-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Cpsnay6PvLFLLytwI+jHS6KslRa1IpJZg/0TaaPgj6LVwRODXXBrb+uodwXPNu2T 0l2IjfGVtLAL6trTmwhAeA== 0000093397-94-000016.txt : 19941116 0000093397-94-000016.hdr.sgml : 19941116 ACCESSION NUMBER: 0000093397-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMOCO CORP CENTRAL INDEX KEY: 0000093397 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94559055 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 CORP 10Q LIVE FILING 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, 1994 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, 1994--496,889,658. 1. 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, 1994 1993 1994 1993 Revenues: Sales and other operating revenues $ 6,764 $ 6,205 $19,221 $18,924 Consumer excise taxes............. 883 698 2,553 2,028 Other income...................... 133 169 806 288 Total revenues................ 7,780 7,072 22,580 21,240 Costs and Expenses: Purchased crude oil, petroleum products and merchandise........ 3,593 3,139 9,972 9,716 Operating expenses................ 1,118 1,075 3,508 3,491 Petroleum exploration expenses, including exploratory dry holes. 151 164 428 360 Selling and administrative expenses 550 454 1,711 1,411 Taxes other than income taxes..... 1,061 891 3,129 2,647 Depreciation, depletion, amorti- zation, and retirements and abandonments.................... 572 561 1,686 1,622 Interest expense.................. 64 80 199 253 Total costs and expenses...... 7,109 6,364 20,633 19,500 Income before income taxes.......... 671 708 1,947 1,740 Income taxes........................ 226 188 694 504 Net income.......................... $ 445 $ 520 $ 1,253 $ 1,236 Weighted average number of shares of common stock outstanding (in thousands)........................ 496,847 496,898 496,648 496,754 Per Share Data (Based on weighted average shares outstanding): Net income.......................... $ .89 $ 1.05 $ 2.52 $ 2.49 Cash dividends per share............ $ .55 $ .55 $ 1.65 $ 1.65 2. Consolidated Statement of Financial Position (millions of dollars) Sept. 30, Dec. 31, 1994 1993 ASSETS Current Assets: Cash............................................. $ 113 $ 103 Marketable securities--at cost, which approximates fair value.................. 1,530 1,114 Accounts and notes receivable (less allowances of $27 at September 30, 1994, and $65 at December 31, 1993)............................. 2,946 3,196 Inventories Crude oil and products......................... 740 813 Materials and supplies......................... 296 297 Prepaid expenses and income taxes................ 677 571 Total current assets........................... 6,302 6,094 Investments and Other Assets: Investments and related advances................. 369 318 Long-term receivables and other assets........... 753 705 1,122 1,023 Properties--at cost, less accumulated depreciation, depletion and amortization of $24,399 at September 30, 1994, and $23,204 at December 31, 1993 (The successful efforts method of accounting is followed for costs incurred in oil and gas producing activities).... 21,387 21,369 Total assets................................... $28,811 $28,486 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations......... $ 46 $ 53 Short-term obligations........................... 116 1,007 Accounts payable................................. 2,450 2,473 Accrued liabilities.............................. 1,090 974 Taxes payable (including income taxes)........... 954 836 Total current liabilities...................... 4,656 5,343 Long-Term Debt..................................... 4,446 4,037 Deferred Credits and Other Non-Current Liabilities: Income taxes..................................... 3,115 2,995 Other............................................ 2,430 2,425 5,545 5,420 Minority Interest.................................. 14 21 Shareholders' Equity: Common stock (authorized 800,000,000 shares; issued and outstanding at September 30, 1994 --496,889,658 shares; December 31, 1993 --496,401,099 shares).......................... 2,168 2,147 Earnings retained and invested in the business... 11,991 11,557 Foreign currency translation adjustment.......... (9) (39) 14,150 13,665 Total liabilities and shareholders' equity..... $28,811 $28,486 3. Consolidated Statement of Cash Flows (millions of dollars) Nine Months Ended September 30, 1994 1993 Cash Flows From Operating Activities: Net income......................................... $ 1,253 $ 1,236 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments................... 1,686 1,622 Decrease in receivables.......................... 