-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NcdKO5VVeUUu/OCxGQlX0zuOKl2pqkTAv6NHMl3DGzLA4hszMl7g3uwAdnx1dH9r 8sLZHeGUjqWtFIL7q5lpvw== 0000093397-96-000008.txt : 19960813 0000093397-96-000008.hdr.sgml : 19960813 ACCESSION NUMBER: 0000093397-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMOCO CORP CENTRAL INDEX KEY: 0000093397 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 361812780 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00170 FILM NUMBER: 96608157 BUSINESS ADDRESS: STREET 1: 200 E RANDOLPH DR STREET 2: MAIL CODE 3107A CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3128566111 FORMER COMPANY: FORMER CONFORMED NAME: STANDARD OIL CO /IN/ DATE OF NAME CHANGE: 19850425 10-Q 1 AMOCO CORPORATION 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-170-2 AMOCO CORPORATION (Exact name of registrant as specified in its charter) INDIANA 36-1812780 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 200 EAST RANDOLPH DRIVE, CHICAGO, ILLINOIS 60601 (Address of principal executive offices) (Zip Code) 312-856-6111 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address, and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of shares outstanding as of June 30, 1996--497,137,345 PART I-- FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statement of Income (millions of dollars) Three Months Six Months Ended Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Sales and other operating revenues................. $ 7,831 $ 6,814 $15,108 $13,434 Consumer excise taxes...... 844 835 1,663 1,643 Other income............... 90 64 208 200 Total revenues........... 8,765 7,713 16,979 15,277 Costs and Expenses: Purchased crude oil, natural gas, petroleum products and merchandise. 4,399 3,589 8,274 7,087 Operating expenses......... 1,207 1,103 2,290 2,224 Petroleum exploration expenses, including exploratory dry holes.... 131 116 251 231 Selling and administrative expenses................. 588 542 1,123 1,013 Taxes other than income taxes.................... 1,040 1,009 2,067 2,011 Depreciation, depletion, amortization, and retire- ments and abandonments... 553 524 1,091 1,058 Interest expense........... 45 89 105 175 Total costs and expenses. 7,963 6,972 15,201 13,799 Income before income taxes... 802 741 1,778 1,478 Income taxes................. 202 208 450 422 Net income................... $ 600 $ 533 $ 1,328 $ 1,056 Weighted average number of shares of common stock outstanding (in thousands). 497,071 494,795 496,874 495,587 Per Share Data (Based on weighted average shares outstanding): Net income................... $ 1.20 $ 1.08 $ 2.67 $ 2.13 Cash dividends per share..... $ .65 $ .60 $ 1.30 $ 1.20 Consolidated Statement of Financial Position (millions of dollars) June 30, Dec. 31, ASSETS 1996 1995 Current Assets: Cash........................................ $ 211 $ 182 Marketable securities -- at cost (all corporate except $71 at June 30, 1996, and $184 at December 31, 1995, which represent state and municipal securities). 621 1,212 Accounts and notes receivable (less allowances of $17 at June 30, 1996, and $16 at December 31, 1995)............. 3,186 3,332 Inventories Crude oil and products.................... 875 750 Materials and supplies.................... 367 291 Prepaid expenses and income taxes........... 806 723 Total current assets...................... 6,066 6,490 Investments and Other Assets: Investments and related advances............ 748 654 Long-term receivables and other assets...... 872 655 1,620 1,309 Properties--at cost, less accumulated depre- ciation, depletion and amortization of $27,100 at June 30, 1996, and $26,531 at December 31, 1995 (the successful efforts method of accounting is followed for costs incurred in oil and gas producing activities)................................. 22,771 22,046 Total assets.............................. $30,457 $29,845 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations.... $ 84 $ 341 Short-term obligations...................... 1,141 735 Accounts payable............................ 2,560 2,822 Accrued liabilities......................... 1,000 989 Taxes payable (including income taxes)...... 817 887 Total current liabilities................. 5,602 5,774 Long-Term Debt................................ 3,987 3,962 Deferred Credits and Other Non-Current Liabilities: Income taxes................................ 2,828 2,745 Other....................................... 2,378 2,401 5,206 5,146 Minority Interest............................. 113 115 Shareholders' Equity: Common stock (authorized 800,000,000 shares; issued and outstanding at June 30, 1996 --497,137,345; December 31, 1995 --496,402,697 shares)..................... 2,624 2,590 Earnings retained and invested in the business.................................. 12,988 12,295 Pension liability adjustment................ (49) (49) Foreign currency translation adjustment..... (14) 12 15,549 14,848 Total liabilities and shareholders' equity $30,457 $29,845 Consolidated Statement of Cash Flows (millions of dollars) Six Months Ended June 30, 1996 1995 Cash Flows from Operating Activities: Net income.................................. $ 1,328 $ 1,056 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments........ 1,091 1,058 Decrease in receivables................... 48 71 Increase in inventories................... (138) (99) Decrease in payables and accrued liabilities............................. (292) (493) Deferred taxes and other items............ (267) (81) Net cash provided by operating activities. 1,770 1,512 Cash Flows From Investing Activities: Capital expenditures........................ (1,707) (1,293) Proceeds from dispositions of property and other assets.......................... 286 166 Net investments, advances and business acquisitions.............................. (600) (148) Proceeds from sales of investments.......... 100 - Other....................................... 19 11 Net cash used in investing activities..... (1,902) (1,264) Cash Flows from Financing Activities: New long-term obligations................... 82 86 Repayment of long-term obligations.......... (317) (113) Cash dividends paid......................... (635) (596) Issuances of common stock................... 34 27 Acquisitions of common stock................ - (465) Increase in short-term obligations.......... 406 24 Net cash used in financing activities..... (430) (1,037) Decrease in Cash and Marketable Securities.... (562) (789) Cash and Marketable Securities- Beginning of Period......................... 1,394 1,789 Cash and Marketable Securities-End of Period.. $ 832 $ 1,000 Basis of Financial Statement Preparation The consolidated financial statements contained herein are unaudited and have been prepared from the books and records of Amoco Corporation ("Amoco" or the "Corporation"). In the opinion of management, the consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of results of operations, financial position and cash flows in conformity with generally accepted accounting principles. Item 2. Management's Discussion and Analysis Results of Operations Six Months 1996 vs. Six Months 1995 Net income for the first six months of 1996 amounted to $1,328 million, or $2.67 per share. Net income for the first six months of 1995 amounted to $1,056 million, or $2.13 per share. The increase in earnings for the first six months of 1996 primarily reflected higher energy prices, partially offset by lower chemical and petroleum products margins. Included in first-half 1996 results were gains of $56 million after tax on certain Canadian asset dispositions. Sales and other operating revenues totaled $15.1 billion for the first six months of 1996, 12 percent higher than the $13.4 billion reported in the corresponding 1995 period. Refined products, crude oil and natural gas revenues increased 15, 17 and 31 percent, respectively, primarily on the strength of higher prices. Chemical product revenues increased two percent resulting from increased sales volumes. Purchases of crude oil, natural gas, petroleum products and merchandise totaled $8.3 billion for the first six months of 1996, 17 percent higher than 1995's first six months. The increase was primarily attributable to higher crude oil volumes and prices and increases in natural gas prices. Petroleum exploration expenses of $251 million in the first six months of 1996 increased nine percent compared with the prior- year period, primarily reflecting higher geological and geophysical expenses overseas. Selling and administrative expenses for the first six months of $1.1 billion compared with $1.0 billion for the comparable 1995 period. Included in selling and administrative expenses were ongoing reorganization costs of $68 million before tax, $8 million higher than 1995, mainly related to system redesign, relocation and new process development. Also reflected in first six-month 1996 results were unfavorable before-tax currency effects of $18 million, compared with favorable currency effects of $14 million for the corresponding 1995 period. Interest expense of $105 million for the first six months of 1996, compared with $175 million for the corresponding 1995 period, decreased primarily as a result of lower interest relating to revised estimates of tax obligations. Second Quarter 1996 vs. Second Quarter 1995 Second-quarter 1996 net income totaled $600 million, or $1.20 per share, an increase of 13 percent over the $533 million, or $1.08 per share, reported in the second quarter of 1995. The improvement resulted from higher energy prices and an increase in production in the exploration and production ("E&P") segment, which more than offset lower petroleum products earnings, and a decline from very strong chemical margins of a year ago. Sales and other operating revenues totaled $7.8 billion for the second quarter of 1996, 15 percent higher than the $6.8 billion reported in the second quarter of 1995. The increase resulted from higher prices for refined products, crude oil and natural gas, and higher chemical product sales volumes. Purchases of crude oil, natural gas, petroleum products and merchandise totaled $4.4 billion for the second quarter of 1996, 23 percent higher than the prior-year quarter. The increase reflected higher prices and volumes for crude oil and higher prices for natural gas. Selling and administrative expenses for the second quarter of 1996 totaled $588 million, nine percent above the $542 million for the second quarter of 1995, reflecting ongoing reorganization costs of $40 million before tax, compared with $34 million in 1995. Also included in the second quarter of 1996 results were unfavorable before-tax currency effects of $19 million, $14 million above the second quarter of 1995. Interest expense of $45 million for the second quarter of 1996 decreased by $44 million from the second quarter of 1995, reflecting lower interest on tax obligations. For the 12 months ended June 30, 1996, return on average shareholders' equity was 14.2 percent compared with 14.3 percent for the 12 months ended June 30, 1995. Return on average capital employed was 11.1 percent for the 12-month period ended June 30, 1996, compared with 11.5 percent for the corresponding prior-year period. Results by Industry Segment Six Months Second Quarter (millions of dollars) 1996 1995 1996 1995 Exploration and Production United States.......... $ 515 $ 364 $ 234 $ 189 Canada................. 189 79 55 33 Overseas............... 206 148 85 61 Subtotal............... 910 591 374 283 Petroleum Products....... 108 123 90 104 Chemicals................ 413 479 173 246 Corporate and Other Operations*...... (103) (137) (37) (100) Net Income............... $1,328 $1,056 $ 600 $ 533 * Corporate and other operations include net interest and general corporate expenses as well as the results of investments in technology companies, real estate interests and other activities. Six Months 1996 vs. Six Months 1995 Exploration and Production - U. S. U.S. E&P operations earned $515 million in the first six months of 1996 compared with $364 million for the similar 1995 period. The increase resulted from higher energy prices and an increase in natural gas production. Amoco's natural gas prices for the first six months of 1996 averaged approximately $1.70 per thousand cubic feet ("mcf"), $.30 per mcf above the first six months of 1995. Amoco's average crude oil prices were up about $2.15 per barrel and averaged approximately $18.50 per barrel for the first six months of 1996. Natural gas production averaged 2.6 billion cubic feet per day, an increase of six percent compared with the prior-year six months. Crude oil and natural gas liquids ("NGL") production averaged 293,000 barrels per day, the same as the first six months of 1995, as higher NGL production offset declining crude oil production. Exploration and Production - Canada Canadian earnings, which include supply and marketing of NGL, totaled $189 million for the first six months of 1996, compared with $79 million for the first six months of 1995. The increase reflected higher energy prices partially offset by higher exploration expenses and lower crude and NGL production. Also impacting 1996 six-month earnings were after-tax gains of $56 million on asset dispositions, including the sale of Amoco's remaining investment in Crestar Energy Inc. Amoco's Canadian natural gas prices averaged approximately $1.10 per mcf for the first six months of 1996 compared with about $.90 per mcf for the prior-year period. Average crude oil prices for the first six months of 1996 increased almost $1.25 per barrel, averaging approximately $16.75 per barrel for the first six months of 1996. Natural gas production during the first six months of 1996 averaged 830 million cubic feet per day, about two percent higher than the prior-year period. Crude oil and NGL production averaged 61,000 barrels per day during the first six months of 1996, a decrease of nine percent from a year ago, in part reflecting divestments. Exploration and Production - Overseas Overseas E&P earnings were $206 million for the first six months of 1996, an increase of $58 million over 1995's first six-months results. Higher crude oil prices and higher crude oil and natural gas production were the primary factors accounting for the improvement. Crude oil and NGL production averaged 301,000 barrels per day for the first six months of 1996, compared with 295,000 barrels per