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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, 1994 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 1-170-2
AMOCO CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 36-1812780
(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, 1994--496,889,658.
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PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
(millions of dollars)
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
Revenues:
Sales and other operating revenues $ 6,764 $ 6,205 $19,221 $18,924
Consumer excise taxes............. 883 698 2,553 2,028
Other income...................... 133 169 806 288
Total revenues................ 7,780 7,072 22,580 21,240
Costs and Expenses:
Purchased crude oil, petroleum
products and merchandise........ 3,593 3,139 9,972 9,716
Operating expenses................ 1,118 1,075 3,508 3,491
Petroleum exploration expenses,
including exploratory dry holes. 151 164 428 360
Selling and administrative expenses 550 454 1,711 1,411
Taxes other than income taxes..... 1,061 891 3,129 2,647
Depreciation, depletion, amorti-
zation, and retirements and
abandonments.................... 572 561 1,686 1,622
Interest expense.................. 64 80 199 253
Total costs and expenses...... 7,109 6,364 20,633 19,500
Income before income taxes.......... 671 708 1,947 1,740
Income taxes........................ 226 188 694 504
Net income.......................... $ 445 $ 520 $ 1,253 $ 1,236
Weighted average number of shares
of common stock outstanding (in
thousands)........................ 496,847 496,898 496,648 496,754
Per Share Data (Based on weighted
average shares outstanding):
Net income.......................... $ .89 $ 1.05 $ 2.52 $ 2.49
Cash dividends per share............ $ .55 $ .55 $ 1.65 $ 1.65
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Consolidated Statement of Financial Position
(millions of dollars)
Sept. 30, Dec. 31,
1994 1993
ASSETS
Current Assets:
Cash............................................. $ 113 $ 103
Marketable securities--at cost,
which approximates fair value.................. 1,530 1,114
Accounts and notes receivable (less allowances
of $27 at September 30, 1994, and $65 at
December 31, 1993)............................. 2,946 3,196
Inventories
Crude oil and products......................... 740 813
Materials and supplies......................... 296 297
Prepaid expenses and income taxes................ 677 571
Total current assets........................... 6,302 6,094
Investments and Other Assets:
Investments and related advances................. 369 318
Long-term receivables and other assets........... 753 705
1,122 1,023
Properties--at cost, less accumulated
depreciation, depletion and amortization of
$24,399 at September 30, 1994, and $23,204
at December 31, 1993 (The successful efforts
method of accounting is followed for costs
incurred in oil and gas producing activities).... 21,387 21,369
Total assets................................... $28,811 $28,486
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term obligations......... $ 46 $ 53
Short-term obligations........................... 116 1,007
Accounts payable................................. 2,450 2,473
Accrued liabilities.............................. 1,090 974
Taxes payable (including income taxes)........... 954 836
Total current liabilities...................... 4,656 5,343
Long-Term Debt..................................... 4,446 4,037
Deferred Credits and Other Non-Current Liabilities:
Income taxes..................................... 3,115 2,995
Other............................................ 2,430 2,425
5,545 5,420
Minority Interest.................................. 14 21
Shareholders' Equity:
Common stock (authorized 800,000,000 shares;
issued and outstanding at September 30, 1994
--496,889,658 shares; December 31, 1993
--496,401,099 shares).......................... 2,168 2,147
Earnings retained and invested in the business... 11,991 11,557
Foreign currency translation adjustment.......... (9) (39)
14,150 13,665
Total liabilities and shareholders' equity..... $28,811 $28,486
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Consolidated Statement of Cash Flows
(millions of dollars)
Nine Months Ended
September 30,
1994 1993
Cash Flows From Operating Activities:
Net income......................................... $ 1,253 $ 1,236
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, amortization, and
retirements and abandonments................... 1,686 1,622
Decrease in receivables.......................... 72 62
(Increase) decrease in inventories............... 74 (102)
Increase (decrease) in payables and accrued
liabilities.................................... 209 (533)
Deferred taxes and other items................... (140) 37
Net cash provided by operating activities...... 3,154 2,322
Cash Flows From Investing Activities:
Capital expenditures............................... (1,699) (1,926)
Proceeds from dispositions of properties
and other assets................................. 138 308
New investments, advances and business
