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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, 1998 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, 1998--954,653,958
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PART I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
(millions of dollars, except as noted)
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Sales and other operating
revenues..................... $ 6,448 $ 7,984 $19,955 $23,724
Consumer excise taxes.......... 924 894 2,682 2,577
Equity in income of affiliates
and other income............. 85 105 384 299
Total revenues............... 7,457 8,983 23,021 26,600
Cost and Expenses:
Purchased crude oil, natural
gas, petroleum products and
merchandise.................. 3,451 4,471 10,817 13,144
Operating expenses............. 1,307 1,219 3,600 3,649
Petroleum exploration expenses,
including exploratory dry
holes........................ 158 132 459 417
Selling and administrative
expenses..................... 550 555 1,661 1,562
Taxes other than income taxes.. 1,043 1,058 3,096 3,163
Depreciation, depletion,
amortization, and retire-
ments and abandonments....... 531 570 1,835 1,662
Interest expense............... 100 97 303 269
Total costs and expenses..... 7,140 8,102 21,771 23,866
Income before income taxes....... 317 881 1,250 2,734
Income taxes..................... 22 246 282 803
Net income....................... $ 295 $ 635 $ 968 $ 1,931
Weighted average number of shares
of common stock outstanding
(in thousands):
Basic.......................... 954,187 976,506 957,410 983,813
Assuming dilution.............. 960,133 982,852 962,087 989,320
Per Share Data (Based on weighted
average shares outstanding):
Net income (basic)............... $ .31 $ .65 $ 1.01 $ 1.96
Net income (assuming dilution)... $ .31 $ .64 $ 1.01 $ 1.95
Cash dividends................... $ .375 $ .35 $ 1.125 $ 1.05
All share data reflect the March 31, 1998 two-for-one common stock
split.
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Consolidated Statement of Financial Position
(millions of dollars)
Sept. 30, Dec. 31,
ASSETS 1998 1997
Current assets:
Cash......................................... $ 122 $ 166
Marketable securities -- at cost (corporate
securities, except $104 at December 31,
1997 which represents state and
municipal securities)...................... 535 979
Accounts and notes receivable (less
allowances of $17 at September 30, 1998,
and $10 at December 31, 1997).............. 2,851 3,585
Inventories
Crude oil and products..................... 999 914
Materials and supplies..................... 271 260
Prepaid expenses, income taxes and other..... 533 1,140
Total current assets....................... 5,311 7,044
Investments and Other Assets:
Investments and related advances............. 2,238 2,099
Long-term receivables and other assets....... 940 803
3,178 2,902
Properties--at cost, less accumulated depre-
ciation, depletion and amortization of
$28,439 at September 30, 1998, and $26,814 at
December 31, 1997............................ 23,060 22,543
Total assets............................... $ 31,549 $ 32,489
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations..... $ 213 $ 218
Short-term obligations....................... 760 751
Accounts payable............................. 2,126 3,026
Accrued liabilities.......................... 1,062 785
Taxes payable (including income taxes)....... 1,052 1,264
Total current liabilities.................. 5,213 6,044
Long-term obligations:
Debt......................................... 5,257 4,639
Capitalized leases........................... 82 80
5,339 4,719
Deferred Credits and Other Non-Current Liabilities:
Income taxes................................. 2,829 2,868
Other........................................ 2,323 2,408
5,152 5,276
Minority Interest.............................. 163 131
Shareholders' Equity:
Common stock (authorized 1,600,000,000 shares;
issued and outstanding at September 30, 1998
--954,653,958; December 31, 1997
--966,047,616 shares)...................... 2,552 2,568
Earnings retained and invested in the
business................................... 13,281 13,900
Accumulated other comprehensive income:
Pension liability adjustment............... (31) (31)
Foreign currency translation adjustment.... (120) (118)
15,682 16,319
Total liabilities and shareholders' equity. $ 31,549 $ 32,489
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Consolidated Statement of Cash Flows
(millions of dollars)
Nine Months Ended
Sept. 30,
1998 1997
Cash Flows from Operating Activities:
Net income................................... $ 968 $ 1,931
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, amortization,
