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, 2003
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, 2003 and 2002, and the results
of its transactions for each of the years then ended.
Page Number
Report of Independent Auditors 1
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2003 and 2002 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 2003 and 2002 2
Notes to Financial Statements 3-7
Signature 8
Supplemental Schedules*:
Schedule of Assets (Held at Year End) 9
Schedule of Reportable Transactions
for the year ended December 31, 2003 10
Exhibit Index 11
* 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 Participants and the Administrative Committee 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 Molycorp, Inc. 401(k) Retirement Savings Plan (the "Plan") at
December 31, 2003 and December 31, 2002, 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 for the year ended
December 31, 2003, 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.
PricewaterhouseCoopers LLP
Los Angeles, California
June 18, 2004
Molycorp, Inc. 401(k) Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31,
2003 2002
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Investments at fair value $ 307,705 $ 173,721
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Net assets available for benefits $ 307,705 $ 173,721
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Molycorp, Inc. 401(k) Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31,
2003 2002
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Additions:
Additions to (deductions from) net assets attributed to:
Investment income (loss)
Net appreciation (depreciation)
in fair value of investments $ 28,962 $ (11,982)
Interest 846 1,464
Dividends 1,220 159
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Total investment gain (loss) 31,028 (10,359)
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Contributions:
Participant 94,552 40,375
Company 16,834 2,233
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Total contributions 111,386 42,608
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Total additions 142,414 32,249
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Deductions:
Participant withdrawals
and distributions 8,430 1,198
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Total deductions 8,430 1,198
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Net increase 133,984 31,051
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Net assets available for benefits:
Beginning of year 173,721 142,670
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End of year $ 307,705 $ 173,721
=============== ==============
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. 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. 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 Corporation 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
-------------
Participant Contributions -- Participant contributions are voluntary
and are pre-tax. A participant's total annual pre-tax contribution limit was
raised to 75 percent from 50 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.
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 fiancial statements.
The maximum employee pay eligible for benefit purposes under a
qualified plan was $200,000 per year for 2003. If an employee's pay exceeded
$200,000, only the first $200,000 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 $12,000 for 2003 and $11,000 for
2002. "Catch-up" contributions allow employees who were at least age 50 to
contribute an additional pre-tax contribution of $2,000 for 2003 and $1,000 for
2002. 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, 2003 and 2002. 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
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.
-5-
NOTE 3 - Investments
The following investments represent 5 percent or more of the Plan's net assets:
December 31,
2003 2002
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Putnam Money Market Fund
128,733 and 111,455 shares, respectively $ 128,733 $ 111,455
Putnam New Opportunities Fund
1,108 and 794 shares, respectively 42,992 23,170
Unocal Common Stock (a)
878 and 132 shares, respectively 32,335 4,032
Putnam S&P 500 Index Fund
872 and 549 shares, respectively 24,221 11,889
Vanguard Lifestrategy Moderate Growth Fund
1,194 and 0 shares, respectively 19,828 -
Putnam International Growth Fund
763 and 655 shares, respectively 15,857 10,829
(a) Includes both participant and nonparticipant-directed amounts.
The Plan's investments appreciated or (depreciated) as follows:
December 31,
2003 2002
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Mutual funds $17,973 ($9,675)
Common or collective trust 4,918 (2,202)
Common stock 6,071 (105)
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$28,962 ($11,982)
============ =============
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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,
2003 2002
--------------------------------------------------------------------------------
Assets:
Unocal common stock $ 23,395 $ 2,284
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Total assets 23,395 2,284
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Total nonparticipant-directed net assets $ 23,395 $ 2,284
========== ==========
Year Ended December 31,
2003 2002
--------------------------------------------------------------------------------
Changes in net assets:
Contributions $ 16,834 $ 2,233
Dividends 227 -
Net appreciation 4,418 51
Benefits paid to participants (368) -
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Net increase $ 21,111 $ 2,284
========== ==========
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 Corporation, which also qualifies as a party-in-interest,
absorbs substantially all of the administrative expenses of the Plan, which were
nominal for the years ended December 31, 2003 and 2002. Such transactions with
the Company qualify for a statutory exemption.
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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 28, 2004 By: /s/ William C. Schramm
-------------------------------
William C. Schramm
Comptroller, Molycorp, Inc.
-8-
Molycorp, Inc. 401(k) Retirement Savings Plan
Schedule of Assets (Held at End of Year) ***
At December 31, 2003
(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
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** Putnam Investments Putnam Money Market Fund $ 128,733
128,733 shares
** Putnam Investments Putnam New Opportunities Mutual Fund 42,992
1,108 shares
* Unocal Corporation Unocal Corporation Common Stock $26,321 32,335
878 shares
** Putnam Investments Putnam S&P 500 Index Fund 24,221
872 shares
Vanguard Group Vanguard Life Strategy Moderate Growth Fund 19,828
1,194 shares
** Putnam Investments Putnam International Growth Fund 15,857
763 shares
** Putnam Investments The Putnam Bond Index Fund 10,999
815 shares
** Putnam Investments Putnam Voyager Fund 10,511
644 shares
** Putnam Investments George Putnam Fund of Boston 8,442
496 shares
PIMCO Funds PIMCO Renaissance Institutional Fund 4,578
196 shares
Vanguard Group The Vanguard Windsor II Fund 2,639
56 shares
Vanguard Group Vanguard Life Strategy Income Fund 2,340
177 shares
Vanguard Group Vanguard Life Strategy Conservative Growth Fund 2,187
150 shares
Vanguard Group Vanguard Life Strategy Growth Fund 2,043
113 shares
-------------------
Total assets held for investment purposes $ 307,705
===================
* 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)
December 31, 2003
(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
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Unocal
Corporation (2) Common Stock $ 23,163 $ 23,163 $ 23,163
(30 transactions)
(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-
EXHIBIT INDEX
Exhibit 23 Consent of PricewaterhouseCoopers LLP
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