<PAGE>
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 March 31, 1999
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 March 31, 1999
--------------------------- -----------------------------
Common stock $.20 par value 347,993,612 shares
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
March 31, 1999 and December 31, 1998 2
Consolidated Condensed Statements of Operations --
Three months ended March 31, 1999 and 1998 4
Consolidated Condensed Statements of Cash Flows --
Three months ended March 31, 1999 and 1998 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security-Holders 18
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
1
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(Amounts in millions)
<TABLE>
<CAPTION>
1999 1998
================================================================================ ======= =======
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 571 $ 96
Receivables, net 408 531
Inventories 495 500
Prepaid expenses, note receivable and other 210 1,668
------- -------
Total current assets 1,684 2,795
LONG-TERM RECEIVABLES, net 124 121
EQUITY INVESTMENTS 1,913 1,959
PROPERTY, PLANT AND EQUIPMENT, at cost, net of
accumulated depreciation, depletion and amortization of $6,954
at March 31, 1999 and $6,774 at December 31, 1998 9,796 9,905
OTHER ASSETS 471 472
------- -------
$13,988 $15,252
================================================================================ ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(Amounts in millions)
<TABLE>
<CAPTION>
1999 1998
================================================================================ ======= =======
<S> <C> <C>
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt and capital lease liabilities $ 5 $ 1,400
Notes payable 25 30
Accounts payable 417 613
Accrued liabilities 858 865
Domestic and foreign income taxes 12 23
------- -------
Total current liabilities 1,317 2,931
------- -------
LONG-TERM DEBT, net of current maturities and unamortized discount 5,454 5,367
------- -------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred and other domestic and foreign income taxes 844 825
Obligation under natural gas delivery commitment 481 503
Other 2,167 2,263
------- -------
3,492 3,591
------- -------
OCCIDENTAL OBLIGATED MANDATORILY REDEEMABLE
TRUST PREFERRED SECURITIES OF A SUBSIDIARY
TRUST HOLDING SOLELY SUBORDINATED NOTES OF
OCCIDENTAL 525 --
------- -------
STOCKHOLDERS' EQUITY
Nonredeemable preferred stock, stated at liquidation value 243 243
Common stock, at par value 69 69
Additional paid-in capital 3,729 3,814
Retained earnings (deficit) (804) (734)
Accumulated other comprehensive income (37) (29)
------- -------
3,200 3,363
------- -------
$13,988 $15,252
================================================================================ ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Amounts in millions, except per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------
1999 1998
================================================================================ ======= =======
<S> <C> <C>
REVENUES
Net sales
Oil and gas operations $ 746 $ 740
Chemical operations 598 960
------- -------
1,344 1,700
Interest, dividends and other income 43 78
Gains on disposition of assets, net 3 107
Income (loss) from equity investments (8) 7
------- -------
1,382 1,892
------- -------
COSTS AND OTHER DEDUCTIONS
Cost of sales 1,075 1,265
Selling, general and administrative and other operating expenses 172 178
Exploration expense 16 23
Minority interest 9 --
Interest and debt expense, net 126 131
------- -------
1,398 1,597
------- -------
Income (loss) from continuing operations before taxes (16) 295
Provision for domestic and foreign income and other taxes 41 156
------- -------
Income (loss) from continuing operations (57) 139
Discontinued operations, net -- 38
Cumulative effect of changes in accounting principles, net (13) --
------- -------
NET INCOME (LOSS) (70) 177
Preferred dividends (4) (4)
------- -------
EARNINGS (LOSS) APPLICABLE TO COMMON STOCK $ (74) $ 173
======= =======
BASIC EARNINGS PER COMMON SHARE
Income (loss) from continuing operations $ (.17) $ .39
Discontinued operations, net -- .11
Cumulative effect of changes in accounting principles, net (.04) --
------- -------
Basic earnings (loss) per common share $ (.21) $ .50
======= =======
DILUTED EARNINGS PER COMMON SHARE
Income (loss) from continuing operations $ (.17) $ .38
Discontinued operations, net -- .11
Cumulative effect of changes in accounting principles, net (.04) --
------- -------
Diluted earnings (loss) per common share $ (.21) $ .49
======= =======
DIVIDENDS PER COMMON SHARE $ .25 $ .25
======= =======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 347.8 344.5
================================================================================ ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Amounts in millions)
<TABLE>
<CAPTION>
1999 1998
========================================================================================= ======= =======
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations $ (57) $ 139
Adjustments to reconcile income (loss) to net cash provided (used) by
operating activities:
Depreciation, depletion and amortization of assets 197 230
Deferred income tax provision 23 3
Other noncash credits to income (6) --
Gains on disposition of assets, net (3) (107)
(Income) loss from equity investments 8 (7)
Exploration expense 16 23
Changes in operating assets and liabilities (75) (147)
Other operating, net (41) (82)
------- -------
62 52
Operating cash flow from discontinued operations -- (244)
------- -------
Net cash provided (used) by operating activities 62 (192)
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (132) (280)
Sale of businesses and disposal of property, plant and equipment, net 2 2,158
Collection of note receivable related to prior year asset sale 1,395 --
Purchase of businesses, net -- (3,516)
Other investing, net 47 6
------- -------
1,312 (1,632)
Investing cash flow from discontinued operations -- (6)
------- -------
Net cash provided (used) by investing activities 1,312 (1,638)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long-term debt 792 4
Net proceeds from (payments on) commercial paper and revolving credit agreements (2,107) 2,605
Proceeds from issuance of trust preferred securities 508 --
Payments on long-term debt and capital lease liabilities (5) (212)
Proceeds from issuance of common stock 6 5
Repurchase of common stock -- (324)
Payments of notes payable (3) (8)
Cash dividends paid (91) (105)
Other financing, net 1 7
------- -------
Net cash provided (used) by financing activities (899) 1,972
------- -------
Increase in cash and cash equivalents 475 142
Cash and cash equivalents--beginning of period 96 113
------- -------
Cash and cash equivalents--end of period $ 571 $ 255
========================================================================================= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1999
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 in Occidental's Annual Report on Form 10-K for the year ended
December 31, 1998 (1998 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 March 31, 1999, and the consolidated
results of operations and cash flows for the three months then ended. The
results of operations and cash flows for the period ended March 31, 1999,
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 1999 presentation.
Reference is made to Note 1 to the consolidated financial statements in the
1998 Form 10-K for a summary of significant accounting policies.
2. Changes in Accounting Principles
Effective January 1, 1999, Occidental adopted the provisions of Statement
of Position 98-5--"Reporting on the Costs of Start-Up Activities" (SOP
98-5), which requires that costs of start-up activities, including
organizational costs, be expensed as incurred. The initial application of
the statement resulted in a charge to income for costs of previously
capitalized start-up activities that have not yet been fully amortized. The
initial adoption of SOP 98-5 resulted in a noncash after-tax charge of $15
million, net of $8 million in taxes, which has been recorded as a
cumulative effect of a change in accounting principle.
Effective January 1, 1999, Occidental adopted the provisions of Emerging
Issues Task Force (EITF) issue No. 98-10--"Accounting for Contracts
Involved in Energy Trading and Risk Management Activities," which
establishes accounting and reporting standards for certain energy trading
contracts. EITF No. 98-10 requires that energy trading contracts must be
marked-to-market with gains and losses included in earnings and separately
disclosed in the financial statements or footnotes thereto. The initial
adoption of EITF No. 98-10 resulted in a noncash after-tax benefit of $2
million, recorded as a cumulative effect of a change in accounting
principle.
3. Comprehensive Income
Occidental's comprehensive income is composed primarily of net income or
loss, foreign currency translation adjustments and minimum pension
liability adjustments. Occidental's comprehensive income was a loss of $78
million and income of $175 million for the first quarter of 1999 and 1998,
respectively.
6
<PAGE>
4. Asset Acquisitions and Dispositions
In May 1998, Occidental contributed its ethylene, propylene, ethylene oxide
(EO), ethylene glycol and EO derivatives businesses to a partnership called
Equistar Chemicals, LP (Equistar), in return for a 29.5 percent equity
interest in the partnership, receipt of approximately $420 million in cash
and the assumption by Equistar of approximately $205 million of Occidental
capital lease liabilities. Occidental did not record a gain or loss on the
transaction.
On February 5, 1998, Occidental acquired the U.S. government's approximate
78 percent interest in the Elk Hills Naval Petroleum Reserve oil and gas
fields for approximately $3.5 billion.
In the first quarter of 1998, Occidental sold certain nonstrategic oil and
gas properties for net proceeds of approximately $438 million, of which
$338 million was received in the first quarter of 1998 and $100 million was
received in the second quarter of 1998. These sales resulted in net pretax
gains of approximately $105 million.