and retirements and abandonments......... 1,835 1,662
Decrease in receivables.................... 744 172
Increase in inventories.................... (93) (200)
Decrease in payables and accrued
liabilities.............................. (944) (583)
Deferred taxes and other items............. (6) 116
Net cash provided by operating activities.. 2,504 3,098
Cash Flows from Investing Activities:
Capital expenditures......................... (2,253) (2,335)
Proceeds from dispositions of property
and other assets........................... 488 450
Net investments, advances and business
acquisitions............................... (288) (507)
Other........................................ 55 74
Net cash used in investing activities...... (1,998) (2,318)
Cash Flows from Financing Activities:
New long-term obligations.................... 767 775
Repayment of long-term obligations........... (150) (116)
Cash dividends paid.......................... (1,080) (1,038)
Issuances of common stock.................... 44 101
Acquisitions of common stock................. (584) (1,056)
Increase in short-term obligations........... 9 258
Net cash used in financing activities...... (994) (1,076)
Decrease in Cash and Marketable
Securities................................... (488) (296)
Cash and Marketable Securities-
Beginning of Period.......................... 1,145 1,321
Cash and Marketable Securities-End of Period... $ 657 $ 1,025
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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 June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
This statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires
that all derivatives be recognized at fair value as either assets
or liabilities in the statement of financial position. The effect
of the adoption of SFAS No. 133 is not known at this time, but is
not expected to be material to Amoco's financial position or
results of operations. Implementation of SFAS No. 133 is required
no later than the quarter ending March 31, 2000.
Amoco adopted Statement of Position ("SOP") 98-1, "Accounting For
the Costs of Computer Software Developed or Obtained for Internal
Use" in the first quarter of 1998. The SOP requires costs of
computer software developed for internal use to be capitalized as
a long-lived asset. The capitalized costs are amortized over the
estimated useful life of the software. The amount capitalized,
which would have been expensed previously, was approximately $71
million after tax in the first nine months of 1998 with $14
million after tax capitalized during the third quarter.
Shown below is Amoco's comprehensive income.
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
Net income............................ $ 295 $ 635 $ 968 $1,931
Other comprehensive income, after tax. (1) (22) (2) (97)
Comprehensive income.................. $ 294 $ 613 $ 966 $1,834
Item 2. Management's Discussion and Analysis
Results of Operations
Net income for the third quarter of 1998 was $295 million, or
$.31 per share, compared to third-quarter 1997 earnings of $635
million, or $.65 per share and $.64 per share, basic and assuming
dilution, respectively. Basic and fully diluted per-share data
were the same for 1998.
The earnings decline primarily resulted from lower worldwide
crude oil prices, which for Amoco have fallen 30 percent in the
last year. In addition, lower crude oil prices have not
translated into more favorable downstream results, which have
been adversely affected by lower margins.
For the first nine months of 1998, Amoco reported earnings of
$1,033 million, excluding the second quarter impairment charges
of $214 million for Colombian assets, favorable second-quarter
tax adjustments of $106 million and the first-quarter gain of $43
million on asset divestitures. This compared with $1,931 million
for the first nine months of 1997. The decrease in earnings in
1998 primarily reflected lower energy prices and chemical
margins.
Sales and other operating revenues totaled $6.4 billion for the
third quarter of 1998, 20 percent lower than the $8.0 billion
reported in the corresponding 1997 period. For the first nine
months of 1998, sales and other operating revenues declined 16
percent to $20.0 billion from 1997 revenues of $23.7 billion. The
decline in revenues in both periods reflected lower prices for
crude oil and refined products.
The increase in other income for the year-to-date 1998 period
reflected gains associated with the divestitures of North
American exploration and production ("E&P") properties. The
divestitures, which began in the third quarter of 1997, were part
of the Corporation's strategy to upgrade and refocus the
portfolio of E&P assets.
