SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
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or
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
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Commission file number 1-554
UNION OIL COMPANY OF CALIFORNIA
-----------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1315450
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 West Fifth Street, Los Angeles, California 90017
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (213) 977-7600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Number of shares of Common Stock, $2-1/12 par value, outstanding as of
April 30, 1994: 1,000
Registrant meets the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q and is, therefore, filing this form with the reduced
disclosure format.
<PAGE>
PART I - FINANCIAL INFORMATION
CONSOLIDATED EARNINGS UNION OIL COMPANY OF CALIFORNIA
(Unaudited)
For the Three Months
Ended March 31
Dollars in millions 1994 1993
Revenues
Sales and operating revenues (a) $1,829 $2,204
Gain on asset sales and other revenues 87 114
- ---------------------------------------------------------------------------
Total revenues 1,916 2,318
Costs and Other Deductions
Crude oil and product purchases 614 898
Operating expense 429 420
Selling, administrative and general expense 120 124
Depreciation, depletion and amortization 272 234
Dry hole costs 24 8
Exploration expense 25 27
Interest expense 74 81
Excise, property and other operating taxes (a) 253 276
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Total costs and other deductions 1,811 2,068
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Earnings before income taxes 105 250
Income taxes 51 109
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Earnings before cumulative effect of accounting changes 54 141
Cumulative effect of accounting changes - (130)
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Net Earnings $ 54 $ 11
(a) Includes consumer excise taxes of $222 $ 237
See Notes to Consolidated Financial Statements.
1
<PAGE>
CONSOLIDATED BALANCE SHEET UNION OIL COMPANY OF CALIFORNIA
(Unaudited)
March 31 December 31
Millions of dollars 1994 1993
- ----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 218 $ 205
Accounts and notes receivable
Trade 879 877
Refundable income taxes 84 114
Inventories
Crude oil 41 44
Refined products 148 146
Chemicals 56 55
Minerals 17 15
Supplies, merchandise and other 71 66
Other current assets 64 56
- -----------------------------------------------------------------------------
Total current assets 1,578 1,578
Investments and long-term receivables 864 847
Properties (net of accumulated depreciation and other
allowances of $11,853 in 1994; $11,667 in 1993) 6,653 6,723
Other assets 88 119
- -----------------------------------------------------------------------------
Total assets $9,183 $9,267
Liabilities
Current liabilities
Accounts payable $ 606 $ 735
Taxes payable 271 208
Current portion of long-term debt and
capital lease obligations 55 54
Interest payable 72 92
Other current liabilities (includes amounts due Unocal:
$91 in 1994; $83 in 1993) 130 132
- -----------------------------------------------------------------------------
Total current liabilities 1,134 1,221
Long-term debt and capital lease obligations 3,467 3,468
Deferred income taxes 846 875
Other deferred credits and liabilities 623 586
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Total liabilities 6,070 6,150
Shareholder's Equity
Common stock ($2-1/12 par value) - -
Capital in excess of par value 891 891
Foreign currency translation adjustment (12) (5)
Retained earnings 2,234 2,231
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Total Shareholder's equity 3,113 3,117
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Total liabilities and Shareholder's equity $9,183 $9,267
See Notes to Consolidated Financial Statements.
2
<PAGE>
CONSOLIDATED CASH FLOWS UNION OIL COMPANY OF CALIFORNIA
(Unaudited)
For the Three Months
Ended March 31
Millions of Dollars 1994 1993
- ------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net earnings $ 54 $ 11
Adjustments to reconcile net earnings to
net cash provided by operating activities
Cumulative effect of accounting changes - 130
Depreciation, depletion and amortization 272 234
Dry hole costs 24 8
Deferred income taxes (27) 50
Gain on sales of assets (before-tax) (14) (77)
Other 40 6
Working capital and other changes related to operations
Accounts and notes receivable 28 85
Inventories (6) (18)
Accounts payable (129) (48)
Taxes payable 63 (16)
Other (5) (61)
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Net cash provided by operating activities 300 304
Cash Flows from Investing Activities
Capital expenditures (includes dry hole costs) (264) (192)
Proceeds from sales of assets 38 320
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Net cash provided by (used in) investing activities (226) 128
Cash Flows from Financing Activities
Long-term borrowings 362 -
Reduction of long-term debt and capital lease obligations (363) (41)
Dividends paid to the Parent (68) (50)
Other 8 (2)
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Net cash used in financing activities (61) (93)
Increase in cash and cash equivalents 13 339
Cash and cash equivalents at beginning of year 205 157
- -----------------------------------------------------------------------------
Cash and cash equivalents at end of period $218 $496
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $90 $93
Income taxes (net of refunds) $ 9 $52
See Notes to Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The consolidated financial statements included herein are unaudited
and, in the opinion of management, include all adjustments
necessary for a fair presentation of financial position and results
of operations. All adjustments are of a normal recurring nature,
except for items discussed in Note 2. Such financial statements
are presented in accordance with the Securities and Exchange
Commission's disclosure requirements for Form 10-Q.
