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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 June 30, 1995 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 June 30, 1995--490,931,344.
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PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
(millions of dollars)
Three Months Six Months
Ended Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Sales and other operating revenues $ 6,814 $ 6,596 $13,434 $12,457
Consumer excise taxes............. 835 871 1,643 1,670
Other income...................... 64 568 200 673
Total revenues................ 7,713 8,035 15,277 14,800
Costs and Expenses:
Purchased crude oil, natural gas,
petroleum products and
merchandise..................... 3,589 3,482 7,087 6,379
Operating expenses................ 1,103 1,260 2,224 2,390
Petroleum exploration expenses,
including exploratory dry holes. 116 163 231 277
Selling and administrative expenses 542 695 1,013 1,161
Taxes other than income taxes..... 1,009 1,077 2,011 2,068
Depreciation, depletion, amorti-
zation, and retirements and
abandonments.................... 524 575 1,058 1,114
Interest expense.................. 89 64 175 135
Total costs and expenses...... 6,972 7,316 13,799 13,524
Income before income taxes.......... 741 719 1,478 1,276
Income taxes........................ 208 309 422 468
Net income.......................... $ 533 $ 410 $ 1,056 $ 808
Weighted average number of shares
of common stock outstanding (in
thousands)........................ 494,795 496,650 495,587 496,548
Per Share Data (Based on weighted
average shares outstanding):
Net income.......................... $ 1.08 $ .83 $ 2.13 $ 1.63
Cash dividends per share............ $ .60 $ .55 $ 1.20 $ 1.10
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Consolidated Statement of Financial Position
(millions of dollars)
June 30, Dec. 31,
1995 1994
ASSETS
Current Assets:
Cash............................................. $ 133 $ 166
Marketable securities--at cost (all corporate,
except $355 on December 31, 1994, which
represent state and municipal securities)...... 867 1,623
Accounts and notes receivable (less allowances
of $22 at June 30, 1995, and $23 at
December 31, 1994)............................. 3,080 3,180
Inventories
Crude oil and products......................... 831 748
Materials and supplies......................... 306 294
Prepaid expenses and income taxes................ 617 631
Total current assets........................... 5,834 6,642
Investments and Other Assets:
Investments and related advances................. 687 470
Long-term receivables and other assets........... 818 661
1,505 1,131
Properties--at cost, less accumulated
depreciation, depletion and amortization of
$25,301 at June 30, 1995, and $24,906
at December 31, 1994 (The successful efforts
method of accounting is followed for costs
incurred in oil and gas producing activities).... 21,583 21,543
Total assets................................... $28,922 $29,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term obligations......... $ 173 $ 24
Short-term obligations........................... 248 224
Accounts payable................................. 2,421 2,759
Accrued liabilities.............................. 1,016 1,162
Taxes payable (including income taxes)........... 712 855
Total current liabilities...................... 4,570 5,024
Long-Term Debt..................................... 4,223 4,387
Deferred Credits and Other Non-Current Liabilities:
Income taxes..................................... 3,026 2,961
Other............................................ 2,604 2,547
5,630 5,508
Minority Interest.................................. 15 15
Shareholders' Equity:
Common stock (authorized 800,000,000 shares;
issued and outstanding at June 30, 1995
--490,931,344 shares; December 31, 1994
--496,393,067 shares).......................... 2,140 2,166
Earnings retained and invested in the business... 12,323 12,223
Foreign currency translation adjustment.......... 21 (7)
14,484 14,382
Total liabilities and shareholders' equity..... $28,922 $29,316
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Consolidated Statement of Cash Flows
(millions of dollars)
Six Months Ended
June 30,
1995 1994
Cash Flows From Operating Activities:
Net income......................................... $ 1,056 $ 808
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, amortization, and
retirements and abandonments................... 1,058 1,114
Decrease (increase) in receivables............... 71 (700)
(Increase) decrease in inventories............... (99) 51
(Decrease) increase in payables and accrued
liabilities.................................... (493) 287
Deferred taxes and other items................... (81) (170)
Net cash provided by operating activities...... 1,512 1,390
Cash Flows From Investing Activities:
Capital expenditures............................... (1,293) (1,111)
Proceeds from dispositions of properties
and other assets................................. 166 97
New investments, advances and business
acquisitions..................................... (148) (8)
Proceeds from sales of investments................. - 175
Other.............................................. 11 4
Net cash used in investing activities.......... (1,264) (843)
Cash Flows From Financing Activities:
New long-term obligations.......................... 86 104
Repayment of long-term obligations................. (113) (38)
Cash dividends paid................................ (596) (546)
Issuances of common stock.......................... 27 13
Acquisitions of common stock....................... (465) -
Increase (decrease) in short-term obligations...... 24 (361)
Net cash used in financing activities.......... (1,037) (828)
Decrease in Cash and Marketable Securities........... (789) (281)
Cash and Marketable Securities-Beginning of Period... 1,789 1,217
Cash and Marketable Securities-End of Period......... $ 1,000 $ 936
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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.
