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) January 27, 1999
------------------------
UNOCAL CORPORATION
- --------------------------------------------------------------------------------
(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)
<PAGE>
Item 5. Other Events.
Fourth Quarter 1998 Results
Unocal Corporation announced a preliminary loss of $29 million, or 12 cents per
share (basic and diluted), in the fourth quarter of 1998. This compares with
earnings of $142 million, or 57 cents per share (diluted), in the fourth quarter
of 1997. Depressed crude oil and natural gas prices, asset write-downs,
environmental and litigation charges, and a restructuring charge were the major
factors in the loss.
Earnings from continuing operations, excluding special items (detailed in the
attached tables), were $28 million, or 11 cents per share, compared with $134
million, or 54 cents per share (diluted), a year ago.
Lower worldwide commodity prices in the fourth quarter of 1998 resulted in an
approximate $120 million reduction in after-tax operating earnings compared with
the same period a year ago. Other factors affecting operating earnings included
lower worldwide crude oil volumes and a provision for Geothermal receivables
which was offset by lower dry hole costs.
The after-tax special items in the fourth quarter included $65 million in asset
write-downs, $30 million in environmental and litigation provisions, and a $17
million restructuring charge arising from workforce reductions. The asset
write-downs, in accordance with Statement of Financial Accounting Standards No.
121 - Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, were for various oil and gas and mining facilities,
and were primarily the result of forecasted lower commodity prices. The
environmental and litigation provisions were due to new information and/or
events related to estimated remediation and legal settlement costs for various
company operations and former facilities. The restructuring charge resulted from
a plan adopted by management in response to depressed commodity prices and
primarily represents the cost of terminating approximately 475 employees: 240 in
Unocal's mining operations from the suspension of certain mining activities, 95
in various exploration and production business units, and 140 support personnel
at various locations.
Also included as special items was a $45 million benefit from an insurance
recovery for various environmental matters and an $18 million gain from asset
sales. The asset sales included the company's interest in the Alliance Pipeline
Project and the company's Oklahoma operations.
Total revenues for the fourth quarter were $1.48 billion, compared with $1.56
billion in the same period a year ago.
Year-end 1998 Results
Unocal reported preliminary net earnings for 1998 of $130 million, or 54 cents
per share (diluted), compared with $581 million, or $2.31 per share (diluted),
in 1997. Year-end 1998 earnings from continuing operations, excluding special
items (detailed in the attached tables), were $166 million, or 68 cents per
share (diluted), compared with $515 million, or $2.06 per share (diluted), for
1997.
Total revenues for 1998 were $5.48 billion, compared with $6.06 billion for
1997.
Outlook
As a result of forecasted low commodity prices, the company has projected
capital expenditures of about $1.0 billion for 1999, compared with $1.7 billion
in 1998. The company's capital plan is currently focused on preserving its
high-potential deepwater exploration and development programs in the Gulf of
Mexico and Indonesia while maintaining its debt ratio below 50 percent. The
company expects to drill four to six deepwater exploration wells in the Gulf of
Mexico this year and continue its exploration and delineation program on the
greater Seno structure in Indonesia.
Unocal has also established a goal of reducing annualized cash expenses by $150
million to $200 million from the 1998 level to bolster cash flow.
<PAGE>
Unocal is a leading global oil and gas exploration and production company with
significant pipeline and power plant development projects worldwide.
Forward-looking statements and estimates regarding exploration and production
activity and business results in this report are based on assumptions concerning
market, competitive, regulatory, environmental, operational and other
considerations. Actual results could differ materially.