Union Oil Company of California ("Union Oil" or "the company") is
a wholly owned subsidiary of Unocal Corporation ("Unocal" or "the
Parent").
These interim consolidated financial statements should be read in
conjunction with the Consolidated Financial Statements and the
Notes to Consolidated Financial Statements filed with the
Commission in Union Oil Company of California's 1993 Annual Report
on Form 10-K.
Results for the three months ended March 31, 1994, are not
necessarily indicative of future financial results.
(2) 1993 Accounting Changes:
(a) Effective January 1, 1993, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."
This new accounting standard requires the company to recognize
its obligation to provide postretirement health care benefits
and to accrue such costs rather than recording them on a cash
basis. The actuarial present value of the accumulated
postretirement health care obligation existing at January 1,
1993 was recognized in the Consolidated Earnings Statement as a
cumulative effect of an accounting change, resulting in a
charge to the first quarter 1993 earnings of $192 million
before tax ($121 million after tax).
(b) The company also adopted SFAS No. 112, "Employers' Accounting
for Postemployment Benefits," effective January 1, 1993. This
statement requires the company to recognize its obligation to
provide benefits, such as workers' compensation and disabled
employees' medical care, to former or inactive employees after
employment but before retirement. The charge to earnings for
the cumulative effect of the company's unfunded obligation
prior to 1993, was $14 million before tax ($9 million after
tax).
(3) Capitalized interest totaled $9 million and $7 million for the
first quarter of 1994 and 1993, respectively.
(4) Between March 24, and April 27, 1994, the company issued $179
million in Medium Term Notes with interest rates ranging from 6.33%
to 7.24% and maturity dates ranging from February 1997 to March
2001. The proceeds were used to refinance maturing and callable
debt.
(5) Certain items in the prior year financial statements have been
reclassified to conform to the 1994 presentation.
4
<PAGE>
UNION OIL COMPANY OF CALIFORNIA
OPERATING HIGHLIGHTS
(Unaudited)
For the Three Months
Ended March 31
1994 1993
- ----------------------------------------------------------------------
NET DAILY PRODUCTION (a)
Crude oil and condensate (thousand barrels):
United States 141.9 152.5
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Foreign: Thailand 15.4 19.2
Indonesia 61.9 49.8
Canada 16.6 18.5
Other 21.3 12.9
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Total Foreign 115.2 100.4
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Worldwide 257.1 252.9
Natural Gas (million cubic feet):
United States 1,118 929
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Foreign: Thailand 422 532
Indonesia 167 109
Canada 93 61
Other 4 6
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Total Foreign 686 708
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Worldwide 1,804 1,637
Natural gas liquids (thousand barrels) 19.4 19.9
Geothermal (million kilowatt-hours) 19.6 22.1
Input to crude oil processing units
(thousand barrels daily) (b) 294.2 279.4
Sales of petroleum products
(thousand barrels daily) (b) 306.2 379.9
- ----------------------------------------------------------------------
AVERAGE SALES PRICES
Crude oil and condensate (per barrel):
United States $10.48 $14.38
Foreign: Thailand $13.35 $17.35
Indonesia $13.06 $15.58
Canada $11.44 $14.86
Other $12.71 $16.59
Total Foreign $12.72 $16.01
Worldwide $11.32 $14.90
Natural gas (per thousand cubic feet):
United States $2.08 $1.82
Foreign: Thailand $2.10 $2.08
Indonesia $1.68 $2.05
Canada $1.77 $1.46
Other $2.13 $2.42
Total Foreign $1.97 $1.96
Worldwide $2.04 $1.89
(a) Includes net profits type agreements on a gross basis.
(b) Includes the company's 50% equity portion of The UNO-VEN Company.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Union Oil's net earnings for the first quarter of 1994 were $54 million,
compared with $11 million in the first quarter of 1993. The
comparability of the company's reported earnings for these periods is
affected by the following special items:
For the Three Months
Ended March 31
Millions of Dollars 1994 1993
- -----------------------------------------------------------------------------
Special items:
Cumulative effect of accounting changes:
For postretirement benefits (SFAS 106) $ - $(121)
For postemployment benefits (SFAS 112) - (9)
Writedown of investment and provision for abandonment
and remediation of the Guadalupe oil field (23) -
Litigation (17) (1)
MESA settlement 24 -
Asset sales 8 47
Other - (3)
- ------------------------------------------------------------------------------
Total $ (8) $ (87)
Excluding the effect of special items, first quarter 1994 net earnings
were $62 million, compared with $98 million in the first quarter of 1993.
The results reflected the steep decline in crude oil prices from a year
ago, which were offset partially by increased natural gas revenues due to
higher domestic prices and production.
Consolidated revenues for the first quarter 1994 were $1.92 billion, down
from $2.32 billion in the same period a year ago. Total costs and other
deductions for the first quarter 1994 were $1.81 billion, compared to
$2.07 billion in the first quarter of 1993. Both revenues and costs
decreases reflect the sale of several businesses during 1993 and the
continued phase-out of Southeastern retail gasoline marketing operations.