Purchases of crude oil, natural gas, petroleum products and
merchandise totaled $3.5 billion for the third quarter of 1998,
down 23 percent from the third quarter of 1997. For the first
nine months of 1998, purchases totaled $10.8 billion, 18 percent
below the comparable 1997 period. The decrease in both periods
was primarily attributable to lower crude oil purchase prices.
Petroleum exploration expenses of $158 million for the third
quarter of 1998 increased 20 percent from the third quarter of
1997, mainly due to higher dry hole costs. For the first nine
months of 1998, exploration expenses increased ten percent over
the nine-month period in 1997, primarily reflecting higher
exploration costs in the United States.
The increase in depreciation, depletion, amortization, and
retirements and abandonments for the year-to-date period
primarily reflected the previously mentioned impairment charge
for Colombian assets.
The increase in interest expense for the third quarter and first
nine months of 1998, compared with the prior-year's periods,
reflected higher debt balances.
For the 12 months ended September 30, 1998, return on average
shareholders' equity was 11.0 percent compared with 17.5 percent
for the 12 months ended September 30, 1997. Return on average
capital employed was 8.8 percent for the 12-month period ended
September 30, 1998, compared with 13.3 percent for the
corresponding prior-year period.
Results by Industry Segment
Three Months Nine Months
Ended Ended
September 30, September 30,
(millions of dollars) 1998 1997 1998 1997
Exploration and Production
United States................. $ 107 $ 217 $ 474 $ 791
Canada........................ 35 61 142 164
Overseas...................... (30) 67 (254) 261
Subtotal...................... 112 345 362 1,216
Petroleum Products.............. 140 241 469 454
Chemicals....................... 99 172 317 504
Corporate and Other Operations*. (56) (123) (180) (243)
Net Income.................... $ 295 $ 635 $ 968 $1,931
* 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.
Exploration and Production
Operating Statistics
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
Net Production of Natural
Gas(million cubic feet per day)
United States............ 2,123 2,356 2,196 2,385
Canada................... 721 775 753 757
Overseas................. 1,260 910 1,336 974
Total.................. 4,104 4,041 4,285 4,116
Amoco's share of
affiliates' production
(included in overseas)... 164 - 156 -
Net Production of Crude Oil and
NGL(thousand barrels per day)
United States--crude oil. 148 161 151 165
--NGL....... 100 105 106 112
Canada--crude oil........ 66 50 63 51
--NGL.............. 10 10 10 10
Overseas................. 308 292 303 299
Total.................. 632 618 633 637
Amoco's share of
affiliates' production
(included in overseas).... 50 - 48 -
Exploration and Production - U. S.
U.S. E&P operations earned $107 million during the third quarter
of 1998 compared with $217 million for the similar 1997 period.
The decline was primarily due to lower crude oil prices, and
lower crude oil and natural gas production, reflecting normal
field declines and dispositions.
Earnings of $431 million for first nine months of 1998, excluding
$43 million related to asset dispositions, compared with $791
million for the comparable 1997 period. The decrease primarily
reflected lower energy prices and production, and higher
exploration expenses.
Amoco's third-quarter 1998 U.S. natural gas prices averaged
approximately $1.70 per thousand cubic feet ("mcf"), a decrease
of six percent compared with 1997. Amoco's average U.S. crude oil
prices of about $12.50 per barrel declined over $5.00 per barrel
from the third quarter of 1997.
For the first nine months of 1998, Amoco's U.S. natural gas
prices averaged about $1.80 per mcf, about $.20 per mcf below the
prior-year period. Amoco's U.S. crude oil prices averaged $13.00
per barrel during the first nine months of 1998, a decrease of
almost $5.70 per barrel from the comparable 1997 period.
Exploration and Production - Canada
Canadian operations earned $35 million in the third quarter of
1998 compared to $61 million in the 1997 period. The decrease
primarily reflected lower crude oil and NGL prices, partially
offset by higher crude oil production and natural gas prices.
