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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, 1995
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
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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, 1995
--------------------------- ---------------------------------
Common stock $.20 par value 318,449,379 shares
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OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONTENTS
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
September 30, 1995 and December 31, 1994 2
Consolidated Condensed Statements of Operations --
Three and nine months ended September 30, 1995 and 1994 4
Consolidated Condensed Statements of Cash Flows --
Nine months ended September 30, 1995 and 1994 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 6. Exhibits and Reports on Form 8-K 19
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Amounts in millions)
1995 1994
============================================================================= ======== ========
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6) $ 118 $ 129
Receivables, net 946 965
Inventories (Note 7) 773 748
Prepaid expenses and other 323 416
-------- --------
Total current assets 2,160 2,258
LONG-TERM RECEIVABLES, net 168 131
EQUITY INVESTMENTS (Note 14) 778 692
PROPERTY, PLANT AND EQUIPMENT, at cost, net of
accumulated depreciation, depletion and amortization of $9,219
at September 30, 1995 and $8,884 at December 31, 1994 (Note 8) 13,962 14,502
OTHER ASSETS 378 406
-------- --------
$ 17,446 $ 17,989
============================================================================= ======== ========
The accompanying notes are an integral part of these financial statements.
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OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Amounts in millions)
1995 1994
============================================================================= ======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of senior funded debt and capital lease liabilities $ 32 $ 69
Notes payable 17 20
Accounts payable 841 847
Accrued liabilities (Note 9) 1,068 1,212
Domestic and foreign income taxes 75 53
-------- --------
Total current liabilities 2,033 2,201
-------- --------
SENIOR FUNDED DEBT, net of current maturities and unamortized
discount 5,271 5,823
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred and other domestic and foreign income taxes 2,549 2,565
Other (Note 9) 2,894 2,943
-------- --------
5,443 5,508
-------- --------
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 64 63
Other stockholders' equity
Additional paid-in capital 4,728 5,004
Retained earnings (deficit) (1,425) (1,929)
Cumulative foreign currency translation adjustments 7 (6)
-------- --------
4,699 4,457
-------- --------
$ 17,446 $ 17,989
============================================================================== ======== ========
The accompanying notes are an integral part of these financial statements.
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OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Amounts in millions, except per-share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ---------------------
1995 1994 1995 1994
======================================================= ======== ======== ======== ========
REVENUES
Net sales and operating revenues
Oil and gas operations $ 779 $ 741 $ 2,240 $ 1,786
Natural gas transmission operations 454 461 1,460 1,574
Chemical operations 1,325 1,202 4,253 3,313
Interdivisional sales elimination and other (1) -- (3) (1)
-------- -------- -------- --------
2,557 2,404 7,950 6,672
Interest, dividends and other income 31 14 78 62
Gains on asset dispositions, net (2) 14 44 16
Income from equity investments (Note 14) 29 26 87 48
-------- -------- -------- --------
2,615 2,458 8,159 6,798
-------- -------- -------- --------
COSTS AND OTHER DEDUCTIONS
Cost of sales 1,963 1,939 5,945 5,563
Other operating expenses 241 253 839 677
Exploration expense 13 20 63 71
Interest and debt expense, net 147 141 436 434
-------- -------- -------- --------
2,364 2,353 7,283 6,745
-------- -------- -------- --------
INCOME(LOSS) BEFORE TAXES 251 105 876 53
Provision for domestic and foreign
income and other taxes (Note 13) 112 82 372 89
-------- -------- -------- --------
NET INCOME(LOSS) 139 23 504 (36)
Preferred dividends (24) (20) (70) (56)
-------- -------- -------- --------
EARNINGS(LOSS) APPLICABLE TO COMMON STOCK $ 115 $ 3 $ 434 $ (92)
======== ======== ======== ========
PRIMARY EARNINGS(LOSS) PER COMMON SHARE $ .36 $ .01 $ 1.37 $ (.30)
======== ======== ======== ========
FULLY DILUTED EARNINGS(LOSS) PER SHARE $ .36 $ .01 $ 1.33 $ (.30)
======== ======== ======== ========
DIVIDENDS PER SHARE OF COMMON STOCK $ .25 $ .25 $ .75 $ .75
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 318.6 312.4 318.0 310.2
======================================================= ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
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OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Amounts in millions)
1995 1994
============================================================================= ======== ========
CASH FLOW FROM OPERATING ACTIVITIES
Net income(loss) $ 504 $ (36)
Adjustments to reconcile income to net cash from operating activities
Depreciation, depletion and amortization of assets 708 660
Deferred income tax provision 54 10
Other noncash charges to income 230 115
Gains on asset dispositions, net (44) (16)
Income from equity investments (87) (48)
Changes in operating assets and liabilities (357) (188)
Other operating, net (104) (175)
-------- --------
Net cash provided by operating activities 904 322
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (606) (627)
Proceeds from disposal of property, plant and equipment, net 171 8
Buyout of operating leases (141) --
Purchase of businesses -- (5)
Sale of businesses, net 459 2
Other investing, net 96 22
-------- --------
Net cash provided (used) by investing activities (21) (600)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from senior funded debt 218 264
Net payments on commercial paper and
revolving credit agreements (528) (109)
Principal payments on senior funded debt and capital lease liabilities (316) (230)
Proceeds from issuance of preferred stock and common stock 23 584
Payments of notes payable, current maturities of senior
funded debt and capital lease liabilities (4) (17)
Cash dividends paid (303) (278)
Other financing, net 16 (1)
-------- --------
Net cash provided (used) by financing activities (894) 213
-------- --------
Increase (decrease) in cash and cash equivalents (11) (65)
Cash and cash equivalents -- beginning of period 129 157
-------- --------
Cash and cash equivalents -- end of period $ 118 $ 92
============================================================================= ======== ========
The accompanying notes are an integral part of these financial statements.
