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 26, 2000
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
<PAGE> 1
Item 5. Other Events.
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Fourth Quarter Earnings
Unocal Corporation's net earnings were $97 million, or 40 cents per share
diluted, for the fourth quarter of 1999, with $71 million coming from continuing
operations and $26 million coming from discontinued operations. This compared to
a loss of $29 million, or 12 cents per share diluted, for the fourth quarter of
1998, with a loss of $33 million coming from continuing operations and earnings
of $4 million coming from discontinued operations. Discontinued operations
include the former West Coast Refining and Marketing business segment and the
recently announced sale of the company's Agricultural Products business segment.
The fourth quarter 1999 results benefited from higher oil and gas prices. In
addition, the fourth quarter of 1999 included after-tax benefits of $32 million
from a settlement with Tosco Corporation to resolve certain contingent payment
issues related to gasoline margins in Unocal's former West Coast Refining and
Marketing business segment and $16 million from an insurance recovery related to
various environmental matters. The fourth quarter 1999 positive results were
partially offset by lower net oil and gas sales volumes and a higher
international effective tax rate. In addition, the fourth quarter of 1999
included after-tax charges of $12 million in oil and gas asset write-downs, an
$11 million charge related to the company's disposal of its former West Coast
Refining and Marketing business segment and $5 million in environmental and
litigation provisions. The fourth quarter of 1998 included after-tax charges of
$65 million in asset write-downs related primarily to oil and gas assets and
minerals assets, $30 million in environmental and litigation provisions, $17
million in restructuring costs; and after-tax benefits of $45 million from an
insurance recovery and $18 million from asset sale gains.
For the full year of 1999, the company's net earnings were $137 million, or 56
cents per share diluted, with $113 million coming from continuing operations and
$24 million coming from discontinued operations. This compared with net earnings
of $130 million, or 54 cents per share diluted, for the full year of 1998, with
$93 million coming from continuing operations and $37 million coming from
discontinued operations.
The full year 1999 results, compared with the full year 1998 results, benefited
from higher worldwide crude oil prices, lower depreciation, depletion, and
amortization expense, lower operating and exploration expenses. These positive
results were partially offset by lower net oil and gas sales volumes, reduced
earnings from other non-exploration and production businesses and higher
corporate net interest expense. The full year of 1999 included after-tax charges
of $19 million for net environmental and litigation provisions, $12 million in
oil and gas asset write-downs, $11 million in restructuring costs, $11 million
charge related to the company's disposal of its former West Coast Refining and
Marketing business segment, $10 million related to the loss on sale of The
Geysers geothermal assets, $6 million charge related to the Kenai Plant accident
in the Agricultural Products business segment which is now part of discontinued
operations, offset by after-tax benefits of $32 million from the former Refining
and Marketing business segment discussed above and $16 million benefit from an
insurance recovery. The full year of 1998 included after-tax charges of $101
million in environmental and litigation provisions, $65 million in asset
write-downs related primarily to oil and gas assets and minerals assets and $17
million in restructuring costs; and after-tax benefits of $101 million relating
to the gain from the sale of assets in Canada, $45 million benefit from an
insurance recovery and $19 million from other asset sale gains.
Total revenues from continuing operations for the fourth quarter of 1999 were
$1.9 billion, compared with $1.4 billion for the fourth quarter of 1998. Total
revenues from continuing operations for the full year of 1999 were $6.1 billion,
compared with $5.1 billion for the full year of 1998.
Capital expenditures for the fourth quarter of 1999 were $410 million, compared
with $456 million for the fourth quarter of 1998. Capital expenditures for the
full year of 1999 were $1,171 million, compared with $1,704 million for the full
year of 1998. The full year of 1999 capital expenditures excluded $205 million
for the acquisition of Northrock Resources Ltd. (Northrock).
<PAGE> 2
Total debt at the end of 1999 was $2.85 billion, compared with $2.56 billion at
the end of 1998. Most of this increase reflected the consolidation of the
company's investment in Northrock.
Forward-looking statements and estimates regarding exploration and production
activities, production levels, oil and gas prices and their related earnings
effects, costs and capital expenditures in this filing are based on assumptions
about operational, market, competitive, regulatory, environmental, political and
other considerations. Actual results could differ materially as a result of
factors discussed in Unocal 's 1998 Annual Report on Form 10-K.