On January 31, 1998, Occidental completed the sale of MidCon, its natural
gas transmission and marketing business. In the fourth quarter of 1997,
Occidental classified MidCon and its subsidiaries as a discontinued
operation.
5. Supplemental Cash Flow Information
Cash payments during the three months ended March 31, 1999 and 1998
included federal, foreign and state income taxes of approximately $25
million and $28 million, respectively. Interest paid (net of interest
capitalized) totaled approximately $90 million and $115 million for the
three months ended March 31, 1999 and 1998, respectively.
6. 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 $504 million and $58 million at March 31, 1999 and
December 31, 1998, respectively.
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 March 31, 1999 December 31, 1998
======================== ================== ==================
Raw materials $ 52 $ 38
Materials and supplies 182 184
Work in process 9 5
Finished goods 235 278
-------- -------
478 505
LIFO adjustment 17 (5)
-------- -------
Total $ 495 $ 500
======== =======
7
<PAGE>
8. Property, Plant and Equipment
Reference is made to the consolidated balance sheets and Note 1 thereto in
the 1998 Form 10-K for a description of investments in property, plant and
equipment.
9. Trust Preferred Securities
In January 1999, Oxy Capital Trust I, a wholly-owned subsidiary of
Occidental, issued 21,000,000 shares of 8.16 percent Trust Originated
Preferred Securities (Preferred Securities) to the public and 649,485
shares of Trust Originated Common Securities (Common Securities) to
Occidental. The proceeds of such issuances were invested by Oxy Capital
Trust I in $541.2 million aggregate principal amount of Occidental's 8.16
percent Subordinated Deferrable Interest Notes due 2039 (Trust Subordinated
Notes). The Trust Subordinated Notes represent the sole assets of Oxy
Capital Trust I. The Trust Subordinated Notes mature on January 20, 2039,
bear interest at the rate of 8.16 percent payable quarterly and are
redeemable in whole, or in part, by Occidental beginning on January 20,
2004 at 100 percent of the principal amount thereof, plus any accrued and
unpaid interest to the redemption date. The Trust Subordinated Notes are
unsecured obligations of Occidental and are junior in right of payment to
all present and future senior indebtedness of Occidental and are also
effectively subordinate to certain indebtedness of Occidental's
consolidated subsidiaries. Occidental may defer interest payments on the
Trust Subordinated Notes from time to time for a period not exceeding
twenty consecutive quarters. However, any unpaid quarterly interest
payments on the Trust Subordinated Notes will continue to accrue interest
at 8.16 percent per annum.
Holders of the Preferred Securities and Common Securities are entitled to
cumulative cash distributions at an annual rate of 8.16 percent of the
liquidation amount of $25 per security. The Preferred Securities and Common
Securities will be redeemed upon repayment of the Trust Subordinated Notes.
If Occidental defers interest payments on the Trust Subordinated Notes, Oxy
Capital Trust I will defer distributions on the Preferred Securities and
Common Securities during any deferral period. However, any unpaid quarterly
distributions on the Preferred Securities and Common Securities will
continue to accrue with interest at 8.16 percent per annum.
Occidental has guaranteed, on a subordinated basis, distributions and other
payments due on the Preferred Securities (the Guarantee). The Guarantee,
when taken together with Occidental's obligations under the Trust
Subordinated Notes and the indenture pursuant to which the Trust
Subordinated Notes were issued and Occidental's obligations under the
Amended and Restated Declaration of Trust governing Oxy Capital Trust I,
provides a full and unconditional guarantee of amounts due on the Preferred
Securities.
The Trust Subordinated Notes and the related Oxy Capital Trust I investment
in the Trust Subordinated Notes have been eliminated in consolidation and
the Preferred Securities are reported as Occidental Obligated Mandatorily
Redeemable Trust Preferred Securities of a Subsidiary Trust Holding Solely
Subordinated Notes of Occidental in the accompanying consolidated condensed
financial statements. Distributions on the Preferred Securities are
reported under the caption Minority Interest in the statement of
operations. Total net proceeds to Occidental were $508 million.
10. Retirement Plans and Postretirement Benefits
Reference is made to Note 14 to the consolidated financial statements in
the 1998 Form 10-K for a description of the retirement plans and
postretirement benefits of Occidental and its subsidiaries.
8
<PAGE>
11. Lawsuits, Claims, Commitments, Contingencies and Related Matters
Occidental and certain of its subsidiaries have been named as defendants or
as potentially responsible parties in a substantial number of lawsuits,
claims and proceedings, including governmental proceedings under the
Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) and corresponding state acts. These governmental 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.
In December 1998, David Croucher and others filed a purported class action
suit in the Federal District Court in Houston, Texas on behalf of persons
claiming to have been beneficiaries of the MidCon Employee Stock Ownership
Plan (ESOP). The plaintiffs allege that each of the U.S. Trust Company of
California (the ESOP Trustee) and the MidCon ESOP Administrative Committee
breached its fiduciary duty to the plaintiffs by failing to properly value
the securities held by the ESOP, and allege that Occidental actively
participated in such conduct. The plaintiffs claim that, as a result of
this alleged breach, the ESOP participants are entitled to an additional
aggregate distribution of at least $200 million and that Occidental has
been unjustly enriched and is liable for failing to make that distribution.
During the course of its operations, Occidental is subject to audit by
taxing authorities for varying periods in various tax jurisdictions.
Occidental has certain other commitments under contracts, guarantees and
joint ventures, and certain other contingent liabilities.
It is impossible at this time to determine the ultimate liabilities that
Occidental and its subsidiaries may incur resulting from the foregoing
lawsuits, claims and proceedings, audits, commitments, contingencies and
related matters. Several of these matters may involve substantial amounts,
and if these were to be ultimately resolved unfavorably to the full amount
of their maximum potential exposure, an event not currently anticipated, it
is possible that such event could have a material adverse effect upon
Occidental's consolidated financial position or results of operations.
However, in management's opinion, after taking into account reserves, it is
unlikely that any of the foregoing matters will have a material adverse
effect upon Occidental's consolidated financial position or results of
operations.
Reference is made to Note 10 to the consolidated financial statements in
the 1998 Form 10-K for information concerning Occidental's long-term
purchase obligations for certain products and services.
12. Income Taxes
The provision for taxes based on income for the 1999 and 1998 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, 1998, Occidental had, for U.S. federal income tax return
purposes, an alternative minimum tax credit carryforward of $85 million
available to reduce future income taxes. The alternative minimum tax credit
carryforward does not expire.
9
<PAGE>
13. Investments
Investments in entities, other than oil and gas exploration and production
companies, in which Occidental has a voting stock interest of at least 20
percent, but not more than 50 percent, and certain partnerships are
accounted for on the equity method. At March 31, 1999, Occidental's equity
investments consisted primarily of a 29.5 percent interest in Equistar
acquired in May 1998, an investment of approximately 29 percent in the
common shares of Canadian Occidental Petroleum Ltd. and various chemical
partnerships and joint ventures. The following table presents Occidental's
proportionate interest in the summarized financial information of its
equity method investments (in millions):
Three Months Ended March 31, 1999 1998
============================ ======= =======
Revenues $ 504 $ 210
Costs and expenses 512 203
------- -------
Net income (loss) $ (8) $ 7
======= =======
14. 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):
Three Months Ended March 31, 1999 1998
============================ ======= =======
Revenues $ 101 $ 396
Costs and expenses 103 308
------- -------
Net income (loss) $ (2) $ 88
======= =======
<TABLE>
<CAPTION>
Balance at March 31, 1999 December 31, 1998
=================================== ================== ==================
<S> <C> <C>
Current assets $ 48 $ 67
Intercompany receivable $ 145 $ 170
Noncurrent assets $ 1,628 $ 1,673
Current liabilities $ 189 $ 237
Interest bearing note to parent $ 64 $ 73
Noncurrent liabilities $ 879 $ 909
Stockholders' equity $ 689 $ 691
</TABLE>
10
<PAGE>
15. Industry Segments
The following table presents Occidental's interim industry segment
disclosures (in millions):
<TABLE>
<CAPTION>
Oil and Gas Chemical Corporate Total
================================================ ============== ============== =============== ==============
<S> <C> <C> <C> <C>
Quarter ended March 31, 1999
Net sales $ 746 $ 598 $ -- $ 1,344
============== ============== =============== ==============
Pretax operating profit (loss) $ 111 $ 11 $ (138)(a) $ (16)
Income taxes (48) (2) 9 (b) (41)
Cumulative effect of changes in
accounting principles, net -- -- (13) (13)
-------------- -------------- --------------- --------------
Net income (loss) $ 63 $ 9 $ (142) $ (70)
================================================ ============== ============== =============== ==============
Quarter ended March 31, 1998
Net sales $ 740 $ 960 $ -- $ 1,700
============== ============== =============== ==============
Pretax operating profit (loss) $ 269 (c) $ 161 $ (135)(a) $ 295
Income taxes (37) (3) (116)(b) (156)
Discontinued operations, net -- -- 38 38
-------------- -------------- --------------- --------------
Net income (loss) $ 232 $ 158 $ (213) $ 177
================================================ ============== ============== =============== ==============
</TABLE>
(a) Includes unallocated net interest expense, administration expense and other
items.
