall keep a complete set of books, showing the financial transactions of the Company, and shall exhibit his books to any Director upon application at the office of the Company, during business hours; he shall make such reports as the Board of Directors or the Executive Committee may from time to time request; and he shall perform all acts incidental to the office of Treasurer, subject, nevertheless, to the control of the Board of Directors. He shall give such bonds for the faithful discharge of his duties as Treasurer as the Board of Directors may require. Sec. 8. Assistant Treasurers. The Board of Directors may appoint one or more Assistant Treasurers. In the absence of the Treasurer, the Assistant Treasurers shall be vested with the powers of, and any one of them may perform the duties of, the Treasurer. Each Assistant Treasurer shall perform such other duties as from time to time may be assigned to him by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President, or any Vice President. Sec. 9. Controller. The Controller shall have supervision and direction of all accounts of the Company, and shall see that the system of accounts is duly enforced and maintained. There shall be kept in his office a general set of books containing a complete set of all the business transactions of the Company, and he shall, as often as necessary, make an examination of the accounts of any officer, agent or employee entrusted with the handling or care of money of the Company. It shall be the duty of the Controller to know that all money belonging to the Company, collected from any source by any officer, agent or employee, is properly accounted for and promptly paid into the treasury, and that all accounts of the Company are properly and promptly settled. It shall be the duty of the Controller to know that all bonds required of officers, agents and employees for the faithful performance of their duties are given. Such bonds shall be transmitted to the Controller for safe custody and shall be released only upon a complete and satisfactory settlement of the accounts covered by them, unless otherwise ordered by the Board. -15- 16 Sec. 10. Additional Officers; Division Officers. In addition to the above officers, the Board of Directors may also appoint one or more general counsel and one or more auditors and such other officers as they may deem wise and advisable for the best interests of the Company, who shall perform such duties as from time to time may be assigned to them by the Board of Directors. If the Board of Directors establishes divisions of the Corporation, the Board may also establish such division offices and appoint such division officers as the Board deems appropriate. Such division officers shall have such powers and perform such duties as from time to time may be assigned to them by the Board of Directors. The Board of Directors shall fix salaries for all officers of the Company, or may delegate, to any committee of the Board or to the Chairman of the Board, the power to fix salaries of officers of the Company in cases where the Board deems it appropriate to so delegate. Sec. 11. Voting upon Stocks. Unless otherwise ordered by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or any Vice President shall have full power and authority on behalf of the Company to attend, act and vote, or in the name of the Company to execute proxies appointing any person or persons to attend, act and vote on behalf of the Company, at any meeting of stockholders of any corporation in which the Company may hold stock, and at any such meeting such officer or person or persons appointed in any such proxy, as the case may be, shall possess and may exercise on behalf of the Company any and all rights, powers and privileges incident to the ownership of such stock. The Board of Directors may by resolution from time to time confer like powers upon any other person or persons. Sec. 12. Sales of Stock. Neither the corporation of Phelps Dodge Corporation nor any subsidiary company by it controlled, shall speculate in the stock either of Phelps Dodge Corporation or of any subsidiary company, or shall buy or sell same except in the regular course of legitimate business of such company or for the purpose of retirement and this provision shall be unalterable save by the vote of the holders of a majority of the stock of the company voting thereon at a meeting called, as provided by these By-Laws. ARTICLE VI. SHARE CERTIFICATES AND TRANSFERS Sec. 1. Certificates for Shares. The Board of Directors shall prepare, in form according to law, and approve, certificates evidencing shares of the Company. No certificate shall be valid unless it is signed by the Chairman of the Board, any Vice Chairman, the President or any Vice President; and also by the Secretary or an Assistant Secretary. The signatures of the officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Company itself or its employee. Sec. 2. Transfer of Shares. Shares of the Company shall be transferred only on the books of the Company by the holder thereof in person or by his or her attorney duly authorized thereto in writing, and by cancellation and surrender of certificates for a like number of shares. -16- 17 ARTICLE VII. AMENDMENTS These By-Laws, with the exception of Section 12 of Article V, may be amended or repealed by a vote of a majority of all the Directors at any regular or special meeting of the Board. -17- 18 ARTICLE VIII. The Company expressly elects not to be governed by the provisions currently designated as Article 2, Chapter 23, Title 10 of the Arizona Revised Statutes. -18- EX-12 3 p64039qex12.txt EX-12 1 PHELPS DODGE CORPORATION AND SUBSIDIARIES Exhibit 12 COMPUTATION OF TOTAL DEBT TO TOTAL CAPITALIZATION (Unaudited; dollars in millions)
September 30 December 31, 2000 1999 ------------ ------------ Short-term debt ................................. $ 473.4 451.2 Current portion of long-term debt ............... 203.7 131.3 Long-term debt .................................. 2,031.6 2,172.5 ------------ ------------ Total debt ................................. 2,708.7 2,755.0 Minority interests in subsidiaries .............. 88.0 96.3 Common shareholders' equity ..................... 3,156.0 3,276.8 ------------ ------------ Total capitalization ....................... $ 5,952.7 6,128.1 ============ ============ Ratio of total debt to total capitalization ..... 45.5% 45.0% ============ ============
EX-15 4 p64039qex15.txt EX-15 1 Exhibit 15 November 10, 2000 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Commissioners: We are aware that our report dated October 16, 2000 on our review of interim financial information of Phelps Dodge Corporation (the "Corporation") as of and for the period ended September 30, 2000 and included in the Corporation's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in its Registration Statement and Post-Effective Amendment No. 1 on Form S-3 (Nos. 33-44380 and 333-36415), Post-Effective Amendment No. 2 on Form S-3 (No. 33-44380), Registration Statements on Form S-8 (Nos. 33-26442, 33-6141, 33-26443, 33-29144, 33-19012, 2-67317, 33-34363, 33-34362, 33-62648, 333-42231, and 333-52175), Post-Effective Amendment No. 4 on Form S-8 to the Registration Statement on Form S-4 (No. 333-86061) and Registration Statement on Form S-3 (333-43890). Very truly yours, /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP EX-27 5 p64039qex27.txt EX-27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2000 AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 OF PHELPS DODGE CORPORATION AND ITS SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 245,900 0 648,100 0 441,000 1,618,100 9,089,600 3,149,400 8,022,300 1,469,800 2,031,600 492,100 0 0 2,663,900 8,022,300 3,426,000 3,426,000 2,701,100 2,701,100 438,900 0 163,800 42,200 17,300 20,900 0 0 0 20,900 0.27 0.27
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