72 62 (Increase) decrease in inventories............... 74 (102) Increase (decrease) in payables and accrued liabilities.................................... 209 (533) Deferred taxes and other items................... (140) 37 Net cash provided by operating activities...... 3,154 2,322 Cash Flows From Investing Activities: Capital expenditures............................... (1,699) (1,926) Proceeds from dispositions of properties and other assets................................. 138 308 New investments, advances and business acquisitions..................................... (11) (14) Proceeds from sales of investments................. 175 27 Other.............................................. (9) (53) Net cash used in investing activities.......... (1,406) (1,658) Cash Flows From Financing Activities: New long-term obligations.......................... 418 1,022 Repayment of long-term obligations................. (50) (1,504) Cash dividends paid................................ (819) (819) Issuances of common stock.......................... 20 24 Increase (decrease) in short-term obligations...... (891) 291 Net cash used in financing activities.......... (1,322) (986) Increase (decrease) in Cash and Marketable Securities 426 (322) Cash and Marketable Securities-Beginning of Period... 1,217 1,288 Cash and Marketable Securities-End of Period......... $ 1,643 $ 966 4. 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 Comparisons of net income for the first nine months and third quarter were affected by various items, summarized in the table below: (Millions of dollars Nine Months Third Quarter Incr./(decr.) net income) 1994 1993 1994 1993 COET settlement $ 270 $ - $ - $ - Restructuring accrual (256) - - - Congo writedown - (170) - - Disposition of Canadian properties - 70 - 70 Tax obligations and other - 60 - 4 Environmental provisions (32) - (32) - Nine Months 1994 vs. Nine Months 1993 Net income for the first nine months of 1994 amounted to $1,253 million, or $2.52 per share. Included in first nine-month results were third-quarter after-tax environmental charges of $32 million and second-quarter restructuring charges of $256 million after tax. Of this latter amount, $146 million related to costs directly associated with the severance of approximately 3,800 employees expected to occur by mid-1995. The remaining $110 million was attributable to various facility closings and asset dispositions. Current-year results also included second-quarter after-tax benefits of $270 million relating to final settlements with the Internal Revenue Service involving crude oil excise taxes ("COET") in the 1980s. Excluding these items, first nine-months 1994 earnings were $1,271 million, or $2.56 per share. Net income for the first nine months of 1993 totaled $1,236 million, or $2.49 per share. Included in first nine-month results were charges of $170 million related to the writedown of Congo exploration and production operations to current recoverable value, gains of $70 million associated with the disposition of certain non-strategic Canadian properties and favorable net tax adjustments of $60 million, of which $56 million related to disposition of certain operations. Excluding these items, earnings for the first nine months of 1993 would have been $1,276 million, or $2.57 per share. 5. On an adjusted basis, earnings for the first nine months of 1994 of $1,271 million were essentially level with the similar 1993 period, reflecting improved chemical earnings, resulting from higher volumes and margins in major product lines, and lower net corporate expenses. Offsetting were decreased exploration and production earnings mainly due to lower crude oil prices, which averaged about $2 per barrel below last year's level, and lower refining, marketing and transportation earnings, primarily attributable to lower refined product margins. Sales and other operating revenues totaled $19.2 billion for the first nine months of 1994, 2 percent higher than the $18.9 billion reported in the corresponding 1993 period. Chemical revenues increased 20 percent resulting from improved volumes and prices for major product lines. Natural gas revenues were 21 percent above the 1993 level, primarily reflecting higher sales volumes. Partly offsetting were decreases in crude oil revenues of 9 percent, due to lower prices and volumes. Consumer excise taxes increased 26 percent for the first nine months of 1994 compared with 1993, reflecting the effect of a tax increase on transportation fuels resulting from the enactment of the Omnibus Budget Reconciliation Act of 1993. Higher other income for the first nine months