(b) Includes unallocated income taxes.
(c) Includes net pretax gains of approximately $105 million from the sale of
certain nonstrategic oil and gas properties.
16. Subsequent Events
On April 27, 1999 Occidental announced that it will call for redemption on
June 1, 1999, $68.7 million of its 11 1/8 percent senior debentures due
June 1, 2019, at a redemption price of 105.563 percent of the principal
amount thereof. The 11 1/8 percent senior debentures, issued in May 1989,
are outstanding in the aggregate principal amount of $143.7 million.
Effective April 30, 1999, Occidental and The Geon Company (Geon) formed two
partnerships. Occidental has a 76 percent controlling interest in a
polyvinyl chloride (PVC) partnership which is the larger of the
partnerships, and a 10 percent interest in a PVC powder compounding
partnership. The PVC partnership has also entered into long-term agreements
to supply PVC to Geon and vinyl chloride monomer (VCM) to both Occidental
and Geon. In addition, as part of the transaction, Occidental sold its
pellet compounding plant in Pasadena, Texas and its vinyl film assets in
Burlington, New Jersey to Geon. Geon received consideration of
approximately $104 million as part of the transaction and the PVC
partnership undertook approximately $180 million in lease obligations for
certain plant facilities. Occidental does not expect to record a material
gain or loss on the transaction.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Occidental reported a net loss for the first quarter of 1999 of $70 million, on
net sales of $1.3 billion, compared with net income of $177 million, on net
sales of $1.7 billion, for the same period of 1998. Basic earnings per common
share were a loss of $.21 for the first quarter of 1999, compared with income of
$.50 for the same period of 1998.
The first quarter of 1999 included an after-tax charge of $13 million ($.04 per
share), reflecting the cumulative effect of adopting accounting changes mandated
by the American Institute of Certified Public Accountants and the Emerging
Issues Task Force of the Financial Accounting Standards Board. The 1998 first
quarter earnings included an after-tax benefit of $38 million to reflect the
closing of the sale of MidCon and the finalization of the discontinued
operations reserve. The 1998 first quarter earnings also included net pretax
gains of approximately $105 million from the sale of certain nonstrategic oil
and gas properties. Earnings before special items were a loss of $68 million for
the first quarter of 1999, compared with earnings of $89 million for the same
period in 1998. The decrease in earnings before special items reflected lower
worldwide crude oil and natural gas prices, and lower chemical earnings. The
lower chemical earnings reflected lower sales prices for most chemical products,
partially offset by lower raw material costs.
The decrease in net sales in the first quarter of 1999, compared with the same
period in 1998, primarily reflected the absence of sales related to the assets
contributed to the Equistar Chemicals, LP (Equistar) partnership in May 1998,
lower worldwide crude oil and natural gas prices and lower prices for most
chemical products, offset, in part, by higher oil and gas trading activity.
Minority interest includes distributions on the Trust Originated Preferred
Securities (Preferred Securities) issued in January 1999. Interest, dividends
and other income in the first quarter of 1998 included interest earned on a $1.4
billion note received (the $1.4 billion note receivable) in exchange for a note
previously issued to Occidental by the MidCon Corp. ESOP Trust. The loss from
equity investments for the three months ended March 31, 1999 compared with
income from equity investments for the same period in 1998, primarily reflected
the effect of lower oil and gas prices. The provision for income taxes decreased
to $41 million for the first quarter of 1999, compared with $156 million for the
same period in 1998, primarily due to lower earnings in 1999. In addition, the
income tax charge for the first quarter of 1999 mainly consisted of foreign
taxes on international oil and gas operations.
The following table sets forth the sales and earnings of each operating division
and corporate items (in millions):
First Quarter
-----------------------
1999 1998
========= =========
DIVISIONAL NET SALES
Oil and gas $ 746 $ 740
Chemical 598 960
--------- ---------
NET SALES $ 1,344 $ 1,700
========= =========
DIVISIONAL EARNINGS
Oil and gas $ 63 $ 232
Chemical 9 158
--------- ---------
72 390
UNALLOCATED CORPORATE ITEMS
Interest expense, net (116) (112)
Income taxes, administration and other (13) (139)
--------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS (57) 139
Discontinued operations, net -- 38
Cumulative effect of changes in
accounting principles, net (13) --
--------- ---------
NET INCOME (LOSS) $ (70) $ 177
========= =========
12
<PAGE>
Oil and gas earnings for the first quarter of 1999 were $63 million, compared
with $232 million for the same period of 1998. There were no special items in
1999. Oil and gas divisional earnings before special items were $127 million for
the first quarter of 1998. Earnings for the first quarter of 1998 included
pretax gains of approximately $105 million related to the sale of nonstrategic
assets located in Venezuela and the United States. The decrease in earnings
before special items reflects primarily the negative impact of lower worldwide
crude oil and natural gas prices offset, in part, by increased international
production and lower costs. Approximately 40 percent and 13 percent of oil and
gas net sales were attributed to oil and gas trading activity in the first
quarter of 1999 and 1998, respectively. The results of oil and gas trading were
not significant. Oil and gas prices are sensitive to complex factors, which are
outside the control of Occidental. Accordingly, Occidental is unable to predict
with certainty the direction, magnitude or impact of future trends in sales
prices for oil and gas.
Chemical earnings for the first quarter of 1999 were $9 million, compared with
$158 million for the same period of 1998. The lower earnings in 1999 resulted
primarily from lower prices for most chemical products, partially offset by
lower raw material costs. Most of Occidental's chemical products are commodity
in nature, the prices of which are sensitive to a number of complex factors,
accordingly, Occidental is unable to accurately forecast the trend of sales
prices for its commodity chemical products.
Divisional earnings include credits in lieu of U.S. federal income taxes. In the
first quarter of 1999 and 1998, divisional earnings benefited by $6 million and
$10 million, respectively, from credits allocated. This included credits of $2
million and $4 million at oil and gas and chemical, respectively, in the first
quarter of 1999 and $3 million and $7 million at oil and gas and chemical,
respectively, for the first quarter of 1998.
Occidental and certain of its subsidiaries have been named as defendants or as
potentially responsible parties in a substantial number of lawsuits, claims and
proceedings, including governmental proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) and
corresponding state acts. These governmental 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.
During the course of its operations, Occidental is subject to audit by taxing
authorities for varying periods in various tax jurisdictions. Occidental has
certain other commitments under contracts, guarantees and joint ventures, and
certain other contingent liabilities.
It is impossible at this time to determine the ultimate liabilities that
Occidental and its subsidiaries may incur resulting from the foregoing lawsuits,
claims and proceedings, audits, commitments, contingencies and related matters.
Several of these matters may involve substantial amounts, and if these were to
be ultimately resolved unfavorably to the full amount of their maximum potential
exposure, an event not currently anticipated, it is possible that such event
could have a material adverse effect upon Occidental's consolidated financial
position or results of operations. However, in management's opinion, after
taking into account reserves, it is unlikely that any of the foregoing matters
will have a material adverse effect upon Occidental's consolidated financial
position or results of operations.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Occidental's net cash provided by operating activities from continuing
operations was $62 million for the first quarter of 1999, compared with $52
million for the same period of 1998. Included in total cash flow from operating
activities in 1998 was cash used by discontinued operations of $244 million
which included the effect of $250 million in receivables repurchased in
connection with the sale of MidCon. The 1999 and 1998 noncash charges included
employee benefit plans expense and various other charges.
13
<PAGE>
Occidental's net cash provided by investing activities was $1.312 billion for
the first quarter of 1999, compared with net cash used of $1.638 billion for the
same period of 1998. The 1999 amount included the proceeds from the $1.4 billion
note receivable. The 1998 amount reflected cash used of $3.5 billion for the
purchase of the Elk Hills Field (Elk Hills Field). The 1998 amount also
reflected proceeds of $2.2 billion, primarily from the sale of MidCon, as well
as disposals of property, plant and equipment. Capital expenditures were $132
million for the first quarter of 1999, including $100 million in oil and gas and
$32 million in chemical. Capital expenditures were $280 million for the first
quarter of 1998, including $212 million in oil and gas and $68 million in
chemical.
Financing activities used net cash of $899 million in the first quarter of 1999,
compared with cash provided of $1.972 billion for the same period of 1998. The
1999 amount reflected the use of the proceeds from the $1.4 billion note
receivable to repay approximately $1.3 billion in debt and for the payment of
dividends of $91 million. The 1999 amount also reflected net proceeds of $508
million from the issuance of Preferred Securities. The 1998 amount reflected net
cash provided of $2.4 billion primarily from proceeds from borrowings to fund a
portion of the acquisition of the Elk Hills Field in February 1998. The 1998
amount also included cash used of $324 million for the repurchase of Occidental
common stock and $105 million for the payment of dividends.