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OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 1995
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, 1994 (1994 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, 1995 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,
1995 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 prior years have been changed
to conform to the 1995 presentation.
Reference is made to Note 1 to the consolidated financial statements
incorporated by reference in the 1994 Form 10-K for a summary of
significant accounting policies.
2. Earnings per Share
The computation of primary earnings per share was based on the weighted
average number of common shares outstanding and the dilutive effect of
exercise of stock options. The computation of fully diluted earnings per
share further assumes the dilutive effect of conversion of the $3.00
cumulative CXY-indexed convertible preferred stock and the $3.875
cumulative convertible preferred stock.
3. Asset Acquisitions and Dispositions
Reference is made to Note 3 to the consolidated financial statements
incorporated by reference in the 1994 Form 10-K for a description of asset
acquisitions in 1994.
During 1995, Occidental sold its high density polyethylene business to
Lyondell Petrochemical Company. Occidental also sold, pursuant to a
Federal Trade Commission divestiture order, its polyvinyl chloride (PVC)
facilities at Addis, Louisiana and Burlington South, New Jersey (see Legal
Proceedings in Part II). In addition, Occidental sold certain Canadian
oil and gas assets, which were acquired as part of the purchase of Placid
Oil Company in December 1994. The combined cash proceeds from these asset
dispositions were in excess of $550 million.
During the second quarter of 1995, Occidental and Canadian Occidental
Petroleum Ltd. (CanadianOxy) formed partnerships into which they
contributed certain chemical assets. Occidental retained a less-
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than-twenty-percent interest in these partnerships to be accounted for on
the equity method. This transaction did not result in any gain or loss.
The pretax gain on asset dispositions for the nine months ended September
30, 1995 included a second quarter gain of $40 million from the sale of
Occidental's PVC facility at Addis, Louisiana.
The pretax gain on asset dispositions for the third quarter and the nine
months ended September 30, 1994 included a gain of $16 million from the
sale of Occidental's remaining interests in its producing operations in
Argentina.
4. Accounting Changes
Reference is made to Note 4 to the consolidated financial statements
incorporated by reference in the 1994 Form 10-K for a description of
accounting changes.
5. Supplemental Cash Flow Information
Cash payments during the nine month periods ended September 30, 1995 and
1994 included federal, foreign and state income taxes of approximately
$221 million and $121 million, respectively. Interest paid (net of
interest capitalized) totaled approximately $442 million and $396 million
for the nine month periods ended September 30, 1995 and 1994,
respectively.
6. Cash and Cash Equivalents
Cash equivalents consist of highly liquid short-term money market
instruments with maturities of three months or less when purchased. Cash
equivalents totaled $147 million and $180 million at September 30, 1995
and December 31, 1994, respectively.
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.
7. 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, 1995 December 31, 1994
======================= ================== =================
Raw materials $ 119 $ 135
Materials and supplies 193 201
Work in progress 43 21
Finished goods 468 428
-------- --------
823 785
LIFO reserve (50) (37)
-------- --------
Total $ 773 $ 748
======== ========
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During the second quarter of 1994, inventory quantities were reduced at
natural gas transmission. These reductions resulted in a liquidation of
LIFO inventory quantities carried at lower costs that prevailed in prior
years. The effect of this liquidation was to reduce cost of sales by $9
million for the nine month period ended September 30, 1994.
8. Property, Plant and Equipment
Reference is made to the consolidated balance sheets and Note 1 thereto
incorporated by reference in the 1994 Form 10-K for a description of
investments in property, plant and equipment.
9. Contract Impairment Reserve and Other Liabilities
Accrued liabilities -- current and other liabilities -- noncurrent include
reserves for contract impairment at MidCon Corp. that recognize the
disadvantageous aspects of certain gas purchase and sales contracts
resulting from economic and regulatory conditions. Reference is made to
Note 1 to the consolidated financial statements incorporated by reference
in the 1994 Form 10-K regarding the contract impairment reserve. The
current portion of the reserve totaled $15 million at September 30, 1995
and $4 million at December 31, 1994. The noncurrent portion of the
reserve totaled $75 million at September 30, 1995 and $137 million at
December 31, 1994. The noncurrent portion of the reserve was reduced by
$58 million during the nine month period ended September 30, 1995
primarily to reflect the settlement of an impaired contract, partial
payment thereon and the payment of other above market costs.
Other liabilities -- noncurrent include capital lease liabilities, net of
the current portion, of $269 million and $291 million at September 30,
1995 and December 31, 1994, respectively.
