UNITED STATES
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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 1-3939
KERR-McGEE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
A Delaware Corporation 73-0311467
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Kerr-McGee Center, Oklahoma City, Oklahoma 73125
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code (405) 270-1313
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, $1.00 par value, outstanding as of
April 30, 1999: 86,372,748
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars, except per-share amounts) 1999 1998
--------------------------
<S> <C> <C>
Sales $ 485.9 $ 506.7
--------- -------
Costs and Expenses
Costs and operating expenses 225.1 213.0
Selling, general and administrative expenses 52.7 47.7
Depreciation and depletion 131.2 129.7
Exploration, including dry holes and
amortization of undeveloped leases 28.8 67.0
Taxes, other than income taxes 15.3 8.7
Merger costs 155.1 -
Interest and debt expense 44.7 34.8
--------- -------
Total Costs and Expenses 652.9 500.9
--------- -------
(167.0) 5.8
Other Income 16.4 21.6
--------- -------
Income (Loss) from Continuing Operations before Income Taxes (150.6) 27.4
Provision (Benefit) for Income Taxes (44.1) 11.6
-------- -------
Income (Loss) from Continuing Operations (106.5) 15.8
Income from Discontinued Operations (net of provision for income
taxes of $2.4) - 8.0
Cumulative Effect of Change in Accounting Principle (net of benefit
for income taxes of $2.2) (4.1) -
-------- -------
Net Income (Loss) $ (110.6) $ 23.8
======== =======
Net Income (Loss) per Common Share
Basic and Diluted
Continuing operations $ (1.23) $ .18
Discontinued operations - .09
Cumulative effect of change in accounting principle (.05) -
-------- -------
Total $ (1.28) $ .27
======== =======
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
March 31, December 31,
(Millions of dollars) 1999 1998
----------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 208.5 $ 121.0
Notes and accounts receivable 402.2 388.4
Inventories 281.5 247.1
Deposits and prepaid expenses 110.6 120.2
--------- ---------
Total Current Assets 1,002.8 876.7
--------- ---------
Property, Plant and Equipment 10,684.3 10,651.7
Less reserves for depreciation,
depletion and amortization 6,562.1 6,498.9
--------- ---------
4,122.2 4,152.8
--------- ---------
Investments and Other Assets 417.8 421.8
--------- ---------
$5,542.8 $5,451.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 10.1 $ 35.8
Accounts payable 364.9 385.3
Long-term debt due within one year 219.3 235.6
Other current liabilities 370.9 393.3
--------- ---------
Total Current Liabilities 965.2 1,050.0
--------- ---------
Long-Term Debt 2,269.5 1,978.5
--------- ---------
Deferred Credits and Reserves 1,124.7 1,077.3
--------- ---------
Stockholders' Equity
Common stock, par value $1 - 300,000,000
shares authorized, 93,383,538 shares issued at
3-31-99 and 93,378,069 shares issued at 12-31-98 93.4 93.4
Capital in excess of par value 1,279.6 1,282.2
Preferred stock purchase rights .5 .5
Retained earnings 377.5 527.0
Accumulated other comprehensive loss (50.1) (36.0)
Common shares in treasury, at cost - 7,010,790
shares at both 3-31-99 and at 12-31-98 (387.8) (387.8)
Deferred compensation (129.7) (133.8)
--------- ---------
Total Stockholders' Equity 1,183.4 1,345.5
--------- ---------
$5,542.8 $5,451.3
======== ========
The "successful efforts" method of accounting for oil and gas exploration and
production activities has been followed in preparing this balance sheet.
