UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2001
Or
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number 1-8483
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
UNOCAL SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address of
its principal executive office:
Unocal Corporation,
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
INDEX TO FINANCIAL STATEMENTS OF THE UNOCAL SAVINGS PLAN
The following financial statements reflect the status of the Unocal Savings Plan
as of December 31, 2001 and 2000, and the results of its transactions for each
of the years then ended.
Page Number
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 2001 and 2000 3
Notes to Financial Statements 4-9
Supplemental Schedules*:
Schedule of Assets Held for Investment Purposes
at December 31, 2001 11
Schedule of Reportable Transactions for
the year ended December 31, 2001 12
Exhibit Index 13
* Supplemental schedules required by the Employee Retirement Income Security Act
of 1974 that are omitted are not applicable to the Unocal Savings Plan.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Unocal Savings Plan Committee:
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of the Unocal Savings Plan (the "Plan") at December 31, 2001 and 2000,
and the changes in net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Plan's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes at December 31, 2001 and reportable
transactions for the year ended December 31, 2001 are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/Pricewaterhouse Coopers LLP
PricewaterhouseCoopers LLP
Los Angeles, California
May 24, 2002
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Unocal Savings Plan
Statements of Net Assets Available for Benefits
December 31,
2001 2000
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Assets:
Investments at fair value $485,383,654 $558,100,005
Cash 773,306 2,713,377
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Total assets 486,156,960 560,813,382
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Net assets available for benefits $486,156,960 $560,813,382
================== ==================
See accompanying notes to financial statements.
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Unocal Savings Plan
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31,
2001 2000
--------------------------------------------------------------------------------
Additions:
Additions to (deductions from) net assets attributed to:
Investment income:
Net depreciation in
fair value of investments $ (60,087,690) $ (17,470,031)
Interest 2,123,253 2,987,898
Dividends 7,656,962 20,960,987
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Total investment income (loss) (50,307,475) 6,478,854
Contributions:
Participant 18,047,217 21,797,371
Company 10,996,479 13,138,933
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Total contributions 29,043,696 34,936,304
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Total (deductions) additions (21,263,779) 41,415,158
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Deductions:
Deductions from net assets attributed to:
Participant withdrawals & distributions 53,385,593 67,771,562
Trustee fees and other expense 7,050 11,439
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Total deductions 53,392,643 67,783,001
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Net decrease (74,656,422) (26,367,843)
Net assets available for benefits:
Beginning of year 560,813,382 587,181,225
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End of year $486,156,960 $560,813,382
============== ==============
See accompanying notes to financial statements.
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UNOCAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Description of the Plan
General
Unocal Corporation ("Unocal") was incorporated in Delaware on March 18,
1983, as the parent of Union Oil Company of California. The Unocal Savings Plan
(the "Plan") provides for Union Oil Company of California (d.b.a. "Unocal") (the
"Company") matching contributions and for participants' voluntary pre-tax and/or
after-tax contributions. Putnam Fiduciary Trust Company is the trustee
("Trustee") of the Plan and invests funds contributed by the Company and
participants to the Plan. During 2001 and 2000, all Company contributions were
invested in common stock of Unocal and participant contributions were invested
at the discretion of the participants in a range of investment fund options and
Unocal common stock. During 2001 and 2000, participants were permitted to
immediately transfer Company contributions from Unocal common stock into any of
the Plan investment options. Most balances remain with the Trustee until
withdrawn by participants following termination of employment although loans,
hardship withdrawals, and certain other withdrawals are permitted during
employment. The Plan is subject to certain provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") as a defined contribution plan.
The Savings Plan booklet dated May 1, 2000 and the Addendum dated
January 1, 2001 constitute part of a prospectus covering securities that have
been registered under the Securities Act of 1933. The Savings Plan booklet and
Addendum constitute the Summary Plan Description of the Plan as of January 1,
2001. The Company has made certain plan changes that were allowed under the new
Economic Growth and Tax Relief Reconciliation Act of 2001. Many of these changes
will allow members to save more on a tax-deferred basis. Most of these changes
will become effective January 1, 2002 and other changes are expected to be
implemented by year-end 2002.
