<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended DECEMBER 31, 1997
-------------------------------------------------
Or
[_] Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from_____________________ to_____________________
Commission file number 1-8483
----------------------------------------------------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
UNOCAL SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
Unocal Corporation, 2141 Rosecrans Avenue, Suite 4000, El Segundo, California
90245
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF THE UNOCAL SAVINGS PLAN
The following financial statements reflect the status of the Unocal Savings
Plan as of December 31, 1997 and 1996, and the results of its transactions for
each of the years then ended.
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
Statements included herein:
Report of Independent Accountants 2
Statements of Net Assets Available for Benefits with Fund Information 3-4
Statements of Changes in Net Assets Available for Benefits with Fund Information 5-6
Notes to Financial Statements 7-11
Item 27(a) - Schedule of Assets Held for Investment Purposes 13
Item 27(d) - Schedule of Reportable Transactions 14
Exhibit Index 15
</TABLE>
Schedules I, II and III are omitted because the subject matter did not
exist or the required information is given in the financial statements or notes
to financial statements.
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Unocal Savings Plan/ESOP Committee:
We have audited the accompanying statements of net assets available for
benefits of the Unocal Savings Plan (the "Plan") as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1997 and 1996, and the changes in net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are presented
for the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The fund information
in the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
COOPERS & LYBRAND L. L. P.
June 26, 1998
Los Angeles, California
2
<PAGE>
Unocal Savings Plan
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
--------------- -------------------------------------------------------------
Unocal Low
Common S&P 500 George Putnam Volatility Money
Stock Index Fund Fund of Boston Trust Fund Market Fund
--------------- ---------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Investments at fair value (Note 2)
Unocal Common Stock $236,345,347 $ - $ - $ - $ -
Shares of registered
investment companies:
S&P 500 Index Fund - 69,606,728 - - -
George Putnam Fund of Boston - - 47,367,931 - -
Low Volatility Trust - - - 7,282,078 -
Money Market Fund - - - - 21,152,142
New Opportunities Fund - - - - -
Voyager - - - - -
Participant notes receivable - - - - -
------------ ----------- ----------- ---------- -----------
Total investments 236,345,347 69,606,728 47,367,931 7,282,078 21,152,142
Cash - - - - -
------------ ----------- ----------- ---------- -----------
Total assets 236,345,347 69,606,728 47,367,931 7,282,078 21,152,142
Liabilities
Amounts due to Plan Sponsor 429,250 - - - -
------------ ----------- ----------- ---------- -----------
Total liabilities 429,250 - - - -
Net Assets Available For Benefits $235,916,097 $69,606,728 $47,367,931 $7,282,078 $21,152,142
============ =========== =========== ========== ===========
<CAPTION>
--------------------------------------------------
Unocal
New Common
Opportunities Voyager Stock Other Total
------------- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Assets
Investments at fair value (Note 2)
Unocal Common Stock $ - $ - $142,161,246 $ - $378,506,593
Shares of registered
investment companies:
S&P 500 Index Fund - - - - 69,606,726
George Putnam Fund of Boston - - - - 47,367,931
Low Volatility Trust - - - - 7,282,076
Money Market Fund - - - - 21,152,142
New Opportunities Fund 23,616,128 - - - 23,616,126
Voyager - 14,934,256 - - 14,934,256
Participant notes receivable - - - 14,009,883 14,009,883
----------- ----------- ----------- ----------- ------------
Total investments 23,616,128 14,934,256 142,161,246 14,009,883 576,475,739
Cash - - 643,419 - 643,419
