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, 1998
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, 1998 and 1997, and the results of its
transactions for each of the years then ended.
Page Number
Report of Independent Accountants 2
Financial Statements:
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
Supplemental Schedules*:
Item 27(a) - Schedule of Assets Held for Investment Purposes 13
Item 27(d) - Schedule of Reportable Transactions 14
Exhibit Index 15
* Supplemental schedules required by the Employee Retirement Income Security
Act of 1974 that are omitted are not applicable to the Unocal Savings Plan.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Unocal Savings Plan/ESOP Committee:
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of the Unocal Savings Plan (the "Plan") at December 31, 1998 and 1997,
and the changes in net assets available for benefits for the years ended
December 31, 1998 and 1997 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were conducted 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 statement of net assets available for benefits and the
statement 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 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.
PricewaterhouseCoopers LLP
Los Angeles, California
June 18, 1999
2
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1998
Non Participant Participant
Directed Directed
------------ ---------------------------------------------------------
Unocal Low
Common S&P 500 George Putnam Volatility Money
Stock Index Fund Fund of Boston Fund Market Fund
------------ ------------ ------------ ------------ ------------
Assets
Investments at fair value (Note 2)
<S> <C> <C> <C> <C> <C>
Unocal Common Stock ............... $159,766,160 $ -- $ -- $ -- $ --
Shares of registered
investment companies:
S&P 500 Index Fund ................ -- 100,025,611 -- -- --
George Putnam Fund of Boston ...... -- -- 52,411,607 -- --
Low Volatility Fund ............... -- -- -- 10,708,881 --
Money Market Fund ................. -- -- -- -- 25,469,955
New Opportunities Fund ............ -- -- -- -- --
Voyager Fund ...................... -- -- -- -- --
Participant notes receivable(loans) -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total investments............. 159,766,160 100,025,611 52,411,607 10,708,881 25,469,955
Cash ..................................... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total Assets ................. 159,766,160 100,025,611 52,411,607 10,708,881 25,469,955
Liabilities
Amounts due to Plan Sponsor.......... 516,250 -- -- -- --
------------ ------------ ------------ ------------ ------------
Total Liabilities ............ 516,250 -- -- -- --
Net assets available for benefits......... $159,249,910 $100,025,611 $ 52,411,607 $ 10,708,881 $ 25,469,955
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------------------
New Unocal
Opportunities Voyager Common
Fund Fund Stock Other Total
------------ ------------ ------------ ------------ ------------
Assets
Investments at fair value (Note 2)
<S> ....................................... <C> <C> <C> <C> <C>
Unocal Common Stock ................ $ -- $ -- $ 98,872,048 $ -- $258,638,208
Shares of registered
investment companies:
S&P 500 Index Fund ................. -- -- -- -- 100,025,611
George Putnam Fund of Boston ....... -- -- -- -- 52,411,607
Low Volatility Fund ................ -- -- -- -- 10,708,881
Money Market Fund .................. -- -- -- -- 25,469,955
New Opportunities Fund ............. 37,952,648 -- -- -- 37,952,648
Voyager Fund ....................... -- 23,697,333 -- -- 23,697,333
Participant notes receivable (loans) -- -- -- 13,186,560 13,186,560
------------ ------------ ------------ ------------ ------------
Total investments ............. 37,952,648 23,697,333 98,872,048 13,186,560 522,090,803
Cash ...................................... -- -- 37,427 -- 37,427
------------ ------------ ------------ ------------ ------------
Total Assets .................. 37,952,648 23,697,333 98,909,475 13,186,560 522,128,230
Liabilities
Amounts due to Plan Sponsor .......... -- -- -- -- 516,250
------------ ------------ ------------ ------------ ------------
Total Liabilities ............. -- -- -- -- 516,250
Net assets available for benefits ......... $ 37,952,648 $ 23,697,333 $ 98,909,475 $ 13,186,560 $521,611,980
============ ============ ============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1997
Non Participant Participant
Directed Directed
------------ ---------------------------------------------------------
Unocal Low
Common S&P 500 George Putnam Volatility Money
Stock Index Fund Fund of Boston Fund Market Fund
------------ ------------ ------------ ------------ ------------
Assets
Investments at fair value (Note 2)
<S> <C> <C> <C> <C> <C>
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 Fund ............... -- -- -- 7,282,078 --
Money Market Fund ................. -- -- -- -- 21,152,142
New Opportunities Fund ............ -- -- -- -- --
