SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the fiscal period ended February 28, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from _____________to_____________
Commission file number: 1-9210
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Oxy Vinyls, LP Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
OXY VINYLS, LP SAVINGS PLAN
By: /s/ Peter G. Vincent
-----------------------------------------
Peter G. Vincent - Member of the
Occidental Petroleum Corporation Pension and
Retirement Plan Administrative Committee
Dated: June 27, 2002
OXY VINYLS, LP
SAVINGS PLAN
Financial Statements
February 28, 2002 and December 31, 2001
(With Independent Auditors' Report Thereon)
OXY VINYLS, LP
SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits - February 28, 2002 and December 31, 2001 2
Statements of Changes in Net Assets Available for Benefits - Period ended February 28, 2002 and
year ended December 31, 2001 3
Notes to Financial Statements 4 - 11
All schedules omitted are not required based on disclosure requirements of the
Employee Retirement Income Security Act of 1974 and regulations issued by the
Department of Labor.
INDEPENDENT AUDITORS' REPORT
The Occidental Petroleum Corporation
Pension and Retirement Plan Administrative Committee:
We have audited the accompanying statements of net assets available for benefits
of the Oxy Vinyls, LP Savings Plan as of February 28, 2002 and December 31,
2001, and the related statements of changes in net assets available for benefits
for the period ended February 28, 2002 and for the year ended December 31, 2001.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Oxy Vinyls,
LP Savings Plan as of February 28, 2002 and December 31, 2001 and the changes in
net assets available for benefits for the period ended February 28, 2002 and for
the year ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.
/s/ KPMG LLP
Los Angeles, California
June 20, 2002
OXY VINYLS, LP
SAVINGS PLAN
Statements of Net Assets Available for Benefits
FEBRUARY 28, DECEMBER 31,
ASSETS 2002 2001
-------------- --------------
Investments at fair value:
Short-term investment fund $ -- 564,805
Mutual funds -- 40,508,877
Common collective funds -- 18,584,383
Common stock -- 36,915,357
Interest in represented Master Trust -- 165,845
Participant loans -- 3,502,233
-------------- --------------
Total investments at fair value -- 100,241,500
-------------- --------------
Receivables:
Participant contributions -- 439,506
Employer contributions -- 276,879
Interest and dividends -- 437,192
Securities due from broker -- 16,685
-------------- --------------
Total receivables -- 1,170,262
-------------- --------------
Total assets -- 101,411,762
-------------- --------------
LIABILITIES
Accrued liabilities -- 41,010
-------------- --------------
Total liabilities -- 41,010
-------------- --------------
Net assets available for benefits $ -- 101,370,752
============== ==============
See accompanying notes to financial statements.
2
OXY VINYLS, LP
SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
PERIOD ENDED YEAR ENDED
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Additions to net assets attributable to:
Investment income:
Interest $ 232,539 1,366,532
Dividends -- 285,630
Net (depreciation) in fair value of investments (794,524) (669,901)
Plan interest in Master Trust investment loss (7,169) (18,013)
-------------- --------------
Total investment (loss) income (569,154) 964,248
-------------- --------------
Contributions:
Participant 622,165 5,796,144
Employer 389,672 3,627,297
Participant rollover -- 218,840
-------------- --------------
Total contributions 1,011,837 9,642,281
-------------- --------------
Total additions 442,683 10,606,529
Deductions from net assets attributable to:
Benefits paid to participants 1,191,095 6,790,152
Administrative expenses -- 172,278
Transfer to successor plan 100,622,340 --
-------------- --------------
Total deductions 101,813,435 6,962,430
-------------- --------------
Net (decrease) increase (101,370,752) 3,644,099
Net assets available for benefits:
Beginning of year 101,370,752 97,726,653
-------------- --------------
End of year $ -- 101,370,752
============== ==============
See accompanying notes to financial statements.
3
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
(1) DESCRIPTION OF THE PLAN
The following description of the Oxy Vinyls, LP Savings Plan (Plan)
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
(a) GENERAL
Occidental Chemical Corporation (OxyChem), a wholly owned subsidiary
of Occidental Petroleum Corporation (OPC or Oxy), a Delaware
corporation, and The Geon Company (Geon) caused a partnership to be
formed, Oxy Vinyls, LP, a Delaware limited partnership, and selected
affiliates (collectively, the Company or the Employer), in which
OxyChem and Geon have indirect interests of 76% and 24%, respectively.
