SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: Janaury 30, 1995
UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-8483 95-3825062
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1201 West Fifth Street, Los Angeles, California 90017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 977-7600
ITEM 5. OTHER EVENTS
On January 30, 1995, the following news release was issued:
Los Angeles, January 30 -- Unocal Corporation today said the company
recorded a preliminary net loss of $153 million, or 78 cents per common
share for 1994, compared with net earnings of $213 million, or 73 cents per
common share, in the previous year.
Excluding a $277 million charge for the cumulative effect of an
accounting change and $176 million for other special items (detailed in
attached table), Unocal's 1994 adjusted net earnings from operations were
$300 million, or $1.09 per common share. This compares with adjusted net
earnings of $347 million, or $1.29 per common share, for 1993.
Roger C. Beach, Unocal chief executive officer, said that full-year
operating earnings reflected higher natural gas production, higher foreign
crude oil production, stronger agricultural products earnings, and lower
domestic oil and gas operating and depreciation expense.
"Unfortunately, these positive factors could not make up for the lower
crude oil and natural gas prices, and disappointing margins in our West
Coast refining and marketing operations," Beach said.
For the fourth quarter, Unocal posted a preliminary net loss of $68
million, or 32 cents per common share. This compares with reported net
earnings of $44 million, or 14 cents per common share, the previous year.
Included in the 1994 fourth quarter results were previously announced
special charges: $94 million ($152 million pretax) for environmental
remediation costs; $22 million ($35 million pretax) for litigation expenses
for various claims; $22 million ($35 million pretax) for the write-down of
various properties, including certain laboratories and research facilities
that are being closed, and a marine terminal that being phased out; and $15
million ($25 million pretax) for restructuring costs related to staff
reductions.
Excluding the effects of these special items, Unocal's adjusted
earnings from operations for the fourth quarter were $86 million, or 32
cents per common share, up from $70 million, or 25 cents per common share
for the same period a year ago.
Despite lower natural gas prices, the company realized improved
operating earnings due to higher natural gas production, lower domestic oil
and gas operating and depreciation expense, and significantly improved
earnings from the company's agricultural products business unit.
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Due to lower natural gas prices, the company curtailed some domestic
natural gas production in October and November. These curtailments lowered
the company average net production by 51 million cubic feet per day for the
quarter. The company also said that some production has been curtailed
starting in mid-January.
Total revenues for the full-year 1994 were $7.97 billion, down from
$8.34 billion for the previous year. This decrease was due principally to
lower average sales price of refined products.
Cash flow from operations, before working capital changes, was $1.26
billion for 1994, compared with $1.42 billion for 1993. The decrease was
due primarily to lower oil and gas commodity prices.
Full-year capital expenditures were $1.27 billion, up slightly from
$1.25 billion in 1993.
Fourth Quarter Operations
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Worldwide petroleum exploration and production earnings were $107
million, up from $86 million a year ago. Adjusted for special items,
earnings from petroleum exploration and production operations were $116
million, compared with $89 million in the fourth quarter of 1993.
The improvement in earnings is due to continued higher natural gas
sales in the Far East and increased foreign crude oil production. Fourth
quarter domestic petroleum exploration and production earnings also reflected
lower depreciation and depletion expense: $9 million due to reduced net book
values of oil and gas producing properties as a result of the change in
accounting policy described below, and $13 million for other year-end
adjustments.
Unocal's worldwide average natural gas sales price was $1.72 per
thousand cubic feet (mcf), down from $2.02 per mcf in the fourth quarter
1993. The company's worldwide average crude oil sales price was $14.32 per
barrel in the fourth quarter, up from $12.47 the year before.
Earnings from refining, marketing and transportation were $13 million,
down from $23 million in the fourth quarter 1993. Excluding special items,
operating earnings from the downstream businesses were $34 million, down
slightly from $39 million a year ago. The marketplace exerted pressure on
the company's marketing margins during the fourth quarter.
Chemicals earnings were $19 million, more than double the $9 million
recorded a year ago. The earnings reflected considerably higher margins on
sales of agricultural ammonia and urea products, particularly overseas in
Asian markets.
Geothermal earnings were $8 million, up from $5 million a year ago.
This increase is principally the result of lower operating expenses.
Net expense for corporate and other was $215 million, compared with a
net expense of $79 million for the fourth quarter 1993. Adjusted for
special items, expense for corporate and other was $91 million, up from $73
million a year ago. Special items for the current quarter included a
substantial portion of the charges for environmental remediation costs,
asset write-
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downs and litigation expenses. Also included is the charge for
restructuring costs related to staff reductions.