Participation
Regular, full-time employees are eligible to participate in the Plan
immediately upon employment by the Company. Part-time and temporary employees
are eligible to participate following the first service year in which they
complete at least 1,000 hours of service.
Contributions
Participant Contributions -- Participant contributions are voluntary
and can be all pre-tax, all after-tax, or a combination of both. However, a
participant's total annual contribution must not exceed 15 percent of the
participant's annual base pay. The pre-tax contributions are also known as
401(k) contributions. A participant's contributions shall not exceed the maximum
amount allowed by law.
Company Matching Contributions -- The Company matches employee pre-tax
401(k) contributions on a dollar for dollar basis, up to six percent of the
contributing participant's base pay.
At its discretion, the Company directs the Trustee to purchase shares
attributable to Company matching contributions either on the open market or by
private purchases directly from the Company.
Participant Accounts
Each participant's account is credited with the contributions and the
respective net investment earnings or losses of the individual funds as governed
by the participant's investment selection.
-4-
Vesting
Participants are always 100 percent vested in participant contributions
and the dividends on those contributions. Vesting in the Company contributions
portion of participants' accounts and the dividends thereon is based on years of
vesting service. Participants are 100 percent vested in Company contributions
and dividends thereon after two years of vesting service. Special vesting rules
also apply to certain participants depending on the date and reason for
termination of employment.
Payment of Benefits
Following termination of employment, participants may elect to receive
their account balance or defer their distribution until a later date chosen by
the participant, but not beyond April 1 of the year following attainment of age
70-1/2.
Rollovers into the Plan
The Plan will accept rollovers from other employers' qualified plans,
subject to certain restrictions.
Loans
All employees who are participants of the Plan and have a sufficient
balance in their employee pre-tax contributions account are eligible to apply
for a loan. Members borrow against their own pre-tax account balance and all
payments of principal and interest are credited back to their account. Loan
types available are "any reason" (except investment in registered securities);
"home purchase" (for purchase of a primary residence only); and loans "forced"
by a hardship withdrawal request. Repayment periods range from 1 to 15 years
depending on the type of loan. The Unocal Savings Plan Loan and Hardship
Withdrawal Committee determines the interest rate for loans based on appropriate
market rates and applicable federal regulations.
Federal Income Tax Status
The Company obtained its latest determination letter on February 15,
2000, from the Internal Revenue Service, in which the Internal Revenue Service
stated that the Plan, as then designed, was in compliance with the applicable
requirements of the Internal Revenue Code (the "Code"). The Plan has been
amended since receiving the determination letter. However, the plan
administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Code. Therefore, no provision for income taxes has been included in the
Plan's financial statements. The Company filed a request for a new determination
letter in February of 2002 and is awaiting a reply from the Internal Revenue
Service.
For 2001, the maximum employee pay eligible for benefit purposes under
a qualified plan was $170,000 per year. If an employee's pay exceeded $170,000,
only the first $170,000 of base pay was eligible for calculating employee and
Company contributions.
Federal regulations place an annual dollar limit on the amount of
employee pre-tax contributions. The limit was $10,500 for 2001 and 2000. If
pre-tax contributions reach the annual limit before year-end, they are suspended
for the balance of the year. The Company matching contributions are also
suspended if the annual limit is reached before year-end.
Withdrawals from the Plan are generally subject to federal income tax.
Also, in-service withdrawals and withdrawals following termination of employment
prior to retirement may be subject to a 10 percent federal income tax penalty.
Retiring employees and former employees who are at least age 55 may make a
partial withdrawal from their plan account without a tax penalty.
-5-
Plan Amendment or Termination
The Company expects to continue the Plan indefinitely, but, as future
conditions cannot be foreseen, the Company may at any time or from time to time
amend or terminate the Plan in whole or part. In the event of termination,
participants become fully vested in their individual accounts, and the net
assets of the Plan must be allocated among the participants and beneficiaries of
the Plan in the order provided by ERISA. The Company has no present intent to
discontinue the Company matching contributions or to terminate the Plan.