Voyager Fund ...................... -- -- -- -- --
Participant notes receivable(loans) -- -- -- -- --
------------ ------------ ------------ ------------ ------------
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
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------------------
New Unocal
Opportunities Voyager Common
Fund Fund Stock Other Total
------------ ------------ ------------ ------------ ------------
Assets
Investments at fair value (Note 2)
<S> <C> <C> <C> <C> <C>
Unocal Common Stock ................ $ -- $ -- $142,161,246 $ -- $378,506,593
Shares of registered
investment companies:
S&P 500 Index Fund ................. -- -- -- -- 69,606,728
George Putnam Fund of Boston ....... -- -- -- -- 47,367,931
Low Volatility Fund ................ -- -- -- -- 7,282,078
Money Market Fund .................. -- -- -- -- 21,152,142
New Opportunities Fund ....... ..... 23,616,128 -- -- -- 23,616,128
Voyager Fund ....................... -- 14,934,256 -- -- 14,934,256
Participant notes receivable (loans) -- -- -- 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
============ ============ ============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Statement of Changes in Net Assets Available for Benefits with Fund Information
For the Year Ended December 31, 1998
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
---------- ----------------------------------------------------------------
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation)
<S> <C> <C> <C> <C> <C>
in fair value of investments.............. $(51,525,716) $ 20,644,488 $ 24,626 $ 521,742 $ --
Interest .................................... -- 227,713 141,438 21,816 35,080
Dividends ................................... 4,559,695 -- 4,887,237 -- 1,161,596
------------ ------------ ------------ ------------ ------------
Total investment income/(loss)............. (46,966,021) 20,872,201 5,053,301 543,558 1,196,676
Contributions
Participant ..................................... -- 7,633,768 4,794,267 962,326 3,106,877
Company ......................................... 15,285,419 -- -- -- --
------------ ------------ ------------ ------------ ------------
Total contributions .......................... 15,285,419 7,633,768 4,794,267 962,326 3,106,877
Total additions ........................... (31,680,602) 28,505,969 9,847,568 1,505,884 4,303,553
Deductions from net assets attributed to:
Participant withdrawals & distributions ......... 18,849,142 9,446,369 7,144,729 1,391,798 9,305,528
Trustee fees and other expenses ................. -- 4,802 2,706 442 1,140
------------ ------------ ------------ ------------ ------------
Total deductions ............................. 18,849,142 9,451,171 7,147,435 1,392,240 9,306,668
Net increase/(decrease) prior to interfund transfers (50,529,744) 19,054,798 2,700,133 113,644 (5,003,115)
Interfund transfers ................................ (26,136,443) 11,364,085 2,343,543 3,313,159 9,320,928
------------ ------------ ------------ ------------ ------------
Net increase/(decrease).................... (76,666,187) 30,418,883 5,043,676 3,426,803 4,317,813
Net assets available for benefits:
Beginning of year ............................... 235,916,097 69,606,728 47,367,931 7,282,078 21,152,142
------------ ------------ ------------ ------------ ------------
End of year ..................................... $159,249,910 $100,025,611 $ 52,411,607 $ 10,708,881 $25,469,955
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------------------------
New Unocal
Opportunities Voyager Common Other Total
Fund Fund Stock
--------------- ------------- ----------------- ------------- -------------
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation)
<S> <C> <C> <C> <C> <C>
in fair value of investments .......... $ 5,360,000 $ 2,480,170 $ (31,867,251) $ $(54,361,941)
Interest ................................. 81,361 50,945 306,153 -- 864,776
Dividends ................................ 1,190,440 1,608,188 2,805,767 -- 16,212,923
------------- ------------- ------------- ------------- -------------
Total investment income/(loss)......... 6,632,071 4,139,303 (28,755,331) -- (37,284,242)
Contributions
Participant .................................. 3,875,442 2,516,870 11,485,875 -- 34,375,425
Company ...................................... -- -- -- -- 15,285,419
------------- ------------- ------------- ------------- -------------
Total contributions ....................... 3,875,442 2,516,870 11,485,875 -- 49,660,844
Total additions ........................ 10,507,513 6,656,173 (17,269,456) -- 12,376,602
Deductions from net assets attributed to:
Participant withdrawals & distributions ...... 3,303,158 2,740,226 13,700,556 1,553,966 67,435,472
Trustee fees and other expenses .............. 1,984 1,520 6,464 -- 19,058
------------- ------------- ------------- ------------- -------------
Total deductions .......................... 3,305,142 2,741,746 13,707,020 1,553,966 67,454,530
Net increase (decrease) prior
to interfund transfers ....................... 7,202,371 3,914,427 (30,976,476) (1,553,966) (55,077,928)
