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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
For the fiscal year ended December 31, 1997 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 1-8888
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 20, 1998, was 100 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1997 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 1997 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 1997 Annual Report on
Form 10-K.
Item 4. Submission of Matters to a Vote of Security Holders
Not required.
_________________
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
1997 Compared With 1996
The Company earned $2,274 million in 1997 compared with
$2,402 million in 1996. Earnings in 1997 included $271 million of
net gains from asset dispositions, primarily the sale of non-core
oil and gas properties in the United States. Asset sales in the
United States, including the sale of a natural gas pipeline unit
in Texas, generated proceeds of about $1.2 billion. Additional
sales of U.S. oil and gas properties are expected to be completed
in 1998.
Benefiting 1996 earnings was a 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.
Adjusting both years for these items, 1997 earnings were
$2,003 million compared with 1996 earnings of $2,215 million.
Earnings in 1997 benefited from higher natural gas prices and
improved refining operations and petroleum product sales margins.
Also benefiting 1997 results were continued efficiencies accruing
from Amoco's Shared Services operations. Adversely affecting 1997
earnings were lower crude oil prices and lower production
volumes. Chemical earnings were below 1996 levels, as excess
industry capacity put downward pressure on sales prices and
margins, especially paraxylene.
Sales and other operating revenues totaled $28.5 billion for
1997, about the same as in 1996. Natural gas revenues increased
five percent primarily as the result of higher prices. Chemical
revenues increased by five percent, as higher sales volumes
associated with capacity additions and acquisitions more than
offset lower prices. Crude oil and refined products revenues
declined eight and four percent, respectively, mainly reflecting
lower prices.
Other income of $1,045 million in 1997 was $471 million
above 1996, primarily reflecting the gain on U.S. non-core
exploration and production ("E&P") property dispositions.
Costs and expenses totaled $30 billion, an increase of two
percent from 1996. Operating expenses increased nine percent
primarily resulting from higher refinery maintenance costs and
costs associated with the start-up of production in Venezuela and
Bolivia, increased activity in Trinidad and higher maintenance
costs related to operations in the North Sea and the United
States. Interest expense increased $225 million in 1997,
reflecting an increase in long-term debt, as well as interest
expense associated with revised estimates of tax obligations.
Lower selling and administrative expenses, exploration expenses
and costs for purchased materials and products were partly
offsetting. Net income also benefited from favorable prior-year
tax adjustments.
Depreciation, depletion, amortization, and retirements and
abandonments for 1997 included charges of $133 million, primarily
related to the anticipated sale or other disposition of certain
non-core chemical operations. During 1997 these assets generated
net income of $9 million on a carrying value of $339 million,
before the impairment charge.
Liquidity and Capital Resources
Cash flows from operating activities totaled $3.7 billion in
1997, compared with $3.5 billion in 1996. Working capital totaled
$1,277 million at December 31, 1997, compared with $1,435 million
at December 31, 1996. The Company's current ratio was 1.25 to 1
at year-end 1997. 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 21.7 percent at December 31, 1997, compared with
17.4 percent at December 31, 1996. Including debt with
affiliates, the ratio was 39.5 at December 31, 1997, and 36.8
percent at year-end 1996.
The Company believes that its strong financial position will
permit the financing of business needs and opportunities as they
arise. During 1997, Amoco Company issued $300 million of ten-
year, 6.5% guaranteed notes and $200 million of seven-year, 6.25%
guaranteed notes. A $500 million shelf registration for debt
securities is on file with the Securities and Exchange Commission
to permit ready access to capital markets.
Amoco Corporation and Amoco Company guarantee the notes,
bonds and debentures of Amoco Canada Petroleum Company Ltd.
Contingent liabilities of the Company include guarantees of $200
million of outstanding loans of an equity affiliate.
In 1997, proceeds from dispositions of property and other
assets included approximately $1.2 billion from the sale of U.S.
non-core oil and gas properties and an intrastate natural gas
pipeline unit in Texas. These sales were part of the
corporation's strategy to upgrade and refocus the U.S. portfolio
of E&P assets. Other income included related gains on property
dispositions, which increased after-tax earnings by $377 million.
