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 September 30, 1996
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 September 30, 1996
--------------------------- ---------------------------------
Common stock $.20 par value 328,906,609 shares
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONTENTS
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
September 30, 1996 and December 31, 1995 2
Consolidated Condensed Statements of Operations --
Three and nine months ended September 30, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows --
Nine months ended September 30, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
1
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(Amounts in millions)
1996 1995
================================================================= ========= =========
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 5) $ 135 $ 520
Receivables, net 938 891
Inventories (Note 6) 610 647
Prepaid expenses and other 328 461
--------- ---------
Total current assets 2,011 2,519
LONG-TERM RECEIVABLES, net 140 158
EQUITY INVESTMENTS (Note 12) 1,029 927
PROPERTY, PLANT AND EQUIPMENT, at cost, net of
accumulated depreciation, depletion and amortization of $9,268
at September 30, 1996 and $8,837 at December 31, 1995 (Note 7) 13,794 13,867
OTHER ASSETS 360 344
--------- ---------
$ 17,334 $ 17,815
================================================================= ========= =========
The accompanying notes are an integral part of these financial statements.
2
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(Amounts in millions)
1996 1995
========================================================================= ========= =========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of senior funded debt and capital lease liabilities $ 28 $ 522
Notes payable 67 16
Accounts payable 888 859
Accrued liabilities 1,052 1,168
Domestic and foreign income taxes 126 92
--------- ---------
Total current liabilities 2,161 2,657
--------- ---------
SENIOR FUNDED DEBT, net of current maturities and unamortized discount 4,570 4,819
--------- ---------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred and other domestic and foreign income taxes 2,530 2,620
Other 3,004 3,089
--------- ---------
5,534 5,709
--------- ---------
NONREDEEMABLE PREFERRED STOCK, COMMON STOCK AND
OTHER STOCKHOLDERS' EQUITY
Nonredeemable preferred stock, stated at liquidation value 1,325 1,325
Common stock, at par value 66 64
Other stockholders' equity
Additional paid-in capital 4,564 4,631
Retained earnings(deficit) (893) (1,402)
Cumulative foreign currency translation adjustments 7 12
--------- ---------
5,069 4,630
--------- ---------
$ 17,334 $ 17,815
========================================================================= ========= =========
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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Amounts in millions, except per-share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ----------------------
1996 1995 1996 1995
====================================================== ========= ========= ========= =========
REVENUES
Net sales and operating revenues
Oil and gas operations $ 1,148 $ 779 $ 2,780 $ 2,240
Natural gas transmission operations 554 454 1,777 1,460
Chemical operations 1,084 1,325 3,210 4,253
Other -- (1) (2) (3)
--------- --------- --------- ---------
2,786 2,557 7,765 7,950
Interest, dividends and other income 63 31 233 78
Gains on asset dispositions, net 1 (2) 5 44
Income from equity investments (Note 12) 21 29 64 87
--------- --------- --------- ---------
2,871 2,615 8,067 8,159
--------- --------- --------- ---------
COSTS AND OTHER DEDUCTIONS
Cost of sales 2,162 1,958 5,870 5,931
Selling, general and administrative and other
operating expenses 322 241 779 837
Environmental remediation 6 5 94 16
Exploration expense 31 13 78 63
Interest and debt expense, net 115 147 375 436
--------- --------- --------- ---------
2,636 2,364 7,196 7,283
--------- --------- --------- ---------
Income(loss) before taxes 235 251 871 876
Provision for domestic and foreign income and
other taxes (Note 11) 41 112 332 372
--------- --------- --------- ---------
Income before extraordinary gain(loss), net 194 139 539 504
Extraordinary gain(loss), net (Note 3) -- -- (30) --
--------- --------- --------- ---------
NET INCOME(LOSS) 194 139 509 504
Preferred dividends (23) (24) (69) (70)
--------- --------- --------- ---------
EARNINGS(LOSS) APPLICABLE TO
COMMON STOCK $ 171 $ 115 $ 440 $ 434
========= ========= ========= =========
PRIMARY EARNINGS PER COMMON SHARE
Income before extraordinary gain(loss), net $ .53 $ .36 $ 1.46 $ 1.37
Extraordinary gain(loss), net -- -- (.09) --
--------- --------- --------- ---------
Primary earnings(loss) per common share $ .53 $ .36 $ 1.37 $ 1.37
========= ========= ========= =========
FULLY DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary gain(loss), net $ .50 $ .36 $ 1.41 $ 1.33
Extraordinary gain(loss), net -- -- (.08) --
--------- --------- --------- ---------
Fully diluted earnings(loss) per common share $ .50 $ .36 $ 1.33 $ 1.33
========= ========= ========= =========
DIVIDENDS PER SHARE OF COMMON STOCK $ .25 $ .25 $ .75 $ .75
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 325.3 318.6 322.4 318.0
====================================================== ========= ========= ========= =========
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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Amounts in millions)
1996 1995
============================================================================== ========= =========
CASH FLOW FROM OPERATING ACTIVITIES
Net income(loss) $ 509 $ 504
Adjustments to reconcile income to net cash provided by operating activities
Extraordinary (gain)loss, net 30 --
Depreciation, depletion and amortization of assets 687 708
Deferred income tax provision 7 54
Other noncash charges to income 271 167
Gains on asset dispositions, net (5) (44)
Income from equity investments (64) (87)
Exploration expense 78 63
Changes in operating assets and liabilities (110) (357)
Other operating, net (153) (104)
--------- ---------
Net cash provided by operating activities 1,250 904
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (780) (606)
Proceeds from disposal of property, plant and equipment, net 213 171
Buyout of operating leases -- (141)
Purchase of businesses (18) --
Sale of businesses, net 24 469
Other investing, net (46) 86
--------- ---------
Net cash used by investing activities (607) (21)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from senior funded debt 11 218
Net proceeds from commercial paper and revolving credit agreements 531 (528)
Payments on senior funded debt and capital lease liabilities (1,340) (316)
Proceeds from issuance of common stock 18 23
Proceeds(payments) of notes payable 51 (4)
Cash dividends paid (309) (303)
Other financing, net 10 16
--------- ---------
Net cash used by financing activities (1,028) (894)
--------- ---------
Increase(decrease) in cash and cash equivalents (385) (11)
Cash and cash equivalents--beginning of period 520 129
--------- ---------
Cash and cash equivalents--end of period $ 135 $ 118
============================================================================== ========= =========
The accompanying notes are an integral part of these financial statements.
5
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 1996
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, 1995 (1995 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 September 30, 1996 and the
consolidated results of operations for the three and nine months then ended
and the consolidated cash flows for the nine months then ended. The results
of operations and cash flows for the periods ended September 30, 1996 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 1996 presentation.
Reference is made to Note 1 to the consolidated financial statements
incorporated by reference in the 1995 Form 10-K for a summary of significant
accounting policies.
2. Asset Acquisitions and Dispositions
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 notes receivable of approximately $20
million. In July, Occidental sold its royalty oil interests in the Congo for
$215 million to the Republic of the Congo. None of these transactions
resulted in a material gain or loss.
In August 1996, Occidental acquired three specialty chemical operations--
Laurel Industries, Inc., Natural Gas Odorizing, Inc. and a plant from Power
Silicates Manufacturing, Inc.--in three separate transactions for
approximately $146 million, of which approximately $127 million was in
Occidental common stock.
3. Extraordinary Gain(Loss)
The 1996 nine month results included a net extraordinary loss of $30
million, which resulted from the early retirement of high-coupon debt.
6
4. Supplemental Cash Flow Information
Cash payments during the nine months ended September 30, 1996 and 1995
included federal, foreign and state income taxes of approximately $186
million and $221 million, respectively. Interest paid (net of interest
capitalized) totaled approximately $383 million and $450 million for the
nine month periods ended September 30, 1996 and 1995, respectively.
5. Cash and Cash Equivalents
Cash equivalents consist of highly liquid money-market mutual funds and bank
deposits with maturities of three months or less when purchased. Cash
equivalents totaled $190 million and $620 million at September 30, 1996 and
December 31, 1995, respectively. The reduction in cash equivalents reflected
the use of cash for the redemption of the 11.75% Senior Debentures in March
1996.
