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, 2004
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:
MOLYCORP, INC. 401(K) RETIREMENT 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
MOLYCORP, INC. 401(k) RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
The following financial statements reflect the status of the Molycorp,
Inc. 401(k) Retirement Savings Plan as of December 31, 2004 and 2003, and the
results of its transactions for each of the years then ended.
Page Number
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 2004 and 2003 2
Notes to Financial Statements 3-8
Supplemental Schedules*:
Schedule of Assets (Held at End of Year) 9
Schedule of Reportable Transactions for
the year ended December 31, 2004 10
Signature 11
Exhibit Index 12
* Supplemental schedules required by the Employee Retirement Income Security
Act of 1974 that are omitted are not applicable to the Molycorp, Inc. 401(k)
Retirement Savings Plan.
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of the Molycorp, Inc. 401 (k) Retirement
Savings Plan:
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 Molycorp, Inc. 401 (k) Retirement Savings Plan (the "Plan") at December
31, 2004 and 2003, 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for 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 at end of year) and reportable transactions as of and for the year ended
December 31, 2004 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/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Los Angeles, California
June 24, 2005
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Molycorp, Inc. 401(k) Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31,
2004 2003
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Investments at fair value $ 481,737 $ 307,705
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Net assets available for benefits $ 481,737 $ 307,705
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Molycorp, Inc. 401(k) Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31,
2004 2003
--------------------------------------------------------------------------------
Additions:
Additions to net assets attributed to:
Investment income
Net appreciation in
fair value of investments $ 28,126 $ 28,962
Interest 1,317 846
Dividends 4,099 1,220
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Total investment income 33,542 31,028
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Contributions:
Participants' 129,080 94,552
Employer's 21,763 16,834
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Total contributions 150,843 111,386
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Total additions 184,385 142,414
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Deductions:
Benefits paid to participants 10,353 8,430
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Total deductions 10,353 8,430
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Net increase 174,032 133,984
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Net assets available for benefits:
Beginning of year 307,705 173,721
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End of year $ 481,737 $ 307,705
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See accompanying notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN
General
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The Molycorp, Inc. 401(k) Retirement Savings Plan (the "Plan") is
sponsored by Molycorp, Inc. (the "Company"), an indirect wholly owned subsidiary
of Unocal Corporation ("Unocal" or the "Company"). The Plan provides for
voluntary pre-tax contributions by participants, who are employees represented
by collective bargaining agents at certain facilities operated by the Company
and for matching contributions by the Company. The Plan's trustee and
administrator is Putnam Fiduciary Trust Company (the "Trustee"). Each
participant is allowed to choose how funds are invested from a range of
investment fund options made available through Putnam investments and Unocal
common stock. The Plan is subject to certain provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") as a defined contribution plan.
The Plan booklets dated April 1, 1999, and December 1, 1996, constitute
part of a prospectus covering securities that has been registered under the
Securities Act of 1933. The April 1, 1999, and December 1, 1996, booklets can be
referenced for other information about the Plan.
Participation
-------------
Regular, full-time employees are eligible to participate in the Plan
upon completion of six months of service.
Contributions
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Participant Contributions -- Participant contributions are voluntary
and are pre-tax. A participant's total annual pre-tax contribution limit is 75
percent of the participant's annual base pay. The pre-tax contributions are also
known as "401(k) contributions".
Company Matching Contributions -- The Company matches employee pre-tax
401(k) contributions at the rate of 25 cents per dollar up to 6 percent of the
employee's total annual wage (base pay plus overtime 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. During 2004, all purchases were on
the open market.
Participant Accounts
--------------------
Each participant's account is credited with the participant's
contributions and increased or decreased by the respective investment earnings
or losses of the individual investments as governed by the participant's
investment selections.
Vesting
-------
Participants are always 100 percent vested in participant contributions
and in the dividends and interest 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
of and reason for termination of employment.
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Payment of Benefits
-------------------
On termination of employment or at such time that participants become
eligible to receive benefits, participants may elect to receive their account
balances or defer their distributions until a later date, but no later than 60
days after the end of the plan year in which the latest of the following occurs:
April 1 after the close of the calendar year in which the participant attains
age 70 1/2, or two years after the participant's employment terminates. If a
participant continues to work after age 70 1/2, distribution of a portion of the
participant's account balance is required by April 1 of the calendar year
following the calendar year in which the participant attains age 70 1/2.
