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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 No Fee Required
For the fiscal year ended December 31, 1996 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 No Fee Required
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)
Registrant's telephone number, including area code: (312)856-6111
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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 the 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. Number of shares outstanding
as of March 21, 1997, was 100 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1996 Annual Report on Form 10-K of Amoco Corporation
Registrant meets the conditions set forth in General
Instructions J(1)(a) and (b) of Form 10-K and is therefore filing
this form with reduced disclosure format.
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AMOCO COMPANY
PART I
Items 1. and 2. Business and Properties
Amoco Company, a Delaware corporation (the "Company"), the
principal wholly owned subsidiary of Amoco Corporation, an
Indiana corporation ("Amoco"), functions as the holding company
for substantially all of Amoco's petroleum and chemical
operations, except Canadian petroleum operations and selected
other activities. Amoco has guaranteed all presently outstanding
public debt obligations of Amoco Company. The principal wholly
owned subsidiaries of the Company 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.
Since the Company's operations are similar to those of
Amoco, except for Canadian petroleum operations and selected
other activities, the information contained in Items 1. and 2.
"Business and Properties" of Amoco Corporation's 1996 Annual
Report on Form 10-K is incorporated herein by reference.
Information related to Canadian petroleum operations is
identified separately therein and is not incorporated herein.
Item 3. Legal Proceedings
The information required by this item is incorporated by
reference to Item 3 of Amoco Corporation's 1996 Annual Report on
Form 10-K.
Item 4. Submission of Matters to a Vote of Security Holders
Not required.
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_________________
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters
All of the common stock of the registrant is owned by its
parent company; therefore, there is no market for such stock.
Item 6. Selected Financial Data
Not required.
Item 7. Management's Narrative Analysis of Results of Operations
Results of Operations
1996 Compared With 1995
The Company earned $2,402 million in 1996 compared with
$1,798 million in 1995. Benefiting 1996 earnings was a third-
quarter gain of $97 million from the sale of Amoco's polystyrene
foam products business, and a fourth-quarter gain of $90 million
from the drawdown of inventories valued under the last-in first-
out ("LIFO") method. Adversely affecting 1995 earnings were non-
cash charges of $287 million associated with the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of". Also included in 1995 earnings
was an $83 million gain related to the sale of Amoco Motor Club.
Adjusting both years for special items, 1996 earnings were
$2,215 million compared with 1995 earnings of $2,002 million. The
increase in 1996 results reflected an increase in exploration and
production earnings primarily driven by higher crude oil and
natural gas prices and an increase in worldwide natural gas
production. Offsetting this increase were lower chemical and
petroleum product results, primarily reflecting lower margins.
Sales and other operating revenues totaled $28.7 billion for
1996, an increase of 17 percent over the $24.4 billion recorded
in 1995. Refined product revenues increased due to higher U.S.
gasoline prices and sales volumes. Crude oil and natural gas
revenues increased as a result of higher prices. Chemical
revenues declined slightly reflecting lower prices and
divestments offset by higher sales volumes associated with
capacity additions and acquisitions.
Total costs and expenses increased 13 percent in 1996.
Purchased crude oil, natural gas, petroleum products and
merchandise costs increased 26 percent due to higher crude oil
and natural gas prices and volumes.
Selling and administrative expenses for 1996 increased by
$191 million over 1995. Included in selling and administrative
expenses was unfavorable currency effects of $73 million before
tax in 1996 compared with favorable currency effects of $17
million before tax in 1995.
Depreciation, depletion, amortization and retirements and
abandonments ("DD&A") decreased $318 million compared with 1995.
Included in 1995 DD&A were impairment charges of $441 million
associated with the adoption of SFAS No. 121.
Interest expense other than affiliates decreased $127
million in 1996, reflecting lower interest related to revised
estimates of tax obligations.
Liquidity and Capital Resources
Cash flows from operating activities totaled $3.5 billion in
1996, compared with $3.7 billion in 1995. Working capital totaled
$1,435 million at December 31, 1996, compared with $725 million
at December 31, 1995. The Company's current ratio was 1.29 to 1
at year-end 1996, compared with 1.16 to 1 at year-end 1995. As a
matter of policy, Amoco 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.
