SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 27, 2000
(Date of Report - Date of earliest event reported)
KERR-MCGEE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-3939 73-0311467
(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
Kerr-McGee Center
Oklahoma City, Oklahoma 73125
(Address of principal executive offices) (Zip Code)
(405) 270-1313
(Registrant's telephone number)
<PAGE>
Item 5. Other Events
On January 27, 2000, Kerr-McGee Corporation issued a press release
reporting its financial and operating results for the fourth quarter and twelve
months ended December 31, 1999. The press release is attached hereto as an
exhibit and is incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Press Release dated January 27, 2000.
SIGNATURES
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 hereunto duly authorized.
KERR-MCGEE CORPORATION
By: (Deborah A. Kitchens)
Deborah A. Kitchens
Vice President and Controller
Dated: January 28, 2000
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated January 27, 2000.
Exhibit 99.1
Kerr-McGee Reports Earnings
OKLAHOMA CITY (Jan. 27, 2000) -- Kerr-McGee Corp. (NYSE: KMG) reports
1999 income from continuing operations before special items of $296 million
($3.42 per diluted share), compared with a $24 million loss (28 cents per share)
in 1998. Net income for 1999 was $142 million ($1.64 per share), compared with
1998's net loss of $68 million (78 cents per share). These amounts include $10
million of after-tax foreign currency gains in 1999, compared with after-tax
losses of $2 million in 1998. All 1998 amounts have been restated to reflect the
merger with Oryx Energy Company in February 1999.
For the 1999 fourth quarter, income from continuing operations before
special charges was $130 million ($1.51 per share). This compares with a net
loss of $21 million (24 cents per share) in the prior-year quarter. Including
special charges, fourth-quarter 1999 net income was $110 million ($1.27 per
share), compared with a $325 million loss ($3.74 per share) in the 1998 quarter.
These results include after-tax foreign currency gains of $4 million in the 1999
quarter.
"Kerr-McGee recorded strong earnings while growing our core businesses
and reducing unit operating costs," said Luke R. Corbett, Kerr-McGee chairman
and chief executive officer. "Our worldwide oil and gas production volumes
increased 9% to 108 million barrels of oil equivalent. We replaced 117% of this
production at a finding and development cost of approximately $4.90 per barrel
of oil equivalent. This excludes the benefit from recently announced discoveries
in the deepwater Gulf of Mexico and Bohai Bay, China. We have also achieved our
$100 million annualized synergy goal from the merger with Oryx. In January 2000,
we added 96 million barrels of proved reserves with the acquisition of Repsol
S.A.'s North Sea properties, and announced an offering of our common stock and a
convertible debt
(more)
issuance, which will provide long-term financing for this acquisition and for
general corporate purposes. We are pleased with the position of both of our
business units as we move into the new millennium."
Fourth-Quarter Results Excluding Special Items
Operating profit for the 1999 fourth quarter was $252 million.
Reflecting robust oil and gas prices, exploration and production operating
profit rose to $216 million, compared with a fourth-quarter operating loss of
$18 million in 1998. In addition to higher oil and gas prices, both oil and gas
volumes increased, and exploration expenses were lower.
The chemical quarterly operating profit was $35 million, a 30% increase
from the prior-year period. Lower operating costs at all titanium dioxide
pigment facilities and higher pigment sales volumes in Europe and the Hamilton,
Miss., facility were partially offset by lower sales realizations in Europe and
a slight decline in U.S. prices. "Also in 1999, Kerr-McGee completed an
expansion that added 38,000 tonnes of annual capacity to our titanium dioxide
pigment plant in Hamilton, Mississippi. Pigment sales prices continued to
rebound in the first quarter of 2000," Corbett said. "These increases, combined
with cost reduction initiatives at all of our pigment manufacturing facilities,
indicate a bright outlook for this year."
Net nonoperating expenses were $8 million higher in the 1999 fourth
quarter than the prior-year period, largely attributable to lower foreign
currency gains and lower gains on asset sales. Net interest expense increased by
$8 million to $45 million due to lower capitalized interest, increased
borrowings primarily associated with merger costs and lower interest income.
Fourth-Quarter Special Items
In the 1999 fourth quarter, the company had after-tax special charges
totaling $21 million, including $12 million of litigation settlements and $9
million of additional costs related to the merger with Oryx and associated
transition expenses.
