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