<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO __________
COMMISSION FILE NUMBER 1-9019
UNION TEXAS PETROLEUM HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0040040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1330 POST OAK BLVD.
HOUSTON, TEXAS 77056
(Address of principal
executive offices
and zip code)
(713) 623-6544
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ------
As of October 17, 1997, there were 85,071,219 shares of Union Texas Petroleum
Holdings, Inc. $.05 par value Common Stock issued and outstanding.
<PAGE> 2
FORM 10-Q
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................ $ 25,229 $ 43,574
Accounts and notes receivable, less allowance for doubtful accounts .. 75,691 96,687
Inventories .......................................................... 34,743 39,721
Prepaid expenses and other current assets ............................ 39,818 23,560
----------- -----------
Total current assets ............................................ 175,481 203,542
Equity investments ........................................................ 94,197 93,262
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization* ............................ 1,696,418 1,632,423
Other assets .............................................................. 11,623 12,777
----------- -----------
Total assets .................................................... $ 1,977,719 $ 1,942,004
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .................................... $ 1,144 $ 2,290
Accounts payable ..................................................... 85,568 103,225
Taxes payable ........................................................ 110,175 126,813
Other current liabilities ............................................ 54,469 48,511
----------- -----------
Total current liabilities ....................................... 251,356 280,839
Long-term debt ............................................................ 619,345 558,463
Deferred income taxes ..................................................... 325,775 391,534
Other liabilities ......................................................... 124,488 125,146
----------- -----------
Total liabilities ............................................... 1,320,964 1,355,982
----------- -----------
Stockholders' equity:
Common stock ......................................................... 4,391 4,391
Paid in capital ...................................................... 18,477 18,863
Cumulative foreign exchange translation adjustment and other ......... (49,936) (21,955)
Retained earnings .................................................... 738,754 614,376
Common stock held in treasury, at cost:
2,844,431 shares at September 30, 1997 and 1,490,322 shares at
December 31, 1996 ............................................... (54,931) (29,653)
----------- -----------
Total stockholders' equity ...................................... 656,755 586,022
----------- -----------
Total liabilities and stockholders' equity ...................... $ 1,977,719 $ 1,942,004
=========== ===========
</TABLE>
* The Company follows the successful efforts method of accounting for oil and
gas activities.
The accompanying notes are an integral part of this financial statement.
1
<PAGE> 3
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Sales and operating revenues ................... $ 182,843 $227,284 $ 676,550 $ 708,654
Interest income and other revenues ............. 239 644 3,712 1,709
Net earnings of equity investees ............... 5,206 7,645 17,240 22,516
--------- -------- --------- ---------
188,288 235,573 697,502 732,879
Costs and other deductions:
Product costs and operating expenses ........... 68,624 81,016 230,707 242,338
Exploration expenses ........................... 16,118 8,834 47,688 33,299
Depreciation, depletion and amortization ....... 47,592 48,628 153,564 152,436
Selling, general and administrative expenses ... 8,016 6,516 19,960 18,691
Interest expense ............................... 1,113 5,582 6,700 20,092
--------- -------- --------- ---------
Income before income taxes ......................... 46,825 84,997 238,883 266,023
Income taxes (benefit) ............................. (1,222) 51,476 101,717 154,104
--------- -------- --------- ---------
Net income ......................................... $ 48,047 $ 33,521 $ 137,166 $ 111,919
========= ======== ========= =========
Earnings per share of common stock ................. $ .57 $ .39 $ 1.61 $ 1.28
========= ======== ========= =========
Dividends per share of common stock ................ $ .05 $ .05 $ .15 $ .15
========= ======== ========= =========
Weighted average number of shares outstanding (000s) 84,795 86,996 85,099 87,379
========= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
2
<PAGE> 4
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................. $ 137,166 $ 111,919
Adjustment to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization ................................ 153,564 152,436
Deferred income taxes ................................................... (52,499) (23,061)
Net income of equity investees .......................................... (17,240) (22,516)
Other ................................................................... 1,149 2,449
--------- ---------
Net cash provided by operating activities before changes in other
assets and liabilities ............................................ 222,140 221,227
Decrease (Increase) in accounts and notes receivable .................... 19,720 (10,821)
Decrease in inventories ................................................. 4,427 1,641
Increase in prepaid expenses and other assets ........................... (16,202) (13,870)
(Decrease) Increase in accounts payable and other liabilities ........... (13,358) 167
(Decrease) Increase in income taxes payable ............................. (12,928) 23,077
--------- ---------
Net cash provided by operating activities ........................... 203,799 221,421
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ................................. (264,630) (127,483)
Cash provided by equity investees ......................................... 16,305 27,350
--------- ---------
Net cash required by investing activities ............................... (248,325) (100,133)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of long-term debt ............................... 37,312 46,696
Payments to settle long-term debt .......................................... (1,146) (1,146)
Net proceeds (payments) under the credit facilities ........................ 75,000 (42,000)
Net payments on money market lines of credit ............................... (44,431) (89,380)
Dividends .................................................................. (12,788) (13,131)
Proceeds from issuance of treasury stock ................................... 6,539 1,577
Purchase of treasury stock ................................................. (34,305) (20,087)
--------- ---------
Net cash provided (required) by financing activities .................... 26,181 (117,471)
--------- ---------
Net (decrease) increase in cash and cash equivalents ....................... (18,345) 3,817
Cash and cash equivalents at beginning of period ........................... 43,574 11,069
--------- ---------
Cash and cash equivalents at end of period ................................. $ 25,229 $ 14,886
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) .................................... $ 1,823 $ 15,714
Income taxes ............................................................ 164,372 155,944
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE> 5
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NOTE 1 - BASIS OF PRESENTATION - These consolidated financial statements should
be read in the context of the consolidated financial statements and notes
thereto filed with the Securities and Exchange Commission ("SEC") in the
Company's 1996 annual report on Form 10-K. In the opinion of management, the
accompanying unaudited consolidated financial statements reflect all
adjustments, consisting only of normal adjustments, necessary to present fairly
the financial position of Union Texas Petroleum Holdings, Inc. ("UTPH") and its
consolidated subsidiaries (referred to herein individually and collectively as
the "Company") at September 30, 1997, and the results of operations and cash
flows for the three and nine months ended September 30, 1997 and 1996. The
results of operations for the nine months ended September 30, 1997, should not
necessarily be taken as indicative of the results of operations that may be
expected for the entire year 1997.
NOTE 2 - ACCOUNTING PRONOUNCEMENTS RECENTLY ISSUED - In 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share", SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information".
SFAS No. 128, effective for financial statements issued for periods ending
after December 15, 1997, replaced primary earnings per share ("EPS") with a
newly defined basic EPS and modifies the computation of diluted EPS. SFAS No.
130 requires that all items required to be recognized under accounting
standards as components of comprehensive income be reported as a part of the
basic financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 establishes standards for
reporting information about operating segments in annual financial statements
and requires selected information about operating segments in interim financial
reports issued to shareholders. SFAS No. 131 is effective for financial
statements for periods beginning after December 15, 1997 but the statement need
not be applied to interim financial statements in the initial year of
application. The Company does not expect adoption of these new standards to
materially affect the Company's reporting practices.
NOTE 3 - INCOME TAXES - Since the Company's U.S. corporate alternative minimum
tax ("AMT") liability has exceeded its otherwise determined regular U.S.
federal income tax liability, the Company has accumulated an AMT credit of
approximately $24 million which may be applied against future regular federal
tax liabilities. In addition, the Company has approximately $117 million
(pre-tax) of Net Operating Loss ("NOL") carryforwards from its U.S. exploration
and production operations which could be applied against future U.S. federal
taxable income. These NOLs must be utilized prior to their expiration, which is
between 2002 and 2006.