Debt to debt-plus-equity ratio on outstanding public
obligations was 17.4 percent at December 31, 1996, compared with
20 percent at December 31, 1995. Including debt with affiliates,
the ratio was 36.8 at December 31, 1996, and 40.7 percent at year-
end 1995.
The Company believes that its strong financial position will
permit the financing of business needs and opportunities as they
arise. To maintain flexibility, a shelf registration statement
for $500 million in debt securities remains on file with the
Securities and Exchange Commission to permit ready access to
capital markets.
Amoco Corporation and Amoco Company guarantee the notes and
debentures of Amoco Canada Petroleum Company Ltd. and Amoco
Argentina Oil Company ("Amoco Argentina"). In 1995, Amoco
Argentina, an indirect wholly owned subsidiary of the Company,
filed a shelf registration with the SEC for $200 million in debt
securities, of which $100 million in debt securities were
subsequently issued. In early 1997, the $100 million remaining
under this registration was issued.
Proceeds from dispositions of property and other assets
included $310 million received from the sale of Amoco Foam
Company to a unit of Tenneco Inc.
On March 1, 1996, Albemarle Corporation's ("Albemarle")
alpha-olefins, poly alpha olefins and synthetics alcohol
businesses were purchased for $535 million. The purchase involved
about 550 employees and assets in Texas and Belgium.
Capital and exploration expenditures, excluding the
Albemarle acquisition, totaled $3,994 million for 1996 compared
with $3,436 million spent during 1995. The increase over 1995
reflected planned increases in spending in growth areas. The
majority of spending occurred in exploration and production
operations.
Investments in affiliates totaled $1,464 million at December
31, 1996. The investments reflect the Company's remaining
interest in certain European chemical operations, of which 95
percent ownership was transferred to Amoco Corporation in 1994.
Also reflected were the Company's purchases of Amoco
Corporation's common stock.
The following table summarizes selected liquidity
information for the last three years as of December 31:
1996 1995 1994
Debt to debt-plus-equity
ratio on outstanding
public debt obligations ... 17.4 20.0 18.8
Debt to debt-plus-
equity ratio including
debt with affiliates ...... 36.8 40.7 39.6
Current ratio ............. 1.29 1.16 1.30
Ratio of earnings to
fixed charges* ............ 14.2 11.6 20.4
* Earnings consist of income before income taxes and fixed
charges; fixed charges include interest on outstanding public
debt obligations, rental expense representative of an interest
factor, and adjustments for certain companies accounted for by
the equity method.
Including debt with affiliates, the ratio of earnings to fixed
charges was 5.5 as of December 31, 1996, 4.4 as of December 31,
1995, and 13.0 as of December 31, 1994.
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Item 8. Financial Statements and Supplemental Information
Index to Financial Statements and Supplemental Information
Page
Financial Statements:
Basis of Financial Statement Preparation ...... 6
Condensed Consolidated Statement of Income .... 7
Condensed Consolidated Statement of
Financial Position .......................... 8
Condensed Consolidated Statement of Cash Flows 9
Supplemental Information:
Supplemental Oil and Gas Exploration and
Production Activities ....................... 10
Quarterly Financial Data ...................... 10
Separate financial statements 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.
Financial Statements
Basis of Financial Statement Preparation
The Company is a wholly owned subsidiary of Amoco and its
presently outstanding public debt securities are guaranteed by
Amoco. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 53, summarized financial data of the
Company appear in a note to Amoco's 1996 audited consolidated
financial statements. Such financial statements, together with
the Report of Independent Accountants thereon of Amoco's 1996
Annual Report on Form 10-K are incorporated herein by reference.
The unaudited condensed financial statements of the Company
contained herein do not include all information and footnotes
necessary for a complete presentation of results of operations
and financial position in conformity with generally accepted
accounting principles and should be read in conjunction with
Amoco's audited consolidated financial statements.
