-----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, Dqh7klGKmOtiXCEeIuoSzImU8z+0na+kGGGrTveLBeIGcSsUKfFRMqcAZR8JL0+i BCWtks5p739PP7IJKyeWPw== 0000093397-97-000010.txt : 19971113 0000093397-97-000010.hdr.sgml : 19971113 ACCESSION NUMBER: 0000093397-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: 363353184 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00170 FILM NUMBER: 97715909 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 September 30, 1997 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 September 30, 1997--486,937,192 PART I-- FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statement of Income (millions of dollars) Three Months Nine Months Ended Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Sales and other operating revenues................... $ 7,984 $ 7,910 $23,724 $23,018 Consumer excise taxes........ 894 869 2,577 2,532 Other income................. 105 239 299 447 Total revenues ............ 8,983 9,018 26,600 25,997 Costs and Expenses: Purchased crude oil, natural gas, petroleum products and merchandise... 4,471 4,582 13,144 12,856 Operating expenses........... 1,219 1,165 3,649 3,455 Petroleum exploration expenses, including exploratory dry holes...... 132 165 417 416 Selling and administrative expenses................... 555 488 1,562 1,611 Taxes other than income taxes 1,058 1,088 3,163 3,155 Depreciation, depletion, amortization, and retire- ments and abandonments..... 570 583 1,662 1,674 Interest expense............. 97 59 269 164 Total costs and expenses... 8,102 8,130 23,866 23,331 Income before income taxes..... 881 888 2,734 2,666 Income taxes................... 246 253 803 703 Net income..................... $ 635 $ 635 $ 1,931 $ 1,963 Weighted average number of shares of common stock outstanding (in thousands)... 488,253 497,203 491,906 496,984 Per Share Data (Based on weighted average shares outstanding): Net income..................... $ 1.30 $ 1.28 $ 3.92 $ 3.95 Cash dividends per share....... $ .70 $ .65 $ 2.10 $ 1.95 Consolidated Statement of Financial Position (millions of dollars) Sept. 30, Dec. 31, ASSETS 1997 1996 Current Assets: Cash......................................... $ 186 $ 186 Marketable securities -- at cost (all corporate except $52 at September 30, 1997, and $141 at December 31, 1996 which represent state and municipal securities).. 839 1,135 Accounts and notes receivable (less allowances of $17 at September 30, 1997, and $17 at December 31, 1996).............. 3,777 3,942 Inventories Crude oil and products..................... 992 795 Materials and supplies..................... 274 274 Prepaid expenses, income taxes and other..... 969 731 Total current assets....................... 7,037 7,063 Investments and Other Assets: Investments and related advances............. 900 796 Long-term receivables and other assets....... 1,013 841 1,913 1,637 Properties--at cost, less accumulated depre- ciation, depletion and amortization of $27,931 at September 30, 1997, and $27,111 at December 31, 1996 (The successful efforts method of accounting is followed for costs incurred in oil and gas producing activities) 23,914 23,400 Total assets............................... $ 32,864 $ 32,100 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations..... $ 170 $ 151 Short-term obligations....................... 1,079 821 Accounts payable............................. 2,662 3,196 Accrued liabilities.......................... 923 908 Taxes payable (including income taxes)....... 1,067 1,063 Total current liabilities.................. 5,901 6,139 Long-term Obligations: Debt......................................... 4,843 4,153 Capitalized leases........................... 89 76 4,932 4,229 Deferred Credits and Other Non-Current Liabilities: Income taxes................................. 3,061 2,850 Other........................................ 2,290 2,345 5,351 5,195 Minority Interest.............................. 432 129 Shareholders' Equity: Common stock (authorized 800,000,000 shares; issued and outstanding at September 30, 1997--486,937,192; December 31, 1996 --497,275,364 shares)...................... 2,584 2,646 Earnings retained and invested in the business................................... 13,805 13,806 Pension liability adjustment................. (25) (25) Foreign currency translation adjustment...... (116) (19) 16,248 16,408 Total liabilities and shareholders' equity. $ 32,864 $ 32,100 Consolidated Statement of Cash Flows (millions of dollars) Nine Months Ended September 30, 1997 1996 Cash Flows from Operating Activities: Net income.................................. $ 1,931 $ 1,963 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments........ 1,662 1,674 Decrease (increase) in receivables........ 172 (140) Increase in inventories................... (200) (111) Decrease in payables and accrued liabilities............................. (583) (181) Deferred taxes and other items............ 