As a result of reserve engineering analysis and subsequent development plans
for the Company's reserves in the Alpine field in Alaska as well as
expectations for its U.S. petrochemical business, the Company now expects to
utilize the AMT credit and a portion of the NOL carryforwards. Consequently, in
the third quarter of 1997 the Company adjusted the valuation allowance
previously provided against these carryforwards, resulting in deferred tax
assets of approximately $43 million, representing the $24 million AMT credit
and $19 million (after-tax) of NOL carryforwards. Changes in the Company's
actual or anticipated income subject to U.S. taxes, changes in U.S. tax laws or
changes in U.S. tax rates may give rise to adjustments to the Company's
deferred tax assets or liabilities, including the valuation allowance, in the
future. The offset to the deferred tax assets was a $43 million credit to tax
expense.
NOTE 4 - U.K. TAX LAW CHANGES - In the third quarter of 1997, the British
government enacted certain changes in the U.K. corporate tax laws. The Advanced
Corporation Tax ("ACT") credit on dividends paid by U.K. companies will be
substantially reduced starting in April, 1999. Also, the U.K. corporate tax
rate was lowered from 33% to 31%, effective April 1, 1997. In accordance with
these changes, the Company recorded during the third quarter of 1997, a
one-time, non-cash charge to deferred tax expense of approximately $14 million.
NOTE 5 -CONTINGENCIES - The Company and its subsidiaries and related companies
are named defendants in a number of lawsuits and named parties in numerous
government proceedings arising in the ordinary course of business. While the
outcome of contingencies, lawsuits or other proceedings against the Company
cannot be predicted with certainty, management expects that any liability, to
the extent not provided for through insurance or otherwise, will not have a
material adverse effect on the financial statements of the Company.
4
<PAGE> 6
UNION TEXAS PETROLEUM HOLDINGS, INC.
With respect to the unaudited consolidated financial information of Union Texas
Petroleum Holdings, Inc. for the three and nine month periods ended September
30, 1997 and 1996, Price Waterhouse LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report dated October 21, 1997 appearing
below, states that they did not audit and they do not express an opinion on
that unaudited consolidated financial information. Price Waterhouse LLP has not
carried out any significant or additional audit tests beyond those which would
have been necessary if their report had not been included. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. Price Waterhouse
LLP is not subject to the liability provisions of section 11 of the Securities
Act of 1933 for their report on the unaudited consolidated financial
information because that report is not a "report" prepared or certified by
Price Waterhouse LLP within the meaning of sections 7 and 11 of the Act.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
of Union Texas Petroleum Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Union Texas
Petroleum Holdings, Inc. and consolidated subsidiaries as of September 30, 1997
and the related consolidated statements of operations for the three and nine
month periods ended September 30, 1997 and 1996 and of cash flows for the nine
month periods ended September 30, 1997 and 1996. This financial information is
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial information for it to be in conformity
with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1996, and the related
consolidated statements of operations, of cash flows, and of stockholders'
equity for the year then ended (not presented herein), and in our report dated
February 14, 1997 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of December 31, 1996, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
PRICE WATERHOUSE LLP
Houston, Texas
October 21, 1997
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements, notes, and management's discussion contained in the registrant's
1996 annual report on Form 10-K, and condensed financial statements and notes
contained in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1996
Net income for the three months ended September 30, 1997, was $48 million, or
$.57 per share, as compared to net income of $34 million, or $.39 per share,
reported for the same period in 1996. Included in the third quarter of 1997 was
approximately $43 million of U.S. tax benefits (see Note 3) and a one-time U.K.
deferred tax charge of $14 million (see Note 4). Without these tax items, third
quarter 1997 net income was $19 million or $.23 per share. The current quarter
was unfavorably impacted by anticipated declines in Indonesian LNG volumes,
lower prices and volumes for U.K. oil, Indonesian LNG and Pakistan gas and
higher exploration expenses, partially offset by higher Petrochemical operating
profit and lower interest expense.
Sales and operating revenues for the three months ended September 30, 1997,
were $183 million, $44 million lower than the third quarter of 1996.
International revenues totaled $135 million as compared to $178 million for the
third quarter of 1996. In the U.K., sales and operating revenues decreased by
$20 million due to lower oil prices and volumes and lower gas volumes. In
Indonesia, sales decreased $19 million due to anticipated lower LNG volumes and
lower LNG prices. In Pakistan, sales were $4 million lower than 1996 due to
lower gas prices and volumes.
Average prices received and volumes sold by the Company's major operations
during the third quarter of 1997 and 1996, respectively, were as follows:
<TABLE>
<CAPTION>
PRICES VOLUMES
(000S PER DAY)
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil (barrels):
U.K. $16.70 $20.11 33 37
Pakistan 15.73 17.32 6 6
Indonesia 18.30 18.63 6 6
Indonesian LNG (Mcf) 3.20 3.47 176 222
Pakistan natural gas (Mcf) 1.55 2.36 32 41
U.K. natural gas (Mcf) 2.38 2.21 4 18
U.S. ethylene (pounds) .23 .23 1,432 1,385
</TABLE>
Petrochemical revenues totaled $48 million for the current period, essentially
level with 1996, while operating profit was $13 million as compared to $9
million in the prior period. The increased operating profit was primarily due
to lower feedstock costs and higher ethylene sales volumes.
Exploration expenses in the third quarter of 1997 were $7 million higher than
the same period of 1996 primarily due to drilling expenditures in Tunisia and
increased geological and geophysical expenses for new exploration ventures.
Interest expense decreased by $4 million during the period due to higher
capitalized interest.
6
<PAGE> 8
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1996
Net income for the nine months ended September 30, 1997, was $137 million, or
$1.61 per share, as compared to net income of $112 million, or $1.28 per share,
reported for the same period in 1996. Included in the current period was
approximately $43 million of U.S. tax benefits (see Note 3) and a one-time U.K.
deferred tax charge of $14 million (see Note 4). Without these tax items, net
income for the first nine months of 1997 was $108 million or $1.28 per share.
The current period was unfavorably impacted by anticipated declines in
Indonesian LNG volumes, lower U.K. oil prices and higher exploration expenses,
partially offset by higher LNG sales prices, higher Petrochemical operating
profit, higher oil sales volumes in Pakistan and lower interest expense.
Sales and operating revenues for the nine months ended September 30, 1997, were
$677 million, down from $709 million in the prior year. International revenues
totaled $536 million as compared to $566 million for the first nine months of
1996. In the U.K., sales and operating revenues decreased by $5 million due to
lower crude oil prices. In Indonesia, sales decreased $29 million as compared
to 1996 due to lower LNG sales volumes partially offset by higher LNG sales
prices. In Pakistan, sales were $4 million above 1996 due to higher crude oil
sales volumes and prices.
Average prices received and volumes sold by the Company's major operations
during the first nine months of 1997 and 1996, respectively, were as follows:
<TABLE>
<CAPTION>
PRICES VOLUMES
(000S PER DAY)
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil (barrels):
U.K. $17.43 $18.76 41 41
Pakistan 17.16 16.58 7 6
Indonesia 19.74 18.59 6 6
Indonesian LNG (Mcf) 3.55 3.39 183 225
Pakistan natural gas (Mcf) 1.64 1.64 36 42
U.K. natural gas (Mcf) 2.93 2.39 29 33
U.S. ethylene (pounds) .24 .21 1,264 1,381
</TABLE>
Petrochemical revenues totaled $141 million, essentially level with 1996 while
operating profit was $26 million as compared to $20 million in the prior
period. The increased operating profit was primarily due to higher ethylene
sales prices and lower feedstock costs partially offset by lower ethylene sales
volumes.
