SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-9210
_____________________
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-4035997
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10889 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (Zip Code)
(310) 208-8800
(Registrant's telephone number, including area code)
_____________________
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1997
--------------------------- ----------------------------
Common stock $.20 par value 331,265,678 shares
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONTENTS
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
June 30, 1997 and December 31, 1996 2
Consolidated Condensed Statements of Operations --
Three and six months ended June 30, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows --
Six months ended June 30, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 15
1
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Amounts in millions)
1997 1996
================================================================= ========= =========
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 5) $ 331 $ 279
Receivables, net 825 871
Inventories (Note 6) 632 633
Prepaid expenses and other 311 407
--------- ---------
Total current assets 2,099 2,190
LONG-TERM RECEIVABLES, net 137 152
EQUITY INVESTMENTS (Note 12) 1,032 1,039
PROPERTY, PLANT AND EQUIPMENT, at cost, net of
accumulated depreciation, depletion and amortization of $9,551
at June 30, 1997 and $9,369 at December 31, 1996 (Note 7) 13,903 13,808
OTHER ASSETS 505 445
--------- ---------
$ 17,676 $ 17,634
================================================================= ========= =========
The accompanying notes are an integral part of these financial statements.
2
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Amounts in millions)
1997 1996
====================================================================== ========= =========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt and capital lease liabilities $ 5 $ 27
Notes payable 77 20
Accounts payable 960 1,023
Accrued liabilities 1,148 1,291
Domestic and foreign income taxes 104 109
--------- ---------
Total current liabilities 2,294 2,470
--------- ---------
LONG-TERM DEBT, net of current maturities and unamortized discount 4,743 4,511
--------- ---------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred and other domestic and foreign income taxes 2,551 2,560
Other 2,802 2,953
--------- ---------
5,353 5,513
--------- ---------
STOCKHOLDERS' EQUITY
Nonredeemable preferred stock, stated at liquidation value 1,307 1,325
ESOP preferred stock, at par value 1,400 1,400
Unearned ESOP shares (1,370) (1,394)
Common stock, at par value 66 66
Additional paid-in capital 4,275 4,463
Retained earnings(deficit) (388) (726)
Cumulative foreign currency translation adjustments (4) 6
--------- ---------
5,286 5,140
--------- ---------
$ 17,676 $ 17,634
====================================================================== ========= =========
The accompanying notes are an integral part of these financial statements.
3
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Amounts in millions, except per-share amounts)
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
1997 1996 1997 1996
================================================= ========= ========= ========= =========
REVENUES
Net sales and operating revenues
Oil and gas operations $ 1,055 $ 878 $ 1,897 $ 1,632
Natural gas transmission operations 565 521 1,419 1,223
Chemical operations 1,103 1,058 2,178 2,126
Other (6) -- (16) (2)
--------- --------- --------- ---------
2,717 2,457 5,478 4,979
Interest, dividends and other income 20 145 37 170
Gains on asset dispositions, net (1) (1) (1) 4
Income from equity investments (Note 12) 15 23 37 43
--------- --------- --------- ---------
2,751 2,624 5,551 5,196
--------- --------- --------- ---------
COSTS AND OTHER DEDUCTIONS
Cost of sales 2,093 1,834 4,143 3,708
Selling, general and administrative and other
operating expenses 226 229 465 457
Environmental remediation 11 82 17 88
Exploration expense 17 31 42 47
Interest and debt expense, net 109 120 218 260
--------- --------- --------- ---------
2,456 2,296 4,885 4,560
--------- --------- --------- ---------
Income(loss) before taxes and extraordinary items 295 328 666 636
Provision for domestic and foreign income and
other taxes (Note 11) 137 147 329 291
--------- --------- --------- ---------
Income(loss) before extraordinary items 158 181 337 345
Extraordinary gain(loss), net (Note 3) -- -- -- (30)
--------- --------- --------- ---------
NET INCOME(LOSS) 158 181 337 315
Preferred dividends (23) (23) (46) (46)
--------- --------- --------- ---------
EARNINGS(LOSS) APPLICABLE TO
COMMON STOCK $ 135 $ 158 $ 291 $ 269
========= ========= ========= =========
PRIMARY EARNINGS PER COMMON SHARE
Income(loss) before extraordinary items $ .41 $ .49 $ .88 $ .93
Extraordinary gain(loss), net -- -- -- (.09)
--------- --------- --------- ---------
Primary earnings(loss) per common share $ .41 $ .49 $ .88 $ .84
========= ========= ========= =========
FULLY DILUTED EARNINGS PER COMMON SHARE
Income(loss) before extraordinary items $ .39 $ .47 $ .84 $ .91
Extraordinary gain(loss), net -- -- -- (.09)
--------- --------- --------- ---------
Fully diluted earnings(loss) per common share $ .39 $ .47 $ .84 $ .82
========= ========= ========= =========
DIVIDENDS PER COMMON SHARE $ .25 $ .25 $ .50 $ .50
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 330.6 322.4 330.3 320.9
================================================= ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
4
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Amounts in millions)
1997 1996
================================================================================= ========= =========
CASH FLOW FROM OPERATING ACTIVITIES
Net income(loss) $ 337 $ 315
Adjustments to reconcile income to net cash provided by operating activities
Extraordinary (gain)loss, net -- 30
Depreciation, depletion and amortization of assets 488 451
Deferred income tax provision 77 103
Other noncash charges to income 21 27
Gains on asset dispositions, net 1 (4)
Income from equity investments (37) (43)
Exploration expense 42 47
Changes in operating assets and liabilities (242) (57)
Other operating, net (119) (123)
--------- ---------
Net cash provided by operating activities 568 746
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (686) (508)
Proceeds from disposal of property, plant and equipment, net 6 8
Buyout of operating leases (20) --
Purchase of businesses, net (4) --
Sale of businesses, net 95 24
Other investing, net 12 (24)
--------- ---------
Net cash used by investing activities (597) (500)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long-term debt 57 8
Net proceeds from commercial paper and revolving credit agreements 355 475
Payments on long-term debt and capital lease liabilities (193) (1,025)
Proceeds from issuance of common stock 13 9
Proceeds(payments) of notes payable 58 77
Cash dividends paid (211) (206)
Other financing, net 2 9
--------- ---------
Net cash provided (used) by financing activities 81 (653)
--------- ---------
Increase(decrease) in cash and cash equivalents 52 (407)
Cash and cash equivalents--beginning of period 279 520
--------- ---------
Cash and cash equivalents--end of period $ 331 $ 113
================================================================================= ========= =========
The accompanying notes are an integral part of these financial statements.
5
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1997
1. General
The accompanying unaudited consolidated condensed financial statements have
been prepared by Occidental Petroleum Corporation (Occidental) pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and disclosures normally included in notes to consolidated
financial statements have been condensed or omitted pursuant to such rules
and regulations, but resultant disclosures are in accordance with generally
accepted accounting principles as they apply to interim reporting. The
consolidated condensed financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto
incorporated by reference in Occidental's Annual Report on Form 10-K for the
year ended December 31, 1996 (1996 Form 10-K).
In the opinion of Occidental's management, the accompanying consolidated
condensed financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly Occidental's
consolidated financial position as of June 30, 1997 and the consolidated
results of operations for the three and six months then ended and the
consolidated cash flows for the six months then ended. The results of
operations and cash flows for the periods ended June 30, 1997 are not
necessarily indicative of the results of operations or cash flows to be
expected for the full year.
Certain financial statements and notes for the prior year have been changed
to conform to the 1997 presentation.
Reference is made to Note 1 to the consolidated financial statements
incorporated by reference in the 1996 Form 10-K for a summary of significant
accounting policies.
2. Asset Acquisitions and Dispositions
In June 1997, Occidental sold its chlor-alkali chemical plant located in
Tacoma, Washington for approximately $102 million which included $97 million
in cash and the balance in preferred stock. The sale did not have a material
effect on the results of operations. Also in June 1997, Occidental purchased
28,000 shares of preferred stock of Leslie's Poolmart, Inc. (Leslie's) for
total consideration of $28 million, which consisted of cash and the exchange
of $10 million of Leslie's subordinated debentures held by Occidental.
In April 1996, Occidental completed the acquisition of a 64 percent equity
interest in INDSPEC Holding Corporation (INDSPEC) for approximately $87
million in common stock. Under the terms of the transaction, INDSPEC's
management and employees retained voting control of INDSPEC. Also in April,
Occidental completed the sale of its subsidiary which engages in on-shore
drilling and servicing of oil and gas wells for approximately $32 million.
In addition, certain assets of its international phosphate fertilizer
trading operations were sold for approximately $20 million. None of these
transactions resulted in a material gain or loss.
3. Extraordinary Gain(Loss)
The 1996 six month results included a net extraordinary loss of $30 million,
which resulted from the early retirement of high-coupon debt in the first
quarter.