----------- ----------- ------------ ----------- ------------
Total assets 23,616,128 14,934,256 142,804,665 14,009,883 577,119,158
Liabilities
Amounts due to Plan Sponsor - - - - 429,250
----------- ----------- ------------ ----------- ------------
Total liabilities - - - - 429,250
Net assets available for benefits $23,616,128 $14,934,256 $142,804,665 $14,009,883 $576,689,908
=========== =========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Unocal Savings Plan
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1996
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
------------------- ------------------------------------------------------------------------
Unocal Low
Common S&P 500 George Putnam Volatility Money
Stock Index Fund Fund of Boston Trust Fund Market Fund
------------------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Investments at fair value (Note 2)
Unocal Common Stock $329,991,884 $ - $ - $ - $ -
Shares of registered
investment companies:
S&P 500 Index Fund - 39,659,989 - - -
George Putnam Fund of Boston - - 28,940,379 - -
Low Votatility Trust - - - 4,240,936 -
Money Market Fund - - - - 12,007,378
New Opportunities Fund - - - - -
Voyager - - - - -
Participant notes receivable - - - - -
------------ ----------- ----------- ---------- -----------
Total investments 329,991,884 39,659,989 28,940,379 4,240,936 12,007,378
Cash - - - - -
------------ ----------- ----------- ---------- -----------
Total assets 329,991,884 39,659,989 28,940,379 4,240,936 12,007,378
Liabilities
Amounts due to Plan Sponsor 628,608 - - - -
------------ ----------- ----------- ---------- -----------
Total liabilities 628,608 - - - -
New assets available for benefits $329,363,276 $39,659,989 $28,940,379 $4,240,936 $12,007,378
============ =========== =========== ========== ===========
<CAPTION>
Participant Directed
-----------------------------------------------------------------------------------
Unocal
New Common
Opportunites Voyager Stock Other Total
------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Assets
Investments at fair value (Note 2)
Unocal Common Stock $ - $ - $153,834,109 $ - $483,825,993
Shares of registered
investment companies:
S&P 500 Index Fund - - - - 39,659,989
George Putnam Fund of Boston - - - - 28,940,379
Low Votatility Trust - - - - 4,240,936
Money Market Fund - - - - 12,007,378
New Opportunities Fund 13,768,188 - - - 13,768,188
Voyager - 7,208,151 - - 7,208,151
Participant notes receivable - - - 16,636,176 16,636,176
----------- ---------- ------------ ----------- ------------
Total investments 13,768,188 7,208,151 153,834,109 16,636,176 606,287,190
Cash - - 196,435 - 196,435
----------- ---------- ------------ ----------- ------------
Total assets 13,768,188 7,208,151 154,030,544 16,636,176 606,483,625
Liabilities
Amounts due to Plan Sponsor - - - - 628,608
----------- ---------- ------------ ----------- ------------
Total liabilities - - - - 628,608
New assets available for benefits $13,768,188 $7,208,151 $154,030,544 $16,636,176 $605,855,017
=========== ========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Statement of Changes in Net Assets Available for Benefits with Fund Information
For the Year Ended December 31, 1997
Non-Participant
Directed Participant Directed
----------------- ----------------------------------------------------------------------------
Unocal Low
Common S&P 500 George Putnam Volatility Money
Stock Index Fund Fund of Boston Trust Fund Market Fund
----------------- ------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation)
in fair value of
investments $ (9,906,045) $14,857,874 $ 2,983,768 $ 367,418 $ -
Interest - 223,420 156,562 21,843 30,722
Dividends 5,889,452 - 4,243,774 - 927,878
------------ ----------- ----------- ---------- -----------
Total investment
income (4,016,593) 15,081,294 7,384,104 389,261 958,600
Contributions
Participant - 8,764,900 6,446,088 1,125,325 2,423,537
Company 17,714,653 - - - -
------------ ----------- ----------- ---------- -----------
Total contributions 17,714,653 8,764,900 6,446,088 1,125,325 2,423,537
Total additions 13,698,060 23,846,194 13,830,192 1,514,586 3,382,137