PETROLEUM EXPLORATION AND PRODUCTION. Earnings for the first quarter
1994 totaled $71 million, compared with $142 million in 1993. Excluding
special charges related to the Guadalupe oil field and gains from asset
sales, petroleum exploration and production earnings were $87 million,
compared with $120 million during the same period a year ago.
The company took a charge in the first quarter of 1994 for the writedown
of investment, abandonment and remediation of the Guadalupe oil field,
located on the central coast of California. This charge covers
remediation and cleanup efforts currently underway from leaks of a diesel-
like additive, called diluent, that was formerly used to help produce the
heavy crude oil.
The decline in operating earnings reflected lower worldwide crude oil
prices which was partially offset by higher domestic natural gas prices
and production.
The average sales price for worldwide crude oil in the first quarter of
1994 was $11.32 per barrel, down from $14.90 per barrel a year ago.
Net daily domestic natural gas production averaged 1,118 million cubic
feet (mmcf), compared to 929 mmcf for the first quarter of 1993. The
increased domestic natural gas production was a result of the accelerated
development program initiated in 1993. Domestic natural gas sales prices
averaged $2.08 per thousand cubic feet (mcf), up from $1.82 per mcf last
year.
6
<PAGE>
REFINING, MARKETING AND TRANSPORTATION. First quarter earnings for Union
Oil's refining, marketing and transportation segment totaled $41 million,
compared with $48 million in 1993. For the quarter, margins on refined
product sales were slightly lower. Petroleum product sales were 306,200
barrels per day in the first quarter of 1994, down from 379,900 barrels
per day in the same period in 1993. The decline is the result of the
sale of the auto/truckstop system and the continued phase-out of
Southeastern retail gasoline marketing. However, the company's West
Coast U.S. petroleum product sales volumes increased 7 percent to 240,000
barrels per day in the first quarter 1994, compared with 224,200 barrels
per day a year ago.
CHEMICALS. Chemicals operations recorded earnings of $9 million for the
first quarter 1993, compared with $12 million a year ago. The results
reflected lower earnings from agricultural products.
GEOTHERMAL. First quarter 1994 geothermal earnings were $5 million,
compared with $32 million a year ago. The 1993 first quarter included a
$26 million gain from the sale of the company's Imperial Valley
(California) geothermal assets and other geothermal exploration
properties.
CORPORATE AND OTHER. Corporate expenses and the results of other
businesses were $72 million in the first quarter 1994. This compares
with $93 million in the same period in 1993. Adjusted for special items,
net expense for corporate and other was $80 million in 1994, versus $89
million for the same period a year ago. The decrease reflected lower net
interest expense and a reduction in administrative and general expense.
The special items in the first quarter of 1994 included $24 million from
the settlement of a lawsuit against Mesa Petroleum, resulting from the
takeover attempt in 1985. Also, the first quarters of 1994 and 1993 each
included litigation expenses.
FINANCIAL CONDITION AND CAPITAL EXPENDITURES
Cash flow from operating activities, including working capital changes,
was $288 million in the first quarter of 1994, down from $305 million in
1993. The effect of lower crude oil prices was largely offset by higher
gas revenues and the Mesa lawsuit settlement.
Proceeds from asset sales were $38 million in the first quarter of 1994,
compared to $320 million in the first quarter a year ago. The 1994
proceeds were mainly from the sale of nonstrategic oil and gas
properties, while 1993 included $224 million from the sale of the
company's Imperial Valley (California) geothermal assets and other
geothermal exploration properties.
Consolidated working capital at March 31, 1994, was $476 million, an
increase of $94 million from the 1993 year-end level of $382 million.
The company's total debt remained at $3,522 million, unchanged from the
year-end 1993 level.
Capital expenditures for the first quarter 1994 totaled $264 million,
compared with $192 million a year ago. The increase reflected Union
Oil's accelerated exploration and development program in Louisiana and
Alaska's Cook Inlet, as well as refinery construction to prepare for
manufacturing reformulated gasoline. Dry hole expense for the first
quarter was $24 million in 1994, compared with $8 million in the first
quarter of 1993.
OUTLOOK
Worldwide crude oil prices are expected to remain unstable through the
rest of this year, while the demand for natural gas is expected to remain
strong. On the West Coast, the sluggish economy continues to affect
demand for refined products.
Total production of natural gas is expected to average about 1,800
million cubic feet per day during the full-year 1994, up nearly 13
percent from the 1993 level. Total production should grow to almost
2,000 million cubic feet per day by 1996, driven by higher production
from the Gulf of Mexico area and Thailand.
Crude oil and condensate production is expected to remain stable at
257,000 barrels per day if the price of West Texas Intermediate crude
remains in the $15 barrel range. However, if oil prices recover to $18
per barrel, Union Oil's production could increase to 280,000 barrels per
day by 1996.
