FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 1-3939
KERR-McGEE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
A Delaware Corporation 73-0311467
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Kerr-McGee Center, Oklahoma City, Oklahoma 73125
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code(405) 270-1313
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares of common stock, $1.00 par value, outstanding
as of July 31, 1996: 49,205,158
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
(Millions of dollars,
except per-share amounts) 1996 1995 1996 1995
Sales $470.2 $442.2 $925.0 $894.2
Costs and Expenses
Costs and operating expenses 261.8 241.1 512.0 487.4
Selling, general, and
administrative expenses 53.4 20.8 76.6 39.1
Depreciation and depletion 68.1 75.4 133.7 154.6
Exploration, including dry holes
and amortization of
undeveloped leases 29.6 22.6 52.1 43.8
Provision for environmental
reclamation and remediation
of inactive sites 5.0 6.5 14.2 14.6
Taxes, other than income taxes 17.2 17.2 34.3 33.2
Interest and debt expense 12.6 16.3 24.9 34.9
Total Costs and Expenses 447.7 399.9 847.8 807.6
22.5 42.3 77.2 86.6
Other Income 50.4 6.3 65.7 14.5
Income from Continuing
Operations before
Income Taxes 72.9 48.6 142.9 101.1
Provision for Income Taxes 22.2 13.4 44.3 29.1
Income from Continuing Operations 50.7 35.2 98.6 72.0
Income from Discontinued
Operations (net of provision
for income taxes of $5.9 and
$6.4 for the three and six
months ended June 30, 1995,
respectively) - 9.5 - 10.4
Net Income $ 50.7 $ 44.7 $ 98.6 $ 82.4
Net Income per Common Share
Continuing operations $ 1.01 $ .68 $ 1.95 $ 1.39
Discontinued operations - .18 - .20
Total $ 1.01 $ .86 $ 1.95 $ 1.59
Cash Dividends Declared per
Common Share $ .41 $ .38 $ .82 $ .76
Average Number of Shares
Outstanding (thousands) 49,791 51,786 50,176 51,746
The accompanying notes are an integral part of this statement.
The 1995 amounts have been restated to conform with the current-year
presentation.
<PAGE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, December 31,
(Millions of dollars) 1996 1995
ASSETS
Current Assets
Cash $ 83.6 $ 87.3
Notes and accounts receivable 369.3 333.4
Inventories 228.5 221.0
Deposits and prepaid expenses 90.3 121.9
Total Current Assets 771.7 763.6
Property, Plant, and Equipment 5,661.2 5,767.4
Less reserves for depreciation,
depletion, and amortization 3,438.1 3,557.0
2,223.1 2,210.4
Investments and Other Assets 197.9 239.0
$3,192.7 $3,213.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 111.0 $ 94.0
Accounts payable 258.3 296.6
Current portion of long-term debt 1.6 7.5
Other current liabilities 212.2 176.2
Total Current Liabilities 583.1 574.3
Long-Term Debt 624.8 632.2
Deferred Credits and Reserves 614.2 591.1
Stockholders' Equity
Common stock, par value $1 - 150,000,000
shares authorized, 53,678,258 shares
issued at 6-30-96 and 53,513,888 at
12-31-95 53.7 53.5
Capital in excess of par value 325.7 318.2
Preferred stock purchase rights .5 .5
Retained earnings 1,266.0 1,209.0
Unrealized gain on available-for-sale
securities 20.0 25.9
Common shares in treasury, at cost
- 4,175,365 shares at 6-30-96 and
2,444,690 at 12-31-95 (218.3) (110.5)
Deferred compensation (77.0) (81.2)
Total Stockholders' Equity 1,370.6 1,415.4
$3,192.7 $3,213.0
The "successful efforts" method of accounting for oil and gas exploration
and production activities has been followed in preparing this balance
sheet.
The accompanying notes are an integral part of this statement.
The 1995 amounts have been restated to conform with the current-year
presentation.