The higher adjusted net expense for corporate and other in both the
fourth quarter and full-year 1994 reflected the initiation of the company-
wide Pay for Performance program. The 1993 adjusted expense in the fourth
quarter included a favorable income tax adjustment that was not allocated
to the business segments.
Fourth Quarter Environmental Remediation Provision
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The $94 million ($152 million pretax) environmental remediation
provision recorded in the fourth quarter results from an extensive and
ongoing assessment by the company of its reserves for environmental
remediation costs.
In the fourth quarter, the company provided $19 million ($30 million
pretax) in additional reserves related to various RCRA sites, including the
Beaumont (Texas) Refinery and Terminal and the Los Angeles Refinery; $22
million ($36 million pretax) for environmental remediation for properties
sold during the last five years; and $6 million ($9 million pretax) for the
McColl Superfund site for Unocal's share of a site remedy based on a
settlement proposal made in the fourth quarter.
The above reserve additions are due principally to changes of
estimates.
The company also provided $16 million ($26 million pretax) in the
fourth quarter for environmental remediation of service station sites
previously closed or no longer operated by the company. This provision
represents a catch-up for a number of prior periods with the impact on any
prior period being immaterial. Previous remediation expenditures for these
properties had been expensed as incurred.
The balance of the fourth quarter environmental remediation provision
- -- $31 million ($51 million pretax) -- is the result of the company's
review of its environmental remediation liabilities for sites not
specifically named above. In the majority, this balance is due to changes
of estimates. This brings the company's total environmental remediation
reserve to $270 million at December 31, 1994.
Accounting Policy Change
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The company changed its accounting policy for recognizing the
reduction in value of certain oil and gas producing properties. Under the
new policy, the company evaluates properties for impairment on a field-by-
field basis using oil and gas prices in effect at the time of valuation.
This compares with the country-by-country basis previously used.
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The one-time after-tax charge of $277 million ($447 million pretax)
reflects the write-down of certain domestic oil and gas producing
properties from which the estimated undiscounted future cash flows are less
than the current net book values of the properties.
Current-year depreciation expense for domestic oil and gas operations
decreased 12 percent, or 46 cents per barrel of oil equivalent (BOE), as a
result of the write-down.
The company will restate net earnings for the first quarter 1994 to
reflect the $277 million charge for the change in accounting policy. Also,
net earnings for the first three quarters will be restated for the lower
depreciation and depletion expense resulting from the accounting policy
change. Net earnings for the first quarter 1994 will be restated from $54
million (19 cents per common share) to earnings of $63 million (23 cents
per common share) before the cumulative effect of the accounting change,
and a net loss of $214 million (92 cents per common share) after the
accounting change. Second quarter 1994 net earnings will be restated from
$50 million (16 cents per common share) to $59 million (21 cents per common
share), and third quarter net earnings from $60 million (21 cents per
common share) to $70 million (25 cents per common share).
On a pro forma basis, net earnings for the fourth quarter and full-
year 1993 earnings would have increased by $8 million and $31 million,
respectively, for the effect of the change in accounting policy. Pro forma
net earnings would have been $52 million (18 cents per common share) for
the fourth quarter and $244 million (86 cents per common share) for the
year.