116 (371) Net cash provided by operating activities. 3,098 2,834 Cash Flows from Investing Activities: Capital expenditures........................ (2,335) (2,663) Proceeds from dispositions of property and other assets.......................... 450 705 Net investments, advances and business acquisitions.............................. (507) (642) Proceeds from sales of investments.......... 20 110 Other....................................... 54 15 Net cash used in investing activities..... (2,318) (2,475) Cash Flows from Financing Activities: New long-term obligations................... 775 346 Repayment of long-term obligations.......... (116) (385) Cash dividends paid......................... (1,038) (958) Issuance of common stock.................... 101 40 Acquisitions of common stock................ (1,056) - Increase in short-term obligations.......... 258 165 Net cash used in financing activities..... (1,076) (792) Decrease in Cash and Marketable Securities.... (296) (433) Cash and Marketable Securities- Beginning of Period......................... 1,321 1,394 Cash and Marketable Securities-End of Period.. $ 1,025 $ 961 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 Net income for the third quarter of 1997 of $635 million was equal to third-quarter 1996 earnings. Earnings per share of $1.30 were two percent over the comparable 1996 period. Included in 1996 earnings was a $97 million after-tax gain on the sale of Amoco's polystyrene foam products business. Excluding the gain, 1997 third-quarter earnings were up 18 percent. The increase in earnings reflected stronger refining margins, and an increase in chemical sales volumes for most product lines. Partially offsetting were lower worldwide crude oil prices and lower North American production volumes. A gain on the sale of Amoco's Canadian arctic drilling unit during the quarter largely offset higher corporate and other operations expenses related to revised estimates of litigation and tax obligations. Net income for the first nine months of 1997 totaled $1,931 million or $3.92 per share. Net income for the first nine months of 1996 amounted to $1,810 million, excluding the third-quarter 1996 asset-sale gain of $97 million, and first-quarter 1996 gains of $56 million on certain Canadian asset dispositions. Favorably affecting 1997 earnings were higher exploration and production ("E&P") results, primarily due to higher natural gas prices, and improved refining operations. Offsetting were lower chemical earnings compared to 1996, mainly as a result of lower paraxylene margins. Sales and other operating revenues for the third quarter of 1997 totaled $8 billion, about even with the corresponding 1996 period. For the first nine months of 1997 revenues were $23.7 billion, up slightly over the 1996 revenues of $23 billion, reflecting higher prices for natural gas and refined products and higher sales volumes for most chemical product lines. Other income in the 1997 third quarter was $134 million lower than the comparable 1996 period. In the 1996 third quarter, other income reflected the gain on the sale of Amoco's polystyrene foam products business. Purchases of crude oil, natural gas, petroleum products and merchandise totaled $4.5 billion for the third quarter of 1997, two percent lower than the 1996 third quarter. The decrease was primarily attributable to lower crude oil purchase prices. Year- to-date purchases in 1997 were two percent higher than the 1996 nine-month period, primarily due to higher refined products volumes and higher natural gas prices, offset by lower crude oil purchase prices and volumes. Third-quarter 1997 operating expenses were up slightly over the third quarter of 1996. Operating expenses for the first nine months were six percent above the prior-year period, reflecting higher refining maintenance expenses, primarily in the first quarter, and higher U.S. production costs. Third-quarter 1997 exploration expenses of $132 million decreased by $33 million over the similar 1996 period, reflecting lower dry hole costs worldwide. For the first nine months of 1997, exploration expenses of $417 million were flat compared with 1996, with lower exploration expenses in the United States and Canada offset by higher exploration expenses overseas. Selling and administrative expenses totaled $555 million for the 1997 third quarter compared with $488 million for the comparable 1996 period. Reflected in the third quarter 1997 results were unfavorable before-tax currency effects of $29 million compared with favorable before-tax currency effects of $3 million in the third quarter of 1996. Selling and administrative expenses for the first nine-months of 1997 were slightly lower than the first nine months of 1996. Interest expense increased $38 million and $105 million over the third