In March 1995, the Financial Accounting Standards Board issued 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", which will require the Corporation to change its method of accounting
for the impairment of value of long-lived assets. The Corporation has not
fully evaluated the effect of this change in accounting method, but the
effect could be material to income in the quarter of adoption.
Implementation of SFAS No. 121 will occur no later than the quarter ending
March 31, 1996.
Item 2. Management's Discussion and Analysis
Results of Operations
Six Months 1995 vs. Six Months 1994
Net income for the first six months of 1995 amounted to $1,056 million, or
$2.13 per share. Net income for the first six months of 1994 amounted to
$808 million, or $1.63 per share. Included in 1994 second-quarter
results were after-tax benefits of $270 million relating to final
settlements with the Internal Revenue Service ("IRS") involving crude oil
excise taxes ("COET") in the 1980s. Also included in 1994 results were
restructuring charges of $256 million. Restructuring charges are
discussed further on page 13 of this report. Excluding these items,
earnings for the first six months of 1994 would have been $794 million, or
$1.60 per share.
On an adjusted basis, earnings for the first six months of 1995 of $1,056
million increased 33 percent over 1994, primarily reflecting higher
chemical earnings resulting from both higher volumes and margins across
most product lines. Also attributing to the increase was strong
exploration and production ("E&P") earnings overseas, primarily reflecting
higher crude oil prices and lower exploration and other expenses.
Partially offsetting were lower U.S. E&P earnings, reflecting lower
natural gas prices, and lower petroleum product results attributable to
lower refined product margins and higher refinery maintenance expense.
Sales and other operating revenues totaled $13.4 billion for the first six
months of 1995, 8 percent higher than the $12.5 billion reported in the
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corresponding 1994 period. Chemical revenues increased 40 percent
resulting from higher volumes and prices across most product lines.
Refined product revenues were 9 percent above the 1994 level, primarily
resulting from strengthening U.S. gasoline prices. Natural gas revenues
decreased 19 percent, primarily due to lower prices.
Other income totaled $200 million for the first six month of 1995 as
compared to $673 million for the same period for 1994. Included in other
income for the first six months of 1994 was the benefit of the COET
settlement of approximately $400 million.
Purchases of crude oil, natural gas, petroleum products and merchandise
totaled $7.1 billion for the first six months of 1995, 11 percent higher
than 1994's first six months. The increase was primarily attributable to
higher refined product purchase prices and volumes, higher crude oil
prices, and increased chemical purchases, reflecting increased chemical
activity.
Operating expenses totaled $2.2 billion for the first six months of 1995,
compared with $2.4 billion for the corresponding 1994 period. Included in
first six-month 1994 results were restructuring charges of $169 million
related to various facility closings and asset dispositions. Exclusive of
that charge, first six-month operating expenses for 1995 were about level
with the same period in 1994, as expense reductions related to
restructuring efforts were offset by higher refinery expenses, reflecting
planned and unplanned maintenance, an increase in chemical operations and
inflation.
