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, 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 1-3939
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,
1997: 47,669,033
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(Millions of dollars, except per-share amounts) 1997 1996 1997 1996
--------------------- ---------------------
<S> <C> <C> <C> <C>
Sales $411.7 $470.2 $879.7 $925.0
Costs and Expenses
Costs and operating expenses 241.5 261.8 499.6 512.0
Selling, general, and administrative expenses 20.9 58.4 50.2 90.8
Depreciation and depletion 66.2 68.1 135.1 133.7
Exploration, including dry holes and
amortization of undeveloped leases 17.9 29.6 31.5 52.1
Taxes, other than income taxes 12.8 17.2 28.2 34.3
Interest and debt expense 10.8 12.6 22.5 24.9
------ ------ ------ -------
Total Costs and Expenses 370.1 447.7 767.1 847.8
------ ------ ------ -------
41.6 22.5 112.6 77.2
Other Income 17.9 50.4 47.2 65.7
------ ------ ------ -------
Income before Income Taxes 59.5 72.9 159.8 142.9
Provision for Income Taxes 17.9 22.2 48.0 44.3
------ ------ ------ -------
Net Income $ 41.6 $ 50.7 $111.8 $ 98.6
====== ====== ====== =======
Net Income per Common Share $ .87 $ 1.01 $ 2.32 $ 1.95
Cash Dividends Declared per Common Share $ .45 $ .41 $ .90 $ .82
Average Number of Shares Outstanding
(thousands) 47,845 49,791 47,954 50,176
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
June 30, December 31,
(Millions of dollars) 1997 1996
--------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 76.7 $ 120.9
Notes and accounts receivable 273.5 374.4
Inventories 167.1 218.2
Deposits and prepaid expenses 71.5 91.1
-------- --------
Total Current Assets 588.8 804.6
-------- --------
Property, Plant, and Equipment 4,488.2 4,836.9
Less reserves for depreciation,
depletion, and amortization 2,550.5 2,889.5
-------- --------
1,937.7 1,947.4
-------- --------
Investments and Other Assets 397.4 372.5
-------- --------
$2,923.9 $3,124.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 20.0 $ 36.4
Accounts payable 217.7 262.3
Other current liabilities 211.8 186.0
-------- --------
Total Current Liabilities 449.5 484.7
-------- --------
Long-Term Debt 468.6 625.9
-------- --------
Deferred Credits and Reserves 598.9 646.4
-------- --------
Stockholders' Equity
Common stock, par value $1 - 150,000,000
shares authorized, 54,035,727 shares issued at
6-30-97 and 53,862,347 shares issued at 12-31-96 54.0 53.9
Capital in excess of par value 342.0 334.2
Preferred stock purchase rights .5 .5
Retained earnings 1,417.6 1,348.0
Unrealized gain on available-for-sale securities 4.4 11.6
Common shares in treasury, at cost - 6,286,465
shares at 6-30-97 and 5,568,815 at 12-31-96 (353.0) (305.2)
Deferred compensation (58.6) (75.5)
-------- --------
Total Stockholders' Equity 1,406.9 1,367.5
-------- --------
$2,923.9 $3,124.5
======== ========
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.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
(Millions of dollar) 1997 1996
---------------------
<S> <C> <C>
Operating Activities
Net income $111.8 $ 98.6
Adjustments to reconcile to net cash
provided by operating activities -
Depreciation, depletion, and amortization 138.2 138.5
Deferred income taxes 22.9 24.1
Realized gain on available-for-sale securities (10.7) (16.9)
Noncash items affecting net income (8.2) 15.4
Other net cash provided by operating activities 77.1 30.6
----- ------
Net Cash Provided by Operating Activities 331.1 290.3
----- ------
Investing Activities
Capital expenditures (156.9) (206.4)
Proceeds from the sales of available-for-sale securities 12.4 19.5
Proceeds from sales of exploration and production assets 16.9 14.0
Other investing activities 9.9 16.1
----- ------
Net Cash Used in Investing Activities (117.7) (156.8)
------ ------
Financing Activities
Increase (decrease) in short-term borrowings (16.4) 17.0
Issuance of long-term debt - 24.2
Purchase of treasury stock (49.1) (108.1)
Dividends paid (41.5) (42.2)
Repayment of long-term debt (158.5) (35.8)
Other financing activities 7.9 7.7
----- ------
Net Cash Used in Financing Activities (257.6) (137.2)
------ ------
Net Increase (Decrease) in Cash and Cash Equivalents (44.2) (3.7)
Cash and Cash Equivalents at Beginning of Period 120.9 87.3
----- ------
Cash and Cash Equivalents at End of Period $76.7 $ 83.6
===== ======
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
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.