acquisitions..................................... (11) (14)
Proceeds from sales of investments................. 175 27
Other.............................................. (9) (53)
Net cash used in investing activities.......... (1,406) (1,658)
Cash Flows From Financing Activities:
New long-term obligations.......................... 418 1,022
Repayment of long-term obligations................. (50) (1,504)
Cash dividends paid................................ (819) (819)
Issuances of common stock.......................... 20 24
Increase (decrease) in short-term obligations...... (891) 291
Net cash used in financing activities.......... (1,322) (986)
Increase (decrease) in Cash and Marketable Securities 426 (322)
Cash and Marketable Securities-Beginning of Period... 1,217 1,288
Cash and Marketable Securities-End of Period......... $ 1,643 $ 966
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Basis of Financial Statement Preparation
The consolidated financial statements contained herein are unaudited and
have been prepared from the books and records of Amoco Corporation ("Amoco"
or the "Corporation"). In the opinion of management, the consolidated
financial statements reflect all adjustments, consisting of only normal
recurring adjustments, necessary for a fair statement of the results for
the interim periods. The consolidated 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 Discussion and Analysis
Results of Operations
Comparisons of net income for the first nine months and third quarter were
affected by various items, summarized in the table below:
(Millions of dollars Nine Months Third Quarter
Incr./(decr.) net income) 1994 1993 1994 1993
COET settlement $ 270 $ - $ - $ -
Restructuring accrual (256) - - -
Congo writedown - (170) - -
Disposition of Canadian
properties - 70 - 70
Tax obligations and other - 60 - 4
Environmental provisions (32) - (32) -
Nine Months 1994 vs. Nine Months 1993
Net income for the first nine months of 1994 amounted to $1,253 million, or
$2.52 per share. Included in first nine-month results were third-quarter
after-tax environmental charges of $32 million and second-quarter
restructuring charges of $256 million after tax. Of this latter amount,
$146 million related to costs directly associated with the severance of
approximately 3,800 employees expected to occur by mid-1995. The remaining
$110 million was attributable to various facility closings and asset
dispositions. Current-year results also included second-quarter after-tax
benefits of $270 million relating to final settlements with the Internal
Revenue Service involving crude oil excise taxes ("COET") in the 1980s.
Excluding these items, first nine-months 1994 earnings were $1,271 million,
or $2.56 per share.
Net income for the first nine months of 1993 totaled $1,236 million, or
$2.49 per share. Included in first nine-month results were charges of $170
million related to the writedown of Congo exploration and production
operations to current recoverable value, gains of $70 million associated
with the disposition of certain non-strategic Canadian properties and
favorable net tax adjustments of $60 million, of which $56 million related
to disposition of certain operations. Excluding these items, earnings for
the first nine months of 1993 would have been $1,276 million, or $2.57 per
share.
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On an adjusted basis, earnings for the first nine months of 1994 of $1,271
million were essentially level with the similar 1993 period, reflecting
improved chemical earnings, resulting from higher volumes and margins in
major product lines, and lower net corporate expenses. Offsetting were
decreased exploration and production earnings mainly due to lower crude oil
prices, which averaged about $2 per barrel below last year's level, and
lower refining, marketing and transportation earnings, primarily
attributable to lower refined product margins.
Sales and other operating revenues totaled $19.2 billion for the first nine
months of 1994, 2 percent higher than the $18.9 billion reported in the
corresponding 1993 period. Chemical revenues increased 20 percent
resulting from improved volumes and prices for major product lines.
Natural gas revenues were 21 percent above the 1993 level, primarily
reflecting higher sales volumes. Partly offsetting were decreases in crude
oil revenues of 9 percent, due to lower prices and volumes.
Consumer excise taxes increased 26 percent for the first nine months of
1994 compared with 1993, reflecting the effect of a tax increase on
transportation fuels resulting from the enactment of the Omnibus Budget
Reconciliation Act of 1993. Higher other income for the first nine months
of the current year compared with the corresponding 1993 period primarily
reflected the second-quarter 1994 COET settlement.
Purchases of crude oil, petroleum products and merchandise totaled $10
billion for the first nine months of 1994, 3 percent higher than 1993's
first nine months, primarily attributable to higher natural gas and refined
product volumes, and increased chemical purchases. Partly offsetting were
lower crude oil purchase prices.
