-----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, KnTUJzvzG0cGPpfbJz95PiIVsKPRuO+Sejcs5lQCUQjLytAYitavp5t3kZNHBCs0 4Vqb95n8W40akTInDgxsOw== 0000093397-95-000013.txt : 19951119 0000093397-95-000013.hdr.sgml : 19951119 ACCESSION NUMBER: 0000093397-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95589493 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, 1995 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, 1995-- 496,769,331 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, 1995 1994 1995 1994 Revenues: Sales and other operating revenues................. $ 6,660 $ 6,764 $20,094 $19,221 Consumer excise taxes...... 859 883 2,502 2,553 Other income............... 119 133 319 806 Total revenues........... 7,638 7,780 22,915 22,580 Cost and Expenses: Purchased crude oil, natural gas, petroleum products and merchandise. 3,401 3,593 10,488 9,972 Operating expenses......... 1,132 1,118 3,356 3,508 Petroleum exploration expenses, including exploratory dry holes.... 149 151 380 428 Selling and administrative expenses................. 496 550 1,509 1,711 Taxes other than income taxes.................... 1,046 1,061 3,057 3,129 Depreciation, depletion, amortization, and retire- ments and abandonments... 532 572 1,590 1,686 Interest expense........... 84 64 259 199 Total costs and expenses. 6,840 7,109 20,639 20,633 Income before income taxes... 798 671 2,276 1,947 Income taxes................. 199 226 621 694 Net income................... $ 599 $ 445 $ 1,655 $ 1,253 Weighted average number of shares of common stock outstanding (in thousands). 494,060 496,847 495,078 496,648 Per Share Data (Based on weighted average shares outstanding): Net income................... $ 1.21 $ .89 $ 3.34 $ 2.52 Cash dividends per share..... $ .60 $ .55 $ 1.80 $ 1.65 Consolidated Statement of Financial Position (millions of dollars) Sept. 30, Dec. 31, ASSETS 1995 1994 Current Assets: Cash........................................ $ 163 $ 166 Marketable securities -- at cost (corporate except $49 on September 30,1995, and $355 on December 31, 1994 which represents state and municipal securities)........... 964 1,623 Accounts and notes receivable (less allowances of $22 at September 30, 1995, and $23 at December 31, 1994)............. 3,061 3,180 Inventories Crude oil and products.................... 908 748 Materials and supplies.................... 308 294 Prepaid expenses and income taxes........... 725 631 Total current assets...................... 6,129 6,642 Investments and Other Assets: Investments and related advances............ 732 470 Long-term receivables and other assets...... 828 661 1,560 1,131 Properties--at costs, less accumulated depre- ciation, depletion, and amortization of $25,689 at September 30, 1995, and $24,906 at December 31, 1994 (The successful efforts method of accounting is followed for costs incurred in oil and gas producing activities)................................. 22,097 21,543 Total assets.............................. $29,786 $29,316 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations.... $ 170 $ 24 Short-term obligations...................... 913 224 Accounts payable............................ 2,455 2,759 Accrued liabilities......................... 1,049 1,162 Taxes payable (including income taxes)...... 864 855 Total current liabilities................. 5,451 5,024 Long-Term Debt................................ 3,775 4,387 Deferred Credits and Other Non-Current Liabilities: Income taxes................................ 3,057 2,961 Other....................................... 2,454 2,547 5,511 5,508 Minority Interest............................. 15 15 Shareholders' Equity: Common stock (authorized 800,000,000 shares; issued and outstanding at September 30, 1995 --496,769,331; December 31, 1994 --496,393,067 shares)..................... 2,592 2,166 Earnings retained and invested in the business.................................. 12,426 12,223 Foreign currency translation adjustment..... 16 (7) 15,034 14,382 Total liabilities and shareholders' equity $29,786 $29,316 Consolidated Statement of Cash Flows (millions of dollars) Nine Months Ended September 30, 1995 1994 Cash Flows from Operating Activities: Net income................................... $ 1,655 $ 1,253 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments......... 1,590 1,686 Decrease in receivables................... 94 72 (Increase) decrease in inventories......... (174) 74 (Decrease) increase in payables and accrued liabilities...................... (298) 209 Deferred taxes and other items............. (376) (140) Net cash provided by operating activities.. 2,491 3,154 Cash Flows From Investing Activities: Capital expenditures......................... (2,367) (1,699) Proceeds from dispositions of properties and other assets........................... 