of the current year compared with the corresponding 1993 period primarily reflected the second-quarter 1994 COET settlement. Purchases of crude oil, petroleum products and merchandise totaled $10 billion for the first nine months of 1994, 3 percent higher than 1993's first nine months, primarily attributable to higher natural gas and refined product volumes, and increased chemical purchases. Partly offsetting were lower crude oil purchase prices. Operating expenses totaled $3.5 billion for the first nine months of 1994, essentially level with the corresponding 1993 period. Second-quarter 1994 expenses included restructuring charges of $169 million related to various facility closings and asset dispositions. First-quarter 1993 included charges associated with the writedown of Congo exploration and production operations. Excluding these items, operating expenses were slightly higher reflecting increased chemical manufacturing expenses from the fourth- quarter 1993 acquisition of Phillips Fibers Corporation, and increased production expense overseas reflecting added production. Partly offsetting were the effects of lower production expenses in Canada. Petroleum exploration expenses of $428 million in the first nine months of 1994 increased 19 percent, compared with the prior-year period, mainly attributable to higher dry hole costs in Canada and overseas. Selling and administrative expenses for the first nine months were up 21 percent, primarily resulting from second-quarter 1994 restructuring charges of $225 million related to severance costs, lower currency gains and increases related to natural gas activities. Taxes other than income taxes increased in the first nine months by 18 percent compared with the prior-year period principally due to increased 6. consumer excise taxes. Interest expense decreased 21 percent for the first nine months of 1994 compared with the corresponding 1993 period, due to revised estimates of future tax obligations and the effects of debt refinancing. Third Quarter 1994 vs. Third Quarter 1993 Third-quarter 1994 net income totaled $445 million, or $.89 per share, compared with $520 million, or $1.05 per share in the third quarter of 1993. Included in 1994 third-quarter earnings were after-tax charges of $32 million representing estimated future costs of environmental remediation activities. Adjusting for these charges, 1994 third-quarter earnings were $477 million, or $.96 per share. Third-quarter 1993 results included a gain of $70 million associated with the disposition of Canadian properties and favorable prior-year tax adjustments totaling $57 million, partially offset by adverse deferred tax effects of $53 million resulting from enactment of the Omnibus Budget Reconciliation Act of 1993. Exclusive of these items, third-quarter 1993 earnings were $446 million, or $.90 per share. On an adjusted basis, operating results for the third quarter of 1994 of $477 million were 7 percent higher than last year's third quarter, reflecting higher sales volumes and margins for most chemical products and higher crude oil prices, which averaged about $1 per barrel above the similar 1993 period. Partly offsetting were lower refining, marketing and transportation earnings, resulting from lower refined product margins. Sales and other operating revenues totaled $6.8 billion for the third quarter of 1994, 9 percent higher than the $6.2 billion reported in 1993's third quarter. Chemical and natural gas revenues improved 29 percent and 16 percent, respectively, due to increased volumes and prices. Refined product revenues increased 6 percent resulting from higher volumes. Consumer excise taxes increased 26 percent for the third quarter of 1994 compared with last year's levels, reflecting the effect of a tax increase on transportation fuels resulting from the enactment of the Omnibus Budget Reconciliation Act of 1993. Purchases of crude oil, petroleum products and merchandise totaled $3.6 billion for the third quarter of 1994, 14 percent higher than the comparable prior-year quarter, primarily attributable to higher natural gas purchase volumes. Also contributing to the increase were higher crude oil and refined product purchase prices, and increased chemical purchases. Third-quarter 1994 operating expenses totaling $1.1 billion were 4 percent above 1993's third quarter mainly reflecting higher environmental charges. Petroleum exploration expenses of $151 million in the third quarter of 1994 decreased 8 percent compared with prior-year level, mainly attributable to lower dry hole costs. Selling and administrative expenses for the third quarter of 1994 were up 21 percent, due in part to unfavorable currency effects and increases related to natural gas activities. 