10. Retirement Plans and Postretirement and Postemployment Benefits
Reference is made to Note 12 to the consolidated financial statements
incorporated by reference in the 1994 Form 10-K for a description of the
retirement plans and postretirement and postemployment benefits of
Occidental and its subsidiaries.
11. 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. For the remaining proceedings,
as to which Occidental does not have sufficient information to determine a
range of liability, Occidental does have sufficient information on which
to base the opinion expressed in the last paragraph of this Note.
There is a currently pending action seeking relief for remedial and
response measures under federal environmental laws brought by the federal
government in 1979 in the U.S. District Court for the Western
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District of New York against Occidental Chemical Corporation (OCC),
Occidental and others, regarding a former chemical waste landfill. The
federal government is claiming $108 million, plus an estimated $99 million
in pre-judgment interest. The court has held OCC jointly and severally
liable under CERCLA for response costs, but OCC has asserted a
counterclaim against the federal government for its responsibility arising
from direct deposits of waste and the performance of wartime contracts.
The amount of liability of OCC and the federal government, respectively,
will be determined in a subsequent trial. In 1994, the Court approved a
settlement between OCC and the State of New York which resolved all
respective claims that had been asserted between them in this action.
Approximately 1,000 past and present residents of areas adjacent to this
site and another former chemical landfill site continue to pursue actions
brought in the Supreme Court, Niagara County, New York, against OCC and,
in some instances, Occidental and others, claiming damages for personal
injuries or wrongful death and property damages allegedly resulting from
exposure to chemical residues, as well as punitive damages. The
Occidental defendants deny liability in these actions. Occidental has
brought an action against various of its insurers in the same court to
enforce coverage with respect to this site, certain other former landfill
sites and two chemical plants, including the foregoing government and
private actions in New York, which the insurers are defending.
In 1988 and 1992, the U.S. Department of Energy (DOE) issued remedial
orders to Cities Service Oil and Gas Corporation, now OXY USA Inc. (OXY
USA), asserting that certain crude oil tier trades by OXY USA between 1979
and 1981 violated various DOE regulations under the DOE crude oil price
control program and ordering OXY USA to make restitution. The amount
sought by the DOE was approximately $254 million plus accrued interest
amounting to approximately $868.5 million at December 31, 1994. All of
these disputes were settled in August 1995, when Occidental and the DOE
entered into a consent order pursuant to which OXY USA agreed to pay the
DOE $275 million in settlement of these tier trade disputes. In September
1995, $100 million was paid to the DOE. The remainder will be paid in
five equal annual payments of $35 million plus interest at the rate of 7.6
percent per annum.
OCC and affiliated entities produced products containing
dibromochloropropane (DBCP) until 1977 when the State of California banned
DBCP. This pesticide was developed and initially registered by other
chemical companies, produced by several major U.S. chemical companies and
distributed by many U.S. companies. Eight public and private water
providers have actions pending against the developers, producers and
distributors of DBCP, including OCC and Occidental, in Superior Court, San
Francisco County, California. Currently, there are approximately 45 wells
of such providers which exceed California's maximum contaminant level. The
actions allege DBCP contamination of water supplies and seek contribution
from all defendants for remediation costs, including filtering of affected
wells, and punitive damages.
It is impossible at this time to determine the ultimate legal liabilities
that may arise from the lawsuits, proceedings and claims discussed above
or from various other lawsuits and proceedings pending against Occidental
and its subsidiaries, some of which involve substantial amounts. However,
in management's opinion, after taking into account reserves, none of the
lawsuits, proceedings and claims specifically discussed above nor the
various other pending lawsuits and proceedings should have a material
adverse effect upon the consolidated financial position of Occidental,
although the resolution in any reporting period of one or more of these
matters could have a material impact on Occidental's results of operations
for that period.
12. Other Commitments and Contingencies
Occidental has certain other commitments and contingent liabilities under
contracts, guarantees and joint ventures, as well as other potential
obligations.
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Natural Gas Pipeline Company of America (Natural) has been a party to a
number of contracts that require Natural to purchase natural gas at prices
in excess of the prevailing market price. As a result of a Federal Energy
Regulatory Commission (FERC) order prohibiting interstate pipelines from
using their gas transportation and storage facilities to market gas to
sales customers, Natural no longer has a sales market for the gas it is
required to purchase under these contracts. This order went into effect on
Natural's system on December 1, 1993. Natural is incurring substantial
transition costs to reform these contracts with gas suppliers. Settlement
agreements reached by Natural and its former sales customers, under which
Natural will recover from those customers over a four-year period a
significant amount of the gas supply realignment (GSR) costs it incurs,
have been approved by the FERC. The FERC has also permitted Natural to
implement, subject to possible refund, a tariff mechanism to recover
additional portions of its GSR costs in rates charged to transportation
customers that were not party to the settlements.
On June 1, 1995, Natural filed with the FERC a new general rate case which
incorporates new services. By orders issued June 26 and October 11, 1995,
FERC suspended the filing and allowed new services and revised rates to
become effective December 1, 1995, subject to certain modifications. Most
of Natural's major customer contracts will expire on December 1, 1995.