Exploration expenses in the first nine months of 1997 were $14 million higher
than the same period of 1996 primarily due to drilling expenditures in the U.K.
and Tunisia and increased geological and geophysical expenses for new
exploration ventures. Interest expense decreased $13 million during the period
due to higher capitalized interest and a reduction in the Company's debt level.
7
<PAGE> 9
FINANCIAL CONDITION
Cash flow from operations: Net cash provided by operating activities was $204
million in the first nine months of 1997, a decrease of $17 million from the
same period in the prior year. Lower LNG sales volumes and lower U.K. oil
prices were partially offset by higher ethylene sales prices, higher LNG sales
prices, higher U.K. gas prices and higher Pakistan oil sales volumes.
Capital resources: Capital expenditures for the first nine months of 1997 were
$150 million excluding capitalized interest of $28 million. Capital
expenditures for the first nine months of 1996 were $125 million excluding
capitalized interest of $19 million. The increase was primarily due to higher
exploration drilling and geological and geophysical expenditures in new venture
areas.
In June 1997, the Company led a successful bid for Venezuela's Boqueron area
under Venezuela's Third Operating Agreement Round. In the third quarter of 1997
the Company paid $117 million to the Venezuelan government for its share of the
bid. This payment was funded under the credit facilities and lines of credit
described below and cash from operations. The Company was named the Operator
and will have a 66.67% working interest and will work with its partner,
Preussag Energie GmbH of Germany, who will have a 33.33% working interest, to
further develop this currently-producing field. Under the 20-year contract, the
Union Texas group will produce oil from Boqueron on behalf of Lagoven SA, a
subsidiary of Petroleos de Venezuela SA which currently serves as operator, and
will receive a service fee for the production of a "baseline" production
profile of approximately 24 million barrels of oil and a sliding scale
incentive fee for production above this baseline level and for the recovery of
costs. The Company anticipates recording approximately 40 million net barrels
in proved reserves from Boqueron during 1997 with additional reserves expected
to be recorded in the future as the field is further developed. The group must
invest at least $13 million over the next three years and expects to spend
between $250 million to $300 million in the area over the next five years. With
this additional development spending, the Company expects to increase current
production at Boqueron from 10,000 gross barrels of oil a day to 50,000 -
60,000 barrels within three to five years.
Financing Activities: The Company had two unsecured credit facilities (the
"Credit Facilities") at September 30, 1997. One of the Credit Facilities is a
$100 million revolver that provides for conversion of amounts outstanding on
March 10, 1998 to a one-year term loan maturing March 9, 1999. At September 30,
1997, no amounts were outstanding under the $100 million revolver. The other
Credit Facility is a dual currency (U.S. dollars and pounds sterling) $450
million revolver that reduces quarterly by $35 million beginning June 30, 2001,
with a final maturity of March 31, 2002. At September 30, 1997, $75 million was
outstanding under the $450 million facility bearing interest at a weighted
average rate of 5.9% per annum. The Credit Facilities contain restrictive
covenants and require maintenance of stockholders' equity, as adjusted, at $350
million. At September 30, 1997, the Company's adjusted stockholders' equity was
approximately $707 million.
The Company has uncommitted and unsecured lines of credit with several banks in
both U.S. dollars and pounds sterling. At September 30, 1997, $11 million was
outstanding under these money market lines. As of September 30, 1997, the
Company had $464 million of available financing under the Credit Facilities.
The Company's indirect subsidiary, Union Texas Britannia Limited ("UTBL"), has
a 150 million pounds sterling secured financing from a syndicate of banks. At
September 30, 1997, 81 million pounds sterling ($131 million) was outstanding
under UTBL's financing which bore interest at a weighted average rate of 8.0%
per annum.
In July 1997, the Company filed a shelf registration statement with the SEC,
covering the issuance of up to $500 million of several types of securities,
including debt securities, common stock, preferred stock and warrants to
purchase securities in any combination that the Company may elect to offer from
time to time on such terms as the Company deems appropriate. The Company
believes the shelf registration provides additional financing flexibility to
meet future funding requirements and to take advantage of potentially
attractive capital market conditions. The Company intends to use the net
proceeds from any offering for general corporate purposes, which may include
the repayment of outstanding indebtedness, working capital increases, capital
expenditures and acquisitions. No securities have yet been issued.
8
<PAGE> 10
In 1994, the Company's Board of Directors authorized the repurchase of up to
2,000,000 shares of the Company's stock, all of which were repurchased by the
end of 1996. In October, 1996, the Company's Board of Directors authorized the
repurchase of up to an additional 2,000,000 shares of the Company's common
stock, all of which were repurchased by March 31, 1997. The repurchased stock
will be used for general corporate purposes, including fulfilling employee
benefit program obligations. At September 30, 1997, 2,844,431 shares of common
stock were held, at cost, as treasury shares.
Financial condition: In the third quarter of 1997, the Company declared and
paid a dividend of approximately $4.3 million on its common stock. On October
15, 1997, the Company announced a dividend on its common stock of $.05 per
share to stockholders of record as of October 31, 1997, payable on November 14,
1997.
As a result of reserve engineering analysis and subsequent development plans
for the Company's reserves in the Alpine field in Alaska as well as
expectations for its U.S. petrochemical business, the Company now expects to
utilize the AMT credit and a portion of the NOL carryforwards. Consequently, in
the third quarter of 1997 the Company adjusted the valuation allowance
previously provided against these carryforwards, resulting in deferred tax
assets of approximately $43 million, representing the $24 million AMT credit
and $19 million (after-tax) of NOL carryforwards. Changes in the Company's
actual or anticipated income subject to U.S. taxes, changes in U.S. tax laws or
changes in U.S. tax rates may give rise to adjustments to the Company's
deferred tax assets or liabilities, including the valuation allowance, in the
future. The offset to the deferred tax assets was a $43 million credit to tax
expense (see Note 3).
In the third quarter of 1997, the British government enacted changes in the
U.K. corporate tax laws which affect the Company's U.K. operations. The ACT
credit on dividends paid by U.K. companies has been substantially reduced and
the U.K. corporate tax rate was lowered from 33% to 31%. The reduction in the
ACT credit will be effective for dividends paid on or after April 6, 1999 while
the lowering of the corporate tax rate is effective April 1, 1997. In the third
quarter of 1997, the Company recorded a one-time, non-cash charge to deferred
tax expense of approximately $14 million, primarily related to the reduction of
the ACT credit on future dividends. The tax law changes are not anticipated to
have a material impact on the Company's current tax expense (the net effective
U.K. corporation tax rate increases from 27.5% to 31% after April 6, 1999) nor
is it expected to have a material impact on the standardized measure of
discounted future net cash flows (see Note 4).
The foregoing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act that involve risks and uncertainties,
including price volatility, exploration, development, operational, marketing,
reserve estimates, implementation and opportunity risks, changes to tax laws
and rates and other factors described from time to time in the Company's
publicly available SEC reports, which could cause actual results to differ
materially.
9
<PAGE> 11
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company and its subsidiaries and related companies are named defendants in
numerous lawsuits and named parties in numerous governmental proceedings
arising in the ordinary course of business. While the outcome of lawsuits or
other proceedings against the Company cannot be predicted with certainty,
management does not expect these matters to have a material adverse effect on
the financial position of the Company. (See Item 3 in the Company's 1996 annual
report on Form 10-K.)