7. Taxes other than income taxes increased in the current quarter of 1994 by 19 percent compared with the prior-year period principally due to increased consumer excise taxes. Interest expense decreased 20 percent for the third quarter of 1994 compared with the corresponding 1993 period, due to revised estimates of future tax obligations and the effects of debt refinancing. For the 12 months ended September 30, 1994, return on average shareholders' equity was 13.3 percent compared with 13.7 percent for the 12 months ended September 30, 1993. Return on average capital employed was 10.4 percent for the 12-month period ended September 30, 1994, compared with 10.7 percent for the corresponding prior-year period. Results by Industry Segment Nine Months Third Quarter (Millions of dollars) 1994 1993 1994 1993 Exploration and Production United States $ 698 $ 639 $ 193 $ 156 Non-U.S. 21 21 14 62 Refining, Mktg. and Trans. 316 567 157 225 Chemicals 350 157 154 60 Other Operations* (138) (35) (14) 6 Corporate 6 (113) (59) 11 Net Income $1,253 $1,236 $ 445 $ 520 * Other Operations include technology operations, offshore contract drilling, real estate interests, hazardous-waste incineration and other activities. Nine Months 1994 vs. Nine Months 1993 U.S. Exploration and Production U.S. exploration and production ("E&P") operations earned $698 million in 1994 compared with $639 million earned in the similar 1993 period. Included in first nine-month results were second-quarter restructuring charges of $47 million, primarily related to severance costs, and $90 million associated with the favorable COET settlement. Included in 1993 nine-month earnings were second-quarter provisions of $63 million for the estimated future costs of environmental remediation activities related to past E&P operations, and third-quarter net unfavorable tax adjustments of $25 million, primarily reflecting adverse deferred taxes from enactment of the Omnibus Reconciliation Act of 1993. Adjusting the respective periods for these items, nine-month 1994 results were $655 million, $72 million below the year-earlier period. The reduction in 1994 earnings primarily resulted from lower crude oil and natural gas prices, which for Amoco averaged about $2 per barrel and $.10 per thousand cubic feet ("mcf") lower than 1993 averages, respectively. 8. Also contributing to the decline were lower crude oil and natural gas liquids ("NGL") production volumes, which averaged 290 thousand barrels per day ("MB/d") for the first nine months of 1994, 6 percent below the comparable 1993 period. Partly offsetting were benefits associated with higher natural gas volumes, which averaged 2.5 billion cubic feet per day, up slightly over 1993, and lower depreciation, depletion and amortization and other expenses. Non-U.S. Exploration and Production E&P earnings outside the U.S. were $21 million for the first nine months of 1994, the same as the year-earlier period. Results for 1994 included second-quarter restructuring charges of $20 million, primarily related to severance costs. Included in 1993 results were first-quarter charges of $170 million related to the writedown of Congo operations and third-quarter benefits of $70 million attributable to a gain on disposition of certain non-strategic Canadian properties. Adjusting both periods for these items, 1994 nine-month results of $41 million were $80 million lower than 1993 as a result of lower crude oil prices and higher exploration expense. Also contributing to the decline were unfavorable currency effects and charges relating to the relinquishment of the Myanmar concession. Higher natural gas prices and production volumes were partly offsetting. For the first nine months of 1994, natural gas production outside the U.S. averaged 1,667 million cubic feet per day and crude oil and NGL production averaged 376 MB/d, both about the same as the corresponding 1993 period. New production increases in the Netherlands, the United Kingdom and Trinidad offset lower Canadian production, the latter reflecting third- quarter 1993 divestments of non-strategic properties. Refining, Marketing and Transportation Refining, marketing and transportation ("RM&T") activities earned $316 million for the first nine months of 1994, compared with earnings of $567 million for the comparable 1993 period. Included in 1994 results were second-quarter restructuring charges of $41 million, primarily related to severance costs, and third-quarter charges of $32 million representing estimated future costs of environmental remediation activities relating to past operations. Results for 1993 included second-quarter benefits of $59 million associated with a reduction in previous estimates of future costs for environmental remediation activities. Excluding these items, earnings of $389 million were $119 million lower than the first nine months of 1993. Contributing to the decline were lower U.S. refined product margins for Amoco, which averaged about 1 cent per gallon below the 1993 period. Also contributing to the decrease were lower earnings from NGL supply and marketing activities in Canada. For the first nine months of 1994, U.S. refined product sales averaged 9. 