230 138 Net investments, advances and business acquisitions............................... (164) (11) Proceeds from sales of investments........... - 175 Other........................................ 9 (9) Net cash used in investing activities...... (2,292) (1,406) Cash Flows from Financing Activities: New long-term obligations.................... 245 418 Repayment of long-term obligations........... (277) (50) Cash dividends paid.......................... (888) (819) Issuances of common stock.................... 31 20 Acquisitions of common stock................. (661) - Increase (decrease) in short-term obligations 689 (891) Net cash used in financing activities...... (861) (1,322) (Decrease) increase in Cash and Marketable Securities................................... (662) 426 Cash and Marketable Securities- Beginning of Period......................... 1,789 1,217 Cash and Marketable Securities-End of Period.. $ 1,127 $ 1,643 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. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of", which will require the Corporation to change its method of accounting for the impairment of value of long-lived assets. The Corporation has not fully evaluated the effect of this change in accounting method, but the effect could be material to income in the quarter of adoption. Implementation of SFAS No. 121 will occur no later than the quarter ending March 31, 1996. Item 2. Management's Discussion and Analysis Results of Operations Nine Months 1995 vs. Nine Months 1994 Net income for the first nine months of 1995 amounted to $1,655 million, or $3.34 per share. Net income for the first nine months of 1994 amounted to $1,253 million, or $2.52 per share. Included in 1994 results were after-tax benefits recorded in the second quarter of $270 million relating to final settlements with the Internal Revenue Service ("IRS") involving crude oil excise taxes ("COET") in the 1980s. Also included in 1994 results were after-tax restructuring charges of $256 million. Included in third-quarter 1994 results were charges of $32 million related to environmental remediation activities. Excluding these items, earnings for the first nine months of 1994 would have been $1,271 million, or $2.56 per share. The increase in earnings for the first nine months of 1995 primarily reflected higher chemical earnings resulting from both higher volumes and margins across most product lines. Also contributing to the increase was strong exploration and production ("E&P") earnings overseas, primarily reflecting higher crude oil prices and lower exploration and other expenses. Partially offsetting were lower U.S. E&P earnings, reflecting lower natural gas prices, and lower petroleum product results attributable to lower refined product margins, higher refinery maintenance expenses and increased marketing activity-related expense. Sales and other operating revenues totaled $20.1 billion for the first nine months of 1995, 5 percent higher than the $19.2 billion reported in the corresponding 1994 period. Chemical revenues increased 37 percent resulting from higher volumes and prices across most product lines. Refined product revenues were 6 percent above the 1994 level, primarily resulting from strengthening U.S. gasoline prices. Natural gas revenues decreased 16 percent, primarily due to lower prices. Other income totaled $319 million for the first nine months of 1995 compared with $806 million for the same period for 1994. Included in other income for the first nine months of 1994 was the benefit of the COET settlement of approximately $400 million. Purchases of crude oil, natural gas, petroleum products and merchandise totaled $10.5 billion for the first nine months of 1995, 5 percent higher than 1994's first nine months. The increase was primarily attributable to higher refined product purchase prices and volumes, higher crude oil prices and increased chemical purchases. Operating expenses totaled $3.4 billion for the first nine months of 1995, compared with $3.5 billion for the corresponding 1994 period. Included in first nine-month 1994 results were restructuring charges of $169 million related to various facility closings and asset dispositions. Exclusive of that charge, first nine-month operating expenses for 1995 were about level with the same period in 1994. Expense reductions related to restructuring efforts were offset by higher refinery expenses, reflecting planned and unplanned maintenance, and an increase in chemical manufacturing operations. Petroleum exploration expenses of $380 million in the first nine months of 1995 decreased 11 percent compared with the prior-year period, primarily reflecting lower overseas dry hole costs. Selling and administrative expenses for the first nine months of $1.5 billion compared with $1.7 billion for the comparable 1994 period. Included