ITEM 5 - OTHER INFORMATION
Tunisia: In October 1997, the Company announced that it acquired a 25% working
interest in an exploration venture in the Ghadames Basin in southwestern
Tunisia. The Company acquired its interest in the Borj El Khadra block from
Phillips Petroleum Company Tunisia, which serves as operator and has a 25%
interest in the block. Lasmo Tunisia B.V. is also a partner in the venture with
a 50% working interest. In the event that a discovery is developed, L'
Enterprise Tunisienne d' Activites Petrolieres (ETAP), the Tunisian national
oil company, has the right to participate for up to a 50% working interest,
thereby reducing each co-venturer's working interest in half, assuming full
participation by ETAP. The Borj El Khadra block comprises a total of
approximately 1.44 million acres. About 1,500 kilometers of 2-D seismic data
have been acquired over the block, where the venture plans to drill an
exploration well in 1999. The first of two exploration wells on the Bordj
Messouda blocks in Algeria, in which the Company has a 30% working interest and
is adjacent to the Borj El Khadra block, began drilling in October 1997. The
Borj El Khadra block represents Union Texas' third concession in Tunisia.
Offshore Tunisia in the Gulf of Gabes, Union Texas operates and has a 50%
working interest in the Ramla block, where an exploration well is expected to
be drilled in late 1997 or early 1998. Union Texas also operates and has a 65%
working interest in the Jeffara block onshore southeastern Tunisia, where an
unsuccessful exploration well was drilled in the third quarter of 1997.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3.1 Bylaws of Union Texas Petroleum
Holdings, Inc., as amended
September 15, 1997.
3.2 Specimen of Certificate evidencing
the Common Stock with Rights
attached.
4.1 Rights Agreement dated as of
September 12, 1997 between the
Company and First Chicago Trust
Company of New York, as Rights
Agent, which includes as Exhibit A
the Form of Right Certificate and
as Exhibit B the Summary of Rights
to Purchase Common Stock (filed as
Exhibit 1 to the Company's Form
8-A Registration Statement filed
September 15, 1997 (Commission
File No. 1-9019) and incorporated
herein by reference).
10.1 Third Amendment to Union Texas
Petroleum Salaried Employees'
Pension Plan.
10.2 Ninth Amendment to Union Texas
Petroleum Holdings, Inc. Executive
Severance Plan.
10
<PAGE> 12
15 Independent Accountants' Awareness
Letter.
27.1 Financial Data Schedule for the
nine-month period ended September
30, 1997.
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K since the
quarterly period ended June 30, 1997:
The Company filed a Form 8-K dated July 23, 1997 to attach a press
release announcing the Company's second quarter earnings.
The Company filed a Form 8-K dated September 15, 1997 to declare a
dividend as of September 12, 1997 of one Common Stock Purchase
Right for each outstanding share of Common Stock, payable to
stockholders of record as of September 23, 1997, and to incorporate
the Rights Agreement dated as of September 12, 1997.
The Company filed a Form 8-K dated October 22, 1997 to attach a
press release announcing the Company's third quarter earnings.
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<PAGE> 13
SIGNATURE
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.
UNION TEXAS PETROLEUM HOLDINGS, INC.
Date: October 27, 1997 By: /s/ DONALD M. MCMULLAN
--------------------------------
Donald M. McMullan
Vice President and Controller
(Chief Accounting Officer
and officer duly authorized to
sign on behalf of the registrant)
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<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Bylaws of Union Texas Petroleum Holdings, Inc., as amended
September 15, 1997.
3.2 Specimen of Certificate evidencing the Common Stock with
Rights attached.
4.1 Rights Agreement dated as of September 12, 1997 between the
Company and First Chicago Trust Company of New York, as
Rights Agent, which includes as Exhibit A the Form of Right
Certificate and as Exhibit B the Summary of Rights to
Purchase Common Stock (filed as Exhibit 1 to the Company's
Form 8-A Registration Statement filed September 15, 1997
(Commission File No. 1-9019) and incorporated herein by
reference).
10.1 Third Amendment to Union Texas Petroleum Salaried Employees'
Pension Plan.
10.2 Ninth Amendment to Union Texas Petroleum Holdings, Inc.
Executive Severance Plan.
15 Independent Accountants' Awareness Letter.
27.1 Financial Data Schedule for the nine-month period ended
September 30, 1997.
</TABLE>
<PAGE> 1
Exhibit 3.1
BYLAWS
OF
UNION TEXAS PETROLEUM HOLDINGS, INC.
as of September 15, 1997
<PAGE> 2
BYLAWS
OF
UNION TEXAS PETROLEUM HOLDINGS, INC.
ARTICLE I
OFFICES
SECTION 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for the election
of directors shall be held in the City of HOUSTON, State of TEXAS, at such
place as may be fixed from time to time by the board of directors and stated in
the notice of the meeting. Meetings of the stockholders for any other purpose
may be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
SECTION 2. Annual meetings of stockholders shall be held on
the third Tuesday of May if not a legal holiday, and if a legal holiday, then
on the next secular day following, at 3:00 p.m., or at such other date and time
as shall be designated by the board of directors and stated in the notice of
the meeting, at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be brought before
the meeting.
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<PAGE> 3
SECTION 3. Subject to the provisions of Article IV, written
notice of the annual meeting stating the place, date and hour of the meeting
shall be given to each stockholder entitled to vote thereat at least ten days
before the date of the meeting.
SECTION 4. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chairman or by the Chief
Executive Officer and shall be called by the Chairman, Chief Executive Officer,
or Secretary at the request in writing by any two directors. Such request
shall state the purpose or purposes of the proposed meeting.
SECTION 5. Written notice of a special meeting of
stockholders stating the time, place and purpose or purposes thereof shall be
given to each stockholder entitled to vote thereat at least ten days and not
more than sixty (60) days before the date fixed for the meeting.
SECTION 6. The Chairman, at any meeting of stockholders,
shall determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of discussion
as seem to the Chairman in order. The date and time of the opening and closing
of the polls for each matter upon which the stockholders will vote at the
meeting shall be announced at the meeting.
SECTION 7. The holders of at least a majority of the shares
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of stockholders
for the transaction of business, except as otherwise provided by law or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the Chairman or the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting unless the adjournment is for
more than
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<PAGE> 4
thirty (30) days or if after the adjournment a new record date is fixed for the
adjourned meeting, until a quorum shall be present or represented. A holder of
a share shall be treated as being present at a meeting if the holder of such
share is (i) present in person at the meeting or (ii) represented at the
meeting by a valid proxy, whether the instrument granting such proxy is marked
as casting a vote or abstaining, is left blank or does not empower such proxy
to vote with respect to some or all matters to be voted upon at the meeting.
SECTION 8. If a quorum exists, action on a matter (other than
the election of directors) shall be approved if the votes cast in favor of the
matter exceed the votes cast opposing the matter. In determining the number of
votes cast, shares abstaining from voting or not voted on a matter will not be
treated as votes cast. The provisions of this paragraph will govern with
respect to all votes of stockholders except as otherwise provided for in these
Bylaws or in the certificate of incorporation or by some specific statutory
provision superseding the provisions contained in these Bylaws or the
certificate of incorporation.
SECTION 9. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person on or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless the proxy provides
for a longer period.