6
4. Supplemental Cash Flow Information
Cash payments during the six months ended June 30, 1997 and 1996 included
federal, foreign and state income taxes of approximately $156 million and
$91 million, respectively. Interest paid (net of interest capitalized)
totaled approximately $203 million and $269 million for the six month
periods ended June 30, 1997 and 1996, respectively.
5. Cash and Cash Equivalents
Cash equivalents consist of highly liquid money-market mutual funds and bank
deposits with initial maturities of three months or less when purchased.
Cash equivalents totaled approximately $215 million and $206 million at
June 30, 1997 and December 31, 1996, respectively.
6. Inventories
A portion of inventories is valued under the LIFO method. The valuation of
LIFO inventory for interim periods is based on management's estimates of
year-end inventory levels and costs. Inventories consist of the following
(in millions):
Balance at June 30, 1997 December 31, 1996
====================== ============= =================
Raw materials $ 108 $ 135
Materials and supplies 192 184
Work in progress 24 17
Finished goods 362 344
--------- ---------
686 680
LIFO reserve (54) (47)
--------- ---------
Total $ 632 $ 633
========= =========
7. Property, Plant and Equipment
Reference is made to the consolidated financial statements and Note 1 thereto
incorporated by reference in the 1996 Form 10-K for a description of
investments in property, plant and equipment.
8. Retirement Plans and Postretirement Benefits
Reference is made to Note 14 to the consolidated financial statements
incorporated by reference in the 1996 Form 10-K for a description of the
retirement plans and postretirement benefits of Occidental and its
subsidiaries.
7
9. Lawsuits, Claims and Related Matters
Occidental and certain of its subsidiaries have been named in a substantial
number of governmental proceedings as defendants or potentially responsible
parties under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) and corresponding state acts. These proceedings seek
funding, remediation and, in some cases, compensation for alleged property
damage, punitive damages and civil penalties, aggregating substantial
amounts. Occidental is usually one of many companies in these proceedings,
and has to date been successful in sharing response costs with other
financially sound companies. Occidental has accrued reserves at the most
likely cost to be incurred in those proceedings where it is probable that
Occidental will incur remediation costs which can be reasonably estimated.
As to those proceedings for which Occidental does not have sufficient
information to determine a range of liability, Occidental does have
sufficient information on which to base the opinion below.
It is impossible at this time to determine the ultimate legal liabilities
that may arise from various lawsuits, claims and proceedings, including
environmental proceedings described above, pending against Occidental and
its subsidiaries, some of which may involve substantial amounts. However, in
management's opinion, after taking into account reserves, none of such
pending lawsuits, claims and proceedings should have a material adverse
effect upon Occidental's consolidated financial position or results of
operations in any given year.
10. Other Commitments and Contingencies
Occidental has certain other commitments under contracts, guarantees and
joint ventures and certain other contingent liabilities. Additionally,
Occidental has agreed to participate in the development of certain natural
gas reserves and construction of a liquefied natural gas plant in Malaysia;
however, Occidental has not yet entered into any material development or
construction contracts.
Reference is made to Note 11 to the consolidated financial statements
incorporated by reference in the 1996 Form 10-K for information concerning
Occidental's long-term purchase obligations for certain products and
services.
In management's opinion, none of such commitments and contingencies
discussed above should have a material adverse effect upon Occidental's
consolidated financial position or results of operations in any given year.
11. Income Taxes
The provision for taxes based on income for the 1997 and 1996 interim
periods was computed in accordance with Interpretation No. 18 of APB Opinion
No. 28 on reporting taxes for interim periods and was based on projections
of total year pretax income.
At December 31, 1996, Occidental had, for U.S. federal income tax return
purposes, an alternative minimum tax credit carryforward of $200 million
available to reduce future income taxes. The alternative minimum tax credit
carryforward does not expire.
Occidental is subject to audit by taxing authorities for varying periods in
various tax jurisdictions. Management believes that any required adjustments
to Occidental's tax liabilities will not have a material adverse impact on
its financial position or results of operations in any given year.
8
12. Investments
Investments in companies, other than oil and gas exploration and production
companies, in which Occidental has a voting stock interest of at least 20
percent, but not more than 50 percent, and certain partnerships are
accounted for on the equity method. At June 30, 1997, Occidental's equity
investments consisted primarily of joint-interest pipelines, including a
pipeline in the Dutch sector of the North Sea, an investment of
approximately 30 percent in the common shares of Canadian Occidental
Petroleum Ltd. and various chemical partnerships and joint ventures. The
following table presents Occidental's proportional interest in the
summarized financial information of its equity method investments (in
millions):
Periods Ended June 30
------------------------------------------------
Three Months Six Months
---------------------- ----------------------
1997 1996 1997 1996
========= ========= ========= =========
Revenues $ 245 $ 228 $ 480 $ 420
Costs and expenses 230 205 443 377
--------- --------- --------- ---------
Net income $ 15 $ 23 $ 37 $ 43
========= ========= ========= =========
13. Summarized Financial Information of Wholly-Owned Subsidiary
Occidental has guaranteed the payments of principal of, and interest on,
certain publicly traded debt securities of its subsidiary, OXY USA Inc. (OXY
USA). The following tables present summarized financial information for OXY
USA (in millions):
Periods Ended June 30
------------------------------------------------
Three Months Six Months
---------------------- ----------------------
1997 1996 1997 1996
========= ========= ========= =========
Revenues $ 214 $ 244 $ 524 $ 478
Costs and expenses 196 217 438 428
--------- --------- --------- ---------
Net income $ 18 $ 27 $ 86 $ 50
========= ========= ========= =========
Balance at June 30, 1997 December 31, 1996
=============================== ============= =================
Current assets $ 130 $ 183
Intercompany receivable $ 417 $ 428
Noncurrent assets $ 2,131 $ 2,028
Current liabilities $ 256 $ 277
Interest bearing note to parent $ 97 $ 105
Noncurrent liabilities $ 1,204 $ 1,221
Stockholders' equity $ 1,121 $ 1,036
------------------------------- --------- ---------
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Occidental's net income for the first six months of 1997 totaled $337 million,
on net sales and operating revenues of $5.5 billion, compared with net income of
$315 million, on net sales and operating revenues of $5.0 billion, for the same
period of 1996. Occidental's net income for the second quarter of 1997 was $158
million, on net sales and operating revenues of $2.7 billion, compared with $181
million, on net sales and operating revenues of $2.5 billion, for the same
period of 1996. Primary earnings per common share were $.88 for the first six
months of 1997, compared with $.84 for the same period of 1996. Primary
earnings per common share were $.41 for the second quarter of 1997, compared
with $.49 for the same period of 1996.
The increase in net sales and operating revenues for the three and six months
ended June 30, 1997, compared with the same periods in 1996, reflected higher
revenues in all three operating divisions. The decrease in net income for the
second quarter of 1997, compared with the same period in 1996, primarily
reflected the impact of lower domestic natural gas and worldwide crude oil
prices in the oil and gas division, lower gas sales margins for MidCon and the
inclusion in 1996 of a favorable litigation settlement, partially offset by
charges in 1996 for additional environmental reserves and the related tax
effects at the Chemical division. Excluding the impact of the favorable
litigation settlement and charges for additional environmental reserves and the
related tax effects, Chemical division earnings were higher in the second
quarter of 1997 compared with the second quarter of 1996.
Interest, dividends and other income for the three and six months ended June 30,
1996 includes $130 million received for a litigation settlement related to Love
Canal.
Income from equity investments decreased for the three and six months ended June
30, 1997, compared with the similar periods of 1996. The decrease primarily
reflected lower equity earnings from oil and gas investments.
The following table sets forth the sales and earnings of each operating division
and corporate items (in millions):
Periods Ended June 30
-------------------------------------------------
Three Months Six Months
---------------------- -----------------------
1997 1996 1997 1996
========= ========= ========= =========
DIVISIONAL NET SALES
Oil and gas $ 1,055 $ 878 $ 1,897 $ 1,632
Natural gas transmission 565 521 1,419 1,223
Chemical 1,103 1,058 2,178 2,126
Other (6) -- (16) (2)
--------- --------- --------- ---------
NET SALES $ 2,717 $ 2,457 $ 5,478 $ 4,979
========= ========= ========= =========
DIVISIONAL EARNINGS
Oil and gas $ 133 $ 144 $ 361 $ 305
Natural gas transmission 39 51 130 172
Chemical 184 212 276 330
--------- --------- --------- ---------
356 407 767 807
UNALLOCATED CORPORATE ITEMS
Interest expense, net (101) (112) (202) (242)
Income taxes, administration and other (97) (114) (228) (220)
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY ITEMS 158 181 337 345
Extraordinary gain(loss), net -- -- -- (30)
--------- --------- --------- ---------
NET INCOME $ 158 $ 181 $ 337 $ 315
========= ========= ========= =========
10
Environmental remediation expense was $17 million for the first six months of
1997, compared with $88 million for the same period of 1996. The 1996 amount
included a second quarter charge of $75 million for additional environmental
reserves.