Also, 1997 earnings included a gain on the sale of Amoco's Canmar
arctic drilling unit.
Earnings for the first nine months of 1998, of $92 million,
excluding second-quarter tax benefits of $50 million, compared
with nine-month 1997 earnings of $164 million. The earnings
decline resulted primarily from lower crude oil and natural gas
prices.
Amoco's Canadian natural gas prices averaged $1.30 per mcf for
the quarter, 10 cents per mcf higher than the third quarter of
1997. For the first nine months, Canadian natural gas prices
decreased seven percent from the comparable 1997 period,
averaging about $1.30 per mcf.
Canadian crude oil prices averaged $9.00 per barrel for the third
quarter of 1998, about $5.00 per barrel below the prior-year
third quarter average, reflecting lower industry prices and
increased lower-priced heavy oil production. For the first nine
months of 1998, Canadian crude oil prices averaged about $8.00
per barrel, almost $7.00 per barrel lower than the 1997 level.
Exploration and Production - Overseas
Overseas E&P operations lost $30 million in the third quarter of
1998 compared with earnings of $67 million in the third quarter
of 1997. The decline was primarily due to lower crude oil prices,
which on average dropped approximately $6.00 per barrel, and
higher exploration expenses. Partially offsetting was higher
natural gas production.
For the first nine months of 1998, overseas E&P operations lost
$40 million, excluding $214 million related to the impairment of
the Opon field and power plant facility in Colombia. This
compared with earnings of $261 million for the similar 1997
period. The decrease mainly reflected lower crude oil prices,
partly offset by increased production.
Third-quarter 1998 natural gas production increased primarily as
a result of new production in Argentina, the United Kingdom and
Trinidad. Crude oil production increased five percent over the
third quarter of 1997, due to higher production in Azerbaijan,
Venezuela and Egypt.
Of the $214 million second-quarter Colombian impairment charge
referred to above, $121 million related to the Opon field and $93
million related to the adjacent power plant facility. The
impairment of the field reflected lower than anticipated natural
gas production and related reserve estimates, and the adjacent
power plant was impaired because of the unavailability of an
economic fuel supply. The fair value of the impaired assets was
deemed to be minimal given the low level of reserves in the
field, the absence of an economic fuel supply for the power
plant, the potential for dismantlement and transportation costs
related to any sale of assets from the plant, the small number of
potential qualified buyers and uncertainties associated with the
realization of any tax benefits.
Petroleum Products
Operating Statistics
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
U.S. Refined Product Sales
(thousand barrels per day)
Gasoline................. 702 686 677 652
Distillates.............. 360 352 357 338
Other products........... 318 238 256 199
Total.................. 1,380 1,276 1,290 1,189
Input to U.S. Crude Units
(thousand barrels per day) 993 988 953 943
Refinery Utilization Rate 98% 98% 94% 93%
Petroleum Products' activities earned $140 million during the
third quarter of 1998, compared with $241 million for the third
quarter of 1997. The decrease primarily resulted from lower
margins as product prices declined more than crude oil costs.
Earnings for the first nine months of 1998 totaled $469 million,
compared with $454 million for the comparable period of 1997. The
slight increase reflected higher U.S. gasoline and distillate
volumes and the absence of 1997 planned turnarounds at Amoco's
largest refineries. Offsetting were lower refined product
margins and lower earnings from NGL supply and marketing
operations in Canada.
Chemicals
Chemical earnings of $99 million for the third quarter and $317
million for the first nine months of 1998 compared with $172
million and $504 million for the similar 1997 periods,
respectively. The decrease primarily reflected lower olefins,
purified terephthalic acids ("PTA") and paraxylene margins as
additions to industry capacity resulted in oversupply and put
downward pressure on margins across most commodity product lines.
Corporate and Other Operations
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.
Corporate and other operations incurred net expenses of $56
million for the third quarter of 1998, which reflected favorable
tax adjustments. This compared with net expenses after tax of
$123 million in the corresponding 1997 period, which was
adversely affected by revised estimates of litigation and tax
obligations.