Interfund transfers ............................. 7,134,149 4,848,650 (12,918,714) 730,643 --
------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ................ 14,336,520 8,763,077 (43,895,190) (823,323) (55,077,928)
Net assets available for benefits:
Beginning of year ............................ 23,616,128 14,934,256 142,804,665 14,009,883 576,689,908
------------- ------------- ------------- ------------- -------------
End of year .................................. $ 37,952,648 $ 23,697,333 $ 98,909,475 $13,186,560 $521,611,980
============= ============= ============= ============= =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
5
</TABLE>
<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
---------- ----------------------------------------------------------------
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation)
<S> <C> <C> <C> <C> <C>
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/(loss)............. (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:
Participant 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
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------------------------
New Unocal
Opportunities Voyager Common Other Total
Fund Fund Stock
--------------- ------------- -------------- -------------- -------------
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation)
<S> <C> <C> <C> <C> <C>
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/(loss)......... 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:
Participant 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
============= ============= ============= ============= =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
5
</TABLE>
<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
1998 and 1997, 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.
Participation
- -------------
Employees become participants in the Plan after the completion of one year
of continuous service in which the employee has worked at least 1,000 hours.
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 participants' 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
ended 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
- -----------------------
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. Effective July 1,
1998, the Plan accepted rollovers of qualified amounts from the Puregro Company
401(k) Retirement Savings Plan. The Purego Company is a former subsidiary of
Union Oil Company of California, which is a subsidiary of Unocal. 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:
Unocal Corporation Common Stock - Monies are used to purchase shares of Unocal
Corporation common stock. Company contributions are invested only in Unocal
Corporation common stock.
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.
8
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
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 and a risk for greater price fluctuations.
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.
Federal Income Tax Status
- -------------------------
The company obtained its latest determination letter on November 3, 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, 1998, the maximum employee
pay eligible for benefit purposes under a qualified plan is $160,000 per year.
If an employee's 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 contributions. The limit was $10,000 and $9,500 in 1998 and 1997,
respectively. 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.
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. In the event of such
discontinuance of the Plan, participants become fully vested in their individual
accounts, and the net assets of the Plan must be allocated among the
participants and beneficiaries of the Plan in the order provided by ERISA. 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.
9
<PAGE>
UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
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. Benefits are recorded when paid.
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 net 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, 1998 and
1997, respectively. Investments in common trust funds are valued based on
information provided by the Plan's investment custodions. The financial
statements of the common trust funds are audited annually by independent
accountants. 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, 1998 and 1997, forfeited nonvested accounts totaled
$516,520 and $429,250, respectively.
NOTE 4 - Parties-in-interest
Certain of the Plan's investments are shares of mutual funds managed by
Putnam Fidicuary Trust Company, Trustee of the Plan, as defined by the Plan
Agreement. Therefore, these transactions qualify as party-in-interest
transactions for which a statutory exemption exists. Fees paid by the Plan for
investment management services are disclosed on the face of the statement of
changes in net assets available for benefits at December 31, 1998 and 1997,
respectively.