2
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
CONDENSED CONSOLIDATED EARNINGS STATEMENT
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
----------------------- -------------------------
Millions of dollars except per share amounts 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues .......................................................... $ 1,481 $ 1,557 $ 5,479 $ 6,064
Costs and other deductions .............................................. 1,512 1,375 5,174 5,293
----------------------------------------------------
Earnings/(loss) from continuing operations before income taxes .......... (31) 182 305 771
Income taxes / (benefit) ................................................ (2) 34 175 102
----------------------------------------------------
Earnings/(loss) from continuing operations .............................. (29) 148 130 669
Loss from discontinued operations (net of tax) ......................... -- (6) -- (50)
Extraordinary charge - extinguishment of debt (net of tax) .............. -- -- -- (38)
----------------------------------------------------
Net earnings/(loss) ..................................................... $ (29) $ 142 $ 130 $ 581
Basic earnings/(loss) per share of common stock (a)
Continuing operations ............................................. $ (0.12) $ 0.60 $ 0.54 $ 2.69
Discontinued operations (net of tax) .............................. -- (0.02) -- (0.20)
Extraordinary item - extinguishment of debt (net of tax) .......... -- -- -- (0.15)
----------------------------------------------------
Basic net earnings/(loss) per share ..................................... $ (0.12) $ 0.58 $ 0.54 $ 2.34
Diluted earnings/(loss) per share of common stock (b) (c)
Continuing operations ............................................. $ (0.12) $ 0.59 $ 0.54 $ 2.65
Discontinued operations (net of tax) .............................. -- (0.02) -- (0.19)
Extraordinary item - extinguishment of debt (net of tax) .......... -- -- -- (0.15)
----------------------------------------------------
Diluted net earnings/(loss) per share ................................... $ (0.12) $ 0.57 $ 0.54 $ 2.31
(a) Weighted average shares - basic (millions)......................... 241 245 241 248
(b) Weighted average shares - diluted (millions)....................... 242 259 242 262
(c) Distributions on preferred securities (net of taxes) excluded in $ -- $ 6 $ -- $ 24
numerator. In 1998, the effect of assumed conversion of preferred
securities on earnings per share is antidilutive.
- -----------------------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Dec. 31 Dec. 31
Millions of dollars 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents .............................................. $ 238 $ 338
Other current assets ................................................... 1,140 1,163
Investments and long-term receivables .................................. 1,153 1,113
Properties - net ....................................................... 5,276 4,816
Other assets ........................................................... 145 100
-------------------------
Total assets .................................................. $ 7,952 $ 7,530
Liabilities and Equity
Current liabilities .................................................... $ 1,376 $ 1,160
Long-term debt ......................................................... 2,558 2,169
Deferred income taxes .................................................. 132 137
Other deferred credits and liabilities ................................. 1,162 1,228
Convertible preferred securities of a subsidiary trust ................. 522 522
Stockholders' equity
Common stock ........................................................ 712 704
Retained earnings ................................................... 1,935 1,990
Accumulated other comprehensive loss ................................ (34) (18)
Less treasury stock at cost (10,623 thousand shares) ................ (411) (362)
-------------------------
Total liabilities and equity .................................. $ 7,952 $ 7,530
</TABLE>
Table 1
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED) For the Three Months For the Twelve Months
Ended December 31 Ended December 31
----------------------------------------------------
Millions of dollars 1998 1997 (a) 1998 1997 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
<S> <C> <C> <C> <C>
Net earnings (loss) ..................................... $ (29) $ 142 $ 130 $ 581
Adjustments to reconcile net earnings to
net cash provided by operating activities
Loss on disposal of discontinued operations (before-tax) -- 10 -- 81
Depreciation, depletion and amortization .......... 301 207 867 962
Dry hole costs .................................... 34 59 184 110
Deferred income taxes ............................. (38) (23) (72) (249)
Gain on sales of assets (before-tax) .............. (45) (21) (211) (80)
Other ............................................. 17 (27) 35 (110)
Working capital and other changes related to operations . 52 50 70 (162)
----------------------------------------------------
Net cash provided by operating activities ......... 292 397 1,003 1,133
Cash flows from investing activities
Capital expenditures (includes dry hole costs) .......... (456) (474) (1,704) (1,427)
Proceeds from sale of discontinued operations ........... -- -- -- 1,789
Proceeds from asset sales ............................... 136 45 435 100
----------------------------------------------------
Net cash (used in) provided by investing activities (320) (429) (1,269) 462
