SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) July 27, 1999
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events.
Unocal Corporation reported preliminary net earnings of $9 million, or
4 cents per share diluted, for the second quarter 1999. This compared to $105
million, or 43 cents per share diluted, for the second quarter 1998. The lower
second quarter 1999 results were primarily due to lower worldwide crude oil
volumes, lower agricultural products prices and higher corporate expense,
including interest. This was partially offset by higher worldwide crude oil
prices.
In the second quarter of 1999, special items included an $11 million
after-tax restructuring charge. The restructuring charge reflected the cost of
terminating about 250 employees. In the second quarter 1998, special items
included a $53 million after-tax gain on the sale of assets partially offset by
environmental and litigation provisions. The adjusted after-tax earnings for the
second quarter of 1999, excluding special items, were $19 million, or 8 cents
per share diluted. This compared with $62 million, or 26 cents per share
diluted, for the second quarter of 1998.
For the first six months of 1999, the company reported preliminary net
earnings of $16 million, or 7 cents per share diluted. This compared with net
earnings of $123 million, or 50 cents per share diluted, for the first six
months of 1998. The lower six months 1999 results were primarily due to lower
worldwide crude oil and natural gas volumes and prices, lower agricultural
products prices and higher corporate net interest expense. This was partially
offset by lower domestic dry holes.
In the first six months of 1999, special items included the $11 million
after-tax restructuring charge and a $10 million after-tax loss related to the
sale of assets. In the first six months of 1998, special items included the $53
million after-tax gain on the sale of assets which was offset by environmental
and litigation provisions. The adjusted after-tax earnings for the first six
months of 1999, excluding special items, were $39 million, or 16 cents per share
diluted. This compared with $134 million, or 55 cents per share diluted, for the
first six months of 1998.
The company, at times, employs a commodity price option program that
establishes a price floor, while retaining most of the benefits of higher price
movements. This program is designed to protect cash flow and the capital
spending program against the effects of severe commodity price deterioration. In
the first quarter of 1999, the program increased the company's price
realizations by more than $11 million after-tax, or 5 cents per share, while
commodity prices declined. Prices recovered significantly and quickly in the
second quarter. The price protection program resulted in lower realizations for
crude oil and natural gas totaling about $5 million after-tax, or 2 cents per
share, in the second quarter of 1999. For the full-year 1999, based on six-month
actual and the NYMEX futures prices as of July 21st, the company anticipates
this program will lower earnings by approximately $22 million after-tax. Most of
the company's existing price protection positions close out in the fourth
quarter, with no significant positions in 2000. The program results exclude
activities by Northrock Resources Ltd. (Northrock).
Total revenues for the second quarter of 1999 were $1.6 billion,
compared with $1.4 billion for the second quarter of 1998. Total revenues for
the first six months of 1999 were $2.8 billion, compared with $2.6 billion for
the first six months of 1998.
Capital expenditures for the second quarter of 1999 were $243 million,
compared with $440 million for the second quarter of 1998. Capital expenditures
for the first six months of 1999 were $468 million, compared with $766 million
for the first six months of 1998. The 1999 capital expenditures excluded the
acquisition of Northrock in the second quarter. The company expects that capital
expenditures for the full-year will total $1.1 billion, compared with $1.7
billion for the full year 1998. If commodity prices rise as indicated by the
futures market, the company will consider funding previously deferred near-term
gas production projects, which could boost capital spending above the current
expectation of $1.1 billion.
Total debt at the end of the second quarter of 1999 was $2.80 billion, compared
with $2.56 billion at the end of 1998. Most of this increase reflected the
consolidation of the company's investment in Northrock.
Forward-looking statements and estimates regarding exploration and production
activities, oil and gas prices and their related earnings effects, and capital
expenditures in this filing are based on assumptions concerning market,
competitive, regulatory, environmental, operational and other conditions and
considerations. Actual results could differ materially as a result of factors
discussed in Unocal 's 1998 Annual Report on Form 10-K.
<PAGE>
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.