A cash-management system is utilized to minimize the cash balances required
for operations and to invest the surplus cash in liquid short-term money-
market instruments and/or to pay down short-term borrowings. This can result
in the balance of short-term money-market instruments temporarily exceeding
cash and cash equivalents.
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 September 30, 1996 December 31, 1995
======================= ================== =================
Raw materials $ 113 $ 116
Materials and supplies 185 180
Work in progress 18 17
Finished goods 342 363
--------- ---------
658 676
LIFO reserve (48) (29)
--------- ---------
Total $ 610 $ 647
========= =========
7. Property, Plant and Equipment
Reference is made to the consolidated financial statements and Note 1
thereto incorporated by reference in the 1995 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 1995 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 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, as well as 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 1995 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 1996 and 1995 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.
The provision for federal income tax in 1996 is benefited by approximately
$100 million from a reduction in the deferred tax asset valuation allowance
due to the increase in likelihood regarding the realization of specific
deferred tax assets.
At December 31, 1995, Occidental had, for U.S. federal income tax return
purposes, a capital loss carryforward of approximately $21 million, a
business tax credit carryforward of $20 million and an alternative minimum
tax credit carryforward of $270 million available to reduce future income
taxes. To the extent not used, the capital loss carryforward expires in 2000
and the business tax credit expires in
8
varying amounts during the years 2000 and 2001. 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
Occidental's financial position or results of operations in any given year.
12. Investments
Investments in 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 September 30, 1996, Occidental's
equity investments consisted primarily of joint-interest pipelines,
including a pipeline in the Dutch sector of the North Sea, a 30 percent
investment in the common shares of Canadian Occidental Petroleum Ltd. and
various chemical partnerships. The following table presents Occidental's
proportionate interest in the summarized financial information of its equity
method investments (in millions):
Periods Ended September 30
------------------------------------------------
Three Months Nine Months
---------------------- ----------------------
1996 1995 1996 1995
========= ========= ========= =========
Revenues $ 214 $ 202 $ 634 $ 606
Costs and expenses 193 173 570 519
--------- --------- --------- ---------
Net income $ 21 $ 29 $ 64 $ 87
========= ========= ========= =========
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 September 30
------------------------------------------------
Three Months Nine Months
---------------------- ----------------------
1996 1995 1996 1995
========= ========= ========= =========
Revenues $ 254 $ 175 $ 732 $ 537
Costs and expenses 230 194 658 552
--------- --------- --------- ---------
Net income $ 24 $ (19) $ 74 $ (15)
========= ========= ========= =========
Balance at September 30, 1996 December 31, 1995
=============================== ================== =================
Current assets $ 123 $ 206
Intercompany receivable $ 428 $ 323
Noncurrent assets $ 2,018 $ 2,057
Current liabilities $ 221 $ 244
Interest bearing note to parent $ 105 $ 121
Noncurrent liabilities $ 1,232 $ 1,283
Stockholders' equity $ 1,011 $ 938
------------------------------- ------------------ -----------------
9
14. Subsequent Events
On November 4, 1996, Occidental redeemed all of the outstanding $150 million
principal amount of its Floating Rate Senior Notes which were due November
4, 1999 at a redemption price of 100% of the principal amount, and the notes
were replaced with lower-cost debt.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Occidental's net income for the first nine months of 1996 totaled $509 million,
on net sales and operating revenues of $7.8 billion, compared with net income of
$504 million, on net sales and operating revenues of $8.0 billion, for the same
period of 1995. Occidental's net income for the third quarter of 1996 was $194
million, on net sales and operating revenues of $2.8 billion, compared with $139
million, on net sales and operating revenues of $2.6 billion, for the same
period of 1995. Primary earnings per common share were $1.37 for the first nine
months of 1996, compared with $1.37 for the same period of 1995. Primary
earnings per common share were $.53 for the third quarter of 1996, compared with
$.36 for the same period of 1995.
The decrease in net sales and operating revenues for the nine months of 1996,
compared with the same period of 1995, reflected the impact of reduced chemical
prices, primarily for petrochemicals and PVC resins, partially offset by higher
worldwide crude oil prices, higher domestic natural gas prices and higher crude
oil trading revenues.
Interest, dividends and other income for the nine months of 1996 includes $170
million received for a litigation settlement related to Love Canal.
Income from equity investments decreased for the third quarter of 1996, compared
with the similar period of 1995. The decrease in 1996 primarily reflected lower
equity earnings from chemical investments.
The following table sets forth the sales and earnings of each operating division
and corporate items (in millions):
Periods Ended September 30
------------------------------------------------
Three Months Nine Months
---------------------- ----------------------
1996 1995 1996 1995
========= ========= ========= =========
DIVISIONAL NET SALES
Oil and gas $ 1,148 $ 779 $ 2,780 $ 2,240
Natural gas transmission 554 454 1,777 1,460
Chemical 1,084 1,325 3,210 4,253
Other -- (1) (2) (3)
--------- --------- --------- ---------
NET SALES $ 2,786 $ 2,557 $ 7,765 $ 7,950
========= ========= ========= =========
DIVISIONAL EARNINGS
Oil and gas $ 20 $ 46 $ 325 $ 76
Natural gas transmission 49 54 221 191
Chemical 228 252 558 913
--------- --------- --------- ---------
297 352 1,104 1,180
UNALLOCATED CORPORATE ITEMS
Interest expense, net (107) (133) (349) (410)
Income taxes, administration and other 4 (80) (216) (266)
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY GAIN(LOSS), NET 194 139 539 504
Extraordinary gain(loss), net -- -- (30) --
--------- --------- --------- ---------
NET INCOME $ 194 $ 139 $ 509 $ 504
========= ========= ========= =========
11
Selling, general and administrative and other operating expenses were $779
million for the first nine months of 1996, compared with $837 million for the
same period of 1995. Environmental remediation was $94 million for the first
nine months of 1996 which included a second quarter charge of $75 million for
additional environmental reserves, compared with $16 million for the same period
of 1995. The 1996 amount included a third quarter charge of $105 million for
the write-down in an oil and gas project in the Republic of Komi. The 1995
amount included a second quarter charge of $109 million for settlement of
litigation.
The provision for income taxes was $332 million for the first nine months of
1996, compared with $372 million for the same period of 1995 and $41 million for
the third quarter of 1996, compared with $112 million for the third quarter of
1995. Both periods of 1996 benefited by approximately $100 million for a
reduction in the deferred tax asset valuation allowance. This was partially
offset by a slightly higher effective tax rate for 1996.
Oil and gas earnings before special items for the first nine months of 1996 were
$430 million, compared with $185 million for the same period of 1995. Oil and
gas earnings before special items for the third quarter of 1996 were $125
million, compared with $46 million for the third quarter of 1995. The third
quarter 1996 results, after inclusion of the $105 million write-down as
previously discussed, were $20 million. The 1995 first nine months results
included a charge of $109 million for settlement of litigation. The increase in
third quarter earnings in 1996, compared with 1995, reflected higher worldwide
crude oil prices and higher domestic natural gas prices partially offset by
higher exploration expense. 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 nine months of 1996 were $221
million, compared with $191 million for the same period of 1995. Natural gas
transmission earnings for the third quarter of 1996 were $49 million, compared
with $54 million for the same period of 1995. The decline in earnings for the
third quarter of 1996, compared with the same period of 1995, resulted primarily
from lower transport margins, partially offset by higher liquid processing
margins and lower costs related to the reorganization in late 1995.
Chemical earnings before special items for the first nine months of 1996 were
$468 million, compared with $873 million for the same period of 1995. The 1996
results, after inclusion of $170 million related to favorable litigation
settlements and a charge of $75 million for additional environmental reserves
relating to various existing sites, and the related state tax effects, were $558
million. The 1995 results, after inclusion of a $40 million pretax gain related
to the sale of assets, were $913 million. Chemical earnings before special
items for the third quarter of 1996 were $190 million, compared with $252
million for the third quarter of 1995. The 1996 third quarter results were $228
million after inclusion of $40 million related to a favorable litigation
settlement and the related state tax effects. The decline in third quarter 1996
earnings resulted primarily from decreased profit margins in petrochemicals, PVC
resins and caustic soda, partially reduced by improvements in profits from
specialty chemicals. 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. However, PVC and certain petrochemical prices
recently have increased slightly.