For the first nine months of 1998, corporate and other operations
expenses of $180 million compared with $243 million for the
similar 1997 period. The underrun compared with 1997 reflects
favorable tax adjustments, including $48 million second-quarter
favorable adjustments related to Canadian taxes, and currency
effects. These factors more than offset higher interest expense.
Outlook
On August 11, 1998, the British Petroleum Company p.l.c. ("BP")
and Amoco announced their agreement to merge. The merger is
subject to a number of conditions, including shareholder approval
and various regulatory and other consents and confirmations,
which are in process. Assuming all requested consents and
confirmations are obtained, the merger is planned to be
consummated by year-end 1998.
Amoco set a record date of October 19, 1998 for a special meeting
of Amoco shareholders for voting on the merger. Shareholders of
record at the close of business on that date will be entitled to
attend the meeting to be held on December 10, 1998 and vote on
the merger proposal. The proxy statement for the special
shareholders meeting was mailed to shareholders starting October
30, 1998.
Liquidity and Capital Resources
Cash flows from operating activities for the first nine months of
1998 amounted to $2,504 million compared with $3,098 million in
the prior-year period. Working capital of $98 million at
September 30, 1998 compared with $1.0 billion at December 31,
1997. The Corporation's current ratio was 1.02 to 1 at September
30, 1998, compared with 1.17 to 1 at year-end 1997. 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
flexibility since the Corporation has ready access to both short-
and long-term debt markets.
Amoco's debt totaled $6.2 billion at September 30, 1998 and $5.6
billion at year-end 1997. Debt as a percentage of debt-plus-
equity was 28.2 percent at September 30, 1998, and 25.4 percent
at year-end 1997. Amoco Corporation guarantees the public debt
obligations of Amoco Company and the public notes, bonds and
debentures of Amoco Canada Petroleum Company Ltd. ("Amoco
Canada"). Amoco also guarantees certain outstanding loans of
equity-basis affiliates, which at September 30, 1998 totaled $354
million.
Cash dividends paid in the first nine months of 1998 totaled
$1,080 million. Amoco was into the second year of a two-year, $2
billion stock repurchase program which was discontinued as a
result of the merger agreement announced in August 1998 between
Amoco and BP. Total shares repurchased under the program totaled
40.6 million on a post-split basis, at a cost of $1.8 billion.
Stock repurchased under the program was in addition to shares
purchased for benefit plan purposes.
The Corporation believes its strong financial position will
permit the financing of business needs and opportunities as they
arise. Short-term borrowings totaled $760 million at September
30, 1998, an increase of $9 million since year-end 1997. 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, 1998, bank
lines of credit available to support outstanding commercial paper
borrowings amounted to $790 million, all of which were supported
by commitment fees.
The Corporation also may utilize its favorable access to long-
term debt markets to finance profitable growth opportunities and
for ongoing operations.
Capital and exploration expenditures for the first nine months of
1998 totaled $2,712 million, excluding $325 million for Amoco's
share of equity-basis affiliates' spending. This compared with
$2,752 million for the similar 1997 period, excluding $131
million for Amoco's share of affiliates' spending. Approximately
70 percent of the 1998 expenditures was spent in E&P 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.
Year 2000 Update
Amoco has been addressing the issue of preparing its computer
systems to properly handle date information in the year 2000 and
beyond. This has involved the implementation of new systems and
upgrading of business computer information technology ("IT")
where needed. In addition Amoco has reviewed its information and
process control systems, as well as other electronic control
systems, to identify all critical equipment and software that
will need to be altered or replaced in preparation for the year
2000. The upgrading and replacement of these systems is underway
and will occur primarily during the three years ending in
December 1999, with the majority of the work being completed by
year end 1998.