Negotiations of replacement contracts have been completed with those
customers, but several were renewed at reduced levels and reduced prices.
Among the issues in the rate case is the allocation of costs associated
with the reduction in revenues. Natural continues to work towards
offsetting these potential impacts through its marketing efforts and the
regulatory process.
Reference is made to Note 9 to the consolidated financial statements
incorporated by reference in the 1994 Form 10-K for information concerning
Occidental's long-term purchase obligations for certain products and
services.
In management's opinion, after taking into account reserves, none of such
commitments and contingencies discussed above should have a material
adverse effect upon the consolidated financial position of Occidental,
although the resolution in any reporting period of one or more of these
matters could have a material impact on Occidental's results of operations
for that period.
13. Income Taxes
The provision for taxes based on income for the 1995 and 1994 interim
periods was computed in accordance with Interpretation No. 18 of APB
Opinion No. 28 on reporting taxes for interim periods and was based on
projections of total year pretax income.
At December 31, 1994, Occidental had, for U.S. federal income tax return
purposes, a net operating loss carryforward of approximately $650 million,
a business tax credit carryforward of $65 million and an alternative
minimum tax credit carryforward of $240 million available to reduce future
income taxes. To the extent not used, the net operating loss carryforward
expires in varying amounts beginning in 2002 and the business tax
credit expires in varying amounts during the years 1996 through 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 its financial position or results of operations.
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14. Equity 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,
1995, 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 CanadianOxy 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
--------------------- ---------------------
1995 1994 1995 1994
======== ======== ======== ========
Revenues $ 202 $ 170 $ 606 $ 486
Costs and expenses 173 144 519 438
-------- -------- -------- --------
Net income $ 29 $ 26 $ 87 $ 48
======== ======== ======== ========
15. 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
--------------------- ---------------------
1995 1994 1995 1994
======== ======== ======== ========
Revenues $ 175 $ 184 $ 537 $ 577
Costs and expenses 194 177 552 522
-------- -------- -------- --------
Net income(loss) $ (19) $ 7 $ (15) $ 55
======== ======== ======== ========
Balance at September 30, 1995 December 31, 1994
================================ ================== =================
Current assets $ 93 $ 113
Intercompany receivable $ 303 $ 246
Noncurrent assets $ 1,978 $ 2,069
Current liabilities $ 209 $ 167
Interest bearing note to parent $ 121 $ 137
Noncurrent liabilities $ 1,052 $ 1,114
Stockholders' equity $ 992 $ 1,010
-------------------------------- ------------------ -----------------
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16. Subsequent Events
In October 1995, Occidental announced plans to consolidate its worldwide
oil and gas operations with the headquarters in Bakersfield, California.
As a result of the reorganization, Occidental expects to recognize a
charge against fourth quarter earnings. Although the amount has not yet
been determined, the charge is not expected to have a material adverse
effect upon Occidental's consolidated financial position.
In November 1995, Occidental completed the sale of its agricultural
chemicals business for approximately $286 million. Proceeds from this
sale will be used in Occidental's debt reduction program. This
transaction will not result in a material gain or loss.
Also in November, Occidental agreed to deliver to Clark USA, Inc. (Clark)
17.7 million barrels of WTI-equivalent oil over the next six years.
Occidental will receive $100 million in cash and approximately 5.5 million
shares of Clark common stock. The shares are not currently publicly
traded but have been valued at $120 million. Occidental will own
approximately 19 percent of Clark upon completion of this transaction,
which is expected to close in the fourth quarter of 1995.
In addition, Occidental agreed to acquire a 65 percent equity interest
in INDSPEC Chemical Corporation (INDSPEC) for $85 million of Occidental
common stock. Under the terms of the agreement, INDSPEC's management and
employees will retain voting control of the company. This transaction
is expected to close in early 1996.
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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 1995 totaled $504 million,
on net sales and operating revenues of $8.0 billion, compared with a net loss
of $36 million, on net sales and operating revenues of $6.7 billion, for the
same period of 1994. Occidental's net income for the third quarter of 1995 was
$139 million, on net sales and operating revenues of $2.6 billion, compared
with $23 million, on net sales and operating revenues of $2.4 billion, for the
same period of 1994. Earnings per common share were $1.37 for the first nine
months of 1995, compared with a loss per common share of $.30 for the same
period of 1994. Earnings per common share were $.36 for the third quarter of
1995, compared with $.01 for the same period of 1994.
The increase in net sales and operating revenues for the third quarter and
first nine months of 1995 primarily reflected the impact of improved chemical
prices and higher worldwide crude oil production and international crude oil
prices, partially offset by lower domestic natural gas prices. The third
quarter and first nine months of 1995 earnings reflected improved chemical
profit margins, primarily for caustic soda and petrochemicals. The 1995 first
nine months results were negatively impacted by pretax charges of $109 million
for settlement of litigation. The 1994 first nine months results reflected a
net benefit of $7 million resulting from the reversal of reserves no longer
required and the adoption of Statement of Financial Accounting Standards (SFAS)
No. 112 -- "Employers' Accounting for Postemployment Benefits."
The pretax gain on asset dispositions for the nine months ended September 30,
1995 included a second quarter gain of $40 million from the sale of
Occidental's polyvinyl chloride (PVC) facility at Addis, Louisiana.