Oil and gas earnings for the first six months of 1997 were $361 million,
compared with $305 million for the same period of 1996. The increase in
earnings primarily reflected higher worldwide oil and natural gas prices, mainly
in the first quarter, and increased domestic natural gas production in both
quarters. Oil and gas earnings for the second quarter of 1997 were $133
million, compared with $144 million for the second quarter of 1996. The
decrease in second quarter earnings in 1997, compared with the same period in
1996, reflected lower domestic natural gas and worldwide crude oil prices,
partially offset by increased gas production and lower exploration expense. The
increase in revenues in the second quarter of 1997, compared with the same
period in 1996, primarily reflected higher oil trading activity. The increase
in revenues for the six months ended June 30, 1997, compared to the same period
in 1996, reflected higher oil trading activity in the second quarter, as well as
higher domestic natural gas and worldwide crude oil prices in the first quarter.
Approximately 30 percent and 26 percent of oil and gas revenues were attributed
to oil trading activity in the first six months of 1997 and 1996, respectively.
The results of oil trading were not significant. Oil and gas prices are
sensitive to complex factors, which are outside the control of Occidental.
Accordingly, Occidental is unable to predict with certainty the direction,
magnitude or impact of future trends in sales prices for oil and gas.
Natural gas transmission earnings for the first six months of 1997 were $130
million, compared with $172 million for the same period of 1996. Natural gas
transmission earnings for the second quarter of 1997 were $39 million, compared
with $51 million for the same period of 1996. The decline in earnings in both
1997 periods primarily reflected lower gas sales margins. The increase in
revenues for the six months ended June 30, 1997, compared to the same period in
1996, reflected higher gas sales prices and volumes.
Chemical earnings for the first six months of 1997 were $276 million, compared
with earnings before special items of $278 million for the same period of 1996.
The 1996 results, after inclusion of $130 million related to a favorable
litigation settlement and a charge of $75 million for additional environmental
reserves relating to various existing sites, and the related state tax effects,
were $330 million. Chemical earnings for the second quarter of 1997 were $184
million, compared with earnings before special items of $160 million for the
second quarter of 1996. The improvement in 1997 second quarter earnings,
compared with the same period in 1996, reflected improved profit margins in
petrochemicals and chlorine partially offset by lower margins in caustic soda.
The 1996 second quarter results were $212 million after the previously mentioned
items. Most of Occidental's chemical products are commodity in nature, the
prices of which are sensitive to a number of complex factors. Occidental is
unable to accurately forecast the trend of sales prices for its commodity
chemical products.
Divisional earnings include credits in lieu of U.S. federal income taxes. In
the first six months of 1997, divisional earnings benefited by $44 million which
included $7 million, $24 million and $13 million at oil and gas, natural gas
transmission and chemical, respectively. In the first six months of 1996,
divisional earnings benefited by $45 million which included $8 million, $24
million and $13 million at oil and gas, natural gas transmission and chemical,
respectively.
Net interest expense for the first six months of 1997 was $202 million, compared
with $242 million for the same period of 1996. Net interest expense for the
second quarter of 1997 was $101 million, compared with $112 million for the
second quarter of 1996. The lower expense primarily reflected lower average
debt levels and lower average interest rates.
11
Occidental and certain of its subsidiaries are parties to various lawsuits,
environmental and other proceedings and claims, some of which involve
substantial amounts. See Note 9 to the consolidated condensed financial
statements. Occidental also has commitments under contracts, guarantees and
joint ventures and certain other contingent liabilities. See Note 10 to the
consolidated condensed financial statements. In management's opinion, after
taking into account reserves, none of these matters should have a material
adverse effect upon Occidental's consolidated financial position or results of
operations in any given year.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Occidental's net cash provided by operating activities was $568 million for the
first six months of 1997, compared with $746 million for the same period of
1996. The variance resulted mainly from changes in operating assets and
liabilities. This primarily reflects net lower natural gas inventory drawdowns
at MidCon and overall lower accounts payable and other liabilities. The 1996
noncash charges included the previously mentioned $130 million favorable
litigation settlement, partially offset by the $75 million charge for additional
environmental reserves. The 1997 and 1996 noncash charges also included employee
benefit plans expense and various other charges.
Occidental's net cash used by investing activities was $597 million for the
first six months of 1997, compared with cash used of $500 million for the same
period of 1996. Capital expenditures were $686 million in 1997, including $527
million in oil and gas, $31 million in natural gas transmission and $127 million
in chemical. Capital expenditures were $508 million in 1996, including $339
million in oil and gas, $69 million in natural gas transmission and $90 million
in chemical. The increase in 1997 from 1996 reflected higher spending in oil
and gas, primarily in Qatar and in the United States. Net proceeds from the
sale of businesses and disposal of property, plant and equipment for the first
six months of 1997 totaled $101 million which included the proceeds from the
sale of a chemical plant. Net proceeds from the sale of businesses and
disposals of property, plant and equipment for the first six months of 1996
totaled $32 million, which primarily reflected the proceeds from the sale of an
on-shore drilling and well servicing subsidiary.
Financing activities provided net cash of $81 million in the first six months of
1997, compared with a use of $653 million for the same period of 1996. The 1997
amount reflected cash proceeds of $277 million from borrowings, net of
repayments. The 1996 amount reflected net cash used of $465 million to reduce
debt, net of proceeds from borrowings, primarily for the redemption of the
11.75% Senior Debentures. The payment of dividends totaled $211 million and
$206 million in 1997 and 1996, respectively.
For 1997, Occidental expects that cash generated from operations and any asset
sales generally will be adequate to meet its operating requirements, capital
spending and dividend payments. Additionally, Occidental has substantial
borrowing capacity which may also be used to meet cash requirements.
Available but unused lines of committed bank credit totaled approximately $1.6
billion at June 30, 1997, compared with $2.0 billion at December 31, 1996.
In June 1997, Occidental sold its chlor-alkali chemical plant located in Tacoma,
Washington for approximately $102 million which included $97 million in cash and
the balance in preferred stock. The sale did not have a material effect on the
results of operations.
In April 1996, Occidental completed the sale of its subsidiary which engages in
on-shore drilling and servicing of oil and gas wells for approximately $32
million. In addition, certain assets of its international phosphate fertilizer
trading operation were sold for approximately $20 million. Also in April,
Occidental completed the acquisition of a 64 percent equity interest in INDSPEC
for approximately $87 million in common stock. Under the terms of the
transaction, INDSPEC's management and employees retained voting control of
INDSPEC. None of these transactions resulted in a material gain or loss.
12
ENVIRONMENTAL MATTERS
Occidental's operations in the United States are subject to stringent federal,
state and local laws and regulations relating to improving or maintaining the
quality of the environment. Foreign operations also are subject to varied
environmental protection laws. Costs associated with environmental compliance
have increased over time and are generally expected to continue to rise in the
future.
A number of the laws which require or address environmental remediation apply
retroactively to previous waste disposal practices. And, in many cases, the
laws apply regardless of fault, legality of the original activities or ownership
or control of sites. Occidental is currently participating in environmental
assessments and cleanups under these laws at federal Superfund sites, comparable
state sites and other remediation sites, including Occidental facilities and
previously owned sites.
Occidental does not consider the number of Superfund and comparable state sites
at which it has been notified that it has been identified as being involved to
be a relevant measure of exposure. Although the liability of a potentially
responsible party (PRP), and in many cases its equivalent under state law, may
be joint and several, Occidental is usually one of many companies cited as a PRP
at these sites and has, to date, been successful in sharing cleanup costs with
other financially sound companies.
As of June 30, 1997, Occidental had been notified by the Environmental
Protection Agency (EPA) or equivalent state agencies or otherwise had become
aware that it had been identified as being involved at 227 Superfund or
comparable state sites. (This number does not include 80 sites where Occidental
has been successful in resolving its involvement.) The 227 sites include 81
former Diamond Shamrock Chemical sites as to which Maxus Energy Corporation has
retained all liability, and 2 sites at which the extent of such retained
liability is disputed. Of the remaining 144 sites, Occidental has had no recent
or significant communication or activity with government agencies or other PRPs
at 2 sites, has denied involvement at 30 sites and has yet to determine
involvement in 17 sites. With respect to the remaining 95 of these sites,
Occidental is in various stages of evaluation. For 87 of these sites, where
environmental remediation efforts are probable and the costs can be reasonably
estimated, Occidental has accrued reserves at the most likely cost to be
incurred. The 87 sites include 24 sites as to which present information
indicates that it is probable that Occidental's aggregate exposure is
immaterial. In determining the reserves, Occidental uses the most current
information available, including similar past experiences, available technology,
regulations in effect, the timing of remediation and cost-sharing arrangements.