Petroleum exploration expenses of $231 million in the first six months of
1995 decreased 17 percent compared with the prior-year period, mainly
attributable to lower overseas dry hole costs of approximately $50
million.
Selling and administrative expenses for the first six months of $1 billion
compared with $1.2 billion for the comparable 1994 period. Included in
the first six-month 1994 results were restructuring charges of $225
million related to severance costs. Exclusive of these charges, selling
and administrative expenses increased 8 percent as a result of ongoing
restructuring charges of approximately $60 million before tax, related to
system development redesign, and lower favorable currency effects.
Included in 1995 first six-month results were favorable before tax
currency effects of $14 million, compared with $51 million for the
corresponding 1994 period.
Interest expense of $175 million for the first six months of 1995 compared
with $135 million for the corresponding 1994 period, reflecting higher
debt balances and slightly higher interest rates.
Second Quarter 1995 vs. Second Quarter 1994
Second-quarter 1995 net income totaled $533 million, or $1.08 per share,
compared with $410 million, or $.83 per share in the second quarter of
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1994. Included in 1994 second-quarter earnings were the previously
mentioned COET benefits of $270 million and restructuring charges of $256
million. Adjusting for these items, 1994 second-quarter earnings would
have been $396 million, or $.80 per share.
On an adjusted basis, earnings for the second quarter of 1995 of $533
million were 35 percent higher than last year's second quarter, reflecting
higher chemical earnings resulting from increases in volumes and margins
for most product lines. Also attributing to the increase was higher
overseas E&P earnings primarily related to higher crude oil prices and
lower exploration and other expenses. Partly offsetting were lower U.S.
E&P results primarily reflecting lower natural gas prices.
Sales and other operating revenues totaled $6.8 billion for the second
quarter of 1995, 3 percent higher than the $6.6 billion reported in the
second quarter of 1994. Chemical revenues improved 37 percent due to
increased volumes and prices. Refined product revenues increased 8
percent resulting from higher U.S. gasoline prices. Partly offsetting
were lower crude oil revenues, resulting from lower sales volumes, and
lower natural gas revenues, primarily reflecting lower prices.
Other income of $64 million was $504 million below the second quarter of
1994. Included in the 1994 period was approximately $400 million related
to the COET settlement with the IRS.
Purchases of crude oil, natural gas, petroleum products and merchandise
totaled $3.6 billion for the second quarter of 1995, 3 percent higher than
the prior-year quarter.
Second-quarter 1995 operating expenses totaled $1.1 billion compared with
$1.3 billion for the 1994 second quarter. Included in 1994 operating
expenses were restructuring charges of $169 million related to various
facility closings and asset dispositions. Excluding that charge, second
quarter operating expenses increased slightly, reflecting higher refinery
maintenance expense and greater chemical activity.
Petroleum exploration expenses of $116 million in the second quarter of
1995 were 29 percent below the prior-year level, mainly attributable to
lower overseas dry hole costs of approximately $50 million.
Selling and administrative expenses for the second quarter of 1995 totaled
$542 million compared with $695 million for the second quarter of 1994.
Included in the second quarter 1994 selling and administrative expenses
were restructuring charges of $225 million related to severance costs.
Excluding that item, selling and administrative expenses for the second
quarter of 1995 increased by 15 percent primarily due to ongoing
restructuring charges of $35 million before tax related to system
development and redesign.
Interest expense of $89 million for the second quarter of 1995 increased
$25 million over the second quarter of 1994, resulting from higher debt
balances and slightly higher interest rates.
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For the 12 months ended June 30, 1995, return on average shareholders'
equity was 14.3 percent compared with 14.1 percent for the 12 months ended
June 30, 1994. Return on average capital employed was 11.5 percent for
the 12-month period ended June 30, 1995, compared with 10.9 percent for
the corresponding prior-year period.
Results by Industry Segment
As previously announced, Amoco changed the reporting segments to align
more closely with its organizational structure which includes three
sectors: exploration and production, petroleum products and chemicals.
Segment earnings for 1994 have been restated to conform to the new basis.