Cash flows from financing activities
Net increase (decrease) in long-term debt ............... 134 93 419 (866)
Dividends paid .......................................... (48) (49) (193) (199)
Repurchase of common stock .............................. -- (189) (48) (362)
Other ................................................... (3) (1) (12) (47)
----------------------------------------------------
Net cash provided by (used in) financing activities 83 (146) 166 (1,474)
Increase (decrease) in cash and cash equivalents ....................... 55 (178) (100) 121
Cash and cash equivalents at beginning of period ....................... 183 516 338 217
----------------------------------------------------
Cash and cash equivalents at end of period ............................. $ 238 $ 338 $ 238 $ 338
(a) Cash flows related to discontinued operations have not been segregated
- ------------------------------------------------------------------------------------------------------------------------------------
CONDENSED CAPITAL EXPENDITURES
(UNAUDITED)
Millions of dollars
- ------------------------------------------------------------------------------------------------------------------------------------
United States Exploration & Production ................................. $ 221 $ 167 $ 810 $ 367
International Exploration & Production ................................. 186 227 762 801
Geothermal and Power Operations ........................................ 4 26 26 102
Diversified Business Group ............................................. 32 19 78 59
New Ventures (Non-E & P) .............................................. -- -- 1 5
Corporate & Unallocated ................................................ 13 35 27 44
Discontinued Operations ................................................ -- -- -- 49
----------------------------------------------------
Total (b) ............................................... $ 456 $ 474 $ 1,704 $ 1,427
(b) Includes capitalized interest of: $ 4 $ 9 $ 26 $ 35
</TABLE>
Table 2
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
RESULTS OF OPERATIONS FOR
EXPLORATION AND PRODUCTION ACTIVITIES
(UNAUDITED)
For the Three Months
Ended December 31, 1998
--------------------------------------------------------------
Spirit Other
Millions of dollars Energy 76 Alaska Far East International Total
- ------------------------------------------------------------------------------------------------------------------------------------
Sales (includes intercompany sales)
<S> <C> <C> <C> <C> <C>
Crude oil and condensate .............................. $ 43 $ 25 $ 67 $ 22 $ 157
Natural gas ........................................... 135 15 164 6 320
Natural gas liquids ................................... 8 -- 7 -- 15
Other ................................................. -- -- -- -- --
--------------------------------------------------------------
Total ........................................... 186 40 238 28 492
Other revenue ................................................. 14 4 11 5 34
Gain/(loss) on asset sales (a) ................................ 31 1 (3) (2) 27
--------------------------------------------------------------
Total revenues .................................. 231 45 246 31 553
Production costs .............................................. 56 22 35 11 124
Exploration expenses .......................................... 28 -- 9 23 60
Dry hole costs ................................................ 21 -- 7 -- 28
Depreciation, depletion & amortization (b) .................... 143 35 45 25 248
Other operating expenses ...................................... 9 3 27 3 42
--------------------------------------------------------------
Results of operations before income tax ............... $ (26) $ (15) $ 123 $ (31) $ 51
- ------------------------------------------------------------------------------------------------------------------------------------
For the Three Months
Ended December 31, 1997
--------------------------------------------------------------
Spirit Other
Energy 76 Alaska Far East International Total
--------------------------------------------------------------
Sales (includes intercompany sales)
Crude oil and condensate .............................. $ 75 $ 44 $ 111 $ 42 $ 272
Natural gas ........................................... 202 18 157 11 388
Natural gas liquids ................................... 15 1 7 1 24
Other ................................................. 1 -- -- -- 1
--------------------------------------------------------------
Total ........................................... 293 63 275 54 685
Other revenue ................................................. 3 2 5 7 17
Gain on asset sales ........................................... 9 -- -- 1 10
--------------------------------------------------------------
Total revenues .................................. 305 65 280 62 712
Production costs .............................................. 54 20 37 21 132
Exploration expenses .......................................... 22 1 33 20 76
Dry hole costs ................................................ 19 -- 30 -- 49
Depreciation, depletion & amortization (b) .................... 94 11 68 16 189
Other operating expenses ...................................... 21 4 13 12 50
--------------------------------------------------------------
Results of operations before income tax ............... $ 95 $ 29 $ 99 $ (7) $ 216
(a) Includes the gain on the sale of the company's Oklahoma properties.
(b) Includes asset write-downs.
