-----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, JsCLT1wbEBOZLO8Va9LDW7OpZ8Rr03KrZvtKIcL0ENK4Ipiy66qsWvLyKlsU2mTZ Lseu0h11TiAyU/GNX8bxZg== 0000093397-98-000003.txt : 19980323 0000093397-98-000003.hdr.sgml : 19980323 ACCESSION NUMBER: 0000093397-98-000003 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980320 SROS: CSX SROS: NYSE SROS: PCX 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-K405 SEC ACT: SEC FILE NUMBER: 001-00170 FILM NUMBER: 98569725 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-K405 1 AMOCO CORPORATION 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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) Registrant's telephone number including area code: (312) 856-6111 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, without par value New York, Chicago, Pacific, Toronto, and Swiss Stock Exchanges Guarantee of Amoco Company: 8 5/8% Debentures Due 2016 New York Stock Exchange 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, and (2) has been subject to such filing requirements for the past 90 days: Yes X No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: X Aggregate market value of voting stock held by non-affiliates as of January 31, 1998, based on a closing price of $81.375 was approximately $39,451,000,000. Number of common shares outstanding as of January 31, 1998, was 482,203,176 shares. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement dated March 16, 1998 AMOCO CORPORATION INDEX Page PART I Items 1. and 2. Business and Properties ................... 3 Exploration and Production .............................. 3 Reserves ................................................ 12 Oil and Gas Sales Commitments ........................... 13 Supply and Marketing of NGL ............................. 13 Refining ................................................ 14 Transportation .......................................... 14 Marketing of Petroleum Products ......................... 15 Chemicals ............................................... 16 Other Operations ........................................ 18 Research ................................................ 18 Employees ............................................... 19 Competition ............................................. 19 Government Regulation ................................... 19 Safety, Health and Environmental Protection ............. 20 Executive Officers of the Registrant .................... 22 Item 3. Legal Proceedings ................................. 23 Item 4. Submission of Matters to a Vote of Security Holders 24 PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters ............................. 25 Item 6. Selected Financial Data ........................... 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ..................... 27 Item 8. Financial Statements and Supplemental Information . 40 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..................... 95 PART III Item 10. Directors and Executive Officers of the Registrant 95 Item 11. Executive Compensation ........................... 95 Item 12. Security Ownership of Certain Beneficial Owners and Management .......................................... 95 Item 13. Certain Relationships and Related Transactions ... 95 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ..................................... 96 AMOCO CORPORATION PART I Items 1. and 2. Business and Properties Amoco Corporation was incorporated in Indiana in 1889 and has its principal executive offices at 200 East Randolph Drive, Chicago, Illinois 60601. Amoco Corporation is a parent corporation concerned with overall policy guidance, financing, coordination of operations, staff services, performance evaluation and planning for its subsidiaries. Amoco Corporation and its consolidated subsidiaries (herein collectively also called "Amoco" or the "Corporation") form a large integrated petroleum and chemical enterprise. There are three principal wholly owned subsidiaries. These subsidiaries and the businesses in which they are engaged are summarized below: Amoco Production Company .. Exploration, development and production of crude oil, natural gas, and natural gas liquids("NGL"), and marketing of natural gas and NGL. Amoco Oil Company ......... Refining, marketing and transporting of petroleum and related products. Amoco Chemical Company .... Manufacture and sale of chemical products. Amoco Company, a wholly owned subsidiary of Amoco Corporation, is the holding company for substantially all petroleum and chemical operating subsidiaries except Amoco Canada Petroleum Company Ltd. ("Amoco Canada"), which is wholly owned by Amoco Corporation, and selected other activities. Amoco Corporation has guaranteed the outstanding public debt obligations of Amoco Company. Amoco Corporation and Amoco Company have guaranteed the notes, bonds and debentures of Amoco Canada. See Note 10 to the Consolidated Financial Statements. Summarized financial information relating to Amoco Company and Amoco Canada is disclosed in Note 23 to the Consolidated Financial Statements. Selected financial information by geographic area and industry segment for the three years ended December 31, 1997, is presented in Note 24 to the Consolidated Financial Statements. Exploration and Production Amoco is engaged in exploration for crude oil and natural gas in onshore and offshore areas of the United States, Canada and various countries outside North America. United States offshore efforts are conducted primarily in the Gulf of Mexico in both shallow and deep water. Foreign exploration activities are carried out primarily in the Alberta Basin of Canada, the North Sea (United Kingdom and Norway), the Gulf of Suez and Nile Delta (Egypt), West Africa (Algeria, Angola and Nigeria), Caspian Sea (Azerbaijan and Kazakstan), South America (Argentina, Bolivia, Colombia and Venezuela) and Trinidad and Tobago. Amoco's U.S. production of crude oil, condensate, NGL, and natural gas is principally in the states of Alabama, Arkansas, Colorado, Kansas, Louisiana, Mississippi, New Mexico, Oklahoma, Texas, Wyoming and offshore in the Gulf of Mexico. Foreign crude oil and natural gas production is located in Argentina, Azerbaijan, Bolivia, Canada, China, Colombia, Egypt, the Netherlands, Norway, Sharjah, Trinidad, the United Kingdom and Venezuela. Worldwide net production of liquid hydrocarbons in 1997 averaged 637,000 barrels per day, about four percent lower than the 1996 level of 662,000 barrels per day. U.S. liquids production averaged 274,000 barrels per day in 1997, down eight percent from 1996, as a result of normal field declines and property dispositions. Worldwide net production of natural gas decreased 240 million cubic feet ("mmcf") per day in 1997 and averaged 4,142 mmcf per day for the year. In the United States, natural gas production decreased eight percent in 1997, and averaged 2,368 mmcf per day for the year. Amoco's net production of oil and gas for the three years ended December 31, 1997, which includes applicable volumes produced under service contracts and production sharing agreements in certain foreign countries, is summarized below: United States Canada Europe Other Worldwide Crude oil and natural gas liquids* (thousands of barrels per day) 1997................... 274 61 65 237 637 1996 .................. 297 61 60 244 662 1995 .................. 295 66 64 235 660 Natural gas (millions of cubic feet per day) 1997 .................. 2,368 761 390 623 4,142 1996 .................. 2,572 815 386 609 4,382 1995 .................. 2,453 842 363 581 4,239 * 1997 includes Amoco's interest in affiliates' production. U.S. production includes NGL from processing plants in which Amoco has an ownership interest of 62, 66 and 64 thousands of barrels per day for the years 1997, 1996 and 1995, respectively. In early 1997, Amoco and Shell Oil Company completed the formation of Altura Energy Ltd., a partnership combining their assets in the Permian Basin area of west Texas and southeast New Mexico. The partnership is designed to reduce costs and capitalize on economies of scale. In 1997, Amoco received 110,000 barrels of oil equivalent per day from its 64 percent interest. Also in 1997, Amoco formed a partnership called Crescendo Resources L.P., with a subsidiary of YPF S.A. This partnership owns and operates reserves of about one trillion cubic feet ("tcf") of natural gas in the Texas Panhandle and Western Oklahoma. At year-end 1997, Amoco owned entirely or had an ownership interest in 42 natural gas processing plants in the United States. Amoco is the operator of 9 of the plants; Altura Energy Ltd. is the operator for 11 plants; and Crescendo Resources L.P. is the operator of 2 plants. A new plant in Kansas, in which Amoco is operator, is expected to be fully operational by the end of the first quarter of 1998. Amoco continued optimization of production from existing waterflood and improved oil recovery operations in 1997. These projects are predominately located in the Permian Basin of west Texas and New Mexico and in Colorado and Wyoming. Collectively these areas account for approximately 56 percent of Amoco's U.S. net crude and condensate production. After conducting several pilot tests of its proprietary technology in enhanced coalbed methane ("ECBM"), Amoco proceeded with Tiffany ECBM, its first full-scale commercial ECBM project located in southwestern Colorado. Initial nitrogen injection began in January 1998. Capitalizing on recent advances in 3-D seismic technology, Amoco drilled 13 consecutive producing wells in the Tuscaloosa trend of Louisiana. Net proved reserves of 200 billion cubic feet ("bcf") of natural gas and production of 70 mmcf per day of natural gas were added with these wells. Development of Amoco's holdings in this trend is anticipated to continue through the turn of the century. In the Gulf of Mexico deepwater area, Amoco produced first oil and natural gas from the Ram-Powell Project, a development with Shell Oil Company and Exxon Corporation. Amoco's share of total development expenses for the project is estimated at $260 million. Development of the $465 million Marlin Project ("Marlin") began in early 1997. Marlin is located 125 miles southwest of New Orleans in 3,240 feet of water. Marlin is the first Amoco-operated deepwater development in the Gulf of Mexico, and will be developed using a tension leg platform. Construction and drilling operations began in mid-1997 with production expected by mid-1999. Evaluation work continues on nearby acreage. Amoco expects to maintain an active deepwater exploration program in 1998. Amoco is building and will be operating a cryogenic natural gas processing plant in Pascagoula, Mississippi to process the Marlin natural gas. The plant, in which Amoco will have a 60 percent interest, is expected to have a daily processing capacity of one billion cubic feet of natural gas. The plant is anticipated to be fully operational in early 1999. In 1997, Amoco sold non-core oil and gas properties as part of its strategy to upgrade and refocus the U.S. portfolio of E&P assets. These properties had a net annual impact on production of about 20 thousand barrels per day of crude oil and NGL and 120 mmcf per day of natural gas. Proceeds from these sales and the sale of an intrastate natural gas pipeline in Texas, approximated $1.2 billion. Additional oil and gas properties identified by the Corporation as non-core are expected to be sold in 1998. In Canada, Amoco divested its arctic drilling operations, as well as other non-core oil and gas properties in western Canada. Proceeds are mainly being used to maintain natural gas production. Amoco entered into an alliance with Northstar Energy Corporation of Calgary ("Northstar") to pursue natural gas exploration in northeast British Columbia. Northstar will commit $32 million to exploration and development activities on Amoco's acreage over the next three years. Amoco also entered into an agreement with CU Power International Ltd. to develop a steam enhancement plant. The plant will use natural gas as a fuel source to efficiently produce steam and electricity for use at Amoco's Primrose heavy-oil project. Surplus electricity is expected to be sold to third parties. In November 1997, Amoco Argentina Oil Company ("Amoco Argentina")and Bridas Corporation ("Bridas") created a jointly- owned company called Pan American Energy LLC. ("Pan American"). The new enterprise is a result of the combination of the respective assets of Amoco Argentina and Bridas in the southern part of South America. Pan American is the second largest producer of crude oil and natural gas in Argentina. Amoco holds a 60 percent interest in the new venture. In Bolivia, Amoco owns an interest and assumed operatorship of a new Bolivian company, Empresa Petrolera Chaco S.A. ("Chaco"), in April 1997. During 1997, Chaco commenced efforts to increase liquids production, initiate exploration and drilling operations and improve facilities. In China, Amoco completed the Liuhua field program with the completion of the twenty-fourth well in the South China Sea. Development was completed significantly ahead of the original plan and on target with the accelerated plan approved in 1997. Also, acquisition of 3-D seismic data was approved and completed in 1997, and is expected to be used to support optimal sidetrack drilling in 1998 and throughout the remaining life of the field. In Colombia, Amoco completed construction of a pipeline and facilities necessary to begin natural gas sales from its Opon field discovery. Net sales of approximately 30 mmcf per day of natural gas began in late 1997 to Ecopetrol, the Colombian national oil company. In 1998, Amoco is expected to supply natural gas from the Opon field to the 200 megawatt Termo Santander power generation station, which was partially completed in 1997 by Amoco Power Resources Corporation. In Egypt, Amoco continues to enjoy success in exploration and development of natural gas in the Nile Delta. Through its working interest in a number of partnerships, Amoco participated in 18 commercial gas discoveries in the Nile Delta. In 1997, Amoco and its partner announced plans to develop the 2 tcf Ha'py field natural gas discovery in the Nile Delta. Natural gas is expected to be sold into the expanding Egyptian domestic market beginning in late 1999. Amoco is also moving ahead with plans for additional sales to the local Egyptian market over the next few years (net 120 mmcf of natural gas per day on line by 2000), and is exploring natural gas export opportunities. In the Netherlands, Amoco successfully completed the construction of the Peak Gas storage facility. The plant was officially dedicated in December 1997. The $150 million facility at Alkmaar will help the Dutch national gas transmission and distribution company, Gasunie, meet peak demand for natural gas starting in 1998. In Norway, ongoing development drilling on the new well protector platform resulted in the addition of five wells in the 19 well program. Other notable accomplishments included installation of the new crude oil pipeline and natural gas pipeline to be commissioned in conjunction with the Ekofisk II rebuild. In Sharjah, Amoco continued development of the Sajaa Field using multi-lateral horizontal wells resulting in sustained peak production. In addition, the first phase of Inlet Compression was completed resulting in a lower reservoir abandonment pressure. In Trinidad and Tobago, Amoco enjoyed continued success, adding 1.3 tcf of natural gas reserves, 25.5 million barrels of crude oil and condensate reserves and completing three successful exploration wells. Amoco is participating with a 34 percent ownership interest in the construction of a new liquid natural gas ("LNG") facility, and is expected to supply 100 percent of the plant's initial natural gas requirement of approximately 450 mmcf per day beginning in 1999. Amoco is positioned to supply additional gas as the LNG facility is expanded. Amoco recently signed two production sharing contracts with the government of Trinidad and Tobago. Amoco is the operator and holds a 70 percent interest in Block 5B and has a 40 percent non-operating interest in Block S11B. Seismic work on these blocks has been completed and exploration drilling is scheduled to begin in the second quarter of 1998. In the United Kingdom, production from the Armada complex commenced in October 1997, and averaged production of 13,000 barrels of oil equivalent per day to Amoco in the fourth quarter. Amoco's working interest in the project is 18.2 percent. The export of natural gas from Armada boosted throughput in the Amoco operated Central Area Transmission System (CATS). Beacon Gas Limited, whose principal activity is the distribution of natural gas to the retail sector and in which Amoco has a 50 percent interest, increased the number of customers contracted to 150,000. In Venezuela, gross production commenced in the first quarter of 1997 in the Deep Jusepin field at approximately 10,000 barrels of oil per day through a temporary production facility. The rate was increased to 18,000 barrels per day in October 1997 when the permanent production facility was completed. Development drilling is expected to enable gross production at capacity of 30,000 barrels of oil per day by the end of the second quarter of 1998. Amoco has a 45 percent interest in the Jusepin field. During 1997, Amoco began exploration programs in the Punta Pescador and Guarapiche blocks, in which Amoco holds 50 percent and 37.5 percent interests, respectively. Seismic acquisition is currently under way with exploratory wells planned in 1998. In Azerbaijan, Amoco has a 17 percent working interest and is a leading partner in the Azeri, Chirag, and deepwater Gunashli project in the Azeri sector of the Caspian Sea. Azerbaijan International Operating Company ("AIOC") is the operator on behalf of the partners. In 1997, AIOC completed the minimum work program and initiated production from the early oil project. Production from the early oil project is expected to be exported via a distribution route which runs from Baku to Novorossiysk, Russia. In 1997, work progressed on another distribution route from Baku to Supsa, Georgia and on phase 1 of the offshore development. In 1997, Amoco and other partners were awarded the rights to explore and develop the Ashrafi and Dan Ulduzu prospects in the Caspian Sea. Amoco is the lead partner with a 30 percent working interest. North Absheron Operating Company ("NAOC") was formed to act as operator on behalf of the partners. NAOC completed a 3-D seismic program and commenced drilling of the first exploration well. Average sales prices (including transfers) and production costs per unit of crude oil and natural gas produced, for the three years ended December 31, 1997, are as follows: United States Canada Europe Other 1997 Average sales prices: Crude oil (per barrel) ..... $18.47 $14.19 $18.56 $17.85 Natural gas liquids (per barrel) ............. $12.46 $14.36 $ -- $ -- Natural gas (per thousand cubic feet ("mcf")) ...... $ 2.15 $ 1.38 $ 2.69 $ 1.19 Average production costs (per equivalent barrel) (*) ..... $ 4.04 $ 3.48 $ 7.33 $ 4.98 1996 Average sales prices: Crude oil (per barrel) ..... $20.21 $17.73 $20.94 $19.30 Natural gas liquids (per barrel) ............. $13.95 $13.73 $ -- $ -- Natural gas (per mcf) ...... $ 1.93 $ 1.15 $ 2.47 $ 1.17 Average production costs (per equivalent barrel) (*) ..... $ 3.77 $ 3.38 $ 6.23 $ 4.58 1995 Average sales prices: Crude oil (per barrel) ..... $16.02 $15.15 $17.18 $16.02 Natural gas liquids (per barrel) ............. $10.00 $ 9.71 $ -- $ -- Natural gas (per mcf) ...... $ 1.35 $ .89 $ 2.45 $ 1.11 Average production costs (per equivalent barrel) (*) ..... $ 3.54 $ 3.29 $ 5.59 $ 3.93 (*) Production costs are shown on a dollar-per-barrel basis after converting natural gas into equivalent barrel units. Natural gas was converted on the basis of approximate relative energy content. Sales prices have declined significantly since December 31, 1997. Reported average sales prices represent recorded revenues for crude oil and natural gas production quantities sold or transferred. In some cases, particularly in overseas areas, recorded revenues reflect adjustments for royalties, net profits interests, and other contractual provisions. Accordingly, the reported per barrel figures do not necessarily represent actual average prices at which sales and transfer transactions occurred. Production costs include costs involved in lifting crude oil or natural gas to the surface and in gathering, treating, field processing and field storage. Such costs include operating labor, repairs and maintenance, materials, supplies and fuel consumed. Also included are operating costs of NGL plants and in certain overseas areas, costs related to product transportation expenses. Data regarding Amoco's exploratory and development drilling activities during the three years ended December 31, 1997, are summarized below: United World- States Canada Europe Other wide 1997 Net exploratory wells: Productive .......... 13 15 1 3 32 Dry ................. 9 4 15 6 34 Total ............. 22 19 16 9 66 Net development wells: Productive .......... 178 115 5 134 432 Dry ................. 9 19 -- 4 32 Total ............. 187 134 5 138 464 Total net wells ... 209 153 21 147 530 1996 Net exploratory wells: Productive .......... 51 45 -- 13 109 Dry ................. 78 20 5 6 109 Total ............. 129 65 5 19 218 Net development wells: Productive .......... 273 169 5 112 559 Dry ................. 32 22 -- 6 60 Total ............. 305 191 5 118 619 Total net wells ... 434 256 10 137 837 1995 Net exploratory wells: Productive .......... 53 71 -- 4 128 Dry ................. 47 24 4 8 83 Total ............. 100 95 4 12 211 Net development wells: Productive .......... 348 168 6 127 649 Dry ................. 20 10 -- 4 34 Total ............. 368 178 6 131 683 Total net wells ... 468 273 10 143 894 Shown below are wells in process of being drilled at December 31, 1997: United World- States Canada Europe Other wide Gross wells ...... 179 12 8 25 224 Net wells ........ 69 4 2 21 96 The number of wells owned by Amoco at December 31, 1997, was as follows: United World- States Canada Europe Other wide Gross wells owned: Oil wells ...... 22,028 4,623 204 797 27,652 Gas wells ...... 16,114 2,229 194 122 18,659 Total ........ 38,142 6,852 398 919 46,311 Net wells owned: Oil wells ...... 6,376 2,368 47 699 9,490 Gas wells ...... 9,015 1,419 74 75 10,583 Total ........ 15,391 3,787 121 774 20,073 Multiple completion wells included above: Gross wells .... 1,608 354 -- 51 2,013 Net wells ...... 713 249 -- 15 977 Amoco's proved and unproved acreage holdings, including acreage held under reservations, permits, options or similar arrangements at December 31, 1997, are summarized below: United World- States Canada Europe Other wide (thousands of acres) Gross acres: Proved ................ 4,934 2,009 877 898 8,718 Unproved .............. 12,273 3,969 10,023 31,772 58,037 Reservations, permits, options, etc. ....... 134 3,163 -- -- 3,297 Total ............... 17,341 9,141 10,900 32,670 70,052 Net acres: Proved ................ 2,262 1,300 243 368 4,173 Unproved .............. 4,241 2,323 4,513 17,286 28,363 Reservations, permits, options, etc. ....... 32 2,147 -- -- 2,179 Total ............... 6,535 5,770 4,756 17,654 34,715 Reserves This section should be read in conjunction with data on reserves presented in "Supplemental Information" to the Consolidated Financial Statements. Amoco replaced 178 percent of its production on an oil-energy equivalent basis during 1997, excluding ownership changes. Including the sales and purchases of properties, which primarily involved sales of interests in the United States and Canada, the production replacement rate was 147 percent. The tables in the "Supplemental Information" section set forth, by geographic area, net proved reserves as of December 31, 1997, 1996, 1995, and 1994 including reserves in which Amoco holds economic interest under production sharing and other types of operating agreements with foreign governments. Also included are Amoco's proportionate economic interest in estimated proved reserves of equity affiliates in Argentina and Bolivia. Adding to 1997 reserves were discoveries and extensions in the United States, Egypt, Argentina, Canada, Sharjah, the United Kingdom and Trinidad. Major improved recovery additions occurred in Argentina, Sharjah, Egypt, the United Kingdom and the United States. There were also significant upward revisions in crude oil in the United States, Egypt, Norway and Trinidad, and significant natural gas revisions in Canada, Bolivia and Trinidad. Downward revisions of natural gas reserves occurred in the United States. As of March 1, 1998, no major discovery or significant event had occurred that would have a material effect on the estimated proved reserves reported at December 31, 1997. Shown below are estimated proved reserves as of December 31, 1997 and 1996: Crude Oil & NGL Natural Gas (millions of barrels) (billions of cubic feet) Consoli- Affil- Consoli- Affil- dated iates Total dated iates Total Net proved reserves: December 31, 1997 2,253 164 2,417 20,088 1,368 21,456 December 31, 1996 2,423 -- 2,423 20,346 -- 20,346 Net proved developed reserves: December 31, 1997 1,646 120 1,766 13,097 807 13,904 December 31, 1996 1,882 -- 1,882 14,166 -- 14,166 Amoco has been required to file certain oil and gas reserve information with various governmental agencies and committees, including the Department of Energy ("DOE"), in connection with a variety of matters. Reserve estimates furnished to such authorities or agencies were determined on the same basis as the estimates contained herein, except for differences in format and definition as prescribed by the requesting authority. Oil and Gas Sales Commitments Amoco sells natural gas from its producing operations under a variety of contractual arrangements. Amoco has several natural gas sales contracts that specify obligations to make available fixed and determinable quantities. Amoco has 39 such contracts in the United States which, as of December 31, 1997, provide for the delivery over the next three years of 507 bcf of natural gas. Amoco expects this commitment to be fulfilled from proved reserves. Amoco (U.K.) Exploration Company has a gas contract with Teesside Power Limited which provides deliveries of approximately 16 bcf of natural gas over the next three years. Amoco expects this commitment to be fulfilled from reserves currently being developed. In Trinidad and Tobago, Amoco entered into a long-term gas sales contract with Atlantic LNG Company in 1996. Deliveries are expected to commence in 1999 and approximate 79 bcf of natural gas in that year. Amoco expects this commitment to be fulfilled from reserves currently being developed. Amoco Canada has 20 outstanding natural gas contracts as of December 31, 1997. Over the next three years, deliveries under these contracts total approximately 527 bcf of natural gas, which Amoco anticipates will be fulfilled from proved reserves. Satisfying Amoco's obligations under sales contracts that specify fixed and determinable quantities is not expected to have a material adverse effect on Amoco's operations or earnings. These contracts do not limit potential gains due to future increases in market prices since essentially all are based on market postings, an index basis, are negotiated annually, or are converted from fixed prices to market prices through the use of swaps (see Note 4 to the Consolidated Financial Statements and Supplemental Data). Supply and Marketing of NGL In Canada, Amoco is engaged in the wholesale marketing of NGL, which consists of ethane, propane, butanes and pentanes extracted from natural gas. The majority of Amoco's NGL is marketed on a wholesale basis under annual supply contracts which provide for price redetermination based on prevailing market prices. Sales volumes of NGL for 1997, 1996 and 1995 averaged 189,000 barrels per day, 200,000 barrels per day, and 204,000 barrels per day, respectively. Amoco owns or has interest in four fractionator plants in Canada and the United States. Two are located in Canada in Fort Saskatchewan and Sarnia and two are located in the United States in Hobbs, New Mexico and Mont Belvieu, Texas. In 1997, Amoco acquired a 12 percent interest in the Mont Belvieu plant, which has a design capacity to process 200,000 barrels per day of raw NGL mix. Refining Amoco owns and operates five refineries in the United States. The daily operable capacity of these refineries in 1997 is shown below: Daily Operable Capacity Location of Refinery (barrels) Texas City, Texas ........................... 433,000 Whiting, Indiana ............................ 410,000 Mandan, North Dakota ........................ 58,000 Yorktown, Virginia .......................... 57,000 Salt Lake City, Utah ........................ 52,000 Total ..................................... 1,010,000 Daily input to crude units averaged 938,000 in 1997, 954,000 barrels in 1996 and 926,000 barrels in 1995. Crude unit utilization was 92.9 percent in 1997 compared with 94.6 percent in 1996, primarily reflecting planned maintenance on a major crude processing unit. Refinery investments focused on chemical feedstock production, sustaining reliable operations, increasing crude oil flexibility, and environmental compliance. Transportation Amoco operates extensive transportation facilities for crude oil, refined products, NGL, carbon dioxide ("CO2")and petrochemical feedstocks in the United States. Crude oil is transported from most of the oil-producing areas of the continental United States to refining centers in the Rocky Mountain, midwestern and southwestern states. The crude oil system delivers directly to 11 refineries, four of which are owned by Amoco. Indirectly, the system serves some 35 refineries of other companies through connecting common carrier pipelines. In addition, the refined petroleum product system is connected to three refineries. Chemical feedstock lines receive product directly from Amoco refineries and other Amoco and non-Amoco facilities, and deliver directly to various plants. NGL is gathered and then transported through a system of owned, partially owned and common carrier pipelines in Canada and the United States. In total, Amoco's pipeline network in North America aggregates over 15,000 miles. In 1997, shipments through Amoco's pipeline system in North America totaled 442 million barrels of crude oil and 397 million barrels of refined products and feedstocks. Minority interests are also owned in 11 other common carrier pipeline companies, including Amoco's 14.3 percent interest in Colonial Pipeline Company, a common carrier refined products pipeline system which runs 1,600 miles from near Houston, Texas, to the New York City area, and its 10.5 percent interest in Endicott Pipeline, a crude oil pipeline system which runs from the Beaufort Sea to the Trans Alaska Pipeline. In 1997, Amoco acquired an equity interest in the Longhorn Partners Pipeline, Inc., a joint-venture pipeline company that will use new and existing assets to move refined products from Houston to El Paso starting in late 1998. In February 1997, a pipeline from Billings, Montana, to Elk Basin, Wyoming, built as part of a joint venture with Conoco to ship Canadian crude oil to Salt Lake City and Denver, became operational. The pipeline will increase the availability of Canadian crude oil to the Salt Lake City refinery, supporting refining and marketing plans for the northern Rocky Mountain states. Development of the Destine Pipeline system to transport hydrocarbons from Marlin to onshore Mississippi was approved in 1997. The Destine Pipeline system is jointly owned by Amoco, Shell Oil Company and Sonnet Exploration. The pipeline will be used to move product into the natural gas processing plant in Pascagoula, Mississippi. Amoco also owns and leases a number of trucks and railcars which are used to transport crude oil, raw materials, refined products and chemicals in North America. As of December 31, 1997, Amoco owned three U.S. Flag tug/barges and bareboat chartered another tug/barge, giving Amoco an aggregate of 79 thousand deadweight tonnage ("DWT"). In February 1997, Amoco sold a U.S. Flag tug/barge with an aggregate of 21 thousand DWT. Amoco was also committed under long-term time charters to three international flag tankers, totaling 240 thousand DWT. An additional 350 thousand DWT was time chartered on a short- term basis, of which 51 thousand DWT was for a U.S. Flag tanker. Marketing of Petroleum Products The principal refined products manufactured and marketed by Amoco are gasolines, diesel fuels, jet fuels, heating oils, asphalt, residual fuels, motor oils, greases and lubricants. Motor gasolines, diesel fuels, heating oils and motor oils are sold under various brand names and trade names, the principal ones of which include the words AMOCO, PERMALUBE, ULTIMATE, SILVER and in the midwestern states, STANDARD. Amoco also sells large quantities of liquefied petroleum gas and NGL, and offers convenience merchandise and related services to motorists, some of which are marketed under the CERTICARE and SPLIT SECOND brand names. In the United States, Amoco's marketing of petroleum products is concentrated in the midwest, east and southeast. Amoco supplies about 9,300 gasoline retail outlets, of which approximately 3,200 are either owned or leased. Most of these outlets are independently operated. Amoco continues to reposition its marketing operations by acquisitions, asset recapitalization and construction of high volume facilities, including cobranded sites with retailers such as McDonald's Corporation. In 1997, petroleum products sales volumes averaged 1.2 million barrels per day in the United States, about the same as in 1996. Gasoline sales increased five percent during 1997, and averaged 660,000 barrels per day for the year. Distillates sales averaged 339,000 barrels per day, about eight percent lower than in 1996. U.S. sales volumes of petroleum products for the three years ended December 31, 1997, are detailed below: 1997 1996 1995 (thousands of barrels per day) United States: Gasoline .............. 660 630 614 Distillates ........... 339 370 366 Other products ........ 204 201 191 Total ............... 1,203 1,201 1,171 Chemicals Amoco produces and markets a variety of petroleum-based chemicals worldwide. Chemical feedstocks include paraxylene ("PX"), metaxylene, olefins, and styrene used as raw materials for other chemical product lines. Chemical intermediates include purified terephthalic acid ("PTA"), the preferred raw material for the manufacture of polyester; purified isophthalic acid ("PIA") used for isopolyester resins and gel coats; trimellitic anhydride used principally in plasticizers; polybutene used in lubricating oil additives; dimethyl-2,6-naphthalene dicarboxylate, commonly known as "NDC", used for photographic film and specialized packaging; linear alpha-olefins used for polyethylene, detergents and plasticizers; and poly alpha-olefins used as base stock for synthetic lubricants. Polymers include polypropylene used for molded products, fibers and films; engineering polymers used for medical, automotive and electronic applications; and carbon fibers used in sporting goods and aerospace applications. Fabrics and fibers are primarily used in carpet backing, home furnishings and industrial uses such as civil engineering fabrics and bulk bags. Amoco's principal North American chemical and plastic products facilities are located at Alvin, Baytown, Deer Park, Pasadena and Texas City, Texas; Decatur and Roanoke, Alabama; Greenville, Rock Hill, Seneca, Spartanburg, and the Cooper River plant near Mount Pleasant, South Carolina; Rocky Mount, North Carolina; Atlanta, Augusta, Bainbridge, Hazlehurst and Nashville, Georgia; Joliet, Illinois; Afton, Virginia; Marietta, Ohio; Hawkesbury and Brantford, Ontario and Matehuala, Mexico. A wholly owned chemical plant at Geel, Belgium manufactures PTA, PIA and polypropylene. Facilities for the fabrication of carpet backing and industrial cloth from polypropylene are located in the United Kingdom, Germany, Australia and Brazil. In 1997, Amoco began operations at a carpet-backing plant in Gyor, Hungary. Linear alpha-olefins and poly alpha-olefins are processed at a plant in Feluy, Belgium. In 1997, Amoco's PTA plant in Kuantan, Malaysia was expanded by 100,000 metric tons in mid-year. Amoco's PTA joint-venture plant in Indonesia was successfully started in September 1997. A 500,000 ton PTA unit in Mount Pleasant, South Carolina came onstream in June 1997. Construction continues on a new 500,000 ton Geel, Belgium PTA unit, which is scheduled to start in the second quarter of 1998. Amoco also holds a 50 percent interest in a fabrics plant in China; a 50 percent interest in an isophthalic acid plant in Japan; and the following interests in PTA plants: 49 percent in Brazil; 50 percent in Indonesia; 50 percent in Taiwan; 35 percent in South Korea; and 9 percent in Mexico. Amoco holds a 40 percent interest in Singapore Aromatics Company, which operates an aromatic complex that includes 350,000 tons of PX capacity. The following table sets forth chemical segment revenues for the three years ended December 31, 1997: 1997 1996 1995 (millions of dollars) Chemical feedstocks ........ $ 1,230 $ 745 $ 704 Chemical intermediates ..... 2,607 2,533 2,622 Polymers ................... 980 938 890 Fabrics and fibers ......... 927 963 970 Foam products .............. -- 181 288 Other ...................... 646 409 243 Total worldwide .......... $ 6,390 $ 5,769 $ 5,717 Other Operations Amoco has a wholly owned real estate subsidiary, AmProp, Inc. ("AmProp"), which was formed in late 1988. AmProp was established to develop a portfolio of actively managed real estate investments. The real estate investments have been developed in partnerships with local developers. One such venture, the Cantera development west of Chicago, began occupancy in 1997 and will eventually consist of nine million square feet of office, light-industrial, and multi-family residential units. The project will also include retail, hotel, and recreational developments. Amoco conducts certain non-petrochemical technology development through a separate operating subsidiary, Amoco Technology Company. Currently, the operating company has interests in two areas of major focus: photovoltaics (solar power) and genomic disease management. Amoco/Enron Solar, a partnership with Enron Corporation, manufactures and markets semicrystalline and amorphous silicon modules that produce electricity directly from sunlight, as well as develops solar powered electric generation facilities. Vysis, Inc. is a genomic disease management company that develops, commercializes and markets clinical products that provide information critical to the evaluation and management of cancer, prenatal disorders and other genetic diseases. The company currently markets five clinical products cleared by the Food and Drug Administration, more than 240 research products, an integrated line of genetic imaging workstations and other instruments for cytogenetic analysis. In February 1998, Vysis, Inc. completed a public offering of its common stock. Amoco retains a 69 percent interest in this previously wholly owned venture. Amoco has retained LaSalle Partners to handle the possible sale of the Amoco Building in Chicago, Illinois, the headquarters of Amoco. Research Research operations are conducted primarily at five research locations. At Tulsa, Oklahoma, research activities are directed toward new and improved methods for finding and producing crude oil and natural gas. In Naperville, Illinois, research is conducted to develop new and enhanced chemical and petroleum products and processes. These efforts include improvement of product performance and methods used in the manufacturing of chemicals and polymers, and refining of crude oil. The Alpharetta, Georgia, research facility also conducts research for polymers and engineered resins, and at Austell, Georgia, research and development activities focus on extending and creating synthetic fabrics, fibers, yarns and related processing equipment. Research and development in support of genetic research and products is carried out at Downers Grove, Illinois. Expenditures for research and technology development activities totaled $151 million in 1997, $171 million in 1996 and $175 million in 1995. An average of 834, 854 and 1,000 professional employees were engaged full-time in these activities during 1997, 1996 and 1995, respectively. Employees Amoco had 43,451 employees in its worldwide operations as of December 31, 1997. Of this total, 32,726 were located in the United States, with approximately 16 percent represented by various labor organizations. The remaining 10,725 employees were located in non- U.S. countries, of which approximately 28 percent were represented by labor groups. Competition All phases of the petroleum and chemical industries, comprising numerous competitors large and small, are highly competitive, including the search for and development of new sources of supply; the construction and operation of crude oil and refined products pipelines; and the refining, manufacturing, distributing and marketing of petroleum and chemical products. The petroleum industry also competes with other industries in supplying energy, fuel and other needs of consumers. Amoco does not consider one or a small group of competitors to be dominant in the industries in which it competes. In 1997, Amoco was the largest corporate producer of natural gas in the United States. Amoco believes that it ranked sixth in crude oil and natural gas liquids production in the United States in 1997. Amoco sells petroleum products in 33 states and the District of Columbia. Amoco is among the largest U.S. chemical companies in terms of sales revenues. Amoco is the world's largest manufacturer of PTA, with annual capacity of 6.7 million metric tons, including joint ventures. Amoco is also the world's leading manufacturer of paraxylene with annual production capacity of 2.1 million metric tons, including joint ventures. Amoco has operations in approximately 30 countries. In addition, the discussion under the headings "Exploration and Production," "Reserves," "Oil and Gas Sales Commitments," "Supply and Marketing of NGL," "Refining," "Transportation," "Marketing of Petroleum Products," "Chemicals," "Other Operations" and "Research" in Items 1 and 2 of this Form 10-K discloses more detailed information on product markets included in the various segments of Amoco's operations. Government Regulation Petroleum industry activities have been, and in the future may be, affected from time to time by political developments, both foreign and domestic, and federal, state and local laws, regulations and decrees, such as restrictions on production, imports and exports, crude oil and products allocation and rationing, price controls, tax increases and retroactive tax claims, expropriation of property, cancellation of contract rights and environmental protection controls. The likelihood of such occurrences and their overall effect upon Amoco vary from country to country and are not predictable. The DOE and the Federal Energy Regulatory Commission ("FERC") have jurisdiction over Amoco's common carrier pipelines engaged in the interstate transportation of crude oil. The Interstate Commerce Act requires Amoco to file tariffs showing all rates, charges and regulations for movements through its common carrier pipeline system. FERC has the authority to establish rates for regulated movements. Various state agencies also regulate Amoco's common carrier pipelines engaged in the intra-state transportation of crude oil. An excise tax, commonly known as the Superfund tax, became effective on January 1, 1987. This tax is imposed to finance an $11.97 billion hazardous substance cleanup program. The tax consists of four parts: (1) a petroleum tax, imposed at a rate of 9.7 cents per barrel for domestic crude received at U.S. refineries and imported petroleum products (including crude oil). In addition, the Oil Spill Liability Trust Fund Tax became effective January 1, 1990. This tax, which was imposed at the rate of 5 cents per barrel and is an additional part of the petroleum tax portion of the Superfund tax imposed upon domestic crude and imported petroleum products (including crude oil), was suspended effective July 1, 1993; (2) a chemical feedstock tax, imposed at a rate of up to $4.87 per ton for taxable chemicals. Effective January 1, 1989, certain taxable substances, which are manufactured from chemicals subject to the chemical feedstock tax, are taxable on imports into the United States. On export, these substances are eligible for a credit or refund of the chemical feedstock tax paid on chemicals used in their manufacture; (3) a broad-based environmental tax, imposed at a rate of 0.12 percent of a corporation's "modified alternative minimum taxable income" in excess of $2 million as computed under the Tax Reform Act of 1986. This tax applies regardless of whether a taxpayer has any alternative minimum tax liability; and (4) an underground storage tank tax, which is imposed at a rate of 0.1 cent per gallon of gasoline and certain other fuels. Effective January 1, 1996 the Superfund tax expired. However, part (4) the underground storage tank tax was reimposed effective October 1, 1997, at the same rate and on the same fuels as previously imposed. The other parts of the Superfund tax are subject to reauthorization by Congress. Safety, Health and Environmental Protection Amoco facilities and products are subject to a large body of national and local laws and regulations regarding protection of human health, safety and the environment. The Corporation is committed to safety, health and environmental stewardship, as reflected in its policies and programs. An auditing program periodically evaluates and assures the integrity and effectiveness of safety, health and environmental management systems in use at Amoco facilities and operations worldwide. The Amoco Crisis Management system seeks to provide rapid and effective response in the event of an emergency at Amoco operations. Amoco's chemical and petroleum products are manufactured and sold in compliance with numerous laws and regulations related to product safety. The Corporation has a product stewardship program to evaluate the safety, health and environmental aspects of its products, to obtain necessary country-specific clearances for the sale of products, and to provide information to employees and customers on the safe and environmentally sound use of Amoco products. Additionally, Amoco's refining and marketing operations continue to adapt to current and future reformulated gasoline requirements under clean air laws. Amoco's operations face strict controls on release of pollutants to the air, water, soil and ground water. Process equipment and pollution control devices continue to be upgraded or added to meet environmental standards. Waste handling and treatment strategies are reviewed and adjusted to meet requirements for environmental protection. Remediation of contaminated sites under the Resources Conservation and Recovery Act, the federal Superfund law, and similar state laws is ongoing and will continue for the foreseeable future. Existing and potential remediation obligations are identified through an assessment program, and numerous projects are under way to address the contamination found. The Corporation is also subject to claims made for natural resource damages under several federal laws. In the future, new laws or regulations intended to address global climate change could impact emission monitoring or reduction requirements at Amoco operations and facilities. Such requirements also might have impacts on manufacturing processes, product formulation or product characteristics. Amoco's 1997 capital expenditures for existing environmental regulations totaled $89 million. In addition, Amoco spent $292 million for related operating costs and research and development, and $59 million for mandated and voluntary remediation projects. Remediation costs in 1998 are expected to approximate the 1997 level. Capital expenditures in the environmental area are expected to be approximately $96 million in 1998. In 1999, approximately the same level of environmental spending is expected. Executive Officers of the Registrant Certain information required by Item 10 with respect to executive officers is incorporated by reference to pages 2-7 of Amoco's Proxy Statement dated March 16, 1998. The following table sets forth information concerning other executive officers of Amoco as of March 1, 1998: Served as Executive Officer Name Principal Occupation Age Since John F. Campbell . Senior vice president, human 54 1998 resources John L. Carl ..... Executive vice president and 50 1991 chief financial officer James E. Fligg ... Senior executive vice president, 61 1991 strategic planning and international business development L. Richard Flury . Executive vice president, 50 1994 exploration and production sector W. Douglas Ford .. Executive vice president, 54 1992 petroleum products sector Enrique J. Sosa .. Executive vice president, 57 1995 chemicals sector George S. Spindler Senior vice president, law and 60 1989 corporate affairs David F. Work .... Senior vice president, shared 52 1996 services An officer holds office until his or her resignation, removal, death, retirement or termination of employment with Amoco. All executive officers, with the exception of Enrique J. Sosa, have been employed by Amoco or its subsidiaries for more than five years. John F. Campbell was appointed Senior Vice President, Human Resources effective January 1, 1998 replacing R. Wayne Anderson. From April 1996 through December 1997, John F. Campbell was the Vice President of Human Resources for Corporate People Strategies. He was named Vice President Corporate People Strategies and Chemicals Sector HR Contact Executive in April 1997 and Vice President Executive Resources and Chemicals Sector HR Contact Executive in January 1995. Prior to that time, Mr. Campbell had been General Manager Executive Resources since 1992 and progressed through a series of Human Resources managerial positions between 1967 and 1992. John L. Carl was elected Executive Vice President and Chief Financial Officer effective April 1, 1994. From October 1993 to April 1994, he was Senior Vice President Finance and Controller of Amoco Corporation. Prior to that time, John L. Carl was Vice President and Controller of Amoco Corporation, elected effective February 1, 1991. L. Richard Flury was appointed Executive Vice President, Exploration and Production Sector, effective January 1, 1996. L. Richard Flury was elected Senior Vice President, Shared Services in July 1994. From 1993 until July 1994 he was both Chairman of Amoco Orient Company and Project Manager for an extensive study of Amoco's corporate support groups. L. Richard Flury served as Executive Vice President of Amoco Chemical Company from February 1991 to March 1993. W. Douglas Ford was elected Executive Vice President, effective July 1, 1993. His title changed to Executive Vice President, Petroleum Products Sector effective July 1, 1994. He was named President of Amoco Oil Company in July 1992. In February 1991, W. Douglas Ford was named Executive Vice President of Amoco Oil Company. Enrique J. Sosa was appointed Executive Vice President, Chemicals Sector, effective October 1, 1995. From 1990, Enrique J. Sosa was Senior Vice President of Dow Chemical Company and President of Dow North America. David F. Work was appointed Senior Vice President, Shared Services, effective January 1, 1996. David F. Work joined Amoco in 1970 and was Group Vice President of Worldwide Exploration for Amoco Production Company from February 1992 to the effective date of his current appointment. Except as previously described, others shown in the table on the previous page, who have been officers less than five years, served in substantially the same position but were not officers or had different officer titles. Item 3. Legal Proceedings 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 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 $7.25 million. The Internal Revenue Service ("IRS") has challenged the application 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. On June 18, 1992, the IRS issued a statutory Notice of Deficiency for additional taxes in the amount of $466 million, plus interest, relating to 1980 through 1982. The Corporation filed a petition in the U.S. Tax Court contesting the IRS statutory Notice of Deficiency. Trial on the matter was held in April 1995, and a decision was rendered by the U.S. Tax Court in March 1996, in Amoco's favor. The IRS appealed the Tax Court's decision to the U.S. Court of Appeals for the Seventh Circuit, and on March 11, 1998, the Seventh Circuit affirmed the Tax Court's prior decision. A comparable adjustment of foreign tax credits for each year has been proposed for the years 1983 through 1992 based upon subsequent IRS audits. The Corporation believes that the foreign income taxes have been reflected properly in its U.S. federal tax returns. Consequently, this dispute is not expected to have a material adverse effect on liquidity, results of operations, or the consolidated financial position of the Corporation. Amoco has various other suits and claims pending against it among which are several class actions for substantial monetary damages which in Amoco's opinion are not meritorious. While it is impossible to estimate with certainty the ultimate legal and financial liability with respect to these other suits and claims, Amoco believes that, while the aggregate amount could be significant, it will not be material in relation to its liquidity or its consolidated financial position. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the quarter ended December 31, 1997. ___________________________________ PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters The principal public trading market for Amoco common stock is the New York Stock Exchange. Amoco common stock is also traded on the Chicago, Pacific, Toronto, and Swiss stock exchanges. The following table sets forth the high and low share sales prices of Amoco common stock as reported on the New York Stock Exchange and cash dividends paid for the periods presented. Cash Market Prices Dividends High Low Per Share 1997 First quarter ..... $ 91 5/8 $ 80 1/4 $ .70 Second quarter .... $ 91 7/8 $ 79 1/4 $ .70 Third quarter ..... $ 99 $ 87 $ .70 Fourth quarter .... $ 98 3/8 $ 81 13/16 $ .70 1996 First quarter ..... $ 74 1/8 $ 67 1/2 $ .65 Second quarter .... $ 75 1/8 $ 69 1/2 $ .65 Third quarter ..... $ 72 5/8 $ 65 $ .65 Fourth quarter .... $ 83 1/2 $ 70 1/4 $ .65 Year-end 1997 and 1996 market prices were $85 1/8 and $80 1/2, respectively. Amoco had 134,029 shareholders of record at December 31, 1997. The quarterly cash dividend was raised to 75 cents per share, effective with the first quarter 1998 dividend. Amoco declared a two-for-one split of each share of common stock outstanding on March 31, 1998. Item 6. Selected Financial Data The following selected financial data, as it relates to the years 1993 through 1997, have been derived from the consolidated financial statements of Amoco, including the consolidated statement of financial position at December 31, 1997 and 1996 and the related consolidated statement of income and consolidated statement of cash flows for the three years ended December 31, 1997, and the notes thereto, appearing elsewhere herein. 1997 1996 1995 1994 1993 (millions of dollars, except per-share amounts and ratios) Income statement data-- Year ended December 31: Sales and other operating revenues (excluding consumer excise taxes) $31,910 $32,150 $27,066 $26,048 $25,336 Net income .............. $ 2,720 $ 2,834 $ 1,862 $ 1,789 $ 1,820 Net income per share (basic) ............... $ 5.55 $ 5.69 $ 3.76 $ 3.60 $ 3.66 Net income per share (assuming dilution) ... $ 5.52 $ 5.67 $ 3.75 $ 3.57 $ 3.63 Cash dividends per share $ 2.80 $ 2.60 $ 2.40 $ 2.20 $ 2.20 Ratio of earnings to fixed charges (*) ..... 9.1 10.3 6.9 8.9 8.0 Balance sheet data-At December 31: Total assets ............ $32,489 $32,100 $29,845 $29,316 $28,486 Long-term debt .......... $ 4,639 $ 4,153 $ 3,962 $ 4,387 $ 4,037 Shareholders' equity .... $16,319 $16,408 $14,848 $14,382 $13,665 Shareholders' equity per share ................. $ 33.79 $ 33.00 $ 29.91 $ 28.97 $ 27.53 (*) Earnings consist of income before income taxes and fixed charges; fixed charges include interest on indebtedness, rental expense representative of an interest factor, and adjustments for certain companies accounted for by the equity method. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Highlights 1997 1996 1995 Net income (millions) ....... $ 2,720 $ 2,834 $ 1,862 Net income per share (basic). $ 5.55 $ 5.69 $ 3.76 Net income per share (assuming dilution) ....... $ 5.52 $ 5.67 $ 3.75 Cash dividends per share .... $ 2.80 $ 2.60 $ 2.40 Return on average shareholders' equity ...... 16.6% 18.1% 12.7% Return on average capital employed .......... 13.2% 13.8% 10.3% Net income for 1997 was $2.7 billion, second only to record 1996 earnings of $2.8 billion, and $800 million above the $1.9 billion earned in 1995. Year-to-year comparisons of net income were affected by significant unusual items summarized in the table below. incr.(decr.) net income 1997 1996 1995 (millions of dollars) Net asset dispositions and impairments ........... $ 271 $ 153 $ (297) LIFO inventory .............. -- 90 -- Amoco's continued aggressive portfolio management in 1997 focused on investing in significant growth opportunities while identifying non-strategic assets to be divested. Earnings in 1997 included $271 million of net gains from asset dispositions, primarily the sale of non-core oil and gas properties in the United States. Asset sales in the United States, including the sale of a natural gas pipeline unit in Texas, generated proceeds of about $1.2 billion. Additional sales of U.S. oil and gas properties are expected to be completed in early 1998. Included in 1996 earnings were gains of $97 million on the sale of Amoco's polystyrene foam products business and $56 million on the sale of certain Canadian oil and gas properties, and a $90 million gain from a reduction in last-in, first-out ("LIFO") inventory levels. Earnings in 1995 included an $83 million gain on the sale of Amoco Motor Club; non-cash charges of $380 million associated with asset impairments reduced 1995's income. Excluding these unusual items for all periods, 1997 earnings of $2,449 million were five percent below 1996 earnings of $2,591 million, but were 13 percent above 1995 earnings of $2,159 million. Earnings in 1997 benefited from higher natural gas prices and improved refining operations and petroleum product sales margins. Also benefiting 1997 results were continued efficiencies accruing from Amoco's Shared Services operations. Adversely affecting 1997 earnings were lower crude oil prices and lower production volumes. Chemical earnings were below 1996 levels, as excess industry capacity put downward pressure on sales prices and margins, especially for paraxylene ("PX"). Higher corporate expenses reflecting increased interest expense, adverse currency effects and revised estimates of tax obligations, also contributed to the decline. Sales and other operating revenues totaled $32 billion for 1997, about the same as in 1996. Natural gas revenues increased five percent primarily as the result of higher prices. Chemical revenues increased by seven percent, as higher sales volumes associated with capacity additions and acquisitions more than offset lower prices. Refined product and crude oil revenues declined four percent and six percent, respectively, mainly reflecting lower prices. Equity in income of affiliates and other income of $926 million in 1997 was $350 million above 1996, primarily reflecting the gain on U.S. non-core exploration and production ("E&P") property dispositions. Total costs and expenses on a worldwide basis totaled $33 billion, a slight increase from 1996. Operating expenses increased eight percent primarily resulting from higher refinery maintenance costs and costs associated with the start-up of production in Venezuela and Bolivia, increased activity in Trinidad and higher maintenance costs related to operations in the North Sea and the United States. Interest expense increased $209 million in 1997, reflecting an increase in long-term debt, as well as interest expense associated with revised estimates of tax obligations. Lower selling and administrative expenses, exploration expenses and costs for purchased materials and products were partly offsetting. Net income also benefited from favorable prior-year tax adjustments. Industry Segments In 1997, 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 ("NGL") are now included in the petroleum products segment. Previously, those businesses were reported in the Canadian E&P segment. Segment earnings for prior years have been restated to conform to the new basis. Results on a segment basis, for the five years ended December 31, 1997, are presented in the table below: Consolidated Results on a Segment Basis 1997 1996 1995 1994 1993 (millions of dollars) Exploration and production United States .......... $1,447 $1,132 $ 463 $ 820 $ 826 Canada ................. 195 201 (102) 113 347 Europe ................. 145 118 88 (65) (102) Other .................. 193 333 245 76 (48) Subtotal ............. 1,980 1,784 694 944 1,023 Petroleum products ....... 587 528 491 496 815 Chemicals ................ 493 735 963 485 222 Corporate and other operations* ............ (340) (213) (286) (136) (240) Net income ........... $2,720 $2,834 $1,862 $1,789 $1,820 *Corporate and other operations include net interest and general corporate expenses, and the results of investments in technology companies, real estate interests and other activities. Exploration and Production Worldwide Exploration and Production earnings totaled $1.6 billion in 1997, excluding net gains of $352 million associated with the disposition of non-strategic properties, compared with earnings of $1.8 billion in 1996. Higher worldwide natural gas prices favorably affected 1997 results. More than offsetting this favorable factor were lower crude oil and NGL prices and a decline in North American crude oil and natural gas production, due to normal field declines and dispositions. Worldwide, Amoco produced 637,000 barrels per day of crude oil and NGL and 4.1 billion cubic feet ("bcf") per day of natural gas. Production declined the equivalent of 65,000 barrels per day from 1996, reflecting normal field declines and dispositions, primarily in the United States. The production decline was mitigated by incremental or new production in Colombia, Venezuela, Argentina and Bolivia. These new areas along with production in Azerbaijan are projected to add about 50,000 oil-equivalent barrels per day to 1998 production. In 1997, Amoco replaced 178 percent of its production (excluding ownership changes) with new reserves. This was the fifth consecutive year in which reserve additions, (improved recovery, discoveries and revisions) exceeded production. Exploration activities focused on 20 countries in 1997. Amoco's worldwide exploration drilling success rate was 48 percent. Success in recent years came from a combination of new technology, such as 3-D seismic imaging -- utilized over the past few years -- and concentrating on selected countries. United States United States E&P operations earned $1.4 billion in 1997. Excluding gains of $329 million related to non-core property dispositions, 1997 earnings of $1,118 million were comparable with 1996 earnings of $1,132 million. Higher natural gas prices and lower exploration expenses of $41 million before tax favorably affected 1997 results. These favorable factors were offset by lower crude oil prices and production volumes. Amoco's average U.S. natural gas prices of $2.15 per thousand cubic feet ("mcf") in 1997 increased $.22 per mcf from 1996. Amoco's U.S. crude oil prices averaged $18.47 per barrel, down over $1.70 per barrel from 1996, reflecting the effect of more than adequate crude oil supplies. U.S. natural gas production averaged 2.4 bcf per day in 1997, down eight percent from 1996. Crude oil and NGL production averaged 274,000 barrels per day, also down eight percent from 1996. The decline in production resulted from normal field declines and property dispositions. Canada Canadian E&P operations earned $195 million in 1997, compared with earnings of $201 million in 1996. A gain of $56 million on asset dispositions, including Amoco's remaining investment in Crestar Energy Inc., benefited 1996 earnings. Higher natural gas prices and a gain on the sale of Amoco's arctic drilling unit of $35 million impacted 1997 earnings. Amoco's 1997 Canadian natural gas prices averaged $1.38 per mcf, $.23 per mcf over 1996 levels. Crude oil prices of $14.19 per barrel in 1997 were down $3.54 per barrel, reflecting lower industry prices and increased heavy-oil production. Amoco's Canadian natural gas production of 761 million cubic feet ("mmcf") per day in 1997 declined seven percent from 1996 levels due to normal field declines and property dispositions. Crude oil and NGL production averaged 61,000 barrels per day, the same as in 1996, as increased heavy-oil production offset normal field declines and dispositions. In 1997, heavy-oil production averaged 28,000 barrels per day, up from 20,000 barrels per day in 1996. Overseas European exploration and production operations earned $145 million in 1997, $27 million higher than the $118 million earned in 1996. The increase in 1997 earnings primarily reflected higher crude oil and natural gas production, higher natural gas prices and a gain on a property disposition. Partly offsetting these factors were lower crude oil prices, higher exploration expenses of $18 million before tax and higher operating expenses. Exploration and production operations in other overseas areas earned $193 million in 1997, down from the $333 million earned in 1996. Higher operating expenses, mainly reflecting start-up of production and increased maintenance costs, and lower crude oil prices and production, more than offset increased natural gas prices and production. Overseas crude oil and NGL production averaged 302,000 barrels a day, a slight decline from 1996, primarily reflecting lower production in China and Egypt. Partly offsetting the decline was new production in Venezuela and Bolivia and increases in Norway and the United Kingdom. Natural gas production increased two percent to 1,013 mmcf per day, primarily from new production in Argentina and Bolivia. Petroleum Products Petroleum products operations earned $587 million in 1997, compared with earnings of $528 million in 1996. The drawdown of inventories valued under the LIFO method benefited operations in 1996 by $90 million. Adjusting for that item, 1997 earnings were $149 million higher than 1996 earnings of $438 million, reflecting improved refinery operations and higher U.S. refined product margins and volumes. Refined product margins increased 2.4 cents- per-gallon during 1997 as declining crude oil costs more than offset the 2.5 cents-per-gallon decline in the average selling prices. Petroleum product sales volumes averaged 1.4 million barrels per day in 1997, about the same as 1996. Gasoline sales averaged 660,000 barrels per day, an increase of five percent, in response to new and aggressive marketing initiatives. Distillate sales volumes averaged 339,000 barrels per day. The refinery utilization rate averaged 93 percent of rated capacity in 1997, compared with 95 percent in 1996, primarily reflecting planned maintenance on a major crude processing unit. The refinery yield rate was at 107.0 percent in 1997, the same as in 1996. Chemicals Chemical operations earned $493 million in 1997, compared with 1996 earnings of $735 million. Charges related to the anticipated disposition of certain non-core chemical operations lowered 1997 earnings by $81 million, while 1996 earnings included a gain of $97 million from the sale of Amoco's polystyrene foam products business. Adjusting both years for these items, 1997 earnings of $574 million were ten percent lower than 1996. The lower earnings in 1997 mainly reflected a decline in PX margins and the absence of foreign investment incentives. Partially offsetting were increases in purified terephthalic acid ("PTA") and PX sales volumes, reflecting capacity additions, and higher olefins margins. In 1997, produced volumes for PX increased about 30 percent; polypropylene sales volumes were up 11 percent; and PTA sales volumes increased 23 percent. Overall, chemicals' capacity utilization rates averaged 93 percent in 1997 and 94 percent in 1996. Corporate and Other Operations Corporate and other operations include net interest and general corporate expenses, and the results of investments in technology companies, real estate interests and other activities. This segment incurred net after-tax expenses of $340 million in 1997, compared with net expenses of $213 million in 1996. The increase in corporate and other operations expenses primarily reflected an increase in interest expense resulting from higher corporate debt balances, revised estimates of tax obligations, including associated interest expense, and adverse currency effects of $38 million. 1996 vs. 1995 Excluding unusual items, 1996 earnings of $2,591 million increased 20 percent over 1995 earnings of $2,159 million. Higher crude oil and natural gas prices and an increase in worldwide natural gas production contributed to the improvement. Offsetting those favorable items were lower chemical and petroleum product earnings resulting from lower margins. U.S. exploration and production operations earned $1.1 billion in 1996 compared with $463 million in 1995. After-tax charges of $234 million for impairment of crude oil and natural gas producing properties were included in 1995 earnings. Excluding that item, 1996 earnings increased by $435 million, mainly reflecting a 43 percent increase in Amoco's average natural gas prices and a 26 percent increase in Amoco's average crude oil prices. Earnings outside the United States for exploration and production operations were $652 million, an increase of $421 million over 1995. The improvement in earnings primarily reflected higher crude oil and natural gas prices and higher natural gas production volumes. Included in the 1996 results were gains on the sale of assets of $56 million. Included in 1995 earnings were impairment charges of $93 million. In 1996, petroleum products earnings of $528 million compared with earnings of $491 million for 1995. The drawdown of inventories valued under the LIFO method benefited 1996 results by $90 million. Included in 1995 earnings were an after-tax gain of $83 million from an asset sale and an after-tax impairment charge of $11 million. Adjusting both years, 1996 adjusted earnings were $438 million compared with $419 million for 1995. The slight increase in petroleum products earnings reflected higher Canadian supply and marketing earnings, higher sales volumes and a gain on an asset sale. Offsetting these factors were lower refining margins and higher expenses related to international business development. In late 1996, Amoco decided to sell its retail outlets in Central Europe as part of the Corporation's strategy to concentrate on retail marketing operations in North America. The Corporation completed the sale of those facilities in 1997. In 1996, chemical operations earned $735 million compared with 1995 earnings of $963 million. Included in 1996 earnings was a gain of $97 million from the sale of Amoco's polystyrene foam products business. Included in 1995 earnings were charges of $42 million related to the impairment of specialty polymer facilities. After adjusting for special items, 1996 earnings of $638 million were 37 percent lower than adjusted 1995 earnings. The decrease in chemicals earnings was primarily related to a sharp drop in margins for major product lines and the impact from industrywide inventory "destocking" of PTA and PX. Partially offsetting those factors were increases in sales volumes, reflecting capacity additions and acquisitions, and investment incentives. The decrease in corporate and other operations net expenses to $213 million in 1996 from $286 million in 1995 resulted from lower interest expense associated with revised estimates of tax obligations, and a gain on an asset disposition. Outlook The volatility of crude oil, natural gas and refined product prices, and the overall product supply/demand balance of the petrochemical industry will continue to affect Amoco's profitability. While refining margins strengthened during 1997, over the long term Amoco anticipates refining margins being under pressure in a very competitive U.S. market. Uncertainty in world markets, particularly in Asia, new governmental regulation and technological advances add to the significant challenges that must be addressed and successfully managed by Amoco. Amoco believes it has the structure and resources to allow it to achieve improvements in profitability and growth of its businesses through intensive portfolio management. Amoco also expects to continue to benefit from ongoing cost reduction programs. Efficiency gains are expected through development of new work processes, alliances, joint ventures, strategic acquisitions and divestments and increased volume growth in its operations. Amoco's worldwide barrel-oil-equivalent production is expected to increase from 1996 levels by 25 percent by the year 2001, with the largest increases expected to occur in the later years. Significant contributions are anticipated from the deepwater Gulf of Mexico, Trinidad, Venezuela, Colombia, Argentina, Bolivia, Egypt, and the Caspian Basin. In late 1997, Amoco and Bridas Corporation formed Pan American Energy LLC ("Pan American"), which created one of the largest producers of crude oil and natural gas in Argentina. In Bolivia, Amoco acquired an interest and assumed operatorship of the new Bolivian company, Empresa Petrolera Chaco S.A. ("Chaco"). Earlier in 1997, Altura Energy Ltd. was established to operate the combined oil and gas producing properties of Amoco and Shell Oil Company in west Texas and southeast New Mexico. Amoco has a 64 percent interest in the venture. Amoco also formed a limited partnership with YPF S.A., called Crescendo Resources L.P., to manage about one trillion cubic feet of natural gas reserves in the Texas Panhandle and western Oklahoma. In petroleum products, a key to Amoco's improved performance in its refining operations is a new approach and organization that is enhancing revenues and improving refinery utilization simultaneously. This has led to aggressive changes in three key work areas: planning and scheduling, control and optimization, and asset management. Amoco has already seen benefits during 1997, and expects further improvements in the future. Amoco's marketing strategy will continue to emphasize brand product quality and growth in its position as a convenience retailer, with the objective of increasing gasoline volumes an average of four percent per year over the long term. The new convenience store format, Split Second, has the potential to increase site profits compared with traditional food shops. Amoco also has a renewed commitment to the service bay, called Certicare, which has the potential for growth. Strategic marketing alliances with such companies as McDonald's Corporation and Fomento Economico Mexicano S.A. de C.V. in Mexico are expected to continue. In chemicals, Amoco's overall strategy is to manage its portfolio to maximize existing business value by stronger functional excellence, increased market focus and more efficient management of opportunities. Amoco is in the process of selectively increasing capacities within its chemical portfolio. While current industry excess PTA capacity is putting downside pressure on margins, long-term worldwide annual growth is expected to be eight percent. 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-venture operations. A 500,000 ton PTA unit at the Corporation's plant in Geel, Belgium, is expected to be completed in 1998, while a new 420,000 ton PX unit at the same location is scheduled for mechanical completion in late 1999. In the specialty chemical area, Amoco's dimethyl-2,6- naphthalene dicarboxylate ("NDC") plant in Decatur, Ala., achieved full-scale production capacity of 27,000 tons per year in the third quarter of 1997. Amoco is planning expansion of this facility to between 40,000 and 50,000 tons by 2000. Amoco is also expanding its polypropylene capacity, adding a 250,000 ton unit at its existing plant near Alvin, Texas. Alpha- olefins capacity is being expanded by 100,000 tons at a plant in Belgium. Liquidity and Capital Resources In 1997, cash flow from operating activities totaled $4.6 billion, compared with $4.8 billion in 1996. Total short- and long-term debt was $5.6 billion at year-end 1997, compared with $5.1 billion at year-end 1996. Debt as a percent of debt-plus-equity was 25.4 percent at December 31, 1997, up from 23.6 percent at year-end 1996, reflecting new borrowings undertaken during the year. Working capital was $1.0 billion at year-end 1997, compared with $924 million at year-end 1996. At year-end 1997, the Corporation's current ratio was 1.17 to 1. 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. Cash dividends paid in 1997 totaled $1.4 billion, or $2.80 per share, compared to $1.3 billion, or $2.60 per share in 1996. The quarterly cash dividend was raised to 75 cents per share, effective with the first-quarter 1998 dividend, an increase of 5 cents per share, or seven percent. The cash dividend has been raised 20 cents per share each year from 1994 through 1998, an increase of 36 percent over the period. Amoco also declared a two-for-one split of each share of common stock outstanding on March 31, 1998. As of December 31, 1997, Amoco completed $1.2 billion of the previously announced $2 billion, two-year common stock repurchase program, representing 13.4 million common shares. Amoco plans to complete the repurchase program during 1998. Stock repurchased under the program was in addition to shares purchased for benefit plan purposes. The Corporation believes its strong financial position will permit the financing of its 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 December 31, 1997, bank lines of credit available to support commercial paper borrowings were $500 million, all of which were supported by commitment fees. The Corporation also may use its favorable access to long-term debt markets to finance profitable growth opportunities. During 1997, Amoco Company issued $300 million of 10-year, 6.5% guaranteed notes and $200 million of seven-year, 6.25% guaranteed notes. A $500 million shelf registration for debt securities is on file with the Securities and Exchange Commission to permit ready access to capital markets. With the 21st century approaching, Amoco has been addressing the issue of adapting its computer systems to process information in the year 2000 and beyond. As part of the Corporation's renewal process, Amoco has been implementing new systems and upgrading its computer technology. In addition, Amoco has reviewed its information and process control systems, as well as other electronic control systems, to identify all critical equipment and software that will need to be altered or replaced to be prepared for the year 2000. The upgrading of these systems for the year 2000 is under way, and will occur primarily during the three years ending in December 1999. Incremental costs related to the year 2000 issue, beyond the Corporation's normal level of systems renewal or spending primarily designed to provide increased functionality unrelated to the year 2000, are expected to reduce income by about $55 million before tax in 1998, and by about $100 million over the three-year period. Price risk management Amoco is routinely exposed to hydrocarbon commodity price risk. It manages a portion of that risk mainly through the use of futures contracts, swaps and options generally to achieve market prices on specific purchase and sales transactions. See Notes 1 and 4 to the Consolidated Financial Statements and Supplemental Information, "Market Risks and Derivative Instruments." Environmental protection and remediation costs The Corporation has provided in its accounts for reasonably estimable future costs of probable environmental remediation obligations. These amounts relate to various refining and marketing sites, chemical locations, and crude oil and natural gas operations, including multi-party sites where Amoco has been identified as a potentially responsible party by the U.S. Environmental Protection Agency. Such estimated costs will be refined over time as remediation requirements and regulations become better defined. However, any additional 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 be significant, 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. See Notes 1 and 22 to the Consolidated Financial Statements. The Corporation and its subsidiaries maintain insurance coverage for environmental pollution resulting from the sudden or accidental release of pollutants. Various deductibles of up to $50 million per occurrence could apply, depending on the type of incident involved. Coverage for other types of environmental obligations is not generally provided, except when required by regulation or contract. The financial statements do not reflect any significant anticipated recovery from claims under prior or current insurance coverage. At December 31, 1997, the Corporation's reserves for future environmental remediation costs totaled $510 million, of which $310 million was related to refining and marketing sites. The Corporation also maintains reserves associated with dismantlement, restoration and abandonment of crude oil and natural gas properties, which totaled $666 million at December 31, 1997. Capital expenditures resulting from existing environmental regulations, primarily related to refining, marketing and chemicals sites totaled $89 million in 1997. Excluded from that total were $292 million for operating costs and amounts spent on research and development, and $59 million of mandated and voluntary remediation spending. Amoco's 1998 estimated capital spending for environmental cleanup and protection projects is expected to be approximately $96 million; spending for remediation in 1998 is expected to approximate the 1997 level. Capital and exploration expenditures Spending in 1997 totaled $3.9 billion, a decrease of 15 percent from the $4.6 billion spent in 1996. The 1997 spending excludes Amoco's investments in affiliates, including Pan American and Chaco. Expenditures in 1997 included E&P spending associated with construction of facilities in Trinidad, Venezuela, Colombia and the Gulf of Mexico and continuation of programs in Egypt and the North Sea. Chemical spending in 1997 related to expansions and construction of new facilities. The 1996 capital expenditures excluded $535 million for the acquisition of Albemarle Corporation's alpha-olefins and related businesses. Capital and exploration expenditures of $4.2 billion have been approved for 1998. Approximately 60 percent of total E&P spending of $2.7 billion is planned for locations outside the United States. Targeted growth areas include the Caspian Basin, Trinidad, Egypt's Nile Delta, Venezuela, Argentina, Bolivia, West Africa and the deepwater Gulf of Mexico. Chemicals expenditures in 1998 are expected to be approximately $750 million for the completion of expansions currently under way and new facilities in Belgium and the United States. The capital and exploration expenditures budget for 1998 excludes any new investments in affiliates, and the Corporation's share of affiliate spending. It is anticipated that the 1998 capital and exploration expenditures budget will be financed primarily by funds generated internally. The planned expenditure level is subject to adjustment as dictated by changing economic and political conditions. Capital and Exploration Expenditures 1997 1996 1995 1994 1993 (millions of dollars) Exploration and production United States ..... $ 876 $1,196 $1,146 $ 829 $ 672 Canada ............ 393 408 384 408 314 Europe ............ 503 558 491 279 493 Other ............. 942 858 654 687 682 Subtotal ........ 2,714 3,020 2,675 2,203 2,161 Petroleum products .... 455 500 500 465 730 Chemicals ............. 652 985 850 467 369 Corporate and other operations .......... 122 116 111 70 86 Total ........... $3,943 $4,621 $4,136 $3,205 $3,346 Petroleum exploration expenditures charged to income (included above) United States ..... $ 101 $ 142 $ 152 $ 113 $ 90 Canada ............ 69 68 112 117 47 Europe ............ 159 141 123 178 151 Other ............. 270 265 223 225 241 Total ........... $ 599 $ 616 $ 610 $ 633 $ 529 1997 excludes about $200 million of Amoco's share of affiliates' spending. 1993 through 1996 restated; see "Industry Segments." "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Statements in this report that are not historical facts, including statements in Management's Discussion and Analysis under the heading "Outlook" and other statements about industry and company growth, estimates of expenditures and savings, and other trend projections are forward looking statements. These 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, demand and pricing, political stability and economic growth in relevant areas of the world, the Corporation's successful execution of its internal performance plans, development and use of new technology, successful partnering, actions of competitors, natural disasters, and other changes to business conditions. Item 8. Financial Statements and Supplemental Information Index to Financial Statements and Supplemental Information Page Report of Independent Accountants ....................... 41 Consolidated Financial Statements: Consolidated Statement of Income ...................... 42 Consolidated Statement of Financial Position .......... 43 Consolidated Statement of Shareholders' Equity......... 44 Consolidated Statement of Cash Flows .................. 45 Notes to Consolidated Financial Statements ............ 46 Financial Statement Schedule: Valuation and Qualifying Accounts (Schedule II) ..... 99 Supplemental Information: Oil and Gas Exploration and Production Activities ..... 77 Quarterly Results and Stock Market Data ............... 88 Market Risks and Derivative Instruments ............... 89 Separate financial statements of subsidiary companies not consolidated, and of 50 percent or less owned companies accounted for by the equity method, have been omitted since, if considered in the aggregate, they would not constitute a significant subsidiary. REPORT OF INDEPENDENT ACCOUNTANTS PRICE WATERHOUSE LLP To the Board of Directors and Shareholders of Amoco Corporation In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Amoco Corporation and its subsidiaries at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of Amoco Corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 2 to the financial statements, Amoco Corporation changed its method of accounting for the impairment of long-lived assets in 1995 to comply with the provisions of Statement of Financial Accounting Standards No. 121. PRICE WATERHOUSE LLP Chicago, Illinois February 24, 1998 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ CONSOLIDATED STATEMENT OF INCOME Year Ended December 31 1997 1996 1995 (millions of dollars, except as noted) Revenues: Sales and other operating revenues .... $31,910 $32,150 $27,066 Consumer excise taxes ................. 3,451 3,386 3,339 Equity income in affiliates and other income ........................ 926 576 599 Total revenues ...................... 36,287 36,112 31,004 Costs and expenses: Purchased crude oil, natural gas, petroleum products and merchandise .. 17,735 17,942 14,140 Operating expenses .................... 5,009 4,642 4,555 Petroleum exploration expenses, including exploratory dry holes ..... 599 616 610 Selling and administrative expenses ... 2,172 2,246 2,124 Taxes other than income taxes ......... 4,222 4,215 4,042 Depreciation, depletion, amortization, and retirements and abandonments .... 2,373 2,294 2,794 Interest expense ...................... 401 192 335 Total costs and expenses ............ 32,511 32,147 28,600 Income before income taxes ............ 3,776 3,965 2,404 Income taxes .......................... 1,056 1,131 542 Net income ............................ $ 2,720 $ 2,834 $ 1,862 Net income per share Basic ............................... $ 5.55 $ 5.69 $ 3.76 Assuming dilution ................... $ 5.52 $ 5.67 $ 3.75 Average common shares outstanding (millions) Basic ............................... 490 497 495 Assuming dilution ................... 493 499 497 After stock split (Unaudited) Net income per share Basic ............................... $ 2.77 $ 2.84 $ 1.88 Assuming dilution ................... $ 2.76 $ 2.83 $ 1.87 Average common shares outstanding (millions) Basic ............................... 980 994 $ 991 Assuming dilution ................... 986 998 994 (The accompanying notes are an integral part of these statements.) AMOCO CORPORATION AND SUBSIDIARIES ___________________________ CONSOLIDATED STATEMENT OF FINANCIAL POSITION December 31 1997 1996 ASSETS (millions of dollars) Current Assets: Cash ............................................ $ 166 $ 186 Marketable securities--at cost (all corporate, except $104 on December 31, 1997, and $141 on December 31, 1996, which represent state and municipal securities) ......................... 979 1,135 Accounts and notes receivable (less allowances of $10 on December 31, 1997, and $17 on December 31, 1996) ............................ 3,585 3,942 Inventories ..................................... 1,174 1,069 Prepaid expenses, and income taxes and other .... 1,140 731 7,044 7,063 Investments and other assets: Investments and related advances .............. 2,099 796 Long-term receivables and other assets ........ 803 841 2,902 1,637 Properties--at cost, less accumulated depreciation, depletion and amortization of $26,814 on December 31, 1997, and $27,111 on December 31, 1996 ............................. 22,543 23,400 $32,489 $32,100 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations......... $ 218 $ 151 Short-term obligations .......................... 751 821 Accounts payable ................................ 3,026 3,196 Accrued liabilities ............................. 785 908 Taxes payable (including income taxes) .......... 1,264 1,063 6,044 6,139 Long-term obligations: Debt ............................................ 4,639 4,153 Capitalized leases .............................. 80 76 4,719 4,229 Deferred credits and other non-current liabilities: Income taxes .................................... 2,868 2,850 Other ........................................... 2,408 2,345 5,276 5,195 Minority interest ................................. 131 129 Shareholders' equity: Common stock (authorized 800,000,000 shares; issued and outstanding as of December 31, 1997- 483,023,808 shares; December 31, 1996-- 497,275,364 shares) ........................... 2,568 2,646 Earnings retained and invested in the business .. 13,900 13,806 Pension liability adjustment .................... (31) (25) Foreign currency translation adjustment ......... (118) (19) Total shareholders' equity .................... 16,319 16,408 $32,489 $32,100 (The successful efforts method of accounting is followed for costs incurred in oil and gas producing activities.) (The accompanying notes are an integral part of these statements.) AMOCO CORPORATION AND SUBSIDIARIES ___________________________ CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Earnings Retained and Invested Other Common in the Equity Stock Business Adjustments Total (millions of dollars, except as noted) Balance on December 31, 1994 $2,166 $12,223 $ (7) $14,382 Net income ............... 1,862 1,862 Cash dividends of $2.40 per share .............. (1,197) (1,197) Foreign currency translation adjustment . 19 19 Pension liability adjustment.............. (49) (49) Issuances of common stock (net) .................. 424 (593) (169) Balance on December 31, 1995 2,590 12,295 (37) 14,848 Net income ............... 2,834 2,834 Cash dividends of $2.60 per share .............. (1,287) (1,287) Foreign currency translation adjustment . (31) (31) Pension liability adjustment ............. 24 24 Issuances of common stock (net) .................. 56 (36) 20 Balance on December 31, 1996 2,646 13,806 (44) 16,408 Net income ............... 2,720 2,720 Cash dividends of $2.80 per share .............. (1,382) (1,382) Foreign currency translation adjustment . (99) (99) Pension liability adjustment ............. (6) (6) Acquisitions of common stock(net) ............. (78) (1,244) (1,322) Balance on December 31, 1997 $2,568 $13,900 $(149) $16,319 (The accompanying notes are an integral part of these statements.) AMOCO CORPORATION AND SUBSIDIARIES __________________________ CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31 1997 1996 1995 (millions of dollars) Cash flows from operating activities: Net income ......................... $ 2,720 $ 2,834 $ 1,862 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments ............... 2,373 2,294 2,794 Decrease (increase)in receivables 269 (661) (33) (Increase)decrease in inventories (117) 4 1 (Decrease)increase in payables and accrued liabilities ............ (63) 608 31 Gain on sale of assets ........... (645) (220) (221) Deferred taxes and other items ... 108 (71) (625) Net cash provided by operating activities ..................... 4,645 4,788 3,809 Cash flows from investing activities: Capital expenditures ............. (3,344) (3,910) (3,526) Proceeds from dispositions of property and other assets ...... 1,617 475 290 New investments, advances and business acquisitions .......... (1,154) (721) (173) Proceeds from sales of investments 21 521 20 Other ............................ 59 20 81 Net cash used in investing activities ..................... (2,801) (3,615) (3,308) Cash flows from financing activities: New long-term obligations ........ 1,028 362 661 Repayment of long-term obligations (274) (427) (309) Cash dividends paid .............. (1,382) (1,287) (1,197) Issuances of common stock ........ 100 59 42 Acquisitions of common stock ..... (1,422) (39) (704) Issuance of minority interest preferred stock ................ -- -- 100 (Decrease) increase in short-term obligations .................... (70) 86 511 Net cash used in financing activities ..................... (2,020) (1,246) (896) Decrease in cash and marketable securities ....................... (176) (73) (395) Cash and marketable securities- beginning of year .................. 1,321 1,394 1,789 Cash and marketable securities- end of year ........................ $ 1,145 $ 1,321 $ 1,394 (The accompanying notes are an integral part of these statements.) AMOCO CORPORATION AND SUBSIDIARIES __________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies Principles of consolidation. The assets, liabilities and results of operations of subsidiaries in which the Corporation has a controlling interest are included in the Consolidated Financial Statements. The Corporation also consolidates its proportionate share of the accounts of undivided interest pipelines and certain oil and gas joint ventures. Investments in companies in which less than a controlling interest is held are generally accounted for by the equity method. Estimates in financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect certain reported amounts. Actual results may differ in some cases from the estimates. Inventories. Inventories are carried at the lower of current market value or cost. Cost is determined under the last-in, first- out ("LIFO") method for the majority of inventories of crude oil, petroleum products and chemical products. The costs of remaining inventories are determined on the first-in, first-out ("FIFO") or average cost methods. Costs incurred in oil and gas producing activities. The Corporation follows the successful efforts method of accounting. Costs of property acquisitions, successful exploratory wells, all development costs (including CO2 and certain other injected materials that benefit production over multiple years in enhanced recovery projects) and support equipment and facilities are capitalized. Unsuccessful exploratory wells are expensed when determined to be non-productive. Production costs, overhead and all exploration costs other than exploratory drilling are charged against income as incurred. Depreciation, depletion and amortization. Generally, depreciation of plant and equipment, other than oil and gas facilities, is computed on a straight-line basis over the estimated economic lives of the facilities, which for refining and chemical facilities average 20 years, for administrative buildings average 45 years and for service stations average 16 years. Depletion of the cost of producing oil and gas properties, amortization of related intangible drilling and development costs and depreciation of tangible lease and well equipment are recognized using the unit- of-production method. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The portion of costs of unproved oil and gas properties estimated to be non-productive is amortized over projected holding periods. The estimated costs to dismantle, restore and abandon oil and gas properties are recognized over the properties' productive lives on the unit-of-production method. Long-lived assets with recorded values that are not expected to be recovered through future cash flows are written down to current fair value. Fair value is generally determined from estimated discounted future net cash flows. Significant gains or losses from retirements or disposition of facilities are credited or charged to income. Maintenance and repairs. All maintenance and repair costs are charged against income, while significant improvements are capitalized. Derivative contracts. The Corporation enters into futures, swaps, forwards and option contracts to manage its exposure to price fluctuations on hydrocarbon transactions and its exposure to exchange rate fluctuations on its debt and commitments denominated in foreign currencies. Hedge accounting is applied to derivative contracts that reduce the Corporation's exposure to price fluctuations or that are entered into in conjunction with specific fixed price natural gas sales contracts. Gains, losses and cash flows from hedges are reported as components of the related transactions. Translation of foreign currencies. The U.S. dollar has been determined to be the appropriate functional currency for essentially all operations except certain foreign chemical operations. Environmental liabilities. The Corporation has provided in its accounts for the reasonably estimable future costs of probable environmental remediation obligations relating to current and past activities, including obligations for previously disposed assets or businesses. In the case of long-lived cleanup projects, the effects of inflation and other factors, such as improved application of known technologies and methodologies, are considered in determining the amount of estimated liabilities. The liability is undiscounted and primarily consists of costs such as site assessment, monitoring, equipment, utilities and soil and ground water treatment and disposal. Probable recoveries from third parties are recorded as receivables. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Net income per share. Basic net income per share of common stock is based on the monthly weighted average number of shares outstanding during the year. Diluted net income per share reflects the potential dilution from the exercise of stock options. Securities that could potentially dilute basic net income per share in the future are immaterial. Note 2. Acquisitions, Dispositions and Special Items In 1997, proceeds from dispositions included approximately $1.2 billion from the sale of U.S. non-core oil and gas properties and an intrastate natural gas pipeline unit in Texas. These sales were part of the Corporation's strategy to upgrade and refocus the U.S. portfolio of E&P assets. Other income included related gains on property dispositions, which increased after-tax earnings by $377 million. Other current assets include properties held for sale with a net book value of $312 million. In 1997, new investments included approximately $865 million in cash for interests in Pan American Energy LLC in Argentina and Empresa Petrolera Chaco in Bolivia. Depreciation, depletion, amortization, and retirements and abandonments for 1997 included charges of $133 million ($106 million after tax), primarily related to the anticipated sale or other disposition of certain non-core chemical operations. During 1997 these assets generated net income of $9 million on a carrying value of $339 million, before the impairment charge. In 1996, the Corporation acquired the alpha-olefins and related businesses of Albemarle Corporation for $535 million. Other income in 1996 included gains on the sale of Amoco's polystyrene foam products business ($97 million after tax) and on certain Canadian asset dispositions ($56 million after tax). In 1995, the Corporation adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Depreciation, depletion, amortization, and retirements and abandonments for 1995 included $602 million ($380 million after tax) for the impairment of long-lived assets. The charge was primarily related to oil and gas producing properties in North America (about $300 million after tax), which were acquired or developed during periods of higher prices, and AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) certain unprofitable specialty polymer production facilities ($42 million after tax). Other income in 1995 included a gain of $132 million ($83 million after tax) related to the sale of Amoco Motor Club. Note 3. Cash Flow Information The Consolidated Statement of Cash Flows provides information about changes in cash and cash equivalents, including cash in excess of daily requirements that is invested in marketable securities, substantially all of which have a maturity of three months or less when acquired. The effect of foreign currency exchange rate fluctuations on total cash and marketable securities balances was not significant. Net cash provided by operating activities reflects cash payments for interest and income taxes as follows: 1997 1996 1995 (millions of dollars) Interest paid ......... $362 $343 $327 Income taxes paid ..... $913 $951 $706 Excluded from the Consolidated Statement of Cash Flows for 1997 were the following effects of non-cash investing and financing activities related to investments in Argentina and Bolivia: (millions of dollars) Non-cash assets and liabilities contributed: -- Properties .............................. $ 400 -- Working capital and other assets ........ 42 442 -- Long-term debt and liabilities .......... 208 Net assets contributed ....................... 234 Cash portion of new investments .............. 865 New investments .............................. $1,099 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 4. Financial Instruments and Hedging Activities In the normal course of business, Amoco holds or issues various financial instruments which expose the Corporation to financial risk associated with market interest rates, currency exchange rates and credit worthiness. Also, Amoco's petroleum and chemical businesses are affected by commodity price movements. To manage a portion of these inherent risks, Amoco purchases and sells various derivative financial instruments and commodity futures contracts. Substantially all financial instruments held by the Corporation are for purposes other than trading. Fair values. The carrying values of most financial instruments are based on historical costs. The carrying values of receivables, payables, marketable securities and short-term obligations approximate their fair value. The estimated fair value of long-term debt outstanding as of December 31, 1997 and 1996 was $4,909 million and $4,301 million, respectively. The estimated fair values of marketable securities and debt were based on quoted market prices for the same or similar issues, or the current rates offered to the Corporation for issues with the same remaining maturities. Credit risks. A significant portion of Amoco's receivables is from other oil and gas and chemical companies. Although collection of these receivables could be influenced by economic factors affecting these industries and the countries in which Amoco and its customers operate, the risk of significant loss is considered remote. Substantially all derivatives are either exchange traded or with major financial institutions, and the risk of credit loss is considered remote. Currency risks. The Corporation conducts its business primarily in U.S. dollars. Significant exposures to foreign currency exchange risk are reduced through the use of financial instruments, primarily by hedging of foreign currency borrowings and contractual commitments. The following table shows the amount of debt, including current portions, denominated in foreign currencies as of December 31, 1997 and 1996, and the face amounts of foreign currency forward contracts that have been designated as hedges: AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1997 1996 Debt Hedge* Debt Hedge* (millions of U.S. dollars) British pound sterling $ 624 $ 935 $ 652 $ 954 Canadian dollar ...... $ 216 $ 224 $ 276 $ 281 * Includes tax effects. The hedge contracts generally have maturities that match the risks being hedged. The carrying value and fair value of the forward contracts were not material at December 31, 1997 and 1996. Commodity price risks. The Corporation enters into futures, swaps and option contracts to manage a portion of its exposure to price fluctuations on hydrocarbon transactions. Natural gas futures, swaps and options are used to convert specific sales and purchase contracts from fixed prices to market prices. Swaps also are used to hedge exposure for price differences between locations. Futures contracts are used to convert specific gasoline and distillate contracts from fixed to market prices. Natural gas swap contracts outstanding under these programs at December 31, 1997 and 1996 totaled 368 trillion British thermal units ("Btus") and 334 trillion Btus, respectively. Most contracts are for a remaining term of less than one year, while contracts representing 29 trillion Btus of natural gas have terms that extend from one to three years. While these contracts have no carrying value, their fair value, representing the estimated amount that would have been required to terminate the swaps at year-end 1997, was $20 million for contracts with favorable positions, and $20 million for contracts with unfavorable positions. The comparable amounts for 1996 were $28 million for contracts with favorable positions and $19 million for contracts with unfavorable positions. At December 31, 1997, the Corporation also had fixed the sales price or a range of prices of 4 million barrels of crude oil and 6 trillion Btus of natural gas production for periods of less than one year using forward swaps. There were no significant unrealized gains or losses on these contracts at December 31, 1997. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Commitments and guarantees. At December 31, 1997, the remaining minimum payments required under certain contracts for the purchase of transportation capacity, materials and services over terms of up to 20 years totaled $328 million. Contingent liabilities of the Corporation included guarantees of $312 million of outstanding loans of equity affiliates as described in Note 6, and guarantees of $37 million on outstanding loans of others. Note 5. Inventories Inventories at December 31, 1997 and 1996, are shown in the following table: December 31 1997 1996 (millions of dollars) Crude oil and petroleum products ....... $ 407 $ 315 Chemical products ...................... 485 465 Other products and merchandise ......... 22 15 Materials and supplies ................. 260 274 Total ............................. $ 1,174 $ 1,069 During the year ended December 31, 1996, the Corporation reduced certain inventory quantities which were valued at lower LIFO costs prevailing in prior years. The effect of this reduction was to increase net income by approximately $90 million. Inventories carried under the LIFO method represented approximately 55 percent of total year-end inventory carrying values in 1997 and 48 percent in 1996. It is estimated that inventories would have been approximately $800 million and $1,400 million higher than reported on December 31, 1997 and 1996, respectively, if the quantities valued on the LIFO basis were instead valued at current prices. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 6. Equity Investments Amoco conducts portions of its business through investments in companies accounted for using the equity method. The equity affiliates are primarily engaged in exploration and production in the recently established ventures in Argentina and Bolivia, transportation of crude oil and petroleum products in the United States and chemical operations in Asia. Following is summarized financial information for Amoco's equity affiliates combined, as well as Amoco's proportionate interest in the affiliates: 1997 1996 1995 Amoco Amoco Amoco Total Share Total Share Total Share (millions of dollars) Current assets .... $1,319 $ 536 $ 856 $ 310 $1,002 $ 380 Other assets ...... 8,348 3,455 4,032 1,363 3,905 1,080 Current liabilities 1,154 454 783 246 940 311 Other liabilities . 3,725 1,518 2,291 685 2,275 545 Net assets ........ $4,788 $2,019 $1,814 $ 742 $1,692 $ 604 Total revenues .... $2,754 $ 989 $2,658 $ 950 $2,973 $1,110 Income before income taxes ..... $ 378 $ 79 $ 512 $ 130 $ 712 $ 232 Net income ........ $ 152 $ 24 $ 463 $ 144 $ 491 $ 170 Dividends received from these investments amounted to $70 million in 1997, $136 million in 1996 and $101 million in 1995. Amoco's share of undistributed earnings of the equity affiliates totaled $208 million at December 31, 1997. Accounts and notes receivable in the Consolidated Statement of Financial Position included $44 million and $26 million at December 31, 1997 and 1996, respectively, of amounts due from affiliated companies. Accounts payable included $6 million and $4 million at December 31, 1997 and 1996, respectively, of amounts due to affiliated companies. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 7. Property, Plant and Equipment Investment in properties at December 31, 1997 and 1996, detailed by industry segment, was as follows: 1997 1996 Gross Net Net (millions of dollars) Exploration and production: United States ........... $14,872 $ 6,328 $ 7,032 Non-U.S. ................ 14,487 5,426 5,464 Petroleum products ........ 10,656 5,418 5,564 Chemicals ................. 7,801 4,554 4,477 Corporate and other operations .............. 1,541 817 863 $49,357 $22,543 $23,400 Note 8. Short-Term Obligations Amoco's short-term obligations consist of notes payable and commercial paper. Notes payable as of December 31, 1997, totaled $53 million at an average annual interest rate of 5.7 percent, compared with $80 million at an average annual interest rate of 6.2 percent at year-end 1996. Commercial paper borrowings at December 31, 1997, were $698 million at an average annual interest rate of 5.6 percent compared with $741 million at an average annual interest rate of 5.4 percent as of December 31, 1996. Bank lines of credit available to support commercial paper borrowings of the Corporation amounted to $500 million at December 31, 1997, and December 31, 1996. All of these were supported by commitment fees. Note 9. Accounts Payable Accounts payable at December 31, 1997 and 1996, included liabilities in the amount of $418 million and $390 million, respectively, for checks issued in excess of related bank balances but not yet presented for collection. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 10. Long-Term Debt Amoco's long-term debt resides principally with two Amoco subsidiaries--Amoco Company and Amoco Canada Petroleum Company Ltd. ("Amoco Canada"). Amoco Company functions as the principal holding company for substantially all of Amoco's petroleum and chemical operations, except Canadian petroleum operations and selected other activities. The components of long-term debt and year-end interest rates are summarized as follows: 1997 1996 (millions of dollars) Amoco Company and subsidiaries 6.25% Notes due 2004 .............. $ 200 $ -- 6.5% Notes due 2007 ............... 300 -- Environmental and other industrial development obligations ......... 916 880 6.4% Pound Sterling loans* ........ 624 652 6.1% Bank loan due 2002* .......... 300 170 6.2% Bank loan due 2005* .......... 198 177 Other indebtedness ................ 388 366 Subtotal ........................ 2,926 2,245 Less current maturities ........... 135 55 Total Amoco Company ............. 2,791 2,190 Amoco Canada 6 3/4% Debentures due 2005 ........ 299 299 7 1/4% Notes due 2002 ............. 299 299 6 3/4% Debentures due 2023 ........ 297 297 7.95% Debentures due 2022 ......... 297 296 7 1/4% Notes due 2002 ............. 252 253 8.98% Bonds due 2005 .............. 219 222 Other ............................. 41 40 Total Amoco Canada .............. 1,704 1,706 Other subsidiaries (less current maturities) ....................... 144 257 Total long-term debt ............ $4,639 $4,153 *Weighted average interest rate at December 31, 1997. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Amoco Corporation guarantees the outstanding public debt of Amoco Company. Amoco Corporation and Amoco Company guarantee the notes, bonds and debentures of Amoco Canada. Annual maturities of total long-term debt during the next five years, including the portion classified as current, are $207 million in 1998, $220 million in 1999, $274 million in 2000, $344 million in 2001 and $874 million in 2002. Note 11. Capital Stock There were 800,000,000 shares of common stock without par value authorized at December 31, 1997. Details concerning share transactions are shown below: 1997 1996 Shares Amount Shares Amount (thous) (mil) (thous) (mil) Outstanding on Jan. 1 ..... 497,275 $2,646 496,403 $2,590 Stock repurchases ......... (16,167) (178) (457) (2) Sales and distributions under employee benefit plans, etc. ............. 1,916 100 1,329 58 Canadian SEDs conversion .. -- -- -- -- Shares outstanding on Dec. 31 ................. 483,024 $2,568 497,275 $2,646 1995 Shares Amount (thous) (mil) Outstanding on Jan. 1 ..... 496,393 $2,166 Stock repurchases ......... (10,604) (110) Sales and distributions under employee benefit plans, etc. ............. 1,971 92 Canadian SEDs conversion .. 8,643 442 Shares outstanding on Dec. 31 ................. 496,403 $2,590 On January 27, 1998, the Board of Directors approved an irrevocable two-for-one common stock split. Each share outstanding on March 31, 1998, will be split into two shares. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In addition, there are 50 million shares of voting preferred stock and 50 million shares of non-voting preferred stock authorized. As of December 31, 1997, none of the preferred stock had been issued. Note 12. Leases The Corporation leases various types of properties, including service stations, tankers, buildings, railcars and other facilities, some of which are subleased to others. Some of the leases and subleases provide for contingent rentals based on refined product throughput. Summarized below as of December 31, 1997, are future minimum rentals payable and related sublease rental income for non- cancelable capital and operating leases: Capital Leases Operating Leases Rentals Rentals Rental Payable Payable Income (millions of dollars) 1998 ........................... $ 16 $ 207 $ 42 1999 ........................... 14 180 5 2000 ........................... 12 148 2 2001 ........................... 10 112 1 2002 ........................... 10 108 1 After 2003 ..................... 82 444 9 Total minimum rentals ........ 144 $ 1,199 $ 60 Less--Amounts representing interest ...... 53 Capitalized lease obligations (including $11 million payable within one year) .... $ 91 Rental expense and related rental income applicable to operating leases for the three years ended December 31, 1997, are summarized below: 1997 1996 1995 (millions of dollars) Minimum rental expense ....... $ 297 $ 295 $ 269 Contingent rental expense .... 8 42 25 Total .................... 305 337 294 Less--Related rental income .. 47 55 63 Net rental expense ....... $ 258 $ 282 $ 231 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 13. Foreign Currency A foreign currency loss of $36 million was reflected in income in 1997, compared with a loss of $17 million in 1996 and a gain of $1 million in 1995. In addition, net translation losses of $99 million and $31 million for 1997 and 1996, respectively, and a net translation gain of $19 million for 1995 were reflected in the foreign currency translation adjustment account in shareholders' equity. Note 14. Interest Expense The Corporation capitalizes interest cost related to the financing of major projects under development. All other interest is expensed as incurred. The components of interest expense are summarized in the following table: 1997 1996 1995 (millions of dollars) Short-term obligations ...... $ 56 $ 47 $ 16 Long-term obligations ....... 307 270 301 Total external financing .. 363 317 317 Other interest expense ...... 62 (103) 30 425 214 347 Less--Capitalized interest .. 24 22 12 Net interest expense ...... $ 401 $ 192 $ 335 Note 15. Research and Development Expenses Research and development costs are expensed as incurred and amounted to $151 million in 1997, $171 million in 1996 and $175 million in 1995. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 16. Taxes The provision for income taxes is composed of: 1997 1996 1995 (millions of dollars) Federal--current ........ $ 546 $ 513 $ 283 --deferred ....... (50) 57 (63) Foreign--current ........ 518 561 520 --deferred ....... 2 (35) (232) State and local ......... 40 35 34 $1,056 $1,131 $ 542 The following is a reconciliation between the provision for income taxes and income taxes determined by applying the federal statutory rate to income before income taxes: 1997 1996 Percent Percent of of Amount Pre-Tax Amount Pre-Tax (millions) Income (millions) Income Pre-tax income: U.S. source ...... $ 2,504 $ 2,453 Foreign source ... 1,272 1,512 $ 3,776 $ 3,965 Theoretical U.S. income tax ....... $ 1,321 35.0 $ 1,388 35.0 Increase (reduction) due to: Foreign taxes at rates different than the U.S. rate 145 3.8 3 .1 Tax credits ........ (166) (4.4) (176) (4.4) Tax-rate changes ... 15 .4 -- -- Carryforward utilization and prior-year adj. .. (206) (5.4) (46) (1.2) All other (net) .... (53) (1.4) (38) (1.0) $ 1,056 28.0 $ 1,131 28.5 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1995 Percent of Amount Pre-Tax (millions) Income Pre-tax income: U.S. source .............................. $ 1,556 Foreign source ........................... 848 $ 2,404 Theoretical U.S. income tax ................ $ 842 35.0 Increase (reduction) due to: Foreign taxes at rates different than the U.S. rate........................ 39 1.6 Tax credits ................................ (173) (7.2) Tax-rate changes ........................... (16) (.7) Carryforward utilization and prior-year adj. (63) (2.6) All other (net) ............................ (87) (3.6) $ 542 22.5 The aggregate federal and foreign deferred income tax balance represents the tax effect of the following items at December 31: 1997 1996 (millions of dollars) Tax credit and loss carryforwards ..... $1,808 $1,450 Exploration costs ..................... 306 339 Postretirement benefits ............... 541 537 Environmental costs ................... 229 273 Other ................................. 323 394 Gross deferred tax assets ............. 3,207 2,993 Deferred tax asset valuation allowance (886) (569) Net deferred tax assets ............. $2,321 $2,424 Accelerated depreciation .............. $3,307 $3,625 Intangible drilling costs ............. 754 736 Other ................................. 345 249 Deferred tax liabilities ............ $4,406 $4,610 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Taxes other than income taxes include: 1997 1996 1995 (millions of dollars) Consumer excise taxes ........... $3,451 $3,386 $3,339 Production and severance taxes United States ................. 127 140 100 Foreign ....................... 159 187 113 Property taxes .................. 281 290 254 Social Security, corporation and other taxes ................... 204 212 236 $4,222 $4,215 $4,042 Undistributed earnings of certain foreign subsidiaries and joint-venture companies aggregated $549 million on December 31, 1997, which, under existing law, will not be subject to U.S. tax until distributed as dividends. Since the earnings have been or are intended to be indefinitely reinvested in foreign operations, no provision has been made for any U.S. taxes that may be applicable thereto. Furthermore, any taxes paid to foreign governments on those earnings may be used in whole or in part as credits against the U.S. tax on any dividends distributed from such earnings. It is not practicable to estimate the amount of unrecognized deferred U.S. taxes on these undistributed earnings. Note 17. Stock Option Plans The Corporation's stock option plans approved by shareholders provide for the granting of options with or without stock appreciation rights ("SARs") to key managerial and other eligible employees for up to 31 million shares of common stock. Such options may be incentive stock options to the extent provided in the Internal Revenue Code. No options may be granted under the current plan after December 31, 2001. The grant price of each option equals the fair market value of the Corporation's stock on the date of grant. Options granted under the plans normally extend for 10 years and generally become exercisable one or two years after the date of the grant. Options with SARs permit the holder to surrender exercisable options in exchange for payment determined by the amount by which the market value of the shares on the dates the rights are exercised exceeds the grant price. Such payments can be made in shares, cash or a combination at the discretion of the administering committee. No options were granted with SARs in 1997. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Amoco applies APB Option 25 to account for its stock options. Accordingly, no compensation costs have been recognized for its plans. Had compensation costs been determined based on the fair value at the grant dates for awards under the plans consistent with the method recommended by SFAS 123 "Accounting for Stock-Based Compensation," the Corporation's pro forma net income and basic net income per share would have been $2,690 million or $5.49 per share for 1997, $2,813 million or $5.66 per share for 1996 and $1,853 million or $3.74 per share for 1995. The grant-date fair values of options granted during 1997, 1996 and 1995 were $16.82, $13.55 and $13.06, respectively. The fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rates of 6.7 percent for 1997, 6.1 percent for 1996 and 7.0 percent for 1995; expected volatility of 17.2 percent for 1997, 18.9 percent for 1996 and 19.8 percent for 1995; expected life of six years and dividend yield of 4 percent for all years. Option plan transactions in 1997, 1996 and 1995 are summarized in the following table: 1997 1996 1995 Aver- Aver- Aver- age age age Exer- Exer- Exer- Shares cise Shares cise Shares cise (000) Price (000) Price (000) Price Outstanding at Jan. 1 ....... 13,933 $57.06 12,666 $52.50 11,595 $49.91 Granted .... 3,399 $89.79 2,792 $73.21 2,282 $62.69 Exercised .. (1,788) $50.41 (1,218) $47.69 (921) $45.70 Surrendered or terminated . (185) $77.46 (186) $64.75 (214) $56.80 Canceled upon exercise of SARs ....... (40) $39.09 (121) $35.58 (76) $33.88 Outstanding at Dec. 31 ...... 15,319 $65.00 13,933 $57.06 12,666 $52.50 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Options exercisable at December 31, 1997, 1996 and 1995 were 10,719,431; 10,153,687; and 9,440,725; respectively. Of the total options outstanding on December 31, 1997, 108,500 were with SARs. The following table summarizes information about the options outstanding at December 31, 1997: Outstanding Exercisable Average Remaining Average Average Range of Shares Contractual Exercise Shares Exercise Exercise Prices (000) Life (years) Price (000) Price $ 37 - 54 3,011 2.7 $ 46 3,011 $ 46 $ 54 - 58 4,501 5.0 $ 56 4,501 $ 56 $ 59 - 75 4,459 7.8 $ 69 3,207 $ 67 $ 82 - 97 3,348 9.2 $ 90 -- $ -- The Corporation's restricted stock grant plans provide for the awarding of shares of Corporation common stock up to 6 million shares to selected employees and outside directors. Shares issued under the plans may not be sold or otherwise transferred for a minimum period as established at the time of the grant. The shares generally are subject to forfeiture if the recipient's employment terminates during the specified period unless such termination is due to death, total disability or involuntary retirement. Shares issued have dividend and voting rights identical to other outstanding shares of the Corporation's common stock. During 1997, 112,795 shares were issued under the current plans. No restricted shares may be issued under the current employee plan after December 31, 2001. Note 18. Management Incentive Programs Management incentive compensation plans approved by shareholders provide for the granting of awards to key managerial employees and executives of the Corporation and certain subsidiaries. Amounts charged against earnings in anticipation of awards to be made later were $19 million in 1997, $21 million in 1996 and $16 million in 1995. Awards made in 1997, 1996 and 1995 amounted to $20 million, $18 million and $20 million, respectively. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 19. Retirement Plans The Corporation and its subsidiaries have a number of defined benefit pension plans covering most employees. Plan benefits are generally based on employees' years of service and average final compensation. Essentially all of the cost of these plans is borne by the Corporation. The Corporation makes contributions to the plans in amounts that are intended to provide for the cost of pension benefits over the service lives of employees. The funded status of the plans as of December 31 for 1997 and 1996 was as follows: Plans for which Assets Benefits Exceed Exceed Benefits Assets (millions of dollars) 1997 Fair value of plan assets, principally equity and fixed-income securities . $ 3,393 $ -- Actuarial present value of benefit obligations: Accumulated benefit obligation* .... 3,074 123 Additional benefits based on estimated future salary levels ... 452 12 Projected benefit obligation ("PBO") 3,526 135 Plan assets under PBO ................ (133) (135) Unrecognized net (gains) losses at transition ...................... (38) 8 Other unrecognized net losses ........ 197 57 Unrecognized prior service cost ...... (54) (14) Minimum pension liability adjustment . -- (48) Net pension cost accrued ............. $ (28) $ (132) AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Plans for which Assets Benefits Exceed Exceed Benefits Assets (millions of dollars) 1996 Fair value of plan assets, principally equity and fixed-income securities . $ 2,910 $ -- Actuarial present value of benefit obligations: Accumulated benefit obligation* .... 2,785 125 Additional benefits based on estimated future salary levels ... 517 31 Projected benefit obligation ("PBO") 3,302 156 Plan assets under PBO ................ (392) (156) Unrecognized net (gains) losses at transition ......................... (47) 18 Other unrecognized net losses ........ 396 59 Unrecognized prior service cost ...... 61 (19) Minimum pension liability adjustment . -- (39) Net pension cost prepaid (accrued) ... $ 18 $ (137) * Accumulated benefits totaling $150 million and $311 million were non-vested at December 31, 1997 and 1996, respectively. The actuarial assumptions used for the Corporation's principal pension plans for 1997 and 1996 were as follows: 1997 1996 Discount rate for service and interest cost .. 7.0% 7.0% Discount rate for the projected benefit obligation ................................. 7.0% 7.0% Rate of compensation increase for the projected benefit obligation ............... 5.0% 5.0% Long-term rate of return on assets ........... 10.0% 10.0% AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The components of net pension cost for the past three years were as follows: 1997 1996 1995 (millions of dollars) Service cost--benefits earned during the period ........... $ 131 $ 121 $ 98 Interest cost on projected benefit obligation .......... 244 236 242 Actual gain on assets ......... (681) (446) (492) Unrecognized gain ............. 409 186 217 Recognized gain on assets ..... (272) (260) (275) Settlement/curtailment loss ... 9 4 2 Amortization of unrecognized amounts ..................... 27 29 12 Net pension cost .............. $ 139 $ 130 $ 79 Most employees are also eligible to participate in defined contribution plans by contributing a portion of their compensation. The Corporation matches contributions up to specified percentages of each employee's compensation. Matching contributions charged to income were $78 million in 1997, $80 million in 1996 and $83 million in 1995. Note 20. Other Postretirement Benefits The Corporation and its subsidiaries provide certain health care and life insurance benefits for retired employees. Substantially all of the Corporation's domestic employees and employees in certain foreign countries are provided these benefits through insurance companies whose premiums are based on benefits paid during the year. The cost of such benefits is recognized during employees' years of active service. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The status of the Corporation's unfunded plans as of December 31 for 1997 and 1996 was as follows: 1997 1996 (millions of dollars) Accumulated benefit obligation Retirees .............................. $ 638 $ 642 Fully eligible active plan participants 236 216 Other active plan participants ........ 260 281 Total ................................. 1,134 1,139 Unrecognized net gains .................. 258 213 Unrecognized prior service gains ........ 170 191 Accrued postretirement benefit cost ..... $ 1,562 $ 1,543 The actuarial assumptions used for the Corporation's principal postretirement benefit plans for 1997 and 1996 were as follows: 1997 1996 Discount rate for service and interest cost ........ 7.0% 7.0% Discount rate for the accumulated benefit obligation 7.0% 7.0% Rate of compensation increase for the accumulated benefit obligation ............................... 5.0% 5.0% Assumed current year health care cost trend rate --retirees under 65 .............................. 8.5% 9.4% --Medicare eligible retirees ..................... 7.0% 7.5% Assumed ultimate trend rate ........................ 5.0% 5.0% Year ultimate health care cost rate will be achieved 2002 2002 Effect of 1% increase in health care cost trend rates (millions) --annual aggregate service and interest costs .... $ 14 $ 15 --accumulated postretirement benefit obligation .. $ 112 $ 120 The components of net postretirement benefit costs for the past three years were as follows: 1997 1996 1995 (millions of dollars) Service cost--benefits earned during the period ............ $ 27 $ 30 $ 26 Interest cost on accumulated benefit obligation ........... 78 81 86 Amortization and other ......... (33) (39) (36) Net postretirement benefit cost $ 72 $ 72 $ 76 AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 21. Litigation The Internal Revenue Service ("IRS") has challenged the application 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. On June 18, 1992, the IRS issued a statutory Notice of Deficiency for additional taxes in the amount of $466 million, plus interest, relating to 1980 through 1982. The Corporation filed a petition in the U.S. Tax Court contesting the IRS statutory Notice of Deficiency. Trial on the matter was held in April 1995, and a decision was rendered by the U.S. Tax Court in March 1996, in Amoco's favor. The IRS has appealed the Tax Court's decision to the U.S. Court of Appeals for the Seventh Circuit. A comparable adjustment of foreign tax credits for each year has been proposed for the years 1983 through 1992 based upon subsequent IRS audits. The Corporation believes that the foreign income taxes have been reflected properly in its U.S. federal tax returns. Consequently, this dispute is not expected to have a material adverse effect on liquidity, results of operations, or the consolidated financial position of the Corporation. Note 22. Other Contingencies Amoco is subject to federal, state and local environmental laws and regulations. Amoco is currently participating in the cleanup of numerous sites pursuant to such laws and regulations. The reasonably estimable future costs of probable environmental obligations, including Amoco's probable costs for obligations for which Amoco is jointly and severally liable, and for assets or businesses that were previously disposed, have been provided for in the Corporation's results of operations. These estimated costs represent the amount of expenditures expected to be incurred in the future to remediate sites with known environmental obligations. The accrued liability represents a reasonable best estimate of Amoco's remediation liability. As the scope of the obligations becomes better defined, there may be changes in the estimated future costs, which could result in charges against the Company's future results of operations. The ultimate amount of any such future costs, and the range within which such costs can be expected to fall, cannot be determined. Although the costs could be significant in relationship to the results of operations in any one period, they are not expected to have a material effect on Amoco's liquidity or consolidated financial position. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 23. Summarized Financial Data The Corporation's principal subsidiary, Amoco Company, is the holding company for substantially all petroleum and chemical operating subsidiaries except Amoco Canada and selected other activities. Amoco guarantees the outstanding public debt obligations of Amoco Company. Summarized financial data for Amoco Company are presented as follows: 1997 1996 1995 (millions of dollars) For the years ended December 31: Revenues (including excise taxes) ..................... $32,986 $32,629 $28,339 Operating profit ............. $ 3,820 $ 3,735 $ 2,783 Net income ................... $ 2,274 $ 2,402 $ 1,798 At December 31: Current assets ............... $ 6,442 $ 6,361 $ 5,303 Total assets ................. $30,062 $29,208 $26,326 Current liabilities .......... $ 5,165 $ 4,926 $ 4,578 Long-term debt - affiliates .. $ 4,739 $ 4,731 $ 4,608 - other ....... $ 2,791 $ 2,190 $ 2,177 Deferred credits ............. $ 4,663 $ 4,524 $ 4,397 Minority interest ............ $ 119 $ 131 $ 110 Shareholder's equity ......... $12,505 $12,630 $10,456 Annual maturities of long-term debt during the next five years, including the portion classified as current, are $135 million in 1998, $174 million in 1999, $215 million in 2000, $304 million in 2001 and $323 million in 2002. Amoco Canada is a wholly owned subsidiary of Amoco Corporation. Amoco and Amoco Company guarantee the notes, bonds and debentures of Amoco Canada. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Summarized financial data for Amoco Canada are presented as follows: 1997 1996 1995 (millions of dollars) For the years ended December 31: Revenues ..................... $ 4,705 $ 4,598 $ 3,619 Net income (loss) ............ $ 301 $ 307 $ (205) At December 31: Current assets ............... $ 1,479 $ 1,615 $ 1,252 Total assets ................. $ 4,217 $ 4,412 $ 4,493 Current liabilities .......... $ 948 $ 1,110 $ 2,494 Non-current liabilities ...... $ 3,043 $ 3,377 $ 2,381 Shareholder's equity (deficit) $ 226 $ (75) $ (382) $552 million of long-term debt is scheduled to mature in 2002. Note 24. Geographic and Segment Data The Corporation operates worldwide in the petroleum and chemical industries, in several industry segments. Petroleum operations include E&P and petroleum products segments. The E&P segment is engaged in exploring for, developing and producing crude oil and natural gas; extraction of natural gas liquids ("NGL"); and marketing of natural gas. The petroleum products segment is responsible for petroleum refining operations, marketing of all petroleum products, the transportation of crude oil and petroleum products, associated supply and trading activities, primarily in the United States, and transportation and wholesale marketing of Canadian crude oil, sulfur and NGL. The chemical segment manufactures and sells various petroleum-based chemical products. Corporate and other operations include net interest and general corporate expenses, and the results of investments in technology companies, real estate interests and other activities. In 1997, Amoco transferred Canadian supply and marketing activities for crude oil, sulfur and NGL to the petroleum products segment from the E&P segment. Segment data for prior years have been restated. Intersegment and intergeographic sales are accounted for at prices that approximate market prices. Income taxes are generally assigned to the operations that give rise to the tax effects. Identifiable assets are those used in the operations of each segment or area, including intersegment or intergeographic receivables. Corporate assets consist primarily of cash, marketable securities and the unamortized cost of purchased tax benefits. Statement of Information by Geographic Area United (millions of dollars) States Canada Europe Year 1997 Revenues other than intergeographic sales $28,199 $3,389 $2,133 Intergeographic sales . 1,199 1,072 153 Total revenues ...... $29,398 $4,461 $2,286 Operating profit ...... $ 3,189 $ 561 $ 308 Net income ............ $ 2,333 $ 351 $ 135 Capital expenditures .. $ 1,615 $ 364 $ 612 Identifiable assets ... $19,783 $3,065 $2,982 Equity investments and related advances $ 155 $ -- $ -- Equity in earnings of others ........... $ 37 $ -- $ (8) Consol- Cor- idated Other porate (*) Year 1997 Revenues other than intergeographic sales $2,456 $36,287 Intergeographic sales . 471 -- Total revenues ...... $2,927 $36,287 Operating profit ...... $ 466 $ 4,524 Net income ............ $ 196 $( 295) $ 2,720 Capital expenditures .. $ 698 $ 55 $ 3,344 Identifiable assets ... $3,863 $1,813 $30,470 Equity investments and related advances $1,864 2,019 Total assets ........ $32,489 Equity in earnings of others ........... $ (5) $ 24 (*) After elimination of intergeographic transactions. Statement of Information by Geographic Area (continued) United (millions of dollars) States Canada Europe Year 1996 Revenues other than intergeographic sales $27,936 $3,472 $1,916 Intergeographic sales . 1,200 1,040 172 Total revenues ...... $29,136 $4,512 $2,088 Operating profit ...... $ 2,876 $ 563 $ 280 Net income ............ $ 2,094 $ 378 $ 126 Capital expenditures .. $ 2,219 $ 390 $ 636 Identifiable assets ... $20,319 $3,622 $3,101 Equity investments and related advances $ 85 $ -- $ 2 Equity in earnings of others ........... $ 32 $ -- $ 1 Consol- Cor- idated Other porate (*) Year 1996 Revenues other than intergeographic sales $2,583 $36,112 Intergeographic sales . 470 -- Total revenues ...... $3,053 $36,112 Operating profit ...... $ 742 $ 4,461 Net income ............ $ 444 $ (208) $ 2,834 Capital expenditures .. $ 690 $ 70 $ 4,005 Identifiable assets ... $3,612 $1,901 $31,358 Equity investments and related advances $ 655 742 Total assets ........ $32,100 Equity in earnings of others ........... $ 111 $ 144 (*) After elimination of intergeographic transactions. Statement of Information by Geographic Area (continued) United (millions of dollars) States Canada Europe Year 1995 Revenues other than intergeographic sales $23,978 $2,676 $1,749 Intergeographic sales . 1,335 942 170 Total revenues ...... $25,313 $3,618 $1,919 Operating profit ...... $ 2,065 $ 29 $ 223 Net income ............ $ 1,582 $ 11 $ 142 Capital expenditures .. $ 2,039 $ 311 $ 452 Identifiable assets ... $18,880 $3,591 $2,755 Equity investments and related advances $ 53 $ 32 $ 6 Equity in earnings of others ........... $ 36 $ -- $ 1 Consol- Cor- idated Other porate (*) Year 1995 Revenues other than intergeographic sales $2,294 $31,004 Intergeographic sales . 404 -- Total revenues ...... $2,698 $31,004 Operating profit ...... $ 562 $ 2,879 Net income ............ $ 364 $ (237) $ 1,862 Capital expenditures .. $ 658 $ 66 $ 3,526 Identifiable assets ... $2,713 $2,189 $29,241 Equity investments and related advances $ 513 604 Total assets ........ $29,845 Equity in earnings of others ........... $ 133 $ 170 (*) After elimination of intergeographic transactions. Statement of Information by Industry Segment (millions of dollars) Petroleum Operations Exploration and Petroleum Chemical Production Products Operations Year 1997 Revenues other than intersegment sales ......................... $ 7,393 $ 22,794 $ 5,941 Intersegment sales .............. 3,420 2,018 449 Total revenues ................ $ 10,813 $ 24,812 $ 6,390 Operating profit ................ $ 3,004 $ 862 $ 732 Equity in earnings of others .... (6) 35 (7) General corporate amounts ....... Interest expense ................ Income taxes .................... (1,018) (310) (232) Net income .................... $ 1,980 $ 587 $ 493 Depreciation and related charges $ 1,430 $ 455 $ 397 Capital expenditures ............ $ 2,115 $ 455 $ 652 Identifiable assets ............. $ 14,682 $ 7,520 $ 6,351 Equity investments and related advances ...................... $ 1,260 $ 164 $ 569 Corporate and Other Operations Consolidated* Year 1997 Revenues other than intersegment sales ......................... $ 48 $ 36,287 Intersegment sales .............. -- -- Total revenues ................ $ 48 $ 36,287 Operating profit ................ $ (74) $ 4,524 Equity in earnings of others .... 2 24 General corporate amounts ....... (371) (371) Interest expense ................ (401) (401) Income taxes .................... 504 (1,056) Net income .................... $ (340) $ 2,720 Depreciation and related charges $ 91 $ 2,373 Capital expenditures ............ $ 122 $ 3,344 Identifiable assets ............. $ 2,399 $ 30,470 Equity investments and related advances ...................... $ 26 2,019 Total assets .................. $ 32,489 * After elimination of intersegment transactions. Statement of Information by Industry Segment (continued) (millions of dollars) Petroleum Operations Exploration and Petroleum Chemical Production Products Operations Year 1996 Revenues other than intersegment sales ......................... $ 6,409 $ 23,755 $ 5,698 Intersegment sales .............. 3,630 1,607 71 Total revenues ................ $ 10,039 $ 25,362 $ 5,769 Operating profit ................ $ 2,771 $ 771 $ 924 Equity in earnings of others .... (1) 32 112 General corporate amounts ....... Interest expense ................ Income taxes .................... (986) (275) (301) Net income .................... $ 1,784 $ 528 $ 735 Depreciation and related charges $ 1,467 $ 456 $ 261 Capital expenditures ............ $ 2,404 $ 500 $ 985 Identifiable assets ............. $ 15,866 $ 7,415 $ 6,215 Equity investments and related advances ...................... $ 71 $ 82 $ 565 Corporate and Other Operations Consolidated* Year 1996 Revenues other than intersegment sales ......................... $ 44 $ 36,112 Intersegment sales .............. -- -- Total revenues ................ $ 44 $ 36,112 Operating profit ................ $ (5) $ 4,461 Equity in earnings of others .... 1 144 General corporate amounts ....... (448) (448) Interest expense ................ (192) (192) Income taxes .................... 431 (1,131) Net income .................... $ (213) $ 2,834 Depreciation and related charges $ 87 $ 2,271 Capital expenditures ............ $ 116 $ 4,005 Identifiable assets ............. $ 2,513 $ 31,358 Equity investments and related advances ...................... $ 24 742 Total assets .................. $ 32,100 * After elimination of intersegment transactions. Statement of Information by Industry Segment (continued) (millions of dollars) Petroleum Operations Exploration and Petroleum Chemical Production Products Operations Year 1995 Revenues other than intersegment sales ......................... $ 4,717 $ 20,279 $ 5,655 Intersegment sales .............. 2,915 1,038 62 Total revenues ................ $ 7,632 $ 21,317 $ 5,717 Operating profit ................ $ 1,011 $ 687 $ 1,256 Equity in earnings of others .... -- 35 133 General corporate amounts ....... Interest expense ................ Income taxes .................... (317) (231) (426) Net income .................... $ 694 $ 491 $ 963 Depreciation and related charges $ 1,971 $ 471 $ 293 Capital expenditures ............ $ 2,065 $ 500 $ 850 Identifiable assets ............. $ 14,372 $ 7,445 $ 5,183 Equity investments and related advances ...................... $ 47 $ 33 $ 502 Corporate and Other Operations Consolidated* Year 1995 Revenues other than intersegment sales ......................... $ 46 $ 31,004 Intersegment sales .............. -- -- Total revenues ................ $ 46 $ 31,004 Operating profit ................ $ (75) $ 2,879 Equity in earnings of others .... 2 170 General corporate amounts ....... (310) (310) Interest expense ................ (335) (335) Income taxes .................... 432 (542) Net income .................... $ (286) $ 1,862 Depreciation and related charges $ 59 $ 2,794 Capital expenditures ............ $ 111 $ 3,526 Identifiable assets ............. $ 2,705 $ 29,241 Equity investments and related advances ...................... $ 22 604 Total assets .................. $ 29,845 * After elimination of intersegment transactions. AMOCO CORPORATION AND SUBSIDIARIES ___________________________ SUPPLEMENTAL INFORMATION 1. OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES The tables presented below provide supplemental information about oil and gas exploration and production activities as defined by SFAS No. 69, "Disclosures about Oil and Gas Producing Activities." This information excludes activities associated with marketing of natural gas and Amoco's economic interest in equity affiliates. Results of Operations for Oil and Gas Producing Activities United World- (millions of dollars) States Canada Europe Other wide 1997 Oil and gas production revenues: From consolidated subsidiaries ........... $2,938 $ 306 $ -- $ 957 $4,201 From unaffiliated entities 576 387 836 788 2,587 Other revenues ............. 617 86 226 75 1,004 Total revenues ........... 4,131 779 1,062 1,820 7,792 Production costs: Taxes other than income .. 229 14 41 137 421 Other production costs ... 776 230 314 487 1,807 Exploration expenses ....... 101 69 159 270 599 Depreciation, depletion and amortization expense ..... 616 178 220 329 1,343 Other related costs ........ 508 35 37 134 714 Total costs .............. 2,230 526 771 1,357 4,884 Operating profit ........... 1,901 253 291 463 2,908 Income tax expense ......... 476 109 142 268 995 Results of operations .... $1,425 $ 144 $ 149 $ 195 $1,913 Results of Operations for Oil and Gas Producing Activities (continued) United World- (millions of dollars) States Canada Europe Other wide 1996 Oil and gas production revenues: From consolidated subsidiaries ........... $3,075 $ 369 $ 3 $1,146 $4,593 From unaffiliated entities 719 346 817 853 2,735 Other revenues ............. 111 86 83 97 377 Total revenues ........... 3,905 801 903 2,096 7,705 Production costs: Taxes other than income .. 261 15 33 170 479 Other production costs ... 760 235 256 414 1,665 Exploration expenses ....... 142 68 141 265 616 Depreciation, depletion and amortization expense ..... 682 190 164 351 1,387 Other related costs ........ 459 43 64 130 696 Total costs .............. 2,304 551 658 1,330 4,843 Operating profit ........... 1,601 250 245 766 2,862 Income tax expense ......... 398 54 127 433 1,012 Results of operations .... $1,203 $ 196 $ 118 $ 333 $1,850 1995 Oil and gas production revenues: From consolidated subsidiaries ........... $2,223 $ 331 $ -- $ 908 $3,462 From unaffiliated entities 512 274 719 717 2,222 Other revenues ............. 155 100 102 92 449 Total revenues ........... 2,890 705 821 1,717 6,133 Production costs: Taxes other than income .. 179 13 25 112 329 Other production costs ... 744 240 233 369 1,586 Exploration expenses ....... 152 112 123 223 610 Depreciation, depletion and amortization expense ..... 973 350 197 337 1,857 Other related costs ........ 321 73 85 117 596 Total costs .............. 2,369 788 663 1,158 4,978 Operating profit ........... 521 (83) 158 559 1,155 Income tax expense ......... 15 (37) 70 314 362 Results of operations .... $ 506 $ (46) $ 88 $ 245 $ 793 Oil and gas production revenues reflect the market prices of net production sold or transferred, with appropriate adjustments for royalties, net profits interest and other contractual provisions. Other revenues in 1997 included gains on the sale of non-core U.S. and European properties. Taxes other than income include production and severance taxes and property taxes. Other production costs are lifting costs incurred to operate and maintain productive wells and related equipment, including such costs as operating labor, repairs and maintenance, materials, supplies and fuel consumed. Also included are operating costs of field natural gas liquids plants. Production costs include related administrative expenses and depreciation applicable to support equipment associated with production activities. Exploration expenses include the costs of geological and geophysical activity, carrying and retaining undeveloped properties and drilling exploratory wells determined to be non-productive. DD&A expense relates to capitalized costs incurred in acquisition, exploration and development activities and does not include depreciation applicable to support equipment. In 1995, DD&A included $355 million and $121 million in the United States and Canada, respectively, related to impairment of long-lived assets. Included in other related costs are significant, non-recurring items and purchases of natural gas for field natural gas liquids plants. Income taxes are generally assigned to the operations that give rise to the tax effects. Results of operations do not include interest expense and general corporate amounts nor their associated tax effects. Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves The standardized measure of discounted future net cash flows relating to proved oil and gas reserves is prescribed by SFAS No. 69. The statement requires measurement of future net cash flows through assignment of a monetary value to proved reserve quantities and changes therein using a standardized formula. The amounts shown are based on prices and costs at the end of each period, legislated tax rates and a 10 percent annual discount factor. Because the calculation assumes static economic and political conditions and requires extensive judgment in estimating the timing of production, the resultant future net cash flows are not necessarily indicative of the fair market value of estimated proved reserves, but provide a reference point that may assist the user in projecting future cash flows. Summarized below is the standardized measure of discounted future net cash flows relating to proved oil and gas reserves at December 31, 1997, 1996 and 1995. The amount shown for affiliates represents Amoco's proportionate economic interest in the estimated discounted future net cash flows of equity affiliates. United World- (millions of dollars) States Canada Europe Other wide December 31, 1997 Future cash inflows ....... $41,138 $ 7,381 $ 9,441 $19,302 $ 77,262 Future development and production costs ........ 15,178 3,210 4,582 7,192 30,162 Future income taxes ....... 6,885 1,426 1,882 6,049 16,242 Future net cash flows ..... 19,075 2,745 2,977 6,061 30,858 Ten percent annual discount 10,397 1,093 1,025 2,997 15,512 Discounted net cash flows . $ 8,678 $ 1,652 $ 1,952 $ 3,064 $ 15,346 Affiliates ................ $ -- $ -- $ -- $ 809 $ 809 December 31, 1996 Future cash inflows ....... $65,932 $10,929 $11,546 $21,813 $110,220 Future development and production costs ........ 15,749 3,665 4,174 7,595 31,183 Future income taxes ....... 15,497 2,592 3,035 5,854 26,978 Future net cash flows ..... 34,686 4,672 4,337 8,364 52,059 Ten percent annual discount 19,194 2,115 1,759 3,700 26,768 Discounted net cash flows . $15,492 $ 2,557 $ 2,578 $ 4,664 $ 25,291 December 31, 1995 Future cash inflows ....... $33,326 $ 7,534 $ 8,671 $13,359 $ 62,890 Future development and production costs ........ 15,923 3,759 4,174 5,173 29,029 Future income taxes ....... 4,438 1,155 1,841 3,401 10,835 Future net cash flows ..... 12,965 2,620 2,656 4,785 23,026 Ten percent annual discount 7,385 1,013 948 1,844 11,190 Discounted net cash flows . $ 5,580 $ 1,607 $ 1,708 $ 2,941 $ 11,836 Future cash inflows are computed by applying the year-end prices of oil and gas to proved reserve quantities as reported under "Estimated Proved Reserves." Future price changes are considered only to the extent provided by contractual arrangements. Future development and production costs are estimated expenditures to develop and produce the proved reserves based on year-end costs and assuming continuation of existing economic conditions. Future income taxes are calculated by applying appropriate statutory tax rates to future pre-tax net cash flows from proved oil and gas reserves less recovery of the tax basis of proved properties, and adjustments for permanent differences. Statement of Changes in Standardized Measure of Discounted Future Net Cash Flows The following table details the changes in the standardized measure of discounted future net cash flows for the three years ended December 31, 1997: (millions of dollars) 1997 1996 1995 Balance at January 1 $25,291 $11,836 $10,991 Changes resulting from: Sales and transfers of oil and gas produced, net of production costs (4,560) (5,184) (3,769) Net changes in prices, and development and production costs (15,208) 17,332 407 Current-year expenditures for development ..................... 2,077 2,007 1,707 Extensions, discoveries and improved recovery, less related costs ................... 2,056 3,928 1,922 (Sales) purchases of reserves in place ........................ (2,287) (332) 128 Revisions of previous quantity estimates ....................... 31 445 56 Accretion of discount ............. 3,763 1,735 1,441 Net change in income taxes ........ 5,073 (7,375) (833) Other ............................. (890) 899 (214) Balance at December 31 .............. $15,346 $25,291 $11,836 The prices of crude oil and natural gas have fluctuated over the past several years, which effects the computed future cash flows over the period shown. Because the price of crude oil and natural gas is likely to remain volatile in the future, price changes can be expected to continue to significantly affect the standardized measure of discounted future net cash flows. Estimated Proved Reserves Net proved reserves of crude oil (including condensate), NGL and natural gas at the beginning and end of 1997, 1996 and 1995, with the detail of changes during those years, are presented below. Reported quantities include reserves in which the Corporation holds an economic interest under production-sharing and other types of operating agreements with foreign governments. The estimates were prepared by Corporation engineers and are based on current technology and economic conditions. The Corporation considers such estimates to be reasonable and consistent with current knowledge of the characteristics and extent of proved production. These estimates include only those amounts considered to be proved reserves and do not include additional amounts that may result from extensions of currently proved areas, or amounts that may result from new discoveries in the future, or from application of secondary or tertiary recovery processes not yet determined to be commercial. Proved developed reserves are those reserves that are expected to be recovered through existing wells with existing equipment and operating methods. The amounts shown for affiliates represent Amoco's proportionate economic interest in estimated proved reserves of equity affiliates. Crude Oil and NGL Reserves Consolidated United States Canada Europe Crude Crude Oil Crude Oil (millions of barrels) Oil NGL and NGL and NGL Proved reserves: December 31, 1994 ........ 786 447 286 191 Revisions of previous estimates ............ 5 12 5 3 Improved recovery applications ......... 12 2 41 25 Extensions, discoveries and other additions .. 27 9 53 16 Purchases of reserves in place ................ 4 3 2 56 Sales of reserves in place ................ (1) (3) (23) -- Production ............. (66) (22) * (25) (23) December 31, 1995 ........ 767 448 339 268 Revisions of previous estimates ... (1) (19) (2) 2 Improved recovery applications ......... 25 9 24 9 Extensions, discoveries and other additions .. 12 7 93 73 Purchases of reserves in place ............. 3 3 -- -- Sales of reserves in place ............. (9) (4) (49) -- Production ............. (65) (27) * (22) (22) December 31, 1996 ........ 732 417 383 330 Revisions of previous estimates ... 166 (34) 6 11 Improved recovery applications ......... 6 4 1 7 Extensions, discoveries and other additions .. 41 5 47 4 Purchases of reserves in place ............. 11 1 2 -- Sales of reserves in place ............. (107) (78) (11) -- Production ............. (60) (24) * (22) (24) December 31, 1997......... 789 291 406 328 Proved developed reserves: December 31, 1994 ........ 727 404 236 160 December 31, 1995 ........ 713 409 260 150 December 31, 1996 ........ 675 376 274 146 December 31, 1997 ........ 638 267 284 149 Crude Oil and NGL Reserves (continued) Consolidated Other Total Affiliates Worldwide Crude Oil Crude Oil Crude Oil Crude Oil (millions of barrels) and NGL and NGL and NGL and NGL Proved reserves: December 31, 1994 .......... 495 2,205 -- 2,205 Revisions of previous estimates .............. 12 37 -- 37 Improved recovery applications ........... 29 109 -- 109 Extensions, discoveries and other additions .... 54 159 -- 159 Purchases of reserves in place .................. 8 73 -- 73 Sales of reserves in place (12) (39) -- (39) Production ............... (86) (222) -- (222) December 31, 1995 .......... 500 2,322 -- 2,322 Revisions of previous estimates ..... 21 1 -- 1 Improved recovery applications ........... 15 82 -- 82 Extensions, discoveries and other additions .... 114 299 -- 299 Purchases of reserves in place ............... -- 6 -- 6 Sales of reserves in place -- (62) -- (62) Production ............... (89) (225) -- (225) December 31, 1996 .......... 561 2,423 -- 2,423 Revisions of previous estimates ..... 27 176 -- 176 Improved recovery applications ........... 32 50 -- 50 Extensions, discoveries and other additions .... 71 168 -- 168 Purchases of reserves in place ............... 46 60 166 226 Sales of reserves in place (214) (410) -- (410) Production ............... (84) (214) (2) (216) December 31, 1997........... 439 2,253 164 2,417 Proved developed reserves: December 31, 1994 .......... 387 1,914 -- 1,914 December 31, 1995 .......... 386 1,918 -- 1,918 December 31, 1996 .......... 411 1,882 -- 1,882 December 31, 1997 .......... 308 1,646 120 1,766 (*) Excludes non-leasehold NGL production attributable to processing plant ownership of approximately 15 million barrels for 1995, 1996 and 1997. Natural Gas Reserves Consolidated United (billions of cubic feet) States Canada Europe Other Proved reserves: December 31, 1994 ............. 11,728 3,022 1,388 2,383 Revisions of previous estimates ........ (198) (25) 11 126 Improved recovery applications .............. 139 11 39 102 Extensions, discoveries and other additions ....... 475 174 72 1,082 Purchases of reserves in place .................. 305 36 -- -- Sales of reserves in place .. (76) (78) (26) -- Production .................. (891) (302) (131) (213) December 31, 1995 ............. 11,482 2,838 1,353 3,480 Revisions of previous estimates ........ (796) (55) 38 129 Improved recovery applications .............. 214 12 9 -- Extensions, discoveries and other additions ....... 378 79 3 2,871 Purchases of reserves in place .................. 300 21 -- -- Sales of reserves in place .. (154) (259) -- (20) Production .................. (918) (293) (143) (223) December 31, 1996 ............. 10,506 2,343 1,260 6,237 Revisions of previous estimates ........ (308) 96 6 918 Improved recovery applications .............. 100 11 2 93 Extensions, discoveries and other additions ....... 664 112 41 734 Purchases of reserves in place .................. 170 27 -- 980 Sales of reserves in place .. (1,188) (113) (10) (1,101) Production .................. (847) (279) (141) (225) December 31, 1997.............. 9,097 2,197 1,158 7,636 Proved developed reserves: December 31, 1994 ............. 10,829 2,643 1,028 1,038 December 31, 1995 ............. 10,443 2,559 1,017 1,422 December 31, 1996 ............. 9,304 2,156 961 1,745 December 31, 1997 ............. 8,017 1,980 1,034 2,066 Natural Gas Reserves (continued) Consoli- dated (billions of cubic feet) Total Affiliates Worldwide Proved reserves: December 31, 1994 ............. 18,521 -- 18,521 Revisions of previous estimates ........ (86) -- (86) Improved recovery applications .............. 291 -- 291 Extensions, discoveries and other additions ....... 1,803 -- 1,803 Purchases of reserves in place .................. 341 -- 341 Sales of reserves in place .. (180) -- (180) Production .................. (1,537) -- (1,537) December 31, 1995 ............. 19,153 -- 19,153 Revisions of previous estimates ........ (684) -- (684) Improved recovery applications .............. 235 -- 235 Extensions, discoveries and other additions ....... 3,331 -- 3,331 Purchases of reserves in place .................. 321 -- 321 Sales of reserves in place .. (433) -- (433) Production .................. (1,577) -- (1,577) December 31, 1996 ............. 20,346 -- 20,346 Revisions of previous estimates ........ 712 -- 712 Improved recovery applications .............. 206 -- 206 Extensions, discoveries and other additions ....... Purchases of reserves 1,551 -- 1,551 in place .................. 1,177 1,374 2,551 Sales of reserves in place .. (2,412) -- (2,412) Production .................. (1,492) (6) (1,498) December 31, 1997.............. 20,088 1,368 21,456 Proved developed reserves: December 31, 1994 ............. 15,538 -- 15,538 December 31, 1995 ............. 15,441 -- 15,441 December 31, 1996 ............. 14,166 -- 14,166 December 31, 1997 ............. 13,097 807 13,904 Capitalized Costs The following table summarizes capitalized costs for oil and gas exploration and production activities, and the related accumulated depreciation, depletion and amortization: United World- (millions of dollars) States Canada Europe Other wide December 31, 1997 Unproved properties: Gross assets ............ $ 467 $ 270 $ 81 $ 143 $ 961 Accumulated amortization 96 107 26 7 236 Net assets ............ 371 163 55 136 725 Proved properties: Gross assets ............ 14,019 3,334 3,538 6,469 27,360 Accumulated depreciation, depletion, etc. ......... 8,245 1,807 1,942 4,743 16,737 Net assets ............ 5,774 1,527 1,596 1,726 10,623 Support equipment and facilities: Gross assets ............ 386 112 220 278 996 Accumulated depreciation 203 64 84 248 599 Net assets ............ 183 48 136 30 397 Net capitalized costs ..... $6,328 $1,738 $1,787 $1,892 $11,745 December 31, 1996 Unproved properties: Gross assets ............ $ 477 $ 232 $ 98 $ 303 $ 1,110 Accumulated amortization 97 104 6 7 214 Net assets ............ 380 128 92 296 896 Proved properties: Gross assets ............ 15,341 3,364 3,207 6,728 28,640 Accumulated depreciation, depletion, etc. ......... 8,927 1,809 1,767 5,045 17,548 Net assets ............ 6,414 1,555 1,440 1,683 11,092 Support equipment and facilities: Gross assets ............ 369 88 171 325 953 Accumulated depreciation 163 55 79 238 535 Net assets ............ 206 33 92 87 418 Net capitalized costs ..... $7,000 $1,716 $1,624 $2,066 $12,406 1997 excludes $2.0 billion associated with Amoco's interest in affiliates. Costs Incurred Property acquisition costs include costs incurred to purchase, lease or otherwise acquire oil and gas properties. Exploration costs include the costs of geological and geophysical activity, carrying and retaining undeveloped properties and drilling and equipping exploratory wells. Development costs include the costs of drilling and equipping development wells, CO2 and certain other injected materials for enhanced recovery projects and facilities to extract, treat and gather and store oil and gas. Exploration and development costs include administrative expenses and depreciation applicable to support equipment associated with these activities. Costs incurred summarized below include both amounts expensed and capitalized. United World- (millions of dollars) States Canada Europe Other wide Year 1997 Property acquisition: Proved .............. $ 2 $ 5 $ -- $ 2 $ 9 Unproved ............ 38 9 33 2 82 Exploration ........... 261 83 176 372 892 Development ........... 823 327 268 659 2,077 Total ............. $1,124 $ 424 $ 477 $1,035 $3,060 Year 1996 Property acquisition: Proved .............. $ 113 $ 23 $ -- $ 10 $ 146 Unproved ............ 67 20 -- 54 141 Exploration ........... 313 77 174 369 933 Development ........... 833 327 436 411 2,007 Total ............. $1,326 $ 447 $ 610 $ 844 $3,227 Year 1995 Property acquisition: Proved .............. $ 176 $ 6 $ -- $ -- $ 182 Unproved ............ 74 33 -- 28 135 Exploration ........... 262 124 179 409 974 Development ........... 769 288 344 306 1,707 Total ............. $1,281 $ 451 $ 523 $ 743 $2,998 1997 excludes $865 million in cash for Amoco's interest in affiliates. 2. QUARTERLY RESULTS AND STOCK MARKET DATA Net Net Income Income Net Per Per Share Operating Income Share (Assuming Revenues Profit (1) (Basic) Dilution) (millions of dollars, except as noted) 1997 First quarter .. $ 8,993 $ 1,149 $ 674 $ 1.36 $ 1.35 Second quarter . 8,624 1,036 622 1.26 1.25 Third quarter .. 8,983 1,099 635 1.30 1.29 Fourth quarter . 9,687 1,240 789 1.63 1.62 1996 First quarter .. $ 8,214 $ 1,092 $ 728 $ 1.47 $ 1.46 Second quarter . 8,765 989 600 1.20 1.20 Third quarter .. 9,018 1,019 635 1.28 1.27 Fourth quarter . 10,115 1,361 871 1.74 1.73 Cash Dividends Common Stock Per Price Ranges (2) Share High Low 1997 First quarter .. $ .70 $ 91 5/8 $ 80 1/4 Second quarter . .70 91 7/8 79 1/4 Third quarter .. .70 99 87 Fourth quarter . .70 98 3/8 81 13/16 1996 First quarter .. $ .65 $ 74 1/8 $ 67 1/2 Second quarter . .65 75 1/8 69 1/2 Third quarter .. .65 72 5/8 65 Fourth quarter . .65 83 1/2 70 1/4 (1) Fourth-quarter 1997 earnings included net gains of $271 million primarily associated with asset dispositions, including the sale of certain non-core oil and gas properties in the United States. Fourth-quarter 1996 earnings included a gain of $90 million related to a reduction in LIFO inventory levels. Third-quarter 1996 earnings included a gain on the sale of Amoco's polystyrene foam products business of $97 million. Gains of $56 million on certain Canadian asset dispositions benefited first-quarter 1996 results. (2) The common stock price range is that on the New York Stock Exchange. Amoco's common stock is also traded on the Chicago, Pacific, Toronto and Swiss stock exchanges. 3. MARKET RISKS AND DERIVATIVE INSTRUMENTS In the normal course of business, Amoco holds or issues various financial instruments which expose the Corporation to financial risk associated with market currency exchange rates and interest rates. Also, Amoco's petroleum and chemical businesses are affected by commodity price movements. To manage a portion of these inherent risks, Amoco purchases and sells various derivative financial instruments and commodity futures contracts. Substantially all financial instruments held by the Corporation are for purposes other than trading. Currency Risks The Corporation conducts its business primarily in U.S. dollars. Prices for most of the Corporation's products are based on global market prices which are affected primarily by U.S. dollars. Similarly, prices for non-proprietary feedstocks for most of the Corporation's operations are generally based on U.S. dollars. Significant exposures to specific foreign currency exchange risk are reduced through the use of financial instruments, primarily by hedging of foreign currency borrowings and contractual commitments. The table below shows the amount of foreign currency forward contracts that have been designated as hedges of foreign currency debt. In addition, forward contracts to acquire Singapore dollars with a face amount of $4 million, which hedge the Corporation's foreign currency exposure associated with certain construction contracts, were outstanding at December 31, 1997. The forward contracts matured in January 1998. Interest Rate Risks The table below also provides information about the interest rates of the Corporation's debt obligations. The table shows the amount of debt, including current portion, and related weighted average interest rates, as of December 31, 1997, by expected maturity dates. Weighted average variable rates are based on forward rates as of December 31, 1997. Expected Maturity Date 1998 1999 2000 2001 (millions of U.S. dollars) U.S. DOLLAR: Debt - -- Fixed rate ......... $ 27 $ 4 $ 3 $ 33 - -- Avg. interest rate . 6.5% 10.1% 10.1% 10.4% - -- Variable rate ...... $ 12 $ 105 $ 164 $ 82 - -- Avg. interest rate . 6.5% 6.6% 6.9% 6.9% BRITISH POUND: Debt - -- Variable rate ...... $ 120 $ 65 $ 65 $ 190 - -- Avg. interest rate . 6.5% 6.8% 7.0% 7.1% Forward purchases*..... $ 935 $ -- $ -- $ -- CANADIAN DOLLAR: Debt - -- Fixed rate ......... $ 48 $ 46 $ 42 $ 39 - -- Avg. interest rate . 6.7% 6.7% 6.7% 6.7% Forward purchases ..... $ 56 $ 56 $ 56 $ 56 Expected Maturity Date 2002 Thereafter Total Fair Value (millions U.S. of dollars) U.S. DOLLAR: Debt - -- Fixed rate ......... $ 552 $1,793 $2,412 $2,457 - -- Avg. interest rate . 7.3% 7.1% 7.2% - -- Variable rate ...... $ 232 $ 999 $1,594 $1,594 - -- Avg. interest rate . 6.9% 5.5% 6.0% BRITISH POUND: Debt - -- Variable rate ...... $ 90 $ 94 $ 624 $ 624 - -- Avg. interest rate . 7.2% 7.2% 7.0% Forward purchases*..... $ -- $ -- $ 935 $ 10 CANADIAN DOLLAR: Debt - -- Fixed rate ......... $ -- $ 41 $ 216 $ 234 - -- Avg. interest rate . -- 6.1% 6.5% Forward purchases ..... $ -- $ -- $ 224 $ (8) * Forward purchases are renewed periodically to match debt maturities. Commodity Price Risks Amoco is a vertically integrated petroleum and chemical company. The hydrocarbon commodity markets are influenced by global as well as regional supply and demand. Worldwide political events can also impact commodity prices. Amoco's policy generally is to be exposed to market pricing for commodity purchases and sales. Accordingly, the forward energy markets have been used primarily to refloat fixed-price purchases and sales of crude oil, gasoline, heating oil, and natural gas. Most of the contracts listed below are for this purpose. However, Amoco occasionally uses forward sales of its commodity products to fix prices that are favorable with respect to its future price forecasts, reducing its natural long exposure to commodity prices. At December 31, 1997, Amoco had sold forward 4 million barrels of crude oil and 6 trillion Btus of natural gas production for periods of less than one year. The table below provides information about the Corporation's futures, swaps and option contracts that are sensitive to hydrocarbon price changes. Contract amounts represent the notional amount of the contract. Fair value represents the amount that would have been required to terminate the contracts at December 31, 1997. Weighted average price represents the year-end forward price for futures; the fixed price and the year-end forward price related to the settlement month for swaps; and the weighted average strike price for options. Commodity Price Risks (continued) Fair Contract Value Quantity Amount Favorable (000 (millions of dollars) Barrels) Crude Oil: Maturing in 1998 Futures-short ............. 740 $ 13 $ 1 Options-owned puts ........ 50 $ 1 $ -- Swaps-receive fixed pay variable ...... 3,900 $ 82 $ 11 Maturing in 1999 Futures-long .............. 9 $ -- $ -- Refined Products: (million gallons) Heating oil Maturing in 1998 Futures-long .............. 49 $ 26 $ -- Maturing in 1999 Futures-long .............. 1 $ 1 $ -- Unleaded Gasoline Maturing in 1998 Futures-long .............. 3 $ 1 $ -- Natural Gas: (trillion Btus) Maturing in 1998 Futures-long .............. 3 $ 6 $ -- Options-owned puts ........ 3 $ 3 $ -- Options-written puts ...... 6 $ 11 $ -- Options-owned calls ....... 6 $ 14 $ -- Options-written calls ..... 1 $ 2 $ -- Swaps-receive fixed pay variable ...... 52 $ 88 $ 12 Swaps-receive variable pay fixed ...... 95 $166 $ 4 Swaps-receive and pay variable ........ 198 $410 $ 4 Commodity Price Risks (continued) Fair Weighted Average Value Price Unfavorable Receive Pay (millions (dollar/barrel) Crude Oil: of dollars) Maturing in 1998 Futures-short ............. $ 1 $17.91 $ -- Options-owned puts ........ $ -- $17.00 $ -- Swaps receive fixed pay variable ...... $ -- $21.00 $18.29 Maturing in 1999 Futures-long .............. $ -- $ -- $18.64 Refined Products: (dollar/gallon) Heating oil Maturing in 1998 Futures-long .............. $ 2 $ -- $ .50 Maturing in 1999 Futures-long .............. $ -- $ -- $ .54 Unleaded Gasoline Maturing in 1998 Futures-long .............. $ -- $ -- $ .53 Natural Gas: (dollar/mmBtu) Maturing in 1998 Futures-long .............. $ -- $ -- $ 2.21 Options-owned puts ........ $ -- $ 1.31 $ -- Options-written puts ...... $ 1 $ -- $ 1.80 Options-owned calls ....... $ -- $ -- $ 2.28 Options-written calls ..... $ -- $ 1.46 $ -- Swaps-receive fixed pay variable ...... $ 1 $ 1.69 $ 1.48 Swaps-receive variable pay fixed ...... $ 14 $ 1.64 $ 1.75 Swaps-receive and pay variable ........ $ 5 $ 2.07 $ 2.07 Commodity Price Risks (continued) Contract Fair Value Quantity Amount Favorable (trillion (millions of dollars) Btus) Natural Gas: Maturing in 1999 Options-written puts ...... 1 $ 3 $ -- Options-owned calls ....... 1 $ 4 $ -- Options-written calls ..... 1 $ 1 $ -- Swaps-receive fixed pay variable ...... 6 $ 11 $ 1 Swaps-receive variable pay fixed ...... 6 $ 10 $ 1 Swaps-receive and pay variable ........ 10 $ 22 $ -- Maturing in 2000 Swaps-receive fixed pay variable ...... 1 $ 1 $ -- Swaps-receive variable pay fixed ...... 4 $ 8 $ 1 Swaps-receive and pay variable ........ 2 $ 3 $ -- Fair Weighted Average Value Price Unfavorable Receive Pay (millions (dollar/mmBtu) of dollars) Natural Gas: Maturing in 1999 Options-written puts ...... $ -- $ -- $ 2.27 Options-owned calls ....... $ -- $ -- $ 2.56 Options-written calls ..... $ -- $ 1.42 $ -- Swaps-receive fixed pay variable ...... $ -- $ 1.82 $ 1.73 Swaps receive variable pay fixed ...... $ -- $ 1.91 $ 1.77 Swaps-receive and pay variable ........ $ -- $ 2.30 $ 2.29 Maturing in 2000 Swaps-receive fixed pay variable ..... $ -- $ 1.69 $ 1.58 Swaps-receive variable pay fixed ..... $ -- $ 1.99 $ 1.87 Swaps-receive and pay variable ....... $ -- $ 1.99 $ 1.99 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ___________________________ Part III Item 10. Directors and Executive Officers of the Registrant The information required by this item with respect to directors is incorporated by reference to pages 2-7 of Amoco's Proxy Statement dated March 16, 1998. Also, see heading "Executive Officers of the Registrant" of this Form 10-K. Item 11. Executive Compensation The information required by this item is incorporated by reference to pages 8-15 of Amoco's Proxy Statement dated March 16, 1998. Information related to the Board Compensation and Organization Committee Report on Executive Compensation and the Cumulative Total Shareholder Return Five-Year Comparison graph are identified separately therein and are not incorporated herein. Item 12. Security Ownership of Certain Beneficial Owners and Management The information required by this item is incorporated by reference to pages 2, 7, 8, 9, 10 and 11 of Amoco's Proxy Statement dated March 16, 1998. Item 13. Certain Relationships and Related Transactions During 1997, the Corporation and its subsidiaries had purchase and sale transactions with unaffiliated companies of which certain of the Corporation's non-employee directors or director nominees were executive officers or directors. Such transactions were made in the ordinary course of business at competitive prices and terms and are not considered material. ___________________________ Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. and 2. Financial Statements and Schedules See Index to Financial Statements and Supplemental Information under Part II, Item 8, "Financial Statements and Supplemental Information." Schedules not included in this Form 10-K have been omitted because they are either not applicable or the required information is shown in the financial statements or notes thereto. 3. Exhibits See "Index to Exhibits." (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended December 31, 1997. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Chicago, and State of Illinois, on the 20th day of March, 1998. AMOCO CORPORATION (Registrant) JOHN L. CARL John L. Carl Executive Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 20, 1998. Signatures Titles H. L. FULLER* Chairman of the Board and Director H. L. Fuller (Principal Executive Officer) W. G. LOWRIE* President and Director W. G. Lowrie JOHN L. CARL* Executive Vice President and Chief John L. Carl Financial Officer (Principal Financial Officer) JUDITH G. BOYNTON* Vice President and Controller Judith G. Boynton (Principal Accounting Officer) DONALD R. BEALL* Director Donald R. Beall RUTH BLOCK* Director Ruth Block Signatures Titles JOHN H. BRYAN* Director John H. Bryan ERROLL B. DAVIS, JR.* Director Erroll B. Davis Jr. RICHARD FERRIS* Director Richard Ferris F. A. MALJERS* Director F. A. Maljers ARTHUR C. MARTINEZ* Director Arthur C. Martinez WALTER E. MASSEY* Director Walter E. Massey MARTHA R. SEGER* Director Martha R. Seger THEODORE M. SOLSO* Director Theodore M. Solso MICHAEL WILSON* Director Michael Wilson *By JOHN L. CARL Individually and as Attorney-in-Fact John L. Carl SCHEDULE II AMOCO CORPORATION ___________________________ VALUATION AND QUALIFYING ACCOUNTS(1) For the Year Ended December 31, (millions of dollars) Additions Balance Charged at to costs Charged Deduc- Balance beginning and to other tions at end Description of year expenses accounts (2) of year 1997 Allowance for doubtful notes and accounts receivable $ 17 $ 7 $ -- $ 14 $ 10 1996 Allowance for doubtful notes and accounts receivable 16 4 -- 3 17 1995 Allowance for doubtful notes and accounts receivable 23 7 -- 14 16 (1) Reserves were deducted from the assets to which they apply in the Consolidated Statement of Financial Position. (2) Accounts written off less recoveries and other adjustments. AMOCO CORPORATION ___________________________ INDEX TO EXHIBITS Exhibit Number Exhibit 3(a) The Amended Articles of Incorporation of the registrant, * and amendments thereto. 3(b) The Amended By-laws of the registrant dated * January 27, 1998. 4 The registrant will provide to the Securities and Exchange Commission upon request copies of instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries. 9 None. 10(a) The 1981 Management Incentive Program of Amoco Corporation and its Participating Subsidiaries, as amended through November 29, 1983, is incorporated by reference to Exhibit 10(a) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1983. 10(b) Employment arrangements between the registrant and Enrique J. Sosa are incorporated by reference to Exhibit 10(b) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996. --Employment Agreement dated November 22, 1995; --Letter Agreement amending Employment Agreement dated October 28, 1996; --Restricted Stock Agreement under the 1991 Incentive Program of Amoco Corporation and its Participating Subsidiaries, dated October 2, 1995; --Stock Option Agreement under the 1991 Incentive Program of Amoco Corporation and its Participating Subsidiaries, dated March 26, 1996. --Stock Option Agreement under the 1991 Incentive Program of Amoco Corporation and its Participating Subsidiaries, dated October 2, 1995; *Included herein. 10 (b) --Deferred Sign-On Bonus Agreement, dated (cont.) September 25, 1995. --Stock Option Agreement under the 1991 Incentive * Program of Amoco Corporation and its Participating Subsidiaries, dated March 25, 1997; 10(c) The 1986 Management Incentive Program of Amoco Corporation and its Participating Subsidiaries, as amended through April 25, 1989, is incorporated by reference to Exhibit 10(c) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1989. Amendments to the 1986 Management Incentive Program are incorporated by reference to pages 9-16 of Amoco's Proxy Statement dated March 15, 1991. 10(d) Amendments to the 1981 Management Incentive Program are incorporated by reference to pages 22-37 of Amoco's Proxy Statement dated March 14, 1986. 10(e) The 1991 Incentive Program of Amoco Corporation and its Participating Subsidiaries, as amended and restated effective November 1, 1996 is incorporated by reference to Exhibit 10(e) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996. 10(f) Restricted Stock Plan for Non-Employee Directors and Retainer Stock Plan for Non-Employee Directors are incorporated by reference to pages 20 through 26 of the registrant's Proxy Statement dated March 16, 1989. 10(g) Amoco Employee Savings Plan as amended and * restated, effective July 1, 1996. --Seventh Amendment of Amoco Employee Savings Plan * effective January 11, 1998. --Sixth Amendment of Amoco Employee Savings Plan * effective January 1, 1998. --Fifth Amendment of Amoco Employee Savings Plan * effective December 1, 1997. --Fourth Amendment of Amoco Employee Savings Plan * effective January 1, 1998. --Third Amendment of Amoco Employee Savings Plan * effective December 31, 1997. --Second Amendment of Amoco Employee Savings Plan * effective October 1, 1997. *Included herein. 10(g) --Third Amendment of Amoco Employee Savings Plan * (cont.) effective March 1, 1997. 10(h) Deferral and Restoration Plans are incorporated by reference to Exhibit 10(h) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1995. --Performance Unit Deferral Plan and Form of Performance Unit Plan Payout Deferral Election; --ERISA Retirement Restoration Plan of Amoco Corporation and Participating Companies; and --Deferral Retirement Restoration Plan of Amoco Corporation and Participating Companies. 10(i) Amoco Fabrics and Fibers Company Hourly 401(k) Savings Plan ("AFFC Hourly Plan") as amended and restated, effective January 1, 1996 is incorporated by reference to Exhibit 10(i) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1995. Amendments to the AFFC Hourly Plan effective November 1, 1996 are incorporated by reference to Exhibit 10(i) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996. 10(j) Amoco Fabrics and Fibers Company Salaried 401(k) Savings Plan, effective January 1, 1996, and amendments to such plan effective November 1, 1996 are incorporated by reference to Exhibit 10(j) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996. 10(k) Deferral and Restoration Plans are incorporated by reference to Exhibit 10(k) to the registrant's Annual Report or Form 10-K for the year-ended December 31, 1996 --Amoco Performance Share Restoration Plan, amended and restated effective as of January 1, 1997; --Deferral Savings Restoration Plan of Amoco Corporation and Participating Companies, amended and restated as of November 1, 1996; *Included herein. 10(k) --ERISA Savings Restoration Plan of Amoco (cont.) Corporation and Participating Companies, amended and restated as of November 1, 1996; --Amoco Corporation Directors' Deferred Fee Plan, as amended and restated effective November 1, 1996; and --Amoco Corporation Bonus Deferral Plan for 1991 Incentive Program, as amended and restated effective November 1, 1996. 11 Computation of Basic and Diluted Net Income Per Share * for the three years ended December 31, 1997. 12 Statement Setting Forth Computation of Ratio of * Earnings to Fixed Charges for the five years ended December 31, 1997. 13 None. 16 None. 18 None. 21 Subsidiaries of the registrant * 22 None. 23 Consent of Price Waterhouse LLP. * 24 Powers of Attorney are incorporated by reference to Exhibit 24 to the registrant's Annual Report on Form 10-K for the period ended December 31, 1995 or to Exhibit 24 to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996. 27 Financial Data Schedule for the year ended * December 31, 1997. 28 None. *Included herein. EX-3 2 EXHIBIT 3(A) Exhibit 3(a) State of Indiana OFFICE OF THE SECRETARY OF STATE CERTIFICATE OF AMENDED ARTICLES OF INCORPORATION OF STANDARD OIL COMPANY I, Edwin J. Simcox, Secretary of State of Indiana, hereby certify that Amended Articles of Incorporation for the above Corporation have been filed, in the form prescribed by my office, prepared and signed in duplicate in accordance with Chapter Four of the Indiana General Corporation Act (IC 23-1-4). The name of the corporation is amended as follows: AMOCO CORPORATION Now, therefore, upon due examination, I find that the Amended Articles of Incorporation conform to law, and have endorsed my approval upon the duplicate copies of such Articles; that all fees have been paid as required by law; that one copy of such Articles bearing the endorsement of my approval and filing has been returned by me to the Corporation. In Witness Whereof, I have hereunto set my hand and affixed the seal of the State of Indiana, at the City of Indianapolis, this 23rd day of April, 1985. (Seal of The State of Indiana) /s/ Edwin J. Simcox Edwin J. Simcox, Secretary of State By /s/ Mark S. Adams Deputy AMENDED ARTICLES OF INCORPORATION OF STANDARD OIL COMPANY (NOW AMOCO CORPORATION) H. L. Fuller and R. E. Callahan, President and Secretary, respectively, of Standard Oil Company, a corporation existing under the Indiana General Corporation Act, as amended (the "Corporation"), desiring to give notice of corporate action effecting the amendment of its Articles of Incorporation of the Corporation and the restatement of those Articles of Incorporation, as so amended, in the form of these Amended Articles of Incorporation, certify the following facts: Subdivision A - Text of Amended Articles The exact text of the entire Articles of Incorporation of the Corporation as amended now is as follows: Amended Articles of Incorporation of Amoco Corporation The Amended Articles of Incorporation of Amoco Corporation, a corporation duly organized and existing under and pursuant to the provisions of The Indiana General Corporation Act, as amended (the "Act"), which supersede and take the place of the heretofore existing Articles of Incorporation, are as follows: Article 1 - Name of the Corporation The name of the Corporation is Amoco Corporation (the "Corporation"). Article 2 - Purpose of the Corporation The Corporation is organized for the purpose of engaging in any and all lawful businesses for which corporations may be incorporated under the Act. Article 3 - Period of Existence of the Corporation The period during which the Corporation shall continue to exist as a corporation is perpetual. Article 4 - Principal Office and Resident Agent of the Corporation Section 4.1 - Principal Office. The post office address of the Principal Office of the Corporation is: c/o Prentice-Hall Corporation System, Inc. Circle Tower Indianapolis, Indiana 46204 Section 4.2 - Resident Agent. The name and post office address of the Resident Agent of the Corporation are: Prentice-Hall Corporation System, Inc. Circle Tower Indianapolis, Indiana 46204 Article 5 - Number of Authorized Shares of the Corporation The Corporation has authority to issue 900,000,000 shares, all of which are shares without par value. Shares without par value may be issued for such consideration as may be fixed from time to time by the Board of Directors. Article 6 - General Provisions Regarding Shares of the Corporation Section 6.1 - Common Stock. 800,000,000 of the shares which the Corporation has authority to issue constitute a separate and single class of shares known as Common Stock ("Common Stock"). The shares of Common Stock shall not be issued in series. All shares of Common Stock shall be identical with each other in all respects. Section 6.2 - Voting Preferred Stock. 50,000,000 of the shares which the Corporation has authority to issue constitute a separate and single class of shares known as Voting Preferred Stock ("Voting Preferred Stock"). The shares of Voting Preferred Stock may be issued in one or more series. The Board of Directors is vested with authority to determine and state the designations and the relative rights, preferences, qualifications, limitations and restrictions (other than voting rights) of each such series by the adoption and filing in accordance with the Act of an appropriate resolution or resolutions authorizing the issuance of such series prior to the issuance of such series. All shares of Voting Preferred Stock of the same series shall be identical with each other in all respects. Section 6.3 - Non-Voting Preferred Stock. 