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (FAS) No. 130, "Reporting
Comprehensive Income," effective for fiscal years beginning after December
15, 1997, and FAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," effective for financial statements for periods
beginning after December 15, 1997. The company plans to adopt both
accounting standards as of January 1, 1998.
FAS No. 130 requires that all items required to be recognized under
accounting standards as components of comprehensive income be reported as a
part of the basic financial statements. FAS No. 131 establishes standards
for reporting information about operating segments in annual financial
statements and requires selected information about operating segments in
interim financial reports issued to shareholders. The company expects
adoption of the new standards will not materially affect the company's
reporting practices.
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 48,030,170 and 50,060,745 for the three
months ended June 30, 1997 and 1996, respectively, and 48,167,812 and
50,453,791 for the six months ended June 30, 1997 and 1996, respectively.
In March 1997, the FASB issued FAS No. 128, "Earnings per Share," which
requires the calculation of basic and diluted earnings per share (EPS).
Basic EPS includes no dilution and is computed by dividing income available
to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share is computed by
dividing net income by the weighted average number of shares of common stock
and common stock equivalents. The statement is effective for periods ending
after December 15, 1997, and does not allow for early adoption. Restatement
of prior years' EPS is required upon adoption. Had the company been required
to adopt SFAS 128 currently, basic earnings per share for the three months
ended June 30, 1997 and 1996, would have been $.87 and $1.01, respectively,
and for the six months ended June 30, 1997 and 1996, would have been $2.33
and $1.96, respectively. Diluted earnings per share for both the three
months and six months ended June 30, 1997 and 1996, would not have differed
materially from basic EPS. The company expects the effect of the new
standard on its EPS in future periods will be immaterial.
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) 1997 1996
-------------------
Income taxes $13.8 $14.4
Interest 28.2 30.9
D. The company held U.S. government obligations and equity securities
considered to be available for sale at June 30, 1997 and December 31, 1996.
These financial instruments are carried in the Consolidated Balance Sheet at
fair value, which is based on quoted market prices. The company held no
securities classified as held to maturity or trading during the respective
periods. At June 30, 1997 and December 31, 1996, these financial instruments
were as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------------------------- ------------------------------
Gross Unrealized
Fair Holding Gains Fair Gross Unrealized
(Millions of dollars) Value Cost (Losses) Value Cost Holding Gains
<S> <C> <C> <C> <C> <C> <C>
Equity Securities $ 8.1 $ 1.0 $7.1 $21.9 $ 3.1 $18.8
U.S. Government Obligations
Maturing within one year 9.4 9.4 - 25.7 25.7 -
Maturing between one
and four years 16.4 16.5 (.1) - - -
----- ------ ----- ----- ----- -----
Total $33.9 $26.9 $7.0 $47.6 $28.8 $18.8
===== ===== ==== ===== ===== =====
</TABLE>
During 1997, the company sold equity securities considered to be available
for sale. Proceeds from the sale during the 1997 second quarter totaled $7.7
million, resulting in a realized gain of $6.6 million before income taxes.
Proceeds from the sale for the first six months of 1997 totaled $12.4
million, resulting in a realized gain of $10.7 million before income taxes.
The average cost of the securities was used in computing the realized gain.
During 1997, the company donated 50,000 shares of its available-for-sale
securities to the Kerr-McGee Foundation Corporation, a tax-exempt entity
whose purpose is to contribute to not-for-profit organizations. The fair
value of these donated shares totaled $3.2 million, which includes
appreciation of $2.8 million before income taxes.
The change in the equity component for unrealized holding gains and losses,
net of income taxes, for the first six months of 1997 and 1996 was as
follows:
Six Months Ended
June 30,
(Millions of dollars) 1997 1996
--------------------
Balance, January 1 $11.6 $25.9
Net realized gains (2.5) (5.6)
Net unrealized holding gains .5 4.0
----- -----
Balance, March 31 9.6 24.3
Net realized gains (4.3) (5.5)
Net appreciation of donated securities (1.7) -
Net unrealized holding gains .8 1.2
----- -----
Balance, June 30 $ 4.4 $20.0
===== =====
E. Investments in equity affiliates totaled $256.3 million at June 30, 1997,
and $243.7 million at December 31, 1996. Equity income related to the
investments and included in Other Income in the Consolidated Statement of
Income totaled $6.5 million and $2.3 million for the three months ended June
30, 1997 and 1996, respectively, and $16.0 million and $3.5 million for the
six months ended June 30, 1997 and 1996, respectively.
