Occidental Petroleum 2006 Annual Report Download - page 61

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
In January 2004, Occidental acquired a 1,300-mile oil pipeline and gathering system located in the Permian Basin for approximately $143
million in cash.
For strategic and economic reasons, Occidental exited the vinyl specialty resins business by closing the Pottstown, Pennsylvania
manufacturing facility (Specialty Resins) effective January 5, 2005, and recorded an after-tax charge of $32 million as of December 31, 2004.
Occidental's assets and liabilities related to Specialty Resins are classified as held for sale and as discontinued operations in the income
statements for all periods presented. Specialty Resins' net sales included in discontinued operations were $1 million, $27 million and $98 million
for 2006, 2005 and 2004, respectively, and net gains (losses) from discontinued operations were $2 million, $6 million and $(38) million,
respectively.
NOTE 3 ACCOUNTING CHANGES
FUTURE ACCOUNTING CHANGES
FIN 48
In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109.” This
interpretation specifies that benefits from tax positions should be recognized in the financial statements only when it is more-likely-than-not that
the tax position will be sustained upon examination by the appropriate taxing authority having full knowledge of all relevant information. A tax
position meeting the more-likely-than-not recognition threshold should be measured at the largest amount of benefit for which the likelihood of
realization upon ultimate settlement exceeds 50 percent. It also requires additional disclosures related to these tax positions. FIN 48 is effective for
fiscal years beginning after December 15, 2006. Occidental will adopt FIN 48 in the first quarter of 2007 and expects there will not be a material
effect on the financial statements upon adoption.
SFAS No. 157
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement establishes a framework for measuring fair
value and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. Occidental is currently assessing the effect of SFAS No. 157 on its financial statements.
FSP AUG AIR-1
In September 2006, the FASB issued FASB Staff Position (FSP) AUG AIR-1, “Accounting for Planned Major Maintenance Activities.” This FSP
prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial
reporting periods. FSP AUG AIR-1 is effective for the first fiscal year beginning after December 15, 2006. Occidental will adopt FSP AUG AIR-1 in
the first quarter of 2007 and expects there will not be a material effect on the financial statements upon adoption.
EITF Issue No. 06-4
In September 2006, the Emerging Issues Task Force (EITF) finalized the provisions of EITF Issue No. 06-4, “Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” This EITF Issue provides accounting
guidance for endorsement split-dollar life insurance arrangements and require employers to recognize liability for future benefits in accordance
with SFAS 106 or APB Opinion No. 12. The recognition and disclosure provisions of EITF Issue No. 06-4 are effective for fiscal years ending after
December 15, 2007. Occidental is currently assessing the effect of this EITF Issue on its financial statements.
EITF Issue No. 06-5
In September 2006, the EITF finalized the provisions of EITF Issue No. 06-5, "Accounting for Purchase of Life Insurance-Determining the
Amount That Could Be Realized in Accordance with FASB Technical bulletin No. 85-4.” This EITF Issue provides accounting guidance for life
insurance policies and requires employers to consider and account for any additional amounts or restrictions under the terms of such policies. The
recognition and disclosure provisions of EITF Issue No. 06-5 are effective for fiscal years beginning after December 15, 2006. Occidental will adopt
this EITF Issue in the first quarter of 2007 and expects there will not be a material effect on the financial statements upon adoption.
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