Deductions from net assets
attributed to:
Participants withdrawals
& distributions 59,246,666 10,580,917 8,539,430 1,705,331 11,753,101
Trustee fees and other
expenses - 5,835 3,209 502 736
------------ ----------- ----------- ---------- -----------
Total deductions 59,246,666 10,586,752 8,542,639 1,705,833 11,753,837
Net increase (decrease) prior
to interfund transfers (45,548,606) 13,259,442 5,287,553 (191,247) (8,371,700)
Interfund transfers (47,898,573) 16,687,297 13,139,999 3,232,389 17,516,464
------------ ----------- ----------- ---------- -----------
Net increase (decrease) (93,447,179) 29,946,739 18,427,552 3,041,142 9,144,764
Net assets available for
benefits:
Beginning of year 329,363,276 39,659,989 28,940,379 4,240,936 12,007,378
------------ ----------- ----------- ---------- -----------
End of year $235,916,097 $69,606,728 $47,367,931 $7,282,078 $21,152,142
============ =========== =========== ========== ===========
<CAPTION>
Participant Directed
----------------------------------------------------------------------------------------
Unocal
New Common
Opportunities Voyager Stock Other Total
------------- ------- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation)
in fair value of
investments $ 3,238,592 $1,465,635 $ (4,541,225) $ - $ 8,466,017
Interest 81,505 46,613 380,673 - 941,338
Dividends 514,928 884,227 2,740,252 - 15,200,511
------------ ----------- ------------ ----------- ------------
Total investment
income 3,835,025 2,396,475 (1,420,300) - 24,607,866
Contributions
Participant 3,355,612 2,180,352 35,157,981 - 59,453,795
Company - - - - 17,714,653
------------ ----------- ------------ ----------- ------------
Total contributions 3,355,612 2,180,352 35,157,981 - 77,168,448
Total additions 7,190,637 4,576,827 33,737,681 - 101,776,314
Deductions from net assets
attributed to:
Participants withdrawals
& distributions 2,913,046 1,667,146 30,854,321 3,656,143 130,916,101
Trustee fees and other
expenses 2,022 1,459 11,559 - 25,322
------------ ----------- ------------ ----------- ------------
Total deductions 2,915,068 1,668,605 30,865,880 3,656,143 130,941,423
Net increase (decrease) prior
to interfund transfers 4,275,569 2,908,222 2,871,801 (3,656,143) (29,165,109)
Interfund transfers 5,572,371 4,817,883 (14,097,680) 1,029,850 -
------------ ----------- ------------ ----------- ------------
Net increase (decrease) 9,847,940 7,726,105 (11,225,879) (2,626,293) (29,165,109)
Net assets available for
benefits:
Beginning of year 13,768,188 7,208,151 154,030,544 16,636,176 605,855,017
------------ ----------- ------------ ----------- ------------
End of year $ 23,616,128 $14,934,256 $142,804,665 $14,009,883 $576,689,908
============ =========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Unocal Savings Plan
Statement of Changes in Net Assets Available for Benefits with Fund Information
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
-------------- ---------------------------------------------------------------
Unocal Low
Common S&P 500 George Putnam Volatility Money
Stock Index Fund Fund of Boston Trust Fund Market Fund
------------- ------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment Income
Net appreciation (depreciation)
in fair value of investments $ 95,168,952 $ 6,407,719 $ 3,547,841 $ 130,457 $ 394,656
Interest -- 228,933 177,986 24,910 26,085
Dividends 6,672,799 -- -- -- --
------------ ----------- ----------- --------- -----------
Total Investment Income 101,841,751 6,636,652 3,725,827 155,367 420,741
Contributions
Participant -- 9,204,749 7,212,903 1,259,891 2,783,664
Company 22,731,422 -- -- -- --
------------- ----------- ----------- --------- -----------
Total contributions 22,731,422 9,204,749 7,212,903 1,259,891 2,783,664
Total additions 124,573,173 15,841,401 10,938,730 1,415,258 3,204,405
Deduction from net assets attributed to:
Participants withdrawals & distributions 40,251,162 2,070,285 1,744,671 295,665 2,765,931
Trustees fees and other expenses 25 7,426 4,239 666 1,249
------------- ----------- ----------- --------- -----------
Total deductions 40,251,187 2,077,711 1,748,910 296,331 2,767,180
