<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 1-8888
AMOCO COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-3353184
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 EAST RANDOLPH DRIVE, CHICAGO, ILLINOIS 60601
(Address of principal executive offices) (Zip Code)
312-856-6111
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares outstanding as of September 30, 1997--100.
Registrant meets the conditions set forth in General Instructions
H(1)(a) and (b) of Form 10-Q and is therefore filing this form
with reduced disclosure format.
<PAGE>
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income
(millions of dollars)
Three Months Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Sales and other operating revenues $ 7,317 $ 7,149 $21,332 $20,729
Consumer excise taxes............. 894 868 2,577 2,531
Other income...................... 88 255 290 442
Total revenues.................. 8,299 8,272 24,199 23,702
Costs and Expenses:
Purchased crude oil, natural
gas, petroleum products and
merchandise..................... 4,094 4,157 11,914 11,642
Operating expenses................ 1,141 1,029 3,239 3,057
Petroleum exploration expenses,
including exploratory dry holes. 120 148 387 361
Selling and administrative
expenses........................ 409 433 1,267 1,369
Taxes other than income taxes..... 1,038 1,068 3,099 3,088
Depreciation, depletion, amorti-
zation, and retirements
and abandonments................ 479 498 1,415 1,442
Interest expense:
Affiliates...................... 128 131 379 376
Other........................... 81 16 172 57
Total costs and expenses...... 7,490 7,480 21,872 21,392
Income before income taxes.......... 809 792 2,327 2,310
Income taxes........................ 341 226 757 636
Net income.......................... $ 468 $ 566 $ 1,570 $ 1,674
<PAGE>
<PAGE>
Condensed Consolidated Statement of Financial Position
(millions of dollars)
Sept. 30, Dec. 31,
1997 1996
ASSETS
Current Assets:
Cash ......................................... $ 140 $ 222
Marketable securities--at cost................ 579 767
Accounts and notes receivable:
Affiliates.................................. 2,392 745
Other (less allowances of $15 at
September 30, 1997 and $14 at
December 31, 1996)........................ 3,037 3,154
Inventories................................... 960 820
Prepaid expenses, income taxes and other...... 884 653
Total current assets........................ 7,992 6,361
Investments and Other Assets:
Affiliates.................................... 1,410 1,464
Other......................................... 1,694 1,376
3,104 2,840
Properties--at cost, less accumulated
depreciation, depletion and amortization of
$24,979 at September 30, 1997, and $24,151 at
December 31, 1996 (The successful efforts
method of accounting is followed for costs
incurred in oil and gas producing activities). 20,647 20,007
Total assets........................... $31,743 $29,208
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current portion of long-term obligations...... $ 95 $ 74
Short-term obligations........................ 786 442
Accounts payable.............................. 2,149 2,663
Accrued liabilities........................... 923 916
Taxes payable (including income taxes)........ 900 831
Total current liabilities................... 4,853 4,926
Long-Term Obligations:
Affiliates.................................... 4,733 4,731
Other debt.................................... 2,936 2,190
Capitalized Leases............................ 89 76
7,758 6,997
Deferred Credits and Other Non-Current Liabilities:
Income taxes.................................. 2,856 2,592
Other......................................... 1,871 1,932
4,727 4,524
Minority Interest............................... 421 131
Shareholder's Equity............................ 13,984 12,630
Total liabilities and shareholder's equity.. $31,743 $29,208
<PAGE>
<PAGE>
Condensed Consolidated Statement of Cash Flows
(millions of dollars)
Nine Months Ended
September 30,
1997 1996
Cash Flows from Operating Activities:
Net income................................... $ 1,570 $ 1,674
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, amortization,
and retirements and abandonments......... 1,415 1,442
Other...................................... (2,028) (1,071)
Net cash provided by operating activities.. 957 2,045
Cash Flows from Investing Activities:
Capital expenditures......................... (2,032) (2,293)
Proceeds from dispositions of property and
other assets............................... 244 586
Net investments, advances and business
acquisitions............................... (587) (619)
Proceeds from sales of investments........... 77 -
Other........................................ 143 (2)
Net cash used in investing activities...... (2,155) (2,328)
Cash Flows from Financing Activities:
New long-term obligations.................... 993 85
Repayment of long-term obligations........... (273) (237)
Dividends paid............................... (136) -
Increase in short-term obligations........... 344 199
Net cash used in financing activities...... 928 47
Decrease in Cash and Marketable Securities..... (270) (236)
Cash and Marketable Securities-Beginning of
Period....................................... 989 1,000
Cash and Marketable Securities-End of Period... $ 719 $ 764
<PAGE>
<PAGE>
Basis of Financial Statement Preparation
Amoco Company (the "Company") is a wholly owned subsidiary of
Amoco Corporation, an Indiana corporation ("Amoco"), and is the
holding company for substantially all petroleum and chemical
operations except Amoco Canada Petroleum Company Ltd. ("Amoco
Canada") and selected other activities. Amoco guarantees the
public debt obligations of the Company. The Company and Amoco
guarantee the public notes and debentures of Amoco Canada and
Amoco Argentina Oil Company ("Amoco Argentina").
