OCCIDENTAL PETROLEUM CORP /DE/ - FORM 8-K - EX-99.2 - UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - December 1, 2014

Attached files

file filename
8-K - 8-K - OCCIDENTAL PETROLEUM CORP /DE/form8-k.htm
EX-10.7 - INTELLECTUAL PROPERTY LICENSE AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLEUM CORP - OCCIDENTAL PETROLEUM CORP /DE/exhibit107.htm
EX-99.1 - PRESS RELEASE, DATED DECEMBER 1, 2014. - OCCIDENTAL PETROLEUM CORP /DE/exhibit991.htm
EX-10.5 - AREA OF MUTUAL INTEREST AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLEUM CORPORATIO - OCCIDENTAL PETROLEUM CORP /DE/exhibit105.htm
EX-10.1 - STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLE - OCCIDENTAL PETROLEUM CORP /DE/exhibit101.htm
EX-10.4 - TRANSITION SERVICES AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLEUM CORPORATION AN - OCCIDENTAL PETROLEUM CORP /DE/exhibit104.htm
EX-10.2 - TAX SHARING AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLEUM CORPORATION AND CALIFO - OCCIDENTAL PETROLEUM CORP /DE/exhibit102.htm
EX-10.3 - EMPLOYEE MATTERS AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLEUM CORPORATION AND C - OCCIDENTAL PETROLEUM CORP /DE/exhibit103.htm
EX-2.1 - SEPARATION AND DISTRIBUTION AGREEMENT BY AND BETWEEN OCCIDENTAL PETROLEUM CORPOR - OCCIDENTAL PETROLEUM CORP /DE/exhibit21.htm
EX-10.6 - CONFIDENTIALITY AND TRADE SECRET PROTECTION AGREEMENT BY AND BETWEEN OCCIDENTAL - OCCIDENTAL PETROLEUM CORP /DE/exhibit106.htm



UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements of Occidental Petroleum Corporation (Occidental) have been derived from our historical consolidated financial statements and are being presented to give effect to the spin-off of California Resources Corporation (California Resources) into an independent, publicly traded company. Effective with the filing of the Occidental Petroleum Corporation Form 10-K for the period ending December 31, 2014, California Resources Corporation will be reported as a discontinued operation of Occidental Petroleum Corporation. The unaudited pro forma condensed consolidated balance sheet has been prepared as though the spin-off of California Resources Corporation occurred on September 30, 2014. The unaudited pro forma condensed consolidated income statements have been prepared as though the spin-off of California Resources Corporation occurred on January 1, 2014. The following unaudited pro forma condensed consolidated financial statements should be read in conjunction with our historical financial statements and accompanying notes.
The pro forma adjustments are based on available information and assumptions management believes are factually supportable and for income statement purposes recurring in nature. The pro forma adjustments to reflect the spin-off of California Resources Corporation include:
•
Special cash distributions of $4.95 billion and $1.15 billion from California Resources Corporation to Occidental Petroleum Corporation in connection with the separation.
•
The distribution of at least 80.1% of California Resources Corporation common stock to Occidental shareholders.
•
Occidental Petroleum Corporation's remaining investment in California Resources Corporation's common stock.
•
Costs incurred in connection with the separation of California Resources Corporation.
•
Change in the unitary tax rate as a result of the separation of California Resources Corporation.
No adjustments have been made for the costs of operating after the separation of California Resources Corporation, the potentially dilutive impact of changes to stock-based compensation resulting from the Employee Matters Agreement executed in connection with the separation, the use of proceeds from the special cash distribution from California Resources Corporation and any working capital adjustments to be determined after the separation as the impact of these items are not factually supportable at this time.
The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only, and do not reflect what our financial position and results of operations would have been had the separation occurred on the dates indicated and are not necessarily indicative of our future financial position and future results of operations.






OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2014
(Amounts in millions, except per-share amounts)
 
 
 
 
 
Historical
 
Separation of California Resources
 
Pro Forma Adjustments
 
Pro Forma
REVENUES AND OTHER INCOME
 
 
 
 
 
 
 
 
Net sales
 
$
18,359

 
(3,354
)
 
—

 
$
15,005

Interest, dividends, and other income
 
107

 
1

 
—

 
108

Gain on sale of equity instruments
 
520

 
—

 
—

 
520

 
 
18,986

 
(3,353
)
 
—

 
15,633

 
 
 
 
 
 
 
 
 
COSTS AND OTHER DEDUCTIONS
 
 
 
 
 
 
 
 
Cost of sales
 
9,880

 
(1,753
)
 
—

 
8,127

Selling, general, and administrative and other operating expenses
 
1,327

 
(226
)
 
(25
)
(a)
1,076

Asset impairments
 
471

 
—

 
—

 
471

Taxes other than on income
 
593

 
(163
)
 
—

 
430

Exploration expense
 
162

 
(71
)
 
—

 
91

Interest and debt expense, net
 
52

 
6

 
—

 
58

 
 
12,485

 
(2,207
)
 
(25
)
 
10,253

 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES AND OTHER ITEMS
 
6,501

 
(1,146
)
 
25

 
5,380

Provision for domestic and foreign income taxes
 
(2,706
)
 
404

 
42

(b)
(2,260
)
Income from equity investments
 
243

 
—

 
—

 
243

INCOME FROM CONTINUING OPERATIONS
 
4,038

 
(742
)
 
67

 
3,363

Discontinued operations, net
 
(1
)
 
742

 
—

 
741

NET INCOME
 
4,037

 
—

 
67

 
4,104

Less: Net income attributable to noncontrolling interest
 
(8
)
 
—

 
—

 
(8
)
NET INCOME ATTRIBUTABLE TO COMMON STOCK
 
$
4,029

 
—

 
67

 
$
4,096

BASIC EARNINGS PER COMMON SHARE (attributable to common stock)
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
5.13

 
 
 
 
 
$
4.28

Discontinued operations, net
 
—

 
 
 
 
 
0.94

BASIC EARNINGS PER COMMON SHARE
 
$
5.13

 

 

 
$
5.22

 
 
 
 
 
 
 
 
 
DILUTED EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
5.13

 
 
 
 
 
$
4.27

Discontinued operations, net
 
—

 
 
 
 
 
0.94

DILUTED EARNINGS PER COMMON SHARE
 
$
5.13

 

 

 
$
5.21

DIVIDENDS PER COMMON SHARE
 
$
2.16

 
 
 
 
 
$
2.16

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
 
 
 
 
 




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2013
(Amounts in millions, except per-share amounts)
 
 
 
 
 
Historical
 
Separation of California Resources
 
Pro Forma Adjustments
 
Pro Forma
REVENUES AND OTHER INCOME
 
 
 
 
 
 
 
 
Net sales
 
$
18,283

 
(3,205
)
 
—

 
$
15,078

Interest, dividends, and other income
 
89

 
—

 
—

 
89

Gain on sale of equity instruments
 
131

 
—

 
—

 
131

 
 
18,503

 
(3,205
)
 
—

 
15,298

 
 
 
 
 
 
 
 
 
COSTS AND OTHER DEDUCTIONS
 
 
 
 
 
 
 
 
Cost of sales
 
9,531

 
(1,650
)
 
—

 
7,881

Selling, general, and administrative and other operating expenses
 
1,347

 
(185
)
 
—

 
1,162

Taxes other than on income
 
568

 
(141
)
 
—

 
427

Exploration expense
 
196

 
(81
)
 
—

 
115

Interest and debt expense, net
 
93

 
12

 
—

 
105

 
 
11,735

 
(2,045
)
 
—

 
9,690

 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES AND OTHER ITEMS
 
6,768

 
(1,160
)
 
—

 
5,608

Provision for domestic and foreign income taxes
 
(2,782
)
 
410

 
—

 
(2,372
)
Income from equity investments
 
288

 
—

 
—

 
288

INCOME FROM CONTINUING OPERATIONS
 
4,274

 
(750
)
 
—

 
3,524

Discontinued operations, net
 
(14
)
 
750

 
—

 
736

NET INCOME
 
$
4,260

 
—

 
—

 
$
4,260

BASIC EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
5.30

 
 
 
 
 
$
4.37

Discontinued operations, net
 
(0.02
)
 
 
 
 
 
0.91

BASIC EARNINGS PER COMMON SHARE
 
$
5.28

 

 

 
$
5.28

 
 
 
 
 
 
 
 
 
DILUTED EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
5.30

 
 
 
 