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars) 1999 1998
--------------------------
<S> <C> <C>
Operating Activities
Net income (loss) $ (110.6) $ 23.8
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation, depletion and amortization 141.5 143.3
Dry hole costs 4.8 37.4
Deferred income taxes 3.5 4.1
(Gain) Loss on sale and retirement of assets 1.8 (7.1)
Noncash items affecting net income 148.1 .1
Other net cash used in operating activities (127.0) (14.8)
-------- -------
Net Cash Provided by Operating Activities 62.1 186.8
-------- -------
Investing Activities
Capital expenditures (139.1) (287.9)
Acquisitions - (97.0)
Proceeds from sale of assets - 39.7
Other investing activities (8.8) 3.3
-------- -------
Net Cash Used in Investing Activities (147.9) (341.9)
-------- -------
Financing Activities
Issuance of long-term debt 619.3 264.1
Repayment of long-term debt (345.3) (61.6)
Decrease in short-term borrowings (24.5) -
Dividends paid (21.2) (21.5)
Other financing activities (41.9) 4.0
-------- -------
Net Cash Provided by Financing Activities 186.4 185.0
-------- -------
Effects of Exchange Rate changes on Cash and Cash Equivalents (13.1) -
-------- -------
Net Increase in Cash and Cash Equivalents 87.5 29.9
Cash and Cash Equivalents at Beginning of Period 121.0 192.3
-------- -------
Cash and Cash Equivalents at End of Period $ 208.5 $222.2
======== ======
The accompanying notes are an integral part of this statement.
</TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
A. The condensed financial statements included herein have been prepared by
the company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the opinion of management,
include all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the resulting operations for the indicated
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. On February 26, 1999, the company completed the merger
with Oryx Energy Company (Oryx). The merger was accounted for using the
pooling of interest method of accounting for business combinations.
Accordingly, the company's financial statements have been restated to
include the combined business activities for the company and Oryx for all
periods presented. Although the company believes that the disclosures are
adequate to make the information presented not misleading, it is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the company's latest
annual report on Form 10-K.
B. Effective January 1, 1999, the company adopted Statement of Position (SOP)
No. 98-5, "Reporting on the Costs of Start-Up Activities." The SOP requires
costs of start-up activities to be expensed as incurred. Unamortized
start-up costs at the beginning of the year were required to be recognized
as cumulative effect of a change in accounting principle, which increased
the first quarter after-tax loss by $4.1 million.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (FAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." FAS No. 133 establishes accounting and
reporting standards that require derivative instruments to be recorded in
the balance sheet as either an asset or liability and measured at its fair
value. Changes in the derivative's fair value must be recognized currently
in earnings unless specific hedge accounting criteria are met. Accounting
for qualifying hedges allows a derivative's gains and losses to offset
related results on the hedged item in the income statement and requires a
company to formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. FAS No. 133 is effective for
fiscal years beginning after June 15, 1999, and early adoption is
permitted. The effect of adopting FAS No. 133 has not been determined but
is not expected to have a material impact on the company's results of
operations.
C. Net cash provided by operating activities reflects cash payments for income
taxes and interest as follows:
Three Months Ended
March 31,
(Millions of dollars) 1999 1998
---------------------
Income taxes $49.0 $ 4.8
Interest 22.8 21.8
D. During the first quarter of 1999 and 1998, comprehensive income (loss) was
$(124.8) million and $23.9 million, respectively.
E. Investments in equity affiliates totaled $168.5 million at March 31, 1999,
and $170.1 million at December 31, 1998. Equity income related to the
investments is included in Other Income in the Consolidated Statement of
Income and totaled $2.3 million and $6.5 million for the three months ended
March 31, 1999 and 1998, respectively.
F. Income (loss) from continuing operations for purposes of computing both
basic and diluted earnings per share was $(106.5) million and $15.8 million
for the three months ended March 31, 1999 and 1998, respectively. A
reconciliation of the average shares outstanding used to compute basic
earnings per share to the shares used to compute diluted earnings per share
for both periods is presented below:
Three Months Ended
March 31,
1999 1998
-------------------------
Averages shares outstanding - basic 86,372,410 86,843,432
Dilutive effect of stock options - 385,309
Dilutive effect of debendures * - -
---------- ----------
Average shares outstanding assuming dilution 86,372,410 87,228,741
========== ==========
* The company has reserved 1,886,121 shares of common stock for issuance
to the owners of its 7 1/2% Convertible Subordinated Debentures
due 2014 (Debentures). The Debentures were not included in the
computation of diluted shares since they have an antidilutive effect for
all periods presented.