Operating expenses totaled $3.5 billion for the first nine months of 1994,
essentially level with the corresponding 1993 period. Second-quarter 1994
expenses included restructuring charges of $169 million related to various
facility closings and asset dispositions. First-quarter 1993 included
charges associated with the writedown of Congo exploration and production
operations. Excluding these items, operating expenses were slightly higher
reflecting increased chemical manufacturing expenses from the fourth-
quarter 1993 acquisition of Phillips Fibers Corporation, and increased
production expense overseas reflecting added production. Partly offsetting
were the effects of lower production expenses in Canada.
Petroleum exploration expenses of $428 million in the first nine months of
1994 increased 19 percent, compared with the prior-year period, mainly
attributable to higher dry hole costs in Canada and overseas. Selling and
administrative expenses for the first nine months were up 21 percent,
primarily resulting from second-quarter 1994 restructuring charges of $225
million related to severance costs, lower currency gains and increases
related to natural gas activities.
Taxes other than income taxes increased in the first nine months by 18
percent compared with the prior-year period principally due to increased
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consumer excise taxes. Interest expense decreased 21 percent for the first
nine months of 1994 compared with the corresponding 1993 period, due to
revised estimates of future tax obligations and the effects of debt
refinancing.
Third Quarter 1994 vs. Third Quarter 1993
Third-quarter 1994 net income totaled $445 million, or $.89 per share,
compared with $520 million, or $1.05 per share in the third quarter of
1993. Included in 1994 third-quarter earnings were after-tax charges of
$32 million representing estimated future costs of environmental
remediation activities. Adjusting for these charges, 1994 third-quarter
earnings were $477 million, or $.96 per share.
Third-quarter 1993 results included a gain of $70 million associated with
the disposition of Canadian properties and favorable prior-year tax
adjustments totaling $57 million, partially offset by adverse deferred tax
effects of $53 million resulting from enactment of the Omnibus Budget
Reconciliation Act of 1993. Exclusive of these items, third-quarter 1993
earnings were $446 million, or $.90 per share.
On an adjusted basis, operating results for the third quarter of 1994 of
$477 million were 7 percent higher than last year's third quarter,
reflecting higher sales volumes and margins for most chemical products and
higher crude oil prices, which averaged about $1 per barrel above the
similar 1993 period. Partly offsetting were lower refining, marketing and
transportation earnings, resulting from lower refined product margins.
Sales and other operating revenues totaled $6.8 billion for the third
quarter of 1994, 9 percent higher than the $6.2 billion reported in 1993's
third quarter. Chemical and natural gas revenues improved 29 percent and
16 percent, respectively, due to increased volumes and prices. Refined
product revenues increased 6 percent resulting from higher volumes.
Consumer excise taxes increased 26 percent for the third quarter of 1994
compared with last year's levels, reflecting the effect of a tax increase
on transportation fuels resulting from the enactment of the Omnibus Budget
Reconciliation Act of 1993.
Purchases of crude oil, petroleum products and merchandise totaled $3.6
billion for the third quarter of 1994, 14 percent higher than the
comparable prior-year quarter, primarily attributable to higher natural gas
purchase volumes. Also contributing to the increase were higher crude oil
and refined product purchase prices, and increased chemical purchases.
Third-quarter 1994 operating expenses totaling $1.1 billion were 4 percent
above 1993's third quarter mainly reflecting higher environmental charges.
Petroleum exploration expenses of $151 million in the third quarter of 1994
decreased 8 percent compared with prior-year level, mainly attributable to
lower dry hole costs. Selling and administrative expenses for the third
quarter of 1994 were up 21 percent, due in part to unfavorable currency
effects and increases related to natural gas activities.
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Taxes other than income taxes increased in the current quarter of 1994 by
19 percent compared with the prior-year period principally due to increased
consumer excise taxes. Interest expense decreased 20 percent for the third
quarter of 1994 compared with the corresponding 1993 period, due to revised
estimates of future tax obligations and the effects of debt refinancing.