The pretax gain on asset dispositions for the third quarter and the nine months
ended September 30, 1994 included a gain of $16 million from the sale of
Occidental's remaining interests in its producing operations in Argentina.
Income from equity investments increased for the first nine months of 1995,
compared with the similar period of 1994. The increase in 1995 primarily
reflected higher equity earnings from chemical and oil and gas investments.
Other operating expenses increased for the first nine months of 1995, compared
with the similar period of 1994. The increase in 1995 primarily reflected the
$109 million charge for settlement of litigation.
The provision for income taxes was $372 million for the nine months ended
September 30, 1995, compared with $89 million for the same period of 1994. The
provision for income taxes was $112 million for the three months ended
September 30, 1995, compared with $82 million for the same period of 1994. The
increase in both periods of 1995, compared with the similar periods of 1994,
resulted from higher divisional earnings primarily at domestic chemical
operations in 1995.
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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
----------------------- ----------------------
1995 1994 1995 1994
======== ======== ======== ========
DIVISIONAL NET SALES
Oil and gas $ 779 $ 741 $ 2,240 $ 1,786
Natural gas transmission 454 461 1,460 1,574
Chemical 1,325 1,202 4,253 3,313
Other (1) -- (3) (1)
-------- -------- -------- --------
NET SALES $ 2,557 $ 2,404 $ 7,950 $ 6,672
======== ======== ======== ========
DIVISIONAL EARNINGS
Oil and gas $ 46 $ 40 $ 76 $ 69
Natural gas transmission 54 53 191 183
Chemical 252 136 913 223
-------- -------- -------- --------
352 229 1,180 475
UNALLOCATED CORPORATE ITEMS
Interest expense, net (133) (136) (410) (421)
Income taxes, administration and other (80) (70) (266) (90)
-------- -------- -------- --------
NET INCOME(LOSS) $ 139 $ 23 $ 504 $ (36)
======== ======== ======== ========
Oil and gas earnings before special items for the first nine months of 1995
were $185 million, compared with $60 million for the same period of 1994. Oil
and gas earnings were $46 million for the third quarter of 1995, compared with
earnings before special items of $24 million for the same period of 1994. The
1995 nine month earnings, after the previously mentioned charges of $109
million for litigation, were $76 million. The 1994 nine month and third
quarter results included the gain of $16 million from the sale of Occidental's
remaining interests in its producing operations in Argentina. Also included in
the 1994 first nine months results was a $7 million charge for severance and
related costs. The increase in operating earnings in 1995, compared with 1994,
reflected higher worldwide crude oil production and international crude oil
prices, partially offset by lower domestic natural gas prices. 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 1995 were $191
million, compared with earnings before the benefit of special items of $162
million for the same period of 1994. The 1994 first nine months earnings after
the benefit of special items were $183 million. Natural gas transmission
earnings for the third quarter of 1995 were $54 million, compared with $53
million for the same period of 1994. The 1994 first nine months results
included a net benefit of $12 million from a reduction of the contract
impairment reserve and a benefit of $9 million from a reduction of LIFO
inventory. This reduction of the contract impairment reserve resulted from the
elimination of certain potential claims and the settlement of litigation. The
improvement in operating earnings for the first nine months of 1995, compared
with the same period of 1994, resulted primarily from higher storage and
transportation margins. The decrease in revenues for the first nine months of
1995, compared with the same period of 1994, primarily reflected lower gas
sales prices. Although overall revenues were lower, significant volumes of gas
are currently being sold by the unregulated subsidiaries of MidCon Corp.
14
16
On June 1, 1995, Natural Gas Pipeline Company of America (Natural) filed with
the Federal Energy Regulatory Commission (FERC) a new general rate case which
incorporates new services. By orders issued June 26 and October 11, 1995, FERC
suspended the filing and allowed new services and revised rates to become
effective December 1, 1995, subject to certain modifications. Most of
Natural's major customer contracts will expire on December 1, 1995.
Negotiations of replacement contracts have been completed with those customers,
but several were renewed at reduced levels and reduced prices. Among the
issues in the rate case is the allocation of costs associated with the
reduction in revenues. Natural continues to work towards offsetting these
potential impacts through its marketing efforts and the regulatory process.
Chemical earnings for the first nine months of 1995 were $913 million, compared
with $223 million for the same period of 1994. Third quarter earnings of 1995
were $252 million, compared with earnings before special items of $154 million
for the same period of 1994. Chemical earnings, after charges for special
items for the third quarter of 1994, were $136 million. The 1995 nine month
earnings included the previously mentioned $40 million pretax gain related to
the sale of the PVC facility at Addis, Louisiana. The 1994 nine month and
third quarter results reflected a charge of $18 million for a plant closure
reserve. Included in the 1994 nine month results was an $11 million
unfavorable impact related to an explosion at the Taft plant and charges for
start-up costs related to the Swift Creek chemical plant. The increase in 1995
operating earnings reflected the impact of improved profit margins for caustic
soda and petrochemicals. 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
have softened since the first quarter of 1995, while others, particularly
chlor-alkali, have remained firm.
