SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ______________
Commission file number: 1-9210
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Occidental Chemical Corporation Savings and Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
OCCIDENTAL CHEMICAL CORPORATION
SAVINGS AND INVESTMENT PLAN
By: /s/ Samuel P. Dominick, Jr.
------------------------------------------------------
Samuel P. Dominick, Jr. - Member of the
Occidental Petroleum Corporation
Pension and Retirement Plan Administrative Committee
Dated: May 13, 2002
OCCIDENTAL CHEMICAL CORPORATION
SAVINGS AND INVESTMENT PLAN
December 31, 2001 and 2000
Index
-----
Page(s)
-------
Report of Independent Public Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2001 3
Notes to Financial Statements 4 - 10
Note: Supplemental schedules have been omitted because they are not
applicable or are not required by 29 CFR 2520.103 - 10 of the
Department of Labor's Rules and Regulations for Reporting and
Disclosures under the Employee Retirement Income Security Act of 1974.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Pension and Retirement Plan
Administrative Committee:
We have audited the accompanying statements of net assets available for plan
benefits of the OCCIDENTAL CHEMICAL CORPORATION SAVINGS AND INVESTMENT PLAN (the
"Plan") as of December 31, 2001 and 2000, and the related statement of changes
in net assets available for plan benefits for the year ended December 31, 2001.
These financial statements are the responsibility of the Plan's administrator.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2001 and 2000, and the changes in its net assets available for
plan benefits for the year ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Los Angeles, California
May 13, 2002
OCCIDENTAL CHEMICAL CORPORATION
SAVINGS AND INVESTMENT PLAN
Statements of Net Assets Available for Plan Benefits
As of December 31, 2001 and 2000
Assets
------
2001 2000
-------------- --------------
Investments:
At fair value $ -- $ 27,154,582
At contract value -- 2,407,610
-------------- --------------
Total investments -- 29,562,192
Receivables:
Interest and Dividends -- 123,984
Due from broker for securities sold -- 247,274
-------------- --------------
Total receivables -- 371,258
Total assets -- 29,933,450
Liabilities
-----------
Accounts liabilities: -- 264,866
-------------- --------------
Total liabilities -- 264,866
-------------- --------------
Net Assets Available for Plan Benefits $ -- $ 29,668,584
============== ==============
The accompanying notes are an integral part of these financial statements.
2
OCCIDENTAL CHEMICAL CORPORATION
SAVINGS AND INVESTMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 2001
Additions:
Additions to net assets attributable to:
Investment income:
Interest and dividends $ 442,656
Net appreciation in fair value of investments 554,525
--------------
Total investment income 997,181
--------------
Contributions:
Participant 986,480
Employer 472,938
--------------
Total contributions 1,459,418
--------------
Total additions 2,456,599
--------------
Deductions:
Benefits paid to participants 5,896,008
Transfers to other plans 26,229,175
--------------
Total deductions 32,125,183
--------------
Net decrease 29,668,584
Net Assets Available for Plan Benefits,
Beginning of year 29,668,584
--------------
End of year $ --
==============
The accompanying notes are an integral part of this financial statement.
3
OCCIDENTAL CHEMICAL CORPORATION
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
1. Description of the Plan
-----------------------
The following description of the Occidental Chemical Corporation Savings and
Investment Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.
a. General
-------
The Plan was a defined contribution plan established for eligible employees
of Occidental Chemical Corporation ("OxyChem", "the Company", or the
"Employer"), a wholly-owned subsidiary of Occidental Petroleum Corporation
("OPC" or "Oxy"), a Delaware corporation. It was subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
Generally, employees of OxyChem were eligible to participate in the Plan if
they (i) were subject to a collective bargaining agreement and (ii) worked
at an OxyChem location that had negotiated the right to participate in the
Plan in a recognized collective bargaining agreement.
b. Significant Events and Plan Administration
------------------------------------------
Due to the sale of the businesses and assets of Durez phenolic resins and
compounding in November 2000 to Sumitomo Bakelite Co., Ltd., the account
balances of the participants of Durez were transferred from the Plan in
April 2001 to the benefit plan of the buyer. The total net assets
transferred were approximately $473,900 and are reflected in the Statement
of Changes in Net Assets Available for Plan Benefits as part of the
"Transfers to Other Plans".