7
<PAGE>
The company continues to work toward its asset sales targets. Through
the first quarter of 1994, the company has realized proceeds of $595
million (after tax) from asset sales under the program announced in April
1992. This represents 85 percent of the goal to generate at least $700
million in after-tax proceeds by May 1994. The company has identified
additional assets that it plans to sell this year. The goal will not be
met by May 1994, due mainly to soft market conditions; however, the
company still plans to meet the goal by year-end 1994. The company has
decided to take enough time to ensure that fair value is received for
each asset that it sells rather than rush to meet its own self-imposed
deadline.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ---------------------------
In response to a State of California Air Resources Board request
for information regarding additive concentrations levels in
Unocal gasoline, it was learned that there have been several
incidents of additive injection at a rate below required
concentration levels. The company is discussing the matter with
the Air Resources Board. There is likely to be a civil penalty
component of any settlement negotiated.
The above is in addition to items reported in Item 3 of Union Oil
Company of California's Form 10-K for the year ended December 31,
1993.
ITEM 5. OTHER INFORMATION
- ---------------------------
On April 25, 1994, the following directors were reelected to the
board: Roger C. Beach, President and Chief Operating Officer,
Union Oil Company of California; John W. Amerman, Chairman and
Chief Executive Officer, Mattel, Inc.; and MacDonald G. Becket,
F.A.I.A., former Chairman and Chief Executive Officer, The Becket
Group.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Form 10-Q Exhibits
(3) Bylaws of Union Oil Company of California, as amended
April 25, 1994, and currently in effect.
(10) Compensation and perquisites for Richard J. Stegemeier as
nonemployee Chairman of the Board
(12) Statement re computation of ratio of earnings to fixed
charges.
(b) Reports on Form 8-K
During the first quarter of 1994:
Current Report on Form 8-K dated and filed March 2, 1994,
for the purpose of reporting, under Item 5, a change in
the company's bylaws which reduces the number of
directors from 14 to 12, effective April 25, 1994.
8
<PAGE>
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNION OIL COMPANY OF CALIFORNIA
--------------------------------
(Registrant)
by: CHARLES S. MCDOWELL
-----------------------
(Charles S. McDowell,
Vice President and Comptroller)
Dated: May 11, 1994
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9
EXHIBIT 3
BYLAWS
OF
UNION OIL COMPANY OF CALIFORNIA
ARTICLE I
FISCAL YEAR
Section 1. The fiscal year of Union Oil Company of California
(hereinafter called the "Company") shall end on the thirty-first day of
December of each year.
ARTICLE II
OFFICES
Section 1. Principal Office. The principal office for the
transaction of business of the Company is hereby fixed and located at
Unocal Center in the City of Los Angeles, County of Los Angeles, State of
California. The Board of Directors (hereinafter sometimes called the
"Board") is hereby granted full power and authority to change said
principal office from one location to another in said county.
ARTICLE III
SHAREHOLDERS
Section 1. Annual Meetings. The annual meetings of the
shareholders shall be held at l0:00 o'clock A.M. on the last Monday in
April of each year if not a legal holiday, and if a legal holiday at the
same time on the following business day for the purpose of electing
directors, consideration of reports of the affairs of the Company, and
for the transaction of any other business which is within the powers of
the shareholders.
Section 2. Special Meetings. Special meetings of the shareholders
for any purpose whatsoever may be called at any time by the Chairman of
the Board, the President, the Board, or by one or more shareholders
holding not less than ten percent of the voting power of the Company upon
request in writing to the President, a Vice President or the Secretary.
The business transacted at special meetings shall be confined to the
purpose or purposes stated in the notice of such meetings.
Section 3. Notice of Meetings. Written notice of each annual or
special meeting of shareholders shall be given to each shareholder
entitled to vote thereat not less than ten nor more than sixty days
before the meeting.
Section 4. Place of Meetings. All meetings of shareholders,
whether annual or special, shall be held at the principal office of the
Company or at such other place, within or without the State of
California, as the Board may from time to time designate pursuant to
authority hereinafter granted it. In the absence of any such
designation, shareholders' meetings shall be held at the principal office
of the Company.
Section 5. Voting Rights. Shareholders entitled to vote at
shareholder meetings shall be entitled to one vote for each full share.
A fraction of a share or a fractional interest in a share shall not be
entitled to any voting rights whatsoever.
Section 6. Conduct of Meetings. All shareholders' meetings shall
be conducted in accordance with ordinary parliamentary usage and common
practice. The decisions of the officer presiding at such meetings shall
govern in all matters relating to the conduct of the meeting.
Section 7. Voting. Directors shall be elected in accordance with
the provisions of the California Corporations Code by holders of shares
entitled to vote in the election; provided, however, a nomination shall
<PAGE>
2
be accepted, and votes cast for a nominee shall be counted by the
inspectors of election, only if the Secretary of the Company has received
at least twenty-four hours prior to the meeting a statement over the
signature of the nominee that such person consents to being a nominee
and, if elected, intends to serve as a director.