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AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31,
1996 1995 1994
(millions of dollars)
Revenues:
Sales and other operating
revenues ............... $28,669 $24,404 $23,619
Consumer excise taxes .... 3,386 3,339 3,409
Other income ............. 574 596 813
Total revenues ......... 32,629 28,339 27,841
Costs and Expenses:
Purchased crude oil,
natural gas, petroleum
products and merchandise 16,067 12,778 12,330
Operating expenses ....... 4,091 3,991 4,190
Petroleum exploration
expenses, including
exploratory dry holes .. 548 498 514
Selling and administrative
expenses ............... 1,909 1,718 1,901
Taxes other than income
taxes .................. 4,129 3,954 4,087
Depreciation, depletion,
amortization, and
retirements and
abandonments ........... 1,986 2,304 1,894
Interest expense:
Affiliates.............. 496 491 86
Other................... 53 180 151
Net income applicable to
Minority interest....... 6 5 -
Total costs and expenses 29,285 25,919 25,153
Income before income taxes . 3,344 2,420 2,688
Income taxes ............... 942 622 810
Net income ................. $ 2,402 $ 1,798 $ 1,878
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AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31,
1996 1995
ASSETS (millions of dollars)
Current Assets:
Cash ................................... $ 222 $ 145
Marketable securities--at cost ......... 767 855
Accounts and notes receivable (less
allowances of $14 at December 31,
1996, and $12 at December 31, 1995) .. 3,899 2,744
Inventories ............................ 820 870
Prepaid expenses and income taxes ...... 653 689
Total current assets ................. 6,361 5,303
Investments and Other Assets:
Affiliates ............................. 1,464 1,428
Other .................................. 1,376 1,063
2,840 2,491
Properties--at cost, less accumulated
depreciation, depletion and amorti-
zation of $24,151 at December 31, 1996,
and $23,337 at December 31, 1995 (The
successful efforts method of accounting
is followed for costs incurred in oil
and gas producing activities) .......... 20,007 18,532
Total assets ......................... $29,208 $26,326
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current portion of long-term obligations $ 74 $ 196
Short-term obligations ................. 442 266
Accounts payable ....................... 2,663 2,496
Accrued liabilities .................... 916 948
Taxes payable (including income taxes) . 831 672
Total current liabilities ............ 4,926 4,578
Long-Term Obligations:
Affiliate debt ......................... 4,731 4,608
Other debt ............................. 2,190 2,177
Capitalized leases ..................... 76 -
6,997 6,785
Deferred Credits and Other Non-Current Liabilities:
Income taxes ........................... 2,592 2,502
Other .................................. 1,932 1,895
4,524 4,397
Minority Interest ...................... 131 110
Shareholder's Equity ................... 12,630 10,456
Total liabilities and shareholder's
equity ............................. $29,208 $26,326
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AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
1996 1995 1994
(millions of dollars)
Cash Flows From Operating Activities:
Net income ......................... $ 2,402 $ 1,798 $ 1,878
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion,
amortization, and retirements
and abandonments ................. 1,986 2,304 1,894
(Increase) decrease in receivables . (1,290) 142 (361)
Increase in payables
and accrued liabilities .......... 392 56 553
Other .............................. 11 (575) 44
Net cash provided by operating
activities ..................... 3,501 3,725 4,008
Cash Flows From Investing Activities:
Capital expenditures ............... (3,351) (2,938) (2,131)
Proceeds from dispositions of
property and other assets ........ 604 180 316
Other .............................. (731) (738) (145)
Net cash used in investing
activities ..................... (3,478) (3,496) (1,960)
Cash Flows From Financing Activities:
New long-term obligations .......... 265 412 118
Repayment of long-term obligations . (277) (144) (133)
Distributions to Amoco Corporation . (198) (989) (837)
Issuance of preferred stock by
affiliate ........................ - 100 -
Increase (decrease) in short-term
obligations ...................... 176 154 (540)
Net cash used in financing
activities ..................... (34) (467) (1,392)
(Decrease) increase in Cash and
Marketable Securities .............. (11) (238) 656
Cash and Marketable Securities--
Beginning of Year .................. 1,000 1,238 582
Cash and Marketable Securities--
End of Year ........................ $ 989 $ 1,000 $ 1,238
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Supplemental Information
1. Supplemental Oil and Gas Exploration and Production
Activities
The supplemental information about oil and gas exploration
and production activities for the Company is essentially the same
as reported by Amoco, if Canadian exploration and production
information is excluded. Therefore, the information with respect
to supplemental oil and gas exploration and production activities
is incorporated by reference to Amoco Corporation's 1996 Annual
Report on Form 10-K. Information related to Canadian petroleum
operations is identified separately therein and is not
incorporated herein.