Net increase (decrease) prior
to interfund transfers 84,321,986 13,763,690 9,189,820 1,118,927 437,225
Interfund transfers -- 9,876,457 7,268,297 1,091,987 8,686,166
------------- ------------ ------------ --------- ------------
Net increase (decrease) 84,321,986 23,640,147 16,458,117 2,210,914 9,123,391
Net assets available for benefits:
Beginning of year 245,041,290 16,019,842 12,482,262 2,030,022 2,883,987
------------- ------------ ------------ --------- ------------
End year $ 329,363,276 $ 39,659,989 $ 28,940,379 $ 4,240,936 $ 12,007,378
============= ============ ============ =========== ============
<CAPTION>
Participant Directed
-------------------------------------------------------------------------------
Unocal
New Common
Opportunities Voyager Stock Other Total
------------- ------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment Income
Net appreciation (depreciation)
in fair value of investments $ (244,371) $ 163,672 $ 48,279,886 $ -- $ 153,848,812
Interest 60,613 30,366 464,114 -- 1,013,007
Dividends -- -- 3,529,550 -- 10,202,349
---------- ---------- ------------ -------- -------------
Total Investment Income (183,758) 194,038 52,273,550 -- 165,064,168
Contributions
Participant 2,164,478 1,220,965 11,829,369 -- 35,676,019
Company -- -- -- -- 22,731,422
---------- ---------- ------------ -------- -------------
Total contributions 2,164,478 1,220,965 11,829,369 -- 58,407,441
Total additions 1,980,720 1,415,003 64,102,919 -- 223,471,609
Deduction from net assets attributed to:
Participants withdrawals & distributions 309,188 177,965 15,651,422 777,343 64,043,632
Trustees fees and other expenses 1,605 900 26,353 - 42,463
---------- ---------- ------------ -------- -------------
Total deductions 310,793 178,865 15,677,775 777,343 64,086,095
Net increase (decrease) prior
to interfund transfers 1,669,927 1,236,138 48,425,144 (777,343) 159,385,514
Interfund transfers 12,098,261 5,972,013 (49,225,529) 4,232,348 -
---------- ---------- ------------ ------------ -------------
Net increase (decrease) 13,768,188 7,208,151 (800,385) 3,455,005 159,385,514
Net assets available for benefits:
Beginning of year - - 154,830,929 13,181,171 446,469,503
----------- ---------- ------------ ------------ -------------
End year $13,768,188 $7,208,151 $154,030,544 $16,636,176 $605,855,017
=========== ========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN
GENERAL
- -------
Unocal Corporation (Unocal) was incorporated in Delaware on March 18, 1983,
to operate as the parent of Union Oil Company of California. The Unocal Savings
Plan (the "Plan") provides for Union Oil Company of California d.b.a. Unocal
(the "company") contributions and for participants' voluntary contributions.
Putnam Fiduciary Trust Company is the trustee ("Trustee") of the Plan and
invests funds contributed by the company and participants to the Plan. During
1997 and 1996, all company contributions were invested in common stock of Unocal
Corporation and participant contributions were invested at the discretion of the
participants in a range of investment fund options and Unocal Corporation common
stock. Effective March 3, 1997, participants could transfer company
contributions into one or more of the Plan investment options. The company will
continue to match contributions in only Unocal common stock, however,
participants may thereafter transfer these balances into any of the Plan
investment options. All shares remain with the Trustee until delivered to
participants upon request for withdrawal or after termination of employment.
The Plan is subject to certain provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") as a defined contribution plan.
The Savings Plan booklet dated January 1998 constitutes part of a
prospectus covering securities that have been registered under the Securities
Act of 1933. This booklet is a Summary Plan Description of the Unocal Savings
Plan as of January 1, 1998 and supercedes the Plan booklet dated July 1, 1990
and all subsequent amendments. Other information about the Plan can be found in
the Summary Plan Description booklet.
