UNOCAL DETAILS EMPLOYEE REDUCTION PROGRAMS

May 25, 1992
Unocal Corp. last week disclosed details of enhanced voluntary retirement and severance programs to reduce employment as part of a company-wide cost cutting effort. The company expects to eliminate 800-1,200 jobs and implement other expense cuts by the end of 1992, which would ultimately improve after tax cash flow by at least $200 million/year (OGJ, May 11, p. 26). The employee reductions include at least 400 personnel in Unocal's upstream energy resources group.

Unocal Corp. last week disclosed details of enhanced voluntary retirement and severance programs to reduce employment as part of a company-wide cost cutting effort.

The company expects to eliminate 800-1,200 jobs and implement other expense cuts by the end of 1992, which would ultimately improve after tax cash flow by at least $200 million/year (OGJ, May 11, p. 26). The employee reductions include at least 400 personnel in Unocal's upstream energy resources group.

The company expects involuntary layoffs to follow the voluntary program. The extent of involuntary reductions will depend on results of the voluntary program.

Unocal expects to take a one time after tax charge, estimated at $35 million, in the third quarter this year as a result of the job reductions. The charge will depend upon the positions eliminated to meet the cost cutting objectives.

PROGRAMS DETAILED

The voluntary retirement incentive program enhances Unocal's normal retirement plan. It will be offered to eligible employees who are at least 55 years old with 10 or more years of service as of Aug. 31, 1992.

The benefit is a special, one time enhancement to the Unocal retirement plan.

The lump sum benefit will amount to 4.5% of an employee's final average annual pay times years of service to a maximum of 1.5 times final average annual pay.

This benefit also can be taken as an annuity.

The voluntary severance pay (VSP) is available to employees who have at least 1 year of service but are not eligible to retire under the retirement plan.

The VSP benefit will amount to 2-1/2 weeks of base pay for each year of continuous service. The minimum VSP benefit is 10 weeks, the maximum 65 weeks.

Employees are to make a one time election for the programs between July 1 and Aug. 14, 1992.

Most of the employees electing to participate will leave the company Aug. 31.

The company has begun notifying eligible employees about details of the programs.

RESTRUCTURING ASSETS

In addition to the cost and personnel cuts, Unocal plans to generate at least $700 million in after tax proceeds the next 2 years by selling or restructuring nonstrategic assets. About $350 million is expected to come from the sale or joint venture of exploration and production operations.

Since 1988, Unocal has realized more than $1.5 billion from the sale of nonstrategic assets. So far in 1992, the company has sold its emulsion polymers business for $175 million and its chemicals distribution business for $88 million, excluding postclosing adjustments.

Unocal expects to complete the sale of its interest in 24 product distribution terminals in the U.S. Southeast to Louis Dreyfus Energy Corp. in June and continues to negotiate for the sale of its U.S. Auto/TruckStop system with WSGP Partners.

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