</TABLE>
Table 3
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
RESULTS OF OPERATIONS FOR
EXPLORATION AND PRODUCTION ACTIVITIES
(UNAUDITED)
For the Twelve Months
Ended December 31, 1998
--------------------------------------------------------------
Spirit Other
Millions of dollars Energy 76 Alaska Far East International Total
- ------------------------------------------------------------------------------------------------------------------------------------
Sales (includes intercompany sales)
<S> <C> <C> <C> <C> <C>
Crude oil and condensate .............................. $ 194 $ 102 $ 329 $ 101 $ 726
Natural gas ........................................... 566 62 610 25 1,263
Natural gas liquids ................................... 41 2 16 1 60
Other ................................................. 3 -- -- -- 3
--------------------------------------------------------------
Total ........................................... 804 166 955 127 2,052
Other revenue/(loss) .......................................... 20 10 (6) 19 43
Gain on asset sales (a) ....................................... 32 1 -- 158 191
--------------------------------------------------------------
Total revenues .................................. 856 177 949 304 2,286
Production costs .............................................. 187 82 123 66 458
Exploration expenses .......................................... 75 2 59 56 192
Dry hole costs ................................................ 121 -- 42 21 184
Depreciation, depletion & amortization (b) .................... 410 71 212 68 761
Other operating expenses ...................................... 63 13 70 40 186
--------------------------------------------------------------
Results of operations before income tax ............... $ -- $ 9 $ 443 $ 53 $ 505
- ------------------------------------------------------------------------------------------------------------------------------------
For the Twelve Months
Ended December 31, 1997
--------------------------------------------------------------
Spirit Other
Energy 76 Alaska Far East International Total
--------------------------------------------------------------
Sales (includes intercompany sales)
Crude oil and condensate .............................. $ 308 $ 180 $ 453 $ 161 $ 1,102
Natural gas ........................................... 743 65 642 46 1,496
Natural gas liquids ................................... 56 4 25 4 89
Other ................................................. 3 -- -- -- 3
--------------------------------------------------------------
Total ........................................... 1,110 249 1,120 211 2,690
Other revenue ................................................. 10 6 5 23 44
Gain/(loss) on asset sales .................................... 11 -- -- (15) (4)
--------------------------------------------------------------
Total revenues .................................. 1,131 255 1,125 219 2,730
Production costs .............................................. 193 93 130 74 490
Exploration expenses .......................................... 59 1 73 51 184
Dry hole costs ................................................ 29 -- 69 1 99
Depreciation, depletion & amortization (b) .................... 468 53 303 69 893
Other operating expenses ...................................... 77 12 47 57 193
--------------------------------------------------------------
Results of operations before income tax ............... $ 305 $ 96 $ 503 $ (33) $ 871
(a) Includes the gain on the sale of the company's Oklahoma and Canadian
properties.
(b) Includes asset write-downs.
</TABLE>
Table 4
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
OPERATING HIGHLIGHTS
(UNAUDITED) For the Three Months For the Twelve Months
Ended December 31 Ended December 31
----------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Net daily production
Crude oil and condensate (thousand barrels daily):
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ........................................ 42 43 44 45
Alaska .................................................. 29 34 29 31
----------------------------------------------------
Total United States ............................... 71 77 73 76
International
Far East (a) ........................................... 72 96 80 95
Other ................................................... 27 25 30 26
----------------------------------------------------
Total International ............................... 99 121 110 121
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide ................................... 170 198 183 197
Natural gas (million cubic feet daily):
United States
Spirit Energy 76 ........................................ 798 813 795 860
Alaska .................................................. 147 138 132 133
----------------------------------------------------
Total United States ............................... 945 951 927 993
International
Far East (a) ........................................... 857 809 853 795
Other ................................................... 26 57 45 60
----------------------------------------------------
Total International ............................... 883 866 898 855
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide ................................... 1,828 1,817 1,825 1,848
Natural gas liquids (thousand barrels daily) ........................... 19 17 19 18
Geothermal (million kilowatt-hours daily) .............................. 23 20 21 18
Average sales prices (b)
Crude oil and condensate (per barrel):
United States