1,172 MB/d, an increase of 5 percent over the corresponding 1993 period. Canadian sales of NGL averaged 160 MB/d, the same as the first nine months of 1993. Chemicals Chemical operations earned $350 million for the first nine months of 1994. Included in 1994 results were second-quarter restructuring charges of $36 million, primarily related to severance costs. For the first nine months of 1993, chemical operations earned $157 million. The increase in 1994 earnings resulted from higher margins and sales volumes for major product lines, particularly purified terephthalic acid ("PTA"), reflecting strong consumer demand. Worldwide PTA and olefins volumes for the first nine months of 1994 increased 16 and 11 percent, respectively, over the comparable 1993 period. Polypropylene volumes were up 6 percent over last year. Other Operations and Corporate Other operations, which include technology operations, offshore contract drilling, real estate interests, hazardous-waste incineration and other activities, incurred losses of $60 million for the first nine months of 1994, excluding second-quarter restructuring charges of $78 million. The comparable results for 1993 were losses of $35 million. The higher losses in 1994 reflected lower offshore contract drilling revenues and absence of gains realized in 1993. Corporate activities, including net interest and other general corporate expenses, reported income of $6 million for the first nine months of 1994, compared with net expenses of $113 million in the corresponding 1993 period. Results for 1994 included second-quarter interest income of $180 million related to the COET settlement and restructuring charges of $34 million. Included in the 1993 results were tax benefits of $101 million of which $56 million was associated with the disposition of certain operations. Adjusting for these items, net expenses for the first nine months of 1994 of $140 million were $74 million lower than 1993 primarily reflecting lower net interest expense. Third Quarter 1994 vs. Third Quarter 1993 U.S. Exploration and Production U.S E&P earnings were $193 million in the third quarter of 1994 compared with $156 million earned in the third quarter of 1993. Included in 1993 earnings was a $25 million unfavorable adjustment for taxes, mainly associated with passage of the Omnibus Budget Reconciliation Act of 1993. Exclusive of that adjustment, the 1994 increase of $12 million resulted from an increase in crude oil prices of approximately $1 per barrel and higher natural gas volumes, and lower exploration and other expenses. Partly offsetting was a decline in natural gas prices during the third 10. quarter of 1994. Amoco's natural gas prices averaged about $1.60 per mcf during the quarter, down approximately $.20 per mcf from the third quarter of 1993. Natural gas production for the quarter averaged 2.4 billion cubic feet per day, up 2 percent over the 1993 third-quarter average. Crude oil and NGL production averaged 285 MB/d, 5 percent lower than the same prior-year period, reflecting normal field declines. Non-U.S. Exploration and Production E&P earnings outside the United States earned $14 million in the third quarter of 1994. This compared with earnings of $62 million in the third quarter of 1993. Included in 1993 results was a $70 million gain associated with the disposition of certain non-strategic Canadian properties. Excluding this gain, third-quarter 1994 earnings increased $22 million over the similar 1993 period reflecting higher crude oil prices, and lower exploration and operating expenses. Partly offsetting were unfavorable currency effects. Natural gas production averaged 1.5 billion cubic feet per day during the quarter compared with 1.6 billion cubic feet per day during the third quarter of 1993. The decline from last year mainly reflected the divestment of non-strategic Canadian properties, which more than offset higher North Sea production. Crude oil