 
$
4.37

Discontinued operations, net
 
(0.02
)
 
 
 
 
 
0.91

DILUTED EARNINGS PER COMMON SHARE
 
$
5.28

 

 

 
$
5.28

DIVIDENDS PER COMMON SHARE
 
$
1.92

 
 
 
 
 
$
1.92

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
 
 
 
 
 




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2013
(Amounts in millions, except per-share amounts)
 
 
 
 
 
Historical
 
Separation of California Resources
 
Pro Forma Adjustments
 
Pro Forma
REVENUES AND OTHER INCOME
 
 
 
 
 
 
 
 
Net sales
 
$
24,455

 
(4,285
)
 
—

 
$
20,170

Interest, dividends, and other income
 
106

 
1

 
—

 
107

Gain on sale of equity instruments
 
1,175

 
—

 
—

 
1,175

 
 
25,736

 
(4,284
)
 
—

 
21,452

 
 
 
 
 
 
 
 

COSTS AND OTHER DEDUCTIONS
 
 
 
 
 
 
 

Cost of sales
 
7,562

 
(1,065
)
 
—

 
6,497

Selling, general, and administrative and other operating expenses
 
1,801

 
(257
)
 
—

 
1,544

Depreciation, depletion and amortization
 
5,347

 
(1,144
)
 
—

 
4,203

Asset impairments and related items
 
621

 
—

 
—

 
621

Taxes other than on income
 
749

 
(185
)
 
—

 
564

Exploration expense
 
256

 
(116
)
 
—

 
140

Interest and debt expense, net
 
118

 
14

 
—

 
132

 
 
16,454

 
(2,753
)
 
—

 
13,701

 
 
 
 
 
 
 
 

INCOME BEFORE INCOME TAXES AND OTHER ITEMS
 
9,282

 
(1,531
)
 
—

 
7,751

Provision for domestic and foreign income taxes
 
(3,755
)
 
541

 
—

 
(3,214
)
Income from equity investments
 
395

 
—

 
—

 
395

INCOME FROM CONTINUING OPERATIONS
 
5,922

 
(990
)
 
—

 
4,932

Discontinued operations, net
 
(19
)
 
990

 
—

 
971

NET INCOME
 
$
5,903

 
—

 
—

 
$
5,903

BASIC EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 

Income from continuing operations
 
$
7.35

 
 
 
 
 
$
6.12

Discontinued operations, net
 
(0.02
)
 
 
 
 
 
1.21

BASIC EARNINGS PER COMMON SHARE
 
$
7.33

 

 

 
$
7.33

 
 
 
 
 
 
 
 

DILUTED EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 

Income from continuing operations
 
$
7.34

 
 
 
 
 
$
6.12

Discontinued operations, net
 
(0.02
)
 
 
 
 
 
1.20

DILUTED EARNINGS PER COMMON SHARE
 
$
7.32

 

 

 
$
7.32

DIVIDENDS PER COMMON SHARE
 
$
2.56

 
 
 
 
 
$
2.56

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
 
 
 
 
 




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2012
(Amounts in millions, except per-share amounts)
 
 
 
 
 
Historical
 
Separation of California Resources
 
Pro Forma Adjustments
 
Pro Forma
REVENUES AND OTHER INCOME
 
 
 
 
 
 
 
 
Net sales
 
$
24,172

 
(4,072
)
 
—

 
$
20,100

Interest, dividends, and other income
 
81

 
(1
)
 
—

 
80

 
 
24,253

 
(4,073
)
 
—

 
20,180

 
 
 
 
 
 
 
 

COSTS AND OTHER DEDUCTIONS
 
 
 
 
 
 
 

Cost of sales
 
7,844

 
(1,314
)
 
—

 
6,530

Selling, general, and administrative and other operating expenses
 
1,602

 
(236
)
 
—

 
1,366

Depreciation, depletion and amortization
 
4,511

 
(926
)
 
—

 
3,585

Asset impairments and related items
 
1,751

 
(41
)
 
—

 
1,710

Taxes other than on income
 
680

 
(167
)
 
—

 
513

Exploration expense
 
345

 
(148
)
 
—

 
197

Interest and debt expense, net
 
130

 
24

 
—

 
154

 
 
16,863

 
(2,808
)
 
—

 
14,055

 
 