(more)
1999 Results
Operating profit excluding special items totaled $690 million for the
year, compared with 1998 operating profit of $177 million. Exploration and
production operating profit of $562 million was boosted by price increases of
37% for oil and 11% for natural gas, higher oil volumes, lower general and
administrative costs, and lower exploration expenses. Chemical operating profit
was a record $128 million due to successful product cost reduction initiatives
and higher titanium dioxide sales volumes, which more than offset lower pigment
prices in Europe and lower results from forest products and electrolytic
chemicals.
The company also recorded a total of $150 million in after-tax special
charges in 1999, primarily consisting of $116 million of merger-related
expenses, $15 million of transition expenses and litigation expenses of $20
million.
Crude Oil, Natural Gas Production and Prices
Kerr-McGee's average daily crude oil production for the 1999 fourth
quarter was 196,900 barrels, up 15% from 170,900 barrels a year ago. For the
year, production averaged 196,900 barrels of oil per day, up from 172,000
barrels in 1998. The increase in oil production resulted primarily from the
Baldpate field in the Gulf of Mexico and the Janice field in the U.K. North Sea.
Fourth-quarter oil prices averaged $22.75 per barrel, up from $11.39 in
the 1998 period. For the year, average oil prices were $17.15 per barrel,
compared with $12.52 in 1998.
Fourth-quarter daily natural gas sales averaged 601 million cubic feet,
up 6% from the prior-year period. For the year, natural gas sales volumes
totaled 580 million cubic feet per day, compared with 584 million cubic feet in
1998.
Natural gas sales prices averaged $2.56 per thousand cubic feet in the
fourth quarter, up from $2.10 in the 1998 period, and $2.35 per thousand cubic
feet for the year, compared with $2.12 in 1998.
(more)
Sales and Capital Expenditures
Fourth-quarter sales were $801 million, compared with $537 million in
the 1998 fourth quarter. Sales for the full year totaled $2.7 billion in 1999,
an increase of 23% from 1998.
Fourth-quarter 1999 cash capital expenditures were $170 million,
compared with $174 million in the 1998 period. For the year, cash capital
expenditures (excluding acquisitions) were $543 million, compared with $981
million in 1998.
Kerr-McGee is an Oklahoma City-based energy and chemical company with
worldwide operations and $6.5 billion in assets.
(Statements in this press release regarding the company's or management's
intentions, beliefs or expectations for the future are "forward looking
statements" within the meaning of the Securities Litigation Reform Act. Such
statements may be affected by various factors and are subject to numerous risks
such as the accuracy of the assumptions that underlie the statements, the
success of the oil and gas exploration and production program, drilling risks,
the market value of Kerr-McGee's products, uncertainties in interpreting
engineering data, demand for consumer products for which Kerr-McGee's businesses
supply raw materials, general economic conditions and other factors and risks
discussed in the company's SEC filings, including Forms 10-K, 10-Q and 8-K/A.
Actual results and developments may differ materially from those expressed or
implied in this news release.)
CONTACT: Debbie Schramm
(405) 270-2877
00-07
(more)
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Fourth Quarter Ended Twelve Months Ended
December 31, % Inc December 31, % Inc
-------------------- -----------------------
(Millions of dollars, except per-share amounts) 1999 1998 (*) (Dec) 1999 1998 (*) (Dec)