Effective April 30, 1999, Occidental and The Geon Company (Geon) formed two
partnerships. Occidental has a 76 percent controlling interest in a polyvinyl
chloride (PVC) partnership which is the larger of the partnerships and a 10
percent interest in a PVC powder compounding partnership. The PVC partnership
has also entered into long-term agreements to supply PVC to Geon and vinyl
chloride monomer (VCM) to Occidental and Geon. In addition, as part of the
transaction, Occidental sold its pellet compounding plant in Pasadena, Texas and
its vinyl film assets in Burlington, New Jersey to Geon. Geon received
consideration of approximately $104 million as part of the transaction and the
PVC partnership undertook approximately $180 million in lease obligations for
certain plant facilities. Occidental does not expect to record a material gain
or loss on the transaction. The Geon alliance should further strengthen
Occidental's PVC and VCM position, and Occidental believes that the Geon
alliance will create synergies for its chlorovinyls business.
In May 1998, Occidental contributed its ethylene, propylene, ethylene oxide
(EO), ethylene glycol and EO derivatives businesses to the Equistar partnership,
in return for a 29.5 percent equity interest in the partnership, receipt of
approximately $420 million in cash and the assumption by Equistar of
approximately $205 million of Occidental capital lease liabilities. Occidental
did not record a gain or loss on the transaction.
In January 1999, a subsidiary of Occidental issued $525 million of 8.16 percent
Preferred Securities due in 2039, for net proceeds of $508 million. The net
proceeds were used to repay commercial paper. In February 1999, Occidental
issued $450 million of 7.65 percent senior notes due 2006 and $350 million of
8.45 percent senior notes due 2029 for net proceeds of approximately $792
million. The net proceeds were used to repay all outstanding commercial paper
and will also be used for general corporate purposes which may include, but are
not limited to, the redemption of other debt.
On April 27, 1999 Occidental announced that it will call for redemption on June
1, 1999, $68.7 million of its 11 1/8 percent senior debentures due June 1, 2019,
at a redemption price of 105.563 percent of the principal amount thereof.
Occidental expects to record an extraordinary loss of $3 million in the second
quarter of 1999 related to the redemption. The 11 1/8 percent senior debentures,
issued in May 1989, are outstanding in the aggregate principal amount of $143.7
million.
Occidental expects to have sufficient cash in 1999 for its operating needs,
capital expenditure requirements, dividend payments and debt repayments.
Occidental currently expects to spend $450 million on its capital spending
program in 1999, of which approximately $375 million has been allocated to oil
and gas and approximately $75 million has been allocated to chemicals. Available
but unused lines of committed bank credit totaled approximately $2.0 billion at
March 31, 1999, compared with $1.5 billion at December 31, 1998.
The balance in cash and cash equivalents included a portion of the proceeds of
the issuance of Preferred Securities. The balance in prepaid expenses, note
receivable and other at December 31, 1998 includes the $1.4 billion note
receivable that was collected in January 1999. The lower balance in both
receivables and accounts payable at
14
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March 31, 1999, compared with December 31, 1998 reflected lower oil and gas
trading activity in the first quarter of 1999, compared with the fourth quarter
of 1998.
Current maturities of long-term debt and capital lease liabilities decreased
reflecting the current portion of long-term debt that was paid in the first
quarter of 1999 using the proceeds of the $1.4 billion note receivable.
Effective January 1, 1999, Occidental adopted the provisions of Statement of
Position 98-5--"Reporting on the Costs of Start-Up Activities" (SOP 98-5), which
requires that costs of start-up activities, including organizational costs, be
expensed as incurred. The initial application of the statement resulted in a
charge to income for costs of previously capitalized start-up activities that
have not yet been fully amortized. The initial adoption of SOP 98-5 resulted in
a noncash after-tax charge of $15 million, net of $8 million in taxes, which has
been recorded as a cumulative effect of a change in accounting principle.
Effective January 1, 1999, Occidental adopted the provisions of Emerging Issues
Task Force (EITF) issue No. 98-10--"Accounting for Contracts Involved in Energy
Trading and Risk Management Activities," which establishes accounting and
reporting standards for certain energy trading contracts. EITF No. 98-10
requires that energy trading contracts must be marked-to-market with gains and
losses included in earnings and separately disclosed in the financial statements
or footnotes thereto. The initial adoption of EITF No. 98-10 resulted in a
noncash after-tax benefit of $2 million, recorded as a cumulative effect of a
change in accounting principle.
YEAR 2000 COMPLIANCE
Most existing computer hardware and software use only the last two digits to
identify a year. Consequently, as the year 2000 approaches, the difference
between a year that begins with "20" instead of "19" may not be recognized.
This, as well as other date related processing issues, may cause computer-driven
hardware and software to fail or malfunction unless corrected.
Occidental's program to address Year 2000 (Y2K) issues began in 1997. In
addressing the issues Occidental has employed a five-step process consisting of:
1) conducting a company-wide inventory; 2) assessing Y2K compliance; 3)
remediating non-compliant software and hardware, particularly hardware that
employs embedded chips such as process controls; 4) testing remediated hardware
and software; and 5) certifying Y2K compliance.
Personnel from operations and from functional disciplines, as well as
information technology professionals, are involved in the process. Outside
consultants have also been retained to participate in the inventory and
assessment process. A Y2K corporate-level manager was appointed to oversee and
provide consistency to the overall process, provide support resources on a
company-wide basis and minimize duplication of efforts. In addition, a committee
of senior corporate executives provides oversight through an extensive monthly
status review of project elements. Additionally, a progress report is made to
Occidental's Board of Directors on Y2K status at each board meeting.
Inventory and assessment activities are virtually complete. This data is
continuously updated as new information becomes available and Occidental expects
this to continue throughout the Y2K effort. Overall remediation efforts are
estimated at approximately 80 percent complete. The coincidental replacement of
several major existing systems is on schedule to be completed prior to January
1, 2000; these efforts began before the Y2K efforts were initiated and the
timing for completion of these projects has not been accelerated as a result of
Y2K issues.
Costs for Y2K efforts are not being accumulated separately. Much of the cost is
being accounted for as part of normal operating budgets. Overall, the costs,
including amounts incurred to date, are estimated to be approximately $40
million, which is $10 million lower than the previous estimate due primarily to
embedded systems requiring less remediation than previously anticipated.
Approximately half the cost is related to control systems while the remainder
relates to information technology software and hardware. Overall, the costs are
not expected to have a significant effect on Occidental's consolidated financial
position or results of operations.
The risks associated with the Y2K issue can be substantial from the standpoint
of reliance on third parties. Communication with customers, suppliers and equity
partners to determine the extent of their Y2K efforts,
15
<PAGE>
including selected site visits with several utilities and some closed linked
customers, is an integral part of the program. Occidental, like most companies,
is reliant on third parties for a wide variety of goods and services - from raw
materials to electricity. Occidental's efforts include addressing the "supply
chain" issues to minimize the potential impact of a major supplier (or customer)
experiencing a Y2K problem that would adversely affect Occidental.
Because of these company-wide efforts, Occidental believes that appropriate
actions are being taken to minimize the risk to its operations and financial
condition.
Contingency plans that address a reasonably likely worst case scenario are
approximately 40 percent complete. These plans address key systems and third
parties that present potential significant risk and analyze the strategies and
resources necessary to restore operations in the unlikely event that an
interruption does occur. The plans also outline a recovery program detailing the
necessary participants, processes and equipment needed to restore operations.
Contingency plans are expected to be finalized during the third quarter of 1999.
ENVIRONMENTAL MATTERS
Occidental's operations in the United States are subject to stringent federal,
state and local laws and regulations relating to improving or maintaining the
quality of the environment. Foreign operations also are subject to varied
environmental protection laws. Costs associated with environmental compliance
have increased over time and may continue to rise in the future.
The laws which require or address environmental remediation apply retroactively
to previous waste disposal practices. And, in many cases, the laws apply
regardless of fault, legality of the original activities or ownership or control
of sites. Occidental is currently participating in environmental assessments and
cleanups under these laws at federal Superfund sites, comparable state sites and
other remediation sites, including Occidental facilities and previously owned
sites.
Occidental does not consider the number of Superfund and comparable state sites,
at which it has been notified that it has been identified as being involved, to
be a relevant measure of exposure. Although the liability of a potentially
responsible party (PRP), and in many cases its equivalent under state law, may
be joint and several, Occidental is usually one of many companies cited as a PRP
at these sites and has, to date, been successful in sharing cleanup costs with
other financially sound companies.
