Long-Term Debt



(in millions)	September 28, 2012			December 31, 2011
North America
5.75% Senior Notes due 2022	$	600.0		$	—
Subordinated Convertible Notes due 2029	429.5			429.5
Debt discount on Subordinated Convertible Notes due 2029	(263.4		)	(264.4		)
1.00% Senior Convertible Notes due 2012	10.6			10.6
Debt discount on 1.00% Senior Convertible Notes due 2012	—			(0.5		)
0.875% Convertible Notes due 2013	355.0			355.0
Debt discount on 0.875% Convertible Notes due 2013	(25.5		)	(40.6		)
7.125% Senior Notes due 2017	200.0			200.0
Senior Floating Rate Notes	125.0			125.0
Revolving Credit Facility	—			34.9
Other	9.0			9.0
Europe and Mediterranean
Spanish Term Loans	16.9			31.4
Credit facilities	35.1			27.4
Uncommitted accounts receivable facilities	—			2.1
Other	12.2			11.5
Rest of World (“ROW”)
Credit facilities	192.7			118.0
Total debt	1,697.1			1,048.9
Less current maturities	231.3			156.3
Long-term debt	$	1,465.8		$	892.6

At September 28, 2012, maturities of long-term debt during the twelve month periods beginning September 28, 2012 through September 29, 2017 are $231.3 million, $357.4 million, $128.8 million, $1.3 million and $201.3 million, respectively, and $777.0 million thereafter. As of September 28, 2012 and December 31, 2011, the Company was in compliance with all debt covenants as discussed below.

5.75% Senior Notes due 2022

On September 25, 2012, the Company completed the issuance and sale of $600.0 million in aggregate principal amount of new senior unsecured notes (the "5.75% Senior Notes"). As of September 28, 2012, the 5.75% Senior Notes were jointly and severally guaranteed by each of the Company's current and future U.S. and Canadian subsidiaries that was a borrower or a guarantor under the Company's Revolving Credit Facility or certain of the Company's or the guarantors' other indebtedness. The 5.75% Senior Notes were offered and sold in private transactions in accordance with Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The 5.75% Senior Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

The Company's 5.75% Senior Notes are summarized in the table below:



	5.75% Senior Notes
(in millions)	September 28, 2012		December 31, 2011
Face Value	$	600.0	$	—
Fair Value (Level 2)	610.5		—
Interest Rate	5.75%
Interest Payment	Semi-Annual: Apr 1 & Oct 1
Maturity Date	October 2022
Guarantee	Jointly and severally guaranteed by the Company's wholly owned U.S. and Canadian subsidiaries



		5.75% Senior Notes
	Beginning Date	Percentage
Call Option⁽¹⁾	October 1, 2017	102.875	%
	October 1, 2018	101.917	%
	October 1, 2019	100.958	%
	October 1, 2020 and thereafter	100.000	%

(1)

The Company may, at its option, redeem the 5.75% Senior Notes on or after the stated beginning dates at percentages noted above (plus accrued and unpaid interest). Additionally, the Company, may on or prior to October 1, 2015 redeem in the aggregate up to 35% of the aggregate principal amount of 5.75% Senior Notes issued with the cash proceeds from one or more equity offerings, at a redemption price in cash equal to 105.75% of the principal plus accrued and unpaid interest so long as (i) at least 65% of the aggregate principal amount of the 5.75% Senior Notes issued remains outstanding immediately after giving effect to any such redemption; and (ii) notice of any such redemption is given within 60 days after the date of the closing of any such equity offering. In addition, at any time prior to October 1, 2017, the Company may redeem some or all of the 5.75% Senior Notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, plus a make whole premium.

The 5.75% Senior Notes' indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to (i) incur additional indebtedness and guarantee indebtedness; (ii) pay dividends or make other distributions or repurchase or redeem the Company's capital stock; (iii) purchase, redeem or retire debt; (iv) issue certain preferred stock or similar equity securities; (v) make loans and investments; (vi) sell assets; (vii) incur liens; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the Company's subsidiaries' ability to pay dividends; and (x) consolidate, merge or sell all or substantially all assets. However, these covenants are subject to exceptions and qualifications.

The 5.75% Senior Notes may also be repurchased at the option of the holders in connection with a change of control (as defined in the indenture governing the 5.75% Senior Notes) or in connection with certain asset sales.