G. CONTINGENCIES
WEST CHICAGO -
In 1973, a wholly owned subsidiary, Kerr-McGee Chemical Corporation, closed
the facility at West Chicago, Illinois, that processed thorium ores.
Kerr-McGee Chemical Corporation now operates as Kerr-McGee Chemical LLC
(Chemical). Operations resulted in some low-level radioactive contamination
at the site and, in 1979, Chemical filed a plan with the Nuclear Regulatory
Commission (NRC) to decommission the facility. The NRC transferred
jurisdiction of this site to the State of Illinois (the State) in 1990.
Following is the current status of various matters associated with the West
Chicago site.
Closed Facility - In 1994, Chemical, the City of West Chicago (the City)
and the State reached agreement on the initial phase of the decommissioning
plan for the closed West Chicago facility, and Chemical began shipping
material from the site to a licensed permanent disposal facility.
In February 1997, Chemical executed an agreement with the City as to the
terms and conditions for completing the final phase of decommissioning
work. The State has indicated approval of this agreement and has issued
license amendments authorizing much of the work. Chemical expects most of
the work to be completed within five years.
In 1992, the State enacted legislation imposing an annual storage fee equal
to $2 per cubic foot of byproduct material located at the closed facility.
The storage fee cannot exceed $26 million per year, and any storage fee
payments must be reimbursed to Chemical as decommissioning costs are
incurred. Chemical has been fully reimbursed for all storage fees paid
pursuant to this legislation. In June 1997, the legislation was amended to
provide that future storage fee obligations are to be offset against
decommissioning costs incurred but not yet reimbursed.
Offsite Areas - The U.S. Environmental Protection Agency (EPA) has listed
four areas in the vicinity of the West Chicago facility on the National
Priority List that the EPA promulgates under authority of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)
and has designated Chemical as a potentially responsible party in these
four areas. The EPA issued unilateral administrative orders for two of
these areas (referred to as the residential areas and Reed-Keppler Park),
which require Chemical to conduct removal actions to excavate contaminated
soils and ship the soils elsewhere for disposal. Without waiving any of its
rights or defenses, Chemical has begun the cleanup of these two sites.
Judicial Proceedings - In December 1996, a lawsuit was filed against the
company and Chemical in Illinois state court on behalf of a purported class
of present and former West Chicago residents. The lawsuit seeks damages for
alleged diminution in property values and the establishment of a medical
monitoring fund to benefit those allegedly exposed to thorium wastes
originating from the former facility. The case was removed to federal court
and is being vigorously defended.
Government Reimbursement - Pursuant to Title X of the Energy Policy Act of
1992 (Title X), the U. S. Department of Energy is obligated to reimburse
Chemical for certain decommissioning and cleanup costs in recognition of
the fact that much of the facility's production was dedicated to United
States government contracts. Title X was amended in 1998 to increase the
amount authorized to $140 million plus inflation adjustments. Through April
30, 1999, Chemical has been reimbursed approximately $69 million under
Title X.
OTHER MATTERS
The company's current and former operations involve management of regulated
materials and are subject to various environmental laws and regulations.
These laws and regulations will obligate the company to clean up various
sites at which petroleum, chemicals, low-level radioactive substances or
other regulated materials have been disposed of or released. Some of these
sites have been designated Superfund sites by the EPA pursuant to CERCLA.