The company, who also qualifies as a party-in-interest, absorbs certain
administrative expenses of the Plan. Such transactions with the company qualify
for a statutory exemption. Total expenses paid by the company were $162,326 and
$195,761 for the years ended December 31, 1998 and 1997, 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 29, 1999 By: /s/ Joe D. Cecil
---------------------
Joe D. Cecil
Vice President and Comptroller
12
<PAGE>
<TABLE>
<CAPTION>
UNOCAL SAVINGS PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
For the Year Ended DECEMBER 31, 1998
(c) Description of Investment
Including Maturity Date,
(b) Identity of Issue, Borrower, Rate of Interest, Collateral, (e)Current
(a) Lessor or Similar Party Par or Maturity Value (d) Cost Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
** Unocal Corporation Unocal Corporation Common Stock $238,058,671 $258,638,208
( 8,861,267 shares)
* Putnam Investments S & P 500 Index Fund 66,506,052 100,025,611
( 3,457,505 shares)
* Putnam Investments George Putnam Fund of Boston 50,046,073 52,411,607
( 2,905,300 shares)
* Putnam Investments Putnam Low Volatility Trust Fund 9,932,020 10,708,881
( 833,376 shares)
* Putnam Investments Putnam Money Market Fund 25,469,955 25,469,955
(25,469,956 shares)
* Putnam Investments Putnam New Opportunities Fund 30,912,464 37,952,648
( 649,540 shares)
* Putnam Investments Putnam Voyager Fund 20,685,820 23,697,333
( 1,081,083 shares)
* Putnam Investments Participant Loans -- 13,186,560
------------ ------------
$441,611,055 $522,090,803
============ ============
<FN>
* Trustee for the Plan and, therefore a party-in-interest for which a
statutory exemption exists.
** Sponser and employer, and therefore, a party-in-interest for which a
statutory exemption exists.
</FN>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
UNOCAL SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1998
(b)Description (f)Expense (h)Current
of Assets Incurred Value of (i)Net
(Including Interest (c)Purchase (d)Selling (e)Lease With (g) Cost Asset on Gain
(a)Identity of Rate and Maturity Price Price Rental Transaction of Asset Transaction Or
Party Involved in Case of a loan) Date (loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Unocal Corporation Unocal Corporation 48,679,893 48,679,893 48,679,893
(2) Common Stock
( 369 Transactions)
Unocal Corporation Unocal Corporation 90,740,555 68,106,169 90,740,555 22,634,386
(2) Common Stock
(1,280 Transactions)
Putnam Investments George Putnam Fund 19,802,931 19,802,931 19,802,931
(3) ( 308 Transactions)
Putnam Investments George Putnam Fund 14,783,881 13,759,782 14,783,881 1,024,099
(3) ( 551 Transactions)
Putnam Investments Putnam Voyager Fund 13,257,330 13,257,330 13,257,330
(3) ( 319 transactions)
Putnam Investments Putnam Voyager Fund 6,974,423 6,547,452 6,974,423 426,971
(3) ( 443 transactions)
Putnam Investments Putnam New 19,206,127 19,206,127 19,206,127
(3) Opportunity Fund
( 342 transactions)
Putnam Investments Putnam New 10,229,607 9,429,209 10,229,607 800,398
(3) Opportunity Fund
( 482 transactions)
Putnam Investments Putnam S&P 500 Fund 33,430,585 33,430,585 33,430,585
(3) ( 364 transactions)
Putnam Investments Putnam S&P 500 Fund 23,656,586 18,707,897 23,656,586 4,948,689
(3) ( 588 transactions)
Putnam Investments Putnam Low 7,891,452 7,891,452 7,891,452
(3) Volatility Fund
( 265 transactions)
Putnam Investments Putnam Low 4,986,390 4,803,270 4,986,390 183,120
(3) Volatility Fund
( 349 transactions)
Putnam Investments Putnam Money 30,118,256 30,118,256 30,118,256
(3) Market Fund
( 542 transactions)
Putnam Investments Putnam Money 27,379,819 27,379,817 27,379,819 2
(3) Market Fund
( 523 transactions)
<FN>
(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's net 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) Trustree for the Plan and, therefore a party-in-interest for which a
statutory exemption exists.
</FN>
</TABLE>
14
<PAGE>
UNOCAL CORPORATION
EXHIBIT INDEX
Exhibit 23 Consent of PricewaterhouseCoopers LLP
15
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 18,
1999, on our audits of the financial statements and supplemental schedules of
the Unocal Savings Plan as of December 31, 1998 and 1997 and for the years then
ended which report is included in this annual report on Form 11-K.
PricewaterhouseCoopers LLP
Los Angeles, California
June 29, 1999