In addition, the OPC Board of Directors authorized the transfers of
participant accounts relating to certain locations from the Plan to the
Occidental Petroleum Corporation Savings Plan ("PSA") throughout 2001.
These transfers were completed after negotiations with, and the acceptance
by, the various unions. These transfers were approximately $5,853,500 and
are reflected in the Statement of Changes in Net Assets Available for Plan
Benefits as part of the "Transfers to Other Plans".
Furthermore, effective December 31, 2001 the Plan was merged into the PSA
(such transaction herein called the "Merger"). As of December 31, 2001
approximately $7,174,600 assets were transferred to the PSA. The remaining
assets of approximately $12,727,200 were physically transferred to PSA in
January 2002 and the trust account was closed in March 2002. These
transfers are reflected in the Statement of Changes in Net Assets Available
for Plan Benefits as "Transfers to Other Plans".
Prior to the Merger, the Plan was administered by the OPC Pension and
Retirement Trust and Investment Committee as to investment decisions and by
the OxyChem Pension and Retirement Plan Administrative
4
Committee as to all matters except investment decisions (collectively, the
"Committees"). The Committees had been given all powers necessary to carry
out their respective duties, including as applicable, but not limited to,
the power to administer and interpret the Plan and to answer all questions
affecting eligibility of participants. The Northern Trust Company (the
"Trustee") was trustee and custodian of a trust fund which held all the
assets of the Plan. The Company paid certain costs and expenses incurred in
administering the Plan. Such costs and expenses were not significant for
the year ended December 31, 2001.
c. Contributions
-------------
Participant Contributions - Participants could contribute from 1 to 12
percent of eligible compensation to the Plan on a before- or after-tax
basis or in any combination thereof, subject to certain Internal Revenue
Code ("IRC") limitations.
Employer Contributions - OxyChem contributed 50 or 75 percent, as
negotiated, of the first 6 percent of eligible compensation, as defined in
the Plan document, that a participant contributed to the Plan. All Employer
contributions were invested in the Occidental Petroleum Corporation Common
Stock Fund (the "Oxy Stock Fund").
d. Participant Accounts
--------------------
Participant accounts were credited or debited with the participant's
contribution and allocations of (i) the Employer's contribution, (ii)
investment income and (iii) Plan expenses, if any. Income or loss
allocations were based on account balances, as defined. The benefit to
which a participant was entitled was the benefit that could be provided
from the participant's vested account.
e. Vesting
-------
Participants immediately vested in their contributions plus actual
investment income, if any. Vesting in the Employer's contribution portion
of the account plus actual earnings thereon was based on years of service.
Generally, a participant received 20 percent vesting for each year of
service until full vesting was achieved after 5 years of service.
f. Forfeitures
-----------
Forfeited nonvested accounts were used to reduce employer contributions.
During 2001, there were no forfeitures used to reduce employer
contributions from forfeited nonvested accounts. Unallocated forfeitures at
December 31, 2001 and 2000, were not significant to the financial
statements.
g. Distributions
-------------
Generally, upon termination of service for any reason other than death, a
participant with an account balance greater than $5,000, could elect to
receive the vested portion of their account in the following distribution
options: (i) one lump sum payment, (ii) straight life annuity, (iii)
ten-year term certain annuity, (iv) joint and survivor annuity, (v) partial
cash distributions or (vi) deferral of payment with certain restrictions.