SECTION 10. Notice of Stockholder Business and Nominations
A. Annual Meetings of Stockholders.
(1) Nominations of persons for election to the board of
directors and the proposal of business to be considered by the stockholders may
be made at an annual meeting of stockholders (a) pursuant to the Corporation's
notice of meeting, (b) by or at the direction of the board of directors or (c)
by any stockholder of the Corporation who was a stockholder of record at the
time of giving
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<PAGE> 5
of notice provided for in this Section 10, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section
10.
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (c) of
paragraph (A)(1) of this Section 10, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for stockholder action. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the
annual meeting is more than thirty (30) days before or more than sixty (60)
days after such anniversary date, notice by the stockholder to be timely must
be so delivered not earlier than the close of business on the ninetieth (90th)
day prior to such annual meeting and not later than the close of business on
the later of the sixtieth (60th) day prior to such annual meeting or the close
of business on the tenth (10th) day following the day on which public
announcement of the date of such meeting is first made by the Corporation.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected); (b) as to any other business that the stockholder proposes to
bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business
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<PAGE> 6
of such stockholder and the beneficial owner, if any, on whose behalf the
proposal is made; and (c) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation that are owned beneficially and held of record by
such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Section 10 to the contrary, in the event that the
number of directors to be elected to the board of directors of the Corporation
is increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased board of
directors at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting (or, if the annual meeting is held more than
thirty (30) days before or sixty (60) days after such anniversary date, at
least seventy (70) days prior to such annual meeting), a stockholder's notice
required by this Section 10 shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
Corporation.
B. Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting
of stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
board of directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the board of directors or (b) provided that the board
of directors has determined that
6
<PAGE> 7
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice of
the special meeting, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 10. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the board of directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (A)(2) of this Section 10 shall be
delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the ninetieth (90th) day prior to such special
meeting and not later than the close of business on the later of the sixtieth
(60th) day prior to such special meeting or the tenth (10th) day following the
day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the board of directors to be elected at
such meeting.
C. General.
(1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 10 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 10. Except as otherwise provided by
law or these Bylaws, the Chairman shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 10 and, if any proposed nomination or business is not in
compliance herewith to declare that such defective proposal or nomination shall
be disregarded.
7
<PAGE> 8
(2) For purposes of this Section 10, "public
announcement" shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable national news service or in
a document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 10, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein. Nothing in this Section 10 shall be deemed to affect
any rights (i) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.
SECTION 11. In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the board of directors, and which date shall not be more than 10
days after the date upon which the resolution fixing the record date is adopted
by the board of directors. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent shall, by
written notice to the Secretary, request the board of directors to fix a record
date. The board of directors shall promptly, but in all events within 10 days
of the date on which such a request is received, adopt a resolution fixing the
record date. If no record date has been fixed by the board of directors within
10 days of the date on which such a request is received, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required
by applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
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<PAGE> 9
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or any officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the board of directors and prior action by the
board of directors is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
board of directors adopts the resolution taking such prior action.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the
whole board shall be eleven, except as otherwise provided by the certificate of
incorporation. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article or as otherwise
provided by the certificate of incorporation, and each director elected shall
hold office until his successor is elected and qualifies, except as otherwise
provided by the certificate of incorporation; provided, however, that unless
otherwise restricted by the certificate of incorporation or these Bylaws, any
director of the entire board of directors may be removed either with or without
cause, at any meeting of stockholders by vote of a majority of the stock
present and entitled to vote thereat. Directors need not be stockholders.
SECTION 2. Except as otherwise provided by the certificate of
incorporation, by law or by resolution of the board of directors, vacancies and
newly created directorships resulting from any increase in the authorized
number of directors shall be filled only by a majority of the directors then in
office, though less than a quorum, and not by the stockholders and the
directors so chosen
9
<PAGE> 10
shall hold office until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced.
SECTION 3. The business of the Corporation shall be managed
under the direction of its board of directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The board of directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
SECTION 5. The first meeting of each newly elected board of
directors shall be held as soon as practicable after the annual meeting of
stockholders and no notice of such meeting to the newly elected directors shall
be necessary in order legally to constitute the meeting, provided a quorum
shall be present.
SECTION 6. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time
be determined by resolution of the board of directors.
SECTION 7. Special meetings of the board may be held at any
time upon the call of the Chairman of the Board or the Chief Executive Officer
or by any director at such place, on such date, and at such time as he or she
shall fix. Notice of the place, date and time of each such special meeting
shall be given each director by whom it is not waived by mailing written notice
not less than five (5) days before the meeting or by telegraphing or telexing
or by facsimile transmission or by oral notice of the same not less than
twenty-four hours before such meeting. Oral notice shall be
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<PAGE> 11
confirmed in writing. Unless otherwise indicated in the notice thereof, any
and all business may be transacted at a special meeting.
SECTION 8. Except as may be otherwise specifically provided
by statute or by the certificate of incorporation, at all meetings of the board
six directors shall constitute a quorum for the transaction of business and the
approval of six of the directors present at any meeting shall be required for
action. Any director not present for approval of any action shall not be
counted for purposes of determining whether a quorum is present with respect to
such matter, regardless of whether such director is present for approval of any
other matter. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 9. Unless otherwise restricted by the certificate of
incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the board of directors may be taken without a meeting if all
members of the board consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the board.
RESIGNATIONS
SECTION 10. Any director or officer of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, the
Chief Executive Officer or the Vice President-Secretary of the Corporation.
Such resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
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<PAGE> 12
ARTICLE IV
NOTICES
SECTION 1. Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the Corporation. Notice by mail
shall be deemed to be given at the time when the same shall be mailed. Notice
to directors may also be given orally or by telegram, telecopy, telex or other
reasonable form of communication.
SECTION 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
SECTION 1. The officers of the Corporation shall be chosen by
the board of directors and shall be a chairman of the board (if elected), a
chief executive officer, a vice president, a secretary, a controller and a
treasurer. The board of directors may also choose additional vice presidents,
and one or more assistant secretaries and assistant treasurers or other
officers as deemed necessary. Two or more offices may be held by the same
person.
SECTION 2. The board of directors at its first meeting after
each annual meeting of stockholders may choose a chairman of the board from
among the directors, and shall choose a chief executive officer, one or more
vice presidents, a vice president-secretary and a treasurer, none of whom need
to be a member of the board.
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<PAGE> 13
SECTION 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
SECTION 4. The salaries of all officers and agents of the
Corporation may be fixed by the board of directors.
SECTION 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time, either with or
without cause, by the action of the board of directors. Any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise
shall be filled by the action of the board of directors.
CHAIRMAN OF THE BOARD
SECTION 6. The Chairman of the Board, if one shall be elected
and if present, shall preside at all meetings of the board and of the
stockholders. He shall have, to the extent designated by and under the control
of the board, general supervision and direction of the business and affairs of
the Corporation. He shall at all times see that all resolutions or
determinations of the board are carried into effect. He shall perform the
duties incident to the office of the Chairman of the Board and all such other
duties as are specified in these Bylaws or as shall be assigned to him from
time to time by the board.
CHIEF EXECUTIVE OFFICER
SECTION 7. The Chief Executive Officer shall perform such
duties as from time to time shall be assigned to him by the board. He shall
also be the chief operating officer of the Corporation and shall, in
conjunction with any such duties of the Chairman, if any, generally supervise
and direct the business and affairs of the Corporation. He may execute bonds,
mortgages
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<PAGE> 14
and other contracts requiring a seal, under the seal of the Corporation, and
any and all other contracts or obligations of the Corporation.