Divisional earnings include credits in lieu of U.S. federal income taxes. In
the first nine months of 1996, divisional earnings benefited by $67 million from
credits allocated. This included credits of $11 million, $36 million and $20
million at oil and gas, natural gas transmission and chemical, respectively. Of
the total amount for the first nine months of 1996, $22 million was recorded in
the third quarter of 1996 as a benefit to divisional earnings, of which $3
million, $12 million and $7 million was recorded at oil and gas, natural gas
transmission and chemical, respectively. In the first nine months of 1995,
divisional earnings benefited by $68 million. The comparable amounts allocated
to the divisions were credits of $12 million, $36 million and $20 million at oil
and gas, natural gas transmission and chemical, respectively. Of the total
amount for the nine months of 1995, $22 million was recorded in the third
quarter of 1995 as a benefit to divisional earnings, of
12
which $4 million, $12 million and $6 million was recorded at oil and gas,
natural gas transmission and chemical, respectively.
Interest expense for the first nine months of 1996 was $349 million, compared
with $410 million for the same period of 1995. Interest expense for the third
quarter of 1996 was $107 million, compared with $133 million for the third
quarter of 1995. The decline in interest expense is primarily attributable to
lower average interest rates and lower average debt levels resulting primarily
from redemptions of high-coupon debt.
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 $1,250 million for
the first nine months of 1996, compared with $904 million for the same period of
1995. The 1996 noncash charges included $105 million for the write-down in an
oil and gas project in the Republic of Komi and $75 million for additional
environmental reserves, partially offset by a $39 million favorable litigation
settlement. The 1996 and 1995 noncash charges also included employee benefit
plans expense and various other charges.
Occidental's net cash used by investing activities was $607 million for the
first nine months of 1996, compared with $21 million for the same period of
1995. Capital expenditures were $780 million in 1996, including $510 million in
oil and gas, $102 million in natural gas transmission and $154 million in
chemical. Capital expenditures were $606 million in 1995, including $374
million in oil and gas, $93 million in natural gas transmission and $132 million
in chemical. The increase in 1996 from 1995 reflected higher spending in oil
and gas, primarily in Peru and Qatar. Net proceeds from the sale of businesses
and disposals of property, plant and equipment for the first nine months of 1996
totaled $237 million, which primarily reflected the proceeds from the sale of
Occidental's royalty interest in the Congo and an on-shore drilling and well
servicing subsidiary. Net proceeds from the sale of businesses and disposals of
property, plant and equipment for the first nine months of 1995 totaled $640
million, which primarily reflected the proceeds from the sale of Occidental's
high density polyethylene business (HDPE), its PVC facility at Addis, Louisiana
and the sale of a portion of Occidental's oil and gas operation in Pakistan.
Financing activities used net cash of $1,028 million in the first nine months of
1996, compared with $894 million for the same period of 1995. The 1996 amount
reflected net cash used of $747 million to reduce short-term and long-term debt,
net of proceeds from borrowings, primarily for the redemptions of the 11.75%
Senior Debentures and the 9.625% Senior Notes, and the payment of dividends of
$309 million. In 1995, repayments of debt, net of proceeds from borrowings,
resulted in net cash used of $630 million to reduce long-term debt.
Additionally, dividend payments were $303 million.
For 1996, Occidental expects that cash generated from operations and asset sales
will be more than adequate to meet its operating requirements, capital spending
and dividend payments. Excess cash generated is expected to be applied to debt
and liability reduction. Occidental also has substantial borrowing capacity to
meet unanticipated cash requirements.
At September 30, 1996, Occidental's working capital was a negative $150 million,
compared with a negative $138 million at December 31, 1995. Available but
unused lines of committed bank credit totaled approximately $2.0 billion at
September 30, 1996, compared with $2.6 billion at December 31, 1995.
13
Receivables at September 30, 1996 include the accrual for litigation settlements
previously mentioned.
Equity investments at September 30, 1996 include the interest in INDSPEC Holding
Corporation (INDSPEC) as discussed below.
Current maturities of senior funded debt and capital lease liabilities decreased
primarily as a result of the redemption of the 11.75% Senior Debentures in March
1996.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." As permitted by SFAS No. 123, Occidental will not recognize
compensation expense for stock-based compensation arrangements, but rather will
disclose in the notes to the financial statements the impact on annual net
income and earnings per share as if the fair value based compensation cost had
been recognized commencing in 1996.
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 notes receivable of 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.
In August 1996, Occidental acquired three specialty chemical operations--Laurel
Industries, Inc., Natural Gas Odorizing, Inc. and a plant from Power Silicates
Manufacturing, Inc.--in three separate transactions for approximately $146
million, of which approximately $127 million was in Occidental common stock.
On November 4, 1996, Occidental redeemed all of the outstanding $150 million
principal amount of its Floating Rate Senior Notes which were due November 4,
1999 at a redemption price of 100% of the principal amount, and the notes were
replaced with lower-cost debt.
ENVIRONMENTAL MATTERS
Occidental's operations in the United States are subject to increasingly
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 expected to continue to rise in the
future.
The laws which require or address 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 as a
relevant measure of exposure. Although the liability of a potentially
responsible party (PRP), and in many cases its equivalent under state law, is
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 September 30, 1996, 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 291 Superfund or
comparable state sites. (This number does not include 65 sites where Occidental
has been successful in resolving its involvement.) The 291 sites include 80
former Diamond Shamrock Chemical sites
14
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 209
sites, Occidental has had no communication or activity with government agencies
or other PRPs in three years at 38 sites, has denied involvement at 33 sites and
has yet to determine involvement in 24 sites. With respect to the remaining 114
of these sites, Occidental is in various stages of evaluation. For 104 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 104 sites include 37 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 10 of the 114 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."
15
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 1995 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 and June 30, 1996 and Note 10 to the
consolidated condensed financial statements in Part I hereof.
ENVIRONMENTAL PROCEEDINGS
On September 30, 1996, the Environmental Protection Agency filed an
administrative Complaint against Natural Gas Odorizing, Inc., which was recently
acquired by Occidental, alleging failure to file during 1994 an Inventory Update
Report under the Toxic Substance Control Act regarding its facility in Baytown,
Texas and proposing a "civil" penalty of $136,000. A settlement conference has
been tentatively scheduled.
On October 1, 1996, the West Virginia Division of Environmental Protection filed
a civil action in the Circuit Court, Kanawha County, West Virginia against
Occidental Chemical Corporation (OCC) alleging numerous violations of hazardous
waste management regulations at its Belle Plant from October 1994 to September
1995. The Complaint seeks civil penalties of $25,000 per day and injunctive
relief requiring correction of the alleged violations. OCC will contest the
allegations and proposed civil penalties.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Agreement, dated September 9, 1996, between Occidental and
David R. Martin
10.2 Occidental Petroleum Corporation 1988 Deferred Compensation
Plan (as amended and restated effective as of January 1,
1996)
11 Statement regarding the computation of earnings per share
for the three and nine months ended September 30, 1996 and
1995
12 Statement regarding the computation of total enterprise
ratios of earnings to fixed charges for the nine months
ended September 30, 1996 and 1995 and the five years ended
December 31, 1995
27 Financial data schedule for the nine month period ended
September 30, 1996 (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 September 30, 1996, Occidental filed the
following Current Reports on Form 8-K:
16
1. Current Report on Form 8-K dated July 22, 1996 (date of
earliest event reported), filed on July 23, 1996, for the
purpose of reporting, under Item 5, Occidental's results of
operations for the quarter ended June 30, 1996
From September 30, 1996 to the date hereof, Occidental filed the
following Current Report on Form 8-K:
1. Current Report on Form 8-K dated October 17, 1996 (date of
earliest event reported), filed on October 18, 1996, for
the purpose of reporting, under Item 5, Occidental's
results of operations for the quarter ended September 30,
1996
17
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: November 13, 1996 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
18
EXHIBIT INDEX
EXHIBITS
- --------
10.1 Agreement, dated September 9, 1996, between Occidental and David R.
Martin
10.2 Occidental Petroleum Corporation 1988 Deferred Compensation Plan (as
amended and restated effective as of January 1, 1996)
11 Statement regarding the computation of earnings per share for the
three and nine months ended September 30, 1996 and 1995
12 Statement regarding the computation of total enterprise ratios of
earnings to fixed charges for the nine months ended September 30, 1996
and 1995 and the five years ended December 31, 1995
27 Financial data schedule for the nine month period ended September 30,
1996 (included only in the copy of this report filed electronically
with the Securities and Exchange Commission)
EXHIBIT 10.1
THIS AGREEMENT is entered into on this 9th day of September, 1996, by
and between Occidental Petroleum Corporation, a Delaware corporation ("Oxy"),
and Mr. David R. Martin ("Mr. Martin").