day for the similar 1995 period, reflecting start-up of the Liuhua field in the South China Sea in late March. Natural gas production averaged 1.0 billion cubic feet per day, an increase of seven percent over the first six months of 1995, primarily reflecting higher European demand. Petroleum Products Petroleum Products activities earned $108 million for the first six months of 1996, compared with $123 million for 1995, reflecting lower refining margins, particularly for aromatics. Partly offsetting were higher marketing margins. During the first six months of 1996, U.S. refined product sales averaged 1,168,000 barrels per day compared with 1,112,000 barrels per day for the prior year period. Refineries ran at 94 percent of rated capacity for the first six months of 1996, compared with 89 percent for the corresponding 1995 period. Chemicals Chemical operations earned $413 million for the first six months of 1996 compared with $479 million for the similar 1995 period. The decrease in earnings primarily reflected lower margins for olefins and purified terephthalic acid ("PTA"), the preferred raw material for polyester. Also affecting earnings for the first six months of 1996 were lower sales volumes for PTA, which were 3 percent below year-earlier levels. Corporate and Other Operations Corporate and other operations include net interest and general corporate expenses as well as the results of investments in technology companies, real estate interests and other activities. Corporate and other operations reported net expenses after tax of $103 million for the first six months of 1996, compared with $137 million for the first six months of 1995. The decrease in net expenses reflected lower corporate expenses, lower interest on tax obligations and gains on asset dispositions, partly offset by unfavorable currency effects. Second Quarter 1996 vs. Second Quarter 1995 Exploration and Production - U.S. U.S. E&P earnings were $234 million in the second quarter of 1996 compared with 1995 second-quarter earnings of $189 million. The 1996 increase of $45 million primarily reflected higher energy prices. Amoco's U.S. natural gas prices for the second quarter of 1996 averaged approximately $1.65 per mcf, $.30 per mcf above the prior year quarter. Amoco's average crude oil prices were up about $2.80 per barrel and averaged approximately $19.50 per barrel for the quarter. Natural gas production increased six percent to 2,559 million cubic feet per day for the second quarter of 1996. Crude oil and NGL production was about the same as the second quarter of 1995. Exploration and Production - Canada Canadian E&P operations, which include supply and marketing of NGL, earned $55 million in the second quarter of 1996 compared with $33 million for the second quarter of 1995. The increase reflected higher energy prices, partially offset by higher exploration expenses, and lower production partly due to divestments. Amoco's Canadian natural gas prices averaged approximately $1.05 per mcf for the second quarter of 1996, $.15 per mcf above the prior year quarter. Average crude oil prices for the second quarter of 1996 increased by over $2.50 per barrel compared with the second quarter of 1995, averaging almost $19.15 per barrel for the quarter. Natural gas production of 815 million cubic feet per day was about three percent lower than the prior year period. Crude oil and NGL production averaged 58,000 barrels per day, compared with 62,000 barrels per day a year ago. Exploration and Production - Overseas Overseas E&P operations earned $85 million in the second quarter of 1996 compared with $61 million for the second quarter of 1995. Higher crude oil prices and start-up of production in the Liuhua field were the primary factors accounting for the improvement. Crude oil and NGL production averaged 310,000 barrels per day for the second quarter 1996, and included production of 26,000 barrels per day from the Liuhua field. Natural gas production increased four percent compared with the second quarter of 1995. Petroleum Products Petroleum Products activities earned $90 million during the second quarter of 1996, compared with $104 million in the second quarter of 1995, reflecting lower refining margins, particularly in aromatics, which more than offset higher marketing margins. During the second quarter of 1996, U.S. refined product sales averaged 1,211,000 barrels per day compared with 1,133,000 barrels per day for the prior year period. Refineries ran at 97 percent of rated capacity for the second quarter, compared with 91 percent in the corresponding 1995 period. Chemicals Chemical operations earned $173 million in the second quarter of 1996, compared with $246 million for the second quarter of 1995. The decrease in earnings for the second quarter of 1996 primarily reflected