Other current assets included properties held for sale with a net
book value of $312 million.
Proceeds from dispositions of property and other assets in
1996 included $310 million received from the sale of Amoco's
polystyrene foam products business.
New investments in 1997 included approximately $865 million
in cash for interests in Pan American Energy LLC in Argentina and
Empresa Petrolera Chaco in Bolivia. In 1996, the Company acquired
the alpha-olefins and related businesses of Albemarle Corporation
for $535 million.
Capital and exploration expenditures, excluding the above-
mentioned acquisitions, totaled $3,426 million for 1997 compared
with $3,994 million spent during 1996. Expenditures in 1997
included E&P spending associated with construction of facilities
in Trinidad, Venezuela, Colombia and the Gulf of Mexico and
continuation of programs in Egypt and the North Sea. Chemical
spending in 1997 related to expansion of facilities.
Investments in affiliates totaled $1,391 million at December
31, 1997. 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:
1997 1996 1995
Debt to debt-plus-equity
ratio on outstanding
public debt obligations ... 21.7 17.4 20.0
Debt to debt-plus-
equity ratio including
debt with affiliates ...... 39.5 36.8 40.7
Current ratio ............. 1.25 1.29 1.16
Ratio of earnings to
fixed charges* ............ 11.8 14.2 11.6
* 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 5.0 as of December 31, 1997, 5.5 as of December 31,
1996, and 4.4 as of December 31, 1995.
Item 8. Financial Statements and Supplemental Information
Index to Financial Statements and Supplemental Information
Page
Financial Statements:
Basis of Financial Statement Preparation ...... 7
Condensed Consolidated Statement of Income .... 8
Condensed Consolidated Statement of
Financial Position .......................... 9
Condensed Consolidated Statement of Cash Flows 10
Supplemental Information:
Supplemental Oil and Gas Exploration and
Production Activities ....................... 11
Quarterly Financial Data ...................... 11
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 1997 audited consolidated
financial statements. Such financial statements, together with
the Report of Independent Accountants thereon of Amoco's 1997
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,
1997 1996 1995
(millions of dollars)
Revenues:
Sales and other operating
revenues ............... $28,490 $28,669 $24,404
Consumer excise taxes .... 3,451 3,386 3,339
Other income ............. 1,045 574 596
Total revenues ......... 32,986 32,629 28,339
Costs and Expenses:
Purchased crude oil,
natural gas, petroleum
products and merchandise 15,973 16,067 12,778
Operating expenses ....... 4,468 4,091 3,991
Petroleum exploration
expenses, including
exploratory dry holes .. 529 548 498
Selling and administrative
expenses ............... 1,823 1,915 1,723
Taxes other than income
taxes .................. 4,141 4,129 3,954
Depreciation, depletion,
amortization, and
retirements and
abandonments ........... 2,043 1,986 2,304
Interest expense:
Affiliates.............. 509 496 491
Other................... 265 53 180
Total costs and expenses 29,751 29,285 25,919
Income before income taxes . 3,235 3,344 2,420
Income taxes ............... 961 942 622
Net income ................. $ 2,274 $ 2,402 $ 1,798
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AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31,
1997 1996
ASSETS (millions of dollars)
Current Assets:
Cash ................................... $ 78 $ 222
Marketable securities--at cost ......... 768 767
Accounts and notes receivable (less
allowances of $7 at December 31,
1997, and $14 at December 31, 1996) .. 3,676 3,899
Inventories ............................ 876 820
Prepaid expenses, income taxes and other 1,044 653
Total current assets ................. 6,442 6,361
Investments and Other Assets:
Affiliates ............................. 1,391 1,464
Other .................................. 2,957 1,376
4,348 2,840
Properties--at cost, less accumulated
depreciation, depletion and amorti-
zation of $23,798 at December 31, 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) .......... 19,272 20,007
Total assets ......................... $30,062 $29,208
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current portion of long-term obligations $ 146 $ 74
Short-term obligations ................. 576 442
Accounts payable ....................... 2,497 2,663
Accrued liabilities .................... 872 916
Taxes payable (including income taxes) . 1,074 831
Total current liabilities ............ 5,165 4,926
Long-Term Obligations:
Affiliate debt ......................... 4,739 4,731
Other debt ............................. 2,791 2,190