<PAGE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
(Millions of dollars) 1996 1995
Operating Activities
Net income $ 98.6 $ 82.4
Adjustments to reconcile to net cash
provided by operating activities -
Depreciation, depletion,
and amortization 138.5 176.9
Deferred income taxes 24.1 17.3
Realized gain on
available-for-sale securities (16.9) -
Provision for reclamation and
remediation of inactive sites 14.2 14.6
Noncash items affecting net income 1.2 13.0
Other net cash provided by
(used in) operating activities 30.6 (4.1)
Net Cash Provided by
Operating Activities 290.3 300.1
Investing Activities
Capital expenditures (206.4) (259.3)
Proceeds from the sales of
available-for-sale securities 19.5 -
Proceeds from sales of exploration
and production assets 14.0 -
Proceeds from sales of refining
and marketing assets .7 79.9
Decrease in investments 5.7 45.6
Other investing activities 9.7 (.3)
Net Cash Used in Investing
Activities (156.8) (134.1)
Financing Activities
Increase (decrease) in short-term
borrowings 17.0 (118.4)
Issuance of long-term debt 24.2 -
Purchase of treasury stock (108.1) -
Dividends paid (42.2) (39.3)
Repayment of debt (35.8) (11.3)
Other financing activities 7.7 5.8
Net Cash Used in Financing
Activities (137.2) (163.2)
Net Increase (Decrease) in Cash
and Cash Equivalents (3.7) 2.8
Cash and Cash Equivalents at
Beginning of Period 87.3 80.8
Cash and Cash Equivalents at
End of Period $83.6 $83.6
The accompanying notes are an integral part of this statement.
The 1995 amounts have been restated to conform with the current-year
presentation.
<PAGE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
A. The condensed financial statements included herein have
been prepared by the company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission and, in the opinion of management, include all
adjustments, consisting only of normal recurring
accruals, necessary to present fairly the resulting
operations for the indicated periods. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with
generally accepted accounting principles have been
condensed or omitted pursuant to such rules and
regulations. Although the company believes that the
disclosures are adequate to make the information
presented not misleading, it is suggested that these
condensed financial statements be read in conjunction
with the financial statements and the notes thereto
included in the company's latest annual report on Form
10-K.
Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," was effective January 1, 1996.
This statement prescribes an alternate method of
accounting for stock-based compensation awards under
which the fair value of stock-based compensation awards
is recognized as expense over the vesting period of the
award. The company has elected not to apply this
optional accounting treatment.
B. After adding the dilutive effect of the conversion of
options to the weighted average number of shares
outstanding, the shares used to compute net income per
common share were 50,060,745 and 51,974,852 for the three
months ended June 30, 1996 and 1995, respectively, and
50,453,791 and 51,884,476 for the six months ended June
30, 1996 and 1995, respectively.
C. Net cash provided by operating activities reflects cash
payments for income taxes and interest as follows:
Six Months Ended
June 30,
(Millions of dollars) 1996 1995
Income taxes $14.4 $17.5
Interest 30.9 37.5
D. The company held U.S. government obligations and equity
securities considered to be available for sale at June
30, 1996, and December 31, 1995. These financial
instruments are carried in the Consolidated Balance Sheet
at fair value, based on quoted market prices. The
company held no securities classified as held to maturity
or trading during the periods presented. At June 30,
1996, and December 31, 1995, these financial instruments
were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
June 30, 1996 December 31, 1995
Fair Gross Unrealized Fair Gross Unrealized
(Millions of dollars) Cost Value Holding Gains Cost Value Holding Gains
Equity Securities $7.3 $39.6 $32.3 $11.6 $53.4 $41.8
U.S. Government
Obligations
Maturing within
one year 28.9 28.9 - 9.6 9.6 -
Maturing between
one and four
years - - - 17.1 17.2 .1
Total $36.2 $68.5 $32.3 $38.3 $80.2 $41.9
</TABLE>
During 1996, the company sold equity securities
considered to be available for sale. Proceeds from
the sale for the first six months of 1996 totaled $21
million, resulting in a realized gain of $16.9 million
before income taxes. The average cost of the
securities was used in computing the realized gain.
Equity securities are carried in the Consolidated
Balance Sheet as Investments and Other Assets. U.S.
government obligations are carried as Current Assets
or Investments and Other Assets, depending upon their
maturity. The change in the equity component for
unrealized holding gains and losses, net of income
taxes, for the first six months of 1996 and 1995 was
as follows:
Six Months Ended
June 30,
(Millions of dollars) 1996 1995
Balance, January 1 $25.9 $11.5
Net realized gains (5.6) -
Net unrealized holding gains 4.0 2.3
Balance, March 31 24.3 13.8
Net realized gains (5.5) -
Net unrealized holding gains 1.2 3.2
Balance, June 30 $20.0 $17.0
E. The company uses futures and options contracts to
hedge the effect of the price volatility of crude oil
and natural gas. Net hedging losses on crude oil and
natural gas recognized for the first six months and
second quarter of 1996 were $22 million and $7.1
million, respectively. The effect of the losses was
to reduce the company's average gross margin for crude
oil by $1.03 per barrel for the first half of 1996 and
$.60 per barrel for the second quarter. The negative
impact on the company's average gross margin for
domestic gas was $.28 and $.20 per MCF for the first
six months and the second quarter of 1996,
respectively.