Divisional earnings include credits in lieu of U.S. federal income taxes. In
the first nine months of 1995, divisional earnings benefited by $68 million
from credits allocated. This included 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 first nine months of 1995, $22
million was recorded in the third quarter of 1995 as a benefit to divisional
earnings, of which $4 million, $12 million and $6 million was recorded at oil
and gas, natural gas transmission and chemical, respectively. In the first
nine months of 1994, divisional earnings benefited by $66 million. The
comparable amounts allocated to the divisions were credits of $13 million, $29
million and $24 million at oil and gas, natural gas transmission and chemical,
respectively. Of the total amount for the nine months of 1994, $25 million was
recorded in the third quarter of 1994 as a benefit to divisional earnings, of
which $4 million, $12 million and $9 million was recorded at oil and gas,
natural gas transmission and chemical, respectively.
Occidental and certain of its subsidiaries are parties to various lawsuits,
proceedings and claims, some of which involve substantial amounts. See Note 11
to the consolidated condensed financial statements. Occidental also has
commitments under contracts, guarantees and joint ventures and certain other
contingent liabilities. See Note 12 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 the consolidated
financial position of Occidental, although the resolution in any reporting
period of one or more of these matters could have a material impact on
Occidental's results of operations for that period.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Occidental's net cash provided by operating activities was $904 million for the
first nine months of 1995, compared with $322 million for the same period of
1994. The 1995 improvement, compared with 1994, reflected higher operating
earnings primarily in the chemical and oil and gas divisions. The 1995 noncash
charges included exploration costs charged to expense, employee benefit
plans expense and various other charges. The 1994 noncash charges also
included similar charges, partially offset by credits for the reduction of
the contract impairment reserve and other reserves no longer needed and
credits for foreign currency revaluation effects.
15
17
Occidental's net cash used by investing activities was $21 million for the
first nine months of 1995, compared with $600 million for the same period of
1994. 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. Capital expenditures were $627 million in 1994, including $465
million in oil and gas, $59 million in natural gas transmission and $101
million in chemical. The investing amount for the first nine months of 1995
also reflected operating lease buyouts of $141 million, which included the
Swift Creek chemical plant. This plant is part of the agricultural products
unit which was sold in the fourth quarter of 1995, as discussed below. Net
proceeds from the sale of businesses and disposal of property, plant and
equipment for the first nine months of 1995 totaled $630 million, which
primarily reflected the proceeds from the sale of Occidental's high density
polyethylene business (HDPE), its PVC facilities at Addis, Louisiana and
Burlington South, New Jersey, which were sold pursuant to a Federal Trade
Commission divestiture order (see Legal Proceedings in Part II), and the sale
of a portion of Occidental's oil and gas operations in Pakistan. Net proceeds
from the sale of businesses and disposal of property, plant and equipment for
the first nine months of 1994 included the payment of a tax liability of $53
million following the settlement of tax matters with foreign jurisdictions
relating to the disposition of certain international oil and gas assets, offset
by proceeds of $55 million from the sale of Occidental's remaining interests in
its producing operations in Argentina.
Financing activities used net cash of $894 million in the first nine months of
1995, compared with net cash provided of $213 million for the same period of
1994. 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. The 1994 cash provided by financing
activities included net cash proceeds of approximately $557 million from the
February issuance of 11,388,340 shares of $3.00 cumulative CXY-indexed
convertible preferred stock. The 1994 amount also reflected net cash used of
$92 million to reduce debt, net of proceeds from borrowings, and the payment of
dividends of $278 million.
During the second quarter of 1995, Occidental and Canadian Occidental Petroleum
Ltd. formed partnerships into which they contributed certain chemical assets.
Occidental retained a less-than-twenty-percent interest in these partnerships
to be accounted for on the equity method. This transaction did not result in
any gain or loss.
For 1995, 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 has been applied to debt
and liability reduction. Occidental also has substantial borrowing capacity to
meet unanticipated cash requirements.
At September 30, 1995, Occidental's working capital was $127 million, compared
with $57 million at December 31, 1994. Available but unused lines of committed
bank credit totaled approximately $2.6 billion at September 30, 1995, compared
with $2.2 billion at December 31, 1994.
Property, plant and equipment, net of accumulated depreciation, depletion and
amortization, decreased to $13.962 billion at September 30, 1995 from $14.502
billion at December 31, 1994. The net change reflected the sale of
Occidental's HDPE business and the PVC facilities, as discussed above,
partially offset by capital expenditures and operating lease buyouts.
Accrued liabilities decreased to $1.068 billion at September 30, 1995 from
$1.212 billion at December 31, 1994. The change primarily reflected the
payment of rate refunds, attributable to 1994 activity, to customers of Natural
following the FERC's approval of Natural's rate case settlement in January
1995.
Senior funded debt, net of current maturities and unamortized discount,
decreased to $5.271 billion at September 30, 1995 from $5.823 billion at
December 31, 1994. The net reduction in debt reflected the application of cash
flow from operations together with the net proceeds from the asset
dispositions, described above.
16
18
In October 1995, Occidental announced plans to consolidate its worldwide oil
and gas operations with the headquarters in Bakersfield, California. As a
result of the reorganization, Occidental expects to recognize a charge against
fourth quarter earnings. Although the amount has not yet been determined, the
charge is not expected to have a material adverse effect upon Occidental's
consolidated financial position.