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UNOCAL CORPORATION
1994 EARNINGS NEWS RELEASE SUPPLEMENT
SPECIAL ADJUSTMENTS - CONSOLIDATED
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
1994 1993 1994 1993
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Dollars in millions except per share amounts
Reported net earnings (loss) ($68) $44 ($153) $213
Less: Special items
Cumulative effect of accounting changes
- for a policy change related to asset 0 0 (277) 0
- for postretirement health care costs 0 0 0 (121)
- for postemployment benefits (SFAS 112 0 0 0 (9)
Write-down of investment and provision for abandonment
and remediation of the Guadalupe oil field 0 0 (31) 0
Litigation (22) (7) (30) (30)
Environmental remediation provision (94) (3) (99) (10)
Mesa settlement 0 0 24 0
Write-down of assets (22) (12) (22) (12)
Asset sales (5) 0 8 66
Effect of federal tax rate change on deferred taxes 0 0 0 (14)
Restructuring costs (15) 0 (15) 0
Other 4 (4) (11) (4)
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Total special items (154) (26) (453) (134)
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Adjusted net earnings 86 70 300 347
Less: Dividends on preferred stock 9 9 36 36
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Adjusted net earnings applicable to common shares $77 $61 $264 $311
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Adjusted net earnings per common share $0.32 $0.25 $1.09 $1.29
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UNOCAL CORPORATION
1994 EARNINGS NEWS RELEASE SUPPLEMENT
SPECIAL ADJUSTMENTS ALLOCATED BY BUSINESS SEGMENTS
(UNAUDITIED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
1994 1993 1994 1993
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Dollars in millions except per share amounts
U.S. PETROLEUM EXPLORATION AND PRODUCTION
Reported net earnings $ 53 $ 26 $ 186 $ 235
Less special items:
Write-down of investment and provision for abandonment
and remediation of the Guadalupe oil field 0 0 (31) 0
Litigation 0 (4) 0 (4)
Environmental remediation provision (4) 0 (4) 0
Asset sales (5) 1 (13) 18
Effect of federal tax rate change on deferred taxes 0 0 0 (5)
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Adjusted U.S. E&P earnings $ 62 $ 29 $ 234 $ 226
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FOREIGN PETROLEUM EXPLORATION AND PRODUCTION
Reported net earnings $ 54 $ 60 $ 208 $ 212
Less special items: 0
Asset sales 0 0 16 5
Effect of federal tax rate change on deferred taxes 0 0 0 1
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Adjusted Foreign E&P earnings $ 54 $ 60 $ 192 $ 206
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REFINING, MARKETING AND TRANSPORTATION
Reported net earnings $ 13 $ 23 $ 104 $ 166
Less special items:
Asset sales 0 0 0 15
Write-down of assets (13) (12) (13) (12)
Litigation 0 0 0 (1)
Environmental remediation provision (6) 0 (8) 0
Effect of federal tax rate change on deferred taxes 0 0 0 (7)
Other (2) (4) (8) (4)
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Adjusted R,M&T earnings $ 34 $ 39 $ 133 $ 175
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CHEMICALS
Reported net earnings $ 19 $ 9 $ 53 $ 42
Less special items:
Asset sales 0 0 2 (1)
Effect of federal tax rate change on deferred taxes 0 0 0 (1)
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Adjusted Chemicals earnings $ 19 $ 9 $ 51 $ 44
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GEOTHERMAL
Reported net earnings $ 8 $ 5 $ 33 $ 46
Less special items:
Asset sales 0 (1) 0 25
Effect of federal tax rate change on deferred taxes 0 0 0 (1)
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Adjusted Geothermal earnings $ 8 $ 6 $ 33 $ 22
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CORPORATE AND OTHER
Reported net loss ($ 215) ($ 79) ($ 460) ($ 358)
Less special items:
Mesa settlement 0 0 24 0
Litigation (22) (3) (30) (25)
Environmental remediation provision (84) (3) (87) (10)
Write-down of assets (9) 0 (9) 0
Asset sales 0 0 3 4
Restructuring costs (15) 0 (15) 0
Effect of federal tax rate change on deferred taxes 0 0 0 (1)
Other 6 0 (3) 0
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Adjusted Corporate and Other ($ 91) ($ 73) ($ 343) ($ 326)
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Total adjusted earnings $ 86 $ 70 $ 300 $ 347
Less: Dividends on preferred stock 9 9 36 36
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Adjusted earnings applicable to common shares $ 77 $ 61 $ 264 $ 311
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Adjusted earnings per common share $0.32 $0.25 $1.09 $1.29
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NEWS RELEASE UNOCAL CORPORATION
CONDENSED EARNINGS STATEMENT
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
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Dollars in millions except per share amounts 1994 1993 1994 1993
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Total revenues (a) $ 1,984 $ 1,965 $ 7,965 $ 8,344
Costs and other deductions (a) 2,057 1,908 7,671 7,733
Earnings (loss) before income taxes (73) 57 294 611
Income taxes (5) 13 170 268
Earnings (loss) before cumulative effect of accounting changes (68) 44 124 343
Cumulative effect of accounting changes - - (277) (130)
Net earnings (loss) $ (68) $ 44 $ (153) $ 213
Dividends on preferred stock 9 9 36 36
Net earnings (loss) applicable to common shares $ (77) $ 35 $ (189) $ 177
Earnings (loss) per common share: (b)
Before cumulative effect of accounting changes $ (0.32) $ 0.14 $ 0.36 $ 1.27
Cumulative effect of accounting changes - - (1.14) (0.54)
Net earnings (loss) $ (0.32) $ 0.14 $ (0.78) $ 0.73
(a)Includes consumer excise taxes of $ 207 $ 208 $ 893 $ 816
(b)Based on weighted average common shares outstanding 244 241 243 241
(in millions)
NET EARNINGS BY BUSINESS SEGMENT
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
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Millions of dollars 1994 1993 1994 1993
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Petroleum
Exploration and Production
United States $ 53 $ 26 $ 186 $ 235
Foreign 54 60 208 212
Refining, Marketing and Transportation (a) 13 23 104 166
Chemicals 19 9 53 42
Geothermal 8 5 33 46
Corporate and Other (b) (c) (215) (79) (460) (358)
Sub-total (68) 44 124 343
Cumulative effect of accounting changes - - (277) (130)
Total $ (68) $ 44 $ (153) $ 213
(a)Includes equity in earnings of affiliates (after-tax) of $ 16 $ 15 $ 57 $ 55
(b)Includes net interest expense (after-tax) of $ (44) $ (47) $ (174) $ (193)
(c)Includes minerals and real estate operations.