Six Months Second Quarter
(millions of dollars) 1995 1994 1995 1994
Exploration and Production
United States $ 364 $ 497 $ 189 $ 296
Canada 79 105 33 22
Overseas 148 (66) 61 (69)
Subtotal 591 536 283 249
Petroleum Products 123 130 104 47
Chemicals 479 191 246 103
Corporate and
Other Operations* (137) (49) (100) 11
Net Income $1,056 $ 808 $ 533 $ 410
* Corporate and other operations include net interest and general
corporate expenses as well as the results of investments in
technology companies, real estate interests and other activities.
Six Months 1995 vs. Six Months 1994
Exploration and Production - U. S.
U.S. E&P operations earned $364 million in the first six months of 1995
compared with restated earnings of $497 million for the similar 1994
period. Included in first six-month results for 1994 were $90 million
associated with the favorable COET settlement. Partly offsetting were
restructuring charges of $47 million, primarily related to severance
costs. Adjusting for these factors, 1995 U.S. E&P earnings of $364
million were 20 percent below the comparable 1994 period.
The decrease in earnings mainly resulted from lower natural gas prices,
partly offset by higher crude oil prices. For the first six months of
1995, Amoco's U.S. natural gas prices averaged about $1.40 per thousand
cubic feet ("mcf"), $.50 per mcf below the first six months of 1994.
Average crude oil prices for the same time period averaged about $16.30
per barrel, up over $2.50 per barrel for the same period last year.
Natural gas production for the first six months of 1995 was 2.4 billion
cubic feet per day, which was comparable to the same period in 1994.
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Crude oil and natural gas liquids ("NGL") production of 293 thousand
barrels per day for the first six months of 1995 was essentially level
with the prior-year period.
Exploration and Production - Canada
Canadian earnings, which include supply and marketing of NGL, for the
first six months of 1995 were $79 million compared with last year's
restated six months earnings of $105 million. The decrease in earnings as
compared to the first six months of 1994 reflected lower natural gas
prices, which were about $.70 per mcf below the year-earlier period, and
lower production. Six-month 1995 results also included unfavorable
currency effects of $10 million. Partially offsetting were higher crude
oil prices, which averaged almost $4.00 per barrel above 1994, and higher
NGL margins.
For the first six months of 1995, natural gas production averaged 815
million cubic feet per day, 3 percent below the comparable 1994 period,
primarily reflecting lower demand. Crude oil and NGL production averaged
67 thousand barrels per day for the first six months of 1995, 12 percent
below 1994, as a result of property dispositions and normal field
declines.
Exploration and Production - Overseas
Overseas E&P earnings were $148 million for the first six months of 1995,
an increase of $214 million over restated 1994 earnings for the same
period. Earnings for 1994 included second-quarter restructuring charges
of $17 million, primarily related to severance costs, and charges of $18
million related to concession relinquishments.
The increase in six-month 1995 results also reflected higher crude oil
prices, lower exploration and other expenses and a gain of $18 million
related to the first-quarter divestment of Amoco's Congo operations.
Partially offsetting was lower crude oil production.
For the first six months of 1995, overseas natural gas production averaged
942 million cubic feet per day, 2 percent above 1994 production levels of
927 million cubic feet per day. Crude oil and NGL production averaged 295
thousand barrels per day, 5 percent below the comparable 1994 period.
Petroleum Products
Petroleum Product activities earned $123 million for the first six months
of 1995, compared with restated earnings of $130 million for the
comparable 1994 period. Included in 1994 results were second-quarter
restructuring charges of $41 million, primarily related to severance
costs.
Excluding this item, earnings of $123 million for the first six months of
1995 were $48 million lower than the same period in 1994. The decrease in
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earnings between the two periods mainly reflected lower distillate
margins, lower sales volumes and higher refinery maintenance expense.
For the first six months of 1995, U.S. refined product sales averaged
1,112 thousand of barrels per day, an decrease of 2 percent from the
corresponding 1994 period. Distillate sales volumes decreased 3 percent
compared with 1994, while gasoline volumes were down slightly. For the
first six months of 1995, refineries ran at 89 percent of capacity,
compared with 96 percent for the comparable 1994 period, reflecting higher
planned and unplanned maintenance.
