Occidental Petroleum 2002 Annual Report Download - page 75

the Internal Revenue Service. Disputes arise during the course of such audits as
to facts and matters of law.
At December 31, 2002, commitments for major capital expenditures during
2003 and thereafter were approximately $158 million.
Occidental has entered into agreements providing for future payments to
secure terminal and pipeline capacity, drilling services, electrical power,
steam and certain chemical raw materials. At December 31, 2002, the net present
value of the fixed and determinable portion of the obligations under these
agreements, which were used to collateralize financings of the respective
suppliers, aggregated $94 million, which was payable as follows (in millions):
2003--$21, 2004--$19, 2005--$16, 2006--$14, 2007--$11 and 2008 through
2019--$13. Fixed payments under these agreements were $27 million in 2002, $20
million in 2001 and $42 million in 2000.
Occidental has certain other commitments under contracts, guarantees and
joint ventures, and certain other contingent liabilities. Many of these
commitments, although not fixed or determinable, involve capital expenditures
and are part of the $1.3 billion capital expenditures estimated for 2003.
As discussed in Note 4, FIN No. 45 requires the disclosure in Occidental's
financial statements of information relating to guarantees issued by Occidental
and outstanding at December 31, 2002.
These guarantees encompass performance bonds, letters of credit,
indemnities, commitments and other forms of guarantees provided by Occidental to
third parties, mainly to provide assurance that Occidental and/or its
subsidiaries and affiliates will meet their various obligations ("guarantees").
At December 31, 2002, the notional amount of the guarantees was
approximately $1 billion. Of this amount, approximately $700 million relates to
Occidental's guarantee of equity investees' debt and other commitments. An
additional $200 million relates to the LaPorte, Texas VCM plant operating lease
and other equipment leases. The foregoing items have also been discussed in Note
7 and in Note 14, specifically, the debt guarantees relating to OxyMar and Elk
Hills Power, the guarantees on debt and other commitments relating to the
Ecuador pipeline and the residual value guarantee of the LaPorte, Texas VCM
plant operating lease. The remaining $100 million relates to various indemnities
and guarantees provided to third parties.
Occidental has indemnified various parties against specified liabilities
that those parties might incur in the future in connection with purchases and
other transactions that they have entered into with Occidental. These
indemnities usually are contingent upon the other party incurring liabilities
that reach specified thresholds. As of December 31, 2002, Occidental is not
aware of circumstances that would lead to future indemnity claims against it for
material amounts in connection with these transactions.
It is impossible at this time to determine the ultimate liabilities that
OPC and its subsidiaries may incur resulting from any lawsuits, claims and
proceedings, audits, commitments, contingencies and related matters. If these
matters were to be ultimately resolved unfavorably at amounts substantially
exceeding Occidental's reserves, an outcome not currently
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anticipated, it is possible that such outcome could have a material adverse
effect upon Occidental's consolidated financial position or results of
operations. However, after taking into account reserves, management does not
expect the ultimate resolution of any of these matters to have a material
adverse effect upon Occidental's consolidated financial position or results of
operations.
NOTE 10 DOMESTIC AND FOREIGN INCOME AND OTHER TAXES
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The domestic and foreign components of income(loss) from continuing
operations before domestic and foreign income and other taxes were as follows
(in millions):
For the years ended December 31, Domestic Foreign Total