The company is also a party to legal proceedings involving environmental
matters pending in various courts and agencies. As of March 31, 1999, the
company's estimate for the cost to investigate and/or remediate all
presently identified sites of former or current operations, based on
currently known facts and circumstances, totaled $258 million, which
includes $175 million for the former West Chicago facility, the residential
areas and Reed-Keppler Park. Reserves have been established based on this
estimate. Expenditures are reduced by the amounts recovered under
government programs. Expenditures from inception through March 31, 1999,
totaled $557 million for currently known sites.
In addition to the environmental issues previously discussed, the company
or its subsidiaries are also a party to a number of other legal proceedings
pending in various courts or agencies in which the company or a subsidiary
appears as plaintiff or defendant.
It is not possible for the company to reliably estimate the amount and
timing of all future expenditures related to environmental matters because
of the difficulty of estimating cleanup costs, the uncertainty in
quantifying liability under environmental laws that impose joint and
several liability on all potentially responsible parties, and the
continually changing nature of environmental laws and regulations.
The company provides for costs related to contingencies when a loss is
probable and the amount is reasonably estimable. Although management
believes, after consultation with general counsel, that adequate reserves
have been provided for all known contingencies, the ultimate cost will
depend on the resolution of the above-noted uncertainties. Therefore, it is
possible that additional reserves could be required in the future.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Comparison of 1999 Results with 1998 Results
CONSOLIDATED OPERATIONS
First-quarter 1999 net loss totaled $110.6 million, compared with net income of
$23.8 million for the same 1998 period. Operating profit for the 1999 first
quarter was $48.9 million, compared with $54.7 million in the same 1998 quarter.
Higher chemical operating profit, compared with last year's quarter, was more
than offset by lower operating profit from exploration and production. The
decline in operating profit was due to lower crude oil and natural gas sales
prices, lower natural gas sales volumes and transition expenses related to the
merger, partially offset by lower exploration expenses, higher crude oil sales
volumes and income from the European pigment operations acquired at the end of
the 1998 first quarter.
Other expenses for the first quarter of 1999 totaled $199.5 million, compared
with $27.3 million for the 1998 quarter. The increase was due primarily to
merger costs and lower equity income, partially offset by foreign currency
transaction gains, compared with 1998 losses. Net interest expense for the 1999
first quarter increased 35% from the same 1998 period due to higher average
borrowings.
The income tax benefit was $44.1 million for the 1999 first quarter, compared
with a provision of $11.6 million for the 1998 period. The 1999 first quarter
amount included a tax benefit related to the merger costs.
SEGMENT OPERATIONS
Following is a summary of sales and operating profit and a discussion of major
factors influencing the results of each of the company's business segments for
the first quarter of 1999, compared with the same period last year.
Three Months Ended
March 31,
(Millions of dollars) 1999 1998
-------------------------
Sales
Exploration and production $ 283.1 $328.4
Chemicals 202.7 178.2
-------- ------
485.8 506.6
All other .1 .1
-------- -------
Total Sales $ 485.9 $506.7
======== ======
Operating Profit
Exploration and production $ 20.8 $ 32.8
Chemicals 28.1 21.9
-------- ------
Total Operating Profit 48.9 54.7
Other Expense (199.5) (27.3)
-------- -------
Income (Loss) from Continuing Operations
Before Income Taxes (150.6) 27.4
Provision (Benefit) for Income Taxes (44.1) 11.6
-------- -------
Income (Loss) from Continuing Operations (106.5) 15.8
Discontinued Operations, Net of Income Taxes - 8.0
Cumulative Effect of a Change in Accounting
Principle, Net of Income Taxes (4.1) -
-------- -------
Net Income $ (110.6) $ 23.8
======== =======
Exploration and Production -
Operating profit for the first quarter of 1999 was $20.8 million, compared with
$32.8 million for the same 1998 period. First-quarter 1999 operating profit was
lower due primarily to lower crude oil and natural gas sales prices, lower
natural gas sales volumes and transition expenses related to the merger,
partially offset by lower exploration expenses and higher crude oil sales
volumes.