quarter and first nine months of 1996, respectively, reflecting an increase in long-term debt and associated interest expense on revised estimates of litigation and tax obligations. Included in 1996 was a reduction of interest expense on tax obligations. For the 12 months ended September 30, 1997, return on average shareholders' equity was 17.5 percent compared with 14.0 percent for the 12 months ended September 30, 1996. Return on average capital employed was 13.3 percent for the 12-month period ended September 30, 1997, compared with 10.9 percent for the corresponding prior-year period. Results by Industry Segment As previously announced, Amoco changed the basis upon which operations are grouped for the purpose of business segment reporting to maintain alignment with changes made in its internal structure. Canadian supply and marketing operations for crude oil, sulfur and natural gas liquids are now included in the petroleum products segment. Previously, those businesses were reported in the E&P segment. Segment earnings for 1996 have been restated to conform to the new basis. Three Months Nine Months Ended Ended September 30, September 30, (millions of dollars) 1997 1996 1997 1996 Exploration and Production United States.............. $ 217 $ 224 $ 791 $ 739 Canada..................... 61 8 164 124 Overseas................... 67 104 261 310 Subtotal................... 345 336 1,216 1,173 Petroleum Products........... 241 119 454 300 Chemicals.................... 172 217 504 630 Corporate and Other Operations*............... (123) (37) (243) (140) Net Income................. $ 635 $ 635 $1,931 $1,963 * 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. Exploration and Production Operating Statistics Three Months Nine Months Ended Ended September 30, September 30, 1997 1996 1997 1996 Net Production of Natural Gas(million cubic feet per day) United States............ 2,356 2,579 2,385 2,574 Canada................... 775 802 757 821 Overseas................. 910 840 974 949 Total.................. 4,041 4,221 4,116 4,344 Net Production of Crude Oil and NGL(thousand barrels per day) United States--crude oil. 161 180 165 181 --NGL....... 105 117 112 113 Canada--crude oil........ 50 50 51 50 --NGL.............. 10 11 10 12 Overseas................. 292 307 299 300 Total.................. 618 665 637 656 Exploration and Production - U. S. U.S. E&P operations earned $217 million during the third quarter of 1997 compared with $224 million for the similar 1996 period. The decline primarily reflected lower crude oil prices and lower crude oil and natural gas production. Partly offsetting were lower exploration expenses and higher natural gas prices. Earnings of $791 million for first nine months of 1997 increased seven percent over the comparable 1996 period, primarily reflecting higher natural gas prices and lower exploration expenses, offset by lower production due to normal field declines and dispositions. Amoco's third-quarter U.S. natural gas prices averaged approximately $1.80 per thousand cubic feet ("mcf"), an increase of six percent over the comparable period of 1996. Amoco's average U.S. crude oil prices of about $17.50 per barrel declined over $3.00 per barrel from the third quarter of 1996. For the first nine months of 1997, Amoco's U.S. natural gas prices averaged about $2.00 per mcf, about a 30 cent per mcf increase over the prior-year period. Amoco's U.S. crude oil prices averaged over $18.60 per barrel during the first nine months of 1997, a decrease of about 60 cents per barrel from the comparable 1996 period. Exploration and Production - Canada Canadian operations earned $61 million in the third quarter of 1997 compared with restated 1996 third-quarter earnings of $8 million. The 1996 earnings were restated to reflect the transfer of Canadian supply and marketing operations for crude oil, sulfur and natural gas liquids to the petroleum products segment. The increase in 1997 earnings primarily reflected a gain on the sale of Amoco's Canmar arctic drilling unit and higher natural gas prices, partially offset by lower crude oil prices and lower natural gas production. Earnings for the first nine months of 1997 totaled $164 million compared with nine-month restated 1996 earnings of $68 million, excluding gains of $56 million on the sale of assets. Excluding that gain, the earnings improvement resulted primarily from higher natural gas prices, lower exploration expenses and a gain on the sale of the arctic drilling unit. Partially offsetting was lower natural gas production due to property dispositions and natural field declines. Amoco's Canadian natural gas prices averaged $1.20 per mcf for the quarter, about 25 cents per mcf higher than the third quarter of 1996. For the first nine months, Canadian natural gas prices increased 34 percent over the comparable 1996 period to average about $1.40 per