As of September 28, 2012 the Company intended to use the proceeds of the 5.75% Senior Notes to redeem all of its outstanding $200.0 million of 7.125% Senior Fixed Rate Notes that were to mature in April 2017. The Company intends to use the balance of the proceeds to (i) purchase or redeem its 0.875% Convertible Notes through a possible tender offer, purchases or payment at maturity, and (ii) general corporate purposes, which may include repayment of borrowings under its Revolving Credit Facility. The Company capitalized $11.8 million in deferred financing costs in connection with the 5.75% Senior Notes. See Note 22 - Subsequent Events for further detail.

Convertible Debt Instruments

The Company’s convertible debt instruments outstanding as of September 28, 2012 and December 31, 2011 are as follows:



	Subordinated Convertible Notes						1.00% Senior Convertible Notes					0.875% Convertible Notes
(in millions)	September 28, 2012			December 31, 2011			September 28, 2012		December 31, 2011			September 28, 2012			December 31, 2011
Face value	$	429.5		$	429.5		$	10.6	$	10.6		$	355.0		$	355.0
Debt discount	(263.4		)	(264.4		)	—		(0.5		)	(25.5		)	(40.6		)
Book value	166.1			165.1			10.6		10.1			329.5			314.4
Fair value (Level 1)	461.7			412.3			10.6		9.8			351.9			329.7
Maturity date	Nov 2029						Oct 2012					Nov 2013
Stated annual interest rate	4.50% until Nov 2019 2.25% until Nov 2029						1.00% until Oct 2012					0.875% until Nov 2013
Interest payments	Semi-annually: May 15 & Nov 15						Semi-annually: Apr 15 & Oct 15					Semi-annually: May 15 & Nov 15

As of September 28, 2012 the 1.00% Senior Convertible Notes and the 0.875% Convertible Notes were unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by the Company’s wholly-owned U.S. and Canadian subsidiaries. For additional information on the convertible notes, refer to the Company’s 2011 Amended Annual Report on Form 10-K/A. See Note 22 - Subsequent Events for further detail.

Subordinated Convertible Notes

The Company’s Subordinated Convertible Notes were issued on December 15, 2009 in the amount of $429.5 million as part of an exchange offer. The notes and the common stock issuable upon conversion were registered on a Registration Statement on Form S-4, initially filed with the SEC on October 27, 2009, as amended and as declared effective by the SEC on December 15, 2009. At issuance, the Company separately accounted for the liability and equity components of the instrument, based on the Company’s nonconvertible debt borrowing rate on the instrument’s issuance date of 12.5%. At issuance, the liability and equity components were $162.9 million and $266.6 million, respectively. The equity component (debt discount) is being amortized to interest expense based on the effective interest method. There were no proceeds generated from the transaction and the Company incurred issuance fees and expenses of approximately $14.5 million as a result of the exchange offer which have been proportionately allocated to the liability and equity components of the Subordinated Convertible Notes.

1.00% Senior Convertible Notes

As a result of the aforementioned exchange offer of Subordinated Convertible Notes due in 2029, approximately 97.8% or $464.4 million of the Company’s 1.00% Senior Convertible Notes were validly tendered. As of September 28, 2012, there were $10.6 million of the 1.00% Senior Convertible Notes outstanding. The Company’s 1.00% Senior Convertible Notes were originally issued in September 2007 in the amount of $475.0 million and sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Subsequently, on April 16, 2008, the resale of the notes and the common stock issuable upon conversion of the notes was registered on a Registration Statement on Form S-3. The Company separately accounted for the liability and equity components of the instrument based on the Company’s nonconvertible debt borrowing rate on the instrument’s issuance date of 7.5%. At issuance, the liability and equity components were $348.2 million and $126.8 million, respectively. At the exchange date December 15, 2009, the liability and equity components were $389.7 million and $74.7 million, respectively. The equity component (debt discount) is being amortized to interest expense based on the effective interest method.

Proceeds from the 1.00% Senior Convertible Notes were used to partially fund the purchase price of $707.6 million related to the Phelps Dodge International Corporation ("PDIC") acquisition and to pay transaction costs of approximately $12.3 million directly related to the issuance which have been allocated to the liability and equity components in proportion to the allocation of proceeds.

The 1.00% Senior Convertible Notes matured and were repaid in October of 2012; refer to the Note 22 - Subsequent Events for further detail.