Chemicals
Chemical operations earned $479 million for the first six months of 1995
as compared to the restated earnings of $191 million for the similar
period in 1994. Included in the restated 1994 results were second-quarter
restructuring charges of $36 million, primarily related to severance
costs. After adjusting for this item, 1995 earnings increased by $252
million.
The increase in earnings for the first six months of 1995 resulted from
higher margins and sales volumes for major product lines, particularly
purified terephthalic acid ("PTA"), reflecting strong consumer demand.
Worldwide PTA, polypropylene and olefin volumes for the first six months
of 1995 each increased 8 percent over the comparable 1994 period.
Corporate and Other Operations
Corporate and other operations, which include net interest and general
corporate expenses as well as the results of investments in technology
companies, real estate interests and other activities, reported net
expenses of $137 million for the first six months of 1995, compared with
net expenses after tax of $49 million for the first six months of 1994.
Corporate and other operations expenses for 1994 included second-quarter
interest income of $180 million related to the COET settlement and
restructuring charges of $112 million.
Adjusting for these items, net expenses for the first six months of 1995
of $137 million were $20 million higher than 1994. The increase resulted
from ongoing after-tax restructuring charges of approximately $30 million,
primarily associated with system development and redesign. Also affecting
higher net expenses in 1995 were higher interest expense, reflecting both
an increase in debt balances and slightly higher interest rates, and a
loss on an asset disposition. Partly offsetting were favorable currency
effects and lower costs associated with technology and other activities.
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Second Quarter 1995 vs. Second Quarter 1994
Exploration and Production - U.S.
U.S E&P earnings were $189 million in the second quarter of 1995 compared
with restated 1994 second-quarter earnings of $296 million. Included in
1994 earnings were benefits of $90 million for the COET settlement and
charges of $47 million related to restructuring.
Exclusive of these items, the 1995 decrease of $64 million primarily
resulted from lower natural gas prices. Partly offsetting were higher
crude oil prices for the quarter. Amoco's U.S. natural gas prices
averaged about $1.35 per mcf during the quarter, almost 50 cents per mcf
less than last year's second quarter, reflecting lower market demand and
adequate industry supplies. Amoco's U.S. crude oil prices averaged about
$16.70 per barrel for the 1995 second quarter, compared with about $15 per
barrel for the comparable period of 1994.
Natural gas production for the second quarter of 1995 averaged 2.4 billion
cubic feet per day, comparable to the 1994 second-quarter average. Crude
oil and NGL production averaged 296 thousand barrels per day, up slightly
from the second quarter of 1994.
Exploration and Production - Canada
Canadian E&P earnings were $33 million in the second quarter of 1995
compared with restated earnings of $22 million for the second quarter of
1994. The increase in earnings between the two periods reflected higher
crude oil prices, NGL margins and lower operating expenses. Partially
offsetting were lower natural gas prices and lower crude oil production
volumes.
For the second quarter of 1995, natural gas prices averaged about $.90 per
mcf, $.60 per mcf below the comparable 1994 period. Crude oil prices
averaged $15.50 per barrel in the second quarter of 1995, up $3.80 per
barrel over the previous year. Natural gas production averaged 837
million cubic feet per day in the second quarter of 1995, 2 percent above
the comparable 1994 period. Crude oil and NGL production averaged 62,000
barrels per day, down 16 percent reflecting property dispositions and
normal field declines.
Exploration and Production - Overseas
Overseas E&P earned $61 million in the second quarter of 1995 compared
with a restated loss of $69 million for the second quarter of 1994.
Included in 1994 results were restructuring expenses of $17 million and
charges of $18 million for concession relinquishments.
The increase in second-quarter 1995 earnings also reflected higher crude
oil prices, and lower exploration and other expenses. Partly offsetting
was lower crude oil production.