Federal Income Tax Status
-------------------------
On May 30, 2002, the Company received a ruling, from the Internal
Revenue Service that the Plan meets the requirements of Section 401(a) of the
Internal Revenue Code (the "Code") of 1986, as amended, and that the Trust
established thereunder is entitled to exemption under the provisions of the
Code. The Plan has been amended since receiving the Internal Revenue Service
ruling. However, the plan administrator and the Plan's tax counsel believe 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 maximum employee pay eligible for benefit purposes under a
qualified plan was $205,000 per year for 2004. If an employee's pay exceeded
$205,000, only the first $205,000 of 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 $13,000 for 2004 and $12,000 for
2003. "Catch-up" contributions allow employees who were at least age 50 to
contribute an additional pre-tax contribution of $3,000. These limits are
subject to adjustment in future years, in accordance with federal regulations.
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, withdrawals following termination of employment prior to age 55 may be
subject to an additional 10 percent federal penalty tax.
Plan Termination
----------------
The Company expects to continue the Plan indefinitely, but, as future
conditions cannot be foreseen, the Company may at any time or from time to time
amend or terminate the Plan in whole or in part, subject to the requirements of
ERISA and other applicable laws. An amendment may affect present, as well as
future participants, but may not diminish the account of any participant
existing on the effective date of such amendment. The Company has no present
intent 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 securities are recorded on a trade-date basis.
b. Dividends are recorded on an ex-dividend date basis.
c. Interest income is recorded on the accrual basis.
d. Benefits are recorded when paid.
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The Plan presents in the statements of changes in net assets available
for benefits the net appreciation (depreciation) in the fair value of its
investments which consist 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. Shares of Unocal common stock are valued at the closing price
as reported for the New York Stock Exchange Composite Transactions at December
31, 2004 and 2003. Investments in common trust funds are valued based on
information provided by the Plan's investment custodian at fair value.
The financial statements of the common trust funds are audited annually by
independent auditors.
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.
Risks and Uncertainties
-----------------------
The Plan invests in various investment securities. Investment
securities are exposed to various risks such as interest rate, market and credit
risks. Due to the level of risk associated with certain investment securities,
it is at least reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could materially
affect participants' account balances and the amounts reported in the statement
of net assets available for benefits.
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NOTE 3 - Investments
The following investments represent 5 percent or more of the Plan's net assets:
December 31,
2004 2003
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Putnam Money Market Fund
153,384 and 128,733 shares, respectively $ 153,384 $ 128,733
Unocal Common Stock (a)
1,898 and 878 shares, respectively 82,084 32,335
Vanguard Lifestrategy Moderate Growth Fund
2,834 and 1,194 shares, respectively 50,754 19,828
Putnam New Opportunities Fund
1,015 and 1,108 shares, respectively 43,454 42,992
Putnam S&P 500 Index Fund
1,089 and 872 shares, respectively 33,463 24,221
(a) Includes both participant and nonparticipant-directed amounts.
The Plan's investments appreciated as follows:
December 31,
2004 2003
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Mutual funds $14,749 $17,973
Common or collective trust 3,693 4,918
Common stock 9,684 6,071
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$28,126 $28,962
============ =============
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Nonparticipant-Directed Investments
-----------------------------------
The nonparticipant-directed investments and the significant components
of the changes in those net assets are as follows:
December 31,
2004 2003
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Assets:
Unocal common stock $ 50,691 $ 23,395
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Total assets 50,691 23,395
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Total nonparticipant-directed net assets $ 50,691 $ 23,395
========== ==========
Year Ended December 31,
2004 2003
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Changes in net assets:
Contributions $ 21,763 $ 16,834
Dividends 681 227
Net appreciation 6,698 4,418
Benefits paid to participants - (368)
Transfers to participant
- directed investments (1,846) -
---------- ----------
Net increase $ 27,296 $ 21,111
========== ==========
The Company matches employee pre-tax 401(k) contributions at the rate of 25
cents per dollar up to 6 percent of the employee's total annual wage (base pay
plus overtime pay) in Unocal common stock. Once the Company purchases the
shares attributable to its matching contributions, the participant has the
option to sell and transfer that portion out of Unocal common stock into any
other investment offered in the Plan.
NOTE 4 - 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.
Unocal, which also qualifies as a party-in-interest, absorbs
substantially all of the administrative expenses of the Plan, which were nominal
for the year ended December 31, 2003. Such transactions with the Company qualify
for a statutory exemption. The Company did not pay any such expenses in 2004.