The condensed financial statements contained herein are unaudited
and have been prepared from the books and records of the Company.
In the opinion of management, the financial statements reflect
all adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of the results for the interim
periods. The condensed financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do
not include all information and notes necessary for a complete
presentation of results of operations, financial position and
cash flows in conformity with generally accepted accounting
principles.
Item 2. Management's Narrative Analysis of Results of Operations
Results of Operations
Net income for the third quarter of 1997 of $468 million compared
with $566 million for the third quarter 1996. Included in 1996
earnings was a $97 million after-tax gain on the sale of Amoco's
polystyrene foam products business. Excluding this gain, 1997
third-quarter earnings were the same as 1996 earnings. Favorably
affecting third-quarter earnings were stronger refining margins
offset by lower worldwide crude oil prices and lower U.S.
production volumes.
Net income for the first nine months of 1997 totaled $1,570
million slightly below 1996 after adjusting 1996 earnings for the
$97 million asset-sale gain. Favorably affecting 1997 earnings
were higher exploration and production results due to higher
natural gas prices, and improved refining operations. Offsetting
were lower chemical earnings compared to 1996, mainly as a result
of lower paraxylene margins.
Sales and other operating revenues totaled $7.3 billion for the
third quarter of 1997 and $21.3 billion for the first nine months
of 1997, approximately two percent and three percent higher,
respectively, than the comparable 1996 periods. The increase for
both periods was primarily attributable to higher prices for
natural gas and refined products.
The decline in other income for both year-to-date and third
quarter 1997 mainly reflected the absence of the 1996 gain on the
sale of the polystyrene foam products business.
Operating expenses for the third quarter and nine months of 1997
increased over the comparable 1996 periods, reflecting higher
refining maintenance expenses, primarily in the first quarter,
and higher U.S. production costs.
Third-quarter 1997 exploration expenses decreased $28 million to
$120 million reflecting lower dry hole costs worldwide. For the
first nine months of 1997, exploration expenses totaled $387
million, an increase of seven percent over 1996 year-to-date
expenses. Higher dry hole costs overseas were partially offset by
lower exploration expenses in the United States.
Selling and administrative expenses for the third quarter of 1997
were $409 million compared with $433 million for the similar 1996
period. Third-quarter 1997 expenses included favorable before-tax
currency effects of $17 million compared with unfavorable before-
tax currency effects of $1 million for the comparable 1996
period. Year-to-date selling and administrative expenses were
$1,267 million for 1997 compared to $1,369 million for 1996.
Reflected in year-to-date 1997 expenses were favorable before-tax
currency effects of $19 million compared with unfavorable before-
tax currency effects of $16 million for the comparable 1996
period.
Interest expense other than affiliates totaled $81 million and
$172 million for the third quarter and nine months of 1997,
respectively, compared with $16 million and $57 million for the
comparable 1996 periods. The increase reflected an increase in
long-term debt and associated interest expense on revised
estimates of litigation and tax obligations. Included in the
third quarter of 1996 was a reduction of interest expense on
revised estimates of tax obligations.
Outlook
The Company and the petroleum industry will continue to be
affected by the volatility of crude oil and natural gas prices.
Also, affecting chemicals and petroleum products activities is
the overall industry product supply and demand balance. Amoco's
future performance is expected to continue to be impacted by
ongoing cost reduction programs; the divestment of non-strategic
assets; application of new technologies; and new governmental
regulations.
The Company will pursue areas that capitalize on its natural gas
resources and continue to expand internationally. As announced in
June, Amoco plans to divest a number of its oil and gas
properties and royalty interests in the United States as part of
a major refocusing of its U.S. exploration and production
business. During the third quarter of 1997, Amoco had a sale
pending for the San Juan Basin properties in New Mexico. There
are three remaining packages of non-core U.S. crude oil and
natural gas properties expected to be sold by year-end 1997 or
early 1998. Amoco has also agreed to sell its intrastate pipeline
unit in Texas. The proceeds from the divestments will be invested
in more strategic areas.
Amoco's worldwide barrel-oil-equivalent production is expected to
increase from 1996 levels by 25 percent over the next five years,
with the largest increases expected to occur in the later years.
Production in 1997 is expected to decrease from year-end 1996,
with incremental production from the Gulf of Mexico, and
production from Venezuela, Colombia and Bolivia, being offset by
normal field declines and dispositions.