Section 8. Action Without a Meeting. Any action which may be taken
at any annual or special meeting may be taken without a meeting and
without prior notice, if a consent in writing, setting forth the action
so taken, shall be signed by the holders of the outstanding shares having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted. Directors may not be elected by
written consent except by unanimous written consent of all shares
entitled to vote for the election of directors.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Powers. Subject to the limitations of the Restated
Articles of Incorporation of the Company and of the California General
Corporation Law as to action which shall be authorized or approved by the
shareholders, all corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Company shall be
controlled by, the Board of Directors.
Section 2. Number. The exact number of directors of the Company,
within the limits specified in Article Fourth of the Company's Restated
Articles of Incorporation, shall be twelve until changed in the manner
provided by law.
Section 3. Annual Meetings. Immediately following each annual
meeting of shareholders, the Board shall hold its regular annual meeting
for the purpose of organization, election of officers and the transaction
of any other business.
Section 4. Regular Monthly Meetings. Regular monthly meetings of
the Board shall be held at 9:00 o'clock A.M. on the last Monday of each
month if not a legal holiday, and if a legal holiday, at the same time on
the next following business day unless otherwise fixed by a resolution of
the Board.
Section 5. Special Meetings. Special meetings of the Board for any
purpose or purposes whatsoever may be called by the Chairman of the Board
or the President or in the absence or inability of any of either of these
officers, by any Vice President, or by at least two of the directors at
the time in office.
Section 6. Notice of Meetings. Notice of regular annual meetings
and of regular monthly meetings of the Board is hereby dispensed with.
Notice of special meetings must be given at least four days in advance if
given by mail, or at least forty-eight hours in advance if delivered
personally or given by telephone or telegram.
Section 7. Place of Meetings. All meetings of the Board, whether
regular annual, regular monthly or special meetings, shall be held at any
place within or without the State of California which has been designated
from time to time by resolution of the Board or in the notice of the
meeting. In the absence of such designation all directors' meetings
shall be held at the principal office of the Company.
Section 8. Quorum. A majority of the exact number of directors
specified in Section 2 of ARTICLE IV of the Bylaws shall constitute a
quorum of the Board of Directors for the transaction of business;
provided, however, that vacancies on the Board may be filled by a
majority of the remaining directors, though less than a quorum, or by a
sole remaining director, each such director to hold office until a
successor is elected at an annual or special meeting of the shareholders.
Section 9. Compensation of Directors. Directors and members of
committees appointed by the Board shall receive such compensation, if
any, for their services, and such reimbursement for their expenses as may
be fixed or determined by resolution of the Board. The Board may,
however, in any such resolution provide that directors who are also
employees of the Company or any of its subsidiaries shall not receive
additional compensation for services as a director or member of a
committee appointed by the Board.
<PAGE>
3
Section 10. Indemnification of Directors, Officers, Employees and
Other Agents. The Company shall, to the maximum extent permitted by the
General Corporation Law of California, indemnify each of its directors
and officers against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any
proceeding arising by reason of the fact any such person is or was a
director or officer of the Company and shall advance to such director or
officer expenses incurred in defending any such proceeding to the maximum
extent permitted by such law. For purposes of this section, a "director"
or "officer" of the Company includes any person who is or was a director
or officer of the Company, or is or was serving at the request of the
Company as a director or officer of another corporation, or other
enterprise, or was a director or officer of a corporation which was a
predecessor corporation of the Company or of another enterprise at the
request of such predecessor corporation. The Board of Directors may in
its discretion provide by resolution for such indemnification of, or
advance of expenses to, other employees or agents of the Company, and
likewise may refuse to provide for such indemnification or advance of
expenses except to the extent such indemnification is mandatory under the
California General Corporation Law.
Section 11. Authority to Designate Place of Shareholders' Meetings.
The Board is hereby granted full power and authority to designate from
time to time any place within or without the State of California for the
holding of any shareholders' meeting, whether annual or special.
Section 12. Committees. The Board may, by resolution, appoint one
or more committees, in addition to the Executive Committee, to consist of
two or more of the directors of the Company, and prescribe their duties
and powers. A majority of the members of any such committee may
determine its action and fix the time and place of its meetings unless
the Board shall otherwise provide. The Board shall have the power at any
time to fill vacancies in, to change the membership of, or to dissolve
any such committee.
Section 13. Action by Written Consent. Any action required or
permitted to be taken by the Board under any provision of Division I of
Title I of the Corporations Code of the State of California may be taken
without a meeting, if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the
Board.
Section l4. Conference Calls. Members of the Board may participate
in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such
meeting can hear one another.
ARTICLE V
EXECUTIVE COMMITTEE
Section 1. Number and Composition. The Board of Directors shall
appoint from its membership, annually, an Executive Committee of four or
more directors who are employee officers of the Company. Included on the
Executive Committee shall be the chief executive officer of the Company.
Each member of the Executive Committee shall hold membership at the
pleasure of the Board, which shall have the exclusive power to fill
vacancies thereon as they may occur. The Chairman of the Executive
Committee shall be the chief executive officer of the Company.