lower olefins margins compared with high year-earlier levels and lower PTA margins and volumes. PTA customers, following a period of polyester overproduction and in anticipation of new PTA capacity, reduced PTA inventories adversely impacting results. Corporate and Other Operations Corporate and other operations reported net expenses after tax of $37 million for the second quarter of 1996 compared with the 1995 net expenses after tax of $100 million. The decrease reflected lower corporate expenses, lower interest on tax obligations, and gains on the disposition of non-core assets. Outlook The Corporation and the oil industry will continue to be affected by the volatility of crude oil and natural gas prices. Also affecting chemicals and petroleum products activities is the overall industry product supply and demand balance. Amoco's future performance is expected to continue to be impacted by savings associated with changes in its organizational structure; ongoing cost reduction programs; the divestment of marginal properties and underperforming assets; application of new technologies; and new governmental regulations. Amoco's exploration efforts will continue to target those areas that offer the most potential. Amoco will pursue areas to capitalize on its natural gas resources and continue to expand internationally. Amoco's E&P barrel-oil-equivalent production in North America is expected to remain approximately at 1995 levels. Outside North America, production from the Liuhua oil field in the South China Sea, which came onstream in late March, should benefit crude oil production by an average of approximately 30,000 barrels per day for the remainder of 1996. Overseas natural gas production is expected to increase in 1996 compared to 1995. In the petroleum products sector, Amoco anticipates weak U.S. refining margins in its marketing areas in the near term. Amoco's marketing strategy will continue to emphasize brand product quality and improve its position as a convenience retailer. Amoco will continue to pursue additional cost reduction programs and improved asset utilization. In the chemical sector, while the near-term industry outlook is continuing to soften for commodity chemicals, Amoco expects long- term growth to exceed three percent, with a higher increase anticipated in the Asia-Pacific region. PTA average annual growth is expected to be seven percent over the next decade, with the largest demand increase expected to be in the Asia-Pacific region, while worldwide paraxylene ("PX") demand is expected to grow about six percent per year. Amoco's wholly owned 500,000 metric tons-per-year PTA plant in Malaysia went onstream in the second quarter of 1996. Also, Amoco recently added 350,000 metric tons-per-year of PX capacity in Texas City, Texas. Amoco continues to seek attractive opportunities worldwide and is constantly reviewing strategic alternatives. Amoco will also continue to evaluate and divest marginal properties and underperforming assets. Amoco and Shell Oil Company signed a letter of intent to form a limited partnership combining exploration and production assets in the greater Permian Basin area of west Texas and southeast New Mexico. Final agreement is contingent on the successful completion of ongoing discussions regarding design, management and operation of the company. Start up of the partnership is expected in 1996. In late June, a unit of Tenneco Corporation announced that it was seeking to acquire Amoco Foam Products Company ("Amoco Foam") in a transaction valued at approximately $310 million. Amoco Foam is a leading manufacturer and marketer of polystyrene foam products, with nine plants in the United States. In 1995, Amoco Foam product revenues totaled $288 million. Liquidity and Capital Resources Cash flows from operating activities for the first six months of 1996 amounted to $1,770 million compared with $1,512 million in the prior-year period. Working capital was $464 million at June 30, 1996, compared with $716 million at December 31, 1995. The Corporation's current ratio was 1.08 to 1 at June 30, 1996, compared with 1.12 to 1 at year-end 1995. As a matter of policy, Amoco practices asset and liability management techniques that are designed to minimize its investment in non-cash working capital. This does not impair operational flexibility since the Corporation has ready access to both short- and long-term debt markets. Amoco's debt totaled $5.2 billion at June 30, 1996, compared with $5.0 billion as of year-end 1995. Debt as a percentage of debt- plus-equity was 25.0 percent at June 30, 1996, and 25.2 percent at year-end 1995. Amoco Corporation guarantees the public debt obligations of Amoco Company. Amoco Corporation and Amoco Company guarantee the public notes and debentures of Amoco Canada Petroleum