The estimated total cost of Amoco's year 2000 program is
approximately $155 million with yearly expenditures of $21
million in 1997, $82 million in 1998, $45 million in 1999 and $7
million in the year 2000. The total impact of the year 2000
effort on the Corporation's before-tax net income is expected to
be $100 million over the three-year period. The total amount
expended on the effort through the end of September, 1998 was $82
million. Of the total amount projected to be spent on the
program, approximately $72 million, or 47 percent is expected to be
spent internally on repair or replacement of business computer
systems that have been identified as susceptible to the year 2000
issue. As a result of the year 2000 efforts, several non-critical
IT projects have been either terminated or deferred.
Amoco's year 2000 efforts cover all areas that are known to be
impacted by the issue including IT application systems and
infrastructure, process control systems and embedded
microprocessors in plants, fields and building facilities.
Through September, 1998, in excess of 50 percent of our high
criticality internal systems that have been found to be
susceptible to the year 2000 issue have been either repaired or
replaced.
The Amoco year 2000 process calls for the ongoing assessment of
year 2000 readiness of critical suppliers, customers, joint
ventures and partners. Through September, 1998 over 80 percent of
critical suppliers and customers have been assessed for year 2000
readiness at least once. The Corporation is in the process of
reviewing and updating its business continuity and contingency
plans to mitigate the impact of possible third party failures.
The failure to correct a material year 2000 problem could result
in an interruption in, or a failure of, certain normal business
activities or operations. Such potential interruptions and
failures could materially and adversely affect Amoco. However,
due to the general uncertainty inherent in the year 2000 problem,
Amoco is unable to determine at this time whether the consequences
of such failures will have a material impact on the Corporation's
results of operations, but they are not expected to have a material
effect on Amoco's liquidity or financial condition. Amoco's year
2000 program is expected to significantly reduce Amoco's level of
uncertainty about the year 2000 problem and about the year 2000
compliance and readiness of its material external parties. The
Corporation believes that with the implementation of new business
systems and completion of the program as scheduled, the possibility
of significant interruptions of normal operations should be reduced.
Each business entity is accountable for identifying,
categorizing, and prioritizing risks associated with the year
2000 transition and developing, exercising, and implementing
appropriate contingency plans to mitigate those risks. Amoco
intends to leverage existing Crisis Management, Emergency
Response, and Business Continuity organizations and plans to
assist in contingency planning and to supplement these
organizations and plans as needed. The Corporation is attempting
to minimize the uncertainties expected to be caused by the
proposed BP - Amoco merger. To this end Amoco is currently
focusing contingency planning efforts on the most stable parts of
the existing organizations such as individual plant sites.
Higher level plans that call for cross-organization coordination
are being deferred until completion of the merger and definition
of the resulting organizational structures.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995.
Statements in this report that are not historical facts,
including statements about industry and company growth, estimates
of expenditures and savings, completion of the merger with BP and
other trend projections are forward looking statements. These
statements are based on current expectations and involve risk and
uncertainties. Actual future results or trends may differ
materially depending on a variety of factors. These include
specific factors identified in the discussion accompanying such
forward looking statements, industry product supply, demand and
pricing, political stability and economic growth in relevant
areas of the world, the Corporation's successful execution of its
internal performance plans, development and use of new
technology, successful partnering, actions of competitors,
natural disasters, other changes to business conditions and, 1)
in the case of the merger with BP, attainment of the approval of
the shareholders of BP and Amoco and the required regulatory
consents and confirmations and other unforeseen circumstances in
connection with the merger, and 2) in the case of the year 2000
issue, external parties year 2000 readiness, availability and
costs of personnel trained in relevant areas, the ability to
locate and correct all relevant computer code, complications and
unforeseen circumstances resulting from the proposed BP and Amoco
merger and other uncertainties.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the description of the challenge by the
Internal Revenue Service of certain foreign income taxes as
credits against the Corporation's U.S. taxes that otherwise would
have been payable for the years 1980 through 1992 in Part II,
Item 1 of Amoco's Form 10-Q for the quarter ended March 31, 1998.
Six 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 $3 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.
Item 5. Other Information
Shown below is summarized financial information for Amoco's
wholly owned subsidiary, Amoco Company.