50,000,000 of the shares which the Corporation has authority to issue constitute a separate and single class of shares known as Non-Voting Preferred Stock ("Non-Voting Preferred Stock"). The shares of Non-Voting Preferred Stock may be issued in one or more series. The Board of Directors is vested with authority to determine and state the designations and the relative rights, preferences, qualifications, limitations and restrictions (other than voting rights) of each such series by the adoption and filing in accordance with the Act of a resolution or resolutions authorizing the issuance of such series prior to the issuance of such series. All shares of Non-Voting Preferred Stock of the same series shall be identical with each other in all respects. Section 6.4 - Issuance of Shares. The Board of Directors has authority to authorize and direct the issuance by the Corporation of shares of Common Stock, Voting Preferred Stock and Non-Voting Preferred Stock at such times, in such amounts, to such persons, for such considerations and upon such terms and conditions as it may, from time to time, determine, subject only to the restrictions, limitations, conditions and requirements imposed by the Act, other applicable laws, these Amended Articles of Incorporation and the resolution or resolutions authorizing the issuance of any series of shares of Voting Preferred Stock or Non-Voting Preferred Stock adopted by the Board of Directors pursuant to Section 6.2 or Section 6.3 of these Amended Articles of Incorporation. Section 6.5 - Distribution Upon Shares. The Board of Directors has authority to authorize and direct the payment of dividends and the making of other distributions by the Corporation in respect of shares of the issued and outstanding Common Stock, Voting Preferred Stock and Non-Voting Preferred Stock at such times, in such amounts and forms, from such sources (specifically including, but not limited to, the unrestricted and unreserved capital surplus of the Corporation) and upon such terms and conditions as it may, from time to time, determine, subject only to the restrictions, limitations, conditions and requirements imposed by the Act, by other applicable laws, by these Amended Articles of Incorporation and by the resolution or resolutions authorizing the issuance of any series of shares of Voting Preferred Stock or Non-Voting Preferred Stock adopted by the Board of Directors pursuant to Section 6.2 or Section 6.3 of these Amended Articles of Incorporation. The Board of Directors has authority to authorize and direct the payment of dividends and the making of distributions by the Corporation in respect of shares of the issued and outstanding Common Stock, Voting Preferred Stock or Non-Voting Preferred Stock in shares of the same class or in shares of any other class without obtaining the affirmative vote or the written consent of the class in which the payment or distribution is to be made. Section 6.6 - Acquisition of Shares. The Board of Directors has authority to authorize and direct the acquisition by the Corporation of the issued and outstanding shares of Common Stock, Voting Preferred Stock and Non-Voting Preferred Stock at such times, in such amounts, from such persons, for such considerations, from such sources (specifically including, but not limited to, the unrestricted and unreserved capital surplus of the Corporation) and upon such terms and conditions as it may, from time to time, determine, subject only to the restrictions, limitations, conditions and requirements imposed by the Act, by other applicable laws, by these Amended Articles of Incorporation and by the resolution or resolutions authorizing the issuance of any series of shares of Voting Preferred Stock or Non-Voting Preferred Stock adopted by the Board of Directors pursuant to Section 6.2 or Section 6.3 of these Amended Articles of Incorporation. Article 7 - Voting Rights of Shares of the Corporation Section 7.1 - Common Stock. The holders of shares of Common Stock have the right, voting separately by class, to cast one vote for each duly authorized, issued and outstanding share of Common Stock held by them upon each question or matter in respect of which, under the Act, such holders are entitled to vote by class. Such holders also have the right, voting in common with the holders of shares of Voting Preferred Stock and not separately by class, to cast one vote for each duly authorized, issued and outstanding share of Common Stock held by them upon each question or matter submitted generally to the holders of shares of the Corporation in respect of which, under the Act, voting by class or series is not required. The holders of shares of Common Stock have the right, voting in common with the holders of shares of Voting Preferred Stock and not separately by class, to vote for the election of members of the Board of Directors to be elected at any meeting of shareholders, other than those members, if any, to be elected by the holders of shares of Voting Preferred Stock and Non-Voting Preferred Stock in accordance with Section 7.4 of these Amended Articles of Incorporation. Section 7.2 - Voting Preferred Stock. The holders of shares of Voting Preferred Stock have the right, voting separately by class or by series, to cast one vote for each duly authorized, issued and outstanding share of Voting Preferred Stock held by them upon each question or matter in respect of which, under the Act, such holders are entitled to vote by class or by series. Such holders also have the right, voting in common with the holders of shares of Common Stock and not separately by class or by series, to cast one vote for each duly authorized, issued and outstanding share of Voting Preferred Stock held by them upon each question or matter submitted generally to the holders of shares of the Corporation in respect of which, under the Act, voting by class or by series is not required. The holders of shares of Voting Preferred Stock have the right, voting in common with holders of shares of Common Stock and not separately by class, to vote for the election of members of the Board of Directors to be elected at any meeting of shareholders, other than those members, if any, to be elected by the holders of Voting Preferred Stock and Non-Voting Preferred Stock in accordance with Section 7.4 of these Amended Articles of Incorporation. Section 7.3 - Non-Voting Preferred Stock. The holders of shares of Non-Voting Preferred Stock have the right, voting separately by class or by series, to cast one vote for each duly authorized, issued and outstanding share of Non-Voting Preferred Stock held by them upon each question or matter in respect of which, under the Act, such holders are entitled to vote by class or by series. Such holders have no further voting rights other than in accordance with Section 7.4 of these Amended Articles of Incorporation. Section 7.4 - Election of Directors by Holders of Preferred Stock. If the Corporation shall, at any time, be in default in the payment of dividends on any series of shares of Voting Preferred Stock or Non-Voting Preferred Stock in an amount equivalent to six quarterly dividends, the number of directors constituting the Board of Directors of the Corporation shall automatically be increased by two, and the holders of the shares of all series of Voting Preferred Stock and Non-Voting Preferred Stock in respect to which there shall be such a default shall have the right, in addition to the other voting rights contained in this Article 7, to elect, at the next ensuing special or annual meeting of the shareholders, two individuals to fill the vacancies created in the Board of Directors as a result of such increase in the number of members of the Board of Directors. The right to participate in the election of two individuals to the Board of Directors to fill the positions created by such increase shall continue, in the case of each series of shares of Voting Preferred Stock or Non-Voting Preferred Stock having cumulative dividend rights, until all arrearages in dividends accumulated in respect of such shares shall have been paid in full and, in the case of each series of shares of Voting Preferred Stock or Non-Voting Preferred Stock not having cumulative dividend rights, until dividends in respect of such shares shall have been paid consecutively in an amount equal to four quarterly dividend payments, and shall thereupon terminate. In the case of any series of shares of Voting Preferred Stock or Non-Voting Preferred Stock, this right once terminated shall not revive unless and until the Corporation shall be in default in payment of dividends in an amount equal to six quarterly dividends in respect of dividend periods ending after the date upon which this right shall have terminated in accordance with the preceding sentence. Section 7.5 - Vote Required. Any action required to be taken by the shareholders of shares of Voting Preferred Stock or Non-Voting Preferred Stock in respect of which, under the Act, voting by class is required shall be taken pursuant to the affirmative vote of two-thirds of the duly authorized, issued and outstanding shares of such class. Section 7.6 - Written Consent. Any action which may be taken at a meeting of the shareholders of the Corporation can be taken without a meeting only if, prior to such action, a consent in writing setting forth the action so taken shall be signed by all of the shareholders entitled to vote with respect thereto and such written consent is filed with the minutes of the proceedings of the shareholders. Article 8 - Requirement for Commencing Business The stated capital of the Corporation at April 23, 1985 is at least one billion dollars ($1,000,000,000). Article 9 - The Board of Directors of the Corporation Section 9.1 - Election of Directors. The number of directors of the Corporation shall be specified from time to time by its By-Laws but in no event shall such number be less then ten. The members of the Board of Directors, other than any directors elected by holders of preferred stock pursuant to Section 7.4, shall consist of three classes of membership as nearly equal in number as practicable, as determined by the Board of Directors. One class shall be elected to hold office initially for one year until the annual meeting of shareholders to be held in 1986; a second class shall be elected to hold office initially for two years until the annual meeting of shareholders to be held in 1987; and a third class shall be elected to hold office for three years until the annual meeting of shareholders to be held in 1988. The successors of the class of directors whose term expires at any annual meeting shall be elected to hold office for a term of three years expiring at the annual meeting of shareholders to be held in the third year following the year of election. Section 9.2 - Vacancies. Subject to the rights of holders of any preferred stock under Section 7.4, any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause and newly created directorships resulting from an increase in the number of directors shall be filled by a majority vote of the remaining directors then in office, and any directors so chosen shall hold office for the remainder of the full term of the class of director in which the vacancy occurred or in which the new directorship was created. No decrease in the number of directors shall shorten the term of any incumbent director. Section 9.3 - Removal of Directors. Subject to the rights of holders of any preferred stock under Section 7.4, members of the Board of Directors may be removed from office only for cause and by vote, at a meeting of shareholders called for that purpose, of 75 percent of the shares then entitled to vote at an election of directors. Section 9.4 - Amendment of Article 9. The provisions of this Article 9 may be amended, altered or repealed only at a meeting of shareholders by vote of the holders of 75 percent of the shares then entitled to vote on amendments to these Articles of Incorporation. Article 10 - Identity of Members of the Board of Directors of the Corporation The names and addresses of the directors of the Corporation holding office at the time of adoption of these Amended Articles of Incorporation are as follows: Leland C. Adams 200 E. Randolph Drive, Chicago, IL 60601 Karl D. Bays One American Plaza, Evanston, IL 60201 Henry O. Boswell 200 E. Randolph Drive, Chicago, IL 60601 John H. Bryan Jr. Three First National Plaza, Chicago, IL 60602 James W. Cozad 200 E. Randolph Drive, Chicago, IL 60601 Richard J. Ferris Post Office Box 66100, Chicago, IL 60666 James C. Fletcher 7925 Jones Branch Drive, McLean, VA 22102 H. Laurance Fuller 200 E. Randolph Drive, Chicago, IL 60601 Frederick G. Jaicks 30 W. Monroe Street, Chicago, IL 60603 Richard H. Leet 200 E. Randolph Drive, Chicago, IL 60601 Robert H. Malott 200 E. Randolph Drive, Chicago, IL 60601 Walter E. Massey 5801 S. Ellis Street, Chicago, IL 60637 Richard M. Morrow 200 E. Randolph Drive, Chicago, IL 60601 Walter R. Peirson 200 E. Randolph Drive, Chicago, IL 60601 Arthur E. Rasmussen 155 N. Michigan Avenue, Chicago, IL 60601 Richard D. Wood 307 E. McCarty Street, Indianapolis, IN 46225 The names and addresses of the President and the Secretary of the Corporation holding office at the time of adoption of these Amended Articles of Incorporation are: H. Laurance Fuller, President 200 E. Randolph Drive, Chicago, IL 60601 Ronald E. Callahan, Secretary 200 E. Randolph Drive, Chicago, IL 60601 Article 11 - Location of Meetings of Shareholders All meetings of the shareholders of the Corporation shall be held at such location, within or outside the State of Indiana, as may from time to time be designated by resolution of the Board of Directors as provided in the By-Laws. Subdivision B - Manner of Adoption and Vote Section 1 - Action by Board of Directors. The Board of Directors of the Corporation, at a meeting which was duly called, constituted and held on February 26, 1985, and at which a quorum was present and voting throughout, duly adopted a resolution proposing to the shareholders of the Corporation that the Articles of Incorporation of the Corporation be amended to provide as set forth in these Amended Articles of Incorporation and directing that that proposal be submitted to a vote of the shareholders at their next ensuing annual meeting. Section 2 - Action by Shareholders. The shareholders of the Corporation, at the annual meeting which was duly called, constituted and held on April 23, 1985, and at which a quorum was present and voting throughout, duly adopted a resolution amending the Articles of Incorporation to provide as set forth in these Amended Articles of Incorporation. The number of shares of the Corporation entitled to vote in respect of the amendment, the number of shares voted in favor of the adoption of the amendment and the number of shares voted against the adoption of the amendment, were as follows: Number of Shares Entitled to Vote 269,451,782 Number of Shares Voted in Favor 176,063,244 Number of Shares Voted Against 31,321,993 Section 3 - Compliance With Legal Requirements. The manner of the adoption of the amendment, and the vote by which it was adopted, constitute full legal compliance with the provisions of The Indiana General Corporation Act, as amended, and the Articles of Incorporation and By-Laws of the Corporation. Subdivision C - Statement of Changes Made With Respect to Number of Shares Authorized The number of shares which the Corporation was authorized to issue before the amendment, the additional number of shares which the Corporation is authorized to issue by the adoption of the amendment and the total number of shares which the Corporation is authorized to issue after adoption of the amendment are as follows: Authorized Shares Authorized Shares Authorized Shares Class Before Amendment Added by Amendment After Amendment Common Stock without par value 800,000,000 0 800,000,000 Non-Voting Preferred Stock without par value 0 50,000,000 50,000,000 Voting Preferred Stock without par value 0 50,000,000 50,000,000 Total Authorized Shares 800,000,000 100,000,000 900,000,000 These Amended Articles of Incorporation have been executed as of April 23, 1985. /s/ H. L. Fuller /s/ R. E. Callahan H. L. Fuller, President R. E. Callahan, Secretary _________________________________________________________________ ___________________ STATE OF ILLINOIS ) ) SS: COUNTY OF COOK ) On April 23, 1985, before me, a Notary Public having jurisdiction to act in my capacity as such within such State and County, personally appeared H. L. Fuller and R. E. Callahan, the President and Secretary, respectively, of Standard Oil Company, each of whom, being first duly sworn by me upon his oath according to law, acknowledged his execution of these Amended Articles of Incorporation and stated that the facts set forth therein were true. /s/ Christine S. Sumida Notary Public Christine S. Sumida Printed Signature My commission expires: December 9, 1986 This instrument prepared by: Stephen F. Gates, Esq. 200 East Randolph Drive Chicago, Illinois 60601 STATE OF INDIANA OFFICE OF THE SECRETARY OF STATE ARTICLES OF AMENDMENT To Whom These Presents Come, Greeting: WHEREAS, there has been presented to me at this office, Articles of Amendment for: AMOCO CORPORATION and said Articles of Amendment have been prepared and signed in accordance with the provisions of the Indiana Business Corporation Law, as amended. NOW, THEREFORE, I, SUE ANNE GILROY, Secretary of State of Indiana, hereby certify that I have this day filed said articles in this office. The effective date of these Articles of Amendment is March 12, 1998. In Witness Whereof, I have hereunto set my hand and affixed the seal of the State of Indiana, at the City of Indianapolis, this Twelfth day of March, 1998. /s/ Sue Anne Gilroy SUE ANNE GILROY, Secretary of State Deputy SUE ANNE GILROY SECRETARY OF STATE CORPORATIONS DIVISION 302 W. Washington St., Rm. E018 Indianapolis, IN 46204 Telephone: (317) 232-8576 ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION State Form 38333 (R8/12-96) Approved by State Board of Accounts 1995 Indiana Code 23-1-38-1 et esq. Filing Fee: $30.00 INSTRUCTIONS: Use 8 1/2" x 11" white paper for inserts. Present original and two copies to address in upper right hand corner of this form. Please TYPE or PRINT. ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF: Name of Corporation: AMOCO CORPORATION Date of Incorporation: 6-18-89 The undersigned officers of the above referenced Corporation (hereinafter referred to as the "Corporation") existing pursuant to the provisions of: (indicate appropriate act) X Indiana Business Corporation Law Indiana Professional Corporation Act of 1983 as amended (hereinafter referred to as the "Act"), desiring to give notice of corporate action effectuating amendment to certain provisions of its Articles of Incorporation, certify the following facts: ARTICLE I Amendment(s) The exact text of Article(s) 5 of the Articles ARTICLE 5 NUMBER OF AUTHORIZED SHARES OF THE CORPORATION The Corporation has authority to issue 1,700,000,000 shares, all of which are shares without par value. Shares without par value may be issued for such consideration as may be fixed from time to time by the Board of Directors. The exact text of Article(s) 6 Section 6.1 of the Articles ARTICLE 6 GENERAL PROVISIONS REGARDING SHARES OF THE CORPORATION Section 6.1. Common Stock. 1,600,000,000 of the shares which the Corporation has authority to issue constitute a separate and single class of shares known as Common Stock ("Common Stock"). The shares of Common Stock shall not be issued in series. All shares of Common Stock shall be identical with each other in all respects. ARTICLE II Date of each amendment's adoption: January 27, 1998 (Continued on reverse side) (IND. - 1026 - 6/6/97) ARTICLE III Manner of Adoption and Vote Mark applicable section. NOTE - Only in limited situations does Indiana law permit an Amendment without shareholder approval. Because a name change requires shareholder approval, Section 2 must be marked and either A or B completed. X SECTION 1 This amendment was adopted by the Board of Directors or incorporators and shareholder action was not required. SECTION 2 The shareholders of the Corporation entitled to vote in respect to the amendment adopted the proposed amendment. The amendment was adopted by: (Shareholder approval may be by either A or B.) A. Vote of such shareholders during a meeting called by the Board of Directors. The result of such vote is as follows: Shares entitled to vote. Number of shares represented at the meeting. Shares voted in favor. Shares voted against. B. Unanimous written consent executed on __________________________, 19_____ and signed by all such shareholders entitled to vote. ARTICLE IV Compliance with Legal Requirements The manner of the adoption of the Articles of Amendment and the vote by which they were adopted constitute full legal compliance with the provisions of the Act, the Articles of Incorporation, and the By-Laws of the Corporation. I hereby verify, subject to the penalties of perjury, that the statements contained herein are true, this 11th day of March, 1998. Signature of current officer or chairman of the board. /s/ S. F. Gates Printed name of officer or chairman of the board S. F. Gates Signature's title Vice President, General Counsel and Corporate Secretary EX-3 3 EXHIBIT 3(B) Exhibit 3(b) [LOGO] BY-LAWS AMENDED JANUARY 27, 1998 AMOCO CORPORATION AMOCO CORPORATION INDEX TO BY-LAWS Description Page Article 1 - Shareholders Section 1. Annual Meeting 1 Section 2. Special Meetings 1 Section 3. Notice of Meetings 1 Section 4. Location 1 Section 5. Quorum 1 Section 6. Adjournment 1 Section 7. Organization 1 Section 8. Voting 1 Section 9. List of Shareholders 2 Article II - Directors Section 1. Number 2 Section 2. Term of Office 2 Section 3. Vacancies 2 Section 4. Annual Meeting of Board 2 Section 5. Regular Meetings 2 Section 6. Special Meetings 2 Section 7. Adjournments 3 Section 8. Quorum 3 Section 9. Chairman 3 Section 10. Place of Meeting 3 Article III - Committees Section 1. Designation of Committees 3 Section 2. Executive Committee 3 Article IV - Officers Section 1. Titles, Election, Appointment and Tenure 3 Section 2. Powers 3 Section 3. Chairman of the Board 3 Section 4. Corporate Secretary and Assistant Corporate Secretaries 3 Section 5. Controller and Assistant Controllers 4 Article V - Shares Section 1. Form 4 Section 2. Transfer and Cancellation of Shares 4 Section 3. Regulations 4 Section 4. Fixing Dates of Record 5 Section 5. Shareholder Addresses 5 Article VI - Corporate Seal 5 Article VII - Fiscal Year 5 Article VIII - Indemnification of Directors, Officers and Others 5 Description Page Article IX - Emergency By-Laws Section 1. Applicability 6 Section 2. Emergency Meeting 6 Section 3. Substitute Directors 6 Section 4. Extreme Emergency 6 Section 5. Power/Substitute Officers 7 Section 6. Term 7 Article X - Amendments to By-Laws 7 AMOCO CORPORATION BY-LAWS Article I - Shareholders Section 1. Annual Meeting. The annual meeting of shareholders shall be held on the fourth Tuesday in April of each year for the purpose of electing directors and for the transaction of other business. Section 2. Special Meetings. Special meetings of the shareholders may be called by the Chairman of the Board, or by a majority of the actual number of directors elected and qualified from time to time. The business of any such special meeting shall be confined to the subject or subjects specified in the notice thereof. Section 3. Notice of Meetings. Notice of each meeting of shareholders stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered or mailed by the Corporate Secretary to each shareholder of record entitled to vote at such meeting, at such address as appears upon the books of the Corporation, at least ten (10) days and not more than sixty (60) days before the date of the meeting. Section 4. Location. Meetings of the shareholders shall be held at such location as shall be determined with respect to any such meeting by resolution of the Board of Directors, except that the Chairman of the Board shall determine the location of any special meeting of the shareholders which is called by the Chairman of the Board. Section 5. Quorum. At any shareholders meeting the holders of a majority of the voting power of each class of the issued and outstanding shares entitled to vote at such meeting, represented in person or by proxy, shall constitute a quorum. Section 6. Adjournment. Any meeting of shareholders may adjourn from time to time and no further notice of such adjourned meeting or meetings shall be necessary unless a new record date is set. If at any such meeting there shall be no quorum, a majority in interest of the shareholders attending in person or by proxy may adjourn the meeting from time to time without further notice until a quorum shall attend. Section 7. Organization. The Chairman of the Board, or in his or her absence a Vice Chairman or the President of the Corporation, or in the absence of all of them a director appointed by a majority of the directors present, shall preside as Chairman of meetings of the shareholders. The Corporate Secretary shall act as Secretary of all meetings of shareholders or, if absent, the Chairman of the meeting may appoint a Secretary. The Chairman of the meeting shall have the power and the duty to preserve order and to ensure that the meeting is properly conducted and that the shareholders, both present and absent, are treated fairly and in good faith. Without limiting the generality of the foregoing, the Chairman of the meeting shall declare any shareholder proposal to be out of order if notice of such proposal was not properly given. Notice shall be properly given only if it is received by the Corporate Secretary not less than 90 days or more than 120 days prior to the anniversary of the preceding year's annual meeting and contains (a) a brief description of the business desired to be brought before the meeting, (b) the name and address of the shareholder proposing such business, and if such shareholder is not a holder on the Corporation's stock records, evidence demonstrating beneficial ownership of shares, (c) the total number of shares beneficially owned by the shareholder, and (d) disclosure of any interest of the shareholder in, or benefit from such business, which interest or benefit is not shared with other shareholders at large. Section 8. Voting. At all meetings of the shareholders each shareholder shall be entitled to one vote for each share registered in such shareholder's name at the close of business on the date of record fixed by the Board of Directors, or, if any holder acquires title to a share after that date, such holder shall be entitled to one vote for each share for which such holder has received a proxy from the shareholder of record. Such vote may be given in person or by proxy duly executed in writing by the shareholder or the shareholder's duly authorized attorney- in-fact. The election of directors shall be decided by a plurality of the votes cast by the shares entitled to vote in the election. Action on a matter other than the election of directors is approved if the number of shares cast "for" the proposal exceeds the number of shares cast "against" the proposal, unless otherwise provided by statute or by the Articles of Incorporation. The Board of Directors shall prescribe rules and regulations for voting, consistent with the laws of Indiana and these By-Laws, and shall appoint inspectors to collect and count the votes and cause the result of a vote on any matter voted upon to be entered in the minutes of the shareholders' meeting. The inspectors shall also pass upon the qualification of voters, the validity of proxies, and the acceptance or rejection of votes. No person who is a candidate for the office of director shall act as inspector with respect to a vote for election of directors. The Corporate Secretary shall keep true records of the votes on election of directors and other proceedings at shareholders meetings, but it shall not be necessary to record at length upon such records the names of the shareholders voting, and only the totals of the votes cast "for," "against" or "abstain" on any proposition voted upon by the shareholders need be recorded. Section 9. List of Shareholders. The Corporate Secretary shall make, at least five (5) business days before each shareholders meeting, a complete list of the shareholders entitled to vote at said meeting, arranged in alphabetical order with the address and number of shares so entitled to vote held by each, which list shall be on file at the principal office of the Corporation, and subject to inspection by any shareholder for a proper purpose. Such list shall be produced and kept open at the time and place of the meeting and subject to inspection by any shareholder during the holding of such meeting. The original stock register or transfer record (which may be maintained on magnetic tape or other electrical storage form), or a duplicate thereof or printout therefrom, shall be the only evidence as to who are the shareholders entitled to examine such list or the stock register or transfer record, or to vote at the meeting of shareholders. Article II - Directors Section 1. Number. The Board of Directors shall consist of at least twelve (12) and not more than twenty (20) persons, as fixed from time to time by the Board of Directors. Section 2. Term of Office. The members of the Board of Directors shall consist of three (3) classes of membership as nearly equal in number as practicable, as determined by the Board of Directors. The successors of the class of directors whose term expires at any annual meeting shall be elected to hold office for a term of three (3) years expiring at the annual meeting of shareholders to be held in the third year following the year of election. The Board of Directors may adopt from time to time a director retirement or other tenure policy. Section 3. Vacancies. Any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause and newly created directorships resulting from an increase in the number of directors shall be filled by a majority vote of the remaining directors then in office, and any directors so chosen shall hold office for the remainder of the full term of the class of director in which the vacancy occurred or in which the new directorship was created. No decrease in the number of directors shall shorten the term of any incumbent director. Section 4. Annual Meeting of the Board. After each annual meeting of shareholders, the directors shall meet forthwith for the transaction of business. No prior notice of such meeting shall be required. Section 5. Regular Meetings. Regular meetings of the Board shall be held, without notice, at the office of the Corporation at 200 East Randolph Drive, Chicago, Illinois, at such times as may be fixed from time to time by resolution of the Board. Section 6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, or in his or her absence by a Vice Chairman or the President of the Corporation, or in the absence of all of them by any director, upon at least twenty-four (24) hours prior notice to each director, either personally or by mail or telegram. Special meetings shall be called by the Chairman of the Board, or the Corporate Secretary, in like manner and on like notice on the written request of four directors. Section 7. Adjournments. If less than a quorum is present at any meeting, those directors present may adjourn from time to time until a quorum shall be present. Section 8. Quorum. A majority of the actual number of directors elected and qualified from time to time, and for the time being in office, shall be necessary to constitute a quorum for the transaction of any business, and the act of a majority of the directors present at a meeting at which a quorum is present, shall be the act of the Board of Directors, unless the act of a greater number is required by statute, the Articles of Incorporation or these By-Laws. Section 9. Chairman. At all meetings of the Board, the Chairman of the Board, or in his or her absence a Vice Chairman or the President of the Corporation, or in the absence of all of them a chairman pro tem chosen by the directors present, shall preside. Section 10. Place of Meeting. The Board of Directors may, at their option, hold any special meeting at any place, either within or outside the State of Indiana. Article III - Committees Section 1. Designation of Committees. The Board may from time to time, by resolution adopted by a majority of the directors then in office, (i) designate any three (3) or more of its members to constitute an Executive Committee and specify the number of directors which shall constitute a quorum for the transaction of any business, (ii) designate any one (1) or more of its members to constitute any other Committee, and (iii) designate or change the functions and authority of, fill any vacancies on, change the members on, or terminate the existence of any such Committee. Section 2. Executive Committee. During the intervals between meetings of the Board, and subject to such limitations as may be required by resolution of the Board, the Articles of Incorporation, these By-Laws or applicable law, the Executive Committee shall have and may exercise all of the authority of the Board. Article IV - Officers Section 1. Titles, Election, Appointment and Tenure. The Board of Directors shall elect a Chairman of the Board, a Corporate Secretary, and a Controller and may elect such other officers with such titles as the resolution of the Board electing them shall designate. The Chairman of the Board is authorized to appoint officers of the Corporation to offices other than Vice Chairman, President and those offices specified above. Each officer shall hold office until his or her resignation, removal, death, retirement or termination of employment with the Corporation. The Board of Directors (or, for officers appointed by the Chairman, the Chairman) may remove any officer, either with or without cause, at any time. Section 2. Powers. All officers of the Corporation shall have such authority and perform such duties in the management and operation of the Corporation as shall be prescribed in these By- Laws, the resolutions of the Board of Directors electing them or the documents appointing them, and shall have such additional authority and duties as are incident to their offices except to the extent that such resolutions or documents of appointment may be inconsistent therewith. Section 3. Chairman of the Board. The Chairman of the Board shall be a member of the Board of Directors, shall be the Chief Executive Officer of the Corporation and shall preside at all meetings of the shareholders and of the directors. Subject to the direction of the Board, he or she shall have and exercise general charge and supervision over the business and affairs of the Corporation. Section 4. Corporate Secretary and Assistant Corporate Secretaries. The Corporate Secretary shall attend all meetings of the shareholders and the Board of Directors and shall record and keep minutes thereof in books provided for the purpose; shall attend to the giving of all required notices of meetings of the directors and shareholders; shall have the care and custody of the corporate seal,minute books, and other books, documents and records pertaining to the Corporate Secretary's office and may authenticate records of the Corporation; shall sign, with the proper officers such contracts and other documents as may require the Corporate Secretary's signature and shall, in proper cases, affix the corporate seal thereto; shall, from time to time, render to the Board of Directors and the Chairman of the Board such statements and reports pertaining to the Corporate Secretary's office and duties as they may require; and shall perform such other duties as may be assigned to him or her by the Board or the Chairman of the Board. An Assistant Corporate Secretary may perform any duties of the Corporate Secretary in the absence of the Corporate Secretary, or whenever requested by the Corporate Secretary, and shall perform such other duties as may be assigned to him or her by the Board or the Chairman of the Board. In the absence of the Corporate Secretary and of all Assistant Corporate Secretaries, minutes of any meetings may be kept by a secretary pro tem appointed for that purpose by the presiding officer. Section 5. Controller and Assistant Controllers. The Controller, under such general supervision as may be determined by the Chairman of the Board, shall have general charge and responsibility for the accounting affairs of the Corporation, the keeping of the corporate, general and cost accounting books and records of the Corporation, and other documents and papers necessary to properly reflect the business and corporate transactions upon the books of the Corporation. An Assistant Controller may perform any duties of the Controller in the absence of the Controller, or whenever requested by the Controller. Article V - Shares Section 1. Form. (a) Shares of the Corporation may be issued with or without certificates, as determined by the Board of Directors from time to time. All shares of the same class or series shall have the same rights, preferences, qualifications, limitations and restrictions as other shares of the same class or series regardless of whether such shares are represented by certificates. (b) Certificates for shares of the Corporation shall be in such form as shall be approved by the Board and shall be signed by the Chairman of the Board and the Corporate Secretary, whose signatures thereon may consist of printed facsimiles. Each certificate shall be countersigned by any authorized transfer agent, and by any authorized registrar, whose signatures thereon may consist of printed facsimiles. Certificates shall be numbered consecutively as issued within each class of shares, and the name of the registered holder, the number of shares, and date of issuance shall be entered in the proper books of the Corporation. Section 2. Transfer and Cancellation of Shares. Shares shall be transferable at the office of any authorized transfer agent, and on the books of the Corporation by the record holder thereof in person, or by the record holder's duly authorized attorney appointed in writing. Except as herein provided, no certificate for shares shall be issued in lieu of a former certificate until such former certificate shall have been surrendered and canceled. A new certificate may be issued in the name of the appropriate State Officer or Office without surrender of the original certificate for shares presumed abandoned under the provisions of applicable State escheat or abandoned property statutes. With respect to certificates alleged to have been lost, stolen, or destroyed, a new certificate may be issued in the name of the record holder (or legal representative of the record holder) without surrender of the original certificate, but only upon production of such evidence of the loss, theft, or destruction of the original certificate, and upon delivery to the Corporation of a bond of indemnity in such amount and upon such terms as the Corporation, in its discretion, may require. Section 3. Regulations. The Board may make such rules and regulations as it may deem expedient from time to time concerning the issuance, transfer and registration of certificates for shares of the Corporation. Section 4. Fixing Dates of Record. The Board of Directors may, by resolution, fix, in advance, a date not exceeding seventy (70) days preceding the date of any meeting of shareholders, or the date for the payment of any dividend, or the date for the allotment of any rights, or the date when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or entitled to receive any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares, and in such case only shareholders of record on the date so fixed shall be entitled to notice of and, subject to the provision of Section 8 of Article I hereof, to vote at any such meeting, or to receive payment of such dividend, or to receive such allotment of rights or exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after such record date fixed as aforesaid. Section 5. Shareholder Addresses. Every Shareholder shall furnish the Corporate Secretary with an address to which notices of meetings of the shareholders and all other notices may be served or mailed, and in default thereof notices may be addressed to the shareholder's last known address. Article VI - Corporate Seal The Corporation's corporate seal shall be a circular impression bearing the words "Amoco Corporation" and the date "1889" around the margin and the word "Indiana" in the center. Article VII - Fiscal Year The fiscal year of the Corporation shall be the calendar year. Article VIII - Indemnification of Directors, Officers and Others To the extent not inconsistent with Indiana law as in effect from time to time, every person (and the heirs, executors and administrators of such person) who is or was a director or officer of the Corporation shall in accordance with the provisions of this Article be indemnified by the Corporation against any and all liability and reasonable expense that may be incurred by him or her in connection with or resulting from any claim, action, suit or proceeding; provided that such director or officer is wholly successful with respect thereto or acted in good faith, in what he or she reasonably believed to be either in the best interests of the Corporation or, for matters outside the person's official capacity, not opposed to the Corporation's best interests; and, in addition, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful. "Claim, action, suit or proceeding" shall include any claim, action, suit or proceeding (whether brought by or in the right of the Corporation or any other corporation or otherwise), civil, criminal, administrative or investigative, or threat thereof, in which a director or officer of the Corporation (or his or her heirs, executors or administrators) may become involved, as a party or otherwise: (a) by reason of such person being or having been a director or officer of the Corporation, or of any subsidiary corporation of the Corporation, or of any other corporation which he or she served as such at the request of the Corporation and of which the Corporation directly or indirectly is a shareholder or creditor, or in which, or in the stocks, bonds, securities or other obligations of which, it is in any way interested, or (b) by reason of such person acting or having acted in any capacity in a corporation, partnership, association, trust, foundation, not-for-profit corporation or other organization or entity where he or she served as such at the request of the Corporation, or (c) by reason of any action taken or not taken by such person in any such capacity, whether or not he or she continues in such capacity at the time such liability or expense shall have been incurred. The terms "liability" and "expense" shall include, but shall not be limited to, counsel fees and disbursements and amounts of judgments, fines or penalties against, and amounts paid in settlement by or on behalf of, a director or officer, but shall not in any event include any liability or expenses on account of profits realized by him or her in the purchase or sale of securities of the Corporation. The termination of any claim, action, suit or proceeding, by judgment, settlement (whether with or without court approval) or conviction or upon a plea of guilty or of nolo contendere, or its equivalent, shall not create a presumption that a director or officer did not meet the standards of conduct set forth in this Article. The determination of whether indemnification is permissible hereunder, and any reimbursement of expenses in advance of final disposition of a proceeding, shall be made in accordance with the procedures set forth in the Indiana Business Corporation Law at the time in effect. The rights of indemnification provided in this Article shall be in addition to any rights to which any such director or officer may otherwise be entitled by contract or as a matter of law. Persons who are not directors or officers of the Corporation but are employees of the Corporation or any subsidiary or are directors or officers of any subsidiary may be indemnified to the extent authorized at any time or from time to time by the Board of Directors. Irrespective of the provisions of this Article, the Board of Directors may, at any time or from time to time, approve indemnification of directors and officers or other persons to the full extent permitted by the provisions of the Indiana Business Corporation Law at the time in effect, whether on account of past or future transactions. To the extent not inconsistent with Indiana law as in effect from time to time, the Board of Directors may, at any time or from time to time, approve the purchase and maintenance of insurance on behalf of any such director, officer or other person against any liability asserted against him or her in his or her capacity or arising out of his or her status as a director, officer, employee or agent of the Corporation or any corporation, partnership, association, trust, foundation, not-for-profit corporation or other organization or entity which he or she served as such at the request of the Corporation, whether or not the Corporation would have the power to indemnify him or her under the provisions of this Article. Article IX - Emergency By-Laws Section 1. Applicability. This Article shall apply only during an emergency which is defined for purposes hereof as any period of time during which an extraordinary event prevents a quorum of the Board of Directors from assembling in time to deal with the business for which the meeting has been or is to be called. Section 2. Emergency Meeting. After the extraordinary event giving rise to the emergency has occurred, any director may call an emergency meeting by giving at least twenty-four (24) hours advance notice thereof in whatever manner is reasonably calculated to give actual notice to those directors whom it is practicable to reach. Section 3. Substitute Directors. A majority of directors present at such emergency meeting may appoint substitute directors (i) from a list of Emergency Directors approved in advance of the emergency by a majority of the directors then in office, and (ii) from among any of the following officers of the Corporation: Senior Vice President, Vice President, Treasurer and Controller. Each substitute director so appointed shall be treated for all purposes as a director, and such appointment shall expire upon cessation of the emergency giving rise to such appointment. Section 4. Extreme Emergency. If the emergency is of such a nature that none of the directors is available or able to call a meeting in accordance with Section 2 above, then (i) all of the Emergency Directors on the list established in accordance with Section 3 above shall be automatically deemed to be substitute directors, (ii) any of the Emergency Directors may call an emergency meeting in accordance with the procedure set forth in Section 2 above, (iii) any three (3) of the Emergency Directors shall constitute a quorum at such meeting, and (iv) a majority of the Emergency Directors at such meeting may appoint additional substitute directors from among the officers and employees of the Corporation and its subsidiaries. Section 5. Power/Substitute Officers. Each substitute director appointed under this Article shall be treated for all purposes as a regular director, and the Board of Directors constituted under this Article shall have all of the powers of the regular Board. The Board of Directors constituted hereunder may appoint substitute officers to have the powers and to carry out the duties of any officers of the Corporation who are unavailable because of the emergency. Section 6. Term. The term of any substitute director or any substitute officer appointed under this Article shall expire automatically upon the cessation of the emergency giving rise to the appointment. Article X - Amendments to By-Laws These By-Laws, or any of them, may be altered, amended or repealed by resolution of the Board of Directors adopted by affirmative vote of a majority of the directors then in office. * * * EX-10 4 EXHIBIT 10(B) Exhibit 10(b) STOCK OPTION AGREEMENT UNDER THE 1991 INCENTIVE PROGRAM OF AMOCO CORPORATION AND ITS PARTICIPATING SUBSIDIARIES Agreement dated March 25, 1997 between AMOCO CORPORATION, (the "Corporation") and ENRIQUE J. SOSA (the "Optionee"). WHEREAS, the Corporation, pursuant to the authority and approval of its shareholders, adopted, effective April 23, 1991, the 1991 Incentive Program of Amoco Corporation and its Participating Subsidiaries (the "Program") for the purpose of furthering the interests of the Corporation and its shareholders by providing additional incentives for key, managerial, and other salaried employees who possess valuable experience and skills and giving such employees an interest in the Corporation parallel to that of the shareholders so as to enhance the proprietary and personal interest of such employees in the Corporation's continued success and progress; and WHEREAS, the Optionee has been designated as an eligible employee to whom an option may be granted. NOW, THEREFORE, in consideration of the services to be rendered by the Optionee and the mutual covenants contained herein, and other good and valuable consideration, the parties hereto agree as follows: 1. Program. All of the terms, conditions and provisions of the Program are incorporated herein by reference. All capitalized terms used herein and not otherwise defined shall have the same meanings as set forth in the Program. 2. Nonqualified Stock Option. The Corporation grants to the Optionee, as a matter of separate inducement and agreement in connection with the Optionee's employment by the Corporation or one of its participating subsidiaries, for a period of ten years from the date of this Agreement, options, not intended as an incentive or statutory stock options, to purchase all or any part of an aggregate of 50,000 shares of common stock of the Corporation at a purchase price of $90.1875 per share. 3. Exercise. Except as otherwise provided in the Program and this Agreement, one-half of the total number of options granted under Section 2 shall become exercisable in whole or in part after the expiration of one year from the date of this Agreement. The remaining options granted under Section 2 shall become exercisable in whole or in part after the expiration of two years from the date of this Agreement. No options shall be exercisable if exercise or delivery of shares upon exercise would constitute a violation of any federal or state securities or other valid regulation. 4. Employment. (a) Except as otherwise provided in the Program or this Agreement, an option granted under Section 2 shall be exercisable only if the Optionee remains in the service of the Corporation or of a participating subsidiary continuously until the expiration of the applicable period set forth in Section 3, at such rate or rates of compensation as shall be determined from time to time by the Corporation or as provided in any employment agreement between the Optionee and the Corporation or such participating subsidiary, as the case may be; but except as may be provided in any employment agreement between the Optionee and the Corporation, nothing herein shall be deemed to limit or restrict the right of the Corporation or of such participating subsidiary to terminate the Optionee's employment at any time for any reason. (b) If the Optionee's employment is terminated prior to September 30, 2000 for any reason other than Cause, as defined in Section 5, or if the Optionee terminates his employment prior to September 30, 2000 for Good Reason, as defined below, the options granted under Section 2 shall become immediately exercisable in whole or in part for the full grant period set forth in Section 2. For purposes of this Agreement, "Good Reason" shall have the same meaning as it has in any written Employment Agreement between Amoco Corporation and the Optionee. If no such written Employment Agreement is in effect, "Good Reason" shall mean termination by the Optionee of his employment as a consequence of (i) a material diminution by the Corporation or applicable participating subsidiary of Optionee's duties, responsibilities, authorities or compensation unless agreed to by the Optionee, or, (ii) failure of the Corporation or appropriate participating subsidiary to obtain a contractual commitment from any successor to employ Optionee in the same or equivalent capacity and at the same or equivalent compensation and benefits following a sale or transfer of all or substantially all of the Corporation's assets or all or substantially all of the assets of Amoco Chemical Company. (c) Notwithstanding anything in this Agreement to the contrary, an option granted under Section 2 shall be exercisable only if the Optionee, while employed by the Corporation or a participating subsidiary, or while all or any portion of an option granted under Section 2 remains in effect, does not engage in any activity prejudicial in the judgment of the Compensation and Organization Committee or Human Resources Committee, as appropriate, to the interests of the Corporation or any of its subsidiaries. 