------ -------- ----- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement of Income
Sales $800.5 $536.5 49 $2,696.1 $2,200.3 23
------ ------- -------- --------
Costs and Expenses
Costs and operating expenses 264.5 282.1 (6) 1,037.5 1,053.2 (1)
Selling, general and administrative expenses 49.6 97.4 (49) 205.9 277.4 (26)
Depreciation and depletion 159.9 133.7 20 607.4 560.8 8
Asset impairment - 446.0 NM - 446.0 NM
Exploration, including dry holes and
amortization of undeveloped leases 46.0 65.1 (29) 140.1 215.4 (35)
Taxes, other than income taxes 30.5 8.6 NM 85.0 53.2 60
Merger Costs 8.3 - NM 163.4 - NM
Interest and debt expense 49.3 42.8 15 190.2 157.0 21
------ ------- -------- --------
Total Costs and Expenses 608.1 1,075.7 (43) 2,429.5 2,763.0 (12)
------ ------- -------- --------
192.4 (539.2) NM 266.6 (562.7) NM
Other Income (Loss) (23.7) 28.9 NM (9.9) 42.2 NM
------ ------- -------- --------
Income (Loss) from Continuing Operations
before Income Taxes 168.7 (510.3) NM 256.7 (520.5) NM
Provision (Benefit) for Income Taxes 59.0 (185.6) NM 110.5 (175.5) NM
------ ------- -------- --------
Income (Loss) from Continuing Operations 109.7 (324.7) NM 146.2 (345.0) NM
Income from Discontinued Operations,
Net of Income Taxes - - NM - 277.4 NM
Cumulative Effect of a Change in Accounting
Principle, Net of Income Taxes - - NM (4.1) - NM
------ ------- -------- --------
Net Income (Loss) $109.7 $(324.7) NM $ 142.1 $ (67.6) NM
====== ======= ======== ========
Earnings (Loss) per Common Share
Basic and Diluted
Continuing operations excluding special items $ 1.51 $(0.24) NM $ 3.42 $ (0.28) NM
Continuing operations 1.27 (3.74) NM 1.69 (3.98) NM
Cumulative effect of a change in accounting principle - - NM (0.05) - NM
Net income $ 1.27 $(3.74) NM $ 1.64 $ (0.78) NM
Average Shares Outstanding (thousands) 86,476 86,741 - 86,414 86,688 -
Shares Outstanding at End of Period (thousands) 86,483 86,367 -
Foreign Currency Gains (Losses) $ 5.0 $ 8.1 (38) $ 11.3 $ (2.4) NM
Selected Balance Sheet Information
Cash 266.6 121.0 120
Current Assets 1,158.7 876.7 32
Total Assets 5,894.1 5,451.3 8
Current Liabilities 838.3 1,050.0 (20)
Short-Term Debt 29.1 271.4 (89)
Long-Term Debt 2,496.0 1,978.5 26
Stockholders' Equity 1,467.0 1,345.5 9
Selected Cash Flow Information
Cash Provided by Operating Activities 379.5 32.6 NM 712.6 385.2 85
Depreciation, Depletion and Amortization 169.8 147.9 15 648.2 614.8 5
Dividends Paid 38.9 21.3 83 138.4 85.7 61
Cash Capital Expenditures
Exploration and production (incl. cash dry hole expense) 158.3 175.9 (10) 479.6 962.7 (50)
Chemicals - Pigment 21.8 20.3 7 76.3 68.7 11
Chemicals - Other 6.9 4.8 44 14.4 23.4 (38)
------ ------- -------- --------
187.0 201.0 (7) 570.3 1,054.8 (46)
All other 1.8 1.5 20 6.1 8.0 (24)
Discontinued operations - - NM - 10.3 NM
------ ------- -------- --------
Total (incl. cash dry hole expense) $188.8 $202.5 (7) $ 576.4 $1,073.1 (46)
====== ======= ======== ========
(*) Prior year amounts have been restated to reflect the merger with Oryx Energy
Company.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Fourth Quarter Ended Twelve Months Ended
December 31, % Inc December 31, % Inc
---------------------- --------------------------
(Millions of dollars) 1999 1998 (*) (Dec) 1999 1998 (*) (Dec)
------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Segment Information
Sales
Exploration and production $553.9 $298.1 86 $1,769.7 $1,267.4 40
Chemicals - Pigment 189.7 174.9 8 699.6 639.5 9
Chemicals - Other 56.8 63.4 (10) 226.5 293.1 (23)
------ ------- -------- --------
800.4 536.4 49 2,695.8 2,200.0 23
All other 0.1 0.1 - 0.3 0.3 -
------ ------- -------- --------
Total $800.5 $536.5 49 $2,696.1 $2,200.3 23
====== ======= ======== ========