As of March 31, 1999, 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 162 Superfund or
comparable state sites. (This number does not include those sites where
Occidental has been successful in resolving its involvement). The 162 sites
include 62 former Diamond Shamrock Chemical sites as to which Maxus Energy
Corporation has retained all liability, and 2 sites at which the extent of such
retained liability is disputed. Of the remaining 98 sites, Occidental has denied
involvement at 12 sites and has yet to determine involvement in 18 sites. With
respect to the remaining 68 of these sites, Occidental is in various stages of
evaluation. For 61 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 61 sites include 13 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 and the timing of remediation and
cost-sharing arrangements. For the remaining 7 of the 68 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."
16
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SAFE HARBOR STATEMENT REGARDING OUTLOOK AND FORWARD-LOOKING INFORMATION
Portions of this report contain forward-looking statements and involve risks and
uncertainties that could significantly affect expected results of operations,
liquidity and cash flows. Factors that could cause results to differ materially
include, but are not limited to: global commodity pricing fluctuations;
competitive pricing pressures; higher than expected costs including feedstocks;
the supply/demand considerations for Occidental's products; any general economic
recession domestically or internationally; regulatory uncertainties; and not
successfully completing any development of new fields, expansion, capital
expenditure, efficiency improvement, acquisition or disposition. Forward-looking
statements are generally accompanied by words such as "estimate", "project",
"predict", "believes" or "expect", that convey the uncertainty of future events
or outcomes. Occidental undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information or
otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed might not occur.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in the information provided under Item 305 of
Regulation S-X included in Occidental's 1998 Annual Report on Form 10-K for the
period ended March 31, 1999.
17
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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 1998 Annual Report on Form 10-K
and Note 11 to the consolidated condensed financial statements in Part I hereof.
In 1996, a judgment of $742 million was entered in favor of Occidental's OXY USA
Inc. subsidiary against Chevron USA by the state district court in Tulsa,
Oklahoma. The unanimous verdict was for approximately $229 million in
compensatory damages for breach of a 1982 merger agreement and interest on these
damages from 1982 to the date of judgment. Chevron appealed the decision to the
Oklahoma Supreme Court, and, in connection with that appeal, obtained an appeal
bond in the amount of $890 million to secure payment of the judgment and
interest thereon as required by Oklahoma law. On March 2, 1999, the Oklahoma
Supreme Court affirmed the trial court judgment in all respects. Chevron has
petitioned the Oklahoma Supreme Court for a rehearing. As of April 30, 1999, the
total amount of the award, including accrued interest, had increased to
approximately $949 million.
ENVIRONMENTAL PROCEEDINGS
In April 1998, a civil action was filed on behalf of the U.S. Environmental
Protection Agency against OxyChem relating to the Centre County Kepone Superfund
Site at State College, Pennsylvania. The lawsuit seeks approximately $12 million
in penalties and governmental response costs, a declaratory judgment that
OxyChem is a liable party under CERCLA, and an order requiring OxyChem to carry
out the remedy that is being performed by the site owner. In October 1998, the
U.S. District Court for the Middle District of Pennsylvania granted OxyChem's
motion to dismiss the United States' case. The court denied the government's
motion for partial reconsideration of the dismissal in November 1998. In
February 1999, the United States filed an appeal to the United States Court of
Appeals for the Third Circuit. In April 1999, the United States filed its
appellate brief.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Occidental's 1999 Annual Meeting of Stockholders (the Annual Meeting) was held
on April 30, 1999. The following actions were taken at the Annual Meeting, for
which proxies were solicited pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended:
1. The eight nominees proposed by the Board of Directors were elected as
directors by the following votes:
Name For Withheld
-------------------------- ----------------- -----------------
Dr. Ray R. Irani 289,853,102 20,050,019
Dr. Dale R. Laurance 291,806,398 18,096,723
Ronald W. Burkle 289,813,602 20,089,519
Edward P. Djerejian 291,607,923 18,295,198
John E. Feick 291,631,906 18,271,215
Irvin W. Maloney 291,680,948 18,222,173
Aziz D. Syriani 290,400,832 19,502,289
Rosemary Tomich 289,804,698 20,098,423
18
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2. A proposal to ratify the selection of Arthur Andersen LLP as
Occidental's independent public accountants for 1999 was approved by a
vote of 304,469,684 for versus 4,129,279 against. There were 1,304,158
abstentions and no broker non-votes.
3. A proposal to amend Occidental's Restated Certificate of Incorporation
with respect to the number of directors was approved by a vote of
245,791,612 for versus 57,903,649 against. There were 6,207,860
abstentions and no broker non-votes.
4. A proposal to amend Occidental's 1995 Incentive Stock Plan (the Plan)
to increase, among other things, the number of shares of Common Stock
available for issuance under the Plan was approved by a vote of
282,973,031 for versus 24,431,433 against. There were 2,498,657
abstentions and no broker non-votes.
5. A stockholder proposal to have prepared and to distribute a risk
analysis was defeated by a vote of 40,925,134 for versus 217,242,426
against. There were 11,503,287 abstentions and 40,232,274 broker
non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.(i)(c) Certificate of Amendment of Restated Certificate of
Incorporation of Occidental dated April 30, 1999 (filed
as Exhibit 3.(i)(c) to the Registration Statement on
Form S-8 of Occidental, File No. 333-78031)
3.(ii) By-laws of Occidental, as amended through April 30,
1999 (filed as Exhibit 3.(ii) to the Registration
Statement on Form S-8 of Occidental, File No.
333-78031)
4.1 Second Amendment dated as of March 15, 1999, amending
that certain Credit Agreement dated as of March 20,
1997, among Occidental and the Banks named therein
10.1 Occidental Petroleum Corporation 1995 Incentive Stock
Plan, as amended (filed as Exhibit B to the Proxy
Statement of Occidental for its April 30, 1999, Annual
Meeting of Stockholders, File No. 1-9210)
11 Statement regarding the computation of earnings per
share for the three months ended March 31, 1999 and
1998
12 Statement regarding the computation of total
enterprise ratios of earnings to fixed charges for the
three months ended March 31, 1999 and 1998 and the five
years ended December 31, 1998
27 Financial data schedule for the three month period
ended March 31, 1999 (included only in the copy of this
report filed electronically with the Securities and
Exchange Commission)
19
<PAGE>
(b) Reports on Form 8-K
During the quarter ended March 31, 1999, Occidental filed the
following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated January 6, 1999 (date of
earliest event reported), filed on January 6, 1999, for the
purpose of reporting, under Item 5, certain recent
developments.
2. Current Report on Form 8-K dated January 13, 1999 (date of
earliest event reported), filed on January 20, 1999, for the
purpose of reporting, under Item 5 and 7, the completion of
a Trust Preferred securities offering and the filing of
certain exhibits to a registration statement relating
thereto.
3. Current Report on Form 8-K/A dated January 20, 1999 (date of
earliest event reported), filed on January 22, 1999, for the
purpose of reporting, under Item 7, corrections to certain
exhibits from the prior filing.
4. Current Report on Form 8-K dated January 26, 1999 (date of
earliest event reported), filed on January 27, 1999, for the
purpose of reporting, under Item 5, Occidental's results of
operations for the fourth quarter and fiscal year ended
December 31, 1998.
5. Current Report on Form 8-K dated February 5, 1999 (date of
earliest event reported), filed on February 10, 1999, for
the purpose of reporting, under Items 5 and 7, the
completion of a debt offering and the filing of certain
exhibits to a registration statement relating thereto.
From March 31, 1999 to the date hereof, Occidental filed the
following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated April 20, 1999 (date of
earliest event reported), filed on April 21, 1999, for the
purpose of reporting, under Item 5, Occidental's results of
operations for the first quarter ended March 31, 1999.
20
<PAGE>
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: May 14, 1999 S. P. Dominick, Jr.
-----------------------------------------
S. P. Dominick, Jr., Vice President and
Controller (Chief Accounting and Duly
Authorized Officer)
21
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EXHIBIT INDEX
EXHIBITS
3.(i)(c) Certificate of Amendment of Restated Certificate of Incorporation
of Occidental dated April 30, 1999 (filed as Exhibit 3.(i)(c) to
the Registration Statement on Form S-8 of Occidental, File No.
333-78031)
3.(ii) By-laws of Occidental, as amended through April 30, 1999 (filed
as Exhibit 3.(ii) to the Registration Statement on Form S-8 of
Occidental, File No. 333-78031)
4.1 Second Amendment dated as of March 15, 1999, amending that
certain Credit Agreement dated as of March 20, 1997, among
Occidental and the Banks named therein
10.1 Occidental Petroleum Corporation 1995 Incentive Stock Plan, as
amended (filed as Exhibit B to the Proxy Statement of Occidental
for its April 30, 1999, Annual Meeting of Stockholders, File No.