<PAGE> 3
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: Februrary 14, 2000 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
<PAGE> 4
<TABLE>
<CAPTION>
CONSOLIDATED EARNINGS UNOCAL CORPORATION
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
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Millions of dollars except per share amounts 1999 1998 1999 1998
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Revenues
<S> <C> <C> <C> <C>
Sales and operating revenues ......................................... $ 1,857 $ 1,243 $ 5,842 $ 4,627
Interest, dividends and miscellaneous income ......................... 34 95 106 169
Equity in earnings of affiliated companies ........................... 23 21 95 96
Gain/(loss) on sales of assets ....................................... 14 45 14 211
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Total revenues ................................................. 1,928 1,404 6,057 5,103
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Costs and Other Deductions
Crude oil, natural gas and product purchases ......................... 1,074 607 3,299 2,036
Operating expense .................................................... 274 310 949 1,171
Selling, administrative and general expense .......................... 21 61 135 130
Depreciation, depletion and amortization ............................. 243 296 818 849
Dry hole costs ....................................................... 41 34 148 184
Exploration expense .................................................. 59 64 176 203
Interest expense ..................................................... 54 46 199 177
Property and other operating taxes ................................... 13 12 50 52
Distributions on convertible preferred
securities of subsidiary trust .................................... 9 9 33 33
Minority interests ................................................... 8 -- 16 7
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Total costs and other deductions ............................... 1,796 1,439 5,823 4,842
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Earnings before income taxes ......................................... 132 (35) 234 261
Income taxes ......................................................... 61 (2) 121 168
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Earnings from continuing operations .................................. 71 (33) 113 93
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Discontinued operations
Agricultural Products
Earnings (loss) from operations (net of tax) (a) .................. 1 4 (1) 37
Refining & Marketing
Gain (Loss) on disposal (net of tax) (b) .......................... 25 -- 25 --
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Earnings (loss) from discontinued operations ................... 26 4 24 37
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Net earnings (loss) applicable to common stock ................. $ 97 $ (29) $ 137 $ 130
====================================================================================================================================
Basic earnings (loss) per share of common stock (c)
Continuing operations ............................................. $ 0.29 $ (0.14) $ 0.47 $ 0.39
Discontinued operations ........................................... 0.11 0.02 0.10 0.15
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Basic earnings per share of common stock ....................... $ 0.40 $ (0.12) $ 0.57 $ 0.54
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Diluted earnings (loss) per share of common stock (d)
Continuing operations ............................................. $ 0.29 $ (0.14) $ 0.46 $ 0.39
Discontinued operations ........................................... 0.11 0.02 0.10 0.15
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Diluted earnings per share of common stock ..................... $ 0.40 $ (0.12) $ 0.56 $ 0.54
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Cash dividends declared per share of common stock .................... $ 0.20 $ 0.20 $ 0.80 $ 0.80
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<FN>
(a) Net of income tax (benefit) of: 4 - (5) 7
(b) Net of income tax (benefit) of: 14 - 14 -
(c) Weighted average shares outstanding - basic (in thousands) 242,427 241,372 242,167 241,332
(d) Weighted average shares outstanding - diluted (in thousands) 243,229 242,215 243,112 242,288
</FN>
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET UNOCAL CORPORATION
December 31 December 31
---------------------------------
Millions of dollars 1999 (a) 1998
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Assets
<S> <C> <C>
Current assets
Cash and cash equivalents ......................................... $ 332 $ 238
Accounts and notes receivable ..................................... 994 807
Inventories ....................................................... 179 179
Deferred income taxes ............................................. 100 142
Other current assets .............................................. 26 22
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Total current assets ........................................... 1,631 1,388
Investments and long-term receivables ................................ 1,264 1,143
Properties (b) ....................................................... 5,980 5,276
Deferred income taxes ................................................ 16 23
Other assets ......................................................... 76 122
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Total assets ................................................... $ 8,967 $ 7,952
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Liabilities and Stockholders' Equity
Current liabilities
Accounts payable .................................................. $ 979 $ 709
Taxes payable ..................................................... 192 260
Interest payable .................................................. 62 52
Current portion of environmental liabilities ...................... 100 142