Revenues were $283.1 million and $328.4 million for the three months ended March
31, 1999 and 1998, respectively. The following table shows the company's average
crude oil and natural gas sales prices and volumes for the first quarter of 1999
and 1998.
<TABLE>
<CAPTION>
Three Months Ended Percent
March 31, Increase
1999 1998 (Decrease)
-------------------------------------
<S> <C> <C> <C>
Crude oil sales (thousands of bbls/day)
Domestic
Offshore 50.2 44.9 12
Onshore 19.1 26.1 (27)
North Sea 96.8 71.9 35
Other International 16.4 18.0 (9)
------- -------
Total proprietary sales 182.5 160.9 13
Proportionate interest in equity affiliate's sales 6.9 7.3 (5)
------- -------
Total 189.4 168.2 13
======= =======
Average crude oil sales price (per barrel)
Domestic
Offshore $ 9.73 $13.80 (29)
Onshore 11.23 14.29 (21)
North Sea 11.60 13.85 (16)
Other International 8.83 11.41 (23)
Average $ 10.89 $14.05 (22)
Natural gas sold (MMCF/day)
Domestic
Offshore 347 313 11
Onshore 165 223 (26)
North Sea 58 49 18
------- -------
Total proprietary sales 570 585 (3)
Proportionate interest in equity affiliate's sales 80 62 29
------- -------
Total 650 647 -
======= =======
Average natural gas sales price (per MCF)
Domestic
Offshore $ 1.67 $ 2.15 (22)
Onshore 1.61 2.13 (24)
North Sea 2.52 2.74 (8)
Average $ 1.91 $ 2.22 (14)
</TABLE>
Chemicals -
Chemicals' first-quarter 1999 operating profit was $28.1 million on revenues of
$202.7 million, compared with operating profit of $21.9 million on revenues of
$178.2 million for the same 1998 quarter. Revenues increased due to higher sales
volumes resulting from the acquisition of the European pigment operations and
higher domestic pigment sales prices. Operating profit increased primarily due
to higher revenues and lower domestic pigment production costs.
Financial Condition
At March 31, 1999, the company's net working capital position was $37.6 million,
compared with $41 million at March 31, 1998, and a negative $173.3 million at
December 31, 1998. The current ratio was 1.0 to 1 at March 31, 1999 and 1998,
respectively, and .8 to 1 at December 31, 1998. The company's percentage of net
debt to capitalization was 62% at March 31, 1999, compared with 49% at March 31,
1998, and 59% at December 31, 1998.
The company had unused lines of credit and revolving credit facilities of $802
million at March 31, 1999. Of this amount, $445 million and $250 million can be
used to support commercial paper borrowings of Kerr-McGee Credit LLC and
Kerr-McGee Oil (U.K) PLC, respectively.
On February 26, 1999, the company signed two new revolving credit agreements, a
three-year $500 million facility and a 364-day $250 million facility. Initially,
one-third of the borrowings under each of these agreements may be in British
pounds sterling, euros or other local European Union currencies. Interest for
each of the revolving credit agreements is payable at varying rates. A total of
$400 million was outstanding under these agreements at March 31, 1999.
First-quarter 1999 cash capital expenditures totaled $139.1 million, compared
with $287.9 million for the same period last year. Exploration and production
expenditures, principally in the Gulf of Mexico and North Sea, were 83% of the
1999 total. Chemical and corporate expenditures were 16% and 1% of the 1999
amount, respectively. Management anticipates that the cash requirements for the
next several years can be provided through internally generated funds and
selective borrowings.