mcf. Canadian crude oil prices averaged $14.00 per barrel for the third quarter of 1997, about $4.20 per barrel below the prior- year third quarter average, reflecting lower industry prices and increased lower-priced heavy oil production. For the first nine months of 1997, Canadian crude oil prices averaged about $14.90 per barrel, a $2.30 per barrel decrease from the 1996 level. Exploration and Production - Overseas Overseas E&P operations earned $67 million in the third quarter of 1997 compared with $104 million in the third quarter of 1996. The decline was primarily due to lower crude oil prices. For the first nine months of 1997, overseas E&P operations earned $261 million, a decline of $49 million from the comparable prior-year period. The decrease mainly reflected higher exploration expenses, which more than offset favorable currency effects. Third-quarter 1997 natural gas production increased due to new production in Bolivia and higher European production. Crude oil production for the third quarter of 1997 declined as lower production in China and Egypt more than offset new production in Bolivia and Venezuela. Petroleum Products Operating Statistics Three Months Nine Months Ended Ended September 30, September 30, 1997 1996 1997 1996 U.S. Refined Product Sales (thousand barrels per day) Gasoline................. 686 659 652 633 Distillates.............. 352 343 338 358 Other products........... 238 230 199 198 Total.................. 1,276 1,232 1,189 1,189 Input to U.S. Crude Units (thousand barrels per day) 988 959 943 950 Refinery Utilization Rate 98% 95% 93% 94% Petroleum Products activities earned $241 million for the third quarter compared with restated earnings of $119 million in the third quarter of 1996. The 1996 earnings were restated to reflect the transfer of Canadian supply and marketing operations for crude oil, sulfur and natural gas liquids to the petroleum products segment. The increase in third-quarter 1997 earnings primarily resulted from improved refinery operations and higher U.S. refined product margins and volumes. Earnings for the first nine months of 1997 totaled $454 million, an increase of $154 million over the comparable period of 1996. The increase reflected higher U.S. refined product margins and favorable product mix. Offsetting was lower throughput primarily experienced in the first quarter of 1997, reflecting planned turnaround at Amoco's largest refineries. Chemicals Chemical earnings of $172 million for the third quarter of 1997 compared with $120 million for the similar 1996 period, excluding a $97 million after-tax gain on the 1996 sale of Amoco's polystyrene foam products business. The increase in earnings primarily reflected increased productive capacity, and higher sales volumes and margins for most product lines. For the first nine months of 1997, earnings totaled $504 million compared with $533 million for the same period in 1996, excluding the asset-sale gain. The decline in earnings resulted from lower paraxylene and purified terephthalic acid ("PTA") margins, partly offset by increased sales volumes and higher olefins margins. 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 incurred net expenses of $123 million and $243 million for the third quarter and first nine months of 1997, respectively, compared with net expenses after tax of $37 million and $140 million in the corresponding 1996 periods. The increase in corporate and other operations expenses primarily reflected increases in interest expense for long-term debt, revised estimates of litigation and tax obligations, including associated interest expense, and adverse currency effects. Outlook The Corporation and the petroleum 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 ongoing cost reduction programs; the divestment of non-strategic assets; application of new technologies; and new governmental regulations. Amoco will pursue areas that capitalize on its natural gas resources and continue to expand internationally. As announced in June, Amoco plans to divest a number of its oil and gas properties and royalty interests in the United States as part of a major refocusing of its U.S. exploration and production business. During the third quarter of 1997, Amoco had a sale pending for the San Juan Basin properties in New Mexico. There are three remaining packages of non-core U.S. crude oil and natural gas properties expected to be sold by year-end 1997 or early 1998. Amoco has also agreed to sell its intrastate pipeline unit in Texas. The proceeds from the divestments will be invested in more strategic areas. Amoco's worldwide barrel-oil-equivalent production is expected to increase from 1996 levels by 25 percent over the next five years, with the largest increases expected to occur in the later years. Production in 1997 is expected to decrease from year-end 1996, with incremental production from the