1-9210)
11 Statement regarding the computation of earnings per share for the
three months ended March 31, 1999 and 1998
12 Statement regarding the computation of total enterprise ratios of
earnings to fixed charges for the three months ended March 31,
1999 and 1998 and the five years ended December 31, 1998
27 Financial data schedule for the three month period ended March
31, 1999 (included only in the copy of this report filed
electronically with the Securities and Exchange Commission)
<PAGE>
EXHIBIT 4.1
CONFORMED COPY
SECOND AMENDMENT dated as of March 15, 1999
(this "Amendment"), among OCCIDENTAL PETROLEUM
CORPORATION, a Delaware corporation (hereinafter
called the "Company"), the banks (the "Banks") party
to the Credit Agreement (as defined below), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK and BANCAMERICA
SECURITIES, INC., as co-syndication agents
(hereinafter, in such capacity, together with any
successor to either thereof in such capacity, the
"Co-Syndication Agents", with each reference herein
to the "Syndication Agent" in the singular meaning
MORGAN GUARANTY TRUST COMPANY OF NEW YORK), THE CHASE
MANHATTAN BANK, as documentation agent (hereinafter,
in such capacity, together with any successor thereto
in such capacity, the "Documentation Agent"), THE
BANK OF NOVA SCOTIA, as administrative agent
(hereinafter, in such capacity, together with any
successor thereto in such capacity, the
"Administrative Agent"), and ABN AMRO BANK N.V., THE
BANK OF NEW YORK, CANADIAN IMPERIAL BANK OF COMMERCE,
CITICORP USA, INC., CREDIT LYONNAIS NEW YORK BRANCH,
CREDIT SUISSE FIRST BOSTON, BANKBOSTON, N.A., THE
FUJI BANK, LIMITED, LOS ANGELES AGENCY, THE
INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES
AGENCY, NATIONSBANK OF TEXAS, N.A., ROYAL BANK OF
CANADA, TORONTO DOMINION (TEXAS), INC. and UBS AG, as
co-agents (hereinafter, in such capacity, the
"Co-Agents").
A. Reference is made to the Credit Agreement dated as of March
20, 1997 (as amended from time to time, the "Credit Agreement"), among the
Company, the Banks, the Co-Syndication Agents, the Documentation Agent, the
Administrative Agent and the Co-Agents. Capitalized terms used but not otherwise
defined herein have the meanings assigned to them in the Credit Agreement.
B. The Company has requested that the Banks amend certain
provisions of the Credit Agreement. The Banks are willing to do so, subject to
the terms and conditions of this Amendment.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendment to Section 1.01. Section 1.01 of the
Credit Agreement is hereby amended by inserting in the appropriate alphabetical
order the following definitions:
"FACILITY FEE STEPUP" has the meaning assigned to that term in
Section 2.08(b) hereof.
"MARGIN STEPUP" has the meaning assigned to that term in
Section 3.01(f) hereof.
[NYCorp;761880.7]
<PAGE>
2
"SECOND AMENDMENT EFFECTIVE DATE" means March 15, 1999;
PROVIDED, THAT the conditions set forth in Section 14 of the Second Amendment to
this Agreement dated as of March 15, 1999 shall have been satisfied.
"UTILIZATION FEE" has the meaning assigned to that term in
Section 2.08(c) hereof.
SECTION 2. Amendment to Section 2.08. Section 2.08 of the
Credit Agreement is hereby amended by (a) changing the heading to such Section
to read "SECTION 2.08. FACILITY FEE; UTILIZATION FEE", (b) adding "(a)"
immediately following such heading and (c) adding new paragraphs (b) and (c)
that read in their entirety as follows:
"(b) The Company agrees to pay to each Bank, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31
(the first such payment to be made on March 31, 1999) and on the date on which
the Revolving Credit Commitment of such Bank shall be terminated or the Maturity
Date, whichever shall first occur, in immediately available funds, a facility
fee surcharge (the "FACILITY FEE STEPUP") at a rate per annum (computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be) equal to the amounts set forth below based upon the ratings
applicable on such date to Index Debt on the average daily amount of the
Revolving Credit Commitment of such Bank, whether used or unused, during the
Calendar Quarter (or shorter period ending on March 31, 1999 or the Maturity
Date, as the case may be) then ended; PROVIDED, HOWEVER, that the amount payable
by the Company under this paragraph shall be reduced by any amounts paid on
account of the Facility Fee Stepup pursuant to Section 4.01 hereof:
STEPUP
------
LEVEL 1
A- or better by S&P
A3 or better by Moody's .0200%
LEVEL 2
BBB+ by S&P
Baa1 by Moody's .0350%
LEVEL 3
BBB by S&P
Baa2 by Moody's .0400%
LEVEL 4
BBB- by S&P
Baa3 by Moody's .0400%
LEVEL 5
BB+ or below by S&P
Ba1 or below by Moody's .0500%
[NYCorp;761880.7]
<PAGE>
3
For purposes hereof, (i) if the ratings established (or deemed to have
been established, as provided in clause (ii) below) by Moody's and S&P
shall fall within different Levels, the rating in the inferior Level
shall be disregarded, unless one of the ratings is below Level 4, in
which case the Facility Fee Stepup will be based on the inferior of the
two Levels, (ii) if Moody's or S&P shall not have in effect a rating
for Index Debt (other than (a) because such rating agency shall no
longer be in the business of rating corporate debt obligations or (b)
as a result of a change in the rating system of Moody's or S&P), then
such rating agency will be deemed to have established a rating for
Index Debt in Level 5 and (iii) if any rating established (or deemed to
have been established, as provided in clause (ii) above) by Moody's or
S&P shall be changed (other than as a result of a change in the rating
system of Moody's or S&P), such change shall be effective as of the
date on which it is first publicly announced by the applicable rating
agency. Each change in the Facility Fee Stepup shall apply during the
period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such
change. If the rating system of Moody's or S&P shall change, or if
either such rating agency shall cease to be in the business of rating
corporate debt obligations, the Company and the Banks (acting through
the Syndication Agent) shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such
changed rating system or the non-availability of ratings from such
rating agency. The Facility Fee Stepup shall commence on the Second
Amendment Effective Date.
(c) For any day on or after the Second Amendment Effective
Date on which the outstanding principal amount of Loans shall be (i)
equal to or greater than 33% but less than 66% of the Total Commitment
(or, following the date on which the Commitments terminate, equal to or
greater than 33% but less than 66% of the Total Commitment immediately
prior to such termination) or (ii) equal to or greater than 66% of the
Total Commitment (or, following the date on which the Commitments
terminate, equal to or greater than 66% of the Total Commitment
immediately prior to such termination) the Company agrees to pay to the
Administrative Agent for the account of each Bank a utilization fee
(such utilization fee payable pursuant to clause (i) or (ii) above, a
"UTILIZATION FEE") equal to the rate per annum applicable to such Loans
on such date plus (x) 0.125% in the case of clause (i) and (y) 0.25% if
any of Levels I through IV is applicable and 0.375% if Level V is
applicable in the case of clause (ii).
The Utilization Fees, if any, in respect of any fiscal quarter
shall be payable in arrears on each March 31, June 30, September 30 and
December 31 and on the date on which the Revolving Credit Commitments
shall be terminated or the Maturity Date, whichever shall first occur,
in immediately available funds; PROVIDED, HOWEVER, that the amount
payable by the Company under this paragraph shall be reduced by any
amounts paid on account of the Utilization Fees pursuant to Section
4.01 hereof. All Utilization Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day)."
SECTION 3. Amendment to Section 3.01 Section 3.01 of the
Credit Agreement is hereby amended by (a) relettering paragraph (f) thereof as
paragraph (g) and (b) adding a new paragraph (f) that reads in its entirety as
follows:
[NYCorp;761880.7]
<PAGE>
4
"(f) Subject to the provisions of Section 3.02 hereof, each
Eurodollar Loan, each Certificate of Deposit Loan and each Term Federal
Funds Loan, in any case outstanding on or after the Second Amendment
Effective Date shall be subject to a margin surcharge (the "MARGIN
STEPUP") on any date in an amount equal to the rate per annum (computed
on the basis of the actual number of days elapsed over a year of 360
days) equal to the amount set forth below based upon the ratings
applicable on such date to Index Debt:
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
S&P A- or better BBB+ BBB BBB- BB+ or below
Moody's A3 or better Baa1 Baa2 Baa3 Ba1 or below
Margin Stepup .2300% .3150% .3850% .4350% .6750%
For purposes hereof, (i) if the ratings established (or deemed to have
been established, as provided in clause (ii) below) by Moody's and S&P
shall fall within different Levels, the rating in the inferior Level
shall be disregarded, unless one of the ratings is below Level 4, in
which case the Margin Stepup will be based on the inferior of the two
Levels, (ii) if Moody's or S&P shall not have in effect a rating for
Index Debt (other than (a) because such rating agency shall no longer
be in the business of rating corporate debt obligations or (b) as a
result of a change in the rating system of Moody's or S&P), then such
rating agency will be deemed to have established a rating for Index
Debt in Level 5 and (iii) if any rating established (or deemed to have
been established, as provided in clause (ii) above) by Moody's or S&P
shall be changed (other than as a result of a change in the rating
system of Moody's or S&P), such change shall be effective as of the
date on which it is first publicly announced by the applicable rating
agency. Each change in the Margin Stepup shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If
the rating system of Moody's or S&P shall change, or if either such
rating agency shall cease to be in the business of rating corporate
debt obligations, the Company and the Banks (acting through the
Syndication Agent) shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such
changed rating system or the nonavailability of ratings from such
rating agency. The Margin Stepup on each Eurodollar Loan, Certificate
of Deposit Loan and Term Federal Funds Loan shall accrue from and
including the first day of the Interest Period with respect to such
Loan to but excluding the last day of such Interest Period."