THE VICE PRESIDENTS
SECTION 8. The Vice Presidents in the order of their
seniority, unless otherwise determined by the board of directors, shall, in the
absence or disability of the Chief Executive Officer, perform the duties and
exercise the powers of the Chief Executive Officer. They shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe. They may execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, and any and all other
contracts or obligations of the Corporation.
THE SECRETARY AND ASSISTANT SECRETARIES
SECTION 9. The Secretary or other person acting in that
capacity shall attend all meetings of the board of directors and all meetings
of the stockholders and record all the proceedings of the meetings of the
Corporation and of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when required. He
shall give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the board of directors, and shall perform such other
duties as may be prescribed by the board of directors, the Chairman of the
Board (if any), or the Chief Executive Officer, under whose supervision he
shall be. He shall keep in safe custody the seal of the Corporation, affix the
same to any instrument requiring it and, when so affixed, such instrument may
be attested by his signature or by the signature of the Treasurer or an
assistant secretary.
SECTION 10. The Assistant Secretaries in the order of their
seniority, unless otherwise determined by the board of directors, shall, in the
absence or disability of the Secretary, perform the
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<PAGE> 15
duties and exercise the powers of the Secretary. They shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER, THE CONTROLLER AND ASSISTANT TREASURERS
SECTION 11. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the board of
directors.
SECTION 12. He shall disburse the funds of the Corporation to
be ordered by the board of directors, taking proper orders for such
disbursements, and shall render to the Chairman of the Board, if any, the
President and the board of directors, at its regular meetings, or when the
board of directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.
SECTION 13. If required by the board of directors, he shall
give the Corporation a bond (which shall be renewed every six years) in such
sum and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
SECTION 14. The Controller and the Assistant Treasurers in
the order of their seniority, unless otherwise determined by the board of
directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. They shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
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<PAGE> 16
ARTICLE VI
INDEMNIFICATION
SECTION 1.(a) The Corporation shall indemnify, in the manner
and to the full extent authorized by law (as now in effect or later amended),
any person who was or is a witness in or a party to, or who is threatened to be
made a party to, any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason, in whole or in part, of the fact
that such person or such person's spouse is or was a director or officer of the
Corporation or any predecessor of the Corporation or serves or served in any
other corporation or enterprise as director, officer, employee or agent at the
request of the Corporation or any predecessor of the Corporation.
(b) Without limitation of subsection (a) above, the
Corporation shall indemnify any person who was or is a witness, a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation or any predecessor
of the Corporation) by reason of the fact that such person is or was, at any
time prior to or during which this Article VI is in effect, a director or
officer of the Corporation or any predecessor of the Corporation, or is or was,
at any time prior to or during which this Article VI is in effect, serving at
the request of the Corporation or any predecessor of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan against reasonable
expenses (including attorneys' fees), judgments, fines, penalties, amounts paid
in settlement and other liabilities actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation or any predecessor of the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was
16
<PAGE> 17
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that such person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation or any predecessor of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(c) Without limitation of subsection (a) above, the
Corporation shall indemnify any person who was or is a witness, a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation or any predecessor of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was, at any time prior to or during which this Article VI is in
effect, a director or officer of the Corporation or any predecessor of the
Corporation, or is or was, at any time prior to or during which this Article VI
is in effect, serving at the request of the Corporation or any predecessor of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
reasonable expenses (including attorneys' fees) and amounts paid in settlement,
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to the amounts paid in settlement, the
settlement is determined to be in the best interests of the Corporation;
provided that no indemnification shall be made under this subsection (c) in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Delaware Court of Chancery, or other court of appropriate jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all the
17
<PAGE> 18
circumstances of the case, such person is fairly and reasonably entitled to
indemnity of such expenses which the Delaware Court of Chancery, or other court
of appropriate jurisdiction, shall deem proper.
(d) Any indemnification under subsections (b) or (c) of this
Section 1 (unless ordered by the Delaware Court of Chancery or other court of
appropriate jurisdiction) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of such person
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsections (b) and (c) of this Section 1. Such
determination shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum; or
(2) if there are no such directors, or, if such directors so direct, by
independent legal counsel, selected by the board of directors; or (3) by the
stockholders. In the event a determination is made under this subsection (d)
that the director or officer has met the applicable standard of conduct as to
some matters but not as to others, amounts to be indemnified may be reasonably
prorated.
(e) In addition to and without limitation of subsections (b)
or (c) of this Section 1, expenses incurred by a person or spouse of a person
who is or was a director or officer of the Corporation or any predecessor of
the Corporation, in appearing at, participating in or defending any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, shall be paid by the Corporation at reasonable
intervals in advance of the final disposition of such action, suit or
proceeding; provided, however, that if the Delaware General Corporation Law
requires, an advancement of expenses incurred by a person in his capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person) shall be made only upon receipt of an undertaking by
or on behalf of such person to repay such
18
<PAGE> 19
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article VI.
(f) If a claim under this Article VI is not paid in full by
the Corporation within ninety (90) days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
(g) It is the intention of the Corporation to indemnify the
persons referred to in this Article VI to the fullest extent permitted by law
(as now in effect or later amended) and with respect to any action, suit or
proceeding arising from events which occur at any time prior to or during which
this Article VI is in effect. The indemnification and advancement of expenses
provided by this
19
<PAGE> 20
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be or become entitled
under any law, the certificate of incorporation, agreement, vote of
stockholders or disinterested directors or otherwise, or under any policy or
policies of insurance purchased and maintained by the Corporation on behalf of
any such person, both as to action in his official capacity (if any) and as to
action in another capacity while holding such office, and shall inure to the
benefit of his heirs, legal representatives and assigns. The provisions of
this Article VI are contract rights which (i) are for the benefit of, and may
be enforced by, the persons entitled thereto the same as if set forth in their
entirety in a written instrument duly executed and delivered by the Corporation
and each such person and (ii) constitute a continuing offer to all present and
future directors or officers of the Corporation. The Corporation, by its
adoption of these Bylaws, (i) acknowledges and agrees that each present and
future director or officer of the Corporation has relied upon and will continue
to rely upon the provisions of this Article VI in becoming, and serving as, a
director or officer of the Corporation or, if requested by the Corporation, a
director, officer, employee, agent, trustee or the like of another corporation
or other enterprise, (ii) waives reliance upon, and all notices of acceptance
of, such provisions by such directors or officers and (iii) acknowledges and
agrees that no person entitled to indemnification hereunder shall be prejudiced
in his right to enforce the provisions of this Article VI in accordance with
their terms by any act or failure to act on the part of the Corporation. No
amendment, modification or repeal of this Article VI or any provisions hereof
shall in any manner terminate, reduce or impair the right of any person
entitled to indemnification hereunder to be indemnified or advanced expenses by
the Corporation, nor the obligation of the Corporation to indemnify or advance
expenses to any such person under and in accordance with the provisions of this
Article VI as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters
20
<PAGE> 21
occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claim may arise or be asserted. The provisions
of this Article VI shall be binding upon the Corporation and its successors and
assigns and shall inure to the benefit of each person entitled to
indemnification hereunder and his or her heirs, legal representatives and
assigns.
(h) The indemnification provided by this Article VI shall be
subject to all valid and applicable laws, and, in the event this Article VI or
any of the provisions hereof or the indemnification contemplated hereby are
found to be inconsistent with or contrary to any such valid laws, the latter
shall be deemed to control, and this Article VI shall be regarded as modified
so that this Article and the indemnification provided for herein shall be valid
and enforceable to the greatest extent permitted by applicable laws, and, as so
modified, this Article VI shall continue in full force and effect.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 1. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by (or bearing such a facsimile
signature) or in the name of the Corporation, by the Chairman, Chief Executive
Officer or the Vice President, the Treasurer, or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number
of shares owned by him in the Corporation.