For the remaining 8 of the 95 sites being evaluated, Occidental does not have
sufficient information to determine a range of liability, but Occidental does
have sufficient information on which to base the opinion expressed above under
the caption "Results of Operations."
13
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GENERAL
There is incorporated by reference herein the information regarding legal
proceedings in Item 3 of Part I of Occidental's 1996 Annual Report on Form 10-K,
Item 1 of Part II of Occidental's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997 and Note 9 to the consolidated condensed
financial statements in Part I hereof.
In 1991, Continental Trend Resources (CTR) obtained a jury verdict against OXY
USA (OXY USA) in the U.S. District Court for the Western District of Oklahoma
for $269,000 in actual damages and $30 million in punitive damages for tortious
interference with contract. The verdict has been on appeal since 1991, during
which time interest on the original verdict has been accruing. In November
1996, the 10th Circuit Court of Appeals reduced the punitive damage award to $6
million. In July 1997, OXY USA paid CTR $9.5 million as a final settlement of
this case.
Occidental has been informed by the SEC that it is conducting a private, formal
investigation into the matters that were the subject of the internal inquiry by
Occidental described in a Wall Street Journal article on May 12, 1997. Other
agencies may also seek information on the internal inquiry. Occidental is
cooperating with the SEC in its conduct of the investigation.
In January 1997, Amoco Production Company and Amoco Trading Corporation
(collectively, Amoco), filed a complaint against Natural Gas Pipeline Company of
America (Natural) before the Federal Energy Regulatory Commission (FERC)
contending that Natural improperly had provided its affiliate MidCon Gas
Services Corp. (MidCon Gas) transportation service on preferential terms,
seeking termination of currently effective contracts and the imposition of civil
penalties. A subsequent FERC audit made proposed findings that Natural has
favored MidCon Gas. In July, Amoco and Natural agreed to a settlement of this
proceeding and of a pending rate case. Amoco has filed to withdraw its
complaint subject to the FERC's procedures. The FERC may retain continuing
jurisdiction of the matter.
In 1996, the District of Columbia Circuit Court of Appeals ordered that Kansas
natural gas producers, including OXY USA, refund Kansas ad valorem taxes
collected from gas purchasers as surcharges over maximum lawful prices between
1983 and 1988, although their collection of such taxes had been authorized by
the FERC. OXY USA has joined other producers in filing a petition for
adjustment before the FERC seeking relief from requirements to pay interest on
refunds. Other petitions and applications are pending before the FERC
concerning various issues regarding refund obligations.
ENVIRONMENTAL PROCEEDINGS
In 1996, the Environmental Protection Agency (EPA) filed an administrative
complaint against Natural Gas Odorizing, Inc. (NGO), which was recently acquired
by Occidental, alleging failure to file during 1994 an Inventory Update Report
under the Toxic Substances Control Act regarding its facility in Baytown, Texas,
and proposed an administrative civil penalty of $136,000. In July 1997, this
matter was settled by a Consent Order under which NGO agreed to pay an
administrative civil penalty of $81,600.
In April 1997, Occidental Chemical Corporation (OCC) received an administrative
complaint from the EPA, Region 2, that alleges violations of the permit for a
hazardous waste incinerator at its Durez Division facility in Niagara Falls, New
York. The complaint seeks administrative civil penalties in the amount of
$230,500. OCC is contesting the alleged violations and the administrative civil
penalties.
14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Employment Agreement, dated May 14, 1997, between
Occidental Petroleum Corporation, a Delaware corporation,
and J. Roger Hirl
10.2 Form of 1997 Performance Stock Option Agreement under the
1995 Incentive Stock Plan of Occidental Petroleum
Corporation
11 Statement regarding the computation of earnings per share
for the three and six months ended June 30, 1997 and 1996
12 Statement regarding the computation of total enterprise
ratios of earnings to fixed charges for the six months
ended June 30, 1997 and 1996 and the five years ended
December 31, 1996
27 Financial data schedule for the six month period ended June
30, 1997 (included only in the copy of this report filed
electronically with the Securities and Exchange Commission)
(b) Reports on Form 8-K
During the quarter ended June 30, 1997, Occidental filed the
following Current Report on Form 8-K:
1. Current Report on Form 8-K dated April 17, 1997 (date of
earliest event reported), filed on April 18, 1997, for the
purpose of reporting, under Item 5, Occidental's results of
operations for the quarter ended March 31, 1997
From June 30, 1997 to the date hereof, Occidental filed the
following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated July 17, 1997 (date of
earliest event reported), filed on July 18, 1997, for the
purpose of reporting, under Item 5, Occidental's results of
operations for the quarter ended June 30, 1997
2. Current Report on Form 8-K dated July 18, 1997 (date of
earliest event reported), filed on July 22, 1997, for the
purpose of reporting, under Item 5, recent developments in
legal proceedings
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
DATE: August 13, 1997 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
16
EXHIBIT INDEX
EXHIBITS
- --------
10.1 Employment Agreement, dated May 14, 1997, between Occidental Petroleum
Corporation, a Delaware corporation, and J. Roger Hirl
10.2 Form of 1997 Performance Stock Option Agreement under the 1995
Incentive Stock Plan of Occidental Petroleum Corporation
11 Statement regarding the computation of earnings per share for the
three and six months ended June 30, 1997 and 1996
12 Statement regarding the computation of total enterprise ratios of
earnings to fixed charges for the six months ended June 30, 1997 and
1996 and the five years ended December 31, 1996
27 Financial data schedule for the six month period ended June 30, 1997
(included only in the copy of this report filed electronically with
the Securities and Exchange Commission)
Exhibit 10.1
AGREEMENT
---------
This Employment Agreement is made as of the 14th day of
May, 1997, by and between Occidental Petroleum Corporation,
a Delaware corporation (hereinafter referred to as
"Employer") and J. Roger Hirl (hereinafter referred to as
"Employee").
WITNESSETH:
WHEREAS, Employee has been rendering services to
Employer pursuant to a written agreement which expires on
May 14, 1997, and
WHEREAS, the parties now desire to provide for a
continuation of Employee's employment by Employer, and to
specify the rights and obligations of the parties during
such continued employment;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein, Employer and Employee
hereby agree to continue such employment upon the following
terms and conditions:
1. Duties. Employee shall perform the duties of
------
President and Chief Executive Officer, Occidental Chemical
Corporation, or shall serve in such other capacity and with
such other duties for Employer or any of the subsidiaries of
Employer of any corporation affiliated with Employer (any
such subsidiary or affiliated corporation hereafter to be
deemed Employer under this Agreement) as Employer may
direct. In performing such duties, Employee will comply
with Employer's Code of Business Conduct and Corporate
Policies, as the same may be amended from time to time.
2. Term of Employment. The term of employment shall
------------------
be for a period of five (5) years, commencing on May 14,
1997, and ending midnight May 13, 2002, unless terminated
prior thereto in accordance with the provisions of this
Agreement or
1
unless extended by mutual agreement of the parties in
accordance with Paragraph 8 hereof.
3. Compensation. For the services to be performed
------------
hereunder, Employee shall be compensated by Employer at the
rate of not less than Five Hundred Ninety Thousand Dollars
($590,000) per annum, payable semimonthly. The minimum
salary hereunder shall be automatically adjusted to the
level of any increase in annual compensation as the Employer
may determine during the term of this Agreement.
4. Participation in Benefit Programs. Employee shall
---------------------------------
be eligible to participate in all benefits programs and
under the same terms and conditions as are generally
applicable to salaried employees and senior executives of
Employer during the term of this Agreement. Employee also
shall be eligible to participate in (i) Employer's Incentive
Compensation Plan and (ii) Employer's 1995 Incentive Stock
Plan, as long as Employer continues such plans during the
term of this Agreement, and to receive awards or grants
under such Plans at Employer's sole discretion.
5. Exclusivity of Services. Employee shall not
-----------------------
render paid or unpaid services on a self-employed basis or
to any other employer.
6. Termination.
-----------
(a) Cause - Notwithstanding the term of this
-----
Agreement, Employer may discharge Employee and terminate
this Agreement without severance or other pay upon one
week's written notice or pay in lieu of such notice for
cause, including without limitation, (i) failure to
satisfactorily perform his duties or responsibilities
hereunder or negligence in complying with Employer's legal
obligations, (ii) refusal to carry out any lawful order of
Employer, (iii) breach of any legal duty to Employer, (iv)
breach of Paragraph 5 of the Agreement, or (v) conduct
constituting moral turpitude or conviction of a crime which
may diminish Employee's ability to effectively act on the
Employer's behalf or with or on behalf of others, or (vi)
death.