in the first nine-month 1994 results were restructuring charges of $225 million related to severance costs. Exclusive of these charges, selling and administrative expenses increased slightly as a result of ongoing additional restructuring charges of approximately $85 million before tax, mainly related to system development redesign. Also included in 1995 first nine-month results were adverse before tax currency effects of $13 million, compared with favorable currency effects of $32 million for the corresponding 1994 period. Interest expense of $259 million for the first nine months of 1995 compared with $199 million for the corresponding 1994 period, reflecting higher debt balances and slightly higher interest rates. Third Quarter 1995 vs. Third Quarter 1994 Third-quarter 1995 net income totaled $599 million, or $1.21 per share, compared with $445 million, or $.89 per share, in the third quarter of 1994. Earnings for the third quarter of 1995 were 35 percent higher than last year's third quarter, reflecting higher chemical earnings resulting from increases in margins for most product lines. Also attributing to the increase was higher overseas E&P earnings primarily related to higher crude oil sales volumes and lower exploration and other expenses. Sales and other operating revenues totaled $6.7 billion for the third quarter of 1995, 2 percent lower than the $6.8 billion reported in the third quarter of 1994. The decrease resulted from lower crude oil sales volumes and lower natural gas revenues, mainly reflecting lower prices. Largely offsetting were higher chemical revenues due to increased prices. Purchases of crude oil, natural gas, petroleum products and merchandise totaled $3.4 billion for the third quarter of 1995, 5 percent lower than the prior-year quarter. The decrease reflects lower crude oil prices and volumes during the quarter. Third-quarter 1995 operating expenses totaled $1.1 billion, about the same as the 1994 third quarter of 1994. Included in 1994 operating expenses were charges related to environmental remediation activities. Excluding these charges, savings resulting from restructuring efforts were more than offset by increased chemical activity. Selling and administrative expenses for the third quarter of 1995 totaled $496 million, 10 percent below the $550 million for the third quarter of 1994, reflecting restructuring efforts. Included in third quarter expenses were ongoing restructuring charges of $25 million before tax related to system development and redesign. Interest expense of $84 million for the third quarter of 1995 increased $20 million over the third quarter of 1994, resulting from higher debt balances and slightly higher interest rates. For the 12 months ended September 30, 1995, return on average shareholders' equity was 15.0 percent compared with 13.3 percent for the 12 months ended September 30, 1994. Return on average capital employed was 12.2 percent for the 12-month period ended September 30, 1995, compared with 10.4 percent for the corresponding prior-year period. Results by Industry Segment As previously announced, Amoco changed the reporting segments to align more closely with its organizational structure that includes three sectors: exploration and production, petroleum products and chemicals. Segment earnings for 1994 have been restated to conform to the new basis. Nine Months Third Quarter (millions of dollars) 1995 1994 1995 1994 Exploration and Production United States $ 523 $ 675 $ 159 $ 178 Canada 69 132 (10) 27 Overseas 239 (69) 91 (3) Subtotal 831 738 240 202 Petroleum Products 254 298 131 168 Chemicals 775 333 296 142 Corporate and Other Operations* (205) (116) (68) (67) Net Income $1,655 $1,253 $ 599 $ 445 * 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. Nine Months 1995 vs. Nine Months 1994 Exploration and Production - U. S. U.S. E&P operations earned $523 million in the first nine months of 1995 compared with restated earnings of $675 million for the similar 1994 period. Included in the first nine-month results for 1994 were $90 million associated with the favorable COET settlement. Partly offsetting were restructuring charges of $47 million, primarily related to severance costs. Adjusting for these factors, 1995 U.S. E&P earnings of $523 million were 17 percent below the comparable 1994 period. The decrease in earnings mainly resulted from lower natural gas prices, partly offset by higher crude oil prices. For the first nine months of 1995, Amoco's U.S. natural gas prices averaged about $1.30 per thousand cubic feet ("mcf"), almost $.50 per mcf below the first nine months of 1994. Average crude oil prices for the same time period averaged about $16.20 per barrel, approximately $1.70 per barrel above the same period last year. Natural gas production for the first nine months of 1995 was 2.4 billion