Gulf of Mexico, and production from Venezuela, Colombia and Bolivia, being offset by normal field declines and dispositions. Amoco Argentina Oil Company ("Amoco Argentina") and Bridas Corporation ("Bridas") are in the process of creating a jointly owned company called Pan American Energy LLC. The new diversified enterprise will be formed, pending definitive agreements, by contributing the respective assets of Amoco and Bridas in the Southern Cone of South America and will create the second largest producer of crude oil and natural gas in Argentina. Amoco will hold a 60 percent interest in the new venture. Amoco also recently formed a limited partnership with YPF S.A., called Crescendo Resources L.P., to manage about one trillion cubic feet of natural gas in the Texas Panhandle and western Oklahoma. The combined resources are expected to operate more efficiently and allow the opportunity of sharing best practices and technology of both partners. Recently, Amoco announced a definitive agreement with Shell Oil Company to build a natural gas processing plant in Mississippi to handle anticipated production increases in the Gulf of Mexico. In petroleum products, recent refinery operations have seen improved margins over the last nine months. However, Amoco anticipates a return to more historical levels in U.S. industry refining margins in the long-term. Amoco will continue to pursue additional cost reduction programs and improved asset utilization. Amoco's marketing strategy will continue to emphasize brand product quality and growth in its position as a convenience retailer. Strategic alliances with such companies as McDonald's Corporation and Femsa in Mexico are expected to continue. In chemicals, Amoco's overall strategy is to manage its portfolio to optimize the quality of its businesses through acquisitions and divestments, and selectively invest in local market growth for existing businesses. While current industry excess PTA capacity is putting downside pressure on margins, long-term worldwide annual growth is expected to be eight percent. Paraxylene ("PX") long-term annual growth is expected to be seven percent. In order to meet expected growth in PTA and PX, Amoco is expanding its wholly owned and joint-ventures operations. Amoco's naphthalene dicarboxylate ("NDC") plant in Decatur, Alabama achieved full-scale production capacity of 27,000 tons in the third quarter of 1997. Amoco is planning on expanding the capacity to between 40,000 and 50,000 tons by 1999. Liquidity and Capital Resources Cash flows from operating activities for the first nine months of 1997 amounted to $3.1 billion compared with $2.8 billion in the prior-year period. Working capital of $1,136 million at September 30, 1997 compared with $924 million at December 31, 1996. The Corporation's current ratio was 1.19 to 1 at September 30, 1997, compared with 1.15 to 1 at year-end 1996. 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. Long-term receivables and other assets at September 30, 1997 included $271 million in restricted cash and investments committed to the operatorship of a Bolivian oil and gas company, Empresa Petrolera Chaco. Amoco completed the agreement for operatorship and 50 percent ownership of Empresa Petrolera Chaco in April 1997. Amoco's debt totaled $6.1 billion at September 30, 1997, an increase of $1 billion over the $5.1 billion at year-end 1996. Debt as a percentage of debt-plus-equity was 26.7 percent at September 30, 1997, and 23.6 percent at year-end 1996. 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. In the first nine months of 1997, Amoco completed $1 billion of the previously announced $2 billion, two-year common stock repurchase program. This represented 11.1 million common shares. It is anticipated that share repurchases made in the fourth quarter of 1997 will be largely for benefit plan purposes. In 1998, Amoco plans to complete the share repurchase program. 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 September 30, 1997, 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 favorable access to long- term debt markets to finance profitable growth opportunities and other business needs. In early August 1997, Amoco Company issued $300 million of 10-year, 6.5% guaranteed notes. In October 1997, Amoco Company issued $200 million of seven-year, 6.25% guaranteed notes. Amoco has a shelf registration statement covering an additional $500 million of Amoco Company guaranteed debt. Capital and exploration expenditures for the first nine months of 1997 totaled $2,752 million. Capital and exploration expenditures for the first nine months of 1996 amounted to $3,079 million, excluding $535 million for the purchase of Albemarle Corporation's alpha-olefins, poly alpha-olefins and synthetic alcohol businesses. Proceeds from dispositions of property and other assets for the first nine months of 1996 included $310 million received from the sale of Amoco's polystyrene foam products business to Tenneco Inc. 