Spirit Energy 76 .............................................. $ 11.00 $ 18.08 $ 12.41 $ 18.47
Alaska ........................................................ 8.78 14.83 9.35 15.25
Total United States ..................................... $ 10.07 $ 16.70 $ 11.17 $ 17.13
International
Far East ...................................................... $ 11.00 $ 17.95 $ 12.55 $ 18.52
Other ......................................................... 9.66 16.90 10.73 17.39
Total International ..................................... $ 10.61 $ 17.65 $ 12.04 $ 18.21
Total Worldwide ......................................... $ 10.37 $ 17.23 $ 11.67 $ 17.71
Natural gas (per mcf):
United States
Spirit Energy 76 .............................................. $ 2.05 $ 2.92 $ 2.07 $ 2.51
Alaska ........................................................ 1.20 1.47 1.33 1.41
Total United States ..................................... $ 1.91 $ 2.70 $ 1.97 $ 2.36
International
Far East ...................................................... $ 1.95 $ 2.16 $ 2.06 $ 2.30
Other ......................................................... 2.40 2.34 2.36 2.25
Total International ..................................... $ 1.98 $ 2.17 $ 2.07 $ 2.30
Total Worldwide ......................................... $ 1.96 $ 2.44 $ 2.02 $ 2.33
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Includes host country share of:
Crude oil and condensate .................................................... 9 26 10 28
Natural gas ................................................................. 67 34 49 28
(b) Excludes Global Trade margins and Canada equity affiliate sales
</TABLE>
Table 5
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
OPERATING HIGHLIGHTS (continued)
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
----------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Agricultural products production volumes (thousand tons)
<S> <C> <C> <C> <C>
Ammonia ............................................................... 395 383 1,524 1,455
Urea .................................................................. 235 223 974 919
Agricultural products sales volumes (thousand tons)
Ammonia ............................................................... 240 179 889 769
Urea .................................................................. 242 285 1,096 975
</TABLE>
Table 6
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
(UNAUDITED)
4th Quarter of 1998 4th Quarter of 1997
----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ...................................................... $ (26) $ (17) $ 95 $ 59
Alaska ................................................................ (15) (9) 29 18
International
Far East .............................................................. 123 69 99 102
Other ................................................................. (31) (16) (7) (13)
Global Trade ................................................................. 12 8 5 3
Geothermal and Power Operations .............................................. 11 8 3 1
Diversified Business Group
Agricultural Products .................................................. 4 4 8 4
Carbon and Minerals .................................................... (54) (33) (1) --
Pipelines .............................................................. 28 23 16 13
Other .................................................................. -- -- 2 1
Corporate and Unallocated
Administrative and general expense ..................................... (22) (17) (20) (16)
Net interest expense ................................................... (38) (30) (24) (22)
Environmental and litigation expense ................................... (42) (27) (8) (5)
New Ventures (non E&P) ................................................. (7) (6) (15) (10)
Other .................................................................. 26 14 -- 13
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings / (Loss) from continuing operations
before discontinued operations ............................................ (31) (29) 182 148
Loss from discontinued operations ............................................ -- -- (10) (6)
- ------------------------------------------------------------------------------------------------------------------------------------
Total ............................................................ $ (31) $ (29) $ 172 $ 142
====================================================================================================================================
Exploration and Production - involves the exploration for, and the production of
crude oil and natural gas.
Global Trade - handles the company's worldwide crude oil, condensate and natural
gas trading and marketing activities. Global Trade also purchases crude
oil, condensate and natural gas from the company's joint venture partners,
royalty owners and other unaffiliated oil and gas producers for resale.
Geothermal and Power Operations - involves the exploration for, and the
production and sale of geothermal resources, and the construction and
operation of electrical power plants.
Diversified Business Group:
Agricultural Products - involves the manufacture, transportation and
marketing of nitrogen-based products for agricultural and industrial use.
Carbon and Minerals - involves the production and marketing of petroleum
coke, graphites and specialty minerals.
Pipelines -principally includes the company's equity interests in affiliated
pipeline companies.
Other - principally included the company's equity interest in The UNO-VEN
Company, prior to its restructuring in May 1997.