Amoco Argentina and Bridas Corporation ("Bridas") are in the
process of creating a jointly owned company called Pan American
Energy LLC. The new diversified enterprise will be formed,
pending definitive agreements, by contributing the respective
assets of Amoco and Bridas in the Southern Cone of South America
and will create the second largest producer of crude oil and
natural gas in Argentina. Amoco will hold a 60 percent interest
in the new venture.
Amoco also recently formed a limited partnership with YPF S.A.,
called Crescendo Resources L.P., to manage about one trillion
cubic feet of natural gas in the Texas Panhandle and western
Oklahoma. The combined resources are expected operate more
efficiently and allow the opportunity of sharing best practices
and technology of both partners.
Recently, Amoco announced a definitive agreement with Shell Oil
Company to build a natural gas processing plant in Mississippi to
handle anticipated production increases in the Gulf of Mexico.
In petroleum products, recent refinery operations have seen
improved margins over the last nine months. However, Amoco
anticipates a return to more historical levels in U.S. industry
refining margins in the long-term. Amoco will continue to pursue
additional cost reduction programs and improved asset
utilization. Amoco's marketing strategy will continue to
emphasize brand product quality and growth in its position as a
convenience retailer. Strategic alliances with such companies as
McDonald's Corporation and Femsa in Mexico are expected to
continue.
In chemicals, Amoco's overall strategy is to manage its portfolio
to optimize the quality of its businesses through acquisitions
and divestments, and selectively invest in local market growth
for existing businesses. While current industry excess purified
terephthalic acid ("PTA") capacity is putting downside pressure
on margins, long-term worldwide annual growth is expected to be
eight percent. Paraxylene ("PX") long-term annual growth is
expected to be seven percent. In order to meet expected growth in
PTA and PX, the Company is expanding its wholly owned and joint-
ventures operations. Amoco's naphthalene dicarboxylate ("NDC")
plant in Decatur, Alabama achieved full-scale production capacity
of 27,000 tons in the third quarter of 1997. Amoco plans on
expanding the capacity to between 40,000 and 50,000 tons by 1999.
Liquidity and Capital Resources
Cash flows from operating activities amounted to $957 million in
the first nine months of 1997 compared with $2,045 million in the
comparable 1996 period. Working capital totaled $3,139 million at
September 30, 1997, compared with $1,435 million at year-end
1996. The Company's current ratio was 1.65 to 1 at September 30,
1997 and 1.29 to 1 at year-end 1996. As a matter of policy, the
Company 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
Company has ready access to both short- and long-term debt
markets.
Long-term receivables and other assets at September 30, 1997,
included $271 million in restricted cash and investments
committed to the operatorship of a Bolivian oil and gas company,
Empresa Petrolera Chaco. Amoco completed the agreement for
operatorship and 50 percent ownership of Empresa Petrolera Chaco
in April 1997.
The Company's ratio of debt to debt-plus-equity (excluding debt
with affiliates) was 20.9 percent at September 30, 1997, compared
with 17.4 percent at year-end 1996. Including debt with
affiliates, the ratio was 37.2 percent at September 30, 1997, and
36.8 percent at year-end 1996. The ratio of earnings to fixed
charges on obligations, excluding debt with affiliates, was 11.8
to 1 for first nine months of 1997 compared with 14.2 to 1 for
the year ended December 31, 1996.
The Company believes that its strong financial position will
permit the financing of 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 Company the
flexibility to meet short-term working capital and other
temporary requirements. At September 30, 1997, bank lines of
credit available to support commercial paper borrowings amounted
to $500 million, all of which were supported by commitment fees.
The Company also may utilize its favorable access to long-term
debt markets to finance profitable growth opportunities and other
business needs. In early August 1997, Amoco Company issued $300
million of 10-year, 6.5% guaranteed notes. In October 1997, Amoco
Company issued $200 million of seven-year, 6.25% guaranteed
notes. The Company has a shelf registration statement covering an
additional $500 million of debt, guaranteed by Amoco.
Proceeds from dispositions of property and other assets for the
first nine months of 1996 included $310 million received from the
sale of Amoco's polystyrene foam products business.
Capital and exploration expenditures for the first nine months of
1997 totaled $2,419 million compared with $2,654 million for the
similar 1996 period. The capital and exploration expenditures for
the first nine months of 1996 exclude the purchase of Albemarle
Corporation's alpha-olefins, poly alpha-olefins and synthetic
alcohol businesses for $535 million.
The Company has provided in its accounts for the reasonably
estimable future costs of probable environmental remediation
obligations relating to various oil and gas operations,
refineries, marketing sites and chemical locations, including
multiparty sites at which the Company and certain of its
subsidiaries have been identified as potentially responsible
parties by the U.S. Environmental Protection Agency. Such
estimated costs will be refined over time as remedial
requirements and regulations become better defined. However, any
additional environmental costs cannot be reasonably estimated at
this time due to uncertainty of timing, the magnitude of
contamination, future technology, regulatory changes and other
factors. Although future costs could have a significant effect on
the results of operations in any one period, they are not
expected to be material in relation to the Company's liquidity or
consolidated financial position. In total, the accrued liability
represents a reasonable best estimate of the Company's
remediation liability.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995.