5. Termination of Employment. An option granted under Section 2 shall expire ten years from the date of this Agreement unless otherwise terminated at an earlier date pursuant to the provisions of the Program or this Agreement. In the event of the death of the Optionee during employment by the Corporation or a participating subsidiary or the Optionee becomes Totally Disabled, after completing the applicable period of continuous employment required by Section 4(a), an option granted under Section 2 shall expire at the earlier of ten years from the date of this Agreement or three years from the date of death. Termination of employment with the Corporation for Cause or voluntary resignation, prior to September 30, 2000, will result in cancellation of the option granted under Section 2 as of the Optionee's termination date. For purposes of this Agreement, "Cause" shall mean willful misconduct, gross incompetence in the performance of the Optionee's duties, or engaging in any conduct which constitutes a felony. 6. Notice of Exercise. Subject to the terms, conditions and provisions of this Agreement and the Program, the Optionee from time to time may exercise an option granted under Section 2 to purchase all or any part of the shares of common stock subject thereto by written notice to the Corporation identifying the option to be exercised and specifying the number of shares of stock to be purchased thereunder, addressed to: D. H. Clement, Supervisor-Executive Compensation Administration, Amoco Corporation, 200 East Randolph Drive, Chicago, Illinois 60601, or to any other person at such address as the Corporation may notify the Optionee in writing, accompanied by full payment of the purchase price of said shares in accordance with Section 7. Any other notice by the Optionee to the Corporation shall be similarly addressed, and any certificates or notices to be delivered to the Optionee shall be addressed as set forth beneath the Optionee's signature hereto or as the Optionee may otherwise notify the Corporation in writing. 7. Payment. Payment by the Optionee upon exercise of an option granted under Section 2 may be made in cash or, in the case of an exercise with respect to at least 100 shares, in shares of common stock of the Corporation that have been owned by the Optionee for at least one year prior to the date of exercise, at the fair market value per share on the date of exercise. 8. Taxes. It shall be a condition to delivery by the Corporation of certificates for shares under Section 6 that adequate provision has, in the judgment of the Corporation, been made for payment of any taxes which may be required to be withheld pursuant to any applicable law. 9. Succession. This Agreement shall be binding upon and inure to the benefit of the Corporation and its successors and assigns; and shall be binding upon and, to the extent permitted by the provisions of the Program, shall inure to the benefit of the Optionee and, in the event of the Optionee's death, to such person or persons (including the Optionee's Beneficiary) as shall have acquired the Optionee's rights hereunder by beneficiary designation, by will or the laws of descent and distribution applicable to the Optionee's estate, but shall not otherwise be transferable or assignable by any of them. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above. AMOCO CORPORATION BY H. L. FULLER ENRIQUE SOSA H. L. FULLER ENRIQUE J. SOSA Home Address: 132 E. Delaware Chicago, IL 60611 EX-10 5 EXHIBIT 10(G) Exhibit 10(g) AMOCO EMPLOYEE SAVINGS PLAN As Amended and Restated July 1, 1996 ARTICLE I INTRODUCTION 1 1.1 JULY 1, 1996 AMENDMENT AND RESTATEMENT OF PLAN 1 1.2 COMPLIANCE WITH CODE AND ERISA 1 1.3 EXCLUSIVE BENEFIT OF PARTICIPANTS 1 1.4 LIMITATION ON RIGHTS CREATED BY PLAN 2 1.5 APPLICATION OF PLAN'S TERMS 2 1.6 BENEFITS NOT GUARANTEED 2 ARTICLE II DEFINITIONS 3 2.1 ADMINISTRATIVE AND RECORDKEEPING SERVICES AGREEMENT 3 2.2 AFFILIATED COMPANY 3 2.3 AFTER-TAX SAVINGS CONTRIBUTIONS 4 2.4 ALTERNATE PAYEE 4 2.5 AMOCO 4 2.6 APPLICABLE COMPENSATION 4 2.7 BENEFICIARY 5 2.8 CASUAL EMPLOYEE 5 2.9 CODE 6 2.10 EMPLOYEE 6 2.11 EMPLOYER 6 2.12 ENTRY DATE 6 2.13 ERISA 6 2.14 HIGHLY-COMPENSATED EMPLOYEE 6 2.15 HOUR OF SERVICE 9 2.16 NORMAL RETIREMENT AGE 11 2.17 PART-TIME EMPLOYEE 11 2.18 PARTICIPANT 11 2.19 PLAN 11 2.20 PLAN YEAR 11 2.21 REGULAR EMPLOYEE 11 2.22 SAVINGS CONTRIBUTIONS 11 2.23 SURVIVING SPOUSE 11 2.24 TAX-DEFERRED SAVINGS CONTRIBUTIONS 12 2.25 TEMPORARY EMPLOYEE 12 2.26 TRUST AGREEMENT 12 2.27 TRUST FUND 12 2.28 TRUSTEE 12 ARTICLE III PARTICIPATION 13 3.1 ELIGIBLE CLASS 13 3.2 PARTICIPATION 13 3.3 END OF PARTICIPATION 14 3.4 REENTRY OF FORMER PARTICIPANT 14 ARTICLE IV SAVINGS CONTRIBUTIONS BY PARTICIPANTS 15 4.1 SAVINGS CONTRIBUTIONS 15 4.2 ENROLLMENT FOR SAVINGS CONTRIBUTIONS 15 4.3 COLLECTION OF SAVINGS CONTRIBUTIONS 16 4.4 CHANGE IN SAVINGS CONTRIBUTIONS 16 (A) INCREASE OR REDUCTION 16 (B) SUSPENSION 16 (C) RESUMPTION 16 (D) PLAN ADMINISTRATOR RULES 16 4.5 CONTRIBUTIONS CONTINGENT ON DEDUCTABILITY 16 4.6 RETURN OF EMPLOYER CONTRIBUTIONS 17 4.7 TWO SEPARATE CONTRACTS 17 4.8 401(K) TAX-DEFERRED SAVINGS CONTRIBUTIONS LIMITS 17 4.9 401(K) DEFERRAL PERCENTAGE 18 4.10 HIGHER AND LOWER PAID GROUPS 19 (A) HIGHER PAID GROUP 19 (B) LOWER PAID GROUP 19 4.11 MONITORING PARTICIPANTS' 401(K) DEFERRAL PERCENTAGES; ADJUSTMENTS 19 (A) ADJUSTMENTS FROM THE TOP DOWN 19 (B) TIMING OF ADJUSTMENTS 19 (C) EARNINGS ON EXCESS TAX-DEFERRED SAVINGS CONTRIBUTIONS 20 (D) ANNUAL ADDITIONS FOR CODE SECTION 415 21 4.12 LIMIT ON TDS CONTRIBUTIONS 21 4.13 DIRECT ROLLOVER CONTRIBUTIONS 22 ARTICLE V COMPANY MATCHING CONTRIBUTIONS 24 5.1 COMPANY MATCHING CONTRIBUTIONS 24 5.2 TIME OF CONTRIBUTION 24 5.3 401(M) LIMITS 24 5.4 401(M) CONTRIBUTION PERCENTAGE 25 5.5 401(K)/(401(M) COMBINED LIMIT 26 (A) MULTIPLE USE TEST 26 (B) CORRECTION OF VIOLATION 26 ARTICLE VI ACCOUNTS AND CREDITS 28 6.1 ESTABLISHMENT OF ACCOUNTS 28 6.2 CREDITING PARTICIPANTS' SAVINGS CONTRIBUTIONS 28 6.3 CREDITING MATCHING CONTRIBUTIONS 28 6.4 CREDITING ROLLOVERS 28 6.5 CHARGE TO ACCOUNTS 29 6.6 ANNUAL LIMITS 29 ARTICLE VII INVESTMENT FUNDS AND CREDITING INVESTMENT EXPERIENCE32 7.1 INVESTMENT FUNDS 32 7.2 INVESTMENT DIRECTIONS AND TRANSFERS AMONG FUNDS 32 (A) INVESTMENT OF ACCOUNTS 32 (B) MANNER AND TIME OF GIVING DIRECTIONS 33 7.3 VALUATION OF ASSETS 33 7.4 CREDITING INVESTMENT EXPERIENCE 34 7.5 RISK OF LOSS 34 7.6 INTERESTS IN THE FUNDS 35 7.7 SOLE SOURCE OF BENEFITS 35 ARTICLE VIII LOANS TO PARTICIPANTS 36 8.1 PLAN ADMINISTRATOR SHALL ADMINISTER THE LOAN PROGRAM 36 8.2 AVAILABILITY OF LOANS 36 8.3 PROMISSORY NOTE 36 8.4 CONDITIONS OF LOAN 36 (A) MAXIMUM AMOUNT 36 (B) MINIMUM AMOUNT 37 (C) REPAYMENT PERIOD 37 (D) INTEREST RATE 37 (E) SECURITY FOR REPAYMENT 37 (F) REPAYMENT 37 (G) PREPAYMENT 38 (H) DEFAULT 38 (I) FEES 39 8.5 ACCOUNTING FOR LOANS 40 (A) SOURCE OF LOAN 40 (B) LOAN INVESTMENT ACCOUNT 40 (C) DISTRIBUTION UPON DEFAULT 41 ARTICLE IX IN-SERVICE WITHDRAWALS 42 9.1 WITHDRAWALS FROM AFTER-TAX SAVINGS ACCOUNT 42 9.2 WITHDRAWALS FROM ROLLOVER ACCOUNT 42 9.3 WITHDRAWALS FROM COMPANY CONTRIBUTION ACCOUNT 42 9.4 HARDSHIP WITHDRAWALS FROM TAX-DEFERRED SAVINGS ACCOUNT 43 9.5 ORDER OF ASSET LIQUIDATION FOR ALL WITHDRAWALS 44 9.6 OUTSTANDING LOAN 44 ARTICLE X DISTRIBUTIONS 45 10.1 DISTRIBUTION UPON RETIREMENT 45 (A) AMOUNT 45 (B) RETIREMENT DEFINED 45 (C) FORM OF PAYMENT 45 10.2 TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT OR DEATH 47 10.3 REEMPLOYMENT 51 10.4 $3,500 CASH-OUT 53 10.5 REQUIRED DISTRIBUTION DATE 53 10.6 DISTRIBUTION UPON DEATH OF A PARTICIPANT 53 (A) IN GENERAL 53 (B) DESIGNATION OF BENEFICIARY 54 (C) NO DESIGNATION 54 (D) PAYMENT UNDER PRIOR DESIGNATION 54 (E) RISK OF LOSS 54 10.7 REHIRE BEFORE DISTRIBUTION 55 10.8 WAIVER OF 30 DAY NOTICE 55 ARTICLE XI DIRECT ROLLOVERS 56 11.1 DIRECT ROLLOVER 56 11.2 DEFINITIONS 56 (A) ELIGIBLE ROLLOVER DISTRIBUTION 56 (B) ELIGIBLE RETIREMENT PLAN 56 (C) DISTRIBUTEE 57 (D) DIRECT ROLLOVER 57 ARTICLE XII AMENDMENT, MERGER AND TERMINATION OF PLAN 58 12.1 AMENDMENT OF PLAN 58 12.2 MERGER OF PLANS 58 12.3 TERMINATION 58 12.4 EFFECT OF TERMINATION 59 ARTICLE XIII NAMED FIDUCIARIES 60 13.1 IDENTITY OF NAMED FIDUCIARIES 60 (A) NAMED FIDUCIARIES 60 (B) PLAN ADMINISTRATOR 60 13.2 RESPONSIBILITIES AND AUTHORITY OF PLAN ADMINISTRATOR 60 13.3 RESPONSIBILITIES AND AUTHORITY OF TRUSTEE 60 13.4 RESPONSIBILITIES OF AMOCO 61 13.5 RESPONSIBILITIES NOT SHARED 61 13.6 DUAL FIDUCIARY CAPACITY PERMITTED 61 13.7 ACTIONS BY AMOCO 61 13.8 ADVICE 61 13.9 DESIGN DECISIONS 62 ARTICLE XIV PLAN ADMINISTRATOR 63 14.1 APPOINTMENT 63 14.2 NOTICE TO TRUSTEE 63 14.3 ADMINISTRATION OF PLAN 63 14.4 REPORTING AND DISCLOSURE 63 14.5 RECORDS 63 14.6 CLAIMS REVIEW PROCEDURE 64 14.7 ADMINISTRATIVE DISCRETION; FINAL AUTHORITY 66 ARTICLE XV PARTICIPATING EMPLOYERS 67 15.1 ADOPTION BY OTHER EMPLOYERS 67 15.2 DESIGNATION OF AGENT 67 15.3 EMPLOYEE TRANSFERS 67 15.4 DISCONTINUANCE OF PARTICIPATION 67 15.5 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE 67 ARTICLE XVI MISCELLANEOUS 69 16.1 QUALIFIED DOMESTIC RELATIONS ORDERS 69 16.2 NONALIENATION OF BENEFITS 69 16.3 PAYMENT OF MINORS AND INCOMPETENTS 70 16.4 CURRENT ADDRESS OF PAYEE 70 16.5 DISPUTES OVER ENTITLEMENT TO BENEFITS 70 16.6 PAYMENT OF BENEFITS 70 16.7 TOP-HEAVY PLAN PROVISIONS 71 (A) APPLICABILITY OF SECTION 71 (B) DEFINITIONS 71 (C) MINIMUM CONTRIBUTION 74 16.8 RULES OF CONSTRUCTION 75 16.9 TEXT CONTROLS 75 16.10 APPLICABLE STATE LAW 75 16.11 PLAN ADMINISTRATION EXPENSES 75 16.12 VOTING AND TENDERING OF AMOCO STOCK 76 16.13 TRANSFER OF ABANDONED ESOP ASSETS TO PLAN 77 16.14 SEVERABILITY 78 16.15 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT OF 1994 ("USERRA") 78 ARTICLE I INTRODUCTION 1.1 July 1, 1996 Amendment and Restatement of Plan. This document amends and restates in its entirety the Amoco Employee Savings Plan (the "Plan"), effective as of July 1, 1996. Except as otherwise specifically provided herein, this restatement shall apply only to contributions to the Plan, and the operation of the Plan, from and after July 1, 1996. The operation of the Plan before July 1, 1996, shall be determined under the applicable instruments then in effect, except as otherwise provided herein. Effective July 1, 1996 (except to the extent that a particular provision of the Plan specifies a different effective date), the Plan is hereby amended and restated to read in its entirety as follows. 1.2 Compliance with Code and ERISA. This Plan is intended to qualify as a profit-sharing plan under Code Section 401(a) and a cash or deferred arrangement under Code Section 401(k). It is also intended to comply with the applicable provisions of ERISA. The Plan will be interpreted in a manner that comports with these intentions. 1.3 Exclusive Benefit of Participants. The Plan is for the exclusive benefit of Participants and their Beneficiaries. Employer and Participant contributions are made to the Trust Fund for the purpose of accumulating a fund for distribution to Participants and their Beneficiaries in accordance with the Plan. Except as provided in Section 4.6, no part of the Trust Fund or any distribution therefrom will be used for or diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan and Trust Fund not paid by the Employer. 1.4 Limitation on Rights Created by Plan. Nothing appearing in the Plan will be construed (a) to give any person any benefit, right or interest except as expressly provided herein, or (b) to create a contract of employment or to give any Employee the right to continue as an Employee or to affect or modify his terms of employment in any way. 1.5 Application of Plan's Terms. The benefits and rights of a Participant and his Beneficiaries under the Plan will be determined in accordance with the terms of the Plan that are in effect on the date that contributions on a Participant's behalf are made or credited to his Accounts or on the date of the Participant's retirement, death or other termination of employment, whichever may be applicable. 1.6 Benefits Not Guaranteed. The Employer, the Trustee and the Plan Administrator do not guarantee the payment of benefits hereunder. Benefits will be paid from the assets of the Trust Fund and are limited to the amount of assets therein. ARTICLE II DEFINITIONS This article contains a number of definitions of terms used in the Plan. Other terms are defined, explained or clarified in other articles. This is done for convenience of Plan administration. There is no other significance to the location of a definition. 2.1 "Administrative and Recordkeeping Services Agreement" means the instrument executed by Amoco and the Plan Administrator, as amended from time to time, fixing the rights and responsibilities of each party with respect to the administration of the Plan. 2.2 "Affiliated Company" means (i) a corporation (foreign or domestic) controlled by, controlling or under common control with Amoco, by ownership, direct or indirect, of more than 80% of the voting stock thereof, and any of their respective successors in business; (ii) a trade or business which is under common control (as defined in Code Section 414(c)) with Amoco; (iii) a corporation, partnership or other entity which, together with Amoco, is a member of an affiliated service group (as defined in Code Section 414(m)); (iv) except to the extent otherwise provided in Treasury Regulations, a leasing organization with respect to the periods of service performed by an individual who is a leased employee, within the meaning of Section 414(n) of the Code, with respect to the Company or an Affiliated Company (determined without regard to this paragraph (iv); and (v) an organization which is required to be aggregated with Amoco pursuant to regulations promulgated under Code Section 414(o), provided that an entity described in this Section shall not be considered an Affiliated Company during the period preceding the date on which it becomes an Affiliated Company within the meaning of this Section. 2.3 "After-Tax Savings Contributions" means contributions by a Participant made pursuant to his election which does not reduce his compensation subject to federal income taxation. 2.4 "Alternate Payee" means an alternate payee within the meaning of Section 414(p)(8) of its Code and Section 206(d)(3)(K) of ERISA. 2.5 "Amoco" means Amoco Corporation, an Indiana Corporation, or its successor. 2.6 "Applicable Compensation" means amounts paid by Amoco or an Affiliated Company to an Employee who is eligible to participate as (i) basic salary and wages, including forms of base pay delivered in alternative forms such as piecework; payment by mileage for drivers; overtime; and shift differentials, (ii) pay-in-lieu of vacation, (iii) commissions, (iv) variable incentive payments, (v) bonuses in the year received while an Employee, including foreign service premium payments made prior to January 1, 1997, (vi) lump sum performance awards, and (vii) amounts contributed on behalf of the Employee to a cafeteria plan or a cash or deferred arrangement and not included in the Employee's gross income for federal income tax purposes under Section 125 or 402(e)(3) of the Code, but excluding (i) sign-on, retention, severance and separation payments, (ii) reward and recognition payments, (iii) remuneration received attributable to moving and educational expenses, (iv) expense allowances and reimbursement for federal income tax purposes, and (vi) any other items of remuneration. For any Plan Year beginning on or after January 1, 1989, the amount of Applicable Compensation taken into account under the Plan for any Participant will not exceed $200,000 ($150,000 for Plan Years beginning after December 31, 1993) or such greater amount as may be determined by the Commissioner of Internal Revenue for that year. In determining the compensation of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If as a result of the application of such rules the adjusted annual compensation limitation is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's compensation as determined under this section prior to the application of this limitation. If compensation for any prior determination period is taken into account in determining a Participant's allocations for the current Plan Year, the compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that prior period. For this purpose, in determining allocations in Plan Years beginning on or after January 1, 1989, the annual compensation limit in effect for determination periods beginning before that date is $200,000 (as adjusted in accordance with Code Section 401(a)(17)). In addition, in determining allocations in Plan Years beginning on or after January 1, 1994, the annual compensation limit in effect for determination periods beginning before that date is $150,000 (as adjusted in accordance with Code Section 401(a)(17)). 2.7 "Beneficiary" means a person or persons (natural or otherwise) designated by a Participant in accordance with Section 10.6(b) to receive any death benefit payable under this Plan, or if there is no such designation, the person (natural or otherwise entitled) to receive any death benefit in accordance with Section 10.6(c). 2.8 "Casual Employee" means a person who is employed for work which is irregular or occasional in nature, and who works the schedule of hours (either daily or weekly) in effect at the place of employment for employees regularly assigned to the same or similar work. 2.9 "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute enacted in its place. 2.10 "Employee" means a person who is an employee of Amoco or an Affiliated Company. 2.11 "Employer" means Amoco or any successor organization, and any other entity of Amoco that adopts the Plan for its Employees with the consent of Amoco in accordance with Article XV. The term "Employer" may refer to each Employer individually or to all the Employers collectively, as the context may require. 2.12 "Entry Date" means the date an Employee is eligible to participate in the Plan pursuant to Section 3.2 and Section 3.4. 2.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute enacted in its place. 2.14 "Highly-Compensated Employee" includes highly- compensated active Employees and highly-compensated former Employees. A highly-compensated active Employee includes any Employee who performs services for the Employer during the determination year and who, during the look-back year: (i) received compensation from the Employer in excess of $75,000 (as adjusted pursuant to section 415(d) of the Code); (ii) received compensation from the Employer in excess of $50,000 (as adjusted pursuant to section 415(d) of the Code) and was a member of the top-paid group for such year; or (iii) was an officer of an Employer and received compensation during such year that is greater than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code; provided, that for purposes of this subparagraph (iii) no more than 50 Employees of the Employers (or if lesser, the greater of 3 employees or 10 percent of the Employees) shall be treated as officers. The term highly-compensated Employee also includes: (i) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year," and the Employee is one of the 100 Employees who received the most compensation from the Employer during the determination year; and (ii) Employees who are 5 percent owners at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (iii), above, during either a determination year or a look-back year, the highest paid officer for such year shall be treated as a highly-compensated Employee. For this purpose, the determination year shall be the Plan Year. The look-back year shall be the 12-month period immediately preceding the determination year. A highly-compensated former Employee includes any Employee who separated from service (or was deemed to have separated) prior to the determination year, returns to service for the Employer during the determination year, and was a highly- compensated active Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. If an Employee is, during a determination year or look-back year, a family member of either a 5 percent owner who is an active or former Employee or a highly-compensated Employee who is one of the 10 most highly-compensated Employees ranked on the basis of compensation paid by the Employer during such year, then the family member and the 5 percent owner or top-10 highly- compensated Employee shall be aggregated. In such case, the family member and 5 percent owner or top-10 highly-compensated Employee shall be treated as a single Employee receiving compensation and plan contributions or benefits equal to the sum of such compensation and contributions or benefits of the family member and 5 percent owner or top-10 highly-compensated Employee. For purposes of this section, family member includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. For purposes of this Section 2.14 and the determination of a Highly-Compensated Employee, the term "Compensation" shall mean compensation as defined in Code Section 414 (q)(7) and the regulations thereunder. The determination of who is a highly-compensated Employee, including the determination of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with section 414(q) of the Code and the Regulations thereunder. Effective for the Plan Year beginning December 1, 1989, pursuant to Internal Revenue Code of 1986 Regulation Section 1.414(q)-IT, Q&A 14(b), the look-back year calculation for a determination year shall be made on the basis of the calendar year ending with the applicable determination year. 2.15 "Hour of Service" for purposes of determining an Employee's eligibility to participate under Section 3.2 and Year of Vesting Service under Section 10.2(b), means: (1) Each hour for which an Employee is paid, or entitled to payment for the performance of duties for the Employer. These hours will be credited to the Employee for the computation period in which the duties are performed; and (2) Each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 hours of service will be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period). Hours under this paragraph will be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor Regulations which is incorporated herein by this reference; and (3) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same hours of service will not be credited both under paragraph (1) or paragraph (2), as the case may be, and under this paragraph (3). These hours will be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. Hours of service will be credited for employment with other members of an affiliated service group (under Code Section 414(m)), a controlled group of corporations (under Section 414(b)), or a group of trades or businesses under common control (under Code Section 414(c)) of which the adopting Employer is a member, and any other entity required to be aggregated with the Employer pursuant to Code Section 414(o). An individual who is a "leased employee" (within the meaning of Section 414(n) or (o) of the Code) of Amoco or an Affiliated Company shall be credited with Hours of Service to the same extent as if he had been employed and paid by Amoco or an Affiliated Company for which he performs services, provided that a leased employee shall not be credited with Hours of Service for any period during which the safe harbor requirement of Section 414(a)(5) of the Code is satisfied with respect to such leased employee. Solely for purposes of determining whether a break in service for participation has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the hours of service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited (1) in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period, or (2) in all other cases, in the following computation period. 2.16 "Normal Retirement Age" means age 65. 2.17 "Part-Time Employee" means a person who is assigned to a position which is established to fill regular and ordinary employment requirements, which is expected to continue for an indefinite period of time, and in which the employee is able to work a schedule of up to 35 hours per week. 2.18 "Participant" means an Employee or former Employee whose participation in the Plan has begun and has not yet ended. 2.19 "Plan" means the Amoco Employee Savings Plan, as set forth in this Plan document, and as it may be amended from time to time. 2.20 "Plan Year" effective January 1, 1991, means the 12 consecutive month period beginning on each January 1 during the continuance of the Plan. "Plan Year" shall also mean the time period January 1, 1989 through November 30, 1989; December 1, 1989 through November 30, 1990 and December 1, 1990 through December 31, 1990. 2.21 "Regular Employee" means a person who is assigned to a position which requires full-time service as determined by his Employer, which is established to fill regular and ordinary employment requirements, and which is expected to continue for an indefinite period of time. 2.22 "Savings Contributions" means Participant's Tax- Deferred Savings Contributions and/or After-Tax Savings Contributions. 2.23 "Surviving Spouse" means the person to whom a Participant is lawfully married (under the law of the state in which the Participant resides) on the date of the Participant's death. 2.24 "Tax-Deferred Savings Contributions" means contributions by an Employer on behalf of a Participant in the amount equal to the amount such Participant elects which reduces his compensation subject to federal income taxation. 2.25 "Temporary Employee" means a person who is assigned to a position which requires full-time service as determined by his Employer, which is established due to an unusual circumstance, and which will continue for a specific period of time or until the occurrence of a specified event such as the return to work of a regular employee or the completion of a special assignment or project. 2.26 "Trust Agreement" means the instrument executed by Amoco and the Trustee, as amended from time to time, fixing the rights and responsibilities of each party with respect to the holding, investment and administration of the Trust Fund. 2.27 "Trust Fund" means the property held by the Trustee for the purposes of the Plan. 2.28 "Trustee" means the person, individual, or corporation, serving as sole trustee, or the persons serving as co-trustees, at any time under the terms of the Trust Agreement. ARTICLE III PARTICIPATION 3.1 Eligible Class. Each Employee employed by an Employer who is remunerated in U. S. Currency through an Employer's payroll system, who is classified as an employee by an Employer and who has not been specifically excluded pursuant to his Employer's participation agreement is in the eligible class, except the following: (a) an Employee who is represented by a union unless the union and the Employer have entered into a collective bargaining or other agreement that provides that the Employee shall participate in the Plan; or (b) an Employee who is a nonresident alien (within the meaning of Code Section 7701(b)(1)(B)) and who receives no earned income (within the meaning of Code Section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3)); or (c) an Employee who is employed by an Employer pursuant to an agreement that provides that the individual shall not be eligible to participate in the Plan. 3.2 Participation. Participation in the Plan is voluntary and no Employee will be required to participate. Each Employee who is eligible to make Savings Contributions before this amendment and restatement will continue to be eligible to make Savings Contributions. Each Employee who was a Participant immediately before July 1, 1996, shall be a Participant on July 1, 1996. Every other Employee in the Eligible Class will be eligible to participate as follows: A Regular or Temporary Employee in the Eligible Class will be eligible to participate starting on the day his employment commences with his Employer effective October 1, 1991. A Casual or Part-Time Employee in the Eligible Class will be eligible to participate after he is credited with 1,000 Hours of Service within the fiscal year commencing with his date of hire or, if he fails to meet that requirement, after he is credited with 1,000 Hours of Service within any succeeding Plan Year. 3.3 End of Participation. A Participant's active participation in the Plan will end upon the termination of his service as an Employee in the Eligible Class for any reason. A Participant's participation in the Plan will end when he has no further interest under the Plan. 3.4 Reentry of Former Participant. A former Participant who terminates his service with his Employer and who returns to service as an Employee in the Eligible Class will become an active Participant on his date of rehire and will be eligible to make Savings Contributions immediately following his date of rehire. ARTICLE IV SAVINGS CONTRIBUTIONS BY PARTICIPANTS 4.1 Savings Contributions. Each Employee who has met one of the participation requirements in Article III may make Tax- Deferred and/or After-Tax Savings Contributions to the Plan in integral percentages of his Applicable Compensation from a minimum of 1% percent to the following maximums. Subject to Code limitations, his maximum Tax-Deferred Savings Contributions in any Plan Year is 15% of his Applicable Compensation for such Plan Year. Also, subject to Code limitations, his maximum After-Tax Savings Contributions in any Plan Year is 21% of his Applicable Compensation for such Plan Year. The foregoing 15% Tax-Deferred Savings and 21% After-Tax Savings Contributions limitations are applied to the Participant's Applicable Compensation in each payroll cycle and only prospectively. 4.2 Enrollment for Savings Contributions. An Employee who wishes to make Savings Contributions must specify the amount of his Savings Contributions in such manner and form, and at such time established by Amoco and the Plan Administrator. An Employee will be given the opportunity to elect Savings Contributions beginning on the first date when he is eligible to participate in the Plan pursuant to Article III. His Savings Contributions will begin on such date provided he gives his Employer or the Plan Administrator advance notice in such a manner and form and at such time established by Amoco and the Plan Administrator. If the Employee declines to make Savings Contributions initially, he may elect to begin making Savings Contributions as soon as administratively practicable thereafter, provided he gives the required notice to his Employer or the Plan Administrator in such a manner and form and at such time established by Amoco and the Plan Administrator. 4.3 Collection of Savings Contributions. The Employer will collect Participants' Savings Contributions using payroll procedures. 4.4 Change in Savings Contributions. (a) Increase or Reduction. A Participant making Savings Contributions may increase or reduce the rate of his Tax-Deferred and/or After-Tax Savings Contributions to any higher or lower rate he elects (subject to the limitations stated in Section 4.1) by so notifying his Employer or Plan Administrator once a calendar month in such a manner and form and at such time established by Amoco and the Plan Administrator. The new rate will become effective as soon as practicable upon proper notification. (b) Suspension. A Participant may suspend his Savings Contributions provided he gives proper notice in such manner and form, and at such time established by Amoco and the Plan Administrator. The suspension of Savings Contributions will become effective as soon as practicable following such notification. (c) Resumption. A Participant who suspended his Savings Contributions may resume such contributions on the first day of any of his subsequent payroll cycles provided he gives proper notice in such manner and form, and at such time established by Amoco and the Plan Administrator. (d) Plan Administrator Rules. The Plan Administrator, after consulting with Amoco, may establish such rules and procedures for Savings Contributions as the Plan Administrator deems necessary for the efficient administration of the Plan. 4.5 Contributions Contingent on Deductability. Each Tax- Deferred Contribution and each Company Matching Contribution shall be made on the condition that it is deductible under Section 404 of the Code in the taxable year of the Employer with respect to which the contribution is made. 4.6 Return of Employer Contributions. If a Tax-Deferred Contribution or a Company Matching Contribution was made (i) by reason of a mistake of fact, or (ii) on the condition that it was currently deductible as provided in Section 4.5 and such amount is subsequently determined not to be currently deductible as provided in Section 4.5, the contribution (adjusted for any investment losses allocable thereto, but not for any investment gains allocable thereto) shall be refunded to the Company; provided that in the case of a contribution described in clause (i), the refund may be made only within one year after the payment of the contribution; and provided further that in the case of a contribution described in clause (ii), the refund may be made only within one year after the disallowance of the deduction and may be made only to the extent that the deduction was disallowed. 4.7 Two Separate Contracts. Contributions to the Plan shall be made pursuant to two separate contracts for purposes of Section 72 (e) of the Code. After-Tax Contributions made after December 31, 1986, plus any gains and minus any losses thereon, shall be allocated to one contract (the "first contract"), and all other contributions to the Plan, plus any gains and minus any losses thereon, shall be allocated to the other contract (the "second contract"). If a Participant withdraws After-Tax Contributions from the Plan pursuant to Section 9.1, the withdrawal shall be made first from the second contract (until all of the Participant's After-Tax Contributions thereunder have been withdrawn) and then from the first contract. 4.8 401(k) Tax-Deferred Savings Contributions Limits. As of the last day of each Plan Year the average of the individual 401(k) Deferral Percentages of the Higher Paid Group (the HCE- ADP) may not exceed the average of the individual 401(k) Deferral Percentages of the Lower Paid Group (the NHCE-ADP) by more than the amount specified in the following table: If NHCE-ADP is: HCE-ADP may not exceed: less than 2% two times NHCE-ADP 2% but less two percentage points than 8% more than NHCE-ADP 8% or higher 1.25 times NHCE-ADP See Section 5.5 for additional limits on Tax-Deferred Savings Contributions. 4.9 401(k) Deferral Percentage. The 401(k) Deferral Percentage of a Participant or Employee eligible to be a Participant for a Plan Year means his Tax-Deferred Savings Contributions for such year computed as a percentage of his Applicable Compensation for such year (to the nearest one- hundredth of a percentage point). Applicable Compensation used to calculate a Participant's 401(k) Deferral Percentage shall exclude compensation amounts earned prior to the date on which the Employee becomes eligible to participate in the Plan. If an Employee is eligible to be a Participant under Article III but has not elected to make Tax-Deferred Savings Contributions, he will nevertheless be taken into account as having made zero Tax- Deferred Savings Contributions. Amoco may elect to treat all or a part of the Company Matching Contributions made on a Participant's behalf for a Plan Year as if such Company Matching Contributions were Tax-Deferred Savings Contributions when determining his 401(k) Deferral Percentage. Company Matching Contributions which are used in determining a Participant's 401(k) Deferral Percentage will not be used in determining his Matching Contribution Percentage under Section 5.4. 4.10 Higher and Lower Paid Groups. (a) Higher Paid Group. An Employee who is eligible to make Savings Contributions is in the Higher Paid Group for a Plan Year if during such Plan Year (Determination Year) or the preceding Plan Year (Look-Back Year) he is a Highly- Compensated Employee. (b) Lower Paid Group. If an Employee eligible to make Savings Contributions is not in the Higher Paid Group for a Plan Year, then he is in the Lower Paid Group. 4.11 Monitoring Participants' 401(k) Deferral Percentages; Adjustments. (a) Adjustments from the Top Down. The Plan Administrator will monitor Participants' 401(k) Deferral Percentages to insure compliance with the requirements of Section 4.5 above. Any adjustments in Participants' elections or actual Tax-Deferred Savings Contributions necessary to meet the requirements of Section 4.5 will be made as follows. The Plan Administrator will reduce the 401(k) Deferral Percentage of the Participant (or Participants) in the Higher Paid Group with the highest 401(k) Deferral Percentage until it reaches the 401(k) Deferral Percentage of the Participant (or participants) in the Higher Paid Group with the next highest 401(k) Deferral Percentage; next the Plan Administrator will reduce the 401(k) Deferral Percentages of both (or all) such Participants until they reach that of the Participant with the next highest 401(k) Deferral Percentage; and so on. The foregoing reductions will be made only to the extent necessary to meet the requirements of Section 4.5. (b) Timing of Adjustments. The Plan Administrator will adjust Tax-Deferred Savings Contributions elections by Participants in the Higher Paid Group in accordance with the preceding paragraph at such time or times before or during a Plan Year as the Plan Administrator deems advisable to insure that the requirements of the preceding sentence, and the requirements of Section 4.5, are met as of the last day of a Plan Year. Such adjustments may also be made after the end of a Plan Year by paying to a Participant the amount of his excess Tax-Deferred Savings Contributions plus earnings (or losses) on such excess (as specified in the following paragraph). Excess Tax-Deferred Savings Contributions means Tax-Deferred Savings Contributions by a Participant in the Higher Paid Group in excess of the amount that would satisfy the requirements of Section 4.8 above. Any such payment of excess Tax-Deferred Savings Contributions will be designated as such by the Plan Administrator, and will be made by the end of the succeeding Plan Year to avoid Plan disqualification. (c) Earnings on Excess Tax-Deferred Savings Contributions. The amount of earnings (or losses) to be distributed with a Participant's excess Tax-Deferred Savings Contributions will be determined by multiplying the investment income and gain or loss on the Participant's Tax- Deferred Savings Contributions Account for the Plan Year for which excess Tax-Deferred Savings Contributions are withdrawn by a fraction. The numerator of the fraction is the amount of the Participant's excess Tax-Deferred Savings Contributions to be distributed and the denominator is the amount credited to such Account as of the last day of the Plan Year. To the extent actual earnings figures are unavailable, the amount determined under the preceding two sentences may be increased by 10% for each month between the end of the Plan Year and date of distribution of excess; for this purpose, a distribution on or before the 15th day of a month will be deemed to have occurred on the last day of the preceding month, and a distribution after the 15th day of a month will be deemed to have occurred on the last day of that month. Notwithstanding the foregoing, the Plan Administrator, with the consent of Amoco, may use any method permitted under the Code and applicable regulations in determining the amount, if any, of earnings that have to be distributed with a Participant's excess Tax-Deferred Savings Contributions. (d) Annual Additions for Code Section 415. Any excess Tax-Deferred Savings Contributions distributed under this subsection will nevertheless be considered as annual additions for purposes of applying the limitations of Section 6.6. 4.12 Limit on TDS Contributions. For each Plan year, the aggregrate Tax-Deferred Contributions (as defined in Section 402(g)(3) of the Code) made on behalf of each Participant under the Plan shall not exceed: (a) $7,000 (as adjusted by the Secretary of the Treasury or his delegate for increases in the cost of living pursuant to Section 402(g) of the Code, provided that no such adjustment shall be taken into account hereunder before the Plan Year in which it becomes effective), reduced by (b) the sum of any of the following amounts that were contributed on behalf of the Participant for a calendar year under a plan, contract or arrangement other than this Plan: (1) any employer contribution under a qualified cash or deferred arrangement (as defined in Section 401(k) of the Code) to the extent not includable in the Participant's gross income for the taxable year under Section 402(a)(8) of the Code (determined without regard to Section 402(g) of the Code); (2) any employer contribution to the extent not includable in the Participant's gross income for the taxable year under Section 402(h)(1)(B) of the Code (determined without regard to Section 402(g) of the Code); and (3) any employer contribution to purchase an annuity contract under Section 403(b) of the Code under a salary reduction agreement (within the meaning of Section 3121(a)(5)(D) of the Code); provided that no contribution described in this subsection (b) shall be taken into account for the purpose of reducing the dollar limit in subsection (a), above, if the plan, contract or arrangement is not maintained by Amoco or an Affiliated Company unless the Participant has filed a notice with the Plan Administrator, in such manner and form, at such time and containing such information concerning the contribution as the Plan Administrator shall require. 4.13 Direct Rollover Contributions. (a) With the approval of the Plan Administrator, an Employee who is eligible to participate, an active Participant and a "Retiree" who has assets in any account may make a direct rollover ("Rollover Contribution") to the Plan in cash in an amount which constitutes all or part of an "Eligible Rollover Distribution" (as defined in Section 401(a)(31)(C) of the Code) from a qualified defined benefit and/or defined contribution plan (except a "Keogh" plan and/or an Individual Retirement Account) as defined in the Code. However, a direct rollover to this Plan of accumulated deductible employee contributions made under another plan will not be permitted, and a direct or indirect transfer to this Plan from another qualified plan will not be permitted if such transfer would subject this Plan to the qualified joint and survivor rules of Code Section 401(a)(11). (b) The Employer, the Plan Administrator and the Trustee have no responsibility for determining the propriety of, proper amount or time of, or status as a tax-free transaction of, any transfer under subsection (a) above. (c) The Plan Administrator shall develop such procedures, and may require such information from an the individual who is requesting to make a direct rollover to the Plan, as necessary or desirable in order to determine that the proposed rollover will meet the requirements of this Section 4.13. (d) A direct rollover will be credited to a separate Rollover Account in the name of the Participant making such Rollover Contribution. Such account shall be 100% vested in the Participant. (e) The Plan Administrator in its discretion may direct the return to the Participant of any Rollover Contribution to the extent the Plan Administrator determines that such return may be necessary to insure the continued qualification of this Plan under Section 401(a) of the Code or that the holding of such Rollover Contributions would be administratively burdensome. (f) Company matching contributions shall not be made with respect to Rollover Contributions. ARTICLE V COMPANY MATCHING CONTRIBUTIONS 5.1 Company Matching Contributions. Effective October 1, 1991 for each Plan Year the Employer will make a matching contribution ("Company Matching Contributions") on behalf of each Participant who makes Tax-Deferred and/or After-Tax Savings Contributions during such Plan Year in accordance with the following schedule. For each Plan Year the Company Matching Contributions made on behalf of each Participant will equal 100% of the sum of such Participant's Tax-Deferred and After-Tax Savings Contributions which are equal to or less than (1) 4% of such Participant's Applicable Compensation if he has less than 3 years of Vesting Service, (2) 5% of such Participant's Applicable Compensation if he has 3 or more years of Vesting Service, but less than 6 years of Vesting Service, or (3) 6% of such Participant's Applicable Compensation if he has 6 or more years of Vesting Service. 5.2 Time of Contribution. The Employer will make Company Matching Contributions under Section 5.1 to the Trustee in cash or in Amoco common stock and will normally make such contributions as soon as practicable after each payroll cycle. In any event, such contributions will be made to the Trustee no later than the due date (including extensions) for filing the Employer's federal income tax return for such year. 5.3 401(m) Limits. As of the last day of each Plan Year, the average of the sum of the individual After-Tax Savings Contributions and Company Matching Contributions Percentages ("401(m) Contribution Percentage") of the Higher Paid Group (the HCE-ACP) may not exceed the average of the individual 401(m) Contribution Percentages of the Lower Paid Group (the NHCE-ACP) by more than the amount specified under the following table: If NHCE-ACP is: HCE-ACP may not exceed: less than 2% two times NHCE-ACP 2% but less 8% 2 percentage points more than NHCE-ACP 8% or higher 1.25 times NHCE-ACP See Section 5.5 for additional limits on After-Tax Savings Contributions and Company Matching Contributions. The Higher Paid Group and Lower Paid Group are defined in Section 4.10. 5.4 401(m) Contribution Percentage. (a) The 401(m) Contribution Percentage of a Participant or Employee eligible to be a Participant for a Plan Year means the sum of his After-Tax Savings Contributions and Company Matching Contributions for the Plan Year (other than Company Matching Contributions used in determining his 401(k) Deferral Percentage under Section 4.5), computed as a percentage of his Applicable Compensation for such year (to the nearest 1/100 of a percentage point). Compensation used to calculate the 401(m) Contribution Percentage is an Employee's Applicable Compensation. (b) If the Plan does not meet the requirements of Section 5.3 as of the last day of a Plan Year, the Plan Administrator will reduce the 401(m) Contribution Percentage of the Participant (or Participants) in the Higher Paid Group with the highest 401(m) Contribution Percentage (by reducing his After-Tax Savings Contributions) until it reaches the 401(m) Contribution Percentage of the Participant (or Participants) in the Higher Paid Group with the next highest 401(m) Contribution Percentage; and so on. The foregoing reductions will be made only to the extent necessary to meet the requirements of Section 5.3. After all such reductions have been made, the Plan Administrator shall pay to the Participant the amount of his excess After- Tax Savings Contributions plus earnings (or losses) on such excess (as determined in accordance to the provisions of Section 4.8). Excess 401(m) Contributions means After-Tax Savings Contributions and/or Company Matching Contributions allocated to a Participant in the Higher Paid Group in excess of the amount that would satisfy the requirements of Section 5.3. Any such payment of excess 401(m) Contributions will be designated as such by the Plan Administrator, and will be made by the end of the succeeding Plan Year to avoid Plan disqualification. (c) Notwithstanding any other provision of this Plan to the contrary, all highly compensated participants (those earning more than $52,235 in 1988), are prohibited from making any contributions for the month of November in 1989 in order to comply with the Internal Revenue Code Section 401(m) contributions limitations for the plan year ending November 30, 1989. 