In November 1995, Occidental completed the sale of its agricultural chemicals
business for approximately $286 million. Proceeds from this sale will be used
in Occidental's debt reduction program. This transaction will not result in a
material gain or loss.
Also in November, Occidental agreed to deliver to Clark USA, Inc. (Clark) 17.7
million barrels of WTI-equivalent oil over the next six years. Occidental will
receive $100 million in cash and approximately 5.5 million shares of Clark
common stock. The shares are not currently publicly traded but have been
valued at $120 million. Occidental will own approximately 19 percent of Clark
upon completion of this transaction, which is expected to close in the fourth
quarter of 1995.
In addition, Occidental agreed to acquire a 65 percent equity interest in
INDSPEC Chemical Corporation (INDSPEC) for $85 million of Occidental common
stock. Under the terms of the agreement, INDSPEC's management and employees
will retain voting control of the company. This transaction is expected to
close in early 1996.
STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121 --
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." Occidental will have to implement SFAS No. 121 by the
first quarter of 1996. The provisions will require Occidental to review
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If it is
determined that an impairment loss has occurred based on expected future cash
flows, then a loss will be recognized in the income statement using a
fair-value-based model. Occidental has not yet made a final determination of
the impact, if any, on the financial statements.
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 are also
subject to 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) or, 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, 1995, 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 283
17
19
Superfund or comparable state sites. (This number does not include 51 sites
where Occidental has been successful in resolving its involvement.) The 283
sites include 77 former Diamond Shamrock Chemical sites as to which Maxus
Energy Corporation has retained all liability, and two sites at which the
extent of such retained liability is disputed. Of the remaining 204 sites,
Occidental has had no communication or activity with government agencies or
other PRPs in three years at 35 sites, has denied involvement at 29 sites and
has yet to determine involvement in 20 sites. With respect to the remaining
120 of these sites, Occidental is in various stages of evaluation. For 110 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 110 sites include 42 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 120 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
management's opinion expressed above under the caption "Results of Operations."
For further discussion of one separately disclosed site, see Note 11 to the
consolidated condensed financial statements.
18
20
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 1994 Annual Report on Form
10-K, Item 1 of Part II of Occidental's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31 and June 30, 1995 and Note 11 to the
consolidated condensed financial statements in Part I hereof.
The Federal Trade Commission (FTC), Occidental Chemical Corporation and various
subsidiaries (collectively, OxyChem), have concluded a settlement arising from
OxyChem's acquisition of facilities from Tenneco Polymers, Inc. and a
subsequent FTC order of divestiture, with the closing of OxyChem's sale of the
Burlington South facility to Ozite Corporation.
ENVIRONMENTAL PROCEEDINGS
In August 1995, the Federal Energy Regulatory Commission issued an order
approving, without modification, a Stipulation and Consent Agreement regarding
a 1.6 mile pipeline located in Latimer County, Oklahoma, under which Natural
Gas Pipeline Company of America paid a civil penalty of $200,000 within 30 days
of the date of the order.
In January 1993, the U.S. Environmental Protection Agency (EPA) advised OxyChem
that its Taft, Louisiana chlor-alkali facility had violated certain federal air
emission standards for asbestos used in manufacturing operations. OxyChem
provided certain information to the EPA concerning the company's compliance
with the asbestos standards at the Taft facility. No further enforcement
action was taken until September 1995 when the U.S. Department of Justice, at
the EPA's request, offered OxyChem the opportunity to settle civil penalties
with respect to one thousand six hundred and sixty four (1,664) days of alleged
violations. OxyChem has denied most of the alleged violations and has sought a
meeting with the regulators to discuss these issues.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement regarding the computation of earnings per
share for the three and nine months ended September
30, 1995 and 1994
12 Statement regarding the computation of total
enterprise ratios of earnings to fixed charges for
the nine months ended September 30, 1995 and 1994 and
the five years ended December 31, 1994
27 Financial data schedule for the nine month period
ended September 30, 1995 (included only in the copy
of this report filed electronically with the
Commission)
19
21
(b) Reports on Form 8-K
During the quarter ended September 30, 1995, Occidental filed
the following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated July 20, 1995 (date
of earliest event reported), filed on July 21, 1995,
for the purpose of reporting, under Item 5,
Occidental's results of operations for the quarter
ended June 30, 1995
2. Current Report on Form 8-K dated August 18, 1995
(date of earliest event reported), filed on August
28, 1995, for the purpose of reporting, under Item 5,
Occidental's finalized settlement of the
administrative proceedings between its OXY USA Inc.