SECTION 4. Amendment to Section 3.02. Section 3.02 of the
Credit Agreement is hereby amended by adding the words "and any applicable
Margin Stepup" immediately following the words "(ii) the Applicable Margin" in
the thirteenth line thereof.
SECTION 5. Amendment to Section 4.01. Section 4.01 of the
Credit Agreement is hereby amended by (a) adding the words "and the Facility Fee
Stepup, in each case" immediately following the words "Facility Fees" in the
first sentence thereof and (b) adding the words ", Facility Fee Stepup and
Utilization Fees" immediately following the words "Facility Fees" in the third
sentence.
[NYCorp;761880.7]
<PAGE>
5
SECTION 6. Amendment to Section 6.01(h). Section 6.01(h) of
the Credit Agreement is hereby amended by deleting the words "$2,600,000,000 at
all times" and replacing it with "(i) $2,400,000,000 at all times from the
Second Amendment Effective Date through and including December 30, 2000 and (ii)
$2,600,000,000 at all times thereafter".
SECTION 7. Amendment to Section 6.02(c). Section 6.02(c) of
the Credit Agreement is hereby amended by deleting the ratio "2.6 to 1.0" and
replacing it with "(i) 3.0 to 1.0 on any date on and after the Second Amendment
Effective Date through and including December 30, 2000 and (ii) 2.6 to 1.0 on
any date thereafter".
SECTION 8. Amendment to Section 8.01(a). Section 8.01(a) of
the Credit Agreement is hereby amended by adding the words "or in respect of any
Margin Stepup, any Facility Fee Stepup or the Utilization Fee" immediately
following the words "Facility Fee".
SECTION 9. Amendment to Section 10.06(c). Section 10.06(c) of
the Credit Agreement is hereby amended by deleting each reference to
"$40,000,000" and replacing it with "$32,000,000".
SECTION 10. Amendment to Exhibit G. Exhibit G to the Credit
Agreement is hereby amended by adding the words "Facility Fee Stepups and
Utilization Fees" immediately following the words "Facility Fees," in numbered
paragraph 1 thereof.
SECTION 11. Reduction of Total Commitment. The parties hereto
acknowledge that, pursuant to Section 4.01 of the Credit Agreement, the Company
has notified the Administrative Agent that the Total Commitment shall be
permanently reduced from $2,500,000,000 to $2,000,000,000, and that such
reduction will take effect on the Second Amendment Effective Date.
SECTION 12. Amendment Fee. The Company agrees to pay each Bank
that executes this Amendment on or prior to March 12, 1999 an amendment fee in
an amount equal to 0.05% of such Bank's Commitment, after giving effect to the
reduction in the Total Commitment described in Section 11 of this Amendment.
SECTION 13. Representations and Warranties. The Company
represents and warrants to the Banks, the Agents and the Co-Agents as follows:
(a) The execution and delivery by the Company of this
Amendment, the performance by the Company of its obligations under each
of this Amendment and the Credit Agreement, as amended by this
Amendment, and the Borrowings by the Company in the manner and for the
purpose contemplated by each of this Amendment and the Credit
Agreement, as amended by this Amendment, have been duly authorized by
all necessary corporate action (including any necessary stockholder
action) on the part of the Company, and do not and will not (i) violate
any provision of any law, rule or regulation (including, without
limitation, Regulation U and Regulation X) presently in effect having
applicability to the Company (or any Specified Subsidiary), or of any
order, writ, judgment, decree, determination or award (which is,
individually or in the aggregate, material to the consolidated
financial condition, business or operations of the Company and its
[NYCorp;761880.7]
<PAGE>
6
Consolidated Subsidiaries) presently in effect having applicability to
the Company (or any Specified Subsidiary) or of the charter or by-laws
of the Company (or any Specified Subsidiary), or (ii) subject to the
Company's compliance with any applicable covenants pertaining to its
incurrence of unsecured indebtedness, result in a breach of or
constitute a default under any indenture or loan or credit agreement,
or result in a breach of or constitute a default under any other
agreement or instrument (which is, individually or in the aggregate,
material to the consolidated financial condition, business or
operations of the Company and its Consolidated Subsidiaries), to which
the Company or any Specified Subsidiary is a party or by which the
Company or any Specified Subsidiary or its respective properties may be
bound or affected, or (iii) result in, or require, the creation or
imposition of any Lien of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Company (other than
any right of setoff or banker's lien or attachment that any Bank or
other holder of a Note may have under applicable law), and the Company
is not in default under or in violation of its charter or by-laws.
(b) Each of this Amendment and the Credit Agreement, as
amended by this Amendment, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive
relief (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 14. Conditions to Effectiveness. This Amendment shall
become effective as of the date first above written upon receipt by the
Syndication Agent of duly executed counterparts hereof which, when taken
together, bear the authorized signatures of the Company and the Required Banks.
SECTION 15. GOVERNING LAW; Severability; Execution in
Counterparts. (a) THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.
(b) Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(c) This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Amendment. Delivery of an executed signature page to this Amendment
by facsimile shall be as effective as delivery of a manually signed counterpart
of this Amendment.
[NYCorp;761880.7]
<PAGE>
7
SECTION 16. Expenses. The Company agrees to reimburse the
Syndication Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Syndication Agent.
SECTION 17. Terms and Conditions. Except as specifically
modified herein, all other terms and conditions of the Credit Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective duly authorized officers as of
the date first above written.
OCCIDENTAL PETROLEUM CORPORATION,
by
/s/ John R. Zaylor
------------------------------------
Name: John R. Zaylor
Title: Senior Assistant Treasurer
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, in its individual capacity and as
Syndication Agent,
by
/s/ Diana H. Imhof
------------------------------------
Name: Diana H. Imhof
Title: Vice President
ABN AMRO BANK N.V.,
by
/s/ Paul K. Stimpfl
------------------------------------
Name: Paul K. Stimpfl
Title: Group Vice President
by
/s/ Shikha Rehman
------------------------------------
Name: Shikha Rehman
Title: Vice President
ARAB BANK PLC,
by
/s/ Backer Ali
------------------------------------
Name: Backer Ali
Title: Vice President and Controller
[NYCorp;761880.7]
<PAGE>
8
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED,
by
------------------------------------
Name:
Title:
BANCA DI ROMA SPA,
by
/s/ Thomas C. Woodruff
------------------------------------
Name: Thomas C. Woodruff (97969)
Title: Vice President
by
/s/ Francesco Barolo
------------------------------------
Name: Francesco Barolo (20538)
Title: Senior Vice President and
Manager
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by
/s/ Claire M. Liu
------------------------------------
Name: Claire M. Liu
Title: Managing Director
BANKBOSTON, N.A.,
by
/s/ Sarah P. Z. Dwyer
------------------------------------
Name: Sarah P. Z. Dwyer
Title: Vice President
BANK OF MONTREAL,
by
/s/ Cahal B. Carmody
------------------------------------
Name: Cahal B. Carmody
Title: Director
[NYCorp;761880.7]
<PAGE>
9
THE BANK OF NOVA SCOTIA,
by
/s/ M. Van Otterloo
------------------------------------
Name: M. Van Otterloo
Title: Senior Relationship Manager
THE BANK OF NEW YORK,
by
/s/ Steven Kalachman
------------------------------------
Name: Steven Kalachman
Title: Vice President
BANQUE NATIONALE DE PARIS,
by
/s/ Mitchell M. Ozawa
------------------------------------
Name: Mitchell M. Ozawa
Title: Vice President
by
/s/ Marc T. Schaefer
------------------------------------
Name: Marc T. Schaefer
Title: Assistant Vice President
BBL INTERNATIONAL (U.K.) LIMITED,
by
------------------------------------
Name:
Title:
by
------------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE,
by
/s/ Roger Colden
------------------------------------
Name: Roger Colden
Title: Authorized Signatory
[NYCorp;761880.7]
<PAGE>
10
THE CHASE MANHATTAN BANK,
by
/s/ Beth Lawrence
------------------------------------
Name: Beth Lawrence
Title: Vice President
CITICORP USA, INC.,
by
/s/ Marjorie Futornick
------------------------------------
Name: Marjorie Futornick
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Pascal Poupelle
------------------------------------
Name: Pascal Poupelle
Title: Executive Vice President
CREDIT SUISSE FIRST BOSTON,
by
/s/ Douglas E. Maher
------------------------------------
Name: Douglas E. Maher
Title: Vice President
by
/s/ J. Scott Karro
------------------------------------
Name: J. Scott Karro
Title: Associate
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by
/s/ Michael E. Higgins
------------------------------------
Name: Michael E. Higgins
Title: Vice President
by
/s/ Henry J. Karsch, Jr.