For the 12 months ended September 30, 1994, return on average shareholders'
equity was 13.3 percent compared with 13.7 percent for the 12 months ended
September 30, 1993. Return on average capital employed was 10.4 percent
for the 12-month period ended September 30, 1994, compared with 10.7
percent for the corresponding prior-year period.
Results by Industry Segment
Nine Months Third Quarter
(Millions of dollars) 1994 1993 1994 1993
Exploration and Production
United States $ 698 $ 639 $ 193 $ 156
Non-U.S. 21 21 14 62
Refining, Mktg. and Trans. 316 567 157 225
Chemicals 350 157 154 60
Other Operations* (138) (35) (14) 6
Corporate 6 (113) (59) 11
Net Income $1,253 $1,236 $ 445 $ 520
* Other Operations include technology operations, offshore contract
drilling, real estate interests, hazardous-waste incineration and
other activities.
Nine Months 1994 vs. Nine Months 1993
U.S. Exploration and Production
U.S. exploration and production ("E&P") operations earned $698 million in
1994 compared with $639 million earned in the similar 1993 period.
Included in first nine-month results were second-quarter restructuring
charges of $47 million, primarily related to severance costs, and $90
million associated with the favorable COET settlement. Included in 1993
nine-month earnings were second-quarter provisions of $63 million for the
estimated future costs of environmental remediation activities related to
past E&P operations, and third-quarter net unfavorable tax adjustments of
$25 million, primarily reflecting adverse deferred taxes from enactment of
the Omnibus Reconciliation Act of 1993.
Adjusting the respective periods for these items, nine-month 1994 results
were $655 million, $72 million below the year-earlier period. The
reduction in 1994 earnings primarily resulted from lower crude oil and
natural gas prices, which for Amoco averaged about $2 per barrel and $.10
per thousand cubic feet ("mcf") lower than 1993 averages, respectively.
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Also contributing to the decline were lower crude oil and natural gas
liquids ("NGL") production volumes, which averaged 290 thousand barrels per
day ("MB/d") for the first nine months of 1994, 6 percent below the
comparable 1993 period. Partly offsetting were benefits associated with
higher natural gas volumes, which averaged 2.5 billion cubic feet per day,
up slightly over 1993, and lower depreciation, depletion and amortization
and other expenses.
Non-U.S. Exploration and Production
E&P earnings outside the U.S. were $21 million for the first nine months of
1994, the same as the year-earlier period.
Results for 1994 included second-quarter restructuring charges of $20
million, primarily related to severance costs. Included in 1993 results
were first-quarter charges of $170 million related to the writedown of
Congo operations and third-quarter benefits of $70 million attributable to
a gain on disposition of certain non-strategic Canadian properties.
Adjusting both periods for these items, 1994 nine-month results of $41
million were $80 million lower than 1993 as a result of lower crude oil
prices and higher exploration expense. Also contributing to the decline
were unfavorable currency effects and charges relating to the
relinquishment of the Myanmar concession. Higher natural gas prices and
production volumes were partly offsetting.
For the first nine months of 1994, natural gas production outside the U.S.
averaged 1,667 million cubic feet per day and crude oil and NGL production
averaged 376 MB/d, both about the same as the corresponding 1993 period.
New production increases in the Netherlands, the United Kingdom and
Trinidad offset lower Canadian production, the latter reflecting third-
quarter 1993 divestments of non-strategic properties.
Refining, Marketing and Transportation
Refining, marketing and transportation ("RM&T") activities earned $316
million for the first nine months of 1994, compared with earnings of $567
million for the comparable 1993 period. Included in 1994 results were
second-quarter restructuring charges of $41 million, primarily related to
severance costs, and third-quarter charges of $32 million representing
estimated future costs of environmental remediation activities relating to
past operations. Results for 1993 included second-quarter benefits of $59
million associated with a reduction in previous estimates of future costs
for environmental remediation activities.
Excluding these items, earnings of $389 million were $119 million lower
than the first nine months of 1993. Contributing to the decline were lower
U.S. refined product margins for Amoco, which averaged about 1 cent per
gallon below the 1993 period. Also contributing to the decrease were lower
earnings from NGL supply and marketing activities in Canada.
For the first nine months of 1994, U.S. refined product sales averaged
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1,172 MB/d, an increase of 5 percent over the corresponding 1993 period.