Statements in this report that are not historical facts,
including statements under the heading of "Outlook" and other
statements about industry and company growth, estimates of
expenditures and savings, and other trend projections are forward
looking statements. The 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 and pricing, political stability and economic
growth in relevant areas of the world, the Company's successful
execution of its internal performance plans, successful
partnering, actions of competitors, natural disasters and other
changes to business conditions.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the description of the challenge by the
Internal Revenue Service of certain foreign income taxes as
credits against Amoco's U.S. taxes that otherwise would have been
payable for the years 1980 through 1992 in Part I, Item 3 of the
Company's 1996 Form 10-K.
Eleven proceedings instituted by governmental authorities are
pending or known to be contemplated against the Company 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 the Company's liquidity, consolidated financial
position or results of operations. The Company estimates that in
the aggregate the monetary sanctions reasonably likely to be
imposed from these proceedings amount to approximately $7.3
million.
The Company has various other suits and claims pending against it
among which are several class actions for substantial monetary
damages which in the Company's opinion are not meritorious. While
it is impossible to estimate with certainty the ultimate legal
and financial liability in respect to these other suits and
claims, the Company believes that, while the aggregate amount
could be significant, it will not be material in relation to its
liquidity or its consolidated financial position.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Shown below is summarized financial information for the Company's
indirectly wholly owned subsidiary, Amoco Argentina.
Three Months Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(millions of dollars)
Revenues............. $ 74 $ 90 $ 227 $ 244
Net income........... $ 22 $ 34 $ 78 $ 90
Sept. Dec. 31,
30
1997 1996
(millions of dollars)
Current assets............... $ 50 $ 251
Total assets................. $ 463 $ 613
Current liabilities.......... $ 88 $ 87
Non-current liabilities...... $ 280 $ 237
Shareholder's equity......... $ 95 $ 289
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number
12 Statement Setting Forth Computation of Ratio
of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter
ended September 30, 1997.
<PAGE>
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Amoco Company
(Registrant)
Date: November 13, 1997
Judith G. Boynton
Judith G. Boynton
Vice President and Controller
(Duly Authorized and Chief
Accounting Officer)
<PAGE>
<PAGE>
EXHIBIT 12
AMOCO COMPANY
______________________
STATEMENT SETTING FORTH COMPUTATION OF RATIO OF
EARNINGS TO FIXED CHARGES
(millions of dollars, except ratios)
Nine
Months
Ended Year Ended December 31,
Sept. 30,
1997 1996 1995 1994 1993 1992
Determination of Income:
Consolidated earnings
before income taxes
and minority interest... $2,328 $3,351 $2,425 $2,688 $2,427 $1,823
Fixed charges expensed by
consolidated companies.. 201 251 233 140 193 238
Adjustments for certain
companies accounted for
by the equity method... 39 76 10 7 9 18
Adjusted earnings plus
fixed charges........... $2,568 $3,678 $2,668 $2,835 $2,629 $2,079
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized)... $ 147 $ 164 $ 152 $ 127 $ 162 $ 219
Consolidated rental
expense representative
of an interest factor... 65 88 71 7 31 20
Adjustments for certain
companies accounted for
by the equity method.... 6 8 6 5 6 12
Total fixed charges...... $ 218 $ 260 $ 229 $ 139 $ 199 $ 251
Ratio of earnings to
fixed charges........... 11.8* 14.2* 11.6* 20.4 13.2 8.3
*Based on debt obligations excluding debt with affiliates. Including
debt with affiliates, the ratio would have been 4.9 as of September 30,
1997, 5.5 as of December 31, 1996, and 4.4 as of December 31, 1995.
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Condensed Consolidated Statement of Income and the Condensed
Consolidated Statement of Financial Position and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000766916
<NAME> AMOCO COMPANY
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 140
<SECURITIES> 579
<RECEIVABLES> 5444
<ALLOWANCES> 15
<INVENTORY> 960
<CURRENT-ASSETS> 7992
<PP&E> 45626
<DEPRECIATION> 24979
<TOTAL-ASSETS> 31743
<CURRENT-LIABILITIES> 4853
<BONDS> 2936
0
0
<COMMON> 0
<OTHER-SE> 13984
<TOTAL-LIABILITY-AND-EQUITY> 31743
<SALES> 21332
<TOTAL-REVENUES> 24199
<CGS> 15540
<TOTAL-COSTS> 15540
<OTHER-EXPENSES> 4514
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172
<INCOME-PRETAX> 2327
<INCOME-TAX> 757
<INCOME-CONTINUING> 1570
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1570
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