F. CONTINGENCIES
WEST CHICAGO -
In 1973, a wholly owned subsidiary, Kerr-McGee Chemical Corporation (KMCC),
closed the facility located in West Chicago, Illinois, that processed
thorium ores. Operations resulted in some low-level radioactive
contamination at the site, and in 1979, KMCC filed a plan with the Nuclear
Regulatory Commission (NRC) to decommission the facility. The NRC
transferred jurisdiction of this site to the State of Illinois (the State)
in 1990. The following discusses the current status of various matters
associated with this closed facility.
Decommissioning - In 1994, KMCC, the City of West Chicago (the City), and
the State reached agreement on Phase I of the decommissioning plan for the
closed West Chicago facility. Pursuant to the Phase I agreement, KMCC began
shipping material from the site to a licensed permanent disposal facility in
Utah during 1994.
In February 1997, KMCC executed an agreement with the City as to the terms
and conditions for completing the final phase of decommissioning work, the
bulk of which is expected to be completed about four to six years after
receiving the necessary license amendment. The State has indicated approval
of this agreement, and KMCC expects the State to issue a license amendment
that will enable KMCC to proceed with the final phase of decommissioning
work.
In 1992, the State enacted legislation imposing an annual storage fee equal
to $2 per cubic foot of byproduct material located at the closed facility.
The storage fee cannot exceed $26 million per year, and any storage fee
payments are required to be reimbursed to KMCC as decommissioning costs are
incurred. In June 1997, the legislation was amended to provide that future
storage fee obligations are to be offset against decommissioning costs
incurred but not yet reimbursed. Prior to the 1997 legislative amendments,
KMCC had been fully reimbursed for all storage fee payments previously
assessed and paid. As a result of the 1997 legislative amendments and as
unreimbursed decommissioning costs exceeded storage assessments, KMCC was
not required to pay the balance of the storage fee owed for 1997, and KMCC
does not expect to be required to make future storage fee payments.
Pursuant to Title X of the Energy Policy Act of 1992 (Title X), the United
States Department of Energy is obligated to reimburse KMCC for certain
decommissioning costs. Title X was amended in 1996 to increase the amount
authorized to $65 million plus inflation adjustments. Through the second
quarter of 1997, KMCC has been reimbursed approximately $28 million under
Title X. At June 30, 1997, the remaining reserves to decommission the site
totaled $168 million (without regard to any further recovery under Title X),
payable over the course of the decommissioning work.
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 unilateral administrative orders for two of these areas (referred
to as the residential area and Reed-Keppler Park), which require KMCC to
conduct removal actions to excavate contaminated soils and ship the soils
elsewhere for disposal. At June 30, 1997, the remaining reserves to clean up
the residential area and Reed-Keppler Park totaled $18 million. Without
waiving any of its rights or defenses, KMCC has begun the cleanup of these
two sites and anticipates completing the work within four years.
Judicial Proceedings - In December 1996, a lawsuit was filed against the
company and its subsidiary, KMCC, in Illinois state court on behalf of a
purported class of present and former West Chicago residents. The lawsuit
seeks damages for alleged diminution in property values and the
establishment of a medical monitoring fund to benefit those allegedly
exposed to thorium wastes originating from the former facility. The case
recently has been removed to federal court and is being vigorously defended.
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, 1997, the remaining reserves provided for the cost
to investigate and/or remediate all presently identified sites of former or
current operations totaled $277 million, which included $186 million for the
former West Chicago facility, the residential area and Reed-Keppler Park.
The ultimate costs to decommission these sites are difficult to estimate
because of the numerous contingencies. Actual costs could differ from those
currently estimated as information becomes available for sites that are not
now included in the reserve, if contamination is not as expected, or field
conditions or other variables differ significantly from those that are now
assumed. Actual costs will be reduced by the amounts recoverable under Title
X and other government programs. Expenditures from inception through June
30, 1997, totaled $372 million for currently known sites.
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 1997 Results with 1996 Results
CONSOLIDATED OPERATIONS
Second-quarter 1997 net income totaled $41.6 million, compared with 1996
second-quarter net income of $50.7 million. Excluding unusual items, net income
was $31.1 million in the 1997 second quarter, compared with $45.4 million in the
same 1996 period. For the first six months of 1997, net income was $111.8
million, compared with $98.6 million in the same 1996 period. Excluding unusual
items, net income for the first six months of 1997 totaled $99 million, compared
with $94.3 million in 1996.