Canadian sales of NGL averaged 160 MB/d, the same as the first nine months
of 1993.
Chemicals
Chemical operations earned $350 million for the first nine months of 1994.
Included in 1994 results were second-quarter restructuring charges of $36
million, primarily related to severance costs. For the first nine months
of 1993, chemical operations earned $157 million.
The increase in 1994 earnings resulted from higher margins and sales
volumes for major product lines, particularly purified terephthalic acid
("PTA"), reflecting strong consumer demand. Worldwide PTA and olefins
volumes for the first nine months of 1994 increased 16 and 11 percent,
respectively, over the comparable 1993 period. Polypropylene volumes were
up 6 percent over last year.
Other Operations and Corporate
Other operations, which include technology operations, offshore contract
drilling, real estate interests, hazardous-waste incineration and other
activities, incurred losses of $60 million for the first nine months of
1994, excluding second-quarter restructuring charges of $78 million. The
comparable results for 1993 were losses of $35 million. The higher losses
in 1994 reflected lower offshore contract drilling revenues and absence of
gains realized in 1993.
Corporate activities, including net interest and other general corporate
expenses, reported income of $6 million for the first nine months of 1994,
compared with net expenses of $113 million in the corresponding 1993
period. Results for 1994 included second-quarter interest income of $180
million related to the COET settlement and restructuring charges of $34
million. Included in the 1993 results were tax benefits of $101 million of
which $56 million was associated with the disposition of certain
operations. Adjusting for these items, net expenses for the first nine
months of 1994 of $140 million were $74 million lower than 1993 primarily
reflecting lower net interest expense.
Third Quarter 1994 vs. Third Quarter 1993
U.S. Exploration and Production
U.S E&P earnings were $193 million in the third quarter of 1994 compared
with $156 million earned in the third quarter of 1993. Included in 1993
earnings was a $25 million unfavorable adjustment for taxes, mainly
associated with passage of the Omnibus Budget Reconciliation Act of 1993.
Exclusive of that adjustment, the 1994 increase of $12 million resulted
from an increase in crude oil prices of approximately $1 per barrel and
higher natural gas volumes, and lower exploration and other expenses.
Partly offsetting was a decline in natural gas prices during the third
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quarter of 1994. Amoco's natural gas prices averaged about $1.60 per mcf
during the quarter, down approximately $.20 per mcf from the third quarter
of 1993.
Natural gas production for the quarter averaged 2.4 billion cubic feet per
day, up 2 percent over the 1993 third-quarter average. Crude oil and NGL
production averaged 285 MB/d, 5 percent lower than the same prior-year
period, reflecting normal field declines.
Non-U.S. Exploration and Production
E&P earnings outside the United States earned $14 million in the third
quarter of 1994. This compared with earnings of $62 million in the third
quarter of 1993. Included in 1993 results was a $70 million gain
associated with the disposition of certain non-strategic Canadian
properties.
Excluding this gain, third-quarter 1994 earnings increased $22 million over
the similar 1993 period reflecting higher crude oil prices, and lower
exploration and operating expenses. Partly offsetting were unfavorable
currency effects.
Natural gas production averaged 1.5 billion cubic feet per day during the
quarter compared with 1.6 billion cubic feet per day during the third
quarter of 1993. The decline from last year mainly reflected the
divestment of non-strategic Canadian properties, which more than offset
higher North Sea production. Crude oil and NGL production averaged 363
MB/d in the third quarter of 1994, down slightly from the comparable 1993
period, mainly reflecting Canadian divestments.
Refining, Marketing and Transportation
RM&T activities earned $157 million during the third quarter of 1994,
compared with $225 million earned in the third quarter of 1993.
Included in current-quarter results were charges of $32 million associated
with estimates of future costs for environmental remediation activities
related to past operations.
Adjusting for these charges, 1994 earnings would have been $189 million,
$36 million lower than the corresponding prior-year period. The earnings
decline primarily reflected lower refined product margins, resulting in
part from a very competitive U.S. market.
U.S. sales of refined products averaged 1,236 MB/d per day during the third
quarter of 1994, an increase of 5 percent over the comparable 1993 period.
Refineries ran at 104 percent of rated capacity during the third quarter of
both 1994 and 1993.