Operating Profit (Loss)
Exploration and production
Domestic $138.7 $ 37.1 NM $385.2 $162.3 137
North Sea 115.9 4.6 NM 296.2 97.6 NM
Other International 7.6 5.3 43 20.4 17.5 17
------ ------- -------- --------
Total Production Operations 262.2 47.0 NM 701.8 277.4 153
Exploration Expense (45.9) (64.8) (29) (139.7) (214.5) (35)
Restructuring Reserve - (7.4) NM - (34.5) NM
Asset Impairment - (389.0) NM - (389.0) NM
Transition Costs (6.0) - NM (20.5) - NM
------ ------- -------- --------
210.3 (414.2) NM 541.6 (360.6) NM
------ ------- -------- --------
Chemicals
Pigment 31.2 (6.3) NM 113.0 56.2 101
Other 4.1 (23.5) NM 13.9 (0.2) NM
------ ------- -------- --------
35.3 (29.8) NM 126.9 56.0 127
------ ------- -------- --------
Total 245.6 (444.0) NM 668.5 (304.6) NM
Net Interest Expense (43.8) (30.7) 43 (176.2) (118.8) 48
Income (Loss) from Equity Affiliates 4.8 1.0 NM 16.0 (11.6) NM
Other Expense (29.6) (36.6) (19) (88.2) (85.5) 3
Merger Costs (8.3) - NM (163.4) - NM
Taxes on Income (59.0) 185.6 NM (110.5) 175.5 NM
------ ------- -------- --------
Income (Loss) from Continuing Operations 109.7 (324.7) NM 146.2 (345.0) NM
Income from Discontinued Operations,
Net of Income Taxes - - NM - 277.4 NM
Cumulative Effect of a Change in Accounting
Principle, Net of Income Taxes - - NM (4.1) - NM
------ ------- -------- --------
Net Income (Loss) $109.7 $(324.7) NM $142.1 $ (67.6) NM
====== ======= ======== ========
Net Operating Profit (Loss)
Exploration and production $130.3 $(279.8) NM $337.6 $ (266.6) NM
Chemicals - Pigment 20.9 (3.6) NM 73.3 35.5 106
Chemicals - Other 2.8 (15.2) NM 9.1 (0.1) NM
------ ------- -------- --------
Total 154.0 (298.6) NM 420.0 (231.2) NM
Net Interest Expense (27.7) (20.0) 39 (116.6) (76.4) 53
Income (Loss) from Equity Affiliates 3.1 1.0 NM 10.4 (11.6) NM
Other Expense (14.2) (7.1) 100 (51.6) (25.8) 100
Merger Costs (5.5) - NM (116.0) - NM
Income from Discontinued Operations,
Net of Income Taxes - - NM - 277.4 NM
Cumulative Effect of a Change in Accounting
Principle, Net of Income Taxes - - NM (4.1) - NM
------ ------- -------- --------
Net Income (Loss) $109.7 $(324.7) NM $142.1 $ (67.6) NM
====== ======= ======== ========
Selected Exploration and Production Information
Depreciation and depletion $141.2 $117.2 20 $536.8 $486.6 10
Dry hole expense 18.6 34.7 (46) 42.6 100.2 (57)
Production (lifting) cost (**) 138.9 118.9 17 432.0 391.3 10
(*) Prior year amounts have been restated to reflect the merger with Oryx
Energy Company.
(**) Includes operating expenses, abandonment provision and production taxes.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Fourth Quarter Ended Twelve Months Ended
December 31, % Inc December 31, % Inc
--------------------- ----------------------
(Millions of dollars) 1999 1998 (*) (Dec) 1999 1998 (*) (Dec)
------- -------- ----- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Segment Information Excluding Special Items
Operating Profit
Exploration and production
Domestic $138.7 $ 37.0 NM $385.2 $ 161.7 138
North Sea 115.9 4.6 NM 296.2 97.6 NM
Other International 7.6 5.3 43 20.4 17.5 17
------ ------- ------- -------
Total Production Operations 262.2 46.9 NM 701.8 276.8 154
Exploration Expense (45.9) (64.8) (29) (139.7) (214.5) (35)
------ ------- ------- -------
216.3 (17.9) NM 562.1 62.3 NM
------ ------- ------- -------
Chemicals
Pigment 31.2 25.2 24 113.0 89.3 27
Other 4.1 2.0 105 14.7 25.8 (43)
------ ------- ------- -------
35.3 27.2 30 127.7 115.1 11
------ ------- ------- -------
Total 251.6 9.3 NM 689.8 177.4 NM
Net Interest Expense (45.0) (37.2) 21 (177.4) (137.9) 29
Income from Equity Affiliates 4.8 3.0 60 16.0 17.5 (9)
Other Expense (10.6) (1.2) NM (56.1) (55.0) 2