</TABLE>
Table 7
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
SPECIAL ADJUSTMENTS
(UNAUDITED)
4th Quarter of 1998 4th Quarter of 1997
----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported earnings / (loss) ................................................... $ (31) $ (29) $ 172 $ 142
Less: Special items
Exploration and Production
United States
Spirit Energy
Asset sales .................................................... 22 14 9 5
Asset write-downs .............................................. (43) (27) (4) (2)
Litigation ..................................................... 11 7 -- --
Alaska
Asset write-downs .............................................. (19) (12) -- --
International
Asset sales - Other ............................................ (3) (1) 2 1
Asset write-downs - Other ...................................... (6) (4) (3) (2)
Bangladesh well blowout - Other ................................ -- -- (2) (1)
Deferred tax adjustments ....................................... -- (8) -- 26
Diversified Business Group
Carbon and Minerals
Asset write-downs .............................................. (34) (22) -- --
Environmental and litigation ................................... (21) (13) (10) (6)
Restructuring costs ............................................ -- -- (2) (1)
Pipelines
Asset sales .................................................... 8 5 -- --
Other
UNO-VEN restructuring .......................................... -- -- 2 1
Corporate and Unallocated
Asset sales - Other ............................................ -- -- 11 7
Environmental and litigation ................................... (37) (24) (5) (3)
Deferred tax adjustment - Other ................................ -- -- -- (11)
Insurance benefit - Other ...................................... 70 45 -- --
Restructuring costs - Other .................................... (27) (17) -- --
Discontinued Operations
Net loss on disposal ........................................... -- -- (10) (6)
- ------------------------------------------------------------------------------------------------------------------------------------
Total special items ..................................................... (79) (57) (12) 8
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted earnings ................................................... $ 48 $ 28 $ 184 $ 134
====================================================================================================================================
</TABLE>
Table 8
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
EXCLUDING SPECIAL ADJUSTMENTS
(UNAUDITED)
4th Quarter of 1998 4th Quarter of 1997
----------------------------------------------------
Millions of dollars except share amounts Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ...................................................... $ (16) $ (11) $ 90 $ 56
Alaska ................................................................ 4 3 29 18
International
Far East .............................................................. 123 68 99 76
Other ................................................................. (22) (2) (4) (11)
Global Trade ................................................................. 12 8 5 3
Geothermal and Power Operations .............................................. 11 8 3 1
Diversified Business Group
Agricultural Products .................................................. 4 4 8 4
Carbon and Minerals .................................................... 1 2 11 7
Pipelines .............................................................. 20 18 16 13
Corporate and Unallocated
Administrative and general expense ..................................... (22) (17) (20) (16)
Net interest expense ................................................... (38) (30) (24) (22)
Environmental and litigation expense ................................... (5) (3) (3) (2)
New Ventures (non E&P) ................................................. (7) (6) (15) (10)
Other .................................................................. (17) (14) (11) 17
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations .......................................... $ 48 $ 28 $ 184 $ 134
====================================================================================================================================
Basic earnings from continuing operations
per share of common stock ................................................. $ 0.11 $ 0.55
Diluted earnings from continuing operations
per share of common stock (a) ............................................. $ 0.11 $ 0.54
Distributions on preferred securities (net of tax) excluded
in numerator for diluted earnings per share (a) ........................... $ -- $ 6
Basic weighted average shares ................................................ 241 245
Diluted weighted average shares .............................................. 242 259
(a) In 1998, the effect of assumed conversion of preferred securities on
earnings per share is antidilutive.