Natural gas production for the second quarter of 1995 averaged 898 million
cubic feet per day, up 10 percent over the comparable 1994 period. Crude
oil and NGL production for the second quarter of 1995 averaged 288
thousand barrels per day, 7 percent lower than the prior-year period.
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Petroleum Products
Petroleum Product activities earned $104 million during the second quarter
of 1995, compared with restated earnings of $47 million earned in the
second quarter of 1994. Included in 1994 second-quarter results were
charges of $41 million associated with restructuring charges.
Adjusting for these charges, 1995 earnings would have been $16 million
higher than the corresponding prior-year period. The improvement in
second quarter 1995 earnings resulted from higher margins primarily
reflecting strengthening of U.S. gasoline prices. Partially offsetting
were lower distillate margins, a decrease in sales volumes and higher
refinery maintenance expenses in the quarter.
U.S. sales of refined products averaged 1,133 thousands of barrels per day
during the second quarter of 1995, an decrease of 6 percent from the
comparable 1994 period. Refineries ran at 91 percent of rated capacity
during the second quarter of 1995, compared with 103 percent in the second
quarter of 1994, due to planned and unplanned maintenance.
Chemicals
Chemical operations earned $246 million in the second quarter of 1995,
compared with $103 million for the second quarter of 1994. Included in
the 1994 second-quarter earnings were restructuring expenses of $36
million. After adjusting for these expenses, 1995 earnings increased $107
million from the prior-year period.
The improvement in 1995 earnings resulted from continued strong
performance as margins and sales volumes increased across major product
lines. Worldwide olefin volumes increased 8 percent above last year's
second-quarter levels. Polypropylene and PTA volumes were up 6 percent
and 4 percent, respectively, over second-quarter 1994 volumes.
Corporate and Other Operations
Corporate and other operations reported net expenses after tax of $100
million for the second quarter of 1995. This compared with the 1994 net
income after tax of $11 million. Second-quarter 1994 net expenses
included benefits related to the COET settlement of $180 million and $112
million in restructuring expenses. Adjusting for these factors, the 1995
second-quarter net expenses of $100 million were $43 million dollars above
the comparable prior-year quarter.
The increase in expenses between the two periods reflected ongoing after-
tax restructuring charges of $20 million, primarily related to system
development and redesign, higher net interest expense, and a loss on an
asset disposition.
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Outlook
The Corporation and the oil industry will continue to be affected by the
volatility of crude oil and natural gas prices. Also affecting chemical
and petroleum product activities are the overall industry product supply
and demand balance. Amoco's future performance is expected to be impacted
by its organizational structure announced in July 1994, and associated
savings, ongoing cost reduction programs, the divestment of marginal
properties and underperforming assets, application of new technologies and
new governmental regulation. Amoco's exploration efforts will continue to
target those areas that offer the most potential, especially overseas.
Amoco will also pursue areas that capitalize on its natural gas resources
and continue to develop internationally. The Corporation recently
announced it is expanding its chemical operations in the Far East and
entering gasoline marketing operations in Central Europe.
Restructuring
In July 1994, Amoco announced that its organizational structure was being
changed into 17 business groups with a shared services organization
providing support services. In conjunction with the restructuring, an
after-tax charge of $256 million was accrued in the second quarter of
1994. Selling and administrative expenses for that period included
charges of $225 million ($146 million after-tax) related to employee-
termination costs associated with the severance of approximately 3,800
employees expected to occur by year-end 1995. Since July of last year,
charges against the accrual totaled $128 million ($83 million after-tax).
As of June 30, 1995, the accrual balance associated with restructuring was
$97 million ($63 million after-tax), which was considered adequate for all
future severances and other related activities to which the Corporation
has committed. First six-month 1995 earnings reflected before-tax savings
of approximately $200 million in employment costs and other costs
resulting from the Corporation's restructuring effort.
The second-quarter 1994 accrual also included charges in operating
expenses of $169 million ($110 million after-tax) related to a reduction
in carrying value of assets that were to be divested. The sale of a
hazardous-waste incineration facility in Kimball, Nebraska has been
completed. Disposition of these assets, including the hazardous-waste
incineration facility, will not have a material effect on revenues,
depreciation or income.