subsidiary and the U.S. Department of Energy
From September 30, 1995 to the date hereof, Occidental filed
the following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated October 18, 1995
(date of earliest event reported), filed on October
19, 1995, for the purpose of reporting, under Item 5,
Occidental's results of operations for the quarter
ended September 30, 1995
2. Current Report on Form 8-K dated October 25, 1995
(date of earliest event reported), filed on November
3, 1995, for the purpose of reporting, under Item 5,
Occidental's reorganization of its Oil and Gas
division
20
22
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, 1995 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
21
23
EXHIBIT INDEX
EXHIBITS
- --------
11 Statement regarding the computation of earnings per share for the three
and nine months ended September 30, 1995 and 1994
12 Statement regarding the computation of total enterprise ratios of
earnings to fixed charges for the nine months ended September 30, 1995
and 1994 and the five years ended December 31, 1994
27 Financial data schedule for the nine month period ended September 30,
1995 (included only in the copy of this report filed electronically
with the Commission)
1
EXHIBIT 11
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Amounts in thousands, except per-share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
EARNINGS PER COMMON AND COMMON ---------------------- ----------------------
EQUIVALENT SHARE 1995 1994 1995 1994
- --------------------------------------------------------- --------- --------- --------- ---------
Earnings(loss) applicable to common stock $ 116,305 $ 3,812 $ 434,798 $ (91,910)
========= ========= ========= =========
Common shares outstanding at beginning of period 318,185 312,147 316,853 305,603
Issuance of common shares, weighted average 206 227 877 4,600
Conversions, weighted average options exercised
and other 9 16 210 5
Repurchase of common shares (18) (11) (58) (57)
Effect of assumed exercises
Dilutive effect of exercise of options outstanding
and other 211 66 165 22
--------- --------- --------- ---------
Weighted average common stock and common stock
equivalents 318,593 312,445 318,047 310,173
========= ========= ========= =========
Earnings(loss) per common and common equivalent
share $ .3651 $ .0122 $ 1.3671 $ (.2963)
========= ========= ========= =========
$ .36 $ .01 $ 1.37 $ (.30)
====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE
- ---------------------------------------------------------
Earnings(loss) applicable to common stock $ 116,305 $ 3,812 $ 434,798 $ (91,910)
Dividends applicable to dilutive preferred stock:
$3.875 preferred stock(a) -- -- 43,903 --
$3.00 preferred stock(a) 8,542 -- 25,624 --
--------- --------- --------- ---------
$ 124,847 $ 3,812 $ 504,325 $ (91,910)
========= ========= ========= =========
Common shares outstanding at beginning of period 318,185 312,147 316,853 305,603
Issuance of common shares, weighted average 206 227 877 4,600
Conversions, weighted average options exercised
and other 9 16 210 5
Repurchase of common shares (18) (11) (58) (57)
Effect of assumed conversions and exercises
Dilutive effect of assumed conversion of preferred stock:
$3.875 preferred stock(a) -- -- 33,186 --
$3.00 preferred stock(a) 27,890 -- 27,890 --
Dilutive effect of exercise of options outstanding
and other 211 79 233 35
--------- --------- --------- ---------
Total for computation of fully diluted earnings per share 346,483 312,458 379,191 310,186
========= ========= ========= =========
Fully diluted earnings(loss) per share $ .3603 $ .0122 $ 1.3300 $ (.2963)
========= ========= ========= =========
$ .36 $ .01 $ 1.33 $ (.30)
====== ====== ====== ======
(a) Convertible securities are not considered in the calculations if the effect of the conversion is anti-dilutive.
1
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
--------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
- ------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Income(loss) from continuing
operations(a) $ 517 $ (42) $ (46) $ 80 $ 131 $ 374 $ (1,416)
--------- --------- --------- --------- --------- --------- ---------
Add:
Provision (credit) for taxes on
income (other than foreign oil
and gas taxes) 252 26 50 204 114 343 (78)
Interest and debt expense(b) 446 450 594 601 666 880 919
Portion of lease rentals
representative of the interest
factor 41 39 55 53 56 57 62
Preferred dividends to minority
stockholders of subsidiaries(c) -- -- -- -- 7 11 7
--------- --------- --------- --------- --------- --------- ---------
739 515 699 858 843 1,291 910
--------- --------- --------- --------- --------- --------- ---------
Earnings(loss) before fixed charges $ 1,256 $ 473 $ 653 $ 938 $ 974 $ 1,665 $ (506)
========= ========= ========= ========= ========= ========= =========
Fixed charges
Interest and debt expense
including capitalized interest(b) $ 454 $ 453 $ 599 $ 612 $ 685 $ 912 $ 972
Portion of lease rentals
representative of the interest
factor 41 39 55 53 56 57 62
Preferred dividends to minority
stockholders of subsidiaries(c) -- -- -- -- 7 11 7
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges $ 495 $ 492 $ 654 $ 665 $ 748 $ 980 $ 1,041
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 2.54 n/a(d) n/a(e) 1.41 1.30 1.70 n/a(f)
- --------------------------------------- ========= ========= ========= ========= ========= ========= =========
(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 $19 million.
(e) Not computed due to less than one-to-one coverage. Earnings were inadequate to cover fixed charges by $1 million.
(f) Not computed due to negative result. Earnings were inadequate to cover fixed charges by $1.547 billion.
5
1,000,000
9-MOS
DEC-31-1995
SEP-30-1995
118
0
745
18
773
2,160
23,181
9,219
17,446
2,033
5,540
64
0
1,325
3,310
17,446
7,950
8,159
5,945
6,784
63
0
436
789
372
504
0
0
0
504
1.367
1.330