Company Ltd. ("Amoco Canada") and Amoco Argentina Oil Company ("Amoco Argentina"). The Corporation believes its strong financial position will permit the financing of business needs and opportunities as they arise. It is anticipated that ongoing operations will be financed primarily by internally generated funds. Short-term obligations, such as commercial paper borrowings, give the Corporation the flexibility to meet short-term working capital and other temporary requirements. At June 30, 1996, bank lines of credit available to support commercial paper borrowings amounted to $500 million, all of which were supported by commitment fees. The Corporation also may utilize its access to long-term debt markets to finance profitable growth opportunities. A $500 million shelf registration statement for Amoco Company remains on file with the Securities and Exchange Commission ("SEC") to permit ready access to capital markets. In 1995, Amoco Argentina filed a shelf registration with the SEC for $200 million in debt securities, of which $100 million in debt securities were subsequently issued. Amoco Corporation and Amoco Company guarantee the securities issued under this registration statement. Amoco Canada has a U.S. $225 million revolving 10-year term facility, guaranteed by Amoco and Amoco Company, to be used for general corporate purposes. Amoco Canada is charged a standby fee for the facility, which has not been used. On March 1, 1996, Albemarle Corporation's ("Albemarle") alpha- olefins, poly alpha olefins and synthetic alcohol businesses were purchased for approximately $500 million. The purchase involved about 550 employees and assets in Texas and Belgium. Capital and exploration expenditures, for the first six months of 1996 totaled $1,958 million, excluding the Albemarle acquisition, compared with $1,524 million for the comparable 1995 period. The increase over the first six months of 1995 reflected planned increases in spending in growth areas. Approximately 71 percent of the total 1996 expenditures has been spent in exploration and production operations. The Corporation has provided in its accounts for the reasonably estimable future costs of probable environmental remediation obligations relating to various oil and gas operations, refineries, marketing sites and chemical locations, including multiparty sites at which Amoco and certain of its subsidiaries have been identified as potentially responsible parties by the U.S. Environmental Protection Agency. Such estimated costs will be refined over time as remedial requirements and regulations become better defined. However, any additional environmental costs cannot be reasonably estimated at this time due to uncertainty of timing, the magnitude of contamination, future technology, regulatory changes and other factors. Although future costs could have a significant effect on the results of operations in any one period, they are not expected to be material in relation to Amoco's liquidity or consolidated financial position. In total, the accrued liability represents a reasonable best estimate of Amoco's remediation liability. PART II--OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the description of the challenge by the Internal Revenue Service ("IRS") of certain foreign income taxes as credits against the Corporation's U.S. taxes that would otherwise have been payable for the years 1980 through 1989 in Part I, Item 3 of Amoco's 1995 Form 10-K and Part II, Item 1 of Amoco's Form 10-Q for the quarter ended March 31, 1996. The Tax Court's decision became final on July 16, 1996 and is subject to appeal by the IRS until October 14, 1996. The Corporation believes that the foreign income taxes have been reflected properly in its U.S. federal tax returns. Consequently, this dispute is not expected to have a material adverse effect on the liquidity, results of operations or the consolidated financial position of the Corporation. Reference is made to the description of AMOCO CHEMICAL COMPANY, et al. vs. CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, et al. in Part I, Item 3 of Amoco's 1995 Form 10-K. On June 4, 1996, a California appellate court reversed the judgment in favor of Amoco and remanded the case for a new trial. Accordingly, it is impossible at this time to predict the ultimate outcome of the case. However, it is not expected to have a material effect on the liquidity or consolidated financial position of Amoco. Fourteen proceedings instituted by governmental authorities are pending or known to be contemplated against Amoco and certain of its subsidiaries under federal, state or local environmental laws, each of which could result in monetary sanctions in excess of $100,000. No individual proceeding is, nor are the proceedings as a group, expected to have a material adverse effect on Amoco's liquidity, consolidated financial position or results of operations. Amoco estimates that in the aggregate the monetary sanctions reasonably likely to be imposed from these proceedings amount to approximately $7.6 million. Amoco has various other suits and claims pending against it among which are several class actions for substantial monetary damages which in Amoco's opinion are not meritorious. While it is impossible to estimate with certainty the ultimate legal and financial liability with respect to these other suits and claims, Amoco believes that, while the aggregate amount could be significant, it will not be material in relation to its liquidity or its consolidated financial position. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Shown below is summarized financial information for Amoco's wholly owned subsidiary, Amoco Company. Three Months Six Months Ended Ended June 30, June 30, 1996 1995 1996 1995 (millions of dollars) Total revenues(including excise taxes)........... $8,026 $7,195 $15,430 $13,934 Operating profit........ $ 803 $ 810 $ 1,702 $ 1,489 Net income.............. $ 510 $ 502 $ 1,108 $ 948 June 30, Dec. 31, 1996 1995 (millions of dollars) Current assets................. $ 5,170 $ 5,303 Total assets................... $27,279 $26,326 Current liabilities............ $ 4,347 $ 4,578 Long-term debt................. $ 6,775 $ 6,785 Deferred credits............... $ 4,509 $ 4,397 Minority interest.............. $ 110 $ 110 Shareholder's equity........... $11,538 $10,456 Shown below is summarized financial information for Amoco's wholly owned subsidiary, Amoco Canada. Three Months Six Months Ended Ended June 30, June 30, 1996 1995 1996 1995 (millions of dollars) Revenues................ $1,008 $ 930 $2,041 $1,801 Net income.............. $ 54 $ (25) $ 147 $ (21) June 30, Dec. 31, 1996 1995 (millions of dollars) Current assets.................. $ 1,190 $ 1,252 Total assets.................... $ 4,350 $ 4,493 Current liabilities............. $ 2,215 $ 2,494 Non-current liabilities......... $ 2,370 $ 2,381 Shareholder's deficit........... $ (235) $ (382) Shown below is summarized financial information for Amoco's indirectly wholly owned subsidiary, Amoco Argentina. Three Months Six Months Ended Ended June 30, June 30, 1996 1995 1996 1995 (millions of dollars) Revenues................ $ 79 $ 61 $154 $122 Net income.............. $ 29 $ 20 $ 56 $ 44 June 30, Dec. 31, 1996 1995 (millions of dollars) Current assets.................. $ 62 $ 73 Total assets.................... $419 $389 Current liabilities............. $ 66 $ 49 Non-current liabilities......... $136 $113 Shareholder's equity............ $217 $227 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number 12 Statement Setting Forth Computation of Ratio of Earnings to Fixed Charges. 27 Financial Data Schedule. (b) No reports on Form 8-K were filed during the quarter ended June 30, 1996. Signature Pursuant to the requirements 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. Amoco Corporation (Registrant) Date: August 12, 1996 Judith G. Boynton Judith G. Boynton Vice President and Controller (Duly Authorized and Chief Accounting Officer) EX-12 2 EXHIBIT 12 EXHIBIT 12 AMOCO CORPORATION ______________________ STATEMENT SETTING FORTH COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (millions of dollars, except ratios) Six Months Ended Year Ended December 31, June 30, 1996 1995 1994 1993 1992 1991 Determination of Income: Consolidated earnings before income taxes and minority interest.. $1,778 $2,404 $2,491 $2,506 $ 998 $2,035 Fixed charges expensed by consolidated companies. 198 406 316 350 376 479 Adjustments for certain companies accounted for by the equity method... 25 25 7 11 28 20 Adjusted earnings plus fixed charges.......... $2,001 $2,835 $2,814 $2,867 $1,402 $2,534 Determination of Fixed Charges: Consolidated interest on indebtedness (including interest capitalized).. $ 155 $ 317 $ 288 $ 299 $ 333 $ 433 Consolidated rental expense representative of an interest factor.. 49 89 23 50 44 54 Adjustments for certain companies accounted for by the equity method... 5 6 5 8 20 24 Total fixed charges...... $ 209 $ 412 $ 316 $ 357 $ 397 $ 511 Ratio of earnings to fixed charges............ 9.6 6.9 8.9 8.0 3.5 5.0 EX-27 3 EXHIBIT 27
5 This schedule contains summary financial information extracted from the Consolidated Statement of Income and the Consolidated Statement of Financial Position and is qualified in its entirety by reference to such financial statements. 0000093397 AMOCO CORPORATION 1000000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 211 621 3203 17 1242 6066 49871 27100 30457 5602 3987 0 0 2624 12925 30457 15108 16979 10815 10815 3158 0 105 1778 450 1328 0 0 0 1328 2.67 0
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