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, 1999
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, 1999 and 1998, 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 3
Statements of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5-10
Supplemental Schedules*:
Schedule of Assets Held for Investment Purposes at End of Year 12
Schedule of Reportable Transactions 13
Exhibit Index 14
* 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 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, 1999 and 1998,
and the changes in net assets available for benefits for the years ended
December 31, 1999 and 1998 in conformity with accounting principles generally
accepted in the United States. 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 auditing standards generally accepted in the
United States, 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 at end of year 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 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 23, 2000
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Statements of Net Assets Available for Benefits
December 31,
1999 1998
------------ ------------
Assets:
<S> <C> <C>
Investments at fair value ................... $586,664,187 $522,090,803
Cash ........................................ 517,038 37,427
------------ ------------
Total assets ....................... 587,181,225 522,128,230
Liabilities:
Amounts due to plan sponsor ................. -- 516,250
------------ ------------
Total liabilities .................. -- 516,250
------------ ------------
Net assets available for benefits ................ $587,181,225 $521,611,980
============ ============
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31,
1999 1998
------------- -------------
Additions:
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation) in
<S> <C> <C>
fair value of investments ...................... $ 106,667,069 $ (54,361,941)
Interest ........................................... 2,826,155 2,026,372
Dividends .......................................... 21,546,976 15,051,327
------------- -------------
Total investment income / (loss) .............. 131,040,200 (37,284,242)
Contributions:
Participant ........................................... 25,025,641 34,375,425
Company ............................................... 14,812,757 15,285,419
------------- -------------
Total contributions ........................... 39,838,398 49,660,844
------------- -------------
Total additions ....................................... 170,878,598 12,376,602
------------- -------------
Deductions:
Deductions from net assets attributed to:
Participants withdrawals & distributions .............. 105,292,032 67,435,472
Trustee fees and other expenses ....................... 17,321 19,058
------------- -------------
Total deductions ............................ 105,309,353 67,454,530
------------- -------------
Net increase (decrease) ............................... 65,569,245 (55,077,928)
Net assets available for benefits:
Beginning of year ................................... 521,611,980 576,689,908
------------- -------------
End of year ......................................... $ 587,181,225 $ 521,611,980
============= =============
See accompanying notes to financial statements.
</TABLE>
4
<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") matching contributions and for participants' voluntary
pre-tax and/or after-tax 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 1999 and 1998, 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 Unocal
common stock only; however, participants may thereafter transfer these balances
into any of the Plan investment options once they are fully vested. Most
balances remain with the Trustee until withdrawn by participants following
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 Savings Plan booklet is a Summary Plan Description of the Plan
as of January 1, 1998. The Savings Plan booklet dated January 1998 was
superseded in May 2000; see note 6 for further detail.
Participation
-------------
Regular, full-time employees are eligible to participate in the Plan
immediately upon employment by the company. Part-time and temporary employees
are eligible to participate beginning the first service year in which they
complete at least 1,000 hours of service.
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.
5
<PAGE>
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. Special vesting rules also apply to certain participants depending on
the date and reason for termination of employment.
Payment of Benefits
-------------------
Following termination of employment, 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.
Rollovers into the Plan
-----------------------
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.
Federal Income Tax Status
-------------------------
The company obtained its latest determination letter on February 15, 2000,
from 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 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 exceeded $160,000, only the first $160,000 of
base pay was 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 for both 1999 and 1998. 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.
6
<PAGE>
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.
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 accounting principles generally accepted in the
United States. 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 or more buy and sell trades 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.
Certain items in prior year financial statements have been reclassified to
conform to the 1999 presentation.
7
<PAGE>
Valuation of Investments
------------------------
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at 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, 1999 and 1998, respectively. Investments in common trust funds are
valued based on information provided by the Plan's investment custodian. 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 accounting
principles generally accepted in the United States 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.
NOTE 3 - Investments
The following table presents investments that represent 5 percent or
more of the Plan's net assets:
<TABLE>
December 31,
1999 1998
--------------------------------------------------------------------------------
Unocal Common Stock (a)
<S> <C> <C>
6,714 and 8,861 thousand shares, respectively .... $225,327,484 $258,638,208
Putnam S&P 500 Index Fund
3,502 and 3,458 thousand shares, respectively .... 122,349,845 100,025,611
Putnam New Opportunities Fund
785 and 650 thousand shares, respectively ........ 72,559,112 37,952,648
Putnam Money Market Fund
45,345 and 25,470 thousand shares, respectively .. 45,345,046 25,469,955
George Putnam Fund of Boston
2,675 and 2,905 thousand shares, respectively .... 43,633,627 52,411,607
Putnam Voyager Fund
1,358 and 1,081 thousand shares, respectively .... 42,921,726 23,697,333
<FN>
(a) Includes both participant and nonparticipant-directed amounts.