2. Quarterly Financial Data
Summarized quarterly financial data for the years ended
December 31, 1996 and 1995 are as follows:
Revenues Operating Profit* Net Income*
1996 1995 1996 1995 1996 1995
First ... $7,404 $6,739 $ 899 $ 679 $ 598 $ 446
Second .. $8,026 $7,195 $ 803 $ 810 $ 510 $ 502
Third ... $8,272 $7,062 $ 908 $ 926 $ 566 $ 606
Fourth .. $8,927 $7,343 $1,125 $ 368 $ 728 $ 244
* Net income in the fourth quarter of 1996 included a gain of $90
million related to LIFO inventory levels. Third-quarter 1996
results included a gain on the sale of Amoco's polystyrene foam
products business of $97 million. Net income in the fourth
quarter of 1995 included charges of $287 million related to
impairment of long-lived assets and a gain of $83 million on the
sale of Amoco Motor Club.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Not required.
Item 11. Executive Compensation
Not required.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Not required.
Item 13. Certain Relationships and Related Transactions
Not required.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) 1 and 2.The financial statements, supplemental financial
information and financial statement schedules,
together with the report thereon of Price
Waterhouse LLP dated February 26, 1997, appearing
in Amoco Corporation's 1996 Annual Report on Form
10-K are incorporated by reference in Item 8 of
this Form 10-K. Information related to Canadian
petroleum operations is identified separately
therein and is not incorporated herein. With the
exception of the aforementioned information and the
information incorporated in Items 1, 2, and 3
hereof, Amoco Corporation's 1996 Annual Report on
Form 10-K is not deemed to be filed as part of this
report.
3. Exhibits - See attached Index to Exhibits.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
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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 21st day of March, 1997.
Amoco Company
(Registrant)
JOHN L. CARL
John L. Carl
(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 21, 1997.
Signatures Titles
JOHN L. CARL President and Director
John L. Carl (Principal Executive Officer)
W. R. HUTCHINSON Vice President, Treasurer, and
W. R. Hutchinson Director
(Principal Financial Officer)
JUDITH G. BOYNTON Vice President and Controller
Judith G. Boynton (Principal Accounting Officer)
DANIEL B. PINKERT Vice President and Director
Daniel B. Pinkert
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AMOCO COMPANY
INDEX TO EXHIBITS
Exhibit
Number Exhibit
3(a) The Certificate of Incorporation of the registrant
is incorporated herein by reference to Exhibit 3(a)
to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1989.
3(b) By-laws of the registrant are incorporated herein
by reference to Exhibit 3(b) to the registrant's
Annual Report on Form 10-K for the year ended
December 31, 1989.
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 None.
11 None required.
12 Statement Setting Forth Computation of
Ratio of Earnings to Fixed Charges for the
five years ended December 31, 1996. *
13 Amoco Corporation's 1996 Annual Report on
Form 10-K is incorporated herein by reference
as described in this 1996 Form 10-K. *
16 None.
18 None.
19 None.
21 None required.
23 None required.
24 None.
27 Financial Data Schedule for the year
ended December 31, 1996. *
28 None.
____________
* Included herein.
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EXHIBIT 12
AMOCO COMPANY
STATEMENT SETTING FORTH COMPUTATION OF RATIO OF
EARNINGS TO FIXED CHARGES
(millions of dollars, except ratios)
Year Ended December 31,
1996 1995 1994 1993 1992
Determination of Income:
Consolidated earnings
before income taxes
and minority interest.. $3,351 $2,425 $2,688 $2,427 $1,823
Fixed charges expensed by
consolidated companies.. 251 233 140 193 238
Adjustments for certain
companies accounted for
by the equity method... 76 10 7 9 18
Adjusted earnings plus
fixed charges........... $3,678 $2,668 $2,835 $2,629 $2,079
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized)... $ 164 $ 152 $ 127 $ 162 $ 219
Consolidated rental
expense representative
of an interest factor... 88 71 7 31 20
Adjustments for certain
companies accounted for
by the equity method.... 8 6 5 6 12
Total fixed charges...... $ 260 $ 229 $ 139 $ 199 $ 251
Ratio of earnings to
fixed charges........... 14.2* 11.6* 20.4* 13.2 8.3
_____________
*Based on outstanding public debt obligations. Including debt
with affiliates, the ratio would have been 5.5 as of December 31,
1996, 4.4 as of December 31, 1995, and 13.0 as of December 31,
1994.
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<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>
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