WHEREAS, Mr. Martin has been employed as a full-time employee
rendering services to Oxy and its affiliates pursuant to the terms and
conditions of an Employment Agreement, dated January 1, 1996 (the "Employment
Agreement"), and
WHEREAS, Mr. Martin has notified Oxy that he desires to retire from
his executive and board positions with Oxy and its affiliates, and the parties
are each willing to terminate the Employment Agreement, while concurrently
providing for the availability of Mr. Martin as a source of information with
respect to the business affairs and operations of Oxy and its affiliates wherein
he has knowledge,
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration had and received, the
sufficiency of which is hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Mr. Martin's retirement from his executive and board positions
with Oxy and its affiliates will be accepted, and the Employment Agreement shall
hereby be terminated.
2. Mr. Martin shall make himself available, as Oxy may from time to
time request in writing, on reasonable notice, as a source of information to Oxy
with respect to the business affairs and operations of Oxy and its affiliates
wherein he has knowledge for a term (the "TERM") commencing on September 12,
1996 and ending on December 31, 2000. Mr. Martin shall make himself
available for such services in Bakersfield and/or Los Angeles and at other
places as Oxy may from time to time request.
3. Mr. Martin shall not receive any bonus for the calendar year 1996,
but shall receive a payment of 50% of his current annual base salary in full
satisfaction of any incentive compensation claim. During the TERM and
thereafter, Mr. Martin shall not be entitled to participate in any incentive
compensation plan of Oxy and/or its affiliates. No vacation time is currently
due, and none shall accrue during the TERM or thereafter. Mr. Martin may
purchase his office furniture and personal office equipment at book value.
4. During the TERM, Oxy shall compensate Mr. Martin (a) at his
current annual base salary, which shall be payable in semi-monthly payments, for
the three-year period commencing September 12, 1996 and ending September 12,
1999, and (b) at the annual rate of $20,000.00, which shall also be payable in
semi-monthly payments, for the balance of the TERM (i.e., September 12, 1999
through December 31, 2000). Mr. Martin shall also be reimbursed for his actual
and reasonable expenses incurred in the performance of any services hereunder at
the written request of Oxy.
5. While Mr. Martin is being compensated in accordance with the
provisions of this Agreement, Mr. Martin shall not act in a disloyal manner
inimical to Oxy or accept employment with, or act as a consultant for, or
perform services for any person, firm or corporation engaged in any business
competitive with Oxy without the prior written consent of Oxy.
-2-
6. During the TERM:
(a) Oxy shall continue Mr. Martin as a participant in all
employee benefit (NOT incentive) plans and programs in which he currently
participates, determined according to his annual remuneration hereunder except
for life insurance which shall be determined according to his current
remuneration, except for the following: the Oxy Short-Term Disability Plan, the
Oxy Long-Term Disability Plan, and the Oxy Occupational Accidental Death and
Dismemberment Plan; and
(b) Mr. Martin shall continue to be eligible to exercise any
outstanding stock options and stock grants previously awarded to him under Oxy's
Stock Option and Purchase Plans as and when provided for under such plans and
agreements. At the conclusion of the TERM, the period to exercise any remaining
options and grants shall be governed by the provisions of such Plans.
7. Mr. Martin shall not, without the prior written consent and
approval of Oxy, divulge to any person, firm or corporation, nor use to the
detriment of Oxy or any of its subsidiaries, nor use in any business, venture,
or any organization of any kind, or in any process of manufacture, production or
mining, at any time during the TERM or thereafter:
(a) any trade secrets or confidential information, including all
graphic material, forms, documents, data and information developed, acquired,
disclosed to, or used by Mr. Martin in the prior performance of his services for
Oxy or its affiliates; or
-3-
(b) any confidential information concerning inventions,
discoveries, improvements, methods, technology, business plans, environmental
plans, procedures and practices, enterprises, exploration, mining or drilling
information, manufacturing information, plant design, location or operation; or
(c) any other confidential information affecting the business or
operation of Oxy or its affiliates, obtained during the course of Mr. Martin's
employment by Oxy or its affiliates.
8. Mr. Martin agrees that, at the commencement of the TERM, he will
deliver to Oxy (and will not keep or deliver to anyone else) any and all notes,
notebooks, memoranda, documents and, in general, any and all material in his
possession or control relating to the confidential business affairs of Oxy or
its affiliates, except as the parties shall specifically agree in writing are to
be retained by him, and that thereafter he will keep in strictest confidence
(and will not deliver to anyone else) any and all notes, notebooks, memoranda,
documents and, in general, any and all material in his possession or control
relating to the confidential business affairs of Oxy or its affiliates.
9. (a) Mr. Martin does hereby and forever release and discharge Oxy
and the past and present parent, subsidiary and affiliated corporations of Oxy
as well as the successors, shareholders, officers and directors of corporate
shareholders, officers, directors, heirs, predecessors, assigns, agents,
employees, attorneys and representatives of each of them, past and present, from
any and all cause or causes of action, actions, judgments, liens, indebtedness,
damages, losses, claims, liabilities, and demand of whatsoever kind or
character, known or unknown, suspected to exist or not suspected to exist,
anticipated or not anticipated, whether or not heretofore brought before any
state or federal court or before any state or federal
-4-
agency or other governmental entity, whether statutory or common law, including
without limitation on the generality of the foregoing, any and all claims,
demands or causes of action attributable to, connected with, or incidental to
the employment of Mr. Martin by Oxy, the separation of that employment and any
dealings between the parties concerning Mr. Martin's employment or any other
matter existing prior to the date of execution of this Agreement, excepting only
those obligations to be performed hereunder and the obligations of Oxy under the
Indemnification Agreement, dated as of April 26, 1996, between Oxy and Mr.
Martin (the "Indemnification Agreement") which shall remain in full force and
effect. This release is intended to apply to any claims arising from federal,
state or local laws which prohibit discrimination on the basis of race, national
origin, sex, religion, age, marital status, pregnancy, handicap, perceived
handicap, ancestry, sexual orientation, family or personal leave or any other
form of discrimination, or any common law claims of any kind, including, but not
limited to, breach of privacy, misrepresentation, defamation, wrongful
termination, tortious infliction of emotional distress, loss of consortium and
breach of fiduciary duty, violation of public policy and any other common law
claim of any kind whatever, any claims for severance pay, sick leave, family
leave, vacation, bonuses or incentive compensation; provided however, that Mr.
Martin represents that he is not aware of any workers compensation claims by
him, and that this release does not apply to any of Mr. Martin's rights or
claims, past, present or future, under any of Oxy's benefit plans in which he
currently participates.
(b) Mr. Martin specifically waives the benefits of the provisions
of Section 1542 of the Civil Code of the State of California and any other
analogous state or federal law or regulation. Said Section 1542 of the
California Civil Code reads as follows:
-5-
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
10. If Mr. Martin should become disabled, or if he should die, before
the expiration of the TERM, all payments which were to be made to him hereunder
shall be payable to him, or to his estate, as the case may be, when and as due
hereunder, notwithstanding the cessation of his services hereunder.