Chemicals
Chemical operations earned $154 million in the third quarter of 1994,
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compared with $60 million for the third quarter of 1993.
The improvement in 1994 earnings resulted from continued strong performance
as margins and sales volumes increased across major product lines.
Worldwide PTA and olefins volumes increased 15 percent and 9 percent,
respectively, above last year's third-quarter levels. Polypropylene
volumes were up 13 percent over third-quarter 1993.
Other Operations and Corporate
Other operations, which include technology operations, offshore contract
drilling, real estate interests, hazardous-waste incineration and other
activities, incurred a loss of $14 million in the third quarter of 1994.
This compared with a $6 million gain in the corresponding 1993 period,
which reflected the continued efforts to dispose of noncore assets.
Corporate activities, including net interest and other general corporate
expenses, reported net expenses of $59 million in the third quarter of
1994, compared with income of $11 million for the comparable 1993 period.
Included in the 1993 results were favorable prior-year tax adjustments of
$45 million.
Outlook
The Corporation and the oil industry will continue to be affected by the
price volatility of crude oil and natural gas. Also affecting chemical and
refining, marketing and transportation activities are crude oil prices and
the overall industry product supply and demand balance. Amoco's future
performance is expected to be impacted by ongoing cost reduction programs,
the divestment of marginal properties and underperforming assets,
application of new technologies and new governmental regulation.
In July 1994, Amoco announced that the organizational structure of the
Corporation was being changed to improve profitability, increase operating
flexibility and position the Corporation for long-term growth. The
Corporation's strategies now will be carried out by 17 business groups. A
newly created shared services organization will provide support service to
the business groups. As a result of the restructuring, an after-tax charge
of $256 million was accrued in the second quarter of 1994. Approximately
3,800 positions will be eliminated by July 1995. Through the third quarter
of 1994, charges against the accrual associated with severance,
representing approximately 400 employees, and other costs totaled about $20
million after tax.
An additional 700 positions will be eliminated by the end of 1996 as a
result of ongoing process redesign to improve efficiencies in support
functions. Additional restructuring costs of approximately $200 million
(after-tax) are expected to be incurred through 1996 to reflect costs for
severance, system redesign, relocations, work consolidation and development
of new processes in support of the restructuring. Through the third
quarter of 1994, costs incurred related to these activities were not
significant.
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Liquidity and Capital Resources
Cash flows from operating activities for the first nine months of 1994
amounted to $3,154 million compared with $2,322 million in the prior-year
period. Working capital of $1,646 million at September 30, 1994, increased
$895 million from $751 million at December 31, 1993. As a result, the
Corporation's current ratio increased to 1.35 to 1 at September 30, 1994,
from 1.14 to 1 at year-end 1993. As a matter of policy, Amoco practices
asset and liability management techniques that are designed to minimize its
investment in non-cash working capital. This does not impair operational
capability or flexibility since the Corporation has ready access to both
short-term and long-term debt markets.
Amoco Oil Company, a wholly owned subsidiary of the Corporation, announced
in April 1994 that it had signed a letter of intent to negotiate a contract
with subsidiaries of Associates Corporation of North America ("Associates")
whereby Associates would issue and process Amoco Oil's consumer credit
cards. This transaction was completed in September. Effective September
20, 1994, Associates became the grantor of credit, owner of the receivables
and manager of credit risks for Amoco Oil's consumer credit cards.
Amoco's debt totaled $4.6 billion at September 30, 1994, compared with $5.1
billion at year-end 1993. The reduction in debt largely reflects the
application of the proceeds from the sale of credit card receivables. Debt
as a percent of debt-plus-equity was 24.5 percent at September 30, 1994,
compared with 27.1 percent at year-end 1993.
The Corporation believes its strong financial position will permit the
financing of business needs and opportunities in an orderly manner. It is
anticipated that ongoing operations will be financed primarily by
internally generated funds. Short-term obligations, such as commercial
paper borrowings, give the Corporation the flexibility to meet short-term
working capital and other temporary requirements. At September 30, 1994,
bank lines of credit available to support commercial paper borrowings
amounted to $490 million, all of which were supported by commitment fees.
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.