LOST CERTIFICATES
SECTION 2. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or
21
<PAGE> 22
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the Corporation a bond in such
sum as it may direct as indemnity against any claims that may be made against
the Corporation with respect to the certificate alleged to have been lost or
destroyed.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the
Corporation, if any, may be declared by the board of directors at any regular
or special meeting, pursuant to law. Dividends may be paid in cash, in
property or in shares of the capital stock, subject to the provisions of the
certificate of incorporation.
SECTION 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest
of the Corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
CHECKS
SECTION 3. The persons from time to time holding the position
of Chairman of the Board (if any), Chief Executive Officer, Vice President,
Vice President-Secretary, Treasurer or Controller, of the Corporation, acting
by written instrument signed by any two of them are hereby authorized: (1) to
open or close any bank account of the Corporation; (2) to designate the use of
any
22
<PAGE> 23
such account; (3) to grant authority to any person or combination of persons to
sign checks, by manual or facsimile signature, or issue instructions for
withdrawal of funds from any account maintained by the Corporation; (4) to
revoke the authority of any person or persons to sign checks or to issue
instructions; (5) to establish a maximum amount as to which any person or
combination of persons shall be authorized to sign checks or issue
instructions; and (6) to take all such further actions, and to execute and
deliver all such further instruments and documents, in the name and on behalf
of the Corporation, as in their judgment shall be necessary, proper or
advisable.
FISCAL YEAR
SECTION 4. The fiscal year of the Corporation shall be fixed
by resolution of the board of directors.
SEAL
SECTION 5. The corporate seal shall have inscribed thereon
the name of the Corporation and words "Corporate Seal, Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE IX
AMENDMENTS
SECTION 1. These Bylaws may be altered, amended or repealed
or new bylaws may be adopted by the stockholders or by the board of directors.
23
<PAGE> 1
Exhibit 3.2
[PICTURE OF WORLD MAP, LOGO, COMPANY NAME AND PERSON]
COMMON SHARES
THIS CERTIFICATE IS
TRANSFERABLE IN
NEW YORK, N.Y.
UNION TEXAS
PETROLEUM
HOLDINGS, INC.
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
NUMBER INDEX, INC. SHARES
SEE REVERSE FOR CERTAIN
DEFINITIONS AND STATEMENTS
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF CUSIP 908640 10 5
FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF THE
PAR VALUE OF $.05 EACH OF
Union Texas Petroleum Holdings, Inc., transferable on the books of the
Corporation by the holder hereof in person or by a duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate is not
valid unless countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized Officers.
Dated:
COUNTERSIGNED AND REGISTERED /s/ J. L. WHITMIRE
FIRST CHICAGO TRUST COMPANY OF NEW YORK
TRANSFER AGENT
AND REGISTRAR CHAIRMAN AND
[seal] CHIEF EXECUTIVE OFFICER
/s/ JOSEPH SPADAFORD
/s/ AMY J. WATKINS
SECRETARY
AUTHORIZED OFFICER
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the ------ --------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors
and not as tenants Act
in common ------------------
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell, assign and transfer unto
--------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shares
----------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
--------------------------------------------------------------------
to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated
---------------------------------
-------------------------------------------
-------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Union Texas Petroleum
Holdings, Inc. and First Chicago Trust Company of New York, as Rights Agent,
dated as of September 12, 1997 (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive office of Union Texas Petroleum Holdings, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced by this
certificate. Union Texas Petroleum Holdings, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after receipt by
it of a written request therefor. Under certain circumstances as provided in
the Rights Agreement, Rights issued to or beneficially owned by Acquiring
Persons or their Associates or Affiliates (as defined in the Rights Agreement)
or any subsequent holder of such Rights may become null and void.
<PAGE> 1
Exhibit 10.1
THIRD AMENDMENT TO
UNION TEXAS PETROLEUM
SALARIED EMPLOYEES' PENSION PLAN
WHEREAS, UNION TEXAS PETROLEUM HOLDINGS, INC. (the "Company") and
other Employing Companies have heretofore adopted and maintained the UNION
TEXAS PETROLEUM SALARIED EMPLOYEES' PENSION PLAN (the "Plan") for the benefit
of their eligible employees; and
WHEREAS, the Company desires to amend the Plan on behalf of itself and
the Employing Companies;
NOW, THEREFORE, the Plan shall be amended as follows effective as of
September 5, 1997:
1. Section 9.02(c)(5) the Plan shall be deleted and the following
shall be substituted therefor:
"(5) In the case of a Member actively employed by the
Company on or after April 29, 1990, a lump sum payment."
2. As amended hereby, the Plan is specifically ratified and
reaffirmed.
Executed this 5th day of October, 1997.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ JOHN L. WHITMIRE
----------------------------------
John L. Whitmire Chairman and Chief
Executive Officer
<PAGE> 1
Exhibit 10.2
NINTH AMENDMENT TO
UNION TEXAS PETROLEUM HOLDINGS, INC.
EXECUTIVE SEVERANCE PLAN
WHEREAS, Union Texas Petroleum Holdings, Inc. (the "Company") has
heretofore adopted the Union Texas Petroleum Holdings, Inc. Executive Severance
Plan (the "Plan"); and
WHEREAS, the Company desires to amend the Plan;
NOW, THEREFORE, the Plan shall be and is hereby amended, effective as
of September 5, 1997, as follows:
1. Article I of the Plan shall be deleted and the following shall
be substituted therefor:
"Article I - Purpose
This Plan has been created to provide severance benefits to
the designated officers and key employees of UTP in the event
of the termination of their employment in conjunction with a
Change of Control."
2. The last sentence of Section 2.02 of the Plan shall be deleted
and the following shall be substituted therefor:
"Notwithstanding the foregoing, Annual Incentive Compensation
with respect to a Participant to whom salary and benefit
continuation is applicable following a Change of Control other
than the transaction described in the second paragraph of
Section 2.04 hereof shall mean the greater of (i) the
Participant's target percentage incentive compensation award
in effect immediately prior to such Change of Control, or (ii)
the Participant's target percentage incentive compensation
award in effect immediately prior to the date of the event
giving rise to such salary and benefit continuation times
(iii) Base Salary; provided, however, that if a Change of
Control occurs after September 5, 1997, then solely for
purposes of determining the amount of any payment of Annual
Incentive Compensation with respect to any such Participant
that is to be made in accordance with this Plan in January of
the year following the Change of Control, Annual Incentive
Compensation shall not be less than the incentive compensation
award that would be applicable to such Participant for the
year in which a Change of Control occurs with such award being
determined at the time of the Change of Control and based upon
the levels of objectives achieved by the Company at the time
of the Change of Control.
3. Section 2.08 of the Plan shall be deleted and the following
shall be substituted therefor:
<PAGE> 2
"Participant - means an employee of UTP listed in Appendix A,
and any other officer or key employee of UTP who has been
designated as a Participant in the Plan by action of the Board
of Directors of UTP."
4. Article III of the Plan shall be deleted and the following
shall be substituted therefor:
"Article III - Participation
Employees listed in Appendix A shall be Participants in the
Plan. Prior to a Change of Control, any other employee who is
either an officer of UTP, is in salary grade 17 and above, or
reports directly to the Chairman of the Board and Chief
Executive Officer of UTP may be designated as a Participant in
the Plan by the Board of Directors of UTP. The benefits
provided under the Plan are limited solely to Participants."