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NEWS RELEASE UNOCAL CORPORATION
SELECTED FINANCIAL DATA
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
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Millions of dollars 1994 1993 1994 1993
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INCOME STATEMENT DATA
Exploration expense $ 37 $ 32 $ 116 $ 119
Dry hole costs
United States $ 8 $ 7 $ 45 $ 15
Foreign 12 10 39 30
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Total $ 20 $ 17 $ 84 $ 45
Depreciation, Depletion & Amortization $ 218 $ 261 $ 947 $ 963
CASH FLOW DATA
Cash flows from operating activities
Excluding working capital changes $ 222 $ 356 $ 1,256 $ 1,416
Including working capital changes 444 421 1,299 1,100
Cash flows used in investing activities
Pretax proceeds from asset sales $ 20 $ 7 $ 156 $ 586
Capital expenditures (433) (436) (1,272) (1,249)
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Total $ (413) $ (429) $ (1,116) $ (663)
Cash flows from (used in) financing activities $ (77) $ 40 $ (241) $ (389)
BALANCE SHEET DATA
At December 31
1994 1993
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Total Assets $ 9,337 $ 9,706 (a)
Long Term Debt $ 3,453 $ 3,455
Stockholders' Equity $ 2,815 $ 3,129
(a) Restated to conform to the 1994 classification
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NEWS RELEASE UNOCAL CORPORATION
OPERATING HIGHLIGHTS
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31 Ended December 31
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1994 1993 1994 1993
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Net daily production (a)
Crude oil and condensate (thousand barrels):
United States 131.6 144.8 137.3 147.5
Foreign:
Far East 92.5 68.8 87.1 67.8
Other 32.6 32.2 35.3 30.7
Total Foreign 125.1 101.0 122.4 98.5
Worldwide 256.7 245.8 259.7 246.0
Natural gas (million cubic feet):
United States 1,029 1,016 1,095 952
Foreign:
Far East 675 566 623 601
Other 29 44 48 46
Total Foreign 704 610 671 647
Worldwide 1,733 1,626 1,766 1,599
Natural gas liquids (thousand barrels) 23.2 20.1 21.9 19.9
Geothermal (million kilowatt-hours) 20.1 19.2 20.5 20.1
Input to crude oil processing units (thousand barrels daily) 307 286 295 288
Sales of petroleum products (thousand barrels daily) (b) 331 342 316 345
Average sales prices
Crude oil and condensate (per barrel):
United States $ 13.80 $ 11.69 $ 13.06 $ 13.68
Foreig
Far East $ 14.78 $ 14.04 $ 14.55 $ 15.50
Other $ 15.26 $ 13.42 $ 14.24 $ 14.88
Total Foreign $ 14.97 $ 13.80 $ 14.48 $ 15.26
Worldwide $ 14.32 $ 12.47 $ 13.63 $ 14.21
Natural gas (per mcf):
United States $ 1.57 $ 1.98 $ 1.78 $ 1.97
Foreig
Far East $ 1.94 $ 2.10 $ 2.01 $ 2.11
Other $ 1.98 $ 2.08 $ 1.81 $ 1.79
Total Foreign $ 1.95 $ 2.10 $ 1.99 $ 2.07
Worldwide $ 1.72 $ 2.02 $ 1.86 $ 2.01
(a)Includes net profits type agreements on a gross basis.
(b)Includes 50% of the volumes of The UNO-VEN Company.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNOCAL CORPORATION
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(Registrant)
Dated: January 30, 1995 By: CHARLES S. MCDOWELL
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Charles S. McDowell,
Vice President and Comptroller
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