11. As of the effective date hereof, any other then existing
employment agreement, oral or written, between Mr. Martin and Oxy shall be
deemed to be terminated and of no further force or effect. Mr. Martin hereby
resigns as a director of Oxy and Canadian Occidental Petroleum Ltd., as
Executive Vice President of Oxy, as President and Chief Executive Officer of
Occidental Oil and Gas Corporation and from each other office or directorship
(if any) in which he serves Oxy or any of its subsidiary or affiliated
companies.
12. In the event Mr. Martin is a witness or a defendant in any legal
proceeding as a result of his previous or future services to Oxy or parent,
subsidiary and affiliated corporations of Oxy, or incurs legal expenses in
connection therewith, Oxy agrees to indemnify and defend Mr. Martin in the same
manner and subject to the same conditions as if Mr. Martin had remained an
officer and employee of Oxy, and to provide Mr. Martin with mutually acceptable
legal representation of his choice if same is reasonably necessary or
appropriate under the circumstances, in each case to the extent authorized under
Oxy's by-laws, Delaware law and the Indemnification Agreement.
-6-
13. In the event of any dispute arising out of this Agreement, Mr.
Martin's services to Oxy or its affiliates or any other matter between the
parties, Mr. Martin and Oxy agree that any such dispute shall be decided
exclusively by confidential neutral binding arbitration conducted in Los
Angeles, California, in accordance with the then current rules of the American
Arbitration Association. In the event the parties are unable to agree upon an
arbitrator, they shall select from a list of seven arbitrators designated by the
American Arbitration Association; four shall be retired judges of the Superior
or Appellate Courts resident in Los Angeles, California, and three shall be
members of the National Academy of Arbitrators resident within Los Angeles,
California. This agreement to resolve any disputes by binding arbitration shall
extend to claims against the parent of Oxy, any brother-sister company,
subsidiary or affiliates of Oxy, any officers, directors, employees, or agents
of Oxy and shall apply as well, to the full extent permitted by law, to claims
arising out of state and federal statutes and local ordinances as well as to
claims arising under the common law.
14. The waiver given below is given only in exchange for consideration
in addition to anything of value to which Mr. Martin is already entitled. The
waiver set forth below does not waive rights or claims which may arise after the
date of execution of this Agreement. Mr. Martin acknowledges that this entire
Agreement is written in a manner calculated to be understood by Mr. Martin, by
reviewing this Agreement or drafts thereof he has been advised in writing to
consult with an attorney before executing this Agreement and he was given a
number of days within which to consider the Agreement. In addition to the
release set forth in Paragraph 9(a) hereof, Mr. Martin hereby voluntarily and
knowingly waives all rights or claims arising under the Federal Age
Discrimination in Employment Act.
-7-
15. This Agreement cannot be modified except by a writing signed by
both parties.
16. This Agreement shall be binding upon Mr. Martin, his heirs,
executors and assigns and upon Oxy, its successors and assigns.
17. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California, except as otherwise expressly
provided herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first hereinabove written.
Oxy: Occidental Petroleum Corporation
By RICHARD W. HALLOCK
----------------------------------------------
Name: Richard W. Hallock
Title: Executive Vice President
Mr. Martin: D. R. MARTIN
-------------------------------------------------
David R. Martin
-8-
EXHIBIT 10.2
OCCIDENTAL PETROLEUM CORPORATION
1988 DEFERRED COMPENSATION PLAN
(Amended and Restated Effective as of January 1, 1996)
OCCIDENTAL PETROLEUM CORPORATION
1988 DEFERRED COMPENSATION PLAN
(Amended and Restated Effective as of January 1, 1996)
ARTICLE I
PURPOSE
The purpose of this 1988 Deferred Compensation Plan (the "Plan") is to
provide a tax-advantaged way for key management and other highly compensated
employees of Occidental Petroleum Corporation and its Affiliates to accumulate
additional income for retirement or planned savings for future needs.
ARTICLE II
DEFINITIONS AND CERTAIN PROVISIONS
Affiliate. "Affiliate" means any corporation which is controlled by
or under common control with Occidental Petroleum Corporation.
Base Salary. "Base Salary" means a Participant's annual base salary,
excluding Bonus, all severance allowances, forms of incentive compensation, any
Savings Plan, Retirement Plan or other Company qualified plan contributions or
benefits, retainers, insurance premiums or benefits, reimbursements, and all
other payments, prior to reduction for any deferrals under this Plan or any
other plan of the Company or reductions under the Company's Savings Plan
sanctioned by Section 401(k) of the Internal Revenue Code.
Beneficiary. "Beneficiary" means the person or persons designated as
such in accordance with Article VI.
Board. "Board" means the Board of Directors of the Company.
Bonus. "Bonus" means the bonus awarded to a Participant during the
Plan Year in question prior to reduction for any deferral under this Plan or any
other plan of the Company.
Committee. "Committee" means the administrative committee appointed
to administer the Plan pursuant to Article III.
Company. "Company" means Occidental Petroleum Corporation, or any
successor thereto, and any Affiliates.
Company Management. "Company Management" means the Chairman of the
Board, President or any Executive Vice President of Occidental Petroleum
Corporation.
-2-
Declared Rate. "Declared Rate" with respect to any Plan Year means
the interest rate which will be credited on Deferral Accounts for such Plan
Year. The Declared Rate for each Plan Year prior to 1994 was determined by the
Committee in its complete and sole discretion. The Declared Rate for the 1994
and 1995 Plan Years was equal to (A) the average interest rate of five-year
United States Treasury Notes during the last five trading days of September
preceding the applicable Plan Year plus (B) one percent (1%). The Declared Rate
for each Plan Year commencing in 1996 and thereafter will be equal to (A) the
average interest rate of five-year United States Treasury Notes during the last
five trading days of September preceding the applicable Plan Year plus (B) two
percent (2%). The Declared Rate will be announced on or before January 1 of the
applicable Plan Year. Notwithstanding the foregoing, the Declared Rate on
Deferral Amounts which were earned and deferred prior to 1994 (including bonuses
which were earned for 1993), together with accumulated interest thereon, will in
no event be less than eight percent (8%) for any Plan Year. Accordingly, the
Declared Rate for any Plan Year commencing in 1994 or thereafter may be
different for Deferral Amounts which were earned and deferred prior or
subsequent to January 1, 1994. The Company reserves the right to change the
Declared Rate at any time, but only on a prospective basis; provided that
Deferral Amounts which were earned and deferred prior to 1994 will continue to
be credited with interest at not less than eight percent (8%) per annum.
Deferral Account. "Deferral Account" means the account maintained on
the books of account of the Company for each Participant pursuant to Article IV.
Deferral Amount. "Deferral Amount" means an amount of a Participant's
Base Salary or Bonus which is deferred under this Plan.
Disability. "Disability" means a condition that qualifies as a
disability under the Company's Retirement Plan and which has continued for more
than six (6) months and has been approved by the Committee.
Early Payment Benefit. "Early Payment Benefit" means the payment to a
Participant of part or all of his Deferral Account on an Early Payment Date
prior to Retirement pursuant to Section 5.5.
Early Payment Date. "Early Payment Date" means any date prior to
Retirement on which a Participant elects to receive an Early Payment Benefit
pursuant to Section 5.5.
Election Form. "Election Form" means an Eligible Employee's written
election to defer Base Salary and/or Bonus in accordance with Article IV.
-3-
Eligible Employee. "Eligible Employee" means each key management or
other highly compensated employee of the Company who is selected by Company
Management to participate in the Plan.
Emergency Benefit. "Emergency Benefit" means the payment to a
Participant of part or all of his Deferral Account in the event that the
Participant has an unforeseeable financial emergency pursuant to Section 5.6.
Enrollment Agreement. "Enrollment Agreement" means the written
agreement entered into by the Company and an Eligible Employee pursuant to which
the Eligible Employee becomes a Participant in the Plan. In the sole discretion
of the Company, Election Forms filed by any Participant by which the Participant
makes the elections provided for by this Plan may be treated as a completed and
fully executed Enrollment Agreement for all purposes under the Plan.