Capital and exploration expenditures for the first nine months of 1994
totaled $2,127 million compared with $2,286 million for the comparable 1993
period. Approximately 71 percent of the total 1994 expenditures has been
spent in exploration and production operations.
The Corporation 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 Amoco 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
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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 Amoco's
liquidity or consolidated financial position. In total, the accrued
liability represents a reasonable best estimate of Amoco's remediation
liability.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments in the status of the legal
proceedings reported in Part I, Item 3 of the Corporation's 1993 Annual
Report on Form 10-K and the description of legal proceedings in Part II,
Item 1 of the Corporation's Report on Form 10-Q for the quarter ended June
30, 1994.
Twelve proceedings instituted by governmental authorities are pending or
known to be contemplated against Amoco 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 Amoco's consolidated cash flows, financial
position or results of operations. Amoco estimates that in the aggregate
the monetary sanctions reasonably likely to be imposed from these
proceedings amount to approximately $5.9 million.
Amoco has various other suits and claims pending against it among which are
several class actions for substantial monetary damages which in Amoco'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, Amoco believes that the aggregate amount will not
be material in relation to 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.
14.<PAGE>
<PAGE>
Item 5. Other Information
Shown below is summarized financial information as to the assets,
liabilities and results of operations of Amoco's wholly owned
subsidiary, Amoco Company.
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
(millions of dollars)
Total revenues (including
excise taxes).............. $ 7,204 $ 6,413 $20,737 $19,287
Operating profit............. $ 711 $ 659 $ 1,816 $ 1,827
Net income................... $ 488 $ 486 $ 1,426 $ 1,272
Sept. 30, Dec. 31,
1994 1993
(millions of dollars)
Current assets........................ $ 5,169 $ 4,383
Total assets.......................... $24,422 $23,513
Current liabilities................... $ 3,532 $ 3,976
Long-term debt........................ $ 2,093 $ 1,967
Deferred credits...................... $ 4,555 $ 4,441
Shareholder's equity.................. $14,242 $13,129
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Sequentially
Exhibit Numbered
Number Page
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, 1994.
15.<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 Corporation
(Registrant)
Date: November 14, 1994
J. R. Reid
J. R. Reid
Vice President and Controller
(Duly Authorized and Chief
Accounting Officer)
16.<PAGE>
EXHIBIT 12
AMOCO CORPORATION
_____________
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,
1994 1993 1992 1991 1990 1989
Determination of Income:
Consolidated earnings
before income taxes
and minority interest. $1,947 $2,506 $ 998 $2,035 $3,410 $2,695
Fixed charges expensed by
consolidated companies 263 350 376 479 596 699
Adjustments for certain
companies accounted for
by the equity method.. 5 11 28 20 35 37
Adjusted earnings plus
fixed charges......... $2,215 $2,867 $1,402 $2,534 $4,041 $3,431
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized). $ 211 $ 299 $ 333 $ 433 $ 532 $ 626
Consolidated rental
expense representative
of an interest factor. 48 50 44 54 60 59
Adjustments for certain
companies accounted for
by the equity method.. 3 8 20 24 25 36
Total fixed charges..... $ 262 $ 357 $ 397 $ 511 $ 617 $ 721
Ratio of earnings to
fixed charges........... 8.5 8.0 3.5 5.0 6.5 4.8
17.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Income and the Consolidated Statement of Financial
Position and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000093397
<NAME> AMOCO CORPORATION
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 113
<SECURITIES> 1530
<RECEIVABLES> 2973
<ALLOWANCES> 27
<INVENTORY> 1036
<CURRENT-ASSETS> 6302
<PP&E> 45786
<DEPRECIATION> 24399
<TOTAL-ASSETS> 28811
<CURRENT-LIABILITIES> 4656
<BONDS> 4446
<COMMON> 2168
0
0
<OTHER-SE> 11982
<TOTAL-LIABILITY-AND-EQUITY> 28811
<SALES> 19221
<TOTAL-REVENUES> 22580
<CGS> 13908
<TOTAL-COSTS> 13908
<OTHER-EXPENSES> 4815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 199
<INCOME-PRETAX> 1947
<INCOME-TAX> 694
<INCOME-CONTINUING> 1253
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1253
<EPS-PRIMARY> 2.52
<EPS-DILUTED> 0
</TABLE>