UNOCAL CORPORATION
(Registrant)
Date: July 29, 1999 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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<TABLE>
<CAPTION>
CONSOLIDATED EARNINGS UNOCAL CORPORATION
(Unaudited)
For the Three Months For the Six Months
Ended June 30 Ended June 30
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Millions of dollars except per share amounts 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenues
Sales and operating revenues ......................................... $ 1,495 $ 1,226 $ 2,684 $ 2,397
Interest, dividends and miscellaneous income ......................... 28 51 56 62
Equity in earnings of affiliated companies ........................... 21 27 48 52
Gain/(loss) on sales of assets ....................................... 11 93 (2) 93
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Total revenues ................................................. 1,555 1,397 2,786 2,604
Costs and other deductions
Crude oil, natural gas and product purchases ......................... 838 515 1,438 931
Operating expense .................................................... 286 356 537 680
Selling, administrative and general expense .......................... 52 15 84 39
Depreciation, depletion and amortization ............................. 183 199 383 380
Dry hole costs ....................................................... 47 42 74 92
Exploration expense .................................................. 35 39 73 86
Interest expense ..................................................... 48 42 93 83
Property and other operating taxes ................................... 14 15 27 31
Distributions on convertible preferred
securities of subsidiary trust .................................... 8 8 16 16
Minority interests.................................................... 4 2 4 5
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Total costs and other deductions ............................... 1,515 1,233 2,729 2,343
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Earnings (loss) from operations before income taxes .................. 40 164 57 261
Income taxes ......................................................... 31 59 41 138
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Net earnings (loss)........................... ................. $ 9 $ 105 $ 16 $ 123
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Basic earnings (loss) per share of common stock (a) .................. $ 0.04 $ 0.43 $ 0.07 $ 0.51
Diluted earnings (loss) per share of common stock (b) ................ $ 0.04 $ 0.43 $ 0.07 $ 0.50
Cash dividends declared per share of common stock .................... $ 0.20 $ 0.20 $ 0.40 $ 0.40
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<FN>
(a) Basic weighted average shares outstanding (in thousands) ....... 242,270 241,362 241,649 241,396
(b) Diluted weighted average shares outstanding (in thousands) ...... 244,001 242,707 242,717 242,610
</FN>
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET UNOCAL CORPORATION
June 30 December 31
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Millions of dollars 1999 (a) 1998
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Assets
Current assets
<S> <C> <C>
Cash and cash equivalents ......................................... $ 206 $ 238
Accounts and notes receivable ..................................... 841 807
Inventories ....................................................... 158 179
Deferred income taxes ............................................. 96 142
Other current assets .............................................. 26 22
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Total current assets ........................................... 1,327 1,388
Investments and long-term receivables ................................ 1,194 1,143
Properties (b) ....................................................... 5,840 5,276
Deferred income taxes ................................................ 71 23
Other assets ......................................................... 140 122
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Total assets ................................................... $ 8,572 $ 7,952
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Liabilities and Stockholders' Equity
Current liabilities
Accounts payable .................................................. $ 738 $ 709
Taxes payable ..................................................... 92 260
Interest payable .................................................. 59 52
Current portion of environmental liabilities ...................... 140 142
Other current liabilities ......................................... 150 213
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Total current liabilities ...................................... 1,179 1,376
Long-term debt ....................................................... 2,802 2,558
Deferred income taxes ................................................ 281 132
Accrued abandonment, restoration and environmental liabilities ....... 598 622
Other deferred credits and liabilities ............................... 613 514
Minority interests.................................................... 424 26
Company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust holding solely parent debentures . 522 522
Common stock ($1 par value) .......................................... 253 252
Capital in excess of par value ....................................... 489 460
Unearned portion of restricted stock issued .......................... (23) (24)
Retained earnings .................................................... 1,878 1,959
Accumulated other comprehensive income (loss) ........................ (33) (34)
Treasury stock - at cost (c) ........................................ (411) (411)
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Total stockholders' equity ..................................... 2,153 2,202
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Total liabilities and stockholders' equity .................. $ 8,572 $ 7,952
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<FN>
(a) Unaudited
(b) Net of accumulated depreciation ................................. $ 10,269 $ 10,193
(c) Number of shares (in thousands) ................................. 10,623 10,623
</FN>
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED CASH FLOWS UNOCAL CORPORATION
(Unaudited)
For the Six Months
Ended June 30
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Millions of dollars 1999 1998
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Cash Flows from Operating Activities
<S> <C> <C>
Net earnings (loss) .................................................. $ 16 $ 123
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation, depletion and amortization ....................... 383 380
Dry hole costs ................................................. 74 92
Deferred income taxes .......................................... (9) 30
(Gain) loss on sales of assets (before-tax) .................... 2 (93)
Other .......................................................... (21) 28
Working capital and other changes related to operations
Accounts and notes receivable ............................... (56) 61
Inventories ................................................. 21 24
Accounts payable ............................................ (7) (139)
Taxes payable ............................................... (168) (37)
Other ....................................................... (61) (72)