F. CONTINGENCIES
WEST CHICAGO -
In 1973, a wholly owned subsidiary, Kerr-McGee
Chemical Corporation (KMCC), closed an operation in
West Chicago, Illinois, that processed thorium ores.
Operations resulted in some low-level radioactive
contamination at the site. In 1979, KMCC filed a plan
with the Nuclear Regulatory Commission to decommission
the facility. The State of Illinois (the State) now
has jurisdiction over the site and requires offsite
disposal of contaminated material. The following
discusses the current status of various matters
associated with this closed facility.
Decommissioning - In 1994, KMCC, the City of West
Chicago, and the State executed a Settlement Agreement
(the Agreement) regarding the decommissioning of the
closed West Chicago facility. Pursuant to the
Agreement, KMCC built or leased appropriate support
facilities and began shipping material from the site
to a licensed permanent disposal facility in Utah
during 1994. Although shipments continue, the State
has not yet issued a license amendment that would
permit KMCC to complete the decommissioning work.
Under the Illinois Uranium and Thorium Mill Tailings
Control Act (the Act), KMCC is obligated to pay an
annual storage fee of $2 per cubic foot of byproduct
material located at the former facility. Under the
Agreement, the amount of the storage fee paid each
year shall not exceed $26 million, and all amounts
paid pursuant to the Act are to be reimbursed to KMCC
as decommissioning expenditures are incurred. As of
August 1996, KMCC has received reimbursement for all
amounts paid under the Act to the State and will
continue to seek reimbursement for future amounts paid
under the Act as decommissioning costs are incurred.
The aggregate cost to decommission the former facility
is difficult to estimate because of the many
contingencies, including the terms of the license
amendment required to complete the decommissioning
process. Decommissioning costs to KMCC will be
reduced by any amounts recovered pursuant to the
Federal Energy Policy Act of 1992 (which could total
up to $42 million, of which $18 million has been
received through the second 1996 quarter). At June
30, 1996, the remaining reserves provided for the cost
to decommission the site under the plan proposed by
KMCC were $156 million (before any further recovery
under the Energy Policy Act of 1992), payable over the
time necessary to relocate the materials, which was
estimated at year-end 1995 to take a minimum of four
years and is dependent on receiving the necessary
licensing amendment.
Offsite Areas - The U.S. Environmental Protection
Agency (EPA) has listed four areas in the vicinity of
the West Chicago facility on the National Priority
List that the EPA promulgates under authority of the
Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 and has designated KMCC as
a potentially responsible party in these four areas.
The EPA issued a unilateral administrative order for
one of these areas (referred to as the residential
area), which requires KMCC to conduct a removal action
to excavate contaminated soils and to ship the soils
elsewhere for disposal. At June 30, 1996, the
remaining estimated cost to clean up the residential
area was $15 million. Without waiving any of its
rights or defenses, KMCC began the cleanup of this
site in May 1995.
Judicial Proceedings - Reference is made to the
Financial Condition section of Management's Discussion
and Analysis for a discussion of the settlement of the
personal injury lawsuits at West Chicago.
OTHER -
Reference is made to the Financial Condition section
of Management's Discussion and Analysis for a
discussion of the company's settlement with certain of
its insurance carriers of the pending claims for
environmental coverage.
SUMMARY -
The plants and facilities of the company and its
subsidiaries are subject to various environmental laws
and regulations. The company or its subsidiaries have
been notified that they may be responsible in varying
degrees for a portion of the costs to clean up certain
waste disposal sites and former plant sites. At June
30, 1996, the remaining reserves provided for the cost
to investigate and/or remediate all presently
identified sites of former or current operations,
including $171 million for the former facility and
offsite areas in West Chicago, were $292 million.
Expenditures from inception through June 30, 1996,
totaled $304 million.
In addition to the environmental issues previously
discussed, the company or its subsidiaries are also a
party to a number of other legal proceedings pending
in various courts or agencies in which the company or
a subsidiary appears as plaintiff or defendant.