CONTRIBUTIONS
- -------------
PARTICIPANT CONTRIBUTIONS -- Participant contributions are voluntary and can be
all pre-tax, all after-tax, or a combination of both. However, a participant's
total annual contribution must not exceed 15 percent of the participant's annual
base pay. The pre-tax contributions are also known as 401(k) contributions. A
participant's contributions shall not exceed the maximum amount allowed by law.
COMPANY MATCHING CONTRIBUTIONS -- The company matches employee pre-tax 401(k)
contributions on a dollar for dollar basis, up to six percent of the
contributing participant's base pay.
At its discretion, the company directs the Trustee to purchase shares
attributable to company matching contributions either on the open market or by
private purchases directly from the company.
PARTICIPANT ACCOUNTS
- --------------------
Each participant's account is credited with the contributions and the
respective net investment earnings or losses of the individual funds as governed
by the participant's investment selection.
VESTING
- -------
Participants are always 100 percent vested in participant contributions and
the dividends on those contributions. Vesting in the company contributions
portion of participant's accounts and the dividends thereon is based on years of
vesting service. Effective January 1, 1998, a participant is 100 percent vested
in company contributions and dividends thereon after two years of vesting
service. Prior to this date, a participant was vested in company contributions
and dividends thereon after five years of vesting service.
7
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In 1997, special vesting provisions of the Plan pertaining to the sale of
76 Products Company were enacted to waive the five year vesting period for
certain plan members whose employment terminated due to the sale. The affected
plan members included those employees whose employment terminated due to a work
force reduction or job elimination beginning on the sale announcement date of
November 18, 1996 through December 31, 1997. Subsequently, the special vesting
provisions were amended to include 76 Products Company "transition team" members
who remained employed by Unocal after December 31, 1997, but whose "transition
team" assignment ended on or before March 31, 1998 and whose employment with
Unocal ends on or before July 31, 1998.
PAYMENT OF BENEFITS
- -------------------
On termination of employment or at such time as participants become
eligible to receive benefits, participants may elect to receive their account
balance or defer their distribution until a later date, but not beyond April 1
of the year following attainment of age 70-1/2.
If a participant continues to work past age 70-1/2, federal regulations
require distribution of a portion of the participant's account balance by April
1 of the calendar year following the participant's attainment of age 70-1/2.
ROLLOVERS INTO THE PLAN
- -----------------------
As a result of labor contract negotiations, employees of Molycorp, Inc., a
wholly owned subsidiary of Unocal, at Mountain Pass became eligible to commence
participation in the Plan and make contributions to the Plan after June 30,
1996. In October 1996, employees at Mountain Pass were extended a special
election period to rollover into the Plan account balances existing in the
Molycorp Inc. 401(k) Savings Plan prior to June 30, 1996. Consequently, account
balances totaling $614,739 were transferred in December 1996 to the Plan and are
included in participant contributions in the statement of changes in net assets
available for benefits for the year ended December 31, 1996.
In October 1996, former employees of Prairie Producing Company, a company
acquired by Unocal, were extended a special election period to rollover into the
Plan previously existing account balances in the Prairie Producing Company
Employee Benefit Plan. In December 1996, account balances totaling $933,224
were transferred into the Plan and are included in participant contributions in
the statement of changes in net assets available for benefits for the year ended
December 31, 1996.
Effective March 3, 1997, the Plan accepted rollovers of qualified amounts
from the Unocal Retirement Plan and the Unocal Employee Stock Ownership Plan
that are distributed following termination of employment. Additionally, the
Plan will accept rollovers from other employers' qualified plans, subject to
certain restrictions.