(b) Incapacity - If, during the term of this
----------
Agreement, Employee is incapacitated from performing the
essential functions of his job pursuant to this Agreement by
reason of illness, injury, or disability, Employer may
terminate this Agreement by at least one week's written
notice to Employee, but only in the event that such
conditions shall aggregate not less than one hundred eighty
(180) days during any
2
twelve month period. In the event Employee shall (i)
continue to be incapacitated subsequent to termination for
incapacity pursuant to this Paragraph 6(b), and (ii) be a
participant in and shall qualify for benefits under
Employer's Long Term Disability Plan ("LTD"), then Employer
will continue to compensate Employee, for so long as
Employee remains eligible to receive LTD benefits, in an
amount equal to the difference between 60% of Employer's
annual compensation as set forth in Paragraph 3 hereof and
the maximum annual benefit under the LTD, payable monthly on
a prorated basis.
(c) Without Cause. Employer may at any time
-------------
terminate the employment of Employee without cause or
designate a termination for cause as a termination without
cause, and in such event Employer shall, in lieu of
continued employment, compensate Employee at the rate and in
the manner provided in Paragraph 3 hereof for a period after
termination equivalent to (i) 2 years, or (ii) until the
expiration of this Agreement, whichever of (i) or (ii) is
shorter in time (the "Compensation Period").
During the Compensation Period, Employee
shall continue to be eligible to (i) participate in all
employee benefit plans of Employer, in which he is
participating at the time of the notice and so long as such
plans are available to salaried employees and senior
executives, and (ii) exercise all stock options previously
granted to Employee under Employer's 1987 Stock Option and
1995 Incentive Stock Plan, which options are or become
exercisable under the provisions of such Plans.
Following the Compensation Period, Employee's
employment shall continue (as a consultant to Employer) for
an additional period until May 13, 2002 (the "Consultancy
Period"), during which additional period Employee will
receive a salary at the annual rate of $50,000 payable
semimonthly. During both the Compensation Period and the
Consultancy Period, any award(s) to Employee pursuant to
Employer's 1977 Executive Long-Term Incentive Stock Purchase
Plan and 1995 Incentive Stock Plan shall continue to vest in
the same manner and in the same amounts as such award(s)
would have vested if Employee had continued as a full-time
employee.
During the Compensation Period or the
Consultancy Period, Employee shall not accept employment
with, or act as a consultant for, or perform
3
services for any person, firm or corporation directly or
indirectly engaged in any business competitive with Employer
without the prior written consent of Employer.
All remuneration or wages earned by Employee
after the first twelve (12) months of the Compensation
Period or during the Consultancy Period in excess of $50,000
either as an employee, independent contractor or consultant
to any person, firm or corporation, other than Employer,
shall be set off against the Employer's duty of compensation
to the Employee during the Compensation and Consultancy
Periods. Employee shall promptly notify Employer of his
employment in any capacity during such Periods and of the
amount of remuneration or wages he will receive.
7. Confidential Information. Employee agrees that he
------------------------
will not divulge to any person, nor use to the detriment of
Employer or any of its affiliates or subsidiaries, nor use
in any business or process of manufacture competitive with
or similar to any business or process of manufacture of
Employer or any of its affiliates or subsidiaries, at any
time during employment by Employer or thereafter, any trade
secrets or confidential information obtained during the
course of his employment with Employer, without first
obtaining the written permission of Employer.
Employee agrees that, at the time of leaving the
employ of Employer, he will deliver to Employer, and not
keep or deliver to anyone else, any and all credit cards,
notes, notebooks, memoranda, documents and, in general, any
and all material relating to Employer's business, including
copies thereof, whether in paper or electronic format.
8. Modification. This Agreement contains all the
------------
terms and conditions agreed upon by the parties hereto, and
no other agreements, oral or otherwise, regarding the
subject matter of this Agreement shall be deemed to exist or
bind either of the parties hereto. This Agreement cannot be
modified except by a subsequent writing signed by both
parties.
9. Prior Agreement. This Agreement supersedes and
---------------
replaces any and all previous agreements between the
parties.
10. Severability. If any provision of this Agreement
------------
is illegal and unenforceable in whole or in part, the
remainder of the Agreement shall remain enforceable to the
extent permitted by law.
4
11. Governing Law. This Agreement shall be construed
-------------
and enforced in accordance with the laws of the State of
California. In the event that any ambiguity or questions of
intent or interpretation arise, no presumption or binder of
proof shall arise favoring or disfavoring the Employer by
virtue of authorship of this Agreement and the terms and
provisions of this Agreement shall be given their meaning
under law.
12. Assignment. This Agreement shall be binding upon
----------
Employee, his heirs, executors and assigns and upon
Employer, its successors and assigns.
13. Arbitration. In consideration for entering into
-----------
this Agreement and for the position, compensation, benefits
and other promises provided hereunder, the Employee and
Employer agree to be bound by the arbitration provisions
attached hereto as Attachment 1 and incorporated herein by
this reference.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first above written.
OCCIDENTAL PETROLEUM CORPORATION
By: R. R. IRANI
---------------------------
J. ROGER HIRL
---------------------------
J. Roger Hirl
5
ATTACHMENT 1
ARBITRATION PROVISIONS ("Provisions")
Incorporated by Reference into and Made a Part of the
Agreement, dated May 14, 1997 (the "Agreement"), between
Occidental Petroleum Corporation (the "Employer")
and J. Roger Hirl (the "Employee")
In recognition of the fact that differences may arise
between the Employer and the Employee arising out of or
relating to certain aspects of the Employee's employment
with the Employer or the termination of that employment, and
in recognition of the fact that resolution of any
differences in the courts is rarely timely or cost-effective
for either party, the Employer and Employee have agreed to
the incorporation of the Provisions into the Agreement in
order to establish and gain the benefits of a speedy,
impartial and cost-effective dispute resolution procedure.
By so doing, the Employer and the Employee mutually agree to
arbitrate Claims (as defined below) and each knowingly and
voluntarily waive their rights before a jury. Each party's
promise to resolve Claims (as defined below) by arbitration
in accordance with these Provisions is consideration for the
other party's like promise, in addition to any other
consideration.
1. Claims
------
1.1 Except as provided in paragraph 1.2 below,
"Claims" (collectively called "Claim" or "Claims" in these
Provisions) means all claims or controversies between the
Employer and Employee or between the Employee and others
arising out of, or relating to or concerning the Employee's
employment with the Employer or termination thereof for
which a state or federal court otherwise would be authorized
to grant relief, including, but not limited to, claims based
on any purported breach of contract, tort, state or federal
statute or ordinance, common law, constitution or public
policy, claims for wages or other compensation, or of
discrimination, or violation of public policy of any type.
Claims expressly include the Employee's Claims against the
Employer, and any subsidiary and related or affiliated
entity, successor or assign, and any of their officers,
directors, employees, managers, representatives, attorneys
or agents, and Claims against others arising out of,
relating to or concerning the Employee's employment with the
Employer or termination thereof.
1.2 These Provisions do not apply to or cover: claims
for workers' compensation benefits, claims for unemployment
compensation benefits, or claims for which the National
Labor Relations Board has exclusive jurisdiction; claims by
the Employer for injunctive and/or other equitable relief
for intellectual property, unfair competition and/or the use
and/or unauthorized disclosure of trade secrets or
confidential information; and claims based upon an employee
pension or benefit plan the terms of which contain an
arbitration or other non-judicial resolution procedure, in
which case the provisions of such plan shall apply.
Employee shall further retain the right to seek injunctive
and/or other equitable relief expressly made available by a
statute which forms the basis of a Claim which is subject to
arbitration under these Provisions. Where one or more of
the included Claims in a dispute are covered under these
Provisions and one or
more of the included Claims in the dispute are not covered
under these Provisions, such covered and non-covered claims
shall be separated and shall be heard separately in the
appropriate forum for each claim.
2. Agreement to Arbitrate All Claims
---------------------------------
2.1 Except for claims excluded from these Provisions
by paragraph 1.2 above and as otherwise provided in
paragraph 1.2 and 4.1, the Employer and the Employee hereby
agree to the resolution by exclusive, final and binding
arbitration of all Claims.
2.2 The parties further agree that any issue or
dispute concerning the formation, applicability,
interpretation, or enforceability of these Provisions,
including any
claim or contention that all or any part of these Provisions
is void or voidable, shall be subject to arbitration as
provided herein. The arbitrator, and not any federal, state
or local court or agency, shall have authority to decide any
such issue or dispute.
3. Governing Law
-------------
3.1 Except as modified by these Provisions, the
arbitration shall be conducted pursuant to the rules set
forth in the California Arbitration Act, California Civil
Code or Procedure Section 1281, et. seq.
3.2 The Arbitrator shall apply the substantive law
(and the law of remedies, if applicable) of the State of
California, or federal law, or both, as applicable to the
Claims asserted.
4. Binding Effect
--------------
4.1 The arbitration Award (see Section 10, herein)
shall be final and binding on the parties except that both
parties shall have the right to appeal to the appropriate
court any errors of law in the decision rendered by the
Arbitrator.