NOTE 2 - Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis
of accounting in conformity with accounting principles generally accepted in the
United States of America. In addition, the following accounting policies are
applied:
a. Purchases and sales of Unocal common stock:
During normal trading by participants, the Trustee will collect all
participant directed stock trades throughout the day and will execute
and complete one or more buy and sell trades per day.
During abnormal conditions or heavy trading by participants, the
Trustee may not be able to execute and complete participant directed
trades on the same day without affecting the share price. The Trustee
is authorized, at its discretion, to buy or sell a portion of the
trades during the next day or days. Prices received from each day's
trading will be averaged to ensure that all participants requesting
trades will be treated equitably.
b. Dividend income is recorded on the ex-dividend date.
c. Interest income is recorded as earned on the accrual basis.
d. Benefits are recorded when paid.
The Plan presents in the statement of changes in net assets available
for benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Valuation of Investments
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at the net asset value of shares held by the
Plan at year-end. The Unocal common stock is valued at the closing price as
reported for the New York Stock Exchange Composite Transactions at December 31,
2001 and 2000. Investments in common trust funds are valued based on information
provided by the Plan's investment custodian. The financial statements of the
common trust funds are audited annually by independent accountants. The value of
the assets of the Plan are subject to the variations in the market. The fair
value of the investments and net assets available for benefits could be
materially affected by a change in market conditions.
-6-
Use of Estimates in Preparation of the Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Plan's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of
additions to and deductions from net assets during the reporting periods. Actual
results could differ from those estimates.
NOTE 3 - Investments
The following table presents investments that represent 5 percent or
more of the Plan's net assets available for benefits:
December 31,
Shares in (000s) 2001 2000
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Unocal Common Stock (a)
5,937 and 6,178 shares, respectively $214,155,029 $239,011,758
Putnam S&P 500 Index Fund
3,014 and 3,182 shares, respectively 83,931,101 100,811,110
Putnam New Opportunities Fund
1,042 and 1,106 shares, respectively 43,736,755 66,200,019
Putnam Money Market Fund
40,051 and 38,320 shares, respectively 40,050,878 38,320,056
George Putnam Fund of Boston
2,270 and 2,217 shares, respectively 38,062,917 38,149,305
Putnam Voyager Fund
1,527 and 1,526 shares, respectively 27,127,733 36,481,007
(a) Includes both participant and nonparticipant-directed amounts.
-7-
The Plan's investments appreciated (depreciated) in value as follows:
December 31,
2001 2000
-------------------------------------
Mutual funds $ (33,821,337) $(42,972,819)
Common or collective trusts (11,661,112) (10,287,309)
Common stock (14,605,241) 35,790,097
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$ (60,087,690) $(17,470,031)
============== =============
Nonparticipant-Directed Investments
The nonparticipant-directed investments and the significant components
of the changes in those net assets are as follows:
December 31,
2001 2000
--------------------------------------------------------------------------------
Unocal common stock $ 134,156,612 $ 148,392,402
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Total assets 134,156,612 148,392,402
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Total nonparticipant-directed net assets $ 134,156,612 $ 148,392,402
============== ==============
Year Ended December 31,
2001 2000
--------------------------------------------------------------------------------
Contributions $ 10,996,479 $ 13,138,933
Dividends 3,034,483 3,300,583
Net (depreciation) appreciation (9,202,190) 21,613,424
Benefits paid to participants (10,533,887) (12,479,593)
Transfers to
participant-directed investments (8,529,402) (16,686,182)
-------------- --------------
Net (decrease) increase $ (14,234,517) $ 8,887,165
============== ==============
-8-
NOTE 4 - Forfeitures by Members
Company contributions and dividends thereon under the Plan are
forfeited by employees whose employment is terminated before vesting is
attained. However, if an employee is re-employed by the Company and performs an
hour of service within five years after the date of termination of employment,
the forfeited shares will be restored to the employee's Plan account. Amounts
forfeited will be used to restore previously forfeited accounts when necessary.
Remaining amounts forfeited will then be used to offset future Company
contributions to participant accounts.
At December 31, 2001 and 2000, forfeited nonvested accounts totaled
$45,086 and $173,152, respectively.