Additional restructuring costs totaling approximately $200 million after-
tax are expected to be incurred from July, 1994 through 1996, representing
costs for system redesign, relocations, work force consolidation and
development of new processes in support of the restructuring. Costs
incurred, primarily for system development and redesign, totaled
approximately $40 million after-tax in the first six months of 1995.
Liquidity and Capital Resources
Cash flows from operating activities for the first six months of 1995
amounted to $1,512 million compared with $1,390 million in the prior-year
period. Working capital of $1,264 million at June 30, 1995, decreased
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$354 million from $1,618 million at December 31, 1994. The Corporation's
current ratio was 1.28 to 1 at June 30, 1995 compared with 1.32 to 1 at
year-end 1994. 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's debt totaled $4.6 billion at June 30, 1995, the same as year-end
1994. Debt as a percent of debt-plus-equity was 24.3 percent at June 30,
1995 and at year-end 1994.
Amoco announced on April 25, 1995, that it planned to purchase up to 8.9
million shares of its common stock in excess of amounts needed for benefit
plan purposes. As of June 30, 1995, approximately 6 million shares had
been purchased at a cost of $405 million. Through July 31, 1995, 8.9
million shares were repurchased at a cost of $601 million, completing the
stock repurchase program.
Amoco Corporation guarantees the outstanding public debt obligations of
Amoco Company. Amoco Corporation and Amoco Company guarantee the
outstanding public notes and debentures of Amoco Canada Petroleum Company
LTD. ("Amoco Canada"), except for the 7 3/8 percent Subordinated
Exchangeable Debentures ("SEDs"). On August 1, 1995, Amoco Canada
announced that it will be redeeming the outstanding SEDs. The redemption
date is September 1, 1995, and the redemption price is $1,022.10 per
$1,000.00 face amount, including the redemption premium of 2.21 percent.
The SEDs are exchangeable for common stock of Amoco Corporation at an
exchange price of $52.50 per share up to the close of business on August
31, 1995 and not thereafter. Approximately 8.9 million shares of Amoco
Corporation common stock would be issued if all the SEDs were converted
into stock. At June 30, 1995, the balance of the SEDs totaled $458
million.
On July 7, 1995, Amoco Canada made an offer to purchase all of the common
shares of Home Oil Company Limited ("Home Oil") for Cdn. $16.50 per share,
payable in cash. There are approximately 45,863,000 common shares
outstanding, giving the bid an aggregate value of approximately Cdn. $757
million (about $550 million U.S. based on June 30, 1995 exchange rates.)
The offer is conditional upon at least 90 percent on the Home Oil common
shares being deposited under the offer and not withdrawn. The offer is
also conditional upon Amoco Canada obtaining Investment Canada approvals
on terms and conditions satisfactory to Amoco Canada. The offer will
expire on September 7, 1995.
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 June 30, 1995, bank
lines of credit available to support commercial paper borrowings amounted
14.<PAGE>
<PAGE>
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 ("SEC") to permit ready access to capital markets.
Capital and exploration expenditures for the first six months of 1995
totaled $1,524 million compared with $1,388 million for the comparable
1994 period. Approximately 70 percent of the total 1995 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 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.
15.<PAGE>
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the description of legal proceedings in Part I, Item
3 of the Corporation's 1994 Annual Report on Form 10-K and Part II, Item 1
of the Corporation's Report on Form 10-Q for the quarterly period ended
March 31, 1995.
Thirteen 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 liquidity, consolidated 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 $5.2 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, 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.