LOANS
- -----
All employees who are participants of the Plan and have a sufficient
balance in their employee pre-tax contributions account are eligible to apply
for a loan. Members borrow against their own pre-tax account balance and all
payments of principal and interest are credited back to their account. Loan
types available are "any reason" (except investment in registered securities);
"home purchase" (for purchase of a primary residence only); and loans "forced"
by a hardship withdrawal request. Repayment periods range from 1 to 15 years
depending on the type of loan. The Unocal Savings Plan Loan and Hardship
Withdrawal Committee determines the interest rate for loans based on appropriate
market rates and applicable federal regulations.
INVESTMENT PROGRAM
- ------------------
All contributions are held in trust and invested by the Trustee in
accordance with the option or options elected by the participant. A
participant's account may be invested in any one or more or all of the following
funds administrated by the Trustee:
8
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
UNOCAL CORPORATION COMMON STOCK - Monies are used to purchase shares of Unocal
Corporation common stock. During 1997 and 1996, company contributions were
invested only in Unocal Corporation common stock. Effective March 3, 1997,
participants could transfer company contributions into one or more of the Plan
investment options. The company will continue to match contributions in only
Unocal common stock, however, participants may thereafter transfer these
balances into any of the Plan investment options.
PUTNAM S&P 500 - This fund invests in a large variety of publicly traded common
stock. The fund is designed to mirror the performance and composition of the
Standard & Poor's 500 index.
THE GEORGE PUTNAM FUND OF BOSTON - The monies in this fund are invested in a
diversified group of stocks and bonds.
PUTNAM LOW VOLATILITY TRUST FUND - Monies are invested mainly in U.S. government
debt securities.
PUTNAM MONEY MARKET FUND - Investments are made in a diversified portfolio of
high-quality money market instruments with an average maturity of less than 90
days.
PUTNAM NEW OPPORTUNITIES FUND - Investments are primarily in common stocks of
companies within certain emerging industry groups that offer above average
potential for growth.
PUTNAM VOYAGER FUND - Investments are in a combination of stocks of smaller
companies expected to grow over time, as well as stocks of larger, more
established companies.
Effective during 1996, participants became eligible to transfer pre-tax and
after-tax balances into any of the investment alternatives.
FEDERAL INCOME TAX STATUS
- -------------------------
The company obtained its latest determination letter on November 30, 1995,
from the Los Angeles District Director of the Internal Revenue Service, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code (the
"Code"). The Plan has been amended since receiving the determination letter.
However, the plan administrator and the Plan's tax counsel believe that the Plan
is currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
Under Federal regulations effective January 1, 1997, the maximum employee
pay eligible for benefit purposes under a qualified plan is $160,000 per year.
If an employees' pay exceeds $160,000, only the first $160,000 of base pay will
be eligible for calculating employee and company contributions.
Federal regulations place an annual dollar limit on the amount of employee
pre-tax and company matching contributions. In 1997 and 1996 the limit was
$9,500. If pre-tax contributions reach the annual limit before year-end, they
are suspended for the balance of the year. The company matching contributions
are also suspended if the annual limit is reached before year-end.
Withdrawals from the Plan are generally subject to federal income tax.
Also, in-service withdrawals and withdrawals following termination of employment
prior to retirement may be subject to a 10 percent federal income tax penalty.
9
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PLAN TERMINATION
- ----------------
The company expects to continue the Plan indefinitely, but, as future
conditions cannot be foreseen, the company may at any time or from time to time
amend or terminate the Plan in whole or part. An amendment may affect present
as well as future participants, but may not diminish the account balance of any
participant existing on the effective date of such amendment. The company has
no present intent to discontinue the company matching contributions or to
terminate the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
- -------------------
The accompanying financial statements are prepared on the accrual
basis of accounting in conformity with generally accepted accounting
principles. In addition, the following accounting policies are applied:
a. Purchases and sales of Unocal Corporation common stock:
During normal trading by participants, the Trustee will collect all
participant directed stock trades throughout the day and will execute and
complete one buy and sell trade per day.