Participant. "Participant" means an Eligible Employee who has filed a
completed and fully executed Enrollment Agreement with the Committee and is
participating in the Plan in accordance with the provisions of Article IV.
Plan Year. "Plan Year" means the calendar year beginning January 1
and ending December 31.
Retirement. "Retirement" means termination of a Participant's
employment with the Company for reasons other than death after the Participant
attains age 55 and completes five (5) Years of Service.
Retirement Benefit. "Retirement Benefit" means the payment to a
Participant of the Participant's Deferral Account following Retirement pursuant
to Section 5.1.
Retirement Plan. "Retirement Plan" means the Occidental Petroleum
Corporation Retirement Plan, as amended from time to time.
Retirement Plan Augmentation Account. "Retirement Plan Augmentation
Account" means the account maintained on the books of account of the Company for
each affected Participant pursuant to Section 5.7.
Retirement Plan Augmentation Benefit. "Retirement Plan Augmentation
Benefit" means the payment to a Participant of the Participant's Retirement Plan
Augmentation Account pursuant to Section 5.7.
Savings Plan. "Savings Plan" means the Occidental Petroleum
Corporation Savings Plan, as amended from time to time.
-4-
Savings Plan Augmentation Account. "Savings Plan Augmentation Account"
means the account maintained on the books of account of the Company to reflect
Savings Plan augmentation contributions made by the Company pursuant to Section
4.5.
Service. "Service" means the period of time during which an
employment relationship exists between a Participant and the Company, including
the period of time such relationship existed prior to the time when the employee
in question became a Participant.
Termination Benefit. "Termination Benefit" means the payment to a
Participant of the Participant's Deferral Account on account of his termination
of employment other than due to Retirement, Disability or death pursuant to
Section 5.2.
Termination Event. "Termination Event" means:
(a) the dissolution or liquidation of the Company;
(b) the reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Common Stock of the
Company is exchanged for or converted into cash or property or securities not
issued by the Company, unless the reorganization, merger or consolidation shall
have been affirmatively recommended to the Company's stockholders by a majority
of the members of the Company's Board of Directors;
(c) the acquisition of substantially all of the property or of
more than thirty-five percent (35%) of the voting power of the Company by any
person or entity;
(d) the occurrence of any circumstance having the effect that
directors who were nominated for election as directors by the Nominating
Committee of the Company's Board of Directors shall cease to constitute a
majority of the authorized number of directors of the Company;
(e) the dissemination to the stockholders of the Company of a
proxy statement seeking stockholder approval of a Termination Event of the type
described in (b) above; or
(f) the publication or dissemination of an announcement of an
action intended to result in a Termination Event of the type described in (c) or
(d) above.
Years of Service. "Years of Service" means the number of full years
credited to a Participant under the Retirement Plan for vesting purposes.
-5-
ARTICLE III
ADMINISTRATION OF THE PLAN
An administrative committee shall be appointed by the Company's Chief
Executive Officer to administer the Plan and establish, adopt, or revise such
rules and regulations as the Committee may deem necessary or advisable for the
administration of the Plan and to interpret the provisions of the Plan, and,
except as otherwise indicated herein, any such interpretations shall be
conclusive. All decisions of the Committee shall be by vote of at least two of
the Committee members and shall be final. Members of the Committee shall be
eligible to participate in the Plan while serving as members of the Committee,
but a member of the Committee shall not vote or act upon any matter which
relates solely to such member's interest in the Plan as a Participant.
ARTICLE IV
PARTICIPATION
4.1 Election to Participate. An Eligible Employee may elect to
participate in the Plan by filing a completed and fully executed Enrollment
Agreement with the Committee. An Eligible Employee may thereafter elect to defer
annual Base Salary and/or Bonus under the Plan for any Plan Year by filing a
completed and fully executed Election Form with the Committee prior to the
beginning of such Plan Year or at such other time as the Committee may permit.
Various deferral options will be made available to Eligible Employees under the
Plan, subject to such limitations and conditions as the Committee may impose,
from time to time, in its complete and sole discretion. Unless otherwise
authorized by the Committee, a separate Election Form will be required for each
Plan Year, and the Election Form will designate the Deferral Amounts as a fixed
dollar amount (in increments of $1,000) for Base Salary and/or (A) a fixed
percentage of bonus (in increments of 10%) or (B) 100% of the remainder of any
bonus above a specified dollar amount, as elected by the Participant. Deferrals
of Base Salary will normally be deducted ratably during the Plan Year. In its
sole discretion, the Committee may also permit amounts which an Eligible
Employee has previously elected to defer under other plans or agreements with
the Company to be transferred to this Plan and credited to his Deferral Account
which is maintained hereunder. With the consent of the Committee, a Participant
may revoke a deferral election with respect to amounts not yet deferred and
credited to his Deferral Account, provided that the Participant will not be
permitted to participate in the next enrollment period under the Plan and will
be precluded from electing to make new deferrals under the Plan for a minimum
period of one year (or such lesser period as the Committee may permit) following
the revocation of his deferral election.
-6-
(a) Minimum Deferral. The minimum deferral for any Plan Year
shall be (i) Five Thousand U.S. Dollars (U.S. $5,000.00) for Base Salary and
(ii) ten percent (10%) for Bonus.
(b) Maximum Deferral. The maximum deferral for any Plan Year
shall be (i) seventy-five percent (75%) for Base Salary and (ii) one hundred
percent (100%) for Bonus.
4.2 Deferral Accounts. The Committee shall establish and maintain a
separate Deferral Account for each Participant. A Deferral Amount shall be
credited by the Company to the Participant's Deferral Account no later than the
first day of the month following the month in which the Participant's Base
Salary or Bonus would otherwise have been paid. Such Deferral Account shall be
debited by the amount of any payments made by the Company to the Participant or
the Participant's Beneficiary therefrom.
4.3 Interest. Each Deferral Account of a Participant shall be deemed
to bear interest on the balance from month-to-month in such Deferral Account at
the Declared Rate for each Plan Year, compounded monthly, from the date such
Deferral Account was established through the date of complete distribution of
the Deferral Account. Interest will be credited to each Deferral Account on a
monthly basis on the last day of each month.
4.4 Valuation of Accounts. The value of a Deferral Account as of any
date shall equal the amounts theretofore credited to such account less any
payments debited to such account plus the interest deemed to be earned on such
account in accordance with Section 4.3 through the end of the preceding month.
When payments are made from a Deferral Account for any reason, such payments
shall be deemed to be made on a proportionate or pro-rata basis from Deferral
Amounts (including accumulated interest thereon) which were earned and deferred
prior and subsequent to January 1, 1994.
4.5 Savings Plan Augmentation Contribution. For each Plan Year, the
Company shall credit to the Savings Plan Augmentation Account of any Participant
an amount equal to the amount by which the contribution that would otherwise
have been made by the Company to the Savings Plan for such Plan Year is reduced
by reason of the reduction in the Participant's Base Salary for such Plan Year
under this Plan. The Savings Plan augmentation contribution shall be credited to
the Savings Plan Augmentation Account for each Plan Year at the same time as the
Company contribution for such Plan Year is made to the Savings Plan. A
Participant's interest in any credit to his Savings Plan Augmentation Account
and earnings thereon shall vest at the same rate and at the same time as would
have been the case had such contribution been made to the Savings Plan. Interest
will be credited on a Savings Plan Augmentation Account at the same rate and in
the same manner as if it were a Deferral Account in accordance with Section 4.3.
-7-
Upon death, Disability, Retirement or other termination of
employment, the vested portion of the Participant's Savings Plan Augmentation
Account shall be paid to the Participant (or his Beneficiary in the event of the
Participant's death) in a single lump sum during the first 90 days of the year
following such event.
4.6 Statement of Accounts. The Committee shall submit to each
Participant, within 120 days after the close of each Plan Year, a statement in
such form as the Committee deems desirable setting forth the balance standing to
the credit of each Participant in each of his Deferral Accounts and his Savings
Plan Augmentation Account.
