Occidental Petroleum 2003 Annual Report Download - page 45

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Occidental calculates chemical segment free cash flow as segment income,
adding back depreciation, depletion and amortization, and subtracting from that
amount total capital expenditures, excluding acquisitions. Occidental believes
that free cash flow is useful to investors as an indicator of Occidental's
ability to generate positive cash results to service and/or repay debt and
generate cash for acquisitions and other investments. Free cash flow does not
represent residual cash flow available for discretionary expenditures. Changes
in working capital are not reflected in free cash flow, and Occidental has
certain non-discretionary obligations, such as debt service, that are not
deducted from this measure. In addition, this measure should not be considered
in isolation or as a substitute for measures prepared in accordance with GAAP or
as a measure of profitability or liquidity. Free cash flow as presented herein
may not be comparable to similarly titled measures reported by other companies.
There is no comparable segment cash-flow measure available under GAAP.
30
In addition, Occidental discloses cumulative net pre-tax cash flows
generated by particular properties, which it believes is an important indicator
of cumulative life-to-date performance. There is no comparable property level
cash flow measure available under GAAP.
Chemical segment free cash flow is calculated as follows:
In millions 2003
============================================= ========
Segment earnings $ 210
Depreciation, depletion and amortization 205
Capital spending (a) (121)
--------
Free Cash Flow (b) $ 294
============================================= ========
(a) Excludes $180 million for the purchase of a previously leased facility in
LaPorte, Texas and $44 million related to the exercise of purchase options
for certain leased railcars.
(b) Excludes working capital changes.
SAFE HARBOR STATEMENT REGARDING OUTLOOK AND OTHER FORWARD-LOOKING DATA
Portions of this report, including Items 1 and 2 and the information
appearing under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," including the information under the
sub-caption "2004 Outlook," contain forward-looking statements and involve risks
and uncertainties that could significantly affect expected results of
operations, liquidity, cash flows and business prospects. 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; crude oil and natural gas prices; chemical
prices; potential liability for remedial actions under existing or future
environmental regulations and litigation; potential liability resulting from
pending or future litigation; general domestic and international political
conditions; potential disruption or interruption of Occidental's production or
manufacturing facilities due to accidents, political events or insurgent
activity; potential failure to achieve expected production from existing and
future oil and gas development projects; the supply/demand considerations for
Occidental's products; any general economic recession or slowdown domestically
or internationally; regulatory uncertainties; and not successfully completing,
or any material delay of, any development of new fields, expansion, capital
expenditure, efficiency improvement project, acquisition or disposition.
Forward-looking statements are generally accompanied by words such as
"estimate", "project", "predict", "will", "anticipate", "plan", "intend",