 
 
 
 
 
 
—

INCOME BEFORE INCOME TAXES AND OTHER ITEMS
 
7,390

 
(1,265
)
 
—

 
6,125

Provision for domestic and foreign income taxes
 
(3,118
)
 
459

 
—

 
(2,659
)
Income from equity investments
 
363

 
—

 
—

 
363

INCOME FROM CONTINUING OPERATIONS
 
4,635

 
(806
)
 
—

 
3,829

Discontinued operations, net
 
(37
)
 
806

 
—

 
769

NET INCOME
 
$
4,598

 
—

 
—

 
$
4,598

BASIC EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 

Income from continuing operations
 
$
5.72

 
 
 
 
 
$
4.72

Discontinued operations, net
 
(0.05
)
 
 
 
 
 
0.95

BASIC EARNINGS PER COMMON SHARE
 
$
5.67

 

 

 
$
5.67

 
 
 
 
 
 
 
 

DILUTED EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 

Income from continuing operations
 
$
5.71

 
 
 
 
 
$
4.72

Discontinued operations, net
 
(0.04
)
 
 
 
 
 
0.95

DILUTED EARNINGS PER COMMON SHARE
 
$
5.67

 

 

 
$
5.67

DIVIDENDS PER COMMON SHARE
 
$
2.16

 
 
 
 
 
$
2.16

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
 
 
 
 
 




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2011
(Amounts in millions, except per-share amounts)
 
 
 
 
 
Historical
 
Separation of California Resources
 
Pro Forma Adjustments
 
Pro Forma
REVENUES AND OTHER INCOME
 
 
 
 
 
 
 
 
Net sales
 
$
23,939

 
(3,938
)
 
—

 
$
20,001

Interest, dividends, and other income
 
180

 
4

 
—

 
184

 
 
24,119

 
(3,934
)
 
—

 
20,185

 
 
 
 
 
 
 
 

COSTS AND OTHER DEDUCTIONS
 
 
 
 
 
 
 

Cost of sales
 
7,385

 
(1,074
)
 
—

 
6,311

Selling, general, and administrative and other operating expenses
 
1,523

 
(211
)
 
—

 
1,312

Depreciation, depletion and amortization
 
3,591

 
(675
)
 
—

 
2,916

Taxes other than on income
 
605

 
(143
)
 
—

 
462

Exploration expense
 
258

 
(114
)
 
—

 
144

Interest and debt expense, net
 
298

 
24

 
—

 
322

 
 
13,660

 
(2,193
)
 
—

 
11,467

 
 
 
 
 
 
 
 

INCOME BEFORE INCOME TAXES AND OTHER ITEMS
 
10,459

 
(1,741
)
 
—

 
8,718

Provision for domestic and foreign income taxes
 
(4,201
)
 
628

 
—

 
(3,573
)
Income from equity investments
 
382

 
—

 
—

 
382

INCOME FROM CONTINUING OPERATIONS
 
6,640

 
(1,113
)
 
—

 
5,527

Discontinued operations, net
 
131

 
1,113

 
 
 
1,244

NET INCOME
 
$
6,771

 
—

 
—

 
$
6,771

BASIC EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 

Income from continuing operations
 
$
8.16

 
 
 
 
 
$
6.79

Discontinued operations, net
 
0.16

 
 
 
 
 
1.53

BASIC EARNINGS PER COMMON SHARE
 
$
8.32

 

 

 
$
8.32

 
 
 
 
 
 
 
 

DILUTED EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 

Income from continuing operations
 
$
8.16

 
 
 
 
 
$
6.79

Discontinued operations, net
 
0.16

 
 
 
 
 
1.53

DILUTED EARNINGS PER COMMON SHARE
 
$
8.32

 

 

 
$
8.32

DIVIDENDS PER COMMON SHARE
 
$
1.84

 
 
 
 
 
$
1.84

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
 
 
 
 
 




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2014
(Amounts in millions)
 
 
 
 
 
Historical
 
Separation of California Resources
 
Pro Forma Adjustments
 
Pro Forma
CURRENT ASSETS
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,897

 
(105
)
 
1,150

(c)
$
3,942

Restricted Cash
 
—

 
—

 
4,950

(c)
4,950

Trade receivables, net
 
4,960

 
(441
)
 