0.875% Convertible Notes

The Company’s 0.875% Convertible Notes were issued in November of 2006 in the amount of $355.0 million. At the time of issuance, the notes and the common stock issuable upon conversion of the notes were registered on a Registration Statement on Form S-3ASR, which was renewed on September 30, 2009 when the Company filed a Renewal Registration Statement for the underlying common stock on Form S-3ASR. The Company separately accounted for the liability and equity components of the instrument based on the Company’s nonconvertible debt borrowing rate on the instrument’s issuance date of 7.35%. At issuance, the liability and equity components were $230.9 million and $124.1 million, respectively. The equity component (debt discount) is being amortized to interest expense based on the effective interest method.

Concurrent with the sale of the 0.875% Convertible Notes, the Company purchased note hedges that are designed to mitigate potential dilution from the conversion of the 0.875% Convertible Notes in the event that the market value per share of the Company’s common stock at the time of exercise is greater than approximately $50.36. Under the note hedges that cover approximately 7,048,880 shares of the Company’s common stock, the counterparties are required to deliver to the Company either shares of the Company’s common stock or cash in the amount that the Company delivers to the holders of the 0.875% Convertible Notes with respect to a conversion, calculated exclusive of shares deliverable by the Company by reason of any additional make whole premium relating to the 0.875% Convertible Notes or the Company's election to unilaterally increase the conversion rate as permitted by the indenture governing the 0.875% Convertible Notes. The note hedges expire at the close of trading on November 15, 2013, which is also the maturity date of the 0.875% Convertible Notes, although the counterparties will have ongoing obligations with respect to 0.875% Convertible Notes properly converted on or prior to that date as to which the counterparties have been timely notified.

The Company issued warrants to counterparties that could require the Company to issue up to approximately 7,048,880 shares of the Company’s common stock in equal installments on each of the fifteen consecutive business days beginning on and including February 13, 2014. The strike price is $76.00 per share, which represents a 92.4% premium over the closing price of the Company’s shares of common stock on November 9, 2006. The warrants are expected to provide the Company with some protection against increases in the common stock price over the conversion price per share.

The note hedges and warrants are separate and legally distinct instruments that bind the Company and the counterparties and have no binding effect on the holders of the 0.875% Convertible Notes. In addition, the note hedges and warrants were recorded as a charge and an increase, respectively, in additional paid-in capital in total equity as separate equity transactions.

Proceeds from the offering were used to decrease outstanding debt by $87.8 million, including accrued interest, under the Company’s Terminated Credit Facility, to pay $124.5 million for the cost of the note hedges, and to pay transaction costs of approximately $9.4 million directly related to the issuance which have been allocated to the liability and equity components in proportion to the allocation of proceeds. Additionally, the Company received $80.4 million in proceeds from the issuance of the warrants. At the conclusion of these transactions, the net effect of the receipt of the funds from the 0.875% Convertible Notes and the payments and proceeds mentioned above was an increase in cash of approximately $213.7 million, which was used by the Company for general corporate purposes including acquisitions.

7.125% Senior Notes and Senior Floating Rate Notes

The Company's $325.0 million in aggregate principal amount of senior unsecured notes, comprised of $125.0 million of Senior Floating Rate Notes and $200.0 million of 7.125% Senior Fixed Rate Notes due 2017 (the “7.125% Senior Notes” and together, the “Notes”) were offered and sold in private transactions in accordance with Rule 144A and Regulation S under the Securities Act on March 21, 2007. An exchange offer commenced on June 11, 2007 and was completed on July 26, 2007 to replace the unregistered Notes with registered Notes with like terms pursuant to an effective Registration Statement on Form S-4.



	7.125% Senior Notes						Senior Floating Rate Notes
(in millions)	September 28, 2012			December 31, 2011			September 28, 2012			December 31, 2011
Face value	$	200.0		$	200.0		$	125.0		$	125.0
Fair value (Level 1)	207.3			198.5			122.5			117.5
Interest rate	7.125		%	7.125		%	2.7		%	3.0		%
Interest payment	Semi-annually: Apr 1 & Oct 1						3-month LIBOR rate plus 2.375% Quarterly: Jan 1, Apr 1, Jul 1 & Oct 1
Maturity date	Apr 2017						Apr 2015
Guarantee	Jointly and severally guaranteed by the Company’s wholly-owned U.S. and Canadian subsidiaries
Call Option⁽¹⁾	Beginning Date			Percentage			Beginning Date			Percentage
	April 1, 2012			103.563		%	April 1, 2009			102.0		%
	April 1, 2013			102.375		%	April 1, 2010			101.0		%
	April 1, 2014			101.188		%	April 1, 2011			100.0		%
	April 1, 2015			100.000		%


(1)	The Company may, at its option, redeem the Notes on or after the stated beginning dates at percentages noted above (plus accrued and unpaid interest.)