5.5 401(k)/(401(m) Combined Limit. (a) Multiple Use Test. The sum of the HCE-ADP under Section 4.8 and the HCE-ACP under Section 5.3 cannot exceed the combined limit determined under rules and regulations promulgated by the Internal Revenue Service to prevent the multiple use of the alternative limitation (i.e. 2 percentage points more than NHCE-ADP or NHCE-ACP, but in no event more than twice NHCE-ADP or NHCE-ACP.) (b) Correction of Violation. If the sum of the HCE- ADP and the HCE-ACP exceeds the combined limit, the Plan Administrator will first reduce the After-Tax Savings Contribution percentages of the Participant (or Participants) in the Higher Paid Group in accordance with Section 5.4(b) to the extent necessary to meet the combined limit and will then if necessary reduce the Company Matching Contribution percentages of the Participant (or Participants) in the Higher Paid Group to the extent necessary. ARTICLE VI ACCOUNTS AND CREDITS 6.1 Establishment of Accounts. The Plan Administrator will establish and maintain in the name of each Participant such of the following accounts as are appropriate for the Participant: (a) Tax-Deferred Savings Account; (b) After-Tax Savings Account; (c) Company Contribution Account; and (d) Rollover Account. Credit and charges to such Accounts will be made as provided in the Plan. A Participant is 100% vested in his Tax-Deferred Savings Account, After-Tax Savings Account, and Rollover Account at all times. 6.2 Crediting Participants' Savings Contributions. Savings Contributions made by a Participant for a payroll cycle will be credited to such Participant's Accounts as of the Valuation Date as soon as practicable following receipt thereof by the Trustee. 6.3 Crediting Matching Contributions. Company Matching Contributions made pursuant to Section 5.1 for a payroll cycle will be credited to the Company Contribution Account of those Participants entitled to a Company Matching Contribution for such payroll cycle as of the Valuation Date as soon as practicable following receipt thereof by the Trustee. 6.4 Crediting Rollovers. Rollovers will be credited to the Participant's Rollover Account as of the Valuation Date as soon as practicable following receipt thereof by the Trustee. 6.5 Charge to Accounts. Any amount distributed, paid or withdrawn from an Account will be charged against such Account as of the day on which the distribution, payment or withdrawal occurs. 6.6 Annual Limits. (a) Notwithstanding anything contained herein to the contrary, the annual additions to a Participant's Accounts for a calendar year (which will be the Limitation Year for purposes of Code Section 415) may not exceed the lesser of (i) $30,000, as adjusted periodically for cost-of-living changes in accordance with Code Section 415 and regulations thereunder, or (ii) 25% of his total Code Section 415 compensation for such year. For purposes of this section, Code Section 415 compensation means a Participant's total non-deferred compensation from an Employer for a Plan Year, as defined in Code Section 415 and regulations thereunder. The foregoing $30,000 shall be reduced proportionately to reflect any short Plan Year of less than twelve months. (b) Annual additions to a Participant's Account for any Limitation Year means the sum of the annual additions (as defined in Code Section 415(c)(2)) under all qualified defined contribution plans maintained by Amoco or any Affiliated Company. (c) If the foregoing limit is applicable to a Participant for a Limitation Year, the Plan Administrator shall reduce the annual additions to such Participants' Accounts in the following order of priority: (i) against the After-Tax Savings Contributions made by the Participant under this Plan, but only to the extent that such Participant's Company Matching Contributions are not reduced; (ii) against the Tax-Deferred Savings Contributions made on behalf of the Participant under this Plan; and (iii) against the Company Matching Contributions made on behalf of the Participant under this Plan. (d) For any Plan Year, the sum of a Participant's defined contribution plan fraction and his defined benefit plan fraction may not exceed 1, as follows: (i) His defined contribution plan fraction for any Plan Year is the fraction (A) whose numerator is the sum of annual additions to his Accounts as of the close of such Plan Year, and (B) whose denominator is the sum of the lesser of the following amounts determined for such year and for each prior year of service with his Employer; the product of 1.25 (1.0 if the plan is top-heavy) and the dollar limitation in effect for such year, or the product of 1.4 and 25% of the Participant's compensation determined under Section 415 of the Code for such year. (ii) His defined benefit plan fraction for any Plan Year is a fraction (A) whose numerator is his aggregate projected annual benefit under all defined benefit plans sponsored by Amoco (or any Affiliated Company that is included in a controlled group or under common control with Amoco Corporation within the meaning of Code Section 414(b), (c), (m) and (o) and 415(h)) as the close of such Plan Year, and (B) whose denominator as the lesser of the product of 1.25 (1.0 if the Plan is a top-heavy) and the dollar limitation in effect under Section 415(b)(1)(A) of the Code, or the product of 1.4 and the Participant's highest average compensation as determined under Section 415(b)(1)(B) of the Code. For this purpose, the projected annual benefit of the Participant means the total normal retirement benefit to which he would be entitled on the assumptions that his employment continues until his normal retirement date and his annual earnings and all other relevant factors remain the same for all future years as in the year when the projection is made. (iii) If the sum of such fractions would exceed 1 without the application of this section, his benefit under the defined benefit plan or plans will be reduced to a benefit that will produce a defined benefit plan fraction which, when added to the defined contribution plan fraction, will equal 1. ARTICLE VII INVESTMENT FUNDS AND CREDITING INVESTMENT EXPERIENCE 7.1 Investment Funds. The Trustee will separate the Trust Fund into six Investment Funds as follows: (a) Amoco Stock Fund (b) Money Market Fund (c) U.S. Savings Bonds (d) Equity Index Fund (e) Balanced Fund (f) Bond Index Fund The Plan Administrator will maintain records which reflect the portion of each Account of a Participant that is invested in each separate Investment Fund. The existence of such records and of Participants' Accounts will not be deemed to give any person any right, title or interest in or to any specific assets or part of the Trust Fund or any separate Investment Fund. 7.2 Investment Directions and Transfers Among Funds. (a) Investment of Accounts. Each Participant may direct the separate Investment Fund or Funds in which his Accounts will be invested. Once a calendar month a Participant may direct investment of his future Savings Contributions, except company Matching Contributions, to his Accounts entirely in one Investment Fund or in a combination of two or more of the Investment Funds, provided that combinations must be specified in 5% increments and the total combinations must equal 100%. Company Matching Contributions will be invested initially in the Amoco Stock Fund. In addition, twice a calendar month, but no more than one time per day, the Participant may direct transfers among the Investment Funds, so that his Accounts are invested entirely in one Investment Fund or in a combination of two or more of the Investment Funds, provided that combinations must be specified in 5% increments and the total combinations must equal 100%. The Participant will have sole responsibility for the investment of his Accounts and for transfers among the available Investment Funds, and no named fiduciary or other person will have any liability for any loss or diminution in value resulting from the Participant's exercise of such investment responsibility. It is intended that Section 404(c) of ERISA will apply to a Participant's exercise of investment responsibilities under this subsection. (b) Manner and Time of Giving Directions. A Participant's initial directions governing the investment of his Accounts will be filed with the Plan Administrator in such manner and form, and at such time established by the Plan Administrator. A Participant may change the investment of future Savings Contributions to his Accounts among the Investment Funds in 5% increments once per calendar month by contacting the Plan Administrator in such manner and form, and at such time established by the Plan Administrator. If a Participant does not give any investment directions to the Plan Administrator, his Savings Contributions or Rollover Contribution will be invested in the Money Market Fund. 7.3 Valuation of Assets. Effective October 1, 1991, as of each business day and at any other date ("Valuation Date") that the Plan Administrator may direct, the Trustee will determine the fair market value of the assets in each separate Investment Fund of the Trust Fund, relying upon such evidence of valuation as the Trustee deems appropriate. 7.4 Crediting Investment Experience. As of each Valuation Date (before crediting any contributions or making any investment transfers as of such date), Investment Fund management expenses not paid directly by the Employer, investment income and gains and losses in asset values in each separate Investment Fund since the preceding Valuation Date will be credited or charged to Participants' Accounts invested in such fund. The allocation of Investment Fund management expenses and investment results will be in proportion to the adjusted account balances in such fund as of each Valuation Date. The adjusted account balance of an Account is the amount in such Account as of the close of business on the preceding Valuation Date, increased by any Savings Contributions, Company Matching Contributions and loan repayments credited to such Account as of the current Valuation Date under Article VI and Article VIII, decreased by any withdrawals or distributions from such Account since the preceding Valuation Date, and increased or decreased in accordance with uniform rules established by the Plan Administrator to allocate equitable expenses and investment results. 7.5 Risk of Loss. The Plan Administrator and the Employer do not guarantee that the fair market value of the Investment Funds, or of any particular Investment Fund, will be equal to or greater than the amounts allocated thereto. The Plan Administrator and the Employer do not guarantee that the value of the Accounts will be equal to or greater than the contributions credited thereto. The Participants assume all risk of any decrease in the value of the Investment Funds and the Accounts. 7.6 Interests in the Funds. No Participant, Surviving Spouse or Beneficiary shall have any claim, right, title or interest in or to the Fund, except as and to the extent expressly provided herein. 7.7 Sole Source of Benefits. Members, Surviving Spouses and Beneficiaries shall look only to the Trust for the payment of benefits under the Plan, and except as otherwise required by law, the Employer assumes no responsibility or liability therefor. ARTICLE VIII LOANS TO PARTICIPANTS 8.1 Plan Administrator Shall Administer the Loan Program. The Plan Administrator shall administer the loan program in accordance with the provisions of Article VIII in a uniform and nondiscriminatory manner. 8.2 Availability of Loans. Upon application by a Participant who is an active Employee of Amoco or an Affiliated Company, the Plan Administrator may direct the Trustee to make a loan to the Participant from his Accounts. A Participant may make two loans during a calendar year. However, he may not have more than two outstanding loans. Also, a Participant will not be permitted to make a loan if he previously defaulted on a Plan loan; provided, however, that effective January 1, 1995, a Participant who has defaulted on a loan will be permitted to again make loans two years after the full repayment of the defaulted loan. 8.3 Promissory Note. A Participant may obtain a loan only if he executes a promissory note in a form approved by the Plan Administrator. 8.4 Conditions of Loan. (a) Maximum Amount. The loan shall not exceed the lesser of (i) $50,000 reduced by the excess (if any) of the highest outstanding loan(s) balance during the one-year period ending on the day before the date the current loan is made, over the outstanding loan balance from the Plan to the Participant on the date on which such loan was made or (ii) 50% of the market value of the Participant's non- forfeitable accrued benefit on the date the loan request from the Participant is received by the Plan Administrator. (b) Minimum Amount. The minimum loan shall be $1,000. (c) Repayment Period. The term of the loan shall not be less than 6 months and not more than five years in increments of 6 months. (d) Interest Rate. Effective October 1, 1991, the interest rate shall equal the prime rate, as published in the Wall Street Journal, in effect on the next-to-last business day of the month immediately before the month in which the loan request is received by the Plan Administrator and will be fixed for the term of the loan. (e) Security for Repayment. Each loan hereunder will be a Participant-directed investment for the benefit of the Participant requesting such loan; accordingly, any default in the repayment of principal or interest of any loan hereunder will reduce the amount available for distribution to such Participant (or his Beneficiary). Any loan hereunder will be effectively and adequately secured by 50% of the non-forfeited accrued benefit in the Participant's Accounts. (f) Repayment. A Loan must be repaid in level installments of principal and interest by payroll deduction. If the Participant is granted an unpaid leave of absence or is transferred to an Affiliated Company or a position or location that is not covered by the Plan (or ceases to have sufficient compensation from which the loan payment can be made), the Participant must continue to make timely level installment payments of principal and interest, by certified check or cashier's check. If the automatic payroll arrangement lapses by the Participant's termination of employment for any reason or is canceled and a new arrangement is not in place before the next payment is due, the loan shall be in default and the entire unpaid principal and interest of any loan then outstanding to such Participant will become immediately due and payable. (g) Prepayment. A Participant may prepay a loan, in full, at any time and without penalty by certified check or cashier's check. Partial prepayment of a loan is not permitted. (h) Default. (a) A Participant shall default on a loan if any of the following events occur: (1) the Participant's separation from service for any reason (including the Participant's death); (2) the Participant's failure to make any payment of principal or interest on the loan on the date the payment is due; (3) the Participant's failure to perform or observe any covenant, duty or agreement under the promissory note evidencing the loan; (4) receipt by the Plan of an opinion of counsel to the effect that (i) the Plan will, or could, lose its status as a tax-qualified plan unless the loan is repaid or (ii) the loan violates, or might violate, any provision of ERISA; (5) any portion of the Participant's Account that secures the loan becomes payable to the Participant, his Surviving Spouse or Beneficiary, an Alternate Payee, or any other person; (6) the Participant makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, or becomes a subject of any wage earner plan under federal or state bankruptcy or insolvency law, or there is commenced against the Participant any bankruptcy or insolvency law or similar proceeding that remains undismissed for a period of 90 days (or the Participant by an act indicates his consent to, approval of, or acquiescence in any such proceeding); or (7) the termination of the Plan. (b) If a default on a loan occurs, the entire outstanding balance of the loan shall be immediately due and payable. (c) If a default on a loan occurs, and the Participant does not pay the entire outstanding balance of the loan (together with the accrued and unpaid interest) by the 90th day after the day the default occurs, the Participant's nonforfeitable interest in his Account shall be applied immediately to the extent lawful. (d) Any failure by the Plan Administrator to enforce the Plan's rights with respect to a default on a loan shall not constitute a waiver of such rights either with respect to that default or any other default. (i) Fees. A Participant who receives a loan shall pay such fees as Amoco and the Plan Administrator may establish from time to time. 8.5 Accounting for Loans. (a) Source of Loan. The Plan Administrator shall liquidate the Participant's Investment Funds to make a loan to him in the following order: Investment Funds. (1) Money Market Fund; (2) Equity Index Fund; (3) Balanced Fund; (4) Bond Index Fund; (5) U.S. Savings Bonds; and (6) Amoco Stock Fund. As the Plan Administrator liquidates the Participant's Investment Funds in the above order, he shall liquidate such Participant's Accounts in the following order: Accounts. (1) Tax-Deferred Savings Account; (2) Rollover Account; (3) Company Contribution Account; and (4) After-Tax Savings Account. Effective October 1, 1991, funds shall be liquidated first by Account in the order specified above and then by Investment Fund (i.e. all assets in the Tax-Deferred Savings Account shall be liquidated first in the order of Investment Funds described above; then all assets in the Rollover Account and so forth). (b) Loan Investment Account. The Plan Administrator will establish and maintain a loan investment account for each borrowing Participant. A loan shall be treated by the Plan Administrator as a separate investment of the borrowing Participant's Account. The unpaid principal and accrued but unpaid interest on the loan to a Participant will be reflected for plan accounting purposes in the Participant's loan account. Repayments of principal and interest by the Participant will reduce the Participant's loan account balance and will be credited to the Participant's other Accounts in the order that they were liquidated to make the loan. Repayments will be invested in the Investment Funds according to a Participant's current investment election. (c) Distribution Upon Default. In the event a Participant defaults upon a loan upon termination of employment, the loan shall be deemed to be distributed from the Participant's Accounts in the following order: Accounts. (1) Tax-Deferred Savings Account; (2) Rollover Account; (3) Company Contribution Account; and (4) After-Tax Savings Account. The order of liquidation of funds shall be as specified in (a) above. ARTICLE IX IN-SERVICE WITHDRAWALS 9.1 Withdrawals From After-Tax Savings Account. A Participant may withdraw in cash any portion of his accrued benefit in his After-Tax Savings Account, except for his After- Tax Savings Contributions made in the calendar year during which his withdrawal is made, twice during a 12-month period. 9.2 Withdrawals From Rollover Account. A Participant may withdraw in cash any portion of his accrued benefit in his Rollover Account twice during a 12-month period. 9.3 Withdrawals From Company Contribution Account. A Participant may withdraw in cash any portion of his accrued benefit in his Company Contribution Account, except for the greater of the last 24 months of Company Matching Contributions or the value of the initial Company Matching Contributions that would not be vested under Section 10.2 if such Participant's service with his Employer terminated on the date of such withdrawal, once during a 24-month period. If the Participant withdraws 50% or less of his accrued benefit from his Company Contribution Account then he will not be eligible to receive Company Matching Contributions during the 6-month period commencing with the first day of his payroll cycle starting immediately after the distribution of such withdrawal. If the Participant withdraws more than 50% of his accrued benefit, then he will not be eligible to receive Company Matching Contributions during the 12-month period commencing with the first day of his payroll cycle starting immediately after the distribution of such withdrawal. 9.4 Hardship Withdrawals From Tax-Deferred Savings Account. A Participant may withdraw in cash from his Tax-Deferred Savings Account once every 12 months the amount necessary to meet one of the following immediate and heavy financial needs: (a) Medical expenses described in Code Section 213(d) previously incurred by the Participant, his spouse, or any of his dependents (as defined in Code Section 152) or necessary for these persons to obtain medical care described in Code Section 213(d); (b) The purchase (excluding mortgage payments) of a principal residence for the Participant; (c) Payment of tuition related to educational fees and room and board expenses for the next 12 months of post- secondary education for the Participant, his spouse, children, or dependents; (d) The need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence; or (e) Other unexpected or unusual expenses creating a financial need for which withdrawal is permitted by Code Regulation Section 1.401(k)-1. The amount of an immediate and heavy financial need includes any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from a withdrawal from a Participant's Tax-Deferred Savings Account. Notwithstanding the foregoing, the amount withdrawn cannot include the Participant's current calendar year's Tax-Deferral Savings Contributions and/or any earnings on all his Tax-Deferred Savings Contributions. In addition, before a Participant makes a withdrawal from his Tax-Deferred Account he must make a loan under the Plan for the maximum amount permitted and then withdraw the maximum amount permitted by the Plan from his other Accounts. If a Participant makes a withdrawal from his Tax-Deferred Savings Account he will be prohibited from making any Savings Contributions for the 12-month period commencing with the first day of his payroll cycle starting immediately after the distribution of such withdrawal. Finally, notwithstanding Section 4.12, if a Participant makes a withdrawal from his Tax- Deferred Savings Account, the Code Section 402(g) limitation that applies to his Tax-Deferred Savings Contributions during the Plan Year immediately after such withdrawal shall be reduced by the total amount of his Tax-Deferred Contributions during the year of the withdrawal. 9.5 Order of Asset Liquidation for All Withdrawals. The Plan Administrator shall liquidate the Investment Funds of the Account from which the withdrawal is being made in the following order: Investment Funds. (1) Money Market Fund; (2) Equity Index Fund; (3) Balanced Fund; (4) Bond Index Fund; (5) U.S. Savings Bonds; and (6) Amoco Stock Fund. 9.6 Outstanding Loan. Notwithstanding any other provision of this Article, if a Participant's Account shows that the Participant has an outstanding balance securing a loan, the Participant shall not be permitted to make a withdrawal pursuant to this Article of any portion of the Participant's Account that secures the loan. ARTICLE X DISTRIBUTIONS 10.1 Distribution Upon Retirement. (a) Amount. A Participant whose employment with the Employer and the Affiliated Companies terminates as a result of retirement will receive the total amount in his Accounts. If a Participant receives immediate distribution of his Accounts, his Account balances will be determined as of the valuation date immediately preceding such distribution. If a Participant defers payment of part or all of his Accounts, his Account balances will be determined as of the valuation date immediately preceding his subsequent distribution. (b) Retirement Defined. For purposes of this Plan, "Retirement" means a Participant's termination of employment (1) on or after his 65th birthday or (2) on or after his attainment of age 50 and 15 years of Vesting Service. A Participant will become fully vested in his Company Account balance upon reaching his 65th birthday (normal retirement age). (c) Form of Payment. Upon a Participant's Retirement a distribution of his Accounts will be paid in one of the following methods as selected by the Participant. (i) a single-sum payment of his entire Account balances at any time until age 70 1/2; or (ii) monthly, quarterly or annually (of which the frequency and amount can be changed at any time subject to administrative feasibility) equal payments for a period less than ten years. In addition to the above two methods of distribution, a Participant who has retired in accordance with subsection 10.1(b) can make a withdrawal of any amount once a month. All distributions made pursuant to this subsection shall be made in cash, except that a Participant who elects to receive a single-sum payment under Section 10.1(c)(i) can elect to receive Amoco common stock in-kind. The Plan Administrator shall liquidate the Participant's Accounts to make a distribution to him pursuant to this Section in the following order: Accounts (1) After-Tax Savings Account; (2) Rollover Account; (3) Company Contribution Account; and (4) Tax-Deferred Savings Account. As the Plan Administrator liquidates the Participant's Accounts in the above order, he shall liquidate the Participant's Investment Funds in the following order: Investment Funds (1) Money Market Fund; (2) Equity Index Fund; (3) Balanced Fund; (4) Bond Index Fund; (5) U.S. Savings Bonds; and (6) Amoco Stock Fund. 10.2 Termination of Employment Prior to Retirement or Death. (a) If a Participant's service with the Employer and the Affiliated Companies terminates under circumstances other than as provided for under subsections 10.1(b) or 10.6, he shall be 100% vested in an amount equal to the market value of his Tax-Deferred Savings Account, After-Tax Savings Account and Rollover Account. In addition, such Participant shall be 100% vested in an amount equal to the greater of: (1) the market value of his Company Contribution Account less the value of the sum of the Company Matching Contributions valued on the date credited to his Company Contribution Account, times the result of 100% minus the vested percent, a percentage based on years of Vesting Service as provided below; or (2) the market value of the Participant's Company Contribution Account times the Participant's vested percentage based upon his years of Vesting Service, as follows: Years ofVesting Service At least But Less Percentage Than Vested 2 years 0% 2 years 3 years 25% 3 years 4 years 50% 4 years 5 years 75% 5 years 100% Notwithstanding the foregoing, if a Participant's service with an Employer terminates because of (1) a sale of stock or assets of the Employer, a merger or other transaction involving an Employer, each involving a third party, the result of which is the Employer is no longer deemed an Employer by Amoco, or such other transaction as may be approved by Amoco or (2) under the terms of a voluntary or involuntary Employer severance plan officially adopted by an Employer as evidenced by a written plan document, he shall be 100% vested in his Company Contribution Account. The benefit determined in accordance with the foregoing provision shall never be adjusted or altered in any fashion on account of any years of Vesting Service which the Participant might complete upon reemployment with an Employer, except as otherwise provided in Section 10.3(b). (b)(i) Vesting Service and Period of Vesting Service. Effective with regard to the calculation of Vesting Service on or after October 1, 1991, Vesting Service means the aggregate of all years and fractions of years of an Employee's Periods of Vesting Service with an Employer and an Affiliated Company. A Period of Vesting Service means the period beginning on the first day of the calendar month during which the Employee enters service (or reenters service) and ending on the termination date (as defined below) with respect to such period, subject to the following special rules: (A) An Employee shall be deemed to enter service on the date he first completes an Hour of Service. (B) An Employee shall be deemed to reenter service on the date following a termination date when he again completes an Hour of Service. (C) The termination date of an Employee shall be the last day of the calendar month during which the earlier of the following occurs: (i) the date he quits, is discharged, retires or dies, or (ii) except as provided below, the first anniversary of the date he is absent from service for any other reason (including, but not limited to, vacation, holiday, leave of absence, and layoff). If an Employee, absent from service under circumstances described in (ii) of this paragraph, quits, is discharged, retires or dies before the first anniversary of commencement of said absence, his termination date shall be the date he quits, is discharged, retires or dies. An absence described in (ii) of this paragraph shall be deemed to commence with respect to an Employee on the date he is terminated as an Employee on the payroll records of the Employer or an Affiliate. Notwithstanding the foregoing provisions of (b)(i), an Employee shall be deemed to have continued in service (and thus not to have incurred a termination date) for the following periods: (i) any period for which he shall be required to be given credit for service under any laws of the United States; and (ii) any period for which he is on an approved medical or family "leave of absence". (D) All periods of service of an Employee shall be aggregated in determining his Vesting Service unless they can be disregarded under the break in service rules of Section 10.3. (E) If an Employee shall be absent from work because he quits, is discharged or retires, and he reenters service before the first anniversary of the date of such absence, such date shall not constitute a termination date and the period of such absence shall be included as service. (ii) Month of Vesting Service. A Month of Vesting Service means a calendar month during which an Employee is credited with service. (iii) Year of Vesting Service. A Year of Vesting Service means 12 Months of Vesting Service, whether or not consecutive. (iv) One-Year Break in Service. A One-Year Break in Service means a period of twelve consecutive calendar months during which the Employee is not credited with one Month of Vesting Service. (v) Non-Duplication. Notwithstanding anything to the contrary in this Section, a Participant shall not receive credit under the Plan for a period of service more than once for Vesting Services. (c) Form of Payment. A Participant whose service terminates with his Employer under circumstances other than in accordance with subsection 10.1(b) (retirement) will be paid a distribution of his vested Account balances in one of the following methods as selected by the Participant: (i) a single-sum payment at any time prior to age 65; or (ii) 10 annual installments commencing as soon as practicable after his service terminates. The election to receive 10 annual installments is irrevocable and all such installments shall be made in cash and the Participant's Accounts and Investment Funds that he is invested in shall be liquidated in the same order as provided in Section 10.1(c). If the Participant has not received his single-sum payment before his attainment of age 65, the Plan Administrator shall distribute it as soon as practicable after he reaches such age. A single-sum payment made pursuant to this subsection shall be made in cash, unless the Participant elects to receive Amoco common stock in-kind. (d) If a Participant receives immediate distribution of his Accounts, his Account balances will be determined as of the Valuation Date immediately preceding such distribution. (e) The determination of the amount to which such terminated Participant is entitled in accordance with the foregoing rules shall be made by the Plan Administrator. (f) Any portion of a Participant's Company Contribution Account to which he is not entitled at the time of the distribution of his Account balances shall be forfeited by him upon such termination of employment. As soon as practicable after such forfeitures occur they shall be used to reduce Company Matching Contributions or pay Plan administration expenses in accordance with Section 16.11. 10.3 Reemployment. If a terminated Participant who was partially or fully vested in his Company Contribution Account is reemployed by an Employer, he shall again become a participant upon reemployment pursuant to Section 3.4. All future Company Matching Contributions shall be credited to his Company Contribution Account, and all his prior years of Vesting Service shall be restored for the purpose of calculating the vested portion of such Account. Also, the portion of his Company Contribution Account that has been forfeited, if any, shall be restored without interest to his Account. Upon any subsequent termination of employment the nonforfeitable portion of his Company Contribution Account shall be calculated as if any non- forfeitable amounts distributed upon the previous termination had been repayed to the Plan. If such a terminated Participant was 0% vested in his Company Contribution Account under Section 10.2 at the time of his prior termination, the following special provisions shall apply: (a) If such a terminated Participant is reemployed after incurring 5 or more consecutive One-Year Breaks In Service, he shall have no right to the previously forfeited portion of his Company Contribution Account, and his prior years of Vesting Service shall not be restored for the purpose of calculating the vested portion of such Account. (b) If such a terminated Participant is reemployed before incurring 5 consecutive One-Year Breaks In Service, the portion of the Participant's Company Contribution Account that had been forfeited shall be restored without interest to his Account. In order to effect the restoration of previously forfeited amounts to a Participant's Company Contribution Account, the Plan Administrator shall first utilize any available forfeitures, and then requesting additional Employer Contributions which shall be paid by the Employer, and his prior years of Vesting Service shall be restored for the purpose of calculating the vested portion of such Account. Notwithstanding this section 10.3, if a Participant, after his military leave of absence expires, files for restoration of his job during one of the periods prescribed by the Vietnam Era Veterans' Readjustment Act of 1974 and is hired by an Employer, his prior years of Vesting Service shall be restored and he shall be credited with Vesting Service for the period of time he was on the military leave of absence. In addition, the portion of his company contribution Account that has been forfeited, if any, shall be restored without interest to his Company Account. 10.4 $3,500 Cash-Out. If the value of the nonforfeitable portion of the Participant's Accounts does not exceed $3,500 as of any date after his termination of service for any reason, the Plan Administrator shall distribute in cash and in a single-sum payment the entire balance in his Accounts in accordance with the applicable rules of the Plan Administrator. 10.5 Required Distribution Date. Distribution to any Participant (whether employed by an Employer, retired or otherwise terminated) must be made no later than April 1 following the calendar year in which he reaches age 70-1/2 in accordance with the minimum distribution rules of Section 401(a)(9) of the Code and the regulations promulgated thereunder; provided, however, that in the case of a Participant who attained age 70-1/2 prior to January 1, 1988, distribution may be delayed until April 1 following the calendar year in which he retires if such Participant is not a 5% owner. 10.6 Distribution Upon Death of a Participant. (a) In General. If Participant dies while employed by the Employer or an Affiliated Company with a balance in any Account under the Plan, his Beneficiary will receive 100% of the amount in his Accounts. Such amount will be determined as of the Valuation Date immediately preceding the date when the Plan Administrator makes such distribution. After the Plan Administrator receives instructions from Amoco as to who the Beneficiary is, he shall distribute to such Beneficiary in cash, Amoco common stock, or any combination thereof as directed by Amoco, the remaining amount in the deceased Participant's Accounts as soon as administratively practicable. (b) Designation of Beneficiary. A Participant may designate one or more Beneficiaries and may revoke or change such designation at any time. If the Participant names two or more Beneficiaries, distribution to them will be in such proportions as the Participant designates or, if the Participant does not so designate, in equal shares pro rata from such Participant's Accounts. No such revocation or designation shall be effective unless and until it is received by the Employer or its agent before the Participant's death in such form and manner established by Amoco and the Plan Administrator. Notwithstanding the preceding paragraph, the sole Beneficiary of a married Participant will be the Participant's spouse unless the spouse consents in writing to the designation of another person as beneficiary. The spouse's consent must acknowledge the effect of such consent and be witnessed by a notary public. (c) No Designation. Any portion of a distribution payable upon the death of a Participant which is not disposed of by a designation of Beneficiary for any reason whatsoever will be paid to the Participant's spouse if living at his death, otherwise to the Participant's estate. (d) Payment Under Prior Designation. Amoco may direct the Plan Administrator to make payment in accordance with a prior designation of Beneficiary (and will be fully protected in so doing) if such direction (i) is given before a later designation is received, or (ii) is due to Amoco's inability to verify the authenticity of a later designation. Such a distribution will discharge all liability therefor under the Plan. (e) Risk of Loss. The value of a Participant's nonforfeitable interest in his Account shall continue to be adjusted to reflect the investment performance of the Investment Fund(s) in which his Account is invested (and shall therefore remain subject to the risk of loss) during the period between the Participant's separation of service and the date when the Participant's nonforfeitable interest in his Account has been distributed in full. 10.7 Rehire Before Distribution. If a former Participant is rehired by an Employer or an Affiliated Company before distribution of his Accounts has been made, such distribution will be deferred until his subsequent termination of employment. 10.8 Waiver of 30 Day Notice. If a distribution is one to which section 401(a)(11) and 417 of the Code does not apply, such distribution may commence less than 30 days after the notice required under section 1.411(a)11(c) of the Income Tax Regulations is given, provided that: (1) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) the Participant, after receiving the notice, affirmatively elects a distribution. ARTICLE XI DIRECT ROLLOVERS 11.1 Direct Rollover. This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution provided for in this Plan paid directly to an eligible retirement plan specified by the distributee in a direct rollover. 11.2 Definitions. (a) "Eligible Rollover Distribution" is any distribution provided for in this Plan of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (b) "Eligible Retirement Plan" is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (c) "Distributee" includes a Participant, the Participant's surviving spouse and the Participant's spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code. (d) "Direct Rollover" is a payment by the Plan to the eligible retirement plan specified by the distributee. ARTICLE XII AMENDMENT, MERGER AND TERMINATION OF PLAN 12.1 Amendment of Plan. At any time and from time to time, Amoco may amend or modify any or all of the provisions of the Plan without the consent of any person, provided that no amendment will reduce any Participant's nonforfeitable Account balance as of the date such amendment is adopted (or its effective date if later) or eliminate an optional form of benefit, and provided further that no amendment will permit any part of the Trust Fund to revert to the Employer or be used for or diverted to purposes other than for the exclusive benefit of Participants or their Beneficiaries, except as provided in Section 4.6. 12.2 Merger of Plans. A merger or consolidation with, or transfer of assets or liabilities to, any other plan will be permitted only if the benefit each Participant would receive if such plan were terminated immediately after the merger, consolidation or transfer is not less than the benefit he would have received if this Plan had terminated immediately before the merger, consolidation or transfer. 12.3 Termination. Amoco has established the Plan and is maintaining the Plan with the bona fide expectation and intention that it will continue the Plan indefinitely, but Amoco will not be under any obligation or liability whatsoever to maintain the Plan for any particular length of time. Notwithstanding any other provision hereof, Amoco may terminate this Plan at any time. There will be no liability to any Participant, Beneficiary or other person as a result of any such discontinuance or termination. The Employer's failure to make contributions in any year or years will not operate to terminate the Plan in the absence of formal action by Amoco to terminate the Plan. 12.4 Effect of Termination. Upon complete discontinuance of contributions or termination or partial termination of the Plan, the Tax-Deferred Savings, After-Tax Savings and Rollover Accounts of affected Participants will remain nonforfeitable and their Company Contribution Account will become nonforfeitable. After termination of the Plan, no Employee will become a Participant and no further Savings Contributions or Company Matching Contributions will be made hereunder on behalf of Participants. The Trustee will continue to hold the assets of the Trust Fund for distribution as directed by the Plan Administrator. Amoco will determine whether to direct the Plan Administrator who will, in turn, direct the Trustee to disburse the Plan's assets as immediate benefit payments, to retain and disburse them in the future, or to follow any other procedure which it deems advisable. ARTICLE XIII NAMED FIDUCIARIES 13.1 Identity of Named Fiduciaries. (a) Named Fiduciaries. Amoco or its delegates as provided by Resolution of its Board of Directors, the Plan Administrator, the Trustee and any investment manager appointed by Amoco will be the named fiduciaries under the Plan and will control and manage the Plan and its assets to the extent and in the manner indicated in the Plan, in the Administrative and Recordkeeping Services Agreement, in the Trust Agreement and as described in certain delegations of authority of the Board of Directors of Amoco to the extent such delegations are not inconsistent with the terms of the Plan. Any responsibility assigned to a named fiduciary will not be deemed to be a duty of a "fiduciary" (as defined in ERISA) solely because of such assignment. (b) Plan Administrator. State Street Bank & Trust Company of Boston has been appointed by Amoco as the "Plan Administrator" as defined in ERISA. 13.2 Responsibilities and Authority of Plan Administrator. The Plan Administrator will have the responsibilities and authority with respect to control and management of the Plan and its assets as set forth in detail in various articles of the Plan including Article XIII and the Administrative and Recordkeeping Services Agreement. 13.3 Responsibilities and Authority of Trustee. The Trustee will manage and control the assets of the Plan, except to the extent that such responsibilities are specifically assigned hereunder or under the Trust Agreement to Amoco, the Plan Administrator or the Participants, or are delegated to one or more investment managers by Amoco. The responsibilities and authority of the Trustee are set forth in detail primarily in the Trust Agreement. 13.4 Responsibilities of Amoco. Amoco will have the responsibilities and authority to appoint, remove and replace the Trustee and the Plan Administrator, to monitor their performances, to resolve Plan appeals and to amend and terminate the Plan and Trust. The responsibilities and authority of Amoco are set forth in further detail in the various articles of the Plan and in the Trust Agreement and in the Administrative and Recordkeeping Services Agreement. 13.5 Responsibilities Not Shared. Except as otherwise provided herein or required by law, each named fiduciary will have only those responsibilities that are specifically assigned to it hereunder, in the Administrative and Recordkeeping Services Agreement, and in the Trust Agreement, and no named fiduciary will incur liability because of improper performance or nonperformance of responsibilities assigned to another named fiduciary. 13.6 Dual Fiduciary Capacity Permitted. Any person or group of persons may serve in more than one fiduciary capacity, including service both as Trustee and Plan Administrator. 13.7 Actions by Amoco. Wherever the Plan specifies that Amoco is required or permitted to take any action, such action will be taken by its board of directors, or by a duly authorized committee thereof, or by one or more directors, officers, employees or other persons duly authorized to do so by the board of directors. 13.8 Advice. A named fiduciary may employ or retain such attorneys, accountants, investment advisors, consultants, specialists and other persons or firms as it deems necessary or desirable to advise or assist it in the performance of its duties. Unless otherwise provided by law, the fiduciary will be fully protected with respect to any action taken or omitted by him or it in reliance upon any such person or firm rendered within his or its area of expertise. 13.9 Design Decisions. Decisions regarding the design of the Plan shall be made in a settlor capacity and shall not be governed by the fiduciary responsibility provisions of ERISA. ARTICLE XIV PLAN ADMINISTRATOR 14.1 Appointment. Amoco will appoint a Plan Administrator. 14.2 Notice to Trustee. Amoco will notify the Trustee in writing of the appointment, and the Trustee may assume such appointment continues in effect until written notice to the contrary is given by Amoco. 14.3 Administration of Plan. The Plan Administrator and Amoco will have all powers and authority necessary and appropriate to carry out its responsibilities as provided in the Plan and agreed upon in the Administrative and Recordkeeping Services Agreement with respect to the operation and administration of the Plan. All determinations and actions of the Plan Administrator and Amoco will be conclusive and binding upon all persons, except as otherwise provided herein or by law, and except that the Plan Administrator and Amoco may revoke or modify a determination or action previously made in error. The Plan Administrator and Amoco will exercise all powers and authority given to it in a nondiscriminatory manner. 14.4 Reporting and Disclosure. The Plan Administrator and Amoco, as agreed upon in the Administrative and Recordkeeping Services Agreement, will prepare, file, submit, distribute or make available any plan descriptions, reports, statements, forms or other information to any government agency, Employees, former Employees, or Beneficiary as may be required by law or by the Plan. 14.5 Records. The Plan Administrator will record its acts and decisions, and keep all data, records, books of account and instruments pertaining to plan administration, which will be subject to inspection or audit by Amoco at any time. The Employer will supply all information required by the Plan Administrator to administer the Plan, and the Plan Administrator may rely upon the accuracy of such information. 