Taxes on Income (70.6) 5.2 NM (176.6) (26.4) NM
------ ------- ------- -------
Income (Loss) from Continuing Operations 130.2 (20.9) NM 295.7 (24.4) NM
Income from Discontinued Operations,
Net of Income Taxes - - NM - 277.4 NM
Special Items, Net of Taxes (20.5) (303.8) (93) (149.5) (320.6) (53)
Cumulative Effect of a Change in Accounting
Principle, Net of Income Taxes - - NM (4.1) - NM
------ ------- ------- -------
Net Income (Loss) $109.7 $(324.7) NM $142.1 $ (67.6) NM
====== ======= ======= =======
Net Operating Profit (Loss)
Exploration and production $134.2 $(16.0) NM $351.0 $ 7.9 NM
Chemicals - Pigment 20.9 16.9 24 73.3 57.0 29
Chemicals - Other 2.8 1.4 100 9.6 16.9 (43)
------ ------- ------- -------
Total 157.9 2.3 NM 433.9 81.8 NM
Net Interest Expense (28.5) (24.2) 18 (117.4) (88.7) 32
Income from Equity Affiliates 3.1 3.0 3 10.4 17.5 (41)
Other Expense (2.3) (2.0) 15 (31.2) (35.0) (11)
Income from Discontinued Operations,
Net of Income Taxes - - NM - 277.4 NM
Special Items, Net of Taxes (20.5) (303.8) (93) (149.5) (320.6) (53)
Cumulative Effect of a Change in Accounting
Principle, Net of Income Taxes - - NM (4.1) - NM
------ ------- ------- -------
Net Income (Loss) $109.7 $(324.7) NM $142.1 $ (67.6) NM
====== ======= ======= =======
Special Items, Net of Income Taxes
Income tax settlement $ 1.2 $ 22.0 (95) $ 1.2 $ 41.2 (97)
Settlements with insurance carriers - 1.6 NM - 8.0 NM
Effect of tax rate change - U.K. - 1.3 NM - 7.8 NM
Asset impairment - (299.0) NM - (299.0) NM
Merger costs (5.5) - NM (116.0) - NM
Noncash charge by equity affiliate - - NM - (27.1) NM
Environmental provisions, net - (26.3) NM - (26.5) NM
Litigation Reserves (12.3) - NM (19.6) (1.6) NM
Transition costs (3.9) - NM (14.5) - NM
Restructuring accrual - (4.8) NM (0.6) (25.4) (98)
Other - 1.4 NM - 2.0 NM
------ ------- ------- -------
Total $(20.5) $(303.8) (93) $(149.5) $(320.6) (53)
====== ======= ======= =======
(*) Prior year amounts have been restated to reflect the merger with Oryx Energy
Company.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Fourth Quarter Ended Twelve Months Ended
December 31, % Inc December 31, % Inc
--------------------- ---------------------
1999 1998 (*) (Dec) 1999 1998 (*) (Dec)
-------- -------- ----- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Crude oil & condensate production
(thousands of bbls/day)
Domestic
Offshore 67.3 43.7 54 60.7 42.5 43
Onshore 18.6 21.1 (12) 18.6 23.7 (22)
North Sea 98.3 89.5 10 102.9 87.4 18
Other International 12.7 16.6 (23) 14.7 18.4 (20)
------ ------ ------ ------
Total 196.9 170.9 15 196.9 172.0 14
====== ====== ====== ======
Average price of crude oil sold (per bbl.)
(per bbl.)
Domestic
Offshore $21.37 $10.22 109 $16.28 $11.79 38
Onshore 22.71 11.00 106 17.54 12.64 39
North Sea 23.70 10.79 120 17.77 12.33 44
Other International 20.83 8.77 138 14.34 9.90 45
Average $22.75 $11.39 100 $17.15 $12.52 37
Natural gas sold (MMCF/day)
Domestic
Offshore 347 335 4 353 327 8
Onshore 179 194 (8) 170 214 (21)
North Sea 75 37 103 57 43 33
------ ------ ------ ------
Total 601 566 6 580 584 (1)
====== ====== ====== ======
Average price of natural gas sold (per MCF)
(per MCF)
Domestic
Offshore $ 2.59 $ 1.96 32 $ 2.26 $ 2.06 10
Onshore 2.63 1.98 33 2.30 2.02 14
North Sea 2.01 2.53 (21) 2.12 2.46 (14)
Average $ 2.56 $ 2.10 22 $ 2.35 $ 2.12 11
Industrial and specialty chemical sales
(thousands of metric tons) 146 135 8 518 481 8
Heavy minerals sales
(thousands of metric tons) 16 21 (24) 43 69 (38)
Treated forest product sales
(millions of board feet) 36 44 (18) 182 225 (19)
(*) Prior year amounts have been restated to reflect the merger with Oryx Energy
Company.
</TABLE>