The Plan was a defined contribution plan generally available to
certain employees of the Company. The Plan was established by the
Company effective May 1, 1999. The Plan was subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
(b) MERGER OF PLAN INTO SUCCESSOR PLAN
The Plan was merged into the Occidental Petroleum Corporation Savings
Plan (PSA) with an effective date of February 28, 2002. Plan
participants became participants in the PSA plan and their participant
accounts and the plan assets were transferred into the PSA plan
effective as of February 28, 2002. The transfer is reflected in the
Statements of Changes in Net Assets Available for Benefits for the
period ended February 28, 2002 as "Transfer to successor plan."
(c) PLAN ADMINISTRATION
Prior to the Merger, the Plan was administered by the OPC Pension and
Retirement Trust and Investment Committee as to investment decisions
and by the Oxy Vinyls, LP Pension and Retirement Plan Administrative
Committee as to all matters except investment decisions (these two
committees are herein referred to collectively as the Committees). The
Committees had been given all powers necessary to carry out their
respective duties, including as applicable, but not limited to, the
power to administer and interpret the Plan and to answer all questions
affecting eligibility of participants. The Northern Trust Company (the
Trustee) was the trustee and custodian of a trust fund which held all
of the assets of the Plan.
(d) CONTRIBUTIONS
PARTICIPANT CONTRIBUTIONS - Participants were allowed to contribute
from 1% to 15% of compensation (as defined) to the Plan on a before-
or after-tax basis, or in any combination thereof, subject to certain
Internal Revenue Code (IRC) limitations.
EMPLOYER CONTRIBUTIONS - The Employer contributed 100% of a
participant's contribution up to the first 6% of compensation. All
Employer contributions were invested in the Occidental Petroleum
Corporation Common Stock Fund (the Oxy Stock Fund).
4 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
(e) INVESTMENT OPTIONS
Prior to the Merger, the Plan offered 11 investment options. Upon
enrollment in the Plan, participants could direct their contributions,
in 5% increments, in any of the investment options offered at the
time. Participants could change their investment options daily.
Participants should refer to the Plan fund description pamphlet for a
complete description of the investment options and for the detailed
composition of each investment fund.
(f) PARTICIPANT ACCOUNTS
Participant accounts were credited with the participant's contribution
and allocations of the Employer's contribution and investment income,
and charged with an allocation of administrative expenses and
investment losses, if any. Allocations were based on account balances,
as defined. The benefit to which a participant was entitled was the
benefit that could be provided from the participant's vested account.
(g) VESTING
Participants immediately vested in their contributions plus investment
income thereon, if any. Vesting in the Employer's contribution portion
of the account plus earnings thereon, was based on years of service.
Generally, a participant received 20% vesting for each year of service
and was fully vested after five years of service. Participants who
were eligible to participate in the Plan on May 1, 1999 were fully
vested.
(h) PARTICIPANT LOANS
Participants could borrow from their account a minimum of $1,000 up to
a maximum equal to the lesser of: (i) $50,000, reduced by the highest
outstanding loan balance in the past 12 months, (ii) 50% of their
vested account balance, or (iii) a loan amount which would require
payroll deductions for repayment equal to 25% of the participant's
base compensation. Loan transactions were treated as a transfer
between the investment fund and the participant loan fund. Loan terms
ranged from one to five years for general purpose loans and six to ten
years for primary residence loans. The loans bore interest at a fixed
rate equal to the Western Federal Credit Union's loan rate for a loan
secured by a member's deposit account at the time the loan was
approved. During 2002 and 2001, the interest rate charged on new loans
was 5%. Loan repayments were made ratably through payroll deductions.
(i) PAYMENT OF BENEFITS
Generally, upon termination of service for any reason other than
death, participants with an account balance greater than $5,000 could
elect to receive the vested portion of their account in the following
distribution options: (i) one lump-sum payment, (ii) straight life
annuity, (iii) ten-year term certain annuity, (iv) joint and survivor
annuity, (v) partial cash distributions, or (vi) deferral of payment
with certain restrictions. Upon termination of service due to death,
the participant's beneficiary could elect to receive the vested
interests in the form of (i), (ii), (iii), or (vi) only. A participant
whose vested account balance was $5,000 or less could receive
distributions only under options (i), (v), or (vi). Participants could
elect to receive distributions from their account balance in the Oxy
Stock
5 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
Fund, the PolyOne Stock Fund (formerly the Geon Stock Fund), or the
BFGoodrich Stock Fund in cash or in shares of common stock of such
company.
(j) FORFEITED ACCOUNTS
Forfeited nonvested accounts were used to reduce Employer
contributions.