Upon the death of a participant, a spousal beneficiary could elect to
receive the vested interests in the form of (i), (ii), (iii) or (vi). A
non-spousal beneficiary could elect to receive the vested interest in the
form of (i), (ii)
5
or (iii). If there were multiple beneficiaries the only form of payment
available would be a lump sum. A participant whose vested account balance
was $5,000 or less could receive distributions only under options (i), (v)
or (vi). Participants could elect to receive distributions from their
account balance in the Oxy Stock Fund in cash or in shares of OPC common
stock.
h. Participant Loans
-----------------
Participants could borrow from their fund accounts a minimum of $1,000 up
to a maximum equal to the lesser of: (i) $50,000, reduced by the highest
outstanding loan balance in the past twelve months, (ii) 50 percent of
their vested account balance, or (iii) a loan amount which would require
payroll deductions for repayment equal to 15 percent of the participant's
base compensation. Loan transactions were treated as a transfer between
investment fund and the participant loan fund. Loan terms ranged from 1 to
5 years.
During 2000 and 2001 the interest rate charged on new loans was 5 percent.
Loan repayments were made ratably through payroll deductions. The loans
bore interest at a fixed rate equal to the Western Federal Credit Union's
loan rate for a loan secured by a member's deposit account at the time the
loan was approved.
i. Investment Options
------------------
Prior to the Merger, the Plan offered 7 investment options. Upon enrollment
in the Plan, participants could direct their employee contributions, in 10
percent increments, in any of the investment options. Participants could
change their investment options on a monthly basis. Participants should
refer to the Plan document for a complete description of the investment
options and for the detailed composition of each investment fund.
2. Summary of Significant Accounting Policies
------------------------------------------
a. Basis of Accounting
-------------------
The financial statements of the Plan were prepared under the accrual method
of accounting.
Certain reclassifications have been made to the 2000 notes to financial
statements to be consistent with the presentation of the 2001 notes to
financial statements.
b. Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
6
c. Risk and Uncertainties
----------------------
The Plan provided for various investment options in mutual funds, actively
managed funds and the Oxy Stock Fund. Investment securities were exposed to
various risks such as interest rate, market and credit. Due to the level of
uncertainty related to changes in the value of investment securities, it
was at least reasonably possible that changes in the various risk factors,
in the near term, could materially affect participants' account balances
and the amounts reported in the financial statements.
Additionally, one of the mutual funds provided for invested in the
securities of foreign companies, which involved special risks and
considerations not typically associated with investing in U.S. companies.
These risks include devaluation of currencies, less reliable information
about issuers, different securities transaction clearance and settlement
practices, and possible adverse political and economic developments.
Moreover, securities of many foreign companies and their markets may be
less liquid and their prices more volatile than similar types of securities
of comparable U.S. companies.
Derivative financial instruments were used by the Plan's equity and fixed
income investment managers to remain fully invested in the asset class and
to hedge currency risk. Leveraging of the Plan assets and speculation were
prohibited.
d. Investment Valuation and Income Recognition
-------------------------------------------
The Plan's investments were stated at fair value except for the investments
in stable value contracts which were valued at contract value. Shares of
registered investment companies were valued at quoted market prices, which
represented the net asset value of shares held by the Plan at year end. The
unit price of common or commingled trust funds was based on the current
market value of the underlying assets of the fund. The OPC common stock was
valued at its quoted market price. Participant loans were valued at cost,
which approximates fair value.
Purchases and sales of securities were recorded on a trade-date basis.
Interest income was recorded on the accrual basis. Dividends were recorded
on the ex-dividend date.
Realized gains and losses on investments were based on the market value of
the asset at the beginning of the Plan year, or at the time of purchase for
assets purchased during the Plan year, and the related fair value on the
day the investments were sold during the Plan year. Unrealized gains and
losses on investments were based on the market value of the assets at the
beginning of the Plan year or at the time of purchase for assets purchased
during the Plan year and the related fair value at the end of the plan
year. Net realized and unrealized appreciation/(depreciation) in fair value
of investments is reflected in the accompanying Statement of Changes in Net
Assets Available for Plan Benefits as "Net appreciation in fair value of
investments."
e. Payment of Plan Benefits
------------------------
Plan benefits were recorded when paid.