During abnormal conditions or heavy trading by participants, the Trustee
may not be able to execute and complete participant directed trades on the
same day without affecting the share price. The Trustee is authorized, at
its discretion, to buy or sell a portion of the trades during the next day
or days. Prices received from each day's trading will be averaged to
ensure that all participants requesting trades will be treated equitably.
b. Dividend income is recorded on the ex-dividend date.
c. Interest income is recorded as earned on the accrual basis.
d. Substantially all of the administrative and other costs of the Plan
are paid by the company.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
VALUATION OF INVESTMENTS
- ------------------------
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices from national exchanges
which represent the new asset value of shares held by the Plan at year-end. The
Unocal Corporation common stock is valued at the closing price as reported for
the New York Stock Exchange Composite Transactions at December 31, 1997 and
1996. The assets of the Plan are primarily invested in Unocal common stock and
in the shares of publicly traded registered investment companies (mutual funds).
As a result, the value of the assets of the Plan are subject to the variations
in the market. The fair value of the investments and net assets available for
benefits could be materially affected by a change in market conditions.
USE OF ESTIMATES IN PREPARATION OF THE FINANCIAL STATEMENTS
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan's management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of additions to and deductions from net
assets during the reporting periods. Actual results could differ from those
estimates.
10
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - FORFEITURES BY MEMBERS
Company basic and matching contributions and dividends thereon under the
Plan are forfeited by employees whose employment is terminated before completing
two years of service and whose termination is for any reason other than their
total disability, death or retirement. However, if an employee is re-employed
by the company and performs an hour of service within five years after the date
of termination of employment, the forfeited account balance shares will be
restored to the employee's Plan account. Amounts forfeited will be used to
restore previously forfeited accounts when necessary. Remaining amounts
forfeited will then be used to offset future company contributions to Plan
member accounts.
At December 31, 1997 and 1996, forfeited nonvested accounts totaled
$429,250 and $628,608, respectively.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee appointed by the Board of Directors of the Company to administer the
Plan have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNOCAL SAVINGS PLAN
Date: June 26, 1998 By: /s/ Joe D. Cecil
------------------------------------
Joe D. Cecil
Vice President and Comptroller
12
<PAGE>
Unocal Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Identity of Issue, Description of Investment including
Borrower, Lessor Maturity Date, Rate of Interest, Current
or Similar Party Collateral Par or Maturity Value Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
** Unocal Corporation Unocal Corporation Common Stock $251,898,984 $378,506,593
(9,752,183 shares)
* Putnam Investments S&P 500 Index Fund 51,782,968 69,606,728
(3,084,038 shares)
* Putnam Investments George Putnam Fund of Boston 44,002,925 47,367,931
(2,634,479 shares)
* Putnam Investments Putnam Low Volatility Trust Fund 6,843,838 7,282,078
(603,320 shares)
* Putnam Investments Putnam Money Market Fund 21,152,140 21,152,142
(21,152,142 shares)
* Putnam Investments Putnam New Opportunities Fund 21,135,546 23,616,128
(485,429 shares)
* Putnam Investments Putnam Voyager Fund 13,975,941 14,934,256
(783,950 shares)
* Putnam Investments Participant Loans - 14,009,883
------------ ------------
$410,792,342 $378,506,593
============ ============
</TABLE>
* Trustee for the Plan and, therefore, a party-in-interest for which a
statutory exemption exists.
** Sponsor and employer and, therefore, a party-in-interest for which a
statutory exemption exists.