—

 
4,519

Inventories
 
1,359

 
(72
)
 
—

 
1,287

Other current assets
 
1,291

 
(236
)
 
—

 
1,055

Total current assets
 
10,507

 
(854
)
 
6,100

 
15,753

INVESTMENTS IN UNCONSOLIDATED ENTITIES
 
1,544

 
—

 
—

 
1,544

PROPERTY, PLANT, AND EQUIPMENT
 
 
 
 
 
 
 

Total Property, plant, and equipment
 
94,771

 
(22,680
)
 
—

 
72,091

Accumulated depreciation, depletion, and amortization
 
(36,306
)
 
7,868

 
—

 
(28,438
)
 
 
58,465

 
(14,812
)
 
—

 
43,653

 
 
 
 
 
 
 
 

INVESTMENT IN CALIFORNIA RESOURCES COMPANY
 
—

 
—

 
997

(d)
997

LONG-TERM RECEIVABLES AND OTHER ASSETS, NET
 
994

 
(34
)
 
—

 
960

TOTAL ASSETS
 
$
71,510

 
(15,700
)
 
7,097

 
$
62,907

 
 
 
 
 
 
 
 

CURRENT LIABILITIES
 
 
 
 
 
 
 

Short-term borrowings
 
$
1,599

 
—

 
—

 
$
1,599

Accounts payable
 
5,511

 
(584
)
 
—

 
4,927

Accrued liabilities
 
2,337

 
(259
)
 
—

 
2,078

Domestic and foreign income taxes
 
74

 
—

 
—

 
74

Total current liabilities
 
9,521

 
(843
)
 
—

 
8,678

LONG-TERM DEBT, NET
 
6,837

 
—

 
—

 
6,837

DEFERRED CREDITS AND OTHER LIABILITIES
 
 
 
 
 
 
 

Deferred domestic and foreign income taxes
 
7,634

 
(3,107
)
 
(42
)
(b)
4,485

Other
 
3,433

 
(546
)
 
—

 
2,887

 
 
11,067

 
(3,653
)
 
(42
)
 
7,372

 
 
 
 
 
 
 
 

STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 

Common stock, at par value
 
178

 
—

 
—

 
178

Treasury stock
 
(8,146
)
 
—

 
—

 
(8,146
)
Additional paid-in capital
 
7,570

 
—

 
—

 
7,570

Retained earnings
 
44,166

 
(11,204
)
 
7,139

(e)
40,101

Accumulated other comprehensive loss
 
(289
)
 
—

 
—

 
(289
)
Total equity attributable to common stock
 
43,479

 
(11,204
)
 
7,139

 
39,414

Noncontrolling interest
 
606

 
—

 
—

 
606

Total Equity
 
44,085

 
(11,204
)
 
7,139


40,020

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
71,510

 
(15,700
)
 
7,097

 
$
62,907

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 
 
 
 
 




NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

a.
Reduction of separation costs incurred related to the spin-off of California Resources Corporation. Expenses incurred primarily relate to compensation and benefits, legal, accounting, and information system costs.
b.
Represents the change in the unitary tax rate as a result of the spin-off of California Resources Corporation.
c.
Pursuant to the private letter ruling received from the Internal Revenue Service (IRS), immediately prior to the separation, California Resources Corporation distributed approximately $4.95 billion and $1.15 billion in cash primarily using the proceeds from the $5 billion in Senior Notes issued by California Resources Corporation in October 2014 and borrowings under the $1.0 billion Term Loan Facility and $2.0 billion Revolving Credit Facility. Under the terms of the IRS ruling, the proceeds from the Senior Notes will be used solely to pay dividends, repurchase common stock, repay debt, or a combination of the foregoing, within eighteen months following the distribution.
d.
In connection with the spin-off, Occidental distributed at least 80.1% of California Resources Corporation common stock to Occidental shareholders. The remaining investment is recorded on the pro-forma balance sheet as an Investment in California Resource Corporation at cost. At year end the investment will be recorded at fair value as an available for sale asset with any unrealized gains or losses included in accumulated other comprehensive income. Occidental will dispose of this investment within eighteen months following the spin-off.
e.
Stockholders’ equity was adjusted as a result of adjustments (b), (c) and (d).




OCCIDENTAL PETROLEUM CORP /DE/ Reports