16.<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 Six Months
Ended Ended
June 30, June 30,
1995 1994 1995 1994
(millions of dollars)
Total revenues (including
excise taxes).............. $ 7,195 $ 7,397 $13,934 $13,533
Operating profit............. $ 810 $ 596 $ 1,489 $ 1,105
Net income................... $ 502 $ 561 $ 948 $ 938
June 30, Dec. 31,
1995 1994
(millions of dollars)
Current assets........................ $ 4,552 $ 5,399
Total assets.......................... $25,194 $24,549
Current liabilities................... $ 3,382 $ 4,142
Long-term debt........................ $ 6,844 $ 6,190
Deferred credits...................... $ 4,688 $ 4,584
Minority interest..................... $ 7 $ 5
Shareholder's equity.................. $10,273 $ 9,628
Amoco Argentina Oil Company ("Amoco Argentina") is a wholly owned
subsidiary of Amoco International Petroleum Company, which is an
indirect wholly owned subsidiary of Amoco. Summarized financial
data for Amoco Argentina are presented below.
Three Months Six Months
Ended Ended
June 30, June 30,
1995 1994 1995 1994
(millions of dollars)
Revenues................... $ 61 $ 38 $ 122 $ 80
Net income................. $ 20 $ 20 $ 44 $ 38
June 30, Dec. 31,
1995 1994
(millions of dollars)
Current assets........................ $ 113 $ 97
Total assets.......................... $ 398 $ 349
Current liabilities................... $ 60 $ 58
Non-current liabilities............... $ 103 $ 100
Shareholder's equity.................. $ 235 $ 191
17.<PAGE>
<PAGE>
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) Current reports on Form 8-K dated April 5, 1995
and April 13, 1995 were filed. The filing of
April 5, 1995 was made to include summarized
financial data for Amoco Argentina Oil Company
in Note 22 of the Consolidated Financial
Statements.
The filing of April 13, 1995, announced that the
basis upon which operations are grouped for the
purpose of business segment reporting had been
changed to align with Amoco's organizational
structure. Restated segment earnings for the
years 1994, 1993 and 1992 and earnings by quarter
for 1994 and 1993 were included.
18.<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: August 11, 1995
J. R. Reid
J. R. Reid
Vice President and Controller
(Duly Authorized and Chief
Accounting Officer)
19.<PAGE>
<PAGE>
<PAGE>
EXHIBIT 12
AMOCO CORPORATION
_____________
STATEMENT SETTING FORTH COMPUTATION OF RATIO OF
EARNINGS TO FIXED CHARGES
(millions of dollars, except ratios)
Six Months
Ended Year Ended December 31,
June 30,
1995 1994 1993 1992 1991 1990
Determination of Income:
Consolidated earnings
before income taxes
and minority interest. $1,478 $2,491 $2,506 $ 998 $2,035 $3,410
Fixed charges expensed by
consolidated companies 212 316 350 376 479 596
Adjustments for certain
companies accounted for
by the equity method.. 13 7 11 28 20 35
Adjusted earnings plus
fixed charges......... $1,703 $2,814 $2,867 $1,402 $2,534 $4,041
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized). $ 159 $ 288 $ 299 $ 333 $ 433 $ 532
Consolidated rental
expense representative
of an interest factor. 48 23 50 44 54 60
Adjustments for certain
companies accounted for
by the equity method.. 5 5 8 20 24 25
Total fixed charges..... $ 212 $ 316 $ 357 $ 397 $ 511 $ 617
Ratio of earnings to
fixed charges........... 8.0 8.9 8.0 3.5 5.0 6.5 <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 qualfied in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000093397
<NAME> AMOCO CORPORATION
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 133
<SECURITIES> 867
<RECEIVABLES> 3102
<ALLOWANCES> 22
<INVENTORY> 1137
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<PP&E> 46884
<DEPRECIATION> 25301
<TOTAL-ASSETS> 28922
<CURRENT-LIABILITIES> 4570
<BONDS> 4223
<COMMON> 2140
0
0
<OTHER-SE> 12344
<TOTAL-LIABILITY-AND-EQUITY> 28922
<SALES> 13434
<TOTAL-REVENUES> 15277
<CGS> 9542
<TOTAL-COSTS> 9542
<OTHER-EXPENSES> 3069
<LOSS-PROVISION> 0
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<INCOME-TAX> 422
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<NET-INCOME> 1056
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<EPS-DILUTED> 0
</TABLE>