Section 2. Powers. The Executive Committee, during the intervals
between meetings of the Board, shall have and there is hereby granted to
it all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, except the power
to declare dividends, to adopt, amend or repeal Bylaws, and to fix the
compensation of, or to fill vacancies on the Board or on any committee,
to approve any action for which shareholder approval is also required by
the California General Corporation Law, to amend or repeal any resolution
of the Board which by its express terms is not so amendable or
repealable, or to appoint other committees of the Board or the members
thereof.
Section 3. Procedure. The Executive Committee, by vote of a
majority of its members, shall fix its own times and places of meetings,
shall determine the number of its members constituting a quorum of for
the transaction of business, and shall prescribe its own rules of
procedure; no change in which shall be made save by a majority vote of
its members.
<PAGE>
4
Section 4. Records and Reports. The Executive Committee shall keep
regular minutes of all business transacted at its meetings, and all
action of the Executive Committee shall be reported to the Board at its
next ensuing meeting. Such action shall be subject to review by the
Board, provided that no rights of third parties shall be affected by such
review.
Section 5. Compensation. Members of the Executive Committee may
receive such compensation, if any, for their services, and such
reimbursement for their expenses, as may be fixed or determined by the
Board.
ARTICLE VI
OFFICERS
Section 1. Officers. The officers of the Company shall be a Chief
Executive Officer (who shall be the President, unless such an officer be
elected), a President, a Vice President, a Secretary, a Chief Financial
Officer (who shall be the Treasurer unless such an officer be elected), a
Comptroller, a Treasurer, a Chief Compliance Officer and a Chief Legal
Officer. The Company may also have, at the discretion of the Board, a
Chairman of the Board of Directors, a Chief Operating Officer, one or
more additional Vice Presidents, one or more Assistant Secretaries, one
or more Assistant Treasurers, and one or more Assistant Comptrollers, and
the Board may appoint such other officers as it may deem necessary or
advisable, who shall have such authority and perform such duties as from
time to time may be prescribed by the Board, Chairman of the Board, or
the President. Any two or more offices may be held by the same person.
Section 2. Election and Removal. The officers of the Company shall
be chosen annually by the Board at its regular annual meeting and each
shall hold office until the corresponding regular annual meeting of the
Board in the next year and until a successor shall be elected and
qualified unless such officer shall theretofore resign or shall be
removed or otherwise disqualified to serve. The Board may remove any
officer either with or without cause or under such other terms or
conditions as it may prescribe. Vacancies may be filled by the Board as
they may occur.
Section 3. Powers and Duties.
(a) Chairman of the Board. The Chairman of the Board, if such an
officer be elected, shall preside at all meetings of the Board of
Directors and shall have such other powers and duties as may from time to
time be assigned by the Board of Directors or prescribed by the Bylaws.
(b) President. The President, unless the Chairman of the Board is
so designated, shall be the chief executive officer of the Company. As
chief executive officer, the President shall preside at all meetings of
shareholders and shall be the Chairman of the Executive Committee.
Subject to the control of the Board of Directors, the President shall
have general supervision, direction and control of the business and
affairs of the Company and its officers. The President shall be a member
of the Executive Committee and ex officio member of all other committees,
and in general shall perform all duties incident to the office of
President, and shall have such powers and duties as may from time to time
be assigned by the Board of Directors or prescribed by the Bylaws.
(c) Vice Presidents, Chief Operating Officer, and Chief Financial
Officer. Each Vice President, respectively, the Chief Operating Officer,
and the Chief Financial Officer shall have such authority and shall
perform such duties as shall from time to time be assigned by the Board,
the Chairman of the Board, the President, or the Bylaws.
(d) Secretary. The Secretary shall keep, or cause to be kept, a
book of minutes, at the principal office and/or such other place or
places as the Board may order, of all meetings of directors and
shareholders, with the time and place of holding, whether regular or
special, and if special how authorized, the notice thereof given, the
names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings, and the proceedings
thereof.
<PAGE>
5
The Secretary shall keep, or cause to be kept, at the principal
office or at the office or offices of the Company's transfer agent or
agents, a share register, or a duplicate share register, showing the
names of the shareholders and their addresses, the number and classes of
shares held by each, the number and date of certificates issued for the
same, and the number and date of cancellation of every certificate
surrendered for cancellation.
The Secretary shall give or cause to be given notice of all the
meetings of the shareholders and of the Board of Directors required by
the Bylaws or by law. The Secretary shall have charge and be custodian
of the seal of the Company and of all books, papers, contracts, leases,
deeds, securities and other documents or instruments of whatsoever kind
which belong to or are in the Company's possession, except those
pertaining to the office of Treasurer or Comptroller.
The Secretary shall have such other powers and perform such other
duties as may from time to time be prescribed by the Board, the Chairman
of the Board, the President or the Bylaws, and shall in general, subject
to control of the Board, the Chairman of the Board and the President,
perform all the duties usually incident to the office of secretary of a
corporation.