ARTICLE V
BENEFITS
5.1 Retirement Benefit. Upon Retirement, the Company shall pay to
the Participant with respect to his Deferral Account an annual amount for
fifteen (15) years beginning in the year following his Retirement, the sum of
which payments shall equal (a) the value of the Deferral Account determined
under Section 4.4 as of the end of the year in which his Retirement occurs plus
(b) the interest that will accrue on the unpaid balance in such Deferral Account
during such fifteen year (15) period pursuant to Section 4.3 ("Retirement
Benefit"). For each year after the initial Retirement Benefit payment is made,
the annual Retirement Benefit payment shall be redetermined based upon the value
of the Deferral Account at that time, plus the interest that will accrue
pursuant to Section 4.3 for the remaining period of annual payments. A
Participant may instead elect in his Enrollment Agreement to have the Retirement
Benefit paid to him in annual payments for either five (5), ten (10) or twenty
(20) years or in a single lump sum payment. The amount of any such annual
payments shall be calculated in accordance with the principles stated in the
preceding sentences. Annual payments will normally be made during the first 90
days of the year.
The Committee, in its sole discretion, may permit a Participant to
change his election as to the form of payment upon written petition of the
Participant. In order to be effective, a Participant's election (or modification
or revocation of a prior election) of the form of payment of his Retirement
Benefit must be made not later than 12 months before the Participant's
Retirement, unless otherwise permitted by the Committee. Subject to the
foregoing limitation, a Participant may make such election (or revoke a prior
election and make a new election) at any time. Any election (or modification or
revocation of a prior election) which is made later than 12 months prior to the
Participant's Retirement will be considered void and shall have no force or
effect, except as otherwise determined by the Committee.
-8-
5.2 Termination Benefit. If a Participant shall cease to be an
employee of the Company for any reason other than Retirement, Disability or
death, the Company shall pay to the Participant in one lump sum, except as
provided in Section 5.5 for Early Payment Benefits, an amount (the "Termination
Benefit") equal to the value of his Deferral Account; provided, however, at the
sole discretion of the Committee, no lump sum shall be payable and, instead, the
Company shall pay to the Participant an annual amount each year for a period not
to exceed three years beginning in the year following his termination of
employment, the sum of which payments shall equal (a) the value of the Deferral
Account determined under Section 4.4 as of the end of the year in which he
terminates employment plus (b) the interest that will accrue on the unpaid
balance from month-to-month in such Deferral Account during such three year
period at the Declared Rate, compounded monthly. Annual payments will normally
be made during the first 90 days of the year.
5.3 Disability. If a Participant shall cease to be an employee of
the Company prior to Retirement due to a Disability which continues for more
than six (6) months, the Company shall pay to the Participant in one lump sum,
except as provided in Section 5.5 for Early Payment Benefits, an amount equal to
the value of his Deferral Account.
5.4 Survivor Benefits.
(a) If a Participant dies while employed with the Company prior
to becoming eligible for Retirement, the Company will pay to the Participant's
Beneficiary in one lump sum, except as provided in Section 5.5 for Early Payment
Benefits, an amount equal to the value of the Participant's Deferral Account.
(b) If a Participant dies after becoming eligible for Retirement
or after the commencement of payment of Retirement Benefits, the Company will
pay to the Participant's Beneficiary the remaining installments of the
Retirement Benefits which would have been payable to the Participant for the
balance of the payment period elected by the Participant. If payments have not
yet commenced, payments will commence in the year following the Participant's
death, irrespective of when Retirement Benefit payments would have commenced if
the Participant had survived.
5.5 Early Payment. A Participant may elect, in such manner as the
Committee may permit in any Election Form, to receive part or all of the
Deferral Amounts covered by such Election Form in a lump sum payment or
installments ("Early Payment Benefit") commencing on a date prior to Retirement
designated in such Election Form ("Early Payment Date").
-9-
The Early Payment Date on any Election Form may be any date which is at least
two years after completion of deferral of the Deferral Amounts covered by such
Election Form. If the Participant retires, terminates employment, becomes
disabled or dies prior to commencement or completion of all Early Payment
Benefits, all such elections made by the Participant to receive Early Payment
Benefits shall continue in force. However, any such Early Payments Benefits
which have not yet commenced shall commence in the year following such event.
Annual payments will normally be made during the first 90 days of the year.
5.6 Emergency Benefit. In the event that the Committee, upon written
petition of the Participant (or his Beneficiary, in the event of the
Participant's death), determines, in its sole discretion, that the Participant
or Beneficiary has suffered an unforeseeable financial emergency, the Company
shall pay to the Participant, as soon as practicable following such
determination, such amount up to the balance of his Deferral Account which is
necessary to meet the emergency ("Emergency Benefit"). For purposes of this
Plan, an unforeseeable financial emergency is an unexpected need for cash
arising from an illness, casualty loss, divorce, sudden financial reversal, or
other such unforeseeable occurrence. Cash needs arising from foreseeable events
such as the purchase of a home or education expenses for children shall normally
not be considered to be the result of an unforeseeable financial emergency.
5.7 Retirement Plan Augmentation Benefit. In addition to the other
benefits provided for in this Article V, the Company shall pay a Retirement Plan
Augmentation Benefit to Participants who have elected to defer a portion of
their Base Salary in accordance with this Plan and thereby receive a reduced
benefit under the Retirement Plan. To the extent not provided under any other
plan of the Company, a credit shall be made to a Retirement Plan Augmentation
Account established under this Plan for the Participant. The Committee shall
determine the methods and procedures for computation and payment of the
Retirement Plan Augmentation Benefit and shall have the right to amend or revise
these methods and procedures from time to time, in its complete and sole
discretion.
5.8 Immediate Payment on Termination Event. Upon petition of a
Participant within sixty (60) days after any Termination Event or such other
period as the Committee may permit, the Committee, in its sole discretion, may
pay the balance of the Participant's Deferral Account to him immediately in a
lump sum as a Termination Benefit pursuant to Section 5.2, irrespective of
whether the Participant terminates or continues employment with the Company.
-10-
5.9 Small Benefit. In the event that the Committee determines, in
its sole discretion, that the amount of any benefit is too small to make it
administratively convenient to pay such benefit over time, the Committee may pay
the benefit in a lump sum.
5.10 Lump Sum Payment With Penalty. Notwithstanding any other
provisions of the Plan, a Participant or a Beneficiary of a deceased Participant
may elect at any time to receive an immediate lump sum payment of all or part of
the vested balance of his Deferral Account, reduced by a penalty, which shall be
forfeited to the Company, equal to ten percent (10%) of the amount withdrawn
from such Deferral Account, in lieu of payments in accordance with the form
previously elected by the Participant.
Whenever a Participant receives a lump sum payment under this
Section 5.10, the Participant will be deemed to elect to revoke all current
deferral commitments under the Plan effective as of the date of the lump sum
payment. The Participant will not be permitted to participate in the next
enrollment period under the Plan and will be precluded from electing to make new
deferrals under the Plan for a minimum period of one year (or such lesser period
as the Committee may permit) following receipt of the lump sum payment.
5.11 Withholding; Unemployment Taxes. To the extent required by the
law in effect at the time payments are made, the Company shall withhold from
payments made hereunder the minimum taxes required to be withheld by the Federal
or any state or local government.
ARTICLE VI
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any
person or persons as the Beneficiary to whom payments under this Plan shall be
made in the event of the Participant's death prior to complete distribution to
the Participant of the benefits due under the Plan. Each Beneficiary designation
shall become effective only when filed in writing with the Committee during the
Participant's lifetime on a form prescribed by the Committee. The filing of a
new Beneficiary designation form will cancel any inconsistent Beneficiary
designation previously filed.
If a Participant fails to designate a Beneficiary as provided above,
or if all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, such benefits shall be paid
in accordance
-11-
with the Participant's Beneficiary designation under the Company's Retirement
Plan, and if there is no such valid Beneficiary designation, to the
Participant's then surviving spouse, or, if none, to the Participant's estate,
until directed otherwise by the court that has jurisdiction over the assets
belonging to the Participant's probate estate.