cubic feet per day, which was comparable to the same period in 1994. Crude oil and natural gas liquids ("NGL") production of 291 thousand barrels per day for the first nine months of 1995 was essentially level with the prior-year period. Exploration and Production - Canada Canadian earnings, which include supply and marketing of NGL, for the first nine months of 1995 were $69 million compared with last year's restated nine months earnings of $132 million. The decrease in earnings as compared to the first nine months of 1994 reflected lower natural gas prices, which were over $.60 per mcf below the year-earlier period, and lower crude oil and NGL production. Nine-month 1995 results also included unfavorable currency effects of $22 million. Partially offsetting were higher crude oil prices, which averaged almost $2.40 per barrel above 1994, and an increase in supply and marketing earnings, reflecting higher NGL margins. For the first nine months of 1995, natural gas production averaged 828 million cubic feet per day, 2 percent above the comparable 1994 period. Crude oil and NGL production averaged 66 thousand barrels per day for the first nine months of 1995, 11 percent below 1994, primarily as a result of property dispositions. Exploration and Production - Overseas Overseas E&P earnings were $239 million for the first nine months of 1995, an increase of $308 million over restated 1994 earnings for the same period. Earnings for 1994 included second-quarter restructuring charges of $17 million, primarily related to severance costs, and charges of $18 million related to concession relinquishments. The increase in nine-month 1995 results also reflected higher crude oil prices, lower exploration and other expenses and a gain of $18 million related to the divestment of Amoco's Congo operations. Partially offsetting was lower crude oil production. For the first nine months of 1995, overseas natural gas production averaged 901 million cubic feet per day, 5 percent above 1994 production levels of 856 million cubic feet per day. Crude oil and NGL production averaged 296 thousand barrels per day, 2 percent below the comparable 1994 period. Petroleum Products Petroleum Product activities earned $254 million for the first nine months of 1995, compared with restated earnings of $298 million for the comparable 1994 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 related to environmental remediation activities. Excluding these items, earnings of $254 million for the first nine months of 1995 were $117 million lower than the same period in 1994. The decrease in earnings between the two periods mainly reflected lower refined product margins, and higher operating expenses resulting from an increase in refinery maintenance expense and marketing activity expenses. For the first nine months of 1995, U.S. refined product sales averaged 1,149 thousand of barrels per day, a decrease of 2 percent from the corresponding 1994 period. For the first nine months of 1995, refineries ran at 92 percent of rated capacity, compared with 99 percent for the comparable 1994 period, reflecting higher planned and unplanned maintenance. Chemicals Chemical operations earned $775 million for the first nine months of 1995 compared with restated earnings of $333 million for the similar period in 1994. Included in restated 1994 results were second-quarter restructuring charges of $36 million, primarily related to severance costs. After adjusting for this item, 1995 earnings increased by $406 million. The increase in earnings for the first nine months of 1995 resulted from higher margins and sales volumes for major product lines, reflecting strong customer demand. Olefin volumes for the first nine months of 1995 increased 9 percent over the comparable 1994 period. Also, purified terephthalic acid ("PTA") and polypropylene volumes increased 3 percent and 2 percent, respectively, over the same period. 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 of $205 million for the first nine months of 1995, compared with net expenses after tax of $116 million for the first nine months of 1994. Corporate and other operations expenses for 1994 included second-quarter interest income of $180 million related to the COET settlement and restructuring charges of $112 million. Adjusting for these items, net expenses for the first nine months of 1995 of $205 million were $21 million higher than 1994. The increase resulted from ongoing after-tax restructuring charges of approximately $45 million, primarily associated with system development and redesign. Also affecting net expenses in 1995 were higher interest expense, reflecting an increase in debt balances and slightly higher interest rates, and a loss on an asset disposition. Partly offsetting were favorable currency effects and lower costs associated with technology and