The Notes’ indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to (i) pay dividends on, redeem or repurchase the Company’s capital stock; (ii) incur or guarantee additional indebtedness; (iii) make investments; (iv) create liens; (v) sell assets; (vi) engage in certain transactions with affiliates; (vii) create or designate unrestricted subsidiaries; and (viii) consolidate, merge or transfer all or substantially all assets. However, these covenants are subject to important exceptions and qualifications, one of which permits the Company to declare and pay dividends or distributions on the Series A preferred stock provided there is no default on the Notes and certain financial conditions are met.

The Notes may also be repurchased at the option of the holders in connection with a change of control (as defined in the indenture governing the Notes) or in connection with certain asset sales.

Proceeds from the Notes of $325.0 million, less approximately $7.9 million of cash payments for fees and expenses that are being amortized over the life of the Notes, were used to pay approximately $285.0 million for 9.5% Senior Notes, $9.3 million for accrued interest on the 9.5% Senior Notes and $20.5 million for tender fees and the inducement premium on the 9.5% Senior Notes, leaving net cash proceeds of approximately $2.3 million which were used for general corporate purposes.

See Note 22 - Subsequent Events for further detail on the redemption of the 7.125% Senior Fixed Rate Notes.

Asset-Based Revolving Credit Facility (“Revolving Credit Facility”)

On July 21, 2011, the Company entered into a $400 million Revolving Credit Facility, and on August 1, 2012, the Company entered into an amendment to the Revolving Credit Facility pursuant to which the amount of the facility was increased to $700 million ($70 million of which may be denominated in Canadian dollars). The Revolving Credit Facility replaced the Company's prior $400 million Senior Secured Revolving Credit Facility (“Terminated Credit Facility”), which was set to mature in July 2012. The Revolving Credit Facility contains restrictions in areas consistent with the Terminated Credit Facility, including limitations on, among other things, distributions and dividends, acquisitions and investments, indebtedness, liens and affiliate transactions. In the aggregate, however, the restrictions in the Revolving Credit Facility provide the Company greater flexibility than those under the Terminated Credit Facility, and generally only apply in the event that the Company's availability under the Revolving Credit Facility falls below certain specific thresholds.

The Revolving Credit Facility matures on July 21, 2017 (the “Maturity Date”), but the Maturity Date may be accelerated if the Company's 0.875% Convertible Notes due 2013, Senior Floating Rate Notes, or 7.125% Senior Notes are not refinanced with indebtedness that matures or is mandatorily redeemable not earlier than the date that is six months after the Maturity Date, unless after giving pro forma effect to the repayment of such notes on their respective maturity dates there is at least $100 million of availability under the Revolving Credit Facility and the pro forma fixed charge coverage ratio (which is the ratio of (a) EBITDA minus the unfinanced portion of capital expenditures to (b) fixed charges) is not less than 1.15 to 1.00 for the most recently ended quarter. The commitment amount under the Revolving Credit Facility may be increased by an additional $100 million, subject to certain conditions and approvals as set forth in the credit agreement. The Revolving Credit Facility may be used for working capital and general corporate purposes. The Company capitalized $4.8 million in deferred financing costs in connection with the Revolving Credit Facility in the third quarter of 2011. Also in the third quarter of 2011, the Company expensed $1.3 million in unamortized fees and expenses related to the Terminated Credit Facility. The Revolving Credit Facility requires maintenance of a minimum fixed charge coverage ratio of one to one if availability under the Revolving Credit Facility is less than $70 million or 10% of the then existing aggregate lender commitment under the facility. At September 28, 2012 and December 31, 2011, the Company was in compliance with all covenants under these facilities.

As of September 28, 2012, indebtedness under the Revolving Credit Facility was guaranteed by certain of the Company's U.S. and Canadian subsidiaries and is secured by a first priority security interest in certain tangible and intangible property and assets of certain of its U.S. and Canadian subsidiaries,including a pledge of 65% of the voting equity interests of certain of the Company's foreign subsidiaries. In December 2012, the Company's Canadian subsidiaries were released as guarantors under certain of the Company's notes due to amendments of the Revolving Credit Facility. This change will be reflected in the Company's 2012 Amended Annual Report on Form 10-K/A.