4.2 The Award may be entered as a judgment in any
court of competent jurisdiction and shall serve as a bar to
any court action for any Claim or allegation which was, or
could have been, raised in Arbitration.
4.3 For Claims covered by these Provisions,
Arbitration is the exclusive remedy, except as provided by
paragraph 1.2. The parties shall be precluded from bringing
or raising in court or before any other forum any dispute
which could have been brought or raised pursuant to
Arbitration.
4.4 Nothing in these Provisions shall prevent a
party from pursuing any legal right to bring an action to
vacate or enforce an Award or to compel arbitration pursuant
to applicable California law.
2
5. Initiating Arbitration
----------------------
To initiate the arbitration process, the aggrieved
party must provide the other party or parties with: a
written request to arbitrate any covered Claims which states
the Claim or Claims for which arbitration is sought. The
written request to arbitrate must be received within the
limitations periods applicable under the law to such Claims.
6. Selection of the Arbitrator
---------------------------
6.1 All Claims shall be decided by a single neutral
decision-maker, called the "Arbitrator."
6.2 To be qualified to serve, the Arbitrator must be
an attorney in good standing with at least seven years
experience in employment law or a retired judge and be
available to hear the matter within sixty (60) days of
selection and on consecutive days.
6.3 Within fifteen calendar days after receipt of the
written request to arbitrate, the parties will attempt to
agree on the selection of a qualified Arbitrator pursuant to
paragraph 6.2 above. If the parties fail to agree on the
selection of an Arbitrator within that fifteen calendar day
period, the Employer will designate an alternate dispute
resolution service (by way of example, American Arbitration
Association, National Arbitration Forum, Judicial
Arbitration and Mediation Services/Endispute) which has the
capacity of providing the parties with a list of potential
qualified arbitrators. The parties shall request that
designated alternate dispute resolution service to provide
them with a list of nine persons who meet the requirements
of paragraph 6.2 above. Each party shall rate the nine
names by giving the most preferred arbitrator the number
nine and using descending successive numbers to rate the
remaining choices in descending order of that party's
preference and returning the list to the alternate dispute
resolution service for calculation. The arbitrator
candidate with the highest combined rating will be the
Arbitrator. The functions of the alternate dispute
resolution service shall be strictly limited to providing
the list of arbitrator candidates and tallying the
respective parties' ratings of the candidates in accordance
with this Section 6 and no rules of that service shall
otherwise apply.
7. Arbitration Procedures:
----------------------
7.1 All parties may be represented by counsel
throughout the arbitration process, including without
limitation, at the arbitration hearing.
7.2 The Arbitrator shall afford each party a full
and fair opportunity to present relevant and material proof,
to call and cross-examine witnesses, and to present its
argument.
7.3 The Arbitrator shall not be bound by any formal
rules of evidence with the exception of applicable law
regarding the attorney-client privilege and work product
3
doctrine, and any applicable state or federal law regarding
confidentiality of documents and other information
(including, without limitation, pursuant to rights of
privacy).
7.4 The Arbitrator shall decide the relevance of any
evidence offered, and the Arbitrator's decision on any
question of evidence or argument shall be final and binding.
7.5 The Arbitrator may receive and consider the
evidence of witnesses by affidavit and shall give it such
weight as the Arbitrator deems appropriate after
consideration of any objection made to its admission.
7.6 Either party, at its expense, may arrange and
pay for the cost of a court reporter to provide a
stenographic record of the proceedings. The other party may
obtain a copy of the recording by paying the reporter's
normal fee for such copy. If both parties agree to utilize
the services of a court reporter, the parties shall share
the expense equally and shall be billed and responsible for
payment individually.
7.7 Either party shall have the right to file an
pre- or post-hearing brief. The time for filing such briefs
shall be set by the Arbitrator.
7.8 The Arbitrator has authority to entertain a
written or oral motion to dismiss and motion for summary
judgment, dispositive of all or part of any Claim, to which
the Arbitrator shall apply the standards governing such
motions under the Federal Rules of Civil Procedure.
8. Discovery
---------
8.1 Discovery shall be governed by this paragraph 8,
notwithstanding Code of Civil Procedure Section 1283.05 to
the contrary.
8.2 Discovery shall be conducted in the most
expeditious and cost-effective manner possible, and shall be
limited to that which is relevant and for which the party
seeking it has substantial, demonstrable need.
8.3 All parties shall be entitled to receive,
reasonably prior to the hearing, copies of relevant
documents which are requested in writing, clearly described
and governed by paragraph 8.2 above, and sought with
reasonable advance notice given the nature of the requests.
Upon request, Employee shall also be entitled to a true copy
of his or her personnel file kept in the ordinary course of
business and pursuant to the Employer policy. Any other
requests for documents shall be made by subpoena as provided
for in Section 9 herein.
8.4 Except as mutually agreed by the parties, all
parties shall be entitled to submit no more than twenty
interrogatories (including subparts) and twenty requests for
admission (including subparts), on each of the other
parties, which are requested in
4
writing, clearly described and governed by paragraph 8.2
above, and sought with reasonable advance notice given the
nature of the requests.
8.5 Upon reasonable request and scheduling, each
party shall be entitled to take three depositions in total
of relevant parties, representative of the opposing party,
or third parties, of up to two days duration each.
8.6 Physical and/or mental examinations may be
conducted in accordance with the standards established by
the Federal Rules of Civil Procedure.
8.7 At a mutually agreeable date, the parties will
exchange lists of experts who will testify at the
arbitration. Each party may depose the other party's
experts and obtain documents they reviewed and relied upon
and these depositions will not be charged against the
party's limit of three depositions.
8.8 Any disputes relative to discovery or requests
for discovery other than specifically provided for herein,
shall be presented to the Arbitrator who shall make final
and binding decisions in accordance with paragraphs 8.1 and
8.2 herein.
9. Subpoenas
9.1 Subject to formal request and a determination of
both need and relevance by the Arbitrator in accordance with
paragraphs 8.1 and 8.2 above, each party may issue a
subpoena for production of documents or persons (other than
those provided for in Sections 8.3, 8.5 and 8.7) relevant to
the procedure. The Arbitrator's decision regarding
relevance and the need for subpoenas shall be final and
binding.
9.2 The Arbitrator is empowered to subpoena
witnesses or documents to the extent permitted in a judicial
proceeding, upon his or her own initiative or at the request
of a party.
9.3 The party requesting the production of any
witness or proof shall bear the costs of such production.
10. The Award
---------
10.1 The Arbitrator shall render his or her decision
and award (collectively the "Award") based solely on the
evidence and authorities presented, the applicable policies
of the Employer, any applicable written employment
agreement, the applicable law argued by the parties, and
these Provisions as interpreted by the Arbitrator.
10.2 The Award shall be made promptly by the
Arbitrator, and unless otherwise agreed by the parties, not
later than sixty (60) days from the closing of the hearing,
or the date post-hearing briefs are filed, whichever is
later.
5
10.3 The Award shall be in writing and signed and
dated by the Arbitrator. The Award shall decide all issues
submitted, shall contain express findings of fact and law
(including findings on each issue of fact and law raised by
a party), and provide the reasons supporting the decision
including applicable law. The Arbitrator shall give signed
and duplicate original copies of the Award to all parties at
the same time.
11. Damages and Relief
------------------
11.1 The Arbitrator shall have the same authority to
award remedies and damages as provided to a judge and/or
jury under applicable state or federal laws, where the
aggrieved party has met his or her burden of proof.
11.2 Both parties have a duty to mitigate their
damages by all reasonable means. The Arbitrator shall take
a party's failure to mitigate into account in granting
relief in accordance with applicable state and federal law.
11.3 Arbitration of damages or other remedies may be
conducted in a bifurcated proceeding.
12. Fees and Expenses
-----------------
12.1 All parties shall share equally the fees of the
Arbitrator. Each party will deposit funds or post other
appropriate security for its share of the Arbitrator's fee,
in an amount and manner determined by the Arbitrator, at
least ten (10) days before the first day of hearing.
Additionally, each party shall pay for its own expenses
associated with the arbitration process and attorneys' fees,
if any. If any party prevails on a statutory claim which
entitles the prevailing party to attorneys' fees, or if
there is a written agreement providing for fees, the
Arbitrator may award reasonable fees to the prevailing party
in accordance with such statute or agreement.
12.2 The Arbitrator may additionally award either
party its reasonable attorneys' fees and costs, including
reasonable expenses associated with production of witnesses
or proof, upon a finding that the other party (a) engaged in
unreasonable delay, or (b) failed to comply with the
Arbitrator's discovery order.
6
arbprov
Exhibit 10.2
OCCIDENTAL PETROLEUM CORPORATION
PERFORMANCE STOCK OPTION AGREEMENT
Name of Optionee:
-------------------------------------------------
Date of Grant:
----------------------------------------------------
Number of Optioned Shares:
----------------------------------------
Option Price:
-----------------------------------------------------
Vesting Requirement: See Paragraph 3 below.
