Occidental Petroleum 2001 Annual Report Download - page 72

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NOTE 14 INVESTMENTS AND TRANSACTIONS WITH AFFILIATES
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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 December 31, 2001, Occidental's equity investments
consisted of a 29.5-percent interest in Equistar acquired in May 1998 and
various partnerships and joint ventures, discussed below. As discussed in Note
4, in December 2001, Occidental wrote down its investment in Equistar by $412
million. Equity investments paid dividends of $27 million, $99 million and $100
million to Occidental in 2001, 2000 and 1999, respectively. Cumulative
undistributed earnings since acquisition, in the amount of $51 million, of
50-percent-or-less-owned companies have been accounted for by Occidental under
the equity method. At December 31, 2000, Occidental's investment in equity
investees exceeded the historical underlying equity in net assets by
approximately $128 million. This excess was eliminated in 2001 in connection
with the Equistar write-down. Investments also include certain cost method
investments, in which Occidental owns less than 20 percent of the voting stock.
Occidental and its subsidiaries' purchases from certain chemical
partnerships at market-related prices, in which it has investments, were $656
million, $755 million and $860 million in 2001, 2000 and 1999, respectively.
Occidental and its subsidiaries' sales to certain chemical partnerships at
market-related prices, in which it has investments, were $68 million, $217
million and $251 million, in 2001, 2000 and 1999, respectively.
The following table presents Occidental's proportional interest in the
summarized financial information of its equity method investments (in millions):
For the years ended December 31, 2001 2000 1999
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Revenues $ 2,223 $ 2,735 $ 2,491
Costs and expenses 2,315 2,668 2,450
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Net (loss)income $ (92) $ 67 $ 41
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Balance at December 31, 2001 2000
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Current assets $ 429 $ 512
Noncurrent assets $ 1,951 $ 1,975
Current liabilities $ 298 $ 285
Long-term debt $ 960 $ 1,034
Other non-current liabilities $ 172 $ 74
Stockholders' equity $ 950 $ 1,094
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Occidental has a 78.6-percent ownership interest in OxyMar, a general
partnership that owns a vinyl chloride monomer (VCM) facility in Texas operated
by OxyChem. Marubeni Corporation (Marubeni) owns the remaining 21.4 percent of
OxyMar, but has a 50-percent voting interest. The OxyMar VCM plant is a modern,
efficient manufacturing facility. Occidental's chlorovinyls business derives
economic benefit as the supplier of chlorine, a major raw material, to OxyMar.
OxyMar, in turn, supplies VCM required by Occidental to manufacture PVC, one of
its major products. This investment in OxyMar is recorded as an equity
investment on the consolidated balance sheet. Occidental owns 28.6 percent of
OxyMar directly and the OxyVinyls partnership, which is 76-percent owned by
Occidental, owns 50 percent. Therefore, because of the effect of a third party's
minority ownership interest, Occidental's total share of OxyMar's results is
only approximately 67 percent. Occidental guarantees 50 percent of OxyMar's $165
million private placement bonds due 2016 and 100 percent of a $220 million
revolving line of credit which matures in 2005, under which $105 million was
outstanding at December 31, 2001. These amounts are reflected as debt on
OxyMar's balance sheet. Marubeni has a right to put its interest in OxyMar to