Borrowings under the Revolving Credit Facility bear interest based on the daily balance outstanding at an applicable rate per annum based on the Company's average availability under the Revolving Credit Facility during the most recently completed calendar quarter. The Revolving Credit Facility also carries a commitment fee ranging from 0.375% to 0.50% per annum based on the average daily undrawn portion of the Revolving Credit Facility, as well as participation fees to the lenders ranging from 1.50% to 2.00% per annum based on the average daily amount of letter of credit exposure and a fronting fee of 0.125% per annum based on the average daily amount of letter of credit exposure to the issuing bank of a letter of credit.

The Company’s Revolving Credit Facility is summarized in the table below:



	Revolving Credit Facility
(in millions)	September 28, 2012		December 31, 2011
Outstanding borrowings	$	—	$	34.9
Undrawn availability	562.9		336.0
Interest rate	—		2.9		%
Outstanding letters of credit	$	18.7	$	20.2
Original issuance	Jul 2011
Maturity date	Jul 2017

Spanish Term Loans

The table below provides a summary of the Company’s term loans and corresponding fixed interest rate swaps. The proceeds from the Spanish Term Loans were used to partially fund general working capital needs. There is no remaining availability under these Spanish Term Loans.



	Spanish Term Loans ⁽¹⁾
(in millions)	September 28, 2012			December 31, 2011
Outstanding borrowings	$	16.9		$	31.4
Fair value (Level 2)	17.2			32.0
Interest rate – weighted average ⁽²⁾	3.7		%	3.7		%


(1)	The terms of the Spanish Term Loans are as follows:



(in millions)	Original Amount		Issuance Date	Maturity Date	Interest Rate	Loan and Interest Payable	Interest Rate Swap ⁽²⁾
Term Loan 1	€	20.0	Feb 2008	Feb 2013	Euribor +0.5%	Semi-annual: Aug and Feb	4.20	%
Term Loan 2	€	10.0	Apr 2008	Apr 2013	Euribor +0.75%	Semi-annual: Apr and Oct	4.58	%
Term Loan 3	€	21.0	Jun 2008	Jun 2013	Euribor +0.75%	Quarterly: Mar, Jun, Sept and Dec	4.48	%
Term Loan 4	€	15.0	Sep 2009	Aug 2014	Euribor +2.0%	Quarterly: Mar, Jun, Sept and Dec Principal payments: Feb and Aug	1.54	%


(2)	The Company entered into fixed interest rate swaps to coincide with the terms and conditions of the term loans that will effectively hedge the variable interest rate with a fixed interest rate.

At September 28, 2012 and December 31, 2011, the Company was in compliance with all covenants under these facilities.

Europe and Mediterranean Credit Facilities

The Company’s Europe and Mediterranean credit facilities are summarized in the table below:



	Europe and Mediterranean Credit Facilities
(in millions)	September 28, 2012			December 31, 2011
Outstanding borrowings	$	35.1		$	27.4
Undrawn availability	54.7			108.8
Interest rate – weighted average	4.3		%	5.2		%
Maturity date	Various

Europe and Mediterranean Uncommitted Accounts Receivable Facilities

The Company’s Europe and Mediterranean uncommitted accounts receivable facilities are summarized in the table below:



	Uncommitted Accounts Receivable Facilities
(in millions)	September 28, 2012		December 31, 2011
Outstanding borrowings	$	—	$	2.1
Undrawn availability	77.8		69.2
Interest rate – weighted average	—		2.0		%
Maturity date	Various

The Spanish Term Loans and certain credit facilities held by one of the Company’s Spanish subsidiaries are subject to certain financial ratios, which include minimum net equity and net debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratios. At September 28, 2012 and December 31, 2011, the Company was in compliance with all material covenants under these facilities.

ROW Credit Facilities

The Company’s ROW credit facilities are summarized in the table below:



	ROW Credit Facilities
(in millions)	September 28, 2012			December 31, 2011
Outstanding borrowings	$	192.7		$	118.0
Undrawn availability	269.2			270.1
Interest rate – weighted average	4.2		%	3.8		%
Maturity date	Various

The Company’s ROW credit facilities are short term loans utilized for working capital purposes. Certain credit facilities are subject to financial covenants. The Company was in compliance with all material covenants under these facilities as of September 28, 2012 and December 31, 2011.