other activities. Third Quarter 1995 vs. Third Quarter 1994 Exploration and Production - U.S. U.S. E&P earnings were $159 million in the third quarter of 1995 compared with restated 1994 third-quarter earnings of $178 million. The 1995 decrease of $19 million primarily resulted from lower natural gas prices. Amoco's U.S. natural gas prices averaged about $1.20 per mcf during the quarter, about 40 cents per mcf less than last year's third quarter, reflecting increased industry supplies. Also affecting results were lower industry crude oil prices, which were about $.50 per barrel below the third quarter of 1994. Natural gas production for the third quarter of 1995 averaged 2.5 billion cubic feet per day, which was slightly higher than the same quarter last year. Crude oil and NGL production averaged 286 thousand barrels per day, essentially level with the prior- year period. Exploration and Production - Canada Canadian E&P operations incurred a loss of $10 million in the third quarter of 1995 compared with restated earnings of $27 million for the third quarter of 1994. The decrease in earnings between the two periods reflected lower natural gas prices. Also contributing to the decrease were lower crude oil prices, and lower crude oil production volumes reflecting property divestments. For the third quarter of 1995, natural gas prices averaged about $.80 per mcf, $.50 per mcf below the comparable 1994 period. Crude oil prices averaged about $15.25 per barrel in the third quarter of 1995, down about $.85 per barrel over the previous year. Natural gas production averaged 856 million cubic feet per day in the third quarter of 1995, 13 percent above the comparable 1994 period. Crude oil and NGL production averaged 65,000 barrels per day, down 8 percent from the prior-year period. Exploration and Production - Overseas Overseas E&P operations earned $91 million in the third quarter of 1995 compared with a restated loss of $3 million for the third quarter of 1994. The increase in third-quarter 1995 earnings reflected higher crude oil sales volumes and lower exploration and other expenses. Partly offsetting was lower crude oil prices. Natural gas production for the third quarter of 1995 of 820 million cubic feet per day increased 15 percent over the comparable prior-year period. Crude oil and NGL production for the third quarter of 1995 averaged 298 thousand barrels per day, 2 percent higher than the prior-year period. Petroleum Products Petroleum Product activities earned $131 million during the third quarter of 1995, compared with restated earnings of $168 million in the third quarter of 1994. Included in 1994 third-quarter results were charges of $32 million related to environmental remediation activities. Adjusting for these charges, 1995 earnings would have been $69 million lower than the corresponding prior-year period. The decrease in third quarter 1995 earnings resulted from lower margins, as refined product prices declined more than crude costs. Also affecting the decrease was higher expenses in part reflecting increased marketing activity. U.S. sales of refined products averaged 1,221 thousands of barrels per day during the third quarter of 1995, a decrease of 1 percent from the comparable 1994 period. Refineries ran at 98 percent of rated capacity during the third quarter of 1995, compared with 104 percent in the third quarter of 1994. Chemicals Chemical operations earned $296 million in the third quarter of 1995, compared with $142 million for the third quarter of 1994. The improvement in 1995 earnings resulted from continued strong margins in several product lines, in particular paraxylene and olefins. Worldwide paraxylene margins more than doubled over the third quarter of 1994 and olefin margins increased by almost 90% over 1994 third-quarter margins. Corporate and Other Operations Corporate and other operations reported net expenses after tax of $68 million for the third quarter of 1995 compared with the 1994 net expenses after tax of $67 million. Lower corporate expenses were partially offset by costs of about $15 million related to ongoing restructuring expenses. Outlook The Corporation and the oil industry will continue to be affected by the volatility of crude oil and natural gas prices. Affecting chemical and petroleum product activities are the overall industry product supply and demand balance. Amoco's future performance is expected to continue to be impacted by its organizational structure announced in July 1994 and associated savings; ongoing cost reduction programs; the divestment of marginal properties and underperforming assets; application of new technologies; and new governmental regulation. Amoco's E&P exploration efforts will continue to target those areas that offer the most potential. Amoco will pursue areas that capitalize on its natural gas