Because of continually changing laws and regulations,
the nature of the company's businesses, and pending
legal proceedings, it is not possible to reliably
estimate the amount or timing of all future
expenditures relating to environmental and other
contingencies. The company provides for costs related
to contingencies when a loss is probable and the
amount is reasonably estimable. Although management
believes, after consultation with general counsel,
that adequate reserves have been provided for all
known contingencies, the ultimate cost will depend on
the outcomes of the above-noted uncertainties.
Therefore, it is possible that additional reserves
could be required in the future that could have a
material effect on results of operations in a
particular quarter or annual period. However, the
ultimate resolution of these commitments and
contingencies, to the extent not previously provided
for, should not have a material adverse effect on the
company's financial position.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Comparison of 1996 Results with 1995 Results
CONSOLIDATED OPERATIONS
Second-quarter 1996 net income totaled $50.7 million, compared
with 1995 second-quarter income from continuing operations of
$35.2 million. Including discontinued operations, net income
for the 1995 second quarter was $44.7 million. For the first
six months of 1996, net income was $98.6 million, up from 1995
six-month income from continuing operations of $72 million. Net
income, including discontinued operations, for the first half of
1995 was $82.4 million.
Operating profit increased for both the second quarter and six
months ended June 30, 1996, compared with the same 1995 periods.
The improved results for both periods reflect higher crude oil
and natural gas sales prices, lower depreciation and depletion,
lower per-unit coal production costs, and higher coal sales
volumes. Partially offsetting for both periods were lower crude
oil and natural gas sales volumes, higher exploration costs, and
higher feedstock and energy costs for the chemical pigment
operations. Also offsetting for the second quarter were lower
pigment sales prices.
Second-quarter 1996 nonoperating expense was $9.8 million,
compared with $27.4 million for the 1995 quarter. For the first
six months of 1996, nonoperating expense was $25.1 million,
compared with $56.1 million for the same 1995 period. The
decrease in both periods was due primarily to the settlement of
certain insurance claims related to environmental sites,
realized gains on equity securities, and lower interest expense.
Partially offsetting were provisions for settled and pending
litigation.
The provision for income taxes was $22.2 million and $44.3
million for the second quarter and first six months of 1996,
respectively, compared with $13.4 million and $29.1 million for
the respective 1995 periods. The increased tax provision for
both periods was due to higher pretax income and higher
effective tax rates.
SEGMENT OPERATIONS
Following is a summary of sales and operating profit and a
discussion of major factors influencing the results of each of
the company's business segments for the second quarter and first
six months of 1996, compared with the same periods last year.
Three Months Ended Six Months Ended
June 30, June 30,
(Millions of dollars) 1996 1995(1) 1996 1995(1)
Sales
Exploration and production(2) $205.6 $170.4 $395.4 $341.9
Chemicals 173.2 183.7 348.4 377.5
Coal 91.3 87.9 181.0 174.6
Other .1 .2 .2 .2
Total Sales $470.2 $442.2 $925.0 $894.2
Operating Profit (Loss)
Exploration and production $ 36.1 $ 27.4 $ 70.7 $ 59.3
Chemicals 26.1 33.7 56.7 65.0
Coal 18.2 15.9 36.2 33.0
Other 2.3 (1.0) 4.4 (.1)
Total Operating Profit 82.7 76.0 168.0 157.2
Nonoperating Expense 9.8 27.4 25.1 56.1
Income from Continuing
Operations before Income Taxes 72.9 48.6 142.9 101.1
Provision for Income Taxes 22.2 13.4 44.3 29.1
Income from Continuing Operations 50.7 35.2 98.6 72.0
Discontinued Operations,
Net of Tax - 9.5 - 10.4
Net Income $ 50.7 $ 44.7 $ 98.6 $ 82.4
(1)The 1995 amounts have been restated to conform with the
current-year presentation.
(2)Includes sales of primarily crude oil to discontinued
operations in the amounts of $48.7 and $86.3 million for the
three and six months ended June 30, 1995, respectively.
Exploration and Production -
Operating profit for the second quarter of 1996 was $36.1
million, compared with $27.4 million for the same 1995 period.
Operating profit for the first six months of 1996 and 1995 was
$70.7 million and $59.3 million, respectively. The increase in
operating profit for both 1996 periods was due to higher crude
oil and natural gas sales prices and lower depreciation and
depletion, which declined primarily due to properties held for
sale. Partially offsetting were lower crude oil and natural gas
sales volumes and higher exploration expense. Exploration
expense increased due to higher dry hole cost, primarily in the
North Sea.
