(Press release provided by Standard & Poor's)
NEW YORK, July 25 - Standard & Poor's Ratings Services said today that Phelps Dodge Corp.'s (BBB-/Negative/A-3) second quarter earnings announcement will have no affect on its current ratings or outlook on the company. The key factors for maintaining the current ratings continue to be the degree and timing of economic recovery as well as copper price levels. However, another important factor will be the progress made in the company's "Quest for Zero" initiative targeting $400 million of sustainable cost reductions by the end of 2003.
The company's progress and timeliness in cost reductions continue to meet Standard & Poor's expectations. Despite the balance of $592 million in proceeds from its common stock and mandatory convertible preferred stock issuance applied towards debt reduction, credit measures will continue to remain weak given current low copper prices and soft fundamentals at the company's Phelps Dodge Industries.