13
<PAGE>
Unocal Savings Plan
Item 27(d) - Schedule of Reportable Transactions (1)
December 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d)
Description of Assets
(including Interest Rate and Purchase Selling
Identity of Party Involved Maturity in case of a Loan) Price Price
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unocal Corporation (2) Unocal Corporation 48,839,261
Common Stock
(377 transactions)
Unocal Corporation (2) Unocal Corporation 166,941,824
Common Stock
(1,520 transactions)
Putnam Investments (3) George Putnam Fund 28,740,106
(354 transactions)
Putnam Investments (3) George Putnam Fund 13,296,357
(586 transactions)
Putnam Investments (3) Putnam Voyager Fund 10,538,067
(310 transactions)
Putnam Investments (3) Putnam Voyager Fund 4,277,608
(412 transactions)
Putnam Investments (3) Putnam New Opportunity Fund 14,524,912
(326 transactions)
Putnam Investments (3) Putnam New Opportunity Fund 7,915,564
(466 transactions)
Putnam Investments (3) Putnam S&P 500 Fund 34,743,767
(367 transactions)
Putnam Investments (3) Putnam S&P 500 Fund 19,742,254
(631 transactions)
Putnam Investments (3) Putnam Low Volatility Fund 6,171,628
(249 transactions)
Putnam Investments (3) Putnam Low Volatility Fund 3,519,185
(404 transactions)
Putnam Investments (3) Putnam Money Market Fund 34,230,716
(544 transactions)
Putnam Investments (3) Putnam Money Market Fund 25,110,039
(468 transactions)
</TABLE>
Unocal Savings Plan
Item 27(d) - Schedule of Reportable Transactions (1)
December 31, 1997
<TABLE>
<CAPTION>
(a) (b) (e) (f) (g) (h) (i)
Description of Assets Expense Current Value
(including Interest Rate and Lease Incurred With Cost of Asset on Net Gain
Identity of Party Involved Maturity in case of a Loan) Rental Transaction of Asset Transaction Date Or (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unocal Corporation (2) Unocal Corporation 48,839,261 48,839,261
Common Stock
(377 transactions)
Unocal Corporation (2) Unocal Corporation 96,296,967 166,941,824 70,644,857
Common Stock
(1,520 transactions)
Putnam Investments (3) George Putnam Fund 28,740,106 26,740,106
(354 transactions)
Putnam Investments (3) George Putnam Fund 12,192,234 13,296,357 1,104,123
(586 transactions)
Putnam Investments (3) Putnam Voyager Fund 10,538,067 10,538,067
(310 transactions)
Putnam Investments (3) Putnam Voyager Fund 4,058,002 4,277,608 219,606
(412 transactions)
Putnam Investments (3) Putnam New Opportunity Fund 14,524,912 14,524,912
(326 transactions)
Putnam Investments (3) Putnam New Opportunity Fund 7,498,961 7,915,564 416,603
(466 transactions)
Putnam Investments (3) Putnam S&P 500 Fund 34,743,767 34,743,767
(367 transactions)
Putnam Investments (3) Putnam S&P 500 Fund 15,559,753 19,742,254 4,182,501
(631 transactions)
Putnam Investments (3) Putnam Low Volatility Fund 6,171,628 6,171,828
(249 transactions)
Putnam Investments (3) Putnam Low Volatility Fund 3,404,433 3,519,185 114,752
(404 transactions)
Putnam Investments (3) Putnam Money Market Fund 34,230,716 34,230,716
(544 transactions)
Putnam Investments (3) Putnam Money Market Fund 25,110,039 25,110,039 2
(468 transactions)
(1) Under ERISA, a reportable transaction is a transaction or series of transactions during the Plan year that involves more than
5 percent of the fair value of the Plan assets at the beginning of the Plan year, with certain exceptions.
(2) Sponsor and employer and, therefore, a party-in-interest for which a statutory exemption exists.
(3) Trustee for the Plan and, therefore, a party-in-interest for which a statutory exemption exists.
</TABLE>
14
<PAGE>
UNOCAL CORPORATION
EXHIBIT INDEX
Exhibit 23 Consent of Coopers & Lybrand L.L.P.
15
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Unocal Corporation on Form S-8 (No. 33-65461) of our report, dated June 26,
1998, on our audits of the financial statements and supplemental schedules of
the Unocal Savings Plan as of December 31, 1997 and 1996 and for the years then
ended which report is included in this annual report on Form 11-K.
COOPERS & LYBRAND L. L. P.
Los Angeles, California
June 26, 1998