Revenues were $205.6 million and $170.4 million for the three
months ended June 30, 1996 and 1995, respectively, and $395.4
million and $341.9 million for the first six months of 1996 and
1995, respectively. The following table shows the company's
average crude oil and natural gas sales prices and volumes for
both the second quarter and first six months of 1996 and 1995.
Three Months Ended Percent
June 30, Increase
1996 1995 (Decrease)
Crude oil sales
(thousands of bbls/day)
United States 27.3 29.0 (6)
Canada 3.5 4.5 (22)
North Sea 29.2 36.3 (20)
China 4.7 - NM
Total 64.7 69.8 (7)
Average crude oil sales price
(per barrel)
United States $18.76 $16.14 16
Canada 19.16 16.28 18
North Sea 18.69 17.28 8
China 18.48 - NM
Average $18.73 $16.74 12
Natural gas sold
(MMCF/day)
United States 198 228 (13)
Canada 30 43 (30)
North Sea 28 19 47
Total 256 290 (12)
Average natural gas sales price
(per MCF)
United States $ 1.88 $ 1.53 23
Canada 1.04 .89 17
North Sea 2.33 2.75 (15)
Average $ 1.83 $ 1.51 21
Six Months Ended Percent
June 30, Increase
1996 1995 (Decrease)
Crude oil sales
(thousands of bbls/day)
United States 27.2 29.5 (8)
Canada 3.9 4.6 (15)
North Sea 31.5 37.5 (16)
China 2.3 - NM
Total 64.9 71.6 (9)
Average crude oil sales price
(per barrel)
United States $17.55 $15.90 10
Canada 16.75 15.62 7
North Sea 17.69 16.68 6
China 18.48 - NM
Average $17.61 $16.29 8
Natural gas sold
(MMCF/day)
United States 193 235 (18)
Canada 32 48 (33)
North Sea 32 18 78
Total 257 301 (15)
Average natural gas sales price
(per MCF)
United States $ 1.90 $ 1.47 29
Canada 1.07 .87 23
North Sea 2.41 2.75 (12)
Average $ 1.86 $ 1.45 28
Chemicals -
Second-quarter 1996 operating profit totaled $26.1 million on
revenues of $173.2 million, compared with operating profit of
$33.7 million on revenues of $183.7 million for the 1995
quarter. For the first six months of 1996 and 1995, operating
profit was $56.7 million and $65 million, respectively, on
revenues of $348.4 million and $377.5 million, respectively.
Revenues for the second quarter of 1996 decreased due to lower
pigment sales prices and volumes. Revenues for the first six
months of 1996 decreased due principally to lower pigment sales
volumes. Operating profit for both 1996 periods decreased due
primarily to higher feedstock and energy costs for pigment
operations and lower revenues.
Coal -
Second-quarter 1996 operating profit was $18.2 million, compared
with $15.9 million for the same 1995 quarter. For the first six
months of 1996, operating profit was $36.2 million, compared
with $33 million last year. Revenues were $91.3 million and
$87.9 million for the second quarter of 1996 and 1995,
respectively, and $181 million and $174.6 million for the first
six months of 1996 and 1995, respectively. Revenues for the
second quarter and the first six months of 1996 increased due to
higher sales volumes. Operating profit for both 1996 periods
increased due to lower per-unit production costs and higher
revenues.
Financial Condition
At June 30, 1996, the company's net working capital position was
$188.6 million, compared with $189.3 million at December 31,
1995. The current ratio was 1.3 to 1 at June 30, 1996, and
December 31, 1995, compared with 1.2 to 1 at June 30, 1995. The
company's percentage of total debt to total capitalization was
35% at June 30, 1996 and 1995, compared with 34% at December 31,
1995. For the first six months of 1996, net cash provided by
operating activities was $290.3 million, compared with $300.1
million for the same 1995 period.
On June 3, 1996, the company and the Kerr-McGee Corporation
Employee Stock Ownership Plan (ESOP) entered into an agreement
under which Kerr-McGee, as sponsor of the ESOP, loaned the ESOP
$24.5 million. The note bears interest at 6.85% and is payable
to Kerr-McGee in installments beginning January 2, 1997. The
note will be paid in full on January 2, 2005, which coincides
with the expected allocation of shares held by the ESOP to
participants. The ESOP used the proceeds of the loan to prepay
a portion of the 9.47% Series A notes, which were guaranteed by
the company and reflected in the company's balance sheet as
long-term debt. The remaining $1.5 million Series A notes were
paid as scheduled on July 1, 1996. The amount loaned by the
company to the ESOP represents sponsor financing and, therefore,
does not appear in the company's balance sheet. The 9.61%
Series B notes remains outstanding and are also scheduled to be
paid in full on January 2, 2005. The first payment of $1.5
million is due July 1, 1998.