Capitalized leases ..................... 80 76
7,610 6,997
Deferred Credits and Other Non-Current Liabilities:
Income taxes ........................... 2,781 2,592
Other .................................. 1,882 1,932
4,663 4,524
Minority Interest ...................... 119 131
Shareholder's Equity ................... 12,505 12,630
Total liabilities and shareholder's
equity ............................. $30,062 $29,208
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AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
1997 1996 1995
(millions of dollars)
Cash Flows From Operating Activities:
Net income ......................... $ 2,274 $ 2,402 $ 1,798
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion,
amortization, and retirements
and abandonments ................. 2,043 1,986 2,304
Decrease(increase) in receivables .. 141 (1,290) 142
(Decrease)increase in payables
and accrued liabilities .......... (48) 392 56
Other .............................. (747) 11 (575)
Net cash provided by operating
activities ..................... 3,663 3,501 3,725
Cash Flows From Investing Activities:
Capital expenditures ............... (2,897) (3,351) (2,938)
Proceeds from dispositions of
property and other assets ........ 1,424 604 180
New investments, advances and
business acquisitions............. (1,234) (756) (818)
Other .............................. 214 25 80
Net cash used in investing
activities ..................... (2,493) (3,478) (3,496)
Cash Flows From Financing Activities:
New long-term obligations .......... 1,253 265 412
Repayment of long-term obligations . (380) (277) (144)
Distributions to Amoco Corporation . (2,320) (198) (989)
Issuance of minority interest
preferred stock................... - - 100
Increase in short-term .............
obligations ...................... 134 176 154
Net cash used in financing
activities ..................... (1,313) (34) (467)
Decrease in Cash and
Marketable Securities .............. (143) (11) (238)
Cash and Marketable Securities--
Beginning of Year .................. 989 1,000 1,238
Cash and Marketable Securities--
End of Year ........................ $ 846 $ 989 $ 1,000
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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 1997 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, 1997 and 1996 are as follows:
Revenues Operating Profit* Net Income*
1997 1996 1997 1996 1997 1996
First ... $7,153 $7,404 $ 892 $ 899 $ 556 $ 598
Second .. $7,826 $8,026 $ 916 $ 803 $ 546 $ 510
Third ... $8,299 $8,272 $ 999 $ 908 $ 468 $ 566
Fourth .. $9,708 $8,927 $1,013 $1,125 $ 704 $ 728
*Fourth-quarter 1997 net income included net gains of $271
million primarily associated with asset dispositions, including
the sale of certain non-core oil and gas properties in the United
States. 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.
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 24, 1998, appearing
in Amoco Corporation's 1997 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 1997 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, 1997.
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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 20th day of March, 1998.
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 20, 1998.
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, 1997. *
13 Amoco Corporation's 1997 Annual Report on
Form 10-K is incorporated herein by reference
as described in this 1997 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, 1997. *
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,
1997 1996 1995 1994 1993
Determination of Income:
Consolidated earnings
before income taxes
and minority interest.. $3,235 $3,351 $2,425 $2,688 $2,427
Fixed charges expensed by
consolidated companies.. 282 251 233 140 193
Adjustments for certain
companies accounted for
by the equity method... 50 76 10 7 9
Adjusted earnings plus
fixed charges........... $3,567 $3,678 $2,668 $2,835 $2,629
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized)... $ 212 $ 164 $ 152 $ 127 $ 162
Consolidated rental
expense representative
of an interest factor... 84 88 71 7 31
Adjustments for certain
companies accounted for
by the equity method.... 7 8 6 5 6
Total fixed charges...... $ 303 $ 260 $ 229 $ 139 $ 199
Ratio of earnings to
fixed charges........... 11.8* 14.2* 11.6* 20.4 13.2
_____________
*Based on outstanding public debt obligations. Including debt
with affiliates, the ratio would have been 5.0 as of December 31,
1997, 5.5 as of December 31, 1996, and 4.4 as of December 31,
1995.
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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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