and NGL production averaged 363 MB/d in the third quarter of 1994, down slightly from the comparable 1993 period, mainly reflecting Canadian divestments. Refining, Marketing and Transportation RM&T activities earned $157 million during the third quarter of 1994, compared with $225 million earned in the third quarter of 1993. Included in current-quarter results were charges of $32 million associated with estimates of future costs for environmental remediation activities related to past operations. Adjusting for these charges, 1994 earnings would have been $189 million, $36 million lower than the corresponding prior-year period. The earnings decline primarily reflected lower refined product margins, resulting in part from a very competitive U.S. market. U.S. sales of refined products averaged 1,236 MB/d per day during the third quarter of 1994, an increase of 5 percent over the comparable 1993 period. Refineries ran at 104 percent of rated capacity during the third quarter of both 1994 and 1993. Chemicals Chemical operations earned $154 million in the third quarter of 1994, 11. compared with $60 million for the third quarter of 1993. The improvement in 1994 earnings resulted from continued strong performance as margins and sales volumes increased across major product lines. Worldwide PTA and olefins volumes increased 15 percent and 9 percent, respectively, above last year's third-quarter levels. Polypropylene volumes were up 13 percent over third-quarter 1993. Other Operations and Corporate Other operations, which include technology operations, offshore contract drilling, real estate interests, hazardous-waste incineration and other activities, incurred a loss of $14 million in the third quarter of 1994. This compared with a $6 million gain in the corresponding 1993 period, which reflected the continued efforts to dispose of noncore assets. Corporate activities, including net interest and other general corporate expenses, reported net expenses of $59 million in the third quarter of 1994, compared with income of $11 million for the comparable 1993 period. Included in the 1993 results were favorable prior-year tax adjustments of $45 million. Outlook The Corporation and the oil industry will continue to be affected by the price volatility of crude oil and natural gas. Also affecting chemical and refining, marketing and transportation activities are crude oil prices and the overall industry product supply and demand balance. Amoco's future performance is expected to be impacted by ongoing cost reduction programs, the divestment of marginal properties and underperforming assets, application of new technologies and new governmental regulation. In July 1994, Amoco announced that the organizational structure of the Corporation was being changed to improve profitability, increase operating flexibility and position the Corporation for long-term growth. The Corporation's strategies now will be carried out by 17 business groups. A newly created shared services organization will provide support service to the business groups. As a result of the restructuring, an after-tax charge of $256 million was accrued in the second quarter of 1994. Approximately 3,800 positions will be eliminated by July 1995. Through the third quarter of 1994, charges against the accrual associated with severance, representing approximately 400 employees, and other costs totaled about $20 million after tax. An additional 700 positions will be eliminated by the end of 1996 as a result of ongoing process redesign to improve efficiencies in support functions. Additional restructuring costs of approximately $200 million (after-tax) are expected to be incurred through 1996 to reflect costs for severance, system redesign, relocations, work consolidation and development of new processes in support of the restructuring. Through the third quarter of 1994, costs incurred related to these activities were not significant. 12. Liquidity and Capital Resources Cash flows from operating activities for the first nine months of 1994 amounted to $3,154 million compared with $2,322 million in the prior-year period. Working capital of $1,646 million at September 30, 1994, increased $895 million from $751 million at December 31, 1993. As a result, the Corporation's current ratio increased to 1.35 to 1 at September 30, 1994, from 1.14 to 1 at year-end 1993. 