NOTE 5 - Parties-in-interest
Certain of the Plan's investments are shares of mutual funds managed by
the Trustee, as defined by the Plan Agreement. Therefore, these transactions
qualify as party-in-interest transactions for which a statutory exemption
exists. Fees paid by the Plan for investment management services are included in
the net asset value of the shares of the mutual funds; other fees paid by the
Plan are disclosed on the face of the statement of changes in net assets
available for benefits for the years ended December 31, 2001 and 2000.
The Company, who also qualifies as a party-in-interest, absorbs certain
administrative expenses of the Plan. Such transactions with the Company qualify
for a statutory exemption. Total expenses paid by the Company were $83,335 and
$87,756 for the years ended December 31, 2001 and 2000, respectively.
-9-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee appointed by the Board of Directors of the Company to administer the
Plan has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNOCAL SAVINGS PLAN
Date: June 28, 2002 By: /s/ Joe D. Cecil
-------------------------------------
Joe D. Cecil
Unocal Savings Plan Committee Member
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Unocal Savings Plan
Schedule of Assets Held for Investment Purposes
At December 31, 2001
(a) (b) (c) (d) (e)
Identity of Issuer, Description of Investment,
Borrower, Lessor Including Maturity Date, Rate of
or Similar Party Interest, Collateral, Par, or Maturity Value Cost Current Value
----------------------------------------------------------------------------------------------------------------------------------
* Unocal Corporation Unocal Corporation Common Stock $ 171,350,537 $ 214,155,029
5,937,207 shares
** Putnam Investments Putnam S&P 500 Index Fund 72,342,965 83,931,101
3,013,684 shares
** Putnam Investments George Putnam Fund of Boston 41,845,674 38,062,917
2,269,703 shares
** Putnam Investments The Putnam Bond Index Fund 6,663,549 7,292,768
613,353 shares
** Vanguard Group The Vanguard Windsor II Fund 12,964,099 11,750,352
459,178 shares
** Putnam Investments Putnam International Growth Fund 14,210,915 11,174,104
560,105 shares
** Putnam Investments Putnam Money Market Fund 40,050,878 40,050,878
40,050,878 shares
** Putnam Investments Putnam New Opportunities Mutual Fund 70,191,817 43,736,755
1,042,344 shares
** Putnam Investments Putnam Voyager Fund 38,019,062 27,127,733
1,526,603 shares
** Putnam Investments Participant Loans 8,102,017
-------------------
Total assets held for investment purposes $ 485,383,654
===================
* Sponsor and employer and, therefore, a party-in-interest for which a statuory exemption exists.
** Trustee for the Plan and, therefore, a party-in-interest for which a statuory exemption exists.
The Vanguard Windsor II Fund is also available through Putnam Investments.
-11-
UNOCAL SAVINGS PLAN
Schedule of Reportable Transactions (1)
December 31, 2001
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Identity of Description of Assets Expense Current Value of
Party (including Interest Rate Purchase Selling Lease Incurred With Cost Asset on
Involved And Maturity in Case of a loan Price Price Rental Transaction of Asset Transaction Date Net Gain
------------------------------------------------------------------------------------------------------------------------------------
Unocal
Corrporation (2) Common Stock $39,089,143 $ 39,089,143 $ 39,089,143
(435 transactions)
Unocal
Corporation (2) Common Stock $ 49,306,189 42,636,669 $ 6,669,520
(662 transactions)
Putnam Money
Market Fund (3) Fund Shares $41,669,177 $ 41,669,177 $ 41,669,177
(626 transactions)
Putnam Money
Market Fund (3) Fund Shares $ 39,938,354 $ 39,938,354 $ -
(455 transactions)
(1) Under ERISA, a reportable transaction is a transaction or series of
transactions during the Plan year that involves more than 5 percent of the
fair value of the Plan's net assets at the beginning of the Plan year, with
certain exceptions.
(2) Sponsor and employer and, therefore, a party-in-interest for which a
statutory exemption exists.
(3) Trustee for the Plan and, therefore, a party-in-interest for which a
statutory exemption exists.
-12-
UNOCAL CORPORATION
EXHIBIT INDEX
Exhibit 23 Consent of PricewaterhouseCoopers LLP
-13-