NOTE 5 - Subsequent Events
On April 4, 2005, Unocal entered into a merger agreement with Chevron
Corporation ("Chevron") and Blue Merger Sub Inc., a direct wholly-owned
subsidiary of Chevron. The merger agreement provides that, upon the terms and
subject to the conditions set forth in the merger agreement, Unocal will merge
with and into Blue Merger Sub, with Blue Merger Sub continuing as the surviving
corporation and a wholly-owned subsidiary of Chevron. In the merger, Unocal
stockholders may elect to receive either 1.03 shares of Chevron stock, $65 in
cash or a combination of $16.25 in cash and 0.7725 of a share of Chevron common
stock for each share of Unocal common stock; however, the all-stock and all-cash
elections will be subject to proration to preserve the overall mix of 0.7725 of
a share of Chevron common stock and $16.25 in cash for all outstanding shares of
Unocal common stock taken together.
Consummation of the merger is subject to customary conditions,
including approvals by Unocal stockholders and certain regulatory agencies, such
as the U.S. Federal Trade Commission ("FTC"). The FTC has notified Chevron and
Unocal that Chevron's plans to acquire Unocal have been accepted by the FTC for
public comment.
On June 22, 2005, Unocal received a proposal from CNOOC Limited, an
affiliate of China National Offshore Oil Company, to acquire all outstanding
shares of Unocal for $67 per share in cash. Unocal intends to evaluate the CNOOC
proposal in a manner consistent with the Unocal board's fiduciary duties and its
obligations under the Chevron agreement. There can be no assurance that the
proposal would result in a definitive agreement with CNOOC.
For additional information regarding the pending acquisition, refer to
Unocal's current reports on Form 8-K, as amended, filed with the SEC on April 4,
April 7, June 9, June 10, June 23 and June 24, 2005, and any subsequent current
or periodic reports that may be filed by Unocal with the Securities and Exchange
Commission in connection with the pending merger transaction. Please also refer
to the Form S-4 registration statement filed by Chevron and the proxy statement
that will be filed by Unocal, in each case with the Securities and Exchange
Commission in connection with the pending merger transaction.
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Molycorp, Inc. 401(k) Retirement Savings Plan
Schedule of Assets (Held at End of Year) ***
At December 31, 2004
(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
---------------------------------------------------------------------------------------------------------------------------------
** Putnam Investments Putnam Money Market Fund $ 153,384
153,384 shares
* Unocal Corporation Unocal Corporation Common Stock $ 66,863 82,084
1,898 shares
Vanguard Group Vanguard Life Strategy Moderate Growth Fund 50,754
2,834 shares
** Putnam Investments Putnam New Opportunities Fund 43,454
1,015 shares
** Putnam Investments Putnam S&P 500 Index Fund 33,463
1,089 shares
** Putnam Investments Putnam International Equity Fund 22,669
952 shares
** Putnam Investments Putnam Voyager Fund 18,078
1,055 shares
** Putnam Investments George Putnam Fund of Boston 15,933
880 shares
** Putnam Investments Putnam Bond Index Fund 13,647
972 shares
Vanguard Group Vanguard Windsor II Fund 11,026
202 shares
Vanguard Group Vanguard Life Strategy Conservative Growth Fund 10,653
698 shares
Allianz Funds Allianz OCC Renaissance Fund 8,927
329 shares
Wells Fargo Funds Wells Fargo Small Cap Opportunities Fund 6,625
199 shares
Vanguard Group Vanguard Life Strategy Growth Fund 6,549
327 shares
Royce Funds Royce Opportunity Fund 2,981
223 shares
Vanguard Group Vanguard Life Strategy Income Fund 1,510
112 shares
------------------
Total assets held for investment purposes $ 481,737
==================
* Parent of the Sponsor and employer and, therefore, a party-in-interest for which a statutory exemption exists.
** Trustee for the Plan and, therefore, a party-in-interest for which a statutory exemption exists.
*** Under ERISA, an asset held for investment purposes is any asset held by the Plan on the last day of the Plan's
fiscal year or acquired at any time during the Plan's fiscal year and disposed of at any time before the last day
of the Plan's fiscal year, with certain exceptions.
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Molycorp, Inc. 401(k) Retirement Savings Plan
Schedule of Reportable Transactions (1)
Year Ended December 31, 2004
(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
Corporation (2) Common Stock $ 41,911 $ 41,911 $ 41,911
(32 transactions)
Unocal
Corporation (2) Common Stock $ 1,846 1,370 $ 476
(1 transaction)
(1) Under ERISA, a reportable transaction is defined as 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.
-10-
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.
MOLYCORP, INC. 401(k) RETIREMENT SAVINGS PLAN
Date: June 29, 2005 By: /s/ William C. Schramm
-----------------------
William C. Schramm
Comptroller, Molycorp, Inc.
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EXHIBIT INDEX
Exhibit 23 Consent of PricewaterhouseCoopers LLP
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