</TABLE>
Table 9
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
(UNAUDITED)
Twelve Months Ended Twelve Months Ended
December 31, 1998 December 31, 1997
----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ..................................................... $ -- $ -- $ 305 $ 191
Alaska ............................................................... 9 6 96 60
International
Far East ............................................................. 443 195 503 392
Other ................................................................ 53 41 (33) (45)
Global Trade ................................................................ 33 21 27 16
Geothermal and Power Operations ............................................. 77 52 31 26
Diversified Business Group
Agricultural Products ................................................. 44 37 83 54
Carbon and Minerals ................................................... (28) (9) 109 76
Pipelines ............................................................. 81 67 70 59
Other ................................................................. -- -- 45 38
Corporate and Unallocated
Administrative and general expense .................................... (84) (60) (82) (56)
Net interest expense .................................................. (144) (113) (133) (106)
Environmental and litigation expense .................................. (161) (102) (146) (91)
New Ventures (non E&P) ................................................ (33) (22) (49) (33)
Other ................................................................. 15 17 (55) 88
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations
before discontinued operations
and extraordinary item ................................................... 305 130 771 669
Loss from discontinued operations ........................................... -- -- (81) (50)
Extraordinary item .......................................................... -- -- (52) (38)
- ------------------------------------------------------------------------------------------------------------------------------------
Total ........................................................... $ 305 $ 130 $ 638 $ 581
====================================================================================================================================
</TABLE>
Table 10
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
SPECIAL ADJUSTMENTS
(UNAUDITED)
Twelve Months Ended Twelve Months Ended
December 31, 1998 December 31, 1997
----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported earnings ........................................................... $ 305 $ 130 $ 638 $ 581
Less: Special items
Exploration and Production
United States
Spirit Energy
Asset sales ................................................... 22 14 11 7
Asset write-downs ............................................. (43) (27) (66) (41)
Litigation .................................................... 11 7 -- --
Alaska
Asset write-downs ............................................. (19) (12) -- --
International
Asset sales - Other ........................................... 155 101 (15) (16)
Asset write-downs - Other ..................................... (6) (4) (3) (2)
Bangladesh well blowout - Other ............................... -- -- (12) (8)
Deferred tax adjustments ...................................... -- (29) -- 94
Geothermal and Power Operations
Deferred tax adjustment ....................................... -- -- -- 10
Diversified Business Group
Carbon and Minerals
Asset sales ................................................... -- -- 67 41
Asset write-downs ............................................. (34) (22) -- --
Environmental and litigation .................................. (27) (17) (10) (6)
Restructuring costs ........................................... -- -- (2) (1)
Pipelines
Asset sales ................................................... 8 5 -- --
Other
UNO-VEN restructuring ......................................... -- -- 48 40
Corporate and Unallocated
Asset sales - Other ........................................... -- -- 18 11
Deferred tax adjustment - Other ............................... -- -- -- 103
Environmental and litigation .................................. (143) (91) (125) (78)
Insurance benefit - Other ..................................... 70 45 -- --
Insurance settlement - Other ................................. 17 11 -- --
Restructuring costs - Other ................................... (27) (17) -- --
Discontinued Operations
Net loss on disposal .......................................... -- -- (81) (50)
Extraordinary Item
Extinguishment of debt ........................................ -- -- (52) (38)
- ------------------------------------------------------------------------------------------------------------------------------------
Total special items .................................................... (16) (36) (222) 66
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted earnings .................................................. $ 321 $ 166 $ 860 $ 515
====================================================================================================================================
</TABLE>
Table 11
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
EXCLUDING SPECIAL ADJUSTMENTS
(UNAUDITED)
Twelve Months Ended Twelve Months Ended
December 31, 1998 December 31, 1997
----------------------------------------------------
Millions of dollars except share amounts Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ..................................................... $ 10 $ 6 $ 360 $ 225
Alaska ............................................................... 28 18 96 60
International
Far East ............................................................. 443 215 503 298
Other ................................................................ (96) (47) (3) (19)
Global Trade ................................................................ 33 21 27 16
Geothermal and Power Operations ............................................. 77 52 31 16
Diversified Business Group
Agricultural Products ................................................. 44 37 83 54
Carbon and Minerals ................................................... 33 30 54 42
Pipelines ............................................................. 73 62 70 59
Other ................................................................. -- -- (3) (2)
Corporate and Unallocated
Administrative and general expense .................................... (84) (60) (82) (56)
Net interest expense .................................................. (144) (113) (133) (106)
Environmental and litigation expense .................................. (18) (11) (21) (13)
New Ventures (non E&P) ................................................ (33) (22) (49) (33)
Other ................................................................. (45) (22) (73) (26)
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations ......................................... $ 321 $ 166 $ 860 $ 515
====================================================================================================================================
Basic earnings from continuing operations
per share of common stock ................................................ $ 0.69 $ 2.08
Diluted earnings from continuing operations
per share of common stock (a) ............................................ $ 0.68 $ 2.06
Distributions on preferred securities (net of tax) excluded
in numerator for diluted earnings per share (a) .......................... $ -- $ 24
Basic weighted average shares ............................................... 241 248
Diluted weighted average shares ............................................. 242 262
(a) In 1998, the effect of assumed conversion of preferred securities on
earnings per share is antidilutive
</TABLE>
Table 12
<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: January 28, 1999 By: /s/ JOE D. CECIL
- ----------------------- ------------------------------------
Joe D. Cecil
Vice President and Comptroller