AGREEMENT (this "Agreement") made as of the Date of Grant by and
between OCCIDENTAL PETROLEUM CORPORATION, a Delaware corporation
(hereinafter called "Occidental," and, collectively with its
Subsidiaries, the "Company"), and the Optionee.
1. GRANT OF STOCK OPTION. Subject to and upon the terms,
conditions, and restrictions set forth in this Agreement and in the
Occidental Petroleum Corporation 1995 Incentive Stock Plan (the
"Plan"), Occidental hereby grants to the Optionee as of the Date of
Grant a stock option (the "Option") to purchase up to the number of
shares of Common Stock stated above (the "Optioned Shares"). The
Option may be exercised from time to time in accordance with the
terms of this Agreement. The Option is intended to be a
nonqualified stock option and shall not be treated as an "incentive
stock option" within the meaning of that term under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provision thereto.
2. TERM OF OPTION. The term of the Option shall commence on
the Date of Grant and, unless earlier terminated in accordance with
Section 6 hereof, shall expire ten (10) years from the Date of
Grant.
3. RIGHT TO EXERCISE. Subject to the expiration or earlier
termination of the Option, the Optionee shall become vested in and
entitled to exercise the Option if, and only if, the Common Stock
attains one of the performance targets described hereafter: If,
(i) at any time prior to the third anniversary of the Date of
Grant, the Fair Market Value per Share for twenty consecutive
trading days is thirty dollars ($30.00) or more, (ii) at any time
from the third anniversary of the Date of Grant to the day
preceding the fifth anniversary of the Date of Grant, the Fair
Market Value per Share for twenty consecutive trading days is
thirty-five dollars ($35.00) or more, or (iii) at any time from the
fifth anniversary of the Date of Grant to the day preceding the
tenth anniversary of the Date of Grant, the Fair Market Value per
Share for twenty consecutive trading days is forty dollars ($40.00)
or more, then, on the first trading day following the earliest of
such twenty day periods to occur, the Optionee's rights in and to
the Option shall become fully vested and the Option shall become
fully exercisable. For the purposes of this paragraph 3, "trading
day" means any day on which securities trading is conducted on the
New York Stock Exchange. To the extent the Option is exercisable,
it may be exercised in whole or in part.
4. OPTION NONTRANSFERABLE. The Option granted hereby shall
be neither transferable nor assignable by the Optionee other than
by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the Optionee, only by the
Optionee, or in the event of his or her legal incapacity, by his or
her guardian or legal representative acting on behalf of the
Optionee in a fiduciary capacity under state law and court
supervision.
5. NOTICE OF EXERCISE; PAYMENT. To the extent then
exercisable, the Option shall be exercised by oral or written
notice to Occidental stating the number of Optioned Shares for
which the Option is being exercised and the intended manner of
payment. Payment equal to the aggregate Option Price of the
Optioned Shares shall be (a) in cash in the form of currency or
check or other cash equivalent acceptable to
Occidental, (b) by actual or constructive transfer to Occidental of
nonforfeitable, nonrestricted shares of Common Stock that have been
owned by the Optionee for (i) more than one year prior to the date
of exercise and for more than two years from the date on which the
option was granted, if they were originally acquired by the
Optionee pursuant to the exercise of an incentive stock option, or
(ii) more than six months prior to the date of exercise, if they
were originally acquired by the Optionee other than pursuant to the
exercise of an incentive stock option, or (c) by any combination of
the foregoing methods of payment. Nonforfeitable, nonrestricted
shares of Common Stock that are transferred by the Optionee in
payment of all or any part of the Option Price shall be valued on
the basis of their Fair Market Value per Share. The requirement of
payment in cash shall be deemed satisfied if the Optionee makes
arrangements that are satisfactory to Occidental with a broker that
is a member of the National Association of Securities Dealers, Inc.
to sell a sufficient number of the shares of Common Stock, which
are being purchased pursuant to the exercise, so that the net
proceeds of the sale transaction will at least equal the amount of
the aggregate Option Price, and pursuant to which the broker
undertakes to deliver to Occidental the amount of the aggregate
Option Price not later than the date on which the sale transaction
will settle in the ordinary course of business. The date of such
notice shall be the exercise date. Any oral notice of exercise
shall be confirmed in writing to Occidental before the close of
business the same day.
6. TERMINATION OF AGREEMENT. This Agreement and the Option
granted hereby shall terminate automatically and without further
notice on the earliest of the following dates:
(a) Five years or the remaining term of the Option,
whichever is less, after the date the Optionee ceases to be an
employee of the Company by reason of the Optionee's (i) death, (ii)
permanent disability or (iii) retirement under a retirement plan of
the Company at or after the earliest voluntary retirement age
provided for in such retirement plan or retirement at an earlier
age with the consent of the Board;
(b) Immediately upon the voluntary or involuntary
resignation of the Optionee other than in connection with
retirement as provided in 6(a)(iii) above; or
(c) Ten years from the Date of Grant.
In the event that the Optionee commits an act that the Committee
determines to have been intentionally committed and materially
inimical to the interests of the Company, this Agreement shall
terminate at the time of that determination notwithstanding any
other provision of this Agreement. This Agreement shall not be
exercisable for any number of Optioned Shares in excess of the
number of Optioned Shares for which this Agreement is then
exercisable on the date of termination of employment. For the
purposes of this Agreement, the continuous employment of the
Optionee with the Company shall not be deemed to have been
interrupted, and the Optionee shall not be deemed to have ceased to
be an employee of the Company, by reason of the transfer of his or
her employment among Occidental and its Subsidiaries or an approved
leave of absence.
7. ACCELERATION OF OPTION. In the event of a Change of
Control, the Option granted hereby shall become immediately
exercisable in full. For purposes of this Agreement, "Change of
Control" means the occurrence of any of the following events:
(a) any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any company owned, directly or indirectly, by the
stockholders of Occidental in substantially the same proportions as
their ownership of the Common Stock of Occidental), is or becomes
after the effective date of the Plan as provided in Section 16 of
the Plan (the "Effective Date") the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Occidental (not including in the securities
beneficially owned by such person any securities acquired directly
from Occidental or its affiliates) representing 50 percent or more
of the combined voting power of Occidental's then-outstanding
securities;
(b) during any period of two consecutive years (not
including any period prior to the Effective Date), individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect
2
a transaction described in clause (a), (c), or (d) of this
definition) whose election by the Board or nomination for election
by Occidental's stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the Board;
(c) the stockholders of Occidental approve a merger or
consolidation of Occidental with any other corporation, other than
(i) a merger or consolidation that would result in the voting
securities of Occidental outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
at least 50 percent of the combined voting power of the voting
securities of Occidental or such surviving entity outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of
Occidental (or similar transaction) in which no person acquires
more than 50 percent of the combined voting power of Occidental's
then-outstanding securities; or
(d) the stockholders of Occidental approve a plan of
complete liquidation of Occidental or an agreement for the sale or
disposition of all or substantially all of Occidental's assets;
provided, however, that prior to the occurrence of any of the
events described in clauses (a) through (d) above, the Board may
determine that such event shall not constitute a Change of Control
for purposes of this Agreement.
8. NO EMPLOYMENT CONTRACT; RELATIONSHIP TO EMPLOYMENT
CONTRACT.
(a) Nothing contained in this Agreement shall confer
upon the Optionee any right with respect to continuance of
employment by the Company, nor limit or affect in any manner the
right of the Company to terminate the employment or adjust the
compensation of the Optionee.
(b) In the event of any conflict or inconsistency
between the terms and conditions of this Agreement and any current
or future employment agreement between the Optionee and the
Company, then, notwithstanding any provision of such employment
agreement to the contrary, the terms of this Agreement shall
govern. THE OPTIONEE ACKNOWLEDGES AND AGREES THAT ACCEPTANCE OF
THE FOREGOING PROVISION IS A CONDITION TO THE GRANT OF THIS OPTION
AND THAT, IF THE OPTIONEE SEEKS TO ENFORCE ANY INCONSISTENT OR
CONTRARY TERM OF AN EMPLOYMENT AGREEMENT, THIS OPTION SHALL BE NULL
AND VOID AND ALL RIGHTS THAT THE OPTIONEE HAD UNDER THIS AGREEMENT
SHALL IMMEDIATELY TERMINATE.
Initialed by Optionee:
-----
9. TAXES AND WITHHOLDING. If the Company shall be required
to withhold any federal, state, local or foreign tax in connection
with the exercise of the Option, the Optionee shall pay the tax or
make provisions that are satisfactory to the Company for the
payment thereof. The Optionee may elect to satisfy all or any part
of any such withholding obligation by surrendering to the Company a
portion of the shares of Common Stock that are issued or
transferred to the Optionee upon the exercise of the Option, and
the shares of Common Stock so surrendered by the Optionee shall be
credited against any such withholding obligation at the Fair Market
Value per Share of such shares on the date of such surrender;
provided, however, if the Optionee is subject to Section 16 of the
Exchange Act, such election shall be made in accordance with Rule
16b-3 and subject to approval by the Committee if such approval is
then required by Rule 16b-3.