Year 2000 Program
In 1996, the company established a formal Year 2000 Program (Program) to assess
and correct Year 2000 problems in both information technology and
non-information technology systems. The Program is organized into two major
areas: Business Systems and Facilities Integrity. Business Systems include
replacement and upgrade of computer hardware and software, including major
business applications such as purchasing, inventory, engineering, financial,
human resources, etc. Facilities Integrity encompasses telecommunications, plant
process controls, instrumentation and embedded chip systems as well as an
assessment of third-party Year 2000 readiness. The Program is generally divided
into the following phases:
- - Identification, evaluation and prioritization of systems that need to be
modified or replaced.
- - Remediation work to modify existing systems or install new systems.
- - Testing and validation of the systems and applications.
An integral part of the Program is communication with third parties to assess
the extent and status of their Year 2000 efforts. Formal communications have
been initiated with critical suppliers to determine whether their operations
and/or the products and services provided to the company will be Year 2000
ready. In addition, the company has contacted key customers and partners
requesting information regarding their Year 2000 readiness. The company
continues to evaluate responses and make additional inquiries as needed.
The company is also developing contingency plans, which may include items such
as activating manual systems, placing operations on standby and other procedures
to accommodate significant disruptions that could be caused by system failures.
When appropriate, alternative providers are being identified in the event that
certain critical suppliers are unable to provide an acceptable level of service
to the company.
As of March 31, 1999, 100% of the pre-merger work on the Business Systems had
been completed. Most of these projects were system replacements to improve
business functionality and were not undertaken solely because of Year 2000
issues.
The merger with Oryx was completed in the first quarter of 1999, and the Year
2000 Programs for the companies have been combined. Approximately 75% of Oryx's
business systems will be transitioned to the Year 2000 compliant systems already
in place at Kerr-McGee prior to the merger. The remaining business systems will
be modified or replaced. These Year 2000 activities are being incorporated into
the Program and are scheduled to be completed by the end of the third quarter of
1999.
Approximately 78% of the planned work on Facilities Integrity has also been
completed, including additional activities resulting from the merger. Critical
activities are expected to be completed by the end of the third quarter of 1999.
However, some ongoing work in areas of contingency planning, third-party
communications, auditing and year-end communication response planning is
expected to continue through the end of 1999.
Program expenditures total approximately $48 million from inception through
March 31, 1999, which includes the combined company activities. Expenditures for
the first quarter of 1999 are approximately $6 million. The total cost to
achieve Year 2000 readiness are estimated to be $52 million for the entire
Program, which is not material to the company's consolidated results of
operations, financial position or cash flows. Program expenditures are provided
through internally generated funds and selective short-term and/or long-term
borrowings.
The failure to correct a material Year 2000 problem could result in disruption
to some aspects of the company's normal business activities or operations. Such
failures could have a material adverse effect on the company's results of
operations and cash flows in a particular quarter or annual period. Management
believes that the Program is comprehensive and reduces Year 2000 risks
associated with internal systems to a manageable level. Regardless of
management's efforts to assess and verify readiness, there can be no assurance
that all entities with which the company does business will be Year 2000
compliant. Contingency plans are being developed to address these concerns.
However, failure by a third party to remediate Year 2000 issues in a timely
manner could have a material adverse effect on the company's results of
operations and cash flows in a particular quarter or annual period. Failure of a
critical operating or safety system, or the failure of a key third-party
supplier, partner or customer, are believed to be the most reasonably likely
worst-case scenarios that could impact the company.
Forward-Looking Information
This report contains certain forward-looking statements, particularly as they
relate to the company's Year 2000 readiness, that are based on management's
current views and assumptions regarding future events and financial performance.
These statements are qualified by reference to the section "Forward-Looking
Information" contained in Part I of the company's Form 10-K for the year ended
December 31, 1998.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
Special Meeting
(a) A special meeting of stockholders was held on February 26, 1999.
(c) The stockholders' voted on the proposal to adopt the Agreement and
Plan of Merger, dated as of October 14, 1998, between Kerr-McGee
Corporation and Oryx Energy Company. Affirmative votes were
29,566,248; negative votes were 8,199,513 and abstentions were
208,668.