Other current liabilities ......................................... 226 213
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Total current liabilities ...................................... 1,559 1,376
Long-term debt ....................................................... 2,853 2,558
Deferred income taxes ................................................ 230 132
Accrued abandonment, restoration and environmental liabilities ....... 567 622
Other deferred credits and liabilities ............................... 620 514
Minority interests ................................................... 432 26
Company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust holding solely parent debentures . 522 522
Common stock ($1 par value) .......................................... 253 252
Shares authorized: 750,000 (in thousands) (c)
Capital in excess of par value ....................................... 493 460
Unearned portion of restricted stock issued .......................... (20) (24)
Retained earnings .................................................... 1,902 1,959
Accumulated other comprehensive income (loss) ........................ (33) (34)
Treasury stock - at cost (d) ........................................ (411) (411)
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Total stockholders' equity ..................................... 2,184 2,202
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Total liabilities and stockholders' equity .................. $ 8,967 $ 7,952
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<FN>
(a) Unaudited
(b) Net of accumulated depreciation ................................. $ 10,535 $ 10,193
(c) Number of shares outstanding (in thousands) ..................... 242,441 241,378
(d) Number of shares (in thousands) ................................. 10,623 10,623
</FN>
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
CONSOLIDATED CASH FLOWS UNOCAL CORPORATION
(Unaudited)
For the Twelve Months
Ended December 31
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Millions of dollars 1999 1998
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Cash Flows from Operating Activities
<S> <C> <C>
Net earnings (loss) .................................................. $ 137 $ 130
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation, depletion and amortization ....................... 833 867
Dry hole costs ................................................. 148 184
Deferred income taxes .......................................... (58) (72)
(Gain) loss on sales of assets (pre-tax) ....................... (14) (211)
(Gain) loss on disposal of discontinued operations(pre-tax)..... (39) --
Other .......................................................... (117) 35
Working capital and other changes related to operations
Accounts and notes receivable ............................... (173) 42
Inventories ................................................. -- (7)
Accounts payable ............................................ 234 (76)
Taxes payable ............................................... (68) 134
Other ....................................................... 143 (23)
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Net cash provided by (used in) operating activities ...... 1,026 1,003
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Cash Flows from Investing Activities
Capital expenditures (include dry hole costs) ..................... (1,171) (1,704)
Acquisition of Northrock Resources Ltd. ........................... (205) --
Proceeds from sales of assets ..................................... 238 435
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Net cash provided by (used in) investing activities ...... (1,138) (1,269)
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Cash Flows from Financing Activities
Long-term borrowings .............................................. 862 891
Reduction of long-term debt ....................................... (718) (472)
Dividends paid on common stock .................................... (194) (193)
Repurchases of common stock ....................................... -- (48)
Minority interests ................................................ 233 (10)
Other ............................................................. 23 (2)
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Net cash provided by (used in) financing activities ......... 206 166
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Increase (decrease) in cash and cash equivalents ..................... 94 (100)
Cash and cash equivalents at beginning of year ....................... 238 338
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Cash and cash equivalents at end of period ........................... $ 332 $ 238
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</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
CONSOLIDATED EARNINGS UNOCAL CORPORATION
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
------------------------------------------------------
Millions of dollars except per share amounts 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Earnings (loss) from continuing operations ........................... $ 71 $ (33) $ 113 $ 93
Earnings (loss) from discontinued operations ......................... 26 4 24 37
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Net earnings (loss) .............................................. $ 97 $ (29) $ 137 $ 130
Less: Special items
Continuing operations
Asset Sales .............................................. -- 18 (10) 120
Asset write-downs ........................................ (12) (65) (12) (65)
Deferred tax adjustments ................................. -- (8) -- (29)
Net environmental and litigation provision ............... (5) (30) (19) (101)
Insurance Benefits ....................................... 16 45 16 56
Restructuring costs....................................... -- (17) (11) (17)
Discontinued operations
Agricultural Products
Kenai Plant accident ..................................... -- -- (6) --
Refining & Marketing