(k) ADMINISTRATIVE EXPENSES
The Company paid certain costs and expenses incurred in administering
the Plan and other costs and expenses were paid by the Plan.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The financial statements of the Plan were prepared under the accrual
method of accounting.
(b) USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from
those estimates.
(c) RISKS AND UNCERTAINTIES
The Plan provided for various investment options in mutual funds,
actively managed funds, the Oxy Stock Fund, the PolyOne Stock Fund,
and the BFGoodrich Stock Fund. Investment securities were exposed to
various risks such as interest rate, market, and credit. Due to the
level of uncertainty related to changes in the value of investment
securities, it was at least reasonably possible that changes in the
various risk factors, in the near term, could materially affect
participants' account balances and the amounts reported in the
financial statements.
Additionally, many mutual funds invested in the securities of foreign
companies, which involved special risks and considerations not
typically associated with investing in U.S. companies. These risks
included devaluation of currencies, less reliable information about
issuers, different securities transaction clearance and settlement
practices, and possible adverse political and economic developments.
Moreover, securities of many foreign companies and their markets may
be less liquid and their prices more volatile than similar types of
securities of comparable U.S. companies.
Derivative financial instruments were used by the Plan's equity and
fixed income investment managers to remain fully invested in the asset
class and to hedge currency risk. Leveraging of the Plan assets and
speculation were prohibited.
6 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
(d) INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments were stated at fair value. Shares of registered
investment companies were valued at quoted market prices, which
represented the net asset value of shares held by the Plan at
year-end. The OPC common stock, PolyOne common stock, and BFGoodrich
common stock (see note 3) were valued at their quoted market prices.
The unit price of common or commingled trust funds was based on the
current market value of the underlying assets of the fund. Participant
loans were valued at cost, which approximated fair value.
Purchases and sales of securities were recorded on a trade-date basis.
Interest income was recorded on the accrual basis. Dividends were
recorded on the ex-dividend date.
Realized gains and losses on investments are based on the market value
of the asset at the beginning of the Plan year or at the time of
purchase for assets purchased during the Plan year and the related
fair value on the day the investments were sold during the Plan year.
Unrealized gains and losses on investments were based on the market
value of the assets at the beginning of the Plan year or at the time
of purchase for assets purchased during the Plan year and the related
fair value at the end of the Plan year. Net realized and unrealized
appreciation/(depreciation) in fair value of investments is reflected
in the accompanying Statements of Changes in Net Assets Available for
Benefits as "Net (depreciation) in fair value of investments."
(e) PAYMENT OF BENEFITS
Benefits were recorded when paid.
(3) INVESTMENTS
The following presents investments, with those that represent 5% or more of
the Plan's net assets separately identified:
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Common stock:
Oxy Stock Fund $ -- 35,770,049*
Registered investment companies:
Employee Benefit Index Fund -- 14,275,476
Magellan Fund -- 8,716,147
Contrafund -- 7,843,019
Balanced Fund -- 5,352,957
Common/collective trust:
Stable Value Fund -- 18,584,383
All other investments less than 5% -- 9,699,469
-------------- --------------
$ -- 100,241,500
============== ==============
* Participant and nonparticipant-directed
7 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
During 2002 and 2001, the Plan's investments (including investments bought,
sold, and held during the year) depreciated in value by $794,524 and
$669,901, respectively, as follows:
PERIOD ENDED YEAR ENDED
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Common stock $ 440,961 3,416,779
Registered investment companies (1,235,485) (4,086,680)
-------------- --------------
$ (794,524) (669,901)
============== ==============
(4) OXY STOCK FUND
Information about the net assets and the significant components of the
changes in net assets relating to the Oxy Stock Fund which included both
participant and nonparticipant-directed investments were as follows:
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Net assets:
Oxy Stock Fund $ -- 36,802,277
PERIOD ENDED YEAR ENDED
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Changes in net assets:
Contributions $ 450,347 3,963,622
Investment income 2,362 1,351,039
Net appreciation in fair value 408,756 2,911,027
Transfers between funds (421,428) (493,351)
Plan expenses (9,989) (54,301)
Benefits paid to participants (420,702) (2,480,921)
Transfer to successor plan (36,811,623) --
-------------- --------------
$ (36,802,277) 5,197,115
============== ==============
(5) INTEREST IN MASTER RETIREMENT TRUST
During 2001, an investment option was added to the Plan. This investment is
part of a master trust. The Plan's interest in the master trust investment
loss as reflected in the Statements of Changes in Net Assets Available for
Benefits for the period ended February 28, 2002 and year ended December 31,
2001 represents the period for which the Plan participated in the master
trust.