resources and continue to develop internationally. Amoco's petroleum products marketing strategy will continue to emphasize brand product quality and to grow in the convenience retail business. Amoco is also expanding marketing operations in Central Europe and Mexico. In order to meet expected growth in PTA demand, Amoco's chemical segment is expanding its PTA operations in the United States, Europe and the Asia-Pacific region. Amoco announced plans to sell the Amoco Motor Club to the Signature Group, a wholly owned subsidiary of Montgomery Ward, and a provider of auto club services to members across the country. On October 10, 1995, Amoco and Shell Oil Company ("Shell") announced plans to form a limited partnership combining exploration and production assets in the greater Permian Basin area of west Texas and southeast New Mexico. The plan calls for ownership in the new company to be 65 percent Amoco and 35 percent Shell, based on the relative value of assets contributed, and is contingent on the successful completion of ongoing discussions regarding design, management and operation of the company. Start up of the partnership is expected by mid-1996. In this area, Amoco and Shell employ about 1,300 people operating 12,000 area wells that produce approximately 210,000 gross barrels of crude oil and 250 million gross cubic feet per day ("mmcfd")of natural gas. These operations also include plants that process more than 400 mmcfd of natural gas and yield about 33,000 barrels per day of natural gas liquids. On November 2, 1995, Amoco announced it is negotiating with Albemarle Corporation ("Albemarle") on an exclusive basis for acquisition of Albemarle's olefins and related businesses. No final agreement has been reached. Restructuring In July 1994, Amoco announced that its organizational structure was being changed into 17 business groups with a shared services organization providing support services. In conjunction with the restructuring, an after-tax charge of $256 million was accrued in the second quarter of 1994. Selling and administrative expenses for that period included charges of $225 million ($146 million after-tax) related to employee-termination costs associated with the severance of approximately 3,800 employees expected to occur by year-end 1995. Since July of last year, charges against the accrual totaled $137 million ($89 million after-tax). As of September 30, 1995, the accrual balance associated with restructuring was $88 million ($57 million after-tax), which was considered adequate for all future severances and other related activities to which the Corporation has committed. First nine- month 1995 earnings reflected before-tax savings of more than $350 million in employment costs and other costs resulting from the Corporation's restructuring effort. The second-quarter 1994 accrual also included charges in operating expenses of $169 million ($110 million after-tax) related to a reduction in carrying value of assets that were to be divested. Disposition of these assets, including the recently completed sale of a hazardous-waste incineration facility, will not have a material effect on revenues, depreciation or income. At the time of the July 1994 restructuring announcement, additional restructuring costs totaling approximately $200 million after-tax were expected to be incurred. These restructuring costs represent charges for system redesign, relocations, work force consolidation and development of new processes in support of the restructuring. Since July, 1994, costs incurred, primarily for system development and redesign, totaled approximately $70 million after-tax. Liquidity and Capital Resources Cash flows from operating activities for the first nine months of 1995 amounted to $2,491 million compared with $3,154 million in the prior-year period. Working capital of $678 million at September 30, 1995, decreased $940 million from $1,618 million at December 31, 1994. The Corporation's current ratio was 1.12 to 1 at September 30, 1995, compared with 1.32 to 1 at year-end 1994. 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's debt totaled $4.9 billion at September 30, 1995, compared with $4.6 billion as of year-end 1994. Debt as a percentage of debt-plus-equity was 24.4 percent at September 30, 1995, and 24.3 percent at year-end 1994. Amoco announced on April 25, 1995, that it planned to purchase up to 8.9 million shares of its common stock in excess of amounts needed for benefit plan purposes. Through July 31, 1995, 8.9 million shares were repurchased at a cost of $601 million, completing the stock repurchase program. Amoco Corporation guarantees the outstanding public debt obligations of Amoco Company. Amoco Corporation and Amoco Company guarantee the outstanding public notes and debentures of Amoco Canada Petroleum Company LTD. ("Amoco Canada"). In