ARTICLE VII
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board may at any time amend the Plan in whole or
in part for any reason, including but not limited to tax, accounting or other
changes, which may result in termination of the Plan for future deferrals,
provided, however, that no amendment shall be effective to decrease the benefits
under the Plan payable to any Participant which have accrued prior to the date
of such amendment. The Committee, in its discretion, may amend the Plan if it
finds that such amendment does not significantly increase or decrease Plan
benefits or costs.
7.2 Termination.
(a) Company's Right to Terminate. The Board or the Committee may
at any time terminate the Plan, if in the Board's or the Committee's judgment,
the continuance of the Plan would not be in the Company's best interest due to
tax, accounting or other effects thereof, or potential payouts thereunder.
(b) Payments Upon Termination. Upon any termination of the Plan
under this Section 7.2, the Board or Committee shall determine the date or dates
of Plan distributions to the Participants, which date or dates shall not be
later than the date or dates on which the Participants or their Beneficiaries
would otherwise receive benefits hereunder. Deferral Amounts shall prospectively
cease to be deferred as of the date determined by the Board or Committee.
-12-
ARTICLE VIII
MISCELLANEOUS
8.1 Unsecured General Creditor. The rights of a Participant,
Beneficiary, or their heirs, successors, and assigns, as relates to any Company
promises hereunder, shall not be secured by any specific assets of the Company,
nor shall any assets of the Company be designated as attributable or allocated
to the satisfaction of such promises.
8.2 Trust Fund. The Company shall be responsible for the payment of
all benefits provided under the Plan. At its discretion, the Company may
establish one or more trusts, with such trustees as the Board or Committee may
approve, for the purpose of providing for the payment of such benefits. Such
trust or trusts may be irrevocable, but the assets thereof shall be subject to
the claims of the Company's creditors. To the extent any benefits provided under
the Plan are actually paid from any such trust, the Company shall have no
further obligation with respect thereto, but to the extent not so paid, such
benefits shall remain the obligation of, and shall be paid by, the Company.
8.3 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or interest
therein which are, and all rights to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
8.4 Employment Not Guaranteed. Nothing contained in this Plan nor any
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to be retained in employment with the Company.
Accordingly, subject to the terms of any written employment agreement to the
contrary, the Company shall have the right to terminate or change the terms of
employment of a Participant at any time and for any reason whatsoever, with or
without cause.
8.5 Obligations to Company. If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Company, then the Company may offset such amount owed to it against
the amount of benefits otherwise distributable. Such determination shall be made
by the Committee.
-13-
8.6 Gender, Singular & Plural. All pronouns and any variations
thereof shall be deemed to refer to the masculine or feminine as the identity of
the person or persons may require. As the context may require, the singular may
be read as the plural and the plural as the singular.
8.7 Captions. The captions of the articles, sections, and paragraphs
of the Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
8.8 Validity. In the event any provision of this Plan is held
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
8.9 Notice. Any notice or filing required or permitted to be given
to the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the Company's Executive Vice
President, Human Resources. Such notice shall be deemed given as to the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
8.10 Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of California.
Executed on October 28, 1996, in the City and County of
Los Angeles, State of California.
OCCIDENTAL PETROLEUM CORPORATION
By RICHARD W. HALLOCK
-----------------------------------------
Authorized Officer of
Occidental Petroleum Corporation
Its EVP, Human resources
-----------------------------------------
Attest:
By R. DELMON TURNS
--------------------------------
Its Corporate Manager - Compensation
--------------------------------
-14-
EXHIBIT 11
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Amounts in thousands, except per-share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
EARNINGS PER COMMON AND COMMON ---------------------- ----------------------
EQUIVALENT SHARE 1996 1995 1996 1995
- -------------------------------------------------------------- --------- --------- --------- ---------
Earnings(loss) applicable to common stock $ 171,146 $ 116,305 $ 439,885 $ 434,798
========= ========= ========= =========
Common shares outstanding at beginning of period 323,015 318,185 318,711 316,853
Issuance of common shares, weighted average 2,081 206 3,062 877
Conversions, weighted average options exercised and other 4 9 307 210
Repurchase/cancellation of common shares (36) (18) (86) (58)
Effect of assumed exercises
Dilutive effect of exercise of options outstanding and other 285 211 358 165
--------- --------- --------- ---------
Weighted average common stock and common stock
equivalents 325,349 318,593 322,352 318,047
========= ========= ========= =========
Primary earnings per share:
Income before extraordinary gain(loss), net $ .53 $ .36 $ 1.46 $ 1.37
Extraordinary gain(loss), net -- -- (.09) --
--------- --------- --------- ---------
Earnings(loss) per common and common equivalent share $ .53 $ .36 $ 1.37 $ 1.37
========= ========= ========= =========
FULLY DILUTED EARNINGS PER SHARE
- --------------------------------------------------------------
Earnings (loss) applicable to common stock $ 171,146 $ 116,305 $ 439,885 $ 434,798
Dividends applicable to dilutive preferred stock:
$3.875 preferred stock(a) 14,634 -- 43,903 43,903
$3.00 preferred stock(a) 8,542 8,542 25,624 25,624
--------- --------- --------- ---------
$ 194,322 $ 124,847 $ 509,412 $ 504,325
========= ========= ========= =========
Common shares outstanding at beginning of period 323,015 318,185 318,711 316,853
Issuance of common shares, weighted average 2,081 206 3,062 877
Conversions, weighted average options exercised and other 4 9 307 210
Repurchase/cancellation of common shares (36) (18) (86) (58)
Effect of assumed conversions and exercises
Dilutive effect of assumed conversion of preferred stock:
$3.875 preferred stock(a) 33,186 -- 33,186 33,186
$3.00 preferred stock(a) 27,958 27,890 27,958 27,890
Dilutive effect of exercise of options outstanding and other 285 211 445 233
--------- --------- --------- ---------
Total for computation of fully diluted earnings per share 386,493 346,483 383,583 379,191
========= ========= ========= =========
Fully diluted earnings per common share:
Income before extraordinary gain(loss), net $ .50 $ .36 $ 1.41 $ 1.33
Extraordinary gain(loss), net -- -- (.08) --
--------- --------- --------- ---------
Fully diluted earnings(loss) per common share $ .50 $ .36 $ 1.33 $ 1.33
========= ========= ========= =========
- -------------------------
(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
(Amounts in millions, except ratios)
Nine Months Ended
September 30 Year Ended December 31
---------------------- -------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
- --------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Income(loss) from continuing
operations(a) $ 525 $ 517 $ 478 $ (46) $ 80 $ 131 $ 374
--------- --------- --------- --------- --------- --------- ---------
Add:
Provision(credit) for taxes on
income (other than foreign oil
and gas taxes) 169 252 244 50 204 114 343
Interest and debt expense(b) 384 446 592 594 601 666 880
Portion of lease rentals
representative of the interest
factor 32 41 48 55 53 56 57
Preferred dividends to minority
stockholders of subsidiaries(c) -- -- -- -- -- 7 11
--------- --------- --------- --------- --------- --------- ---------
585 739 884 699 858 843 1,291
--------- --------- --------- --------- --------- --------- ---------
Earnings before fixed charges $ 1,110 $ 1,256 $ 1,362 $ 653 $ 938 $ 974 $ 1,665
========= ========= ========= ========= ========= ========= =========
Fixed charges
Interest and debt expense
including capitalized interest(b) $ 391 $ 454 $ 602 $ 599 $ 612 $ 685 $ 912
Portion of lease rentals
representative of the interest
factor 32 41 48 55 53 56 57
Preferred dividends to minority
stockholders of subsidiaries(c) -- -- -- -- -- 7 11
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges $ 423 $ 495 $ 650 $ 654 $ 665 $ 748 $ 980
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 2.62 2.54 2.10 n/a(d) 1.41 1.30 1.70
- --------------------------------------- ========= ========= ========= ========= ========= ========= =========
(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
9-MOS
DEC-31-1996
SEP-30-1996
135
0
728
22
610
2,011
23,062
9,268
17,334
2,161
4,821
0
1,325
66
3,678
17,334
7,765
8,067
5,870
5,870
172
0
375
807
332
539
0
(30)
0
509
1.37
1.33