10. COMPLIANCE WITH LAW. The Company shall make reasonable
efforts to comply with all applicable federal and state securities
laws; provided, however, notwithstanding any other provision of
this Agreement, the Option shall not be exercisable if the exercise
thereof would result in a violation of any such law.
11. ADJUSTMENTS. The Committee shall make such adjustments
in the Option Price and the number or kind of shares of Common
Stock covered by the Option that the Committee may in good faith
determine to be required in order to prevent dilution or expansion
of the Optionee's rights under this Agreement that otherwise would
result from (a) any stock dividend, stock split, combination of
shares,
3
recapitalization or other change in the capital structure of
Occidental, or (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of warrants
or other rights to purchase securities, or any other corporate
transaction or event having an effect similar to any of the
foregoing. In the event of any such transaction or event, the
Committee may provide in substitution for all or any portion of the
Optionee's rights under this Agreement such alternative
consideration as the Committee may in good faith determine to be
appropriate under the circumstances and may require the surrender
of all rights so replaced.
12. RELATION TO OTHER BENEFITS. Any economic or other
benefit to the Optionee under this Agreement shall not be taken
into account in determining any benefits to which the Optionee may
be entitled under any profit-sharing, retirement or other benefit
or compensation plan maintained by the Company and shall not affect
the amount of any life insurance coverage available to any
beneficiary under any life insurance plan covering employees of the
Company.
13. AMENDMENTS. Any amendment to the Plan shall be deemed to
be an amendment to this Agreement to the extent that the amendment
is applicable hereto; provided, however, that no amendment shall
adversely affect the rights of the Optionee under this Agreement
without the Optionee's consent.
14. SEVERABILITY. In the event that one or more of the
provisions of this Agreement shall be invalidated for any reason by
a court of competent jurisdiction, any provision so invalidated
shall be deemed to be separable from the other provisions hereof,
and the remaining provisions hereof shall continue to be valid and
fully enforceable.
15. RELATION TO PLAN. This Agreement is subject to the terms
and conditions of the Plan. In the event of any inconsistent
provisions between this Agreement and the Plan, the Plan shall
govern. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Plan.
16. SUCCESSORS AND ASSIGNS. Without limiting Section 4
hereof, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of the Optionee, and the
successors and assigns of the Company.
17. GOVERNING LAW. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the
State of Delaware.
18. NOTICES. Any notice to the Company provided for herein
shall be given to its Secretary at 10889 Wilshire Boulevard, Los
Angeles, California 90024, and any notice to the Optionee shall be
addressed to said Optionee at his or her address currently on file
with the Company. Except as otherwise provided herein, any written
notice shall be deemed to be duly given if and when delivered
personally or deposited in the United States mail, first class
registered mail, postage and fees prepaid, and addressed as
aforesaid. Any party may change the address to which notices are
to be given hereunder by written notice to the other party as
herein specified (provided that for this purpose any mailed notice
shall be deemed given on the third business day following deposit
on the same in the United States mail).
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its duly authorized officer and
Optionee has also executed this Agreement in duplicate, as of the
day and year first above written.
OCCIDENTAL PETROLEUM CORPORATION
By:
------------------------------
------------------------------
Optionee
4
EXHIBIT 11
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Amounts in thousands, except per-share amounts)
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE 1997 1996 1997 1996
- -------------------------------------------------------------- --------- --------- --------- ---------
Applicable to common shares:
Income(loss) before extraordinary items $ 135,100 $ 158,285 $ 291,400 $ 298,575
Extraordinary gain(loss), net -- -- -- (29,836)
--------- --------- --------- ---------
Earnings(loss) applicable to common stock $ 135,100 $ 158,285 $ 291,400 $ 268,739
========= ========= ========= =========
Common shares outstanding at beginning of period 329,806 319,354 329,228 318,711
Issuance of common shares, weighted average 224 2,320 583 1,589
Conversions, weighted average options exercised and other 205 143 215 230
Repurchase/cancellation of common shares -- (5) (81) (71)
Effect of assumed exercises
Dilutive effect of exercise of options outstanding and other 358 542 403 395
--------- --------- --------- ---------
Weighted average common stock and common stock equivalents 330,593 322,354 330,348 320,854
========= ========= ========= =========
Primary earnings per share:
Income before extraordinary items $ .41 $ .49 $ .88 $ .93
Extraordinary gain(loss), net -- -- -- (.09)
--------- --------- --------- ---------
Earnings(loss) per common and common equivalent share $ .41 $ .49 $ .88 $ .84
========= ========= ========= =========
FULLY DILUTED EARNINGS PER SHARE
- --------------------------------------------------------------
Earnings(loss) applicable to common stock $ 135,100 $ 158,285 $ 291,400 $ 268,739
Dividends applicable to dilutive preferred stock:
$3.875 preferred stock(a) -- 14,634 -- --
$3.00 preferred stock(a) 8,279 8,541 16,819 17,082
--------- --------- --------- ---------
$ 143,379 $ 181,460 $ 308,219 $ 285,821
========= ========= ========= =========
Common shares outstanding at beginning of period 329,806 319,354 329,228 318,711
Issuance of common shares, weighted average 224 2,320 583 1,589
Conversions, weighted average options exercised and other 205 143 215 230
Repurchase/cancellation of common shares -- (5) (81) (71)
Effect of assumed conversions and exercises
Dilutive effect of assumed conversion of preferred stock:
$3.875 preferred stock(a) -- 33,186 -- --
$3.00 preferred stock(a) 34,582 27,070 34,582 27,070
Dilutive effect of exercise of options outstanding and other 549 543 501 523
--------- --------- --------- ---------
Total for computation of fully diluted earnings per share 365,366 382,611 365,028 348,052
========= ========= ========= =========
Fully diluted earnings per share:
Income before extraordinary items $ .39 $ .47 $ .84 $ .91
Extraordinary gain(loss), net -- -- -- (.09)
--------- --------- --------- ---------
Fully diluted earnings(loss) per common share $ .39 $ .47 $ .84 $ .82
========= ========= ========= =========
- --------------------------------------------------------------
(a) Convertible securities are not considered in the calculations if the effect of the conversion is anti-dilutive.
EXHIBIT 12
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF TOTAL ENTERPRISE RATIOS OF EARNINGS TO FIXED CHARGES
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
AND THE FIVE YEARS ENDED DECEMBER 31, 1996
(Amounts in millions, except ratios)
Six Months Ended
June 30 Year Ended December 31
---------------------- -------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
- -------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Income(loss) from continuing
operations(a) $ 332 $ 334 $ 672 $ 478 $ (46) $ 80 $ 131
--------- --------- --------- --------- --------- --------- ---------
Add:
Provision for taxes on
income (other than foreign oil
and gas taxes) 174 181 212 244 50 204 114
Interest and debt expense(b) 223 266 494 592 594 601 666
Portion of lease rentals
representative of the interest
factor 22 21 43 48 55 53 56
Preferred dividends to minority
stockholders of subsidiaries(c) -- -- -- -- -- -- 7
--------- --------- --------- --------- --------- --------- ---------
419 468 749 884 699 858 843
--------- --------- --------- --------- --------- --------- ---------
Earnings(loss) before fixed charges $ 751 $ 802 $ 1,421 $ 1,362 $ 653 $ 938 $ 974
========= ========= ========= ========= ========= ========= =========
Fixed charges
Interest and debt expense
including capitalized interest(b) $ 231 $ 270 $ 506 $ 602 $ 599 $ 612 $ 685
Portion of lease rentals
representative of the interest
factor 22 21 43 48 55 53 56
Preferred dividends to minority
stockholders of subsidiaries(c) -- -- -- -- -- -- 7
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges $ 253 $ 291 $ 549 $ 650 $ 654 $ 665 $ 748
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 2.97 2.76 2.59 2.10 n/a(d) 1.41 1.30
- -------------------------------------- ========= ========= ========= ========= ========= ========= =========
(a) Includes (1) minority interest in net income of majority-owned subsidiaries having fixed charges and (2) income from less-
than-50-percent-owned equity investments adjusted to reflect only dividends received.
(b) Includes proportionate share of interest and debt expense of 50-percent-owned equity investments.
(c) Adjusted to a pretax basis.
(d) Not computed due to less than one-to-one coverage. Earnings were inadequate to cover fixed charges by $1 million.
5
1,000,000
6-MOS
DEC-31-1997
JUN-30-1997
331
0
656
26
632
2,099
23,454
9,551
17,676
2,294
4,980
0
2,707
66
2,513
17,676
5,478
5,551
4,143
4,143
59
0
218
629
329
337
0
0
0
337
.88
.84