June, Amoco Canada issued bond warrants, which entitle the holders to acquire U.S. $200 million Amoco Canada bonds, guaranteed by Amoco and Amoco Company, having a coupon rate of 8.98 percent. The warrants are exercisable from six to nine months after issue. Effective September 1, 1995, Amoco Canada called the 7 3/8 percent Subordinated Exchangeable Debentures ("SEDs")for redemption. The balance of the SEDs totaled $458 million. The SEDs were exchangeable for common stock of Amoco Corporation at an exchange price of $52.50 per share. A total of 8.6 million shares of Amoco Corporation common stock was issued in exchange for SEDs totaling $442 million. Amoco Canada's conditions relating to the July 7, 1995 proposal to purchase all of the common shares of Home Oil Company Limited for approximately Cdn. $757 million (about $550 million U.S. based on June 30, 1995, exchange rates) were not satisfied and the purchase was not completed. 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, 1995, bank lines of credit available to support commercial paper borrowings amounted to $490 million, all of which were supported by commitment fees. On September 5, 1995, Amoco Canada obtained a U.S. $225 million revolving 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. To maintain flexibility, a shelf registration statement for Amoco Company of $500 million in debt securities remains on file with the Securities and Exchange Commission ("SEC") to permit ready access to capital markets. Amoco Argentina Oil Company ("Amoco Argentina"), an indirect wholly owned subsidiary of Amoco, 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. Capital and exploration expenditures for the first nine months of 1995 totaled $2,747 million compared with $2,127 million for the comparable 1994 period. Approximately 66 percent of the total 1995 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 There have been no material developments in the status of legal proceedings described in Part I, Item 3 of the Corporation's 1994 Annual Report on Form 10-K and Part II, Item 1 of the Corporation's Report on Form 10-Q for the quarterly period ended March 31, 1995. Thirteen 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 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 of Amoco's wholly owned subsidiary, Amoco Company. Three Months Nine Months Ended Ended September 30 September 30 1995 1994 1995 1994 (millions of dollars) Total Revenues(including excise taxes)...... $7,062 $7,204 $20,996 $20,737 Operating Profit... $ 926 $ 711 $ 2,415 $ 1,816 Net Income......... $ 606 $ 488 $ 1,554 $ 1,426 Sept. 30, Dec. 31, 1995 1994 (millions of dollars) Current assets............... $ 5,162 $ 5,399 Total assets................. $26,434 $24,549 Current liabilities.......... $ 3,967 $ 4,142 Long-term debt............... $ 6,919 $ 6,190 Deferred credits............. $ 4,665 $ 4,584 Minority interest............ $ 10 $ 5 Shareholder's equity......... $10,873 $ 9,628 Summarized financial data for Amoco Argentina are presented below. Three Months Nine Months Ended Ended September 30, September 30, 1995 1994 1995 1994 (millions of dollars) Revenues.............. $ 67 $ 75 $189 $155 Net Income............ $ 20 $ 27 $ 64 $ 65 Sept. 30, Dec. 31, 1995 1994 (millions of dollars) Current assets................ $119 $ 97 Total assets.................. $417 $349 Current liabilities........... $ 51 $ 58 Non-current liabilities....... $111 $100 Shareholder's equity.......... $255 $191 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, 1995. 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, 1995 J. R. Reid J. R. Reid 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, 1995 1994 1993 1992 1991 1990 Determination of Income: Consolidated earnings before income taxes and minority interest.. $2,276 $2,491 $2,506 $ 998 $2,035 $3,410 Fixed charges expensed by consolidated companies. 313 316 350 376 479 596 Adjustments for certain companies accounted for by the equity method... 27 7 11 28 20 35 Adjusted earnings plus fixed charges.......... $2,616 $2,814 $2,867 $1,402 $2,534 $4,041 Determination of Fixed Charges: Consolidated interest on indebtedness (including interest capitalized).. $ 239 $ 288 $ 299 $ 333 $ 433 $ 532 Consolidated rental expense representative of an interest factor.. 65 23 50 44 54 60 Adjustments for certain companies accounted for by the equity method... 8 5 8 20 24 25 Total fixed charges...... $ 312 $ 316 $ 357 $ 397 $ 511 $ 617 Ratio of earnings to fixed charges............ 8.4 8.9 8.0 3.5 5.0 6.5 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 1000000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 163 964 3083 22 1216 6129 47786 25689 29786 5451 3775 2592 0 0 12442 29786 20094 22915 14224 14224 4647 0 259 2276 621 1655 0 0 0 1655 3.34 0
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