(e) Assistant Secretaries. Each Assistant Secretary shall assist
the Secretary, and in the absence or disability of the Secretary any
Assistant Secretary may perform the duties of the Secretary unless and
until the contrary is expressed by the Board, and shall perform such
other duties as shall be prescribed by the Board or the Secretary.
(f) Treasurer. The Treasurer shall have custody of and be
responsible for all the monies and funds of the Company. The Treasurer
shall deposit or cause to be deposited all Company monies, funds and
other valuables in the name and to the credit of the Company in such bank
or banks as shall be proper or as shall be directed by the Board, the
Chairman of the Board or the President, and shall disburse the funds of
the Company which have been duly approved for disbursement. The
Treasurer shall enter regularly in the books of the Company to be kept
for the purpose full and accurate accounts of all monies received and
paid out on account of the Company.
The Treasurer shall have such other powers and perform such other
duties as may from time to time be prescribed by the Board, the Chairman
of the Board, the President or the Bylaws, and shall in general, subject
to control of the Board, the Chairman of the Board and the President,
perform all the duties usually incident to the office of treasurer of a
corporation.
(g) Assistant Treasurers. Each Assistant Treasurer shall assist the
Treasurer and, in the absence or disability of the Treasurer, any
Assistant Treasurer may perform the duties of Treasurer unless and until
the contrary is expressed by the Board, and shall perform such other
duties as may be prescribed by the Board or the Treasurer.
(h) Comptroller. The Comptroller shall be the principal officer in
charge of the general accounting books, accounting records and forms of
the Company and shall see that all monies and obligations due the Company
and all properties and assets are properly accounted for. The
Comptroller shall prepare the Company's balance sheets, income accounts
and other financial statements and reports, and render to the Chairman of
the Board and the President such periodic reports covering the results of
operations of the Company as may be required by them.
The Comptroller shall have such other powers and perform such other
duties as may from time to time be prescribed by the Board, the Chairman
of the Board, the President or the Bylaws, and shall in general, subject
to control of the Board, the Chairman of the Board and the President,
perform all the duties usually incident to the office of comptroller of a
corporation.
(i) Assistant Comptrollers. Each Assistant Comptroller shall assist
the Comptroller and, in the absence or disability of the Comptroller, any
Assistant Comptroller may perform the duties of the Comptroller unless
and until the contrary is expressed by the Board, and shall also perform
such other duties as shall be prescribed by the Board or the Comptroller.
<PAGE>
6
(j) Chief Executive Officer. The Chief Executive Officer shall be
the officer, reporting directly to the Board, responsible for overall
management of the Company.
(k) Chief Compliance Officer. The Chief Compliance Officer shall
oversee the Company's compliance with the law. The Chief Compliance
Officer shall render such reports to the Board and/or the officers of the
Company as may be required by them or any of them.
(l) Chief Legal Officer. The Chief Legal Officer shall be in charge
of the Company's legal affairs. The Chief Legal Officer shall advise the
Board and/or the officers of the Company on such legal matters and
prepare such reports as may be required by them or any of them.
ARTICLE VII
MISCELLANEOUS
Section 1. Execution of Documents. Unless otherwise authorized or
prescribed by the Board of Directors, all contracts, leases, deeds, deeds
of trust, mortgages, bonds, indentures, endorsements, assignments, powers
of attorney to transfer stock or for other purposes, and other documents
and instruments of whatsoever kind shall be executed for and on behalf of
the Company by the Chairman of the Board, the President, a Vice
President, the Chief Financial Officer, the Treasurer, or the
Comptroller, or by any such officer and the Secretary or an Assistant
Secretary, who shall have authority to affix the corporate seal to the
same.
The Board also may authorize any other officer or officers, or
agents, to execute any contract, document or instrument of whatever kind
for and on behalf of the Company and such authority may be general or be
confined to specific instances.
Section 2. Undertakings and Commitments. No undertaking,
commitment, contract, instrument or document shall be binding upon the
Company unless previously authorized or subsequently ratified by the
Board or executed by an officer or officers or an agent or agents of the
Company acting under powers conferred by the Board or by these Bylaws.
Section 3. Checks, Drafts, etc. All checks, notes and other
obligations for collection, deposit or transfer, and all checks and
drafts for disbursement from Company funds, and all bills of exchange and
promissory notes, and all acceptances, obligations and other instruments
for the payment of money, shall be endorsed or signed by such officer or
officers, agent or agents, and shall be thereunto authorized from time to
time by the Board of Directors.
Section 4. Representation of Shares of Other Corporations. Shares
standing in the name of the Company may be voted or represented and all
rights incident thereto may be exercised on behalf of the Company by the
Chairman of the Board, the President, a Vice President, the Secretary,
the Treasurer or the Comptroller, or by such other officers as to whom
the Board of Directors may from time to time confer like powers.
ARTICLE VIII
REPEAL OF BYLAWS
Section 1. All existing Bylaws of the Company and all amendments
thereto are hereby repealed.
ARTICLE IX
AMENDMENTS
Section 1. Power of Shareholders. New Bylaws may be adopted or
these Bylaws may be amended or repealed by the vote or written assent of
shareholders entitled to exercise a majority of the voting power of the
Company.