8 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
Prior to the Merger on February 28, 2002 and at December 31, 2001, the
Plan's investment in the assets of the Master Trust represented an
undivided interest of approximately 1%.
The following table presents the aggregate fair value of investments held
by, and investment income earned by, the Trust in which the Plan owns an
undivided interest, as stated above:
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Investment at fair value:
Common stock $ -- 330,330
Preferred stock 6,162,696 6,798,887
Corporate bonds 12,115,384 11,608,322
-------------- --------------
$ 18,278,080 18,737,539
============== ==============
PERIOD ENDED YEAR ENDED
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Investment income:
Net depreciation in fair value of investments:
Common stock $ (161,345) (26,423)
Preferred stock (264,150) (342,000)
Corporate bonds (224,250) (2,023,554)
-------------- --------------
(649,745) (2,391,977)
Interest and dividends 138,631 742,890
Less investment expenses (35,370) (93,661)
-------------- --------------
$ (546,484) (1,742,748)
============== ==============
(6) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 as of February 28, 2002 and
December 31, 2001:
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Net assets available for benefits per the financial statements $ -- 101,370,752
Amounts allocated to withdrawing participants -- (58,405)
-------------- --------------
Net assets available for benefits per the Form 5500 $ -- 101,312,347
============== ==============
9 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
PERIOD ENDED YEAR ENDED
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Benefits paid to participants per the financial statements $ 1,191,095 6,790,152
Add amounts allocated to withdrawing participants at
December 31, 2001 -- 58,405
Less amounts allocated to withdrawing participants at
December 31, 2000 -- (45,292)
Less amounts allocated to withdrawing participants at
December 31, 2001 (58,405) --
-------------- --------------
Benefits paid to participants per the Form 5500 $ 1,132,690 6,803,265
============== ==============
Amounts allocated to withdrawing participants were recorded on the Form
5500 for benefit payments that have been processed and approved for payment
prior to December 31, but not yet paid as of that date.
The following is a reconciliation of investments per the financial
statements to the Form 5500 as of February 28, 2002 and December 31, 2001:
FEBRUARY 28, DECEMBER 31,
2002 2001
-------------- --------------
Total investments per the financial statements $ -- 100,241,500
Less interest in represented Master Trust -- (165,845)
-------------- --------------
Total investments per the Form 5500 $ -- 100,075,655
============== ==============
The Plan's interest in the Master Trust is not included in the Form 5500
since it is not required based on the disclosure requirements of the
Employee Retirement Income Security Act of 1974 and applicable regulations
issued by the Department of Labor.
(7) PARTY-IN-INTEREST TRANSACTIONS
The Trustee, Oxy Vinyls, LP and OPC are parties-in-interest as defined by
ERISA. The Trustee invests certain Plan assets in its collective short-term
investment fund, the Oxy Stock Fund, the PolyOne Stock Fund, and the
BFGoodrich Stock Fund. Such transactions qualify as party-in-interest
transactions permitted by Department of Labor regulations.
For the period ended February 28, 2002 and for the year ended December 31,
2001, the Plan paid the Trustee $2,500 and $114,464, respectively, for
services provided under the trust agreement.
10 (Continued)
OXY VINYLS, LP
SAVINGS PLAN
Notes to Financial Statements
February 28, 2002 and December 31, 2001
(8) PLAN TERMINATION
Prior to the Merger date, the Company had the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject
to the provisions of ERISA. In the event of Plan termination, participants
would become 100% vested in their accounts.
(9) TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letters dated January 30, 2002 and August 3, 2000, that the Plan and
related trust were designed in accordance with applicable sections of the
IRC. Although the Plan had been amended since receiving the determination
letter, the Committees believed that the Plan was designed and operated in
compliance with the applicable requirements of the IRC.
11
EXHIBIT INDEX
Exhibit
No. Exhibit
- --------------------------------------------------------------------------------
23 Independent Auditors' Consent
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Occidental Petroleum Corporation:
We consent to the incorporation by reference in the registration statement (No.
333-79613) on Form S-8 of Occidental Petroleum Corporation and the Oxy Vinyls,
LP Savings Plan of our report dated June 20, 2002, with respect to the
statements of net assets available for benefits as of February 28, 2002 and
December 31, 2001, and the related statements of changes in net assets available
for benefits for the period ended February 28, 2002 and for the year ended
December 31, 2001, which report appears in the February 28, 2002 annual report
on Form 11-K of the Oxy Vinyls, LP Savings Plan.
/s/ KPMG LLP
Los Angeles, California
June 27, 2002