------------------------------------
Name: Henry J. Karsch, Jr.
Title: Assistant Treasurer
[NYCorp;761880.7]
<PAGE>
11
THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY,
by
/s/ Masahito Fukuda
------------------------------------
Name: Masahito Fukuda
Title: Joint General Manager
GULF INTERNATIONAL BANK B.S.C.,
by
/s/ Issa N. Baconi
------------------------------------
Name: Issa N. Baconi
Title: SVP and Branch Manager
by
/s/ William B. Shephard
------------------------------------
Name: William B. Shephard
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY,
by
/s/ Stephen Arce
------------------------------------
Name: Stephen Arce
Title: Vice President
KBC BANK N.V.,
by
/s/ Robert Snauffer
------------------------------------
Name: Robert Snauffer
Title: First Vice President
by
/s/ Marcel Claes
------------------------------------
Name: Marcel Claes
Title: Deputy General Manager
MELLON BANK, N.A.,
by
/s/ John S. McCabe
------------------------------------
Name: John S. McCabe
Title: Senior Vice President
[NYCorp;761880.7]
<PAGE>
12
NATIONAL WESTMINSTER BANK PLC, NEW
YORK BRANCH AND NASSAU BRANCH,
by
/s/ Patricia J. Dundee
------------------------------------
Name: Patricia J. Dundee
Title: Senior Vice President
NATIONSBANK, N.A., Successor by Merger to
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Claire M. Liu
------------------------------------
Name: Claire M. Liu
Title: Managing Director
ROYAL BANK OF CANADA,
by
/s/ Andrew C. Williamson
------------------------------------
Name: Andrew C. Williamson
Title: Senior Manager
THE SAKURA BANK, LIMITED,
by
/s/ Masayuki Kobayashi
------------------------------------
Name: Masayuki Kobayashi
Title: Joint General Manager
STANDARD CHARTERED BANK,
by
/s/ Sylvia D. Rivera
------------------------------------
Name: Sylvia D. Rivera
Title: AVP
by
/s/ M. Machado-Schammel
------------------------------------
Name: M. Machado-Schammel
Title: SVP
TORONTO DOMINION (TEXAS), INC.,
by
/s/ Carol Brandt
------------------------------------
Name: Carol Brandt
Title: Vice President
[NYCorp;761880.7]
<PAGE>
13
UBS AG, (as successor by merger to Union
Bank of Switzerland), by New York Branch,
by
/s/ Paul R. Morrison
------------------------------------
Name: Paul R. Morrison
Title: Director
by
/s/ Andrew N. Taylor
------------------------------------
Name: Andrew N. Taylor
Title: Associate Director
UNION BANK OF CALIFORNIA, N.A.,
by
/s/ Dustin Gaspari
------------------------------------
Name: Dustin Gaspari
Title: Assistant Vice President
[NYCorp;761880.7]
<PAGE>
EXHIBIT 11
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Amounts in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
1999 1998
- ---------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
BASIC EARNINGS PER SHARE
Income (loss) from continuing operations $ (56,400) $ 138,278
Preferred stock dividends (3,639) (4,420)
----------- -----------
Earnings (loss) from continuing operations applicable to common stock (60,039) 133,858
Discontinued operations, net -- 38,400
Cumulative effect of changes in accounting principles, net (13,368) --
----------- -----------
Earnings (loss) applicable to common stock $ (73,407) $ 172,258
=========== ===========
Weighted average common shares outstanding 347,839 344,505
=========== ===========
Basic earnings per share
Income (loss) from continuing operations $ (.17) $ .39
Discontinued operations, net -- .11
Cumulative effect of changes in accounting principles, net (.04) --
----------- -----------
Basic earnings (loss) per common share $ (.21) $ .50
=========== ===========
DILUTED EARNINGS PER SHARE
Earnings (loss) from continuing operations applicable to common stock $ (60,039) $ 133,858
Dividends applicable to dilutive preferred stock -- 4,420
----------- -----------
(60,039) 138,278
Discontinued operations, net -- 38,400
Cumulative effect of changes in accounting principles, net (13,368) --
----------- -----------
Earnings (loss) applicable to common stock $ (73,407) $ 176,678
=========== ===========
Weighted average common shares outstanding 347,839 344,505
Dilutive effect of exercise of options outstanding -- 654
Dilutive effect of convertible preferred stock -- 14,821
----------- -----------
347,839 359,980
=========== ===========
Diluted earnings per share
Income (loss) from continuing operations $ (.17) $ .38
Discontinued operations, net -- .11
Cumulative effect of changes in accounting principles, net (.04) --
----------- -----------
Diluted earnings (loss) per common share $ (.21) $ .49
============================================================================ =========== ===========
</TABLE>
The following items were not included in the computation of diluted earnings per
share because their effect was antidilutive (in thousands, except per-share
amounts):
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999 1998
- ------------------------------------------------ ---------------------- ----------------------
<S> <C> <C>
STOCK OPTIONS
Number of shares 4,404 242
Price range per share $17.750 -- $29.625 $28.375 -- $29.625
Expiration range 8/20/99 -- 1/2/08 8/20/99 -- 1/14/00
CONVERTIBLE PREFERRED STOCK $3.00
Number of shares 11,946 --
Dividends paid $3,639 --
- ------------------------------------------------ ---------------------- ----------------------
</TABLE>
<PAGE>
EXHIBIT 12
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
COMPUTATION OF TOTAL ENTERPRISE RATIOS OF EARNINGS TO FIXED CHARGES
(Amounts in millions, except ratios)
<TABLE>
<CAPTION>
Three Months Ended
March 31 Year Ended December 31
------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
- ---------------------------------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations(a) $ (20) $ 139 $ 400 $ 245 $ 486 $ 325 $ (236)
------- ------- ------- ------- ------- ------- -------
Add:
Provision (credit) for taxes on
income (other than foreign
and gas taxes) 1 80 204 47 99 155 (59)
Interest and debt expense(b) 130 135 576 446 492 591 586
Portion of lease rentals
representative of the interest
factor 9 9 36 39 38 43 50
------- ------- ------- ------- ------- ------- -------
140 224 816 532 629 789 577
------- ------- ------- ------- ------- ------- -------
Earnings (loss) before fixed charges $ 120 $ 363 $ 1,216 $ 777 $ 1,115 $ 1,114 $ 341
======= ======= ======= ======= ======= ======= =======
Fixed charges
Interest and debt expense
including capitalized
interest(b) $ 134 $ 139 $ 594 $ 462 $ 499 $ 595 $ 589
Portion of lease rentals
representative of the interest
factor 9 9 36 39 38 43 50
------- ------- ------- ------- ------- ------- -------
Total fixed charges $ 143 $ 148 $ 630 $ 501 $ 537 $ 638 $ 639
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges n/a(c) 2.45 1.93 1.55 2.08 1.75 n/a(c)
- ---------------------------------------- ======= ======= ======= ======= ======= ======= =======
</TABLE>
(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) Not computed due to less than one-to-one coverage. Earnings were inadequate
to cover fixed charges by $23 million for the three months ended March 31,
1999 and $298 million for the year ended December 31, 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 571
<SECURITIES> 0
<RECEIVABLES> 264
<ALLOWANCES> 23
<INVENTORY> 495
<CURRENT-ASSETS> 1,684
<PP&E> 16,750
<DEPRECIATION> 6,954
<TOTAL-ASSETS> 13,988
<CURRENT-LIABILITIES> 1,317
<BONDS> 5,482
0
243
<COMMON> 69
<OTHER-SE> 2,888
<TOTAL-LIABILITY-AND-EQUITY> 13,988
<SALES> 1,344
<TOTAL-REVENUES> 1,382
<CGS> 1,075
<TOTAL-COSTS> 1,075
<OTHER-EXPENSES> 16
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> (24)
<INCOME-TAX> 41
<INCOME-CONTINUING> (57)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (13)
<NET-INCOME> (70)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