The company had unused lines of credit and revolving credit
facilities of $664 million at June 30, 1996. Of this amount,
$305 million and $230 million can be used to support commercial
paper borrowings of Kerr-McGee Credit Corporation and Kerr-McGee
Oil (U.K.) PLC, respectively.
Cash capital expenditures for the first half of 1996 totaled
$206.4 million, compared with $259.3 million for the same 1995
period. Exploration and production expenditures, principally in
the Gulf of Mexico, North Sea, and offshore China, were 71% of
the 1996 amount. Chemicals expenditures were 22% of the total.
Management anticipates that the cash requirements for the next
several years can be provided through internally generated funds
and selective long- and/or short-term borrowings.
During the second quarter 1996, the company purchased 804,000
shares of its stock at a cost of $49.5 million. Through June
30, 1996, 2.6 million shares were purchased at a cost of $155.8
million since initiation of the stock repurchase program in
October 1995.
In July 1996, KMCC settled all of the pending personal injury
lawsuits related to the closed facility in West Chicago,
Illinois, for $21 million. The plaintiffs had sought
compensation for illnesses allegedly caused by exposure to
thorium wastes from the closed facility. The settlements
require a cash payment to each individual plaintiff, of which
the majority will be paid during the third quarter.
The company has been litigating claims for environmental
coverage against a number of its insurance carriers. During the
1996 second quarter, the company entered into settlement
agreements with certain carriers that totaled $38.8 million,
which was received in July 1996. Litigation is still pending
and negotiations will continue with other insurance carriers.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
A Consent Decree was lodged by the U.S. government in
U.S. vs Braselman Corporation, et al filed in the U.S.
District Court for the Eastern District of Louisiana
for the recovery of remediation costs incurred by the
EPA at the Bayou Bonfouca Superfund site in Slidell,
Louisiana. Under the Settlement Agreement, the
Company agreed to contribute a net of $10 million ($6
million after income tax) to the cost of remediating
this site.
The company continues its efforts to obtain the
necessary approvals to decommission a facility located
in West Chicago, Illinois, which processed thorium
ores and was closed in 1973. Currently, the State of
Illinois has jurisdiction of this site, and the
company has agreed to offsite disposal of the waste
material.
For a discussion of contingencies, including a
detailed discussion of the West Chicago matter,
reference is made to Part I, Item 3, of the company's
Form 10-K for the year ended December 31, 1995. For
the report on the current status of these matters,
reference is made to Note F to the Consolidated
Financial Statements of this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
27.0 Financial Data Schedule
(b) Reports on Form 8-K
On July 9, 1996, the company filed a report on
Form 8-K, reporting Item 5, "Other Events,"
and Item 7, "Exhibits."
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
KERR-McGEE CORPORATION
Date August 14, 1996 By: (John M. Rauh)
John M. Rauh
Vice President and Controller
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at June 30, 1996 and December 31,1995, and the
Consolidated Statement of Income for the periods ending June 30, 1996 and 1995
and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995 DEC-31-1995
<PERIOD-END> JUN-30-1996 JUN-30-1995 DEC-31-1995
<CASH> 83600 0 87300
<SECURITIES> 0 0 0
<RECEIVABLES> 369300 0 333400
<ALLOWANCES> 0 0 0
<INVENTORY> 228500 0 221000
<CURRENT-ASSETS> 771700 0 763600
<PP&E> 5661200 0 5767400
<DEPRECIATION> 3438100 0 3557000
<TOTAL-ASSETS> 3192700 0 3213000
<CURRENT-LIABILITIES> 583100 0 574300
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 53700 0 53500
<OTHER-SE> 1316900 0 1361900
<TOTAL-LIABILITY-AND-EQUITY> 3192700 0 1415400
<SALES> 925000 894200 0
<TOTAL-REVENUES> 925000 894200 0
<CGS> 512000 487400 0
<TOTAL-COSTS> 847800 807600 0
<OTHER-EXPENSES> (65700) (14500) 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 24900 34900 0
<INCOME-PRETAX> 142900 101100 0
<INCOME-TAX> 44300 29100 0
<INCOME-CONTINUING> 98600 72000 0
<DISCONTINUED> 0 10400 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 98600 82400 0
<EPS-PRIMARY> 1.95 1.59 0
<EPS-DILUTED> 0 0 0
</TABLE>