Operating profit decreased 27% in the 1997 second quarter, compared with the
same 1996 period due to lower results from all three of the company's business
units. Operating profit for the first six months of 1997 declined 5% compared
with the same 1996 period due to lower results from chemical and coal
operations, partially offset by improved results from the exploration and
production unit. The decline in operating profit for both periods was due
primarily to the lower production resulting from an underground ignition at one
of the company's coal mines (full production resumed in mid-July), lower coal
sales prices, lower crude oil and natural gas sales volumes, and lower sales
prices and higher production costs for titanium dioxide pigment, partially
offset by higher natural gas sales prices, lower exploration expense, lower
operating expense for the exploration and production unit, and higher pigment
sales volumes. Second-quarter 1997 nonoperating expense was $.6 million,
compared with $9.8 million for the 1996 quarter. For the first six months of
1997, nonoperating expense was $.4 million, compared with $25.1 million for the
same 1996 period. The decrease in both periods was due primarily to provisions
for settled and pending litigation in 1996, lower environmental provisions,
higher equity income, and lower interest expense, partially offset by lower
insurance settlements of certain claims related to environmental sites.
The provision for income taxes was $17.9 million and $48 million for the second
quarter and first six months of 1997, respectively, compared with $22.2 million
and $44.3 million for the respective 1996 periods. The decrease for the second
quarter was due to lower pretax income. The increase for the six months was due
to higher pretax income.
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 1997, compared with the same period
last year.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(Millions of dollars) 1997 1996 1997 1996
-------------------- --------------------
<S> <C> <C> <C> <C>
Sales
Exploration and production $146.5 $205.6 $346.8 $395.4
Chemicals 189.0 173.2 372.4 348.4
Coal 76.2 91.3 160.4 181.0
Other - .1 .1 .2
------ ------ ------ ------
Total $411.7 $470.2 $879.7 $925.0
====== ====== ====== ======
Operating Profit (Loss)
Exploration and production $ 32.5 $ 36.1 $100.5 $ 70.7
Chemicals 21.7 26.1 36.9 56.7
Coal 5.7 18.2 21.0 36.2
Other .2 2.3 1.8 4.4
------ ------ ------ ------
Total 60.1 82.7 160.2 168.0
Nonoperating Income (Expense) (.6) (9.8) (.4) (25.1)
------ ------ ------ ------
Income before Income Taxes 59.5 72.9 159.8 142.9
Provision for Income Taxes 17.9 22.2 48.0 44.3
------ ------ ------ ------
Net Income $ 41.6 $ 50.7 $111.8 $ 98.6
====== ====== ====== ======
</TABLE>
Exploration and Production -
Operating profit for the second quarter of 1997 was $32.5 million, compared with
$36.1 million for the same 1996 period. Operating profit for the first six
months of 1997 and 1996 was $100.5 million and $70.7 million, respectively.
Operating profit for the second quarter of 1997 decreased due to lower crude oil
and natural gas sales volumes and lower crude oil sales prices, partially offset
by lower operating and exploration expenses and higher natural gas sales prices.
The increase in operating profit for the first six months of 1997 was due to
higher crude oil and natural gas sales prices and lower operating and
exploration expenses, partially offset by lower crude oil and natural gas sales
volumes.