</FN>
</TABLE>
8
<PAGE>
During 1999, the Plan's investments appreciated in value as follows:
<TABLE>
<S> <C>
Mutual funds $ 31,852,362
Common or collective trusts 21,518,949
Common stock 53,295,758
--------------
$ 106,667,069
==============
</TABLE>
Nonparticipant-Directed Investments
-----------------------------------
The nonparticipant-directed investments and the significant components of
the changes in those net assets are as follows:
<TABLE>
<CAPTION>
December 31,
1999 1998
--------------------------------------------------------------------------------
Assets:
<S> .............................................. <C> <C>
Unocal common stock ......................... $139,452,514 $159,766,160
------------ ------------
Total assets ........................... 139,452,514 159,766,160
Liabilities
Amounts due to plan sponsor ................. -- 516,250
------------ ------------
Total liabilities ...................... -- 516,250
------------ ------------
Total nonparticipant-directed net assets $139,452,514 $159,249,910
============ ============
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
------------------------------------------------------------------------------------
Changes in net assets:
<S> ................................................ <C> <C>
Contributions ................................. $ 14,812,757 $ 15,285,419
Dividends ..................................... 3,857,896 4,559,695
Net appreciation (depreciation) ............... 32,868,125 (51,525,716)
Benefits paid to participants ................. (21,380,032) (18,849,142)
Transfers to participant - directed investments (49,956,142) (26,136,443)
------------- -------------
Net decrease ............................. $(19,797,396) $(76,666,187)
============= =============
</TABLE>
NOTE 4 - Forfeitures by Members
Company basic and matching contributions and dividends thereon under the
Plan are forfeited by employees whose employment is terminated before vesting is
attained. 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 participant accounts.
At December 31, 1999 and 1998, forfeited nonvested accounts totaled
$170,782 and $87,262, respectively.
9
<PAGE>
NOTE 5 - Parties-in-interest
Certain of the Plan's investments are shares of mutual funds managed by the
Trustee, 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,
1999 and 1998, 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 $169,268 and
$162,326 for the years ended December 31, 1999 and 1998, respectively.
NOTE 6 - Subsequent Events
In May 2000, the company updated and replaced the Savings Plan booklet
dated January 1998. The new Savings Plan booklet is a Summary Plan Description
of the Plan and incorporates amendments to certain sections of the Plan, which
took effect in 2000. Some of these changes pertained to the Plan's entry date
for new hires, contribution election changes, investment election changes,
distribution availability, hardship withdrawals, withdrawals by beneficiaries of
deceased plan members, mandated commencement of benefits, loan availability, and
Internal Revenue Service (IRS) requirements for obtaining an IRS Determination
Letter.
10
<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 28, 2000 By: /s/ Joe D. Cecil
----------------------
Joe D. Cecil
Plan Committee Member
11
<PAGE>
<TABLE>
<CAPTION>
Unocal Savings Plan
Schedule of Assets Held for Investment Purposes at End of Year
As of December 31, 1999
(a) (b) (c) (d) (e)
Identity of Issuer, Borrower, Description of Investment Cost Current Value
Lessor or Similar Party
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
* Unocal Corporation Unocal Corporation Common Stock $188,764,936 $225,327,484
6,713,668 shares
** Putnam Investments Putnam S&P 500 Index Fund 78,912,212 122,349,845
3,501,713 shares
** Putnam Investments George Putnam Fund of Boston 50,934,745 43,633,627
2,675,268 shares
** Putnam Investments The Putnam Bond Index Fund 3,130,959 3,105,299
314,939 shares
** Vanguard Group The Vanguard Windsor II Fund 9,041,416 7,268,445
291,087 shares
** Putnam Investments Putnam International Growth Fund 8,843,853 11,028,344
370,203 shares
** Putnam Investments Putnam Money Market Fund 45,345,046 45,345,046
45,345,046 shares
** Putnam Investments Putnam New Opportunities Mutual Fund 51,944,932 72,559,112
785,187 shares
** Putnam Investments Putnam Voyager Fund 33,944,175 42,921,726
1,358,282 shares
** Putnam Investments Participant Loans 13,125,259
----------------------------
Total assets held for investment purpose $470,862,274 $586,664,187
============================
</TABLE>
[FN]
* Sponsor and employer and, therfore, a party-in-interest for which a
statuory exemption exists.
** Trustee for the Plan and, therefore, a party-in-interest for which a
statuory exemption exists. The Vanguard Windsor II Fund is also available
through Putnam Investments.
</FN>
12
<PAGE>
<TABLE>
<CAPTION>
UNOCAL SAVINGS PLAN
Schedule of Reportable Transactions (1)
December 31, 1999
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Description of Assets Expense Current Value of
Identity of (including Interest Rate Purchase Selling Lease Incurred With Cost Asset on
Party And Maturity in Case of Price Price Rental Transaction of Asset Transaction Date Net Gain
------------------------------------------------------------------------------------------------------------------------------------
Unocal
<S> <C> <C> <C> <C> <C>
Corrporation (2) Common Stock $54,894,244 $ 54,894,244 $ 54,894,244
(456 transactions)
Unocal
Corporation (2) Common Stock $140,249,889 103,664,063 140,249,88 $ 36,585,826
(860 transactions)
</TABLE>
[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.
</FN>
13
<PAGE>
UNOCAL CORPORATION
EXHIBIT INDEX
Exhibit 23 Consent of PricewaterhouseCoopers LLP
14