Annual Meeting
(a) The 1999 annual meeting of stockholders' was held on May 11, 1999.
(b) Directors elected at the 1999 annual meeting were the following:
Tom J. McDaniel
John J. Murphy
Matthew R. Simmons
Ian L. White-Thomson
Directors whose term of office continues after the 1999 annual
meeting were the following:
William E. Bradford
Luke R. Corbett
Sylvia A. Earle
David C. Genever-Watling
Martin C. Jischke
William C. Morris
Leroy C. Richie
Farah M. Walters
(c) The following matters were voted upon at the annual meeting:
(1) Following are the directors elected at the 1999 annual meeting
and the tabulation of votes related to each nominee.
Votes
Affirmative Withheld
Tom J. McDaniel 73,045,972 1,093,617
John J. Murphy 72,976,292 1,163,297
Matthew R. Simmons 72,996,849 1,142,740
Ian L. White-Thompson 73,046,296 1,093,293
(2) The stockholders ratified the appointment of Arthur Andersen
LLP as independent public accountant for 1999. Affirmative
votes were 72,752,690; negative votes were 587,259 and
abstentions were 799,640.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
Exhibit No.
27.0 Financial Data Schedule
(b) Reports on Form 8-K
On January 19, 1999, the company filed a report on Form 8-K
announcing the 1999 capital budget, the 1998 fourth-quarter
asset impairment and the rescission of the stock repurchase program.
On January 26, 1999, the company filed a report on Form 8-K/A
providing additional details relating to the 1998 fourth-quarter
asset impairment.
On February 26, 1999, the company filed a report on Form 8-K
announcing the approval of the merger with Oryx by stockholders of
both companies and the election of five directors.
On March 11, 1999, the company filed a report on Form 8-K reporting
under Item 2, "Acquisition or Disposition of Assets", providing
additional details related to the merger with Oryx.
SIGNATURE
Pursuant to the requirements 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.
KERR-McGEE CORPORATION
Date May 14, 1999 By: (Deborah A. Kitchens)
------------ --------------------------------
Deborah A. Kitchens
Vice President and Controller
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at March 31, 1999 and 1998 the Consolidated Statement
of Income for the period ending March 31, 1999 and 1998, and is qualified in its
entirety by by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998 DEC-31-1998
<CASH> 208500 0 121000<F1>
<SECURITIES> 0 0 0
<RECEIVABLES> 402200 0 388400<F1>
<ALLOWANCES> 0 0 0
<INVENTORY> 281500 0 247100<F1>
<CURRENT-ASSETS> 1002800 0 876700<F1>
<PP&E> 10684300 0 10651700<F1>
<DEPRECIATION> 6562100 0 6498900<F1>
<TOTAL-ASSETS> 5542800 0 5451300<F1>
<CURRENT-LIABILITIES> 965200 0 1050000<F1>
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 93400 0 93400<F1>
<OTHER-SE> 1090000 0 1252100<F1>
<TOTAL-LIABILITY-AND-EQUITY> 5542800 0 5451300<F1>
<SALES> 485900 506700<F1> 0
<TOTAL-REVENUES> 485900 506700<F1> 0
<CGS> 225100 213000<F1> 0
<TOTAL-COSTS> 652900 500900<F1> 0
<OTHER-EXPENSES> (16400) (21600)<F1> 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 44700 34800<F1> 0
<INCOME-PRETAX> (150600) 27400<F1> 0
<INCOME-TAX> (44100) 11600<F1> 0
<INCOME-CONTINUING> (106500) 15800<F1> 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> (4100) 0 0
<NET-INCOME> (110600) 23800<F1> 0
<EPS-PRIMARY> (1.28) .27<F1> 0
<EPS-DILUTED> (1.28) .27<F1> 0
<FN>
<F1>Amount restated as the result of the merger with Oryx Energy Company accounted
for using the pooling of interest method of accounting.
</FN>
</TABLE>