Revenues were $146.5 million and $205.6 million for the three months ended June
30, 1997 and 1996, respectively, and $346.8 million and $395.4 million for the
first six months of 1997 and 1996, 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 1997 and 1996.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, Increase June 30, Increase
1997 1996 (Decrease) 1997 1996 (Decrease)
------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Crude oil sales
(thousands of bbls/day)
United States 25.1 27.3 (8) 25.2 27.2 (7)
North Sea 22.6 29.2 (23) 24.3 31.5 (23)
China 10.2 4.7 117 8.5 2.3 270
Canada - 3.5 NM - 3.9 NM
----- ------ ----- ------
Total proprietary sales 57.9 64.7 (11) 58.0 64.9 (11)
Proportionate interest in
equity affiliate's sales 7.4 - NM 7.4 - NM
----- ------ ----- ------
Total 65.3 64.7 1 65.4 64.9 1
===== ====== ===== ======
Average crude oil sales price
(per barrel)
United States $17.48 $18.76 (7) $19.19 $17.55 9
North Sea 17.19 18.69 (8) 19.49 17.69 10
China 16.52 18.48 (11) 18.16 18.48 (2)
Canada - 19.16 NM - 16.75 NM
Average $17.21 $18.73 (8) $19.16 $17.61 9
Natural gas sold
(MMCF/day)
United States 163 198 (18) 173 193 (10)
North Sea 28 28 - 31 32 (3)
Canada - 30 NM - 32 NM
----- ------ ----- ------
Total proprietary sales 191 256 (25) 204 257 (21)
Proportionate interest in
equity affiliate's sales 59 - NM 59 - NM
----- ------ ----- ------
Total 250 256 (2) 263 257 2
===== ====== ===== ======
Average natural gas sales price
(per MCF)
United States $2.11 $1.88 12 $2.47 $1.90 30
North Sea 2.26 2.33 (3) 2.65 2.41 10
Canada - 1.04 NM - 1.07 NM
Average $2.13 $1.83 16 $2.49 $1.86 34
</TABLE>
Chemicals -
Second-quarter 1997 operating profit totaled $21.7 million on revenues of $189
million, compared with operating profit of $26.1 million on revenues of $173.2
million for the 1996 quarter. For the first six months of 1997 and 1996,
operating profit was $36.9 million and $56.7 million, respectively, on revenues
of $372.4 million and $348.4 million, respectively. Revenues for the second
quarter and the first six months of 1997 increased due to higher pigment sales
volumes, partially offset by lower pigment sales prices. Operating profit for
both 1997 periods decreased due to lower pigment sales prices, and higher
operating expense for pigment operations partially offset by higher pigment
sales volumes.
Coal -
Second-quarter 1997 operating profit was $5.7 million, compared with $18.2
million for the same 1996 quarter. For the first six months of 1997, operating
profit was $21 million, compared with $36.2 million last year. Revenues were
$76.2 million and $91.3 million for the second quarter of 1997 and 1996,
respectively, and $160.4 million and $181 million for the first six months of
1997 and 1996, respectively. Revenues for the second quarter and the first six
months of 1997 declined primarily due to lower sales volumes. Operating profit
decreased for both 1997 periods primarily due to the lower revenues and higher
per-unit production costs that resulted from an underground ignition at one of
the company's mines.
Financial Condition
At June 30, 1997, the company's net working capital position was $139.3 million,
compared with $319.9 million at December 31, 1996. The current ratio was 1.3 to
1 at both June 30, 1997, and June 30, 1996, compared with 1.7 to 1 at December
31, 1996. The company's percentage of total debt to total capitalization was 26%
at June 30, 1997, compared with 35% at June 30, 1996, and 33% at December 31,
1996.
The company had unused lines of credit and revolving credit facilities of $604
million at June 30, 1997. Of this amount, $255 million and $265 million can be
used to support commercial paper borrowings of Kerr-McGee Credit Corporation and
Kerr-McGee (U.K.) PLC, respectively.
Cash capital expenditures for the first six months of 1997 totaled $156.9
million, compared with $206.4 million for the same 1996 period. Exploration and
production expenditures, principally in the Gulf of Mexico, the North Sea, and
offshore China, were 53% of the total. Chemical expenditures were 33% 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 borrowing.
During the 1997 second quarter, the company purchased 254,000 shares of its
stock at a cost of $16 million. Since initiation of the stock repurchase program
in October 1995 through June 30, 1997, 4.7 million shares have been purchased at
a cost of $291 million.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
27.0 Financial Data Schedule
(b) Reports on Form 8-K
None
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, 1997 By: (Deborah A. Kitchens)
--------------- ---------------------
Deborah A. Kitchens
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, 1997, and the Consolidated Statement of
Income for the period ending March 31, 1997, and is qualified in its entirety by
reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 76700
<SECURITIES> 0
<RECEIVABLES> 273500
<ALLOWANCES> 0
<INVENTORY> 167100
<CURRENT-ASSETS> 588800
<PP&E> 4488200
<DEPRECIATION> 2550500
<TOTAL-ASSETS> 2923900
<CURRENT-LIABILITIES> 449500
<BONDS> 0
0
0
<COMMON> 54000
<OTHER-SE> 1352900
<TOTAL-LIABILITY-AND-EQUITY> 2923900
<SALES> 879700
<TOTAL-REVENUES> 879700
<CGS> 499600
<TOTAL-COSTS> 767100
<OTHER-EXPENSES> (47200)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22500
<INCOME-PRETAX> 159800
<INCOME-TAX> 48000
<INCOME-CONTINUING> 111800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111800
<EPS-PRIMARY> 2.32
<EPS-DILUTED> 0
</TABLE>