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. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Statements in this report that are not historical facts, including statements under the heading of "Outlook" and other statements about industry and company growth, estimates of expenditures and savings, and other trend projections are forward looking statements. The statements are based on current expectations and involve risk and uncertainties. Actual future results or trends may differ materially depending on a variety of factors. These include specific factors identified in the discussion accompanying such forward looking statements, industry product supply and pricing, political stability and economic growth in relevant areas of the world, Amoco's successful execution of its internal performance plans, successful partnering, actions of competitors, natural disasters and other changes to business conditions. PART II--OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the description of the challenge by the Internal Revenue Service of certain foreign income taxes as credits against the Corporation's U.S. taxes that otherwise would have been payable for the years 1980 through 1992 in Part I, Item 3 of Amoco's 1996 Form 10-K. Eleven 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 $7.3 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 in 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 Nine Months Ended Ended September 30, September 30, 1997 1996 1997 1996 (millions of dollars) Total revenues(including excise taxes)............. $8,299 $8,272 $24,199 $23,702 Net income................ $ 468 $ 566 $ 1,570 $ 1,674 Sept. 30, Dec. 31, 1997 1996 (millions of dollars) Current assets...................... $ 7,992 $ 6,361 Total assets........................ $31,743 $29,208 Current liabilities................. $ 4,853 $ 4,926 Long-term debt-affiliates........... $ 4,733 $ 4,731 -other................ $ 2,936 $ 2,190 Deferred credits and other non-current liabilities........... $ 4,727 $ 4,524 Minority interest................... $ 421 $ 131 Shareholder's equity................ $13,984 $12,630 Shown below is summarized financial information for Amoco's wholly owned subsidiary, Amoco Canada. Three Months Nine Months Ended Ended September 30, September 30, 1997 1996 1997 1996 (millions of dollars) Revenues.................. $1,101 $1,094 $3,508 $3,135 Net income(loss).......... $ 91 $ (18) $ 228 $ 129 Sept. 30, Dec. 31, 1997 1996 (millions of dollars) Current assets................... $ 1,518 $ 1,615 Total assets..................... $ 4,199 $ 4,412 Current liabilities.............. $ 841 $ 1,110 Non-current liabilities.......... $ 3,205 $ 3,377 Shareholder's equity(deficit).... $ 153 $ (75) Shown below is summarized financial information for Amoco's indirectly wholly owned subsidiary, Amoco Argentina. Three Months Nine Months Ended Ended September 30, September 30, 1997 1996 1997 1996 (millions of dollars) Revenues.................. $ 74 $ 90 $227 $244 Net income................ $ 22 $ 34 $ 78 $ 90 Sept. 30, Dec. 31, 1997 1996 (millions of dollars) Current assets .................. $ 50 $251 Total assets..................... $463 $613 Current liabilities.............. $ 88 $ 87 Non-current liabilities.......... $280 $237 Shareholder's equity ............ $ 95 $289 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 September 30, 1997. 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: November 13, 1997 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) Nine Months Ended Year Ended December 31, Sept. 30, 1997 1996 1995 1994 1993 1992 Determination of Income: Consolidated earnings before income taxes and minority interest $2,737 $3,965 $2,404 $2,491 $2,506 $ 998 Fixed charges expensed by consolidated companies............ 328 412 406 316 350 376 Adjustments for certain companies accounted for by the equity method............... 51 69 25 7 11 28 Adjusted earnings plus fixed charges........ $3,116 $4,446 $2,835 $2,814 $2,867 $1,402 Determination of Fixed Charges: Consolidated interest on indebtedness (including interest capitalized)......... $ 261 $ 317 $ 317 $ 288 $ 299 $ 333 Consolidated rental expense representa- tive of an interest factor............... 79 107 89 23 50 44 Adjustments for certain companies accounted for by the equity method............... 6 8 6 5 8 20 Total fixed charges.... $ 346 $ 432 $ 412 $ 316 $ 357 $ 397 Ratio of earnings to fixed charges.......... 9.0 10.3 6.9 8.9 8.0 3.5 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 1,000,000 9-MOS DEC-31-1997 SEP-30-1997 186 839 3794 17 1266 7037 51845 27931 32864 5901 4843 0 0 2584 13664 32864 23724 26600 17210 17210 4825 0 269 2734 803 1931 0 0 0 1931 3.92 0
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