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Net cash provided by (used in) operating activities ...... 174 397
Cash Flows from Investing Activities
Capital expenditures (includes dry hole costs) .................... (468) (766)
Acquisition of Northrock Resources Ltd., net of $34MM cash acquired (150) --
Proceeds from sales of assets ..................................... 154 34
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Net cash provided by (used in) investing activities ...... (464) (732)
Cash Flows from Financing Activities
Long-term borrowings .............................................. 798 657
Reduction of long-term debt ....................................... (705) (316)
Dividends paid on common stock .................................... (97) (97)
Repurchases of common stock ....................................... -- (48)
Minority interests................................................. 242 (7)
Other ............................................................. 20 1
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Net cash provided by (used in) financing activities ......... 258 190
Increase (decrease) in cash and cash equivalents ..................... (32) (145)
Cash and cash equivalents at beginning of year ....................... 238 338
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Cash and cash equivalents at end of period ........................... $ 206 $ 193
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</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED RESULTS UNOCAL CORPORATION
(Unaudited)
For the Three Months For the Six Months
Ended June 30 Ended June 30
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Millions of dollars except per share amounts 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Reported after-tax earnings .......................................... $ 9 $ 105 $ 16 $ 123
Special items ........................................................ (10) 43 (23) (11)
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Adjusted after-tax earnings .......................................... $ 19 $ 62 $ 39 $ 134
Diluted reported earnings per share .................................. $ 0.04 $ 0.43 $ 0.07 $ 0.50
Diluted adjusted earnings per share .................................. $ 0.08 $ 0.26 $ 0.16 $ 0.55
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ADJUSTED EARNINGS BY BUSINESS SEGMENT
(After-tax)(Unaudited)
For the Three Months For the Six Months
Ended June 30 Ended June 30
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Millions of dollars 1999 1998 1999 1998
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Exploration & Production
United States
Spirit Energy 76 (a) ........................................... $ 6 $ 15 $ 7 $ 24
Alaska ......................................................... 6 1 8 13
International
Far East ....................................................... 39 58 87 100
Other .......................................................... 1 (15) (14) (23)
Global Trade
Global Trade ................................................... -- 4 2 10
Pipelines ...................................................... 16 15 33 30
Geothermal and Power Operations ...................................... 14 14 25 28
Diversified Business Group
Agricultural Products ............................................ 3 12 6 21
Carbon & Minerals (a) ............................................. 7 8 16 22
Corporate and Unallocated
New Ventures ...................................................... (4) (5) (5) (12)
Administrative & General .......................................... (21) (16) (42) (34)
Interest Expense - Net ............................................ (34) (24) (65) (50)
Environmental & Litigation ........................................ (4) (3) (6) (4)
Other ............................................................. (10) (2) (13) 9
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Total adjusted after-tax earnings .................................... $ 19 $ 62 $ 39 $ 134
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<FN>
(a) Includes minority interests income/ (expense) of:
Spirit Energy 76 ........................................... $ (2) $ -- $ (2) $ (1)
Carbon & Minerals .......................................... -- (1) -- (2)
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OPERATING HIGHLIGHTS UNOCAL CORPORATION
(Unaudited)
For the Three Months For the Six Months
Ended June Ended June 30
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1999 1998 1999 1998
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United States Net Daily Production
Crude oil (thousand barrels daily)
<S> <C> <C> <C> <C>
Spirit Energy 76 ............................................................ 40 44 40 44
Alaska ...................................................................... 28 29 28 30
Natural gas - wet basis (million cubic feet daily)
Spirit Energy 76 ............................................................ 764 795 772 784
Alaska ...................................................................... 131 121 137 130
United States Average Sales Prices (a)
Crude oil (per barrel)
Spirit Energy 76 ............................................................ $ 14.98 $ 13.04 $ 13.15 $ 13.50
Alaska ...................................................................... $ 12.02 $ 8.83 $ 10.01 $ 9.84
Natural gas (per mcf)
Spirit Energy 76 ............................................................ $ 2.05 $ 2.15 $ 2.01 $ 2.15
Alaska ...................................................................... $ 1.20 $ 1.48 $ 1.20 $ 1.47
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International Net Daily Production (b)
Crude oil (thousand barrels daily)
Far East .................................................................... 72 79 71 84
Other (c) ................................................................... 35 33 33 32
Natural gas (million cubic feet daily)
Far East .................................................................... 873 864 860 863
Other (c) ................................................................... 88 67 64 60
International Average Sales Prices (a)
Crude oil (per barrel)
Far East .................................................................... $ 14.76 $ 12.85 $ 12.59 $ 13.42
Other ....................................................................... $ 13.41 $ 10.31 $ 12.19 $ 11.34
Natural gas (per mcf)
Far East .................................................................... $ 2.03 $ 2.04 $ 1.95 $ 2.03
Other ....................................................................... $ 1.90 $ 2.46 $ 1.86 $ 2.24
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Worldwide Net Daily Production (b)(c)
Crude oil (thousand barrels daily) ............................................. 175 185 172 190
Natural gas (per mcf) .......................................................... 1,856 1,847 1,833 1,837
Worldwide Average Sales Prices (a)
Crude oil (per barrel) ......................................................... $ 13.99 $ 11.80 $ 12.16 $ 12.49
Natural gas (per mcf) .......................................................... $ 1.97 $ 2.05 $ 1.92 $ 2.05
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<FN>
(a) Realized prices include hedging gains and losses, but exclude other Global
Trade margins
(b) Production includes certain host countries' shares of: Crude oil 26 7 19 13
Natural gas 94 39 84 45
(c) Production includes 100% of Northrock Resources Ltd. in Canada of: Crude oil 5 -- 2 --
Natural gas 59 -- 30 --
</FN>
</TABLE>