Tosco settlement net of adjustments ....................... 21 -- 21 --
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Total special items ............................................... $ 20 $ (57) $ (21) $ (36)
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Adjusted net earnings ........................................... $ 77 $ 28 $ 158 $ 166
====================================================================================================================================
Diluted net earnings (loss) per share:
Continuing operations ........................................... $0.29 $(0.14) $0.46 $0.39
Discontinued operations ......................................... 0.11 0.02 0.10 0.15
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Diluted net earnings (loss) per share ........................... $0.40 $(0.12) $0.56 $0.54
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Diluted adjusted net earnings per share .............................. $0.32 $ 0.11 $0.65 $0.68
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</TABLE>
<TABLE>
ADJUSTED EARNINGS BY BUSINESS SEGMENT
(After-tax)(Unaudited)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
------------------------------------------------
Millions of dollars 1999 1998 1999 1998
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Exploration & Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 (a) ................................... $ 26 $ (11) $ 50 $ 4
Alaska ................................................. 20 3 36 18
International
Far East ............................................... 57 68 222 215
Other (a) .............................................. 9 (2) (12) (47)
Global Trade
Global Trade .............................................. 1 8 (2) 21
Pipelines ................................................. 16 18 62 62
Geothermal and Power Operations .............................. 7 8 38 52
Carbon & Minerals (a) ........................................ 1 2 23 25
Corporate and Unallocated
New Ventures (Non E&P) .................................... (5) (6) (14) (22)
Administrative & General .................................. (16) (21) (81) (79)
Interest Expense - Net (a) ................................ (37) (30) (138) (113)
Environmental & Litigation ................................ (2) (3) (10) (11)
Other ..................................................... (5) (10) (25) 4
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Adjusted earnings from continuing operations ................. 72 24 149 129
Adjusted earnings from discontinued operations ............... 5 4 9 37
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Adjusted net earnings ........................................ $ 77 $ 28 $ 158 $ 166
<FN>
(a) Includes minority interest of:
Spirit Energy 76 ....................................... (4) -- (11) (1)
International - Other .................................. (3) -- (5) --
Carbon & Minerals ...................................... -- -- (2) (3)
Corporate and Unallocated .............................. (1) -- 2 --
</FN>
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
OPERATING HIGHLIGHTS UNOCAL CORPORATION
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
----------------------------------------------------
1999 1998 1999 1998
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United States Net Daily Production
Crude oil (thousand barrels daily)
<S> <C> <C> <C> <C>
Spirit Energy 76 .................................................. 41 42 40 44
Alaska ............................................................ 28 29 27 29
Natural gas - wet basis (million cubic feet daily)
Spirit Energy 76 .................................................. 722 798 747 795
Alaska ............................................................ 154 147 133 133
United States Average Prices (a)
Crude oil (per barrel)
Spirit Energy 76 .................................................. $ 21.90 $ 11.00 $ 16.65 $ 12.41
Alaska ............................................................ $ 18.35 $ 8.78 $ 13.05 $ 9.35
Natural gas (per mcf)
Spirit Energy 76 .................................................. $ 2.41 $ 2.05 $ 2.17 $ 2.07
Alaska ............................................................ $ 1.20 $ 1.20 $ 1.20 $ 1.33
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International Net Daily Production (b)
Crude oil (thousand barrels daily)
Far East .......................................................... 76 72 73 80
Other (c) ......................................................... 35 27 35 31
Natural gas (million cubic feet daily)
Far East .......................................................... 825 857 847 853
Other (c) ......................................................... 158 26 109 45
International Average Prices (a)
Crude oil (per barrel)
Far East .......................................................... $ 20.08 $ 11.00 $ 15.38 $ 12.55
Other ............................................................. $ 20.33 $ 9.66 $ 15.78 $ 10.73
Natural gas (per mcf)
Far East .......................................................... $ 2.22 $ 1.95 $ 2.03 $ 2.06
Other ............................................................. $ 2.44 $ 2.40 $ 2.27 $ 2.29
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Worldwide Net Daily Production (b)(c)
Crude oil (thousand barrels daily) ................................... 180 170 175 184
Natural gas (per mcf) ................................................ 1,859 1,828 1,836 1,826
Worldwide Average Prices (a)
Crude oil (per barrel) ............................................... $ 20.34 $ 10.37 $ 15.38 $ 11.67
Natural gas (per mcf) ................................................ $ 2.22 $ 1.96 $ 2.04 $ 2.01
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<FN>
(a) average prices include hedging gains and losses, but exclude other Global
Trade margins.
(b) production includes certain host countries' shares of: Crude oil 27 9 24 10
Natural gas 75 67 82 49
(c) production includes 100% of Northrock Resources Ltd. : Crude oil 6 - 5 -
Natural gas 104 - 69 -
</FN>
</TABLE>