7
3. Investments
-----------
The following table presents investments that represented 5 percent or more of
the Plan's net assets:
December 31,
2001 2000
-------------- --------------
S & P 500 Index Fund $ -- $ 10,235,937
Oxy Stock Fund -- *8,982,379
Stock Equity Fund -- 4,027,773
Fixed Income Fund (Note 5) -- 2,409,481
Balanced Fund -- 1,613,434
* Participant and non-participant directed
During 2001, the Plan's investments (including investments bought, sold, and
held during the year) appreciated in value by $554,525 as follows:
Registered investment companies $ (430,510)
Oxy Stock Fund 985,035
--------------
$ 554,525
==============
4. Oxy Stock Fund
--------------
Information about the net assets and the significant components of the changes
in net assets related to the Oxy Stock Fund which included both participant and
non-participant directed investments was as follows:
December 31,
2001 2000
-------------- --------------
Net Assets:
Oxy Stock Fund $ -- $ 8,982,379
============== ==============
8
Year Ended
December 31, 2001
-----------------
Changes in Net Assets:
Contribution $ 596,012
Interest and dividends 285,254
Net appreciation in fair value of investments 985,035
Transfers between funds (263,951)
Benefits paid to participants (1,987,802)
Transfer to PSA (8,596,927)
-----------------
$ (8,982,379)
=================
5. Stable Value Contracts
----------------------
The Plan's investments in stable value contracts were included in the Statement
of Net Assets Available for Plan Benefits at contract value (which represents
contributions made under the contract plus earnings, less withdrawals and
administrative expenses) because they were fully benefit responsive. For
example, participants could ordinarily direct the withdrawal or transfer of all
or a portion of their investment at contract value. The fair value of the stable
value contracts approximated contract value. During 2001 and 2000, the average
yield earned on amounts invested in these stable value contracts was 6.04 and
6.34 percent, respectively. The average crediting interest rates on such
contracts as of December 31, 2001 and 2000 was 6.19 and 6.22 percent,
respectively.
6. Reconciliation of Financial Statement to Form 5500
--------------------------------------------------
The following is a reconciliation of net assets available for plan benefits per
the financial statements to the Form 5500:
December 31,
2001 2000
-------------- --------------
Net assets available for plan benefits per the financial
statements $ -- $ 29,668,584
Amounts allocated to withdrawing participants -- (232,690)
-------------- --------------
Net assets available for plan benefits per the Form 5500 $ -- $ 29,435,894
============== ==============
9
The following is a reconciliation of participant withdrawals and distributions
per the financial statements to the Form 5500:
Year Ended
December 31, 2001
-----------------
Participant withdrawals and distributions per
the financial statements $ 5,896,008
Add: Amounts allocated to withdrawing
participants at December 31, 2001 --
Less: Amounts allocated to withdrawing
participants at December 31, 2000 (232,690)
-----------------
Benefits paid to participants per the Form 5500 $ 5,663,318
=================
Amounts allocated to withdrawing participants were recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
7. Related Party Transactions
--------------------------
The Trustee and OPC were parties-in-interest as defined by ERISA. The Trustee
invested certain Plan assets in its collective short-term investment fund and
Oxy Stock Fund. Such transactions qualified as party-in-interest transactions
permitted by Department of Labor regulations.
8. Plan Termination
----------------
Prior to the merger date, OxyChem had the right under the Plan to discontinue
its contributions at any time and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan termination, participants would become
100 percent vested in their accounts.
9. Tax Status
----------
The Internal Revenue Service had determined and informed OxyChem by a letter
dated May 20, 1996, that the Plan was designed in accordance with applicable
sections of the IRC. The Plan had been amended since receiving the determination
letter. However, the Committee, using its judgment and the advice of its
advisors, including the Plan's tax counsel, believed that the Plan, in all
material respects, was designed and operated in a manner that qualified it for
continued tax-exempt status.
10
EXHIBIT INDEX
Exhibit
No. Exhibit Page Number
--------------------------------------------------------------------------------
23 Consent of Independent Public Accountants 12
99 Independent Public Accountant's Representation 13
11