14.6 Claims Review Procedure. A claim for benefits under the Plan by a Participant, Surviving Spouse, Beneficiary, Alternate Payee or any other person shall be filed in writing with the Plan Administrator. The Plan Administrator shall, within a reasonable time, consider the claim and shall issue his determination in writing. If the claim is denied in whole or in part by the Plan Administrator, the Plan Administrator shall, within a reasonable time, provide the claimant with a written notice setting forth in a manner calculated to be understood by the claimant: (a) The specific reason or reasons for the denial of the cliam; (b) Specific reference to pertinent Plan provisions on which the denial is based; (c) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (d) An explanation of the Plan's claim review procedure. Amoco shall provide each claimant with a reasonable opportunity to appeal a denial of the claim to Amoco for a full and fair review. The claimant or his duly authorized representative shall be permitted to request a review upon written application to Amoco to review pertinent documents, and to submit issues and comments in writing. Amoco may establish such time limits within which claimants may request review of denied claims as are reasonable in relation to the nature of the benefit that is the subject of the claim and to other attendant circumstances, but which in no event shall be less than 60 days after receipt by the claimant of written notice of denial of his claim. The decision by Amoco with respect to the claim shall be made not later than 60 days after receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible but not later than 120 days after receipt of the request for review. The decision on review shall be in writing, shall include specific reasons for the decision and specific references to the pertinent Plan provisions on which the decision is based and shall be written in a manner calculated to be understood by the claimant. To the extent permitted by law, the decision of the Plan Administrator (if no review is properly requested) or the decision of Amoco on review, as the case may be, shall be final and binding on all parties if it is supported by the facts that were considered and is reasonably based on the applicable provisions of law, the Plan and the Trust Agreement. Any person eligible to receive benefits hereunder shall furnish to the Plan Administrator or Amoco any information or evidence requested by the Plan Administrator or Amoco and reasonably required for the proper administration of the Plan. Failure on the part of any person to comply with any such request within a reasonable period of time shall be sufficient grounds for delay in the payment of any benefits that may be due under the Plan until such information or evidence is received by the Plan Administrator or Amoco. The Plan Administrator or Amoco may recoup from the payments to any person any amount previously paid to such person to which he was not entitled under the provisions of the Plan. 14.7 Administrative Discretion; Final Authority. (a) The Plan Administrator, and Amoco with regard to the handling of appeals, shall have the exclusive discretionary authority to interpret the Plan and to decide any and all matters arising hereunder, including without limitation the right to remedy possible ambiguities, inconsistencies, or omissions by general rule or particular decision; provided that all such interpretations and decisions shall be applied in a uniform and nondiscriminatory manner to all Participants and beneficiaries who are similarly situated. The Plan Administrator and Amoco with regard to Plan appeals shall determine conclusively for all parties all questions arising out of the interpretation or administration of the Plan. (b) The Plan Administrator may delegate authority with respect to certain matters, and the Plan Administrator may allocate its responsibilities among Amoco employees. (c) To the extent that the Plan Administrator properly delegates or allocates administrative powers or duties to any other individual or entity, such individual or entity shall have exclusive discretionary authority, as described in subsection 14.7(a), to exercise such powers or duties. ARTICLE XV PARTICIPATING EMPLOYERS 15.1 Adoption by Other Employers. Notwithstanding anything herein to the contrary, with the consent of Amoco, any other entity may adopt this Plan and all of the provisions hereof, and participate herein and be known as a participating Employer, by a properly executed Participation Agreement or other documentation evidencing said intent and will of such participating Employer. A Participation Agreement may contain terms and conditions approved by Amoco that apply only to such participating Employer and shall constitute an amendment of the Plan. 15.2 Designation of Agent. Each participating Employer shall be deemed a part of this Plan; provided, however, that with respect to all of its relations with the Trustee and Plan Administrator for the purpose of this Plan, each participating Employer shall be deemed to have designated irrevocably Amoco as its agent. 15.3 Employee Transfers. It is anticipated that an Employee may be transferred between participating Employers and non- participating Affiliated Companies. No such transfer shall effect a termination of employment hereunder for purposes of Section 10. 15.4 Discontinuance of Participation. Any participating Employer shall be permitted to discontinue or revoke its participation in the Plan with a properly executed document filed with Amoco and with the consent of Amoco. 15.5 Participating Employer Contribution for Affiliate. If any participating Employer is prevented in whole or in part from making a contribution to the Trust Fund which it would otherwise have made under the Plan for any reason, then, pursuant to Code Section 404(a)(3)(B), so much of the contribution which such participating Employer was so prevented from making may be made, for the benefit of the participating Employees of such participating Employer, by the other participating Employers who are members of the same affiliated group within the meaning of Code Section 1504. ARTICLE XVI MISCELLANEOUS 16.1 Qualified Domestic Relations Orders. (a) A Qualified Domestic Relations Order (QDRO) is a judgment, decree, or order which meets the requirements of Code Section 414(p). An alternate payee is an individual named in the QDRO who is to receive some or all of the Participant's benefits. (b) Upon receipt of written directions from Amoco that a Participant's Accounts could be subject to a QDRO the Plan Administrator will prohibit such Participant from making any type of withdrawal and making a loan. The Plan Administrator shall prohibit the above transactions until directed otherwise in writing by Amoco. (c) A payment to an alternate payee shall be in cash and in a single sum immediately after Amoco directs the Plan Administrator in writing, even if the Participant is not otherwise eligible for an immediate distribution. 16.2 Nonalienation of Benefits. No benefit, right or interest hereunder of any person will be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, or to seizure, attachment or other legal, equitable or other process, or be liable for, or subject to, the debts, liabilities or other obligations of such person, except (1) federal tax liens, and (2) rules that Amoco may prescribe for the payment of benefits in accordance with Qualified Domestic Relations Orders as defined in Section 16.1. 16.3 Payment of Minors and Incompetents. If the Plan Administrator or Amoco deems any person incapable of giving a binding receipt for benefit payments because of his minority, illness, infirmity or other incapacity, it may direct payment directly for the benefit of such person, or to any person selected by Amoco to disburse it. Such payment, to the extent thereof, will discharge all liability for such payment under the Plan. 16.4 Current Address of Payee. Any person entitled to benefits is responsible for keeping Amoco informed of his current address at all times. The Plan Administrator, the Trustee and Amoco have no obligation to locate such person, and will be fully protected if all payments and communications are mailed to his last known address, or are withheld pending receipt of proof of his current address and proof that he is alive. If payments are withheld and after reasonable efforts, the Plan Administrator or Amoco cannot locate a former Participant (or Beneficiary) within a reasonable time, but in any event not later than 4 years, the amount of the Participant's Accounts shall be forfeited and shall be reapplied in such a way as to reduce succeeding Company Matching Contributions under the Plan; provided, however, that if such former Participant (or Beneficiary) subsequently files a claim for benefits with the Plan Administrator or Amoco with respect to his Account balances under the Plan, his Accounts shall be restored to the value previously forfeited (and without interest) from such Accounts. 16.5 Disputes over Entitlement to Benefits. If two or more persons claim entitlement to payment of the same benefit hereunder, the Plan Administrator, as directed by Amoco, may withhold payment of such benefit until the dispute has been determined by a court of competent jurisdiction or has been settled by the persons concerned. 16.6 Payment of Benefits. Unless he elects otherwise, a Participant's benefit payments under the Plan will begin no later than 60 days after the close of the Plan Year in which the latest of the following dates occurs: (a) the date he terminates service with his Employer; (b) his 65th birthday; or (c) the tenth anniversary of the year in which he began participating in the Plan. 16.7 Top-Heavy Plan Provisions. (a) Applicability of Section. This section is included in the Plan to meet the requirements of Code Section 416, and the provisions of this section will be operative only if, when and to the extent that Code Section 416 applies to the Plan. At such time as the requirements of Code Section 416 apply to the Plan because the Plan is top-heavy as defined in subsection (b)(i) below, the provisions of this section will apply and will govern over contrary provisions of the Plan. (b) Definitions. (i) The Plan will be top-heavy for a Plan Year if, as of the determination date, the sum of (A) the aggregate amount in the accounts of Participants who are key employees (including all defined contributions plans within the required or permissive aggregation group) and (B) the aggregate present value of cumulative accrued benefits of Participants who are key employees (including all defined benefit plans within such group), exceeds 60 percent of such amount determined for all participants in all such plans. In determining the amounts in Participants' Accounts and present values of the accrued benefits under the preceding two paragraphs, (1) the present value of accrued benefits will be based on the actuarial assumptions used to determine the minimum funding requirements of Code Section 412(b); if there is more than one defined benefit plan in the aggregation group, each plan will use the same actuarial assumption for purpose of the top heavy test, as determined by the actuary; (2) distributions made during the five years ending on the determination date will be taken into account; (3) rollover contributions will be taken into account only to the extent provided in regulations under Code Section 416(g)(4)(A); (4) account balances and accrued benefit values of a person who was but no longer is a key employee will be disregarded; and (5) account balances and accrued benefit values of any individual who has not performed any services for the employer at any time during the five years ending on the determination date will be disregarded. (ii) The determination date for purposes of determining whether the Plan is top-heavy under subsection (i) for a particular Plan Year is the last day of the preceding Plan Year, except that in the case of the first Plan Year of any Plan, the determination date is the last day of such Plan Year. (iii) A key employee is any Employee or former Employee who has satisfied Section 3.2 (including a Beneficiary of such an employee) and who at any time during the Plan Year or any of the four preceding Plan Years was: (A) An officer of the Employer or an Affiliated Employer having annual compensation greater than 50% of the amount in effect under Section 415(b)(1)(A) of the Code for such Plan Year (but no more than 50 Employees will be taken into account under this subsection (A) as key employees); (B) One of the 10 Employees owning (or considered as owning within the meaning of Code Section 318) the largest interests in the Employer or Affiliated Employer but only if such Employee's compensation for such plan year exceeds the amount specified in Code Section 415(c)(1)(A). For purposes of the preceding sentence, if two Employees have the same interest in the Employer or Affiliated Employer, the Employee having greater annual compensation from the Employer or an Affiliated Employer shall be treated as having a larger interest; (C) A person owning (or considered as owning within the meaning of Code Section 318) more than 5% of the outstanding stock of the Employee or Affiliated Employer or stock possessing more than 5% of the total combined voting power of all such stock; or (D) A person who has annual compensation from the Employer or an Affiliated Employer of more than $150,000 and who would be described in subsection (C) above if 1% were substituted for 5%. For purposes of applying Code Section 318 to the provisions of this subsection (iii), subparagraph (c) of Code Section 318(a)(2) will be applied by substituting "five percent" for "50 percent." In addition, the rules of Code Section 414(b), (c), (m) and (o) will not apply for purposes of determining ownership under subsections (C) and (D) above. (iv) A non-key employee is an Employee who has satisfied Section 3.2 (including a beneficiary of such employee) and who is not a key employee under subsection (iii) above. (v) A required aggregation group includes all qualified plans of the Employer or an Affiliated Employer in which a key employee participates, including a terminated plan, and each other qualified plan of the Employer or an Affiliated Employer that enables any of such plans to meet the requirements of Section 401(a)(4) or Section 410 of the Code. A permissive aggregation group includes (in addition to plans in a required aggregation group) any plan which Amoco designates for inclusion provided that inclusion of such plan does not cause the group to fail the requirements of Section 401(a)(4) and Section 410 of the Code. (c) Minimum Contribution. For any Plan Year in which the Plan is top-heavy, the Employer will make a minimum contribution on behalf of each non-key employee who has satisfied the requirements of Section 3.2 (and who is therefore eligible to make Savings Contributions) and who is employed on the last day of the Plan Year. The minimum contribution will be 3% of his total compensation (as defined in Section 6.6) or, if less, the percentage for such Plan Year under this Plan (and any other defined contribution plan included in an aggregation group with this Plan) on behalf of the key employee for whom such percentage is the highest. In the case of a non-key employee who participates in a qualified defined benefit plan sponsored by the Employer, the minimum contribution shall be 5% of his total compensation (as defined in Section 6.6). 16.8 Rules of Construction. (a) A word or phase defined or explained in any section or article has the same meaning throughout the Plan unless the context indicates otherwise. (b) Where the context so requires, the masculine includes the feminine, the singular includes the plural, and the plural includes the singular. (c) Unless the context indicates otherwise, the words "herein," "hereof," "hereunder," and words of similar import refer to the Plan as a whole and not only to the section in which they appear. 16.9 Text Controls. Headings and titles are for convenience only and the text will control in all matters. 16.10 Applicable State Law. To the extent that state law applies, the provisions of the Plan will be construed, enforced and administered according to the laws of the State of Illinois. 16.11 Plan Administration Expenses. All reasonable Plan administration expenses shall be paid out of the Trust Fund; provided that the obligation of the Trust Fund to pay such expenses shall cease to exist to the extent such expenses are paid by an Employer or are paid to the Trust Fund as a reimbursement by an Employer. This provision shall be deemed to apply to any contract or arrangement to provide for expenses of plan administration without regard to whether or not the signatory or party to such contract or arrangement is, as a matter of administrative convenience, an Employer. Any reasonable plan administration expense paid to the Trust Fund by an Employer as a reimbursement shall not be considered an Employer contribution and shall not be credited to Participants' Accounts. The Plan Administrator shall only direct the Trustee to pay Plan administration expenses from the Trust Fund upon the written direction of Amoco. 16.12 Voting and Tendering of Amoco Stock. (a) For the purposes of voting or responding to bona fide offers with respect to the Amoco Corporation Stock held by the Plan, each Participant and Beneficiary of a deceased Participant whose Accounts are invested in whole or in part in the Amoco Stock Fund shall be a "named fiduciary" within the meaning of Section 403(a)(1) of ERISA. The Trustee shall follow the proper instructions, which instructions shall be held by the Trustee in strict confidence, of the Participants and Beneficiaries with respect to such Amoco Corporation stock in the manner described in this Section 16.12. (b) Before each annual or special meeting of Amoco Corporation, there shall be sent to each Participant and Beneficiary to whom Amoco Corporation stock is allocated a copy of the proxy solicitation material for the meeting, together with a form requesting instructions to the Trustee on how to vote the Amoco Corporation stock allocated to his Accounts. Upon receipt of such instructions, the Trustee shall vote the Amoco Corporation stock as instructed. (c) The Trustee shall vote Amoco Corporation stock for which no voting instructions are timely received to the extent required by law in its uncontrolled discretion. (d) In the event that a bona fide offer (such as a tender offer or exchange offer) shall be made to acquire any Amoco Corporation Employer stock held by the Trustee, each Participant or Beneficiary of a deceased Participant shall be entitled to direct the Trustee as to the disposition of the Amoco Corporation stock (including fractional shares) allocated to his Accounts, and to direct the Trustee to take other solicited action on his behalf (including the voting of such Stock) with respect to the Amoco Corporation stock allocated to this account. Amoco, with the cooperation of the Trustee, shall use its best efforts to provide each Participant or Beneficiary to whom this paragraph may apply with a copy of any offer solicitation material generally available to members of the public who hold the Amoco Corporation stock affected by the offer, or with such other written information as the offeror may provide. Such material shall be provided with a form requesting instructions to the Trustee as to the disposition under the offer of the Amoco Corporation stock allocated to each Account. Upon receipt of such instructions from the Participant or Beneficiary, the Trustee shall respond to the offer in accordance with such instructions with respect to the Amoco Corporation stock allocated to the Account. (e) The Trustee shall respond to the offer described in subsection (d) with respect to Amoco Corporation stock for which no instructions are timely received to the extent required by law in its uncontrolled discretion. 16.13 Transfer of Abandoned ESOP Assets to Plan. Effective November 30, 1989 the abandoned property in the Amoco Corporation Employee Stock Ownership Plan ("ESOP") was transferred to the Plan's abandoned property account. Notwithstanding anything in the Plan to the contrary, the following shall apply. The assets transferred from the ESOP shall remain in the Plan's abandoned property account until December 31, 1990 and any remaining assets shall be forfeited on January 1, 1991. If the ESOP Plan Administrator determines an individual has a valid claim for benefits under the ESOP he shall instruct the Plan Administrator in writing to distribute the benefits. Such distribution will be made from the abandoned property account, then the forfeiture account if necessary and then from additional employer contributions if necessary. 16.14 Severability. If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of this Plan, but this Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein. 16.15 Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). Notwithstanding any provision of the Plan to the contrary, any Participant or Eligible Employee who is reemployed by an Employer after serving in the United States military within the time period prescribed by USERRA on or after December 12, 1994 shall be treated as not having incurred a break in service due to military service. Such reemployed individual shall have up to three times his period of military service to make missed Participant contributions, not to exceed five years. The Employer will make the applicable Company Matching Contributions with respect to any Participant contributions made pursuant to this Section. No interest will be charged on either the Participant and Company Matching Contributions, and the Participant will not be credited with interest or earnings that would have been earned on such contributions. AMENDMENT AND RESTATEMENT OF AMOCO EMPLOYEE SAVINGS PLAN WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan ("Plan"); and WHEREAS, amendment and restatement of the Plan is now considered desirable: NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994 which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under subsection 12.1 of the Plan, the Plan is hereby amended and restated as evidence by the attached official text, effective July 1, 1996. ***************************************************************** I, R. W. Anderson, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the attached offical text of the Amoco Employee Savings Plan, as amended and restated, effective July 1, 1996. Dated this 24 day of September, 1996 R. Wayne Anderson Senior Vice President, Amoco Corporation As aforesaid SEVENTH AMENDMENT OF AMOCO EMPLOYEE SAVINGS PLAN (As Amended and Restated Effective July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan ("Plan"); and WHEREAS, amendment of the Plan is now considered desirable to allow Amoco to increase the Company Matching Contribution for certain collective bargaining units which have agreed to enter into memoranda of understanding with Amoco regarding certain benefit plan changes. NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994 which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under subsection 12.1 of the Plan, the Plan is hereby amended, effective January 11, 1998 as follows: 1. Section 4.1 is amended in its entirety to read as follows: "4.1 Savings Contributions. Each Employee who has met one of the participation requirements in Article III may make Tax-Deferred and/or After-Tax Savings Contributions to the Plan in integral percentages of his Applicable Compensation from a minimum of 1% percent to the following maximums. Subject to Code limitations, his maximum Tax- Deferred Savings Contributions in any Plan Year is 15% of his Applicable Compensation for such Plan Year. Also, subject to Code limitations, his maximum After-Tax Savings Contributions in any Plan Year is 20% of his Applicable Compensation for such Plan Year. The foregoing 15% Tax- Deferred Savings and 20% After-Tax Savings Contributions limitations are applied to the Participant's Applicable Compensation in each payroll cycle and only prospectively." 2. Section 5.1 is amended in its entirety to read as follows: "5.1 Company Matching Contributions. Effective January 11, 1998 for each Plan Year the Employer will make a matching contribution ("Company Matching Contributions") on behalf of each Participant who makes Tax-Deferred and/or After- Tax Savings Contributions in accordance with the following schedule. For each Plan Year the Company Matching Contributions made on behalf of each Participant will equal 100% of the sum of such Participant's Tax-Deferred and After-Tax Savings Contributions which are equal to or less than (1) 5% of such Participant's Applicable Compensation if he has less than 3 years of Vesting Service, (2) 6% of such Participant's Applicable Compensation if he has 3 or more years of Vesting Service but less than 6 years of Vesting Service, or (3) 7% of such Participant's Applicable Compensation if he has 6 or more years of Vesting Service." ***************************************************************** I, J. F. Campbell, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the foregoing amendment of the Amoco Employee Savings Plan, effective January 11, 1998. Dated this 9th day of January, 1998 John F. Campbell Senior Vice President, Amoco Corporation As aforesaid SIXTH AMENDMENT OF AMOCO EMPLOYEE SAVINGS PLAN (As Amended and Restated Effective July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan ("Plan"); and WHEREAS, amendment of the Plan is now considered desirable to allow Amoco to increase the Company Matching Contribution for certain collective bargaining units which have agreed to enter into memoranda of understanding with Amoco regarding certain benefit plan changes. NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994 which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under subsection 12.1 of the Plan, the Plan is hereby amended, effective January 1, 1998 as follows: 1. The last paragraph of Section 5.1 is amended to read as follows: "For purposes of this subsection (b) "Affected Union Employee" means each Participant who is employed by the Employer within any of the following bargaining units: (i) OCAW Local No. 4-449 - Texas City Chemicals (ii) OCAW Local No. 4-449 - Texas City Refinery." ************************************************** I, R. W. Anderson, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the foregoing amendment of the Amoco Employee Savings Plan, effective January 1, 1998. Dated this 24 day of December, 1997 R. Wayne Anderson Senior Vice President, Amoco Corporation As aforesaid FIFTH AMENDMENT OF AMOCO EMPLOYEE SAVINGS PLAN (As Amended and Restated as of July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan (the "Plan"); and WHEREAS, amendment of the Plan is now considered desirable to specify how the former employees of Amoco Production Company ("APC") and Amoco Gas Company ("AGC") who terminate due to the sale of certain facilities during the period commencing December 1, 1997 and ending July 1, 1998, will be treated under the Plan: NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994, which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco, and the power reserved to Amoco under Section 21.01 of the Plan, the Plan is hereby amended effective December 1, 1997, to provide that all participants whose employment with APC or AGC is terminated because of the sale of any element of APC during the period commencing December 1, 1997 and ending July 1, 1998, shall become 100% vested in their Plan account balance and treated as no longer employed by Amoco or any of its participating subsidiaries for all purposes under the Plan. ****************************************************** I, R. W. Anderson, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the foregoing amendment of the Employee Savings Plan of Amoco Corporation and Participating Companies, effective December 1, 1997. Dated this 19 day of December, 1997 R. Wayne Anderson Senior Vice President, Amoco Corporation As aforesaid FOURTH AMENDMENT OF AMOCO EMPLOYEE SAVINGS PLAN (As Amended and Restated Effective July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan ("Plan"): and WHEREAS, amendment of the Plan is now considered desirable to allow Amoco to increase the Company Matching Contribution and to make certain other changes: NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994 which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under subsection 12.1 of the Plan, the Plan is hereby amended, effective January 1, 1998 as follows: 1. Section 4.1 is amended by adding the following sentence to the end thereto: "Except with respect to each Affected Union Employee (as defined in Section 5.1(b)), the maximum limitation of this Section 4.1 shall be reduced from 21% to 20% commencing effective for the entire payroll period ending on January 9, 1998." 2. The third sentence of Section 4.2 is amended to read as follows: "His Savings Contributions will begin as soon as administratively possible after the first full payroll period following the date he enrolls." 3. Section 5.1 is amended in its entirety to read as follows: "5.1 Company Matching Contributions. (a) For each Plan Year commencing effective for the entire payroll period ending on January 9, 1998, the Employer will make a matching contribution ("Company Matching Contributions") on behalf of each Participant who makes Tax-Deferred and After-Tax Savings Contributions which are equal to or less than (1) 5% of such Participant's Applicable Compensation if he has less than 3 years of Vesting Service, (2) 6% of such Participant's Applicable Compensation if he has 3 or more years of Vesting Service but less than 6 years of Vesting Service, or (3) 7% of such Participant's Applicable Compensation if he has 6 or more years of Vesting Service. (b) Notwithstanding subsection (a), the maximum Company Matching Contributions for each Affected Union Employee will be (1) 4% of such Participant's Applicable Compensation if he has less than 3 years of Vesting Service, (2) 5% of such Participant's Applicable Compensation if he has 3 or more years of Vesting Service, but less than 6 years of Vesting Service, or (3) 6% of such Participant's Applicable Compensation if he has 6 or more years of Vesting Service. For purposes of this subsection (b), "Affected Union Employee" means each Participant who is employed by the Employer within any of the following bargaining units: (i) OCAW Local No. 7-736-Wood River (ii) OCAW Local No. 7-1-Whiting Refinery (iii) OCAW Local No. 7-1-Whiting Terminal (iv) OCAW Local No. 7-1-Whiting Refinery (Guards) (v) OCAW Local No. 6-10-Mandan Refinery (vi) OCAW Local No. 4-449-Texas City Chemicals (vii) OCAW Local No. 4-449-Texas City Refinery (viii) OCAW Local No. 2-286-Salt Lake Refinery (ix) OCAW Local No. 3-1-Yorktown Refinery." 4. Section 8.2 is amended by deleting the second and third sentences thereto and inserting in lieu thereof the following sentence: "A Participant may not have more than two outstanding loans." 5. Section 9.4 is amended by revising the penultimate sentence thereto to read as follows: "If a Participant makes a withdrawal from his Tax- Deferred Savings Account he will be prohibited from making any Savings Contributions until the first day of the first payroll period commencing 12 months following the last day of the payroll period during which the distribution of the withdrawal occurred." ***************************************************************** I, R. W. Anderson, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the foregoing amendment of the Amoco Employee Savings Plan, effective January 1, 1998. Dated this 19 day of December, 1997 R. Wayne Anderson Senior Vice President, Amoco Corporation As aforesaid THIRD AMENDMENT OF AMOCO EMPLOYEE SAVINGS PLAN (As Amended and Restated Effective July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan ("Plan"): and WHEREAS, amendment of the Plan is now considered desirable to allow Amoco to make Supplemental Company Matching Contributions: NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994 which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under subsection 12.1 of the Plan, the Plan is hereby amended, effective December 31, 1997 by adding the following new subsection 16.16: "16.16 Conditions of Supplemental Company Matching Contributions. (a) Supplemental Company Matching Contributions. For any Plan Year, Amoco may make Supplemental Company Matching Contributions to the Plan in the form of employer contributions (within the meaning of Section 404 of the Code), in cash, at least equal to a specified dollar amount. Such amount shall be determined by the Board of Directors of Amoco or an authorized officer of Amoco by appropriate written documentation. Any Supplemental Company Matching Contributions contributed for a Plan Year by Amoco may be made in one or more installments without interest. Amoco shall pay the Supplemental Company Matching Contributions at any time during the Plan Year, and for purposes of deducting such Contribution, shall make the Contribution, not later than the time prescribed by the Code for filing Amoco's Federal income tax return including extensions, for its taxable year that ends within such Plan Year. (b) Allocation of Supplemental Company Matching Contributions. The Supplemental Company Matching Contribution for any Plan Year shall be allocated to the Company Contribution Account of each Participant who was employed by an Employer on the first day of the Plan Year for which the Supplemental Company Matching Contribution is made, as follows: (1) First, the Supplemental Company Matching Contribution for the Plan Year shall be allocated to the Tax- Deferred Savings Account of each Participant as Tax-Deferred Savings Contributions pursuant to Article IV and to the Company Contribution Account of each Participant as Company Matching Contributions pursuant to Article V. (2) Second, the balance of any Supplemental Company Matching Contribution remaining after the allocation in subsection 16.16(b)(1) shall be allocated to the Company Contribution Account of each Participant who is employed by an Employer on the last day of the Plan Year, in the ratio that such Participant's Tax-Deferred Savings Contributions during the Plan Year bears to the Tax-Deferred Savings Contributions of all such Participants during such Plan Year. (3) The Plan Administrator shall reduce the proportionate allocation under subsection 16.16(b)(2) to Highly Compensated Employees (as defined in Section 414(q) of the Code) to the extent necessary to comply with the provisions of Section 401(a)(4) of the Code and regulations thereunder. (4) The Supplemental Company Matching Contribution allocated to the Company Contribution Account of a Participant pursuant to subsection 16.16(b)(2) shall be treated in the same manner as Company Matching Contributions for all purposes of the Plan, and shall become vested in accordance with Section 10.2. (5) The Supplemental Company Matching Contribution shall be held in a suspense account until allocated in accordance with this subsection 16.16. Such suspense account shall not participate in the allocation of investment gains, losses, income and deductions of the Trust Fund as a whole, but shall be invested separately and all gains, losses, income and deductions attributable to such investment shall be applied to reduce any reasonable Plan administrative expense and thereafter, to reduce employer contributions (within the meaning of Section 404 of the Code). In the event that any Supplemental Company Matching Contribution remains to be allocated after the application of subsections 16.16(b)(2) and 16.16(b)(3), then such excess shall be held in a suspense account to be used to be allocated as Supplemental Company Matching Contributions in the next, and (to the extent necessary) succeeding, Plan Years. (6) Notwithstanding any provision of the Plan to the contrary, any allocation of a Participant's Tax-Deferred Savings Contributions shall be made under either Article IV or this subsection 16.16, as appropriate, but not both provisions. Similarly, any allocation of Company Matching Contributions shall be made under either Article V or this subsection 16.16, as appropriate, but not both provisions. (7) Notwithstanding any provision of the Plan to the contrary, any Supplemental Company Matching Contribution made to the Plan by Amoco (i) may not be returned to Amoco or any of its affiliates and (ii) can be made whether or not Amoco has current or accumulated profits." ***************************************************************** I, R. W. Anderson, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the foregoing amendment of the Amoco Employee Savings Plan, effective December 31, 1997. Dated this 19 day of December, 1997 R. Wayne Anderson Senior Vice President, Amoco Corporation As aforesaid SECOND AMENDMENT OF EMPLOYEE SAVINGS PLAN OF AMOCO CORPORATION AND PARTICIPATING COMPANIES (As Amended and Restated July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Employee Savings Plan of Amoco Corporation and Participating Companies (the "Plan"); and WHEREAS, amendment of the Plan is considered desirable: NOW, THEREFORE, pursuant to the resolutions adopted by the Board of Directors of Amoco on September 27, 1994, which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under Section 12.01 of the Plan, the Plan is hereby amended as follows: Midgard Energy Company ("Midgard") employees who become employees of Amoco or any company participating in the Plan shall be given participation and vesting credit under the Plan for Midgard service. This provision shall apply only to employees accepting employment on or after October 1, 1997 but not later than December 31, 1999. I. R.W. Anderson, Senior Vice President (Human Resources) of Amoco Corporation, hereby approve and adopt the foregoing amendment to the Plan, effective October 1, 1997. Dated this 21 day of Oct, 1997 R. W. Anderson Senior Vice President, Amoco Corporation As aforesaid THIRD AMENDMENT OF AMOCO EMPLOYEE SAVINGS PLAN (As Amended and Restated Effective July 1, 1996) WHEREAS, Amoco Corporation ("Amoco") maintains the Amoco Employee Savings Plan ("Plan"): and WHEREAS, amendment of the Plan is now considered desirable to specify how the former employees of Amoco and its participating subsidiaries who become employees of Altura Energy Ltd. during the period commencing March 1, 1997 and ending June 2, 1997 will be treated under the Plan: NOW, THEREFORE, pursuant to resolutions adopted by the Board of Directors of Amoco on September 27, 1994 which delegated various powers relating to employee benefit plans to the Senior Vice President (Human Resources) of Amoco and the power reserved Amoco under subsection 12.1 of the Plan, the Plan is hereby amended, effective March 1, 1997 to specify how the former employees of Amoco and its participating subsidiaries who become employees of Altura Energy Ltd. during the period commencing March 1, 1997 and ending June 2, 1997 they will be 100% vested in their Company Contribution Account balance, their outstanding loans will be subject to the Plan's default procedure, will not be able to initiate any new loans, will not be able to receive a lump-sum distribution resulting from a separation of service until they are no longer employed by Altura Energy Ltd. and will be able to make any type of in-service withdrawal under the Plan. . * * * * * * * * * * * * * * * * * * I, R. W. Anderson, Senior Vice President of Amoco Corporation (Human Resources), hereby approve and adopt the foregoing amendment of the Amoco Employee Savings Plan, effective March 1, 1997. Dated this 10 day of March, 1997. R. Wayne Anderson Senior Vice President, Amoco Corporation As aforesaid EX-11 6 EXHIBIT 11 Exhibit 11 AMOCO CORPORATION _________________ COMPUTATION OF BASIC AND DILUTED NET INCOME PER SHARE (in millions, except per share) Year ended December 31, 1997 1996 1995 Net income per share (basic) Shares of common stock: Weighted average number of common shares outstanding...... 490 497 495 Basic weighted average shares outstanding..................... 490 497 495 Net income....................... $2,720 $2,834 $1,862 Net income used in computing net income per common share (basic). $2,720 $2,834 $1,862 Net income per share (basic)..... $ 5.55 $ 5.69 $ 3.76 Net income per share (assuming dilution) Shares of common stock: Weighted average number of common shares outstanding...... 490 497 495 Dilutive effect of options...... 3 2 2 Diluted weighted average shares outstanding..................... 493 499 497 Net income....................... $2,720 $2,834 $1,862 Net income used in computing net income per common share (assuming dilution)............. $2,720 $2,834 $1,862 Net income per share (assuming dilution)....................... $ 5.52 $ 5.67 $ 3.75 EX-12 7 EXHIBIT 12 EXHIBIT 12 AMOCO CORPORATION __________________ STATEMENT SETTING FORTH COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (millions of dollars, except ratios) Year Ended December 31, 1997 1996 1995 1994 1993 Determination of Income: Consolidated earnings before income taxes and minority interest.. $3,771 $3,965 $2,404 $2,491 $2,506 Fixed charges expensed by consolidated companies. 452 412 406 316 350 Adjustments for certain companies accounted for by the equity method... 66 69 25 7 11 Adjusted earnings plus fixed charges.......... $4,289 $4,446 $2,835 $2,814 $2,867 Determination of Fixed Charges: Consolidated interest on indebtedness (including interest capitalized).. $ 363 $ 317 $ 317 $ 288 $ 299 Consolidated rental expense representative of an interest factor.. 102 107 89 23 50 Adjustments for certain companies accounted for by the equity method... 7 8 6 5 8 Total fixed charges...... $ 472 $ 432 $ 412 $ 316 $ 357 Ratio of earnings to fixed charges............ 9.1 10.3 6.9 8.9 8.0 EX-21 8 EXHIBIT 21 Exhibit 21 AMOCO CORPORATION _________________ SUBSIDIARIES OF THE REGISTRANT AT December 31, 1997 Organized Under Company (1) Laws of Amoco Canada Petroleum Company Ltd.................. Canada ACP (Malaysia), Inc............................... Delaware Amoco Chemical (Malaysia) Sdn Bhd............... Malaysia Amoco Canada Hydrocarbons Ltd..................... Canada Amoco Canada Marketing Corp....................... Delaware Amoco Canada Resources Ltd........................ Canada Dome Petroleum Corp. (U.S.)....................... North Dakota Dome Pipeline Corporation (U.S.)................ Delaware Amoco Company....................................... Delaware Amoco Chemical Company............................ Delaware Amoco Chemical Holding Company.................. Delaware Amoco Chemical Belgium N.V...................... Belgium Amoco Chemical Indonesia Limited................ Delaware Amoco Chemical Malaysia Holding .Co............. Delaware Amoco Chemical Singapore Holding .Co............ Delaware Plaskon Electronic Materials, Ltd............. Bermuda Amoco Chemical Singapore Limited................ Delaware Amoco Chemicals Pty. Limited.................... Australia Amoco do Brasil Ltda............................ Brazil Amoco Fabrics and Fibers Company................ Delaware Amoco Nisseki CLAF, Inc. (A).................. Delaware Amoco Fabrics and Fibers Ltd.................... Canada Amoco International Finance Corporatin.......... Delaware A. G. International Chemical Company Inc.(A).. Japan Amoco Chemical Asia Pacific Limited........... Hong Kong Amoco Olefins Corporation....................... Delaware Amoco Polymers, Inc............................. Delaware Amoco Remediation Management Services Company... Delaware China American Petrochemical Co., Ltd. (A)...... Taiwan Samsung Petrochemical Co., Ltd. (A)............. Korea Amoco Leasing Corporation......................... Delaware Amoco Tax Leasing X Corporation................. Delaware Amoco Research Corporation........................ Delaware Amoco Research Operating Company................ Delaware Amoco Oil Company................................. Maryland Amoco Environmental Services Company............ Virginia Organized Under Company (1) Laws of Amoco Oil Holding Company....................... Delaware Amoco Corporate Development Company (Latin America).................................... Delaware Amoco Mexico Holding Company S.A. de C.V.... Mexico Amoco Fabrics and Fibers de Mexico S.A. de C.V............................. Mexico Amoco Sulfur Recovery Company................. Delaware Amoco Marketing Environmental Services Company.. Nevada Amoco Pipeline Company............................ Maine Amoco Pipeline Holding Company.................. Delaware Amoco Production Company.......................... Delaware Amoco Caspian Sea Petroleum Company............. Delaware Amoco Caspian Sea Petroleum Limited........... British Virgin Islands Amoco Colombia Petroleum Company................ Delaware Amoco D.T. Company............................ Delaware Amoco Egypt Gas Company......................... Delaware Amoco Egypt Oil Company......................... Delaware Gulf of Suez Petroleum Company (A)............ Egypt Amoco Energy Trading Corporation................ Delaware Amoco Eurasia Petroleum Company................. Delaware Amoco Europe Limited............................ England Amoco (U.K.) Exploration Company.............. Delaware Amoco International Petroleum Company........... Delaware Amoco Argentina Oil Company................... Delaware Pan American Energy LLC.(A)................. Delaware Amoco Trinidad Oil Company.................... Delaware Amoco Netherlands Petroleum Company............. Delaware Amoco Bolivia Oil and Gas Atkiebolag.......... Sweden Empresa Petrolera Chaco S.A.(A)............. Bolivia Amoco Netherlands, B.V........................ Delaware Amoco Trinidad (LNG) B.V.................... Netherlands Amoco Nigeria Petroleum Company................. Delaware Amoco Norway Oil Company........................ Delaware Amoco Ob River Petroleum Company................ Delaware Amoco Orient Petroleum Company.................. Delaware Amoco Overseas Exploration Company.............. Delaware Amoco Sharjah LPG Company....................... Delaware Amoco Sharjah Oil Company....................... Delaware Amoco Supply and Trading Company................ Delaware Amoco Trinidad Power Resources Corporation...... Delaware Amoco Venezuela Petroleum Company............... Delaware Organized Under Company (1) Laws of Amoco X.T. Company.............................. Delaware Altura Energy Ltd............................. Texas Amoco Y.M. Company.............................. Delaware Crescendo Resources, L.P.(A).................. Delaware Coastwise Trading Company, Inc.................. Delaware Coastwise Guaranty Company.................... Delaware TOC--Rocky Mountains Inc........................ Delaware Amoco Y.T. Company............................ Delaware Amoco Properties Incorporated..................... Delaware Amoco Chemical (Europe) S.A......................... Delaware Amoco Chemical U.K. Limited....................... England Amoco Fabrics (U.K.) Limited.................... England Amoco Holding GmbH................................ Germany Amoco Deutschland GmbH.......................... Germany Amoco Fabrics Europe B.V........................ Netherlands Amoco Technology Company............................ Delaware Vysis, Inc........................................ Delaware Amoco Solar Holding Company....................... Delaware Amoco/Enron Solar (A)........................... Delaware AmProp Finance Company.............................. Indiana AmProp, Inc......................................... Delaware (1) Three hundred subsidiaries and thirty-six 50% or less owned companies accounted for by the equity method are not named. Such subsidiaries and affiliate companies, considered in the aggregate, do not constitute a significant subsidiary. (A) Represents holdings between 10% and 50% inclusive. EX-23 9 EXHIBIT 23 EXHIBIT 23 AMOCO CORPORATION _________________ CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (Nos. 333-26145, 333- 27981, 33-65153, 33-52575, 33-51475, 33-40099, and 33-5332) and in the Prospectuses constituting part of the Registration Statements on Forms S-3 (Nos. 333-36923, 33-61389, and 33- 63811) of Amoco Corporation of our report dated February 24, 1998 appearing in Item 8 of this Form 10-K. PRICE WATERHOUSE LLP Chicago, Illinois March 20, 1998 EX-27 10 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 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 166 979 3595 10 1174 7044 49357 26814 32489 6044 4639 0 0 2568 13751 32489 31910 36287 23343 23343 6595 0 401 3776 1056 2720 0 0 0 2720 5.55 5.52
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