5. The first sentence of Section 4.02(A) of the Plan shall be
deleted and the following shall be substituted therefor:
"A Participant shall receive Base Salary, paid monthly, and an
Annual Incentive Compensation, paid annually, for a period not
less than twenty-four (24) nor greater than thirty-six (36)
months, as specified in Appendix A or by the Board of
Directors of UTP at the time the officer or key employee is
designated as a Participant; provided, however, in the event
of a Change of Control that occurs after September 5, 1997, a
Participant shall receive Base Salary, paid monthly, and an
Annual Incentive Compensation, paid annually, for a period of
thirty-six (36) months."
6. Section 4.02(C) of the Plan shall be deleted and the following
shall be substituted therefor:
"C) Pension Service Continuation - Under the terms of the
qualified pension plan covering Participant, the months of
Salary Continuation for such Participant shall be recognized
or if not permissible under such qualified pension plan
comparable services shall be recognized under a non-qualified
plan covering Participant."
7. The following new Sections 4.02(D), (E) and (F) shall be added
to the Plan:
"D) Savings Plan Match - In the event of a Change of
Control that occurs after September 5, 1997, a Participant
shall receive an amount equal to 24% of his Base Salary paid
in a lump sum within thirty days
<PAGE> 3
following the termination of employment that entitles a
Participant to benefits under the Plan.
E) Outplacement Services - A Participant who becomes
entitled to benefits under the Plan shall be entitled to
receive Executive Outplacement Services in accordance with the
Company's past practice for such outplacement services.
F) Tax Gross-Up - If it shall be determined that any
payment to or for the benefit of a Participant pursuant to
Sections 4.02(A) - (E) of the Plan or under any other plan or
program of the Company (collectively, the "payments") would be
subject to the excise tax imposed by Section 4999 of the Code
(or any successor provision) or any interest or penalties are
incurred by a Participant with respect to such excise tax
(such excise tax together with any such interest and
penalties, the "Excise Tax"), such Participant shall receive
an additional lump sum cash payment (a "Gross-Up Payment")
such that after payment by the Participant of all taxes
(including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Participant
will retain an amount of the Gross-Up Payment equal to the
Excise Tax on the payments."
8. The last two sentences of Section 4.03 of the Plan shall be
deleted.
9. The third sentence of Section 4.05(B) of the Plan shall be
deleted and the following shall be substituted therefor:
"It is specifically provided that any lump sum payment
described in this Section 4.05(B) shall equal the total
payments to be made or remaining to be made to a Participant
pursuant to Section 4.02(A) without any reduction for the
acceleration of such payments."
10. As amended hereby, the Plan is respectfully ratified and
reaffirmed.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By /s/ JOHN L. WHITMIRE
-------------------------------------------------
John L. Whitmire
Chairman and Chief Executive Officer
-3-
<PAGE> 4
APPENDIX A
TO
EXECUTIVE SEVERANCE PLAN
AS OF SEPTEMBER 5, 1997
Whitmire, J. L. -- Chairman and Chief Executive Officer (36 months)
Krips, W. M. -- Senior Vice President (36 months)
Peabody, A. W. -- Senior Vice President (36 months)
Crain, Jr., A. R. -- Vice President and General Counsel (24 months)
Cunningham, R. A. -- Regional Vice President (24 months)
Kalmbach, L. D. -- Vice President and Chief Financial Officer (24 months)
Knight, J. E. -- Regional Vice President (24 months)
Markowitz, M. N. -- Vice President and Treasurer (24 months)
McMullan, D. M. -- Vice President and Controller (24 months)
Pierce, R. W. -- Vice President Exploration (24 months)
Wilson, III, N. W. -- Regional Vice President (24 months)
Zimmerman, J. M. -- Vice President Investor Relations (24 months)
Cox, C. L. -- Director Corporate Communications (24 months)
Dimick, M. C. -- Director Human Resources (24 months)
Frazier, R. J. -- General Manager Petrochemical Field Operations (24 months)
Hoffman, A. G. -- President Union Texas Pakistan (24 months)
Kennedy, J. E. -- Managing Director UTPL (24 months)
Latch, C. W. -- General Manager Union Texas Venezuela (24 months)
Change-In-Control
- -----------------
In the event of a change-in-control after September 5, 1997, the above named
participants shall be eligible for 36 months of salary continuation.
<PAGE> 1
Exhibit 15
INDEPENDENT ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Union Texas Petroleum Holdings, Inc. has included our report
dated October 21, 1997 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the following registration statements:
Registration Statement on Form S-8 (No. 33-26105) filed on December 21, 1988
Registration Statement on Form S-8 (No. 33-13575) filed on April 29, 1991
Registration Statement on Form S-8 (No. 33-21684) filed on April 29, 1991
Registration Statement on Form S-8 (No. 33-44045) filed on November 19, 1991
Registration Statement on Form S-8 (No. 33-64928) filed on June 24, 1993
Registration Statement on Form S-8 (No. 33-59213) filed on May 10, 1995
Registration Statement on Form S-8 (No. 333-30807) filed on July 3, 1997
Registration Statement on Form S-8 (No. 333-30805) filed on July 3, 1997
Registration Statement on Form S-8 (No. 333-30811) filed on July 3, 1997
Registration Statement on Form S-3 (No. 333-31039) filed on July 10, 1997
We are also aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
Houston, Texas
October 21, 1997
<PAGE> 2
October 24, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Union Texas Petroleum Holdings, Inc.
Report on Form 10-Q
(Commission File No. 1-9019)
(Filer CIK: 0000774214)
Gentlemen:
On behalf of Union Texas Petroleum Holdings, Inc. (the "Company"), we hereby
electronically submit for filing with the Commission, via EDGAR, the Company's
Report on Form 10-Q for the quarter ending September 30, 1996.
Please call me at (713) 220-2722 if you have any questions regarding the Form
10-Q.
Very truly yours,
/s/ Alan R. Crain
Vice President and General Counsel
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Blvd.
Houston, TX 77056
<PAGE> 3
Securities and Exchange Commission
Page 2
cc: Christine LaFollette
King & Spalding
1100 Louisiana Street, Suite 3300
Houston, Texas 77002-5219
Ms. Sharon Carroll Everett
New York Stock Exchange, Inc.
20 Broad Street
New York, NY 10005
Listings Department, MS 7070 (1 copy)
The Pacific Stock Exchange, Inc.
301 Pine Street
San Francisco, CA 94104
State Street Bank
Mr. Andrew M. Sinasky (2 copies)
Corporate Trust, 4th Floor
2 International Place
Boston, MA 02110
Ms. Tammie J. Marshall
First National Bank of Chicago
Mail Suite 0126
One First National Plaza
Chicago, IL 60670-0126
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 25,229
<SECURITIES> 0
<RECEIVABLES> 75,691
<ALLOWANCES> 0
<INVENTORY> 34,743
<CURRENT-ASSETS> 175,481
<PP&E> 3,364,111
<DEPRECIATION> 1,667,693
<TOTAL-ASSETS> 1,977,719
<CURRENT-LIABILITIES> 251,356
<BONDS> 619,345
0
0
<COMMON> 4,391
<OTHER-SE> 652,364
<TOTAL-LIABILITY-AND-EQUITY> 1,977,719
<SALES> 676,550
<TOTAL-REVENUES> 697,502
<CGS> 230,707
<TOTAL-COSTS> 404,231
<OTHER-EXPENSES> 47,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,700
<INCOME-PRETAX> 238,883
<INCOME-TAX> 101,717
<INCOME-CONTINUING> 137,166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137,166
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 0
</TABLE>