<PAGE>
7
Section 2. Power of Directors. Subject to the right of
shareholders as provided in Section 1 of this ARTICLE IX to adopt, amend
or repeal Bylaws, Bylaws may be adopted, amended or repealed by the Board
of Directors as provided or permitted by law.
ARTICLE X
EMERGENCY
Section 1. "Emergency" as used in this Article means disorder,
disturbance or damage caused by war, enemy attack, other warlike acts or
disaster which prevents conduct and management of the affairs and
business of the Company by the Board of Directors and officers in the
manner provided for in other Articles of these Bylaws. The powers and
duties conferred and imposed by this Article, and any resolutions adopted
pursuant thereto, shall be effective only during an emergency. This
Article may be implemented from time to time by resolutions adopted by
the Board of Directors before or during an emergency, or during an
emergency by the Executive Committee or an Emergency Managing Committee
constituted and then acting pursuant hereto. An emergency, once
commenced, shall be deemed to continue until terminated by resolutions
adopted for that purpose by the directors.
Section 2. If, during an emergency, a majority of the Board of
Directors cannot be found or is unable to act, one-third of the exact
number of the Board of Directors shall constitute a quorum thereof.
If, during an emergency, it can be determined that vacancies on the
Board of Directors exist and they are duly filled by the remaining
directors or the sole remaining director pursuant to the provisions of
Section 8 of ARTICLE IV of these Bylaws, then the following provisions of
this Article shall not apply. If, however, vacancies are not so filled
so as to obtain a quorum of the Board of Directors, then during an
emergency the provisions of this Article and any implementing resolutions
shall supersede any conflicting Article of these Bylaws or resolutions
adopted pursuant thereto.
Section 3. During any emergency, the officers and employees of the
Company shall continue, so far as possible, to conduct the Company's
affairs and business under the guidance of the Board of Directors, or the
Executive Committee or any Emergency Managing Committee acting pursuant
to this Article and in accordance with known orders of governmental
authorities.
Section 4. If, during any emergency, a quorum of either the Board
of Directors or Executive Committee cannot be found or is unable to act,
any two or more available members of the Executive Committee who are also
directors and the Chief Executive Officer shall constitute a quorum of
the Executive Committee and as such shall have and exercise the fullest
power for conduct and management of the affairs and business of the
Company, provided that the Executive Committee as so constituted shall
comply to the extent practicable under the circumstances with the
provisions of ARTICLE III of these Bylaws relating to annual and special
meetings of shareholders. If two or more members of the Executive
Committee who are also directors and the Chief Executive Officer are not
able to serve, any three available directors shall be and constitute the
Executive Committee, with two thereof constituting a quorum, for exercise
of the powers conferred and performance of the duties imposed by this
Section 4.
Section 5. If, during any emergency, neither a quorum of the Board
of Directors nor of the Executive Committee as provided for in Section 4
of this Article is available to serve, then the powers conferred and
duties imposed by Section 4 shall vest and devolve upon an Emergency
Managing Committee consisting of available directors, the Chief Executive
Officer, if available, and as many Vice Presidents (or, in case of their
inability, any other officers), as may be necessary from time to time to
constitute a total of three Committee members. The Chief Executive
Officer, if available, and any other one member of the Emergency Managing
Committee shall constitute a quorum of the Committee for exercise of the
powers conferred and performance of the duties imposed upon the Committee
hereunder, but if the Chief Executive Officer is not available any two
members of the Emergency Managing Committee shall constitute a quorum.
EXHIBIT 10
COMPENSATION AND PERQUISITES FOR
RICHARD J. STEGEMEIER
AS NONEMPLOYEE CHAIRMAN OF THE BOARD
Period covered: May 1, 1994 to April 30, 1995
(Subsequent arrangements subject to review
by Compensation Committee on an annual
basis)
Compensation: $110,000 per year
Perquisites:
Automobile and driver: For business-related activities/functions
only
Office and secretary: Provided full-time at Brea
Club Memberships: Monthly dues for one luncheon club
Use of company aircraft: Provided when approved by CEO
Reimbursement for
reasonable business
expenses: Provided
Financial counseling: Provided
Access to other company
resources (e.g., community
and public relations
staffs): Provided
<PAGE>
EXHIBIT 12
UNION OIL COMPANY OF CALIFORNIA AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Three Months
Ended March 31
Dollars in millions 1994 1993
- ----------------------------------------------------------------------
Earnings before cumulative effect of
accounting changes $ 54 $141
Provision for income taxes 51 109
--- ---
Earnings subtotal 105 250
Fixed charges included in earnings:
Interest expense 74 81
Interest portion of rentals 14 15
--- ---
Subtotal 88 96
Earnings available before fixed charges $193 $346
==== ====
Fixed charges:
Fixed charges included in earnings $ 88 $ 96
Capitalized interest 9 7
---- ----
Total fixed charges $ 97 $103
==== ====
Ratio of earnings to fixed charges 2.0 3.4