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
(millions of dollars)
Total revenues(including
excise taxes)........... $ 6,603 $8,299 $20,772 $24,199
Net income.............. $ 243 $ 468 $ 698 $ 1,570
Sept. 30, Dec. 31,
1998 1997
(millions of dollars)
Current assets................. $ 5,557 $ 6,442
Total assets................... $29,679 $30,062
Current liabilities............ $ 4,400 $ 5,165
Long-term debt-affiliates...... $ 5,022 $ 4,739
-other........... $ 3,463 $ 2,791
Deferred credits............... $ 4,761 $ 4,663
Minority interest.............. $ 122 $ 119
Shareholder's equity........... $11,829 $12,505
Shown below is summarized financial information for Amoco's
wholly owned subsidiary, Amoco Canada.
Three Months Nine Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
(millions of dollars)
Revenues................ $ 1,016 $ 1,101 $ 2,849 $ 3,508
Net income(loss)........ $ 72 $ 91 $ 231 $ 228
Sept. 30, Dec. 31,
1998 1997
(millions of dollars)
Current assets.................. $ 864 $ 1,479
Total assets.................... $ 3,923 $ 4,217
Current liabilities............. $ 614 $ 948
Non-current liabilities......... $ 2,852 $ 3,043
Shareholder's equity............ $ 457 $ 226
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number
12 Statement Setting Forth Computation of
Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) A report on Form 8-K was filed on August 26, 1998 with a
copy of the presentation slides and supplemental materials
distributed to attendees at the August 12, 1998 meeting
between BP and Amoco representatives, the financial
community and the press.
<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 13, 1998 A. J. NOCCHIERO
A. J. Nocchiero
Vice President and Controller
(Duly Authorized and Chief
Accounting Officer)
<PAGE>
<PAGE>
EXHIBIT 12
AMOCO CORPORATION
__________________
STATEMENT SETTING FORTH COMPUTATION OF RATIO OF
EARNINGS TO FIXED CHARGES
(millions of dollars, except ratios)
Nine
Months
Ended
Sept. 30, Year Ended December 31,
1998 1997 1996 1995 1994 1993
Determination of Income:
Consolidated earnings
before income taxes
and minority interest.. $ 1,249 $3,771 $3,965 $2,404 $2,491 $2,506
Fixed charges expensed by
consolidated companies. 369 452 412 406 316 350
Adjustments for certain
companies accounted for
by the equity method... 107 66 69 25 7 11
Adjusted earnings plus
fixed charges.......... $ 1,725 $4,289 $4,446 $2,835 $2,814 $2,867
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized).. $ 297 $ 363 $ 317 $ 317 $ 288 $ 299
Consolidated rental
expense representative
of an interest factor.. 75 102 107 89 23 50
Adjustments for certain
companies accounted for
by the equity method... 45 7 8 6 5 8
Total fixed charges...... $ 417 $ 472 $ 432 $ 412 $ 316 $ 357
Ratio of earnings to
fixed charges............ 4.1 9.1 10.3 6.9 8.9 8.0
<TABLE> <S> <C>
<PAGE>
<PAGE>
<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> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<CASH> 122
<SECURITIES> 535
<RECEIVABLES> 2868
<ALLOWANCES> 17
<INVENTORY> 1270
<CURRENT-ASSETS> 5311
<PP&E> 51499
<DEPRECIATION> 28439
<TOTAL-ASSETS> 31549
<CURRENT-LIABILITIES> 5213
<BONDS> 5257
0
0
<COMMON> 2552
<OTHER-SE> 13130
<TOTAL-LIABILITY-AND-EQUITY> 31549
<SALES> 19955
<TOTAL-REVENUES> 23021
<CGS> 14876
<TOTAL-COSTS> 14876
<OTHER-EXPENSES> 4931
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303
<INCOME-PRETAX> 1250
<INCOME-TAX> 282
<INCOME-CONTINUING> 968
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 968
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