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 capability or flexibility since the Corporation has ready access to both short-term and long-term debt markets. Amoco Oil Company, a wholly owned subsidiary of the Corporation, announced in April 1994 that it had signed a letter of intent to negotiate a contract with subsidiaries of Associates Corporation of North America ("Associates") whereby Associates would issue and process Amoco Oil's consumer credit cards. This transaction was completed in September. Effective September 20, 1994, Associates became the grantor of credit, owner of the receivables and manager of credit risks for Amoco Oil's consumer credit cards. Amoco's debt totaled $4.6 billion at September 30, 1994, compared with $5.1 billion at year-end 1993. The reduction in debt largely reflects the application of the proceeds from the sale of credit card receivables. Debt as a percent of debt-plus-equity was 24.5 percent at September 30, 1994, compared with 27.1 percent at year-end 1993. The Corporation believes its strong financial position will permit the financing of business needs and opportunities in an orderly manner. 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, 1994, bank lines of credit available to support commercial paper borrowings amounted to $490 million, all of which were supported by commitment fees. To maintain flexibility, a shelf registration statement for $500 million in debt securities remains on file with the Securities and Exchange Commission to permit ready access to capital markets. Capital and exploration expenditures for the first nine months of 1994 totaled $2,127 million compared with $2,286 million for the comparable 1993 period. Approximately 71 percent of the total 1994 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 13. 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 There have been no material developments in the status of the legal proceedings reported in Part I, Item 3 of the Corporation's 1993 Annual Report on Form 10-K and the description of legal proceedings in Part II, Item 1 of the Corporation's Report on Form 10-Q for the quarter ended June 30, 1994. Twelve 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 consolidated cash flows, 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 $5.9 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 the aggregate amount will not be material in relation to 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. 14. Item 5. Other Information Shown below is summarized financial information as to the assets, liabilities and results of operations of Amoco's wholly owned subsidiary, Amoco Company. Three Months Nine Months Ended Ended September 30, September 30, 1994 1993 1994 1993 (millions of dollars) Total revenues (including excise taxes).............. $ 7,204 $ 6,413 $20,737 $19,287 Operating profit............. $ 711 $ 659 $ 1,816 $ 1,827 Net income................... $ 488 $ 486 $ 1,426 $ 1,272 Sept. 30, Dec. 31, 1994 1993 (millions of dollars) Current assets........................ $ 5,169 $ 4,383 Total assets.......................... $24,422 $23,513 Current liabilities................... $ 3,532 $ 3,976 Long-term debt........................ $ 2,093 $ 1,967 Deferred credits...................... $ 4,555 $ 4,441 Shareholder's equity.................. $14,242 $13,129 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Sequentially Exhibit Numbered Number Page 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, 1994. 15. 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 14, 1994 J. R. Reid J. R. Reid Vice President and Controller (Duly Authorized and Chief Accounting Officer) 16. EX-12 2 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, 1994 1993 1992 1991 1990 1989 Determination of Income: Consolidated earnings before income taxes and minority interest. $1,947 $2,506 $ 998 $2,035 $3,410 $2,695 Fixed charges expensed by consolidated companies 263 350 376 479 596 699 Adjustments for certain companies accounted for by the equity method.. 5 11 28 20 35 37 Adjusted earnings plus fixed charges......... $2,215 $2,867 $1,402 $2,534 $4,041 $3,431 Determination of Fixed Charges: Consolidated interest on indebtedness (including interest capitalized). $ 211 $ 299 $ 333 $ 433 $ 532 $ 626 Consolidated rental expense representative of an interest factor. 48 50 44 54 60 59 Adjustments for certain companies accounted for by the equity method.. 3 8 20 24 25 36 Total fixed charges..... $ 262 $ 357 $ 397 $ 511 $ 617 $ 721 Ratio of earnings to fixed charges........... 8.5 8.0 3.5 5.0 6.5 4.8 17. EX-27 3
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 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 113 1530 2973 27 1036 6302 45786 24399 28811 4656 4446 2168 0 0 11982 28811 19221 22580 13908 13908 4815 0 199 1947 694 1253 0 0 0 1253 2.52 0
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