Item 3. Legal Proceedings
The information required by this item is incorporated by reference to Item 3 of Amoco Corporation's 1993 Annual Report on Form 10-K.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
Not required.
_________________ PART II
Item 5.
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
All of the common stock of the registrant is owned by its parent company; therefore, there is no market for such stock.
Item 6.
Item 6. Selected Financial Data
Not required.
Item 7.
Item 7. Management's Narrative Analysis of Results of Operations
Results of Operations 1993 Compared With 1992
The Company earned $1,803 million in 1993 compared with $524 million in 1992. Excluding the cumulative effects of adoption in 1992 of Statement of Financial Accounting Standards ("SFAS") No. 106, "Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 109, "Accounting for Income Taxes," 1992 earnings were $1,226 million.
Earnings in 1993 were adversely affected by charges of $170 million associated with the writedown of Congo exploration and production operations to current recoverable value and additional deferred taxes of $53 million due to the effect of a tax rate change resulting from enactment of the Omnibus Budget Reconciliation Act of 1993. Partly offsetting were prior-year tax benefits of $107 million and gains from drawdown of inventories valued under the last-in, first-out ("LIFO") method of approximately $50 million. Included in 1992 results were charges of $546 million as part of a strategic reassessment of business operations. Favorably impacting 1992 earnings were $90 million related to natural gas contract settlements in Sharjah and $62 million primarily associated with revised estimates of tax obligations.
Adjusting both years for special items and accounting changes, 1993 earnings were $1,869 million compared with 1992 earnings of $1,620 million. The increase resulted from higher refined product margins in refining, marketing and transportation operations and improved chemical results. Also contributing to the improvement were higher U.S. natural gas prices and volumes and lower worldwide exploration and operating expenses. Partly offsetting were lower crude oil prices and volumes.
Sales and other operating revenues totaled $22.9 billion for 1993 compared with $22.8 billion for 1992. Crude oil revenues increased 6 percent reflecting higher U.S. sales volumes, partly offset by lower prices worldwide. Natural gas revenues were higher as a result of increased U.S. prices and volumes. Included in 1992 were revenues associated with natural gas contract settlements. Refined product revenues declined 2 percent primarily due to lower prices. Other income was higher in 1993 compared with last year as a result of gains on asset dispositions.
Purchases of crude oil, petroleum products and merchandise of $11.8 billion for 1993 were 3 percent above the 1992 level of $11.4 billion, resulting from higher crude oil purchase volumes in the United States. Partly offsetting were lower crude oil prices. Exploration expenses for 1993 were 18 percent below 1992, due to lower dry hole costs worldwide. Selling and administrative expenses also declined 18 percent compared with prior year, mainly due to the absence of 1992 restructuring charges. Depreciation, depletion, amortization, and retirements and abandonments for 1993 were 8 percent below 1992 reflecting property dispositions. Interest expense increased in 1993 over the prior year, primarily reflecting the absence of benefits associated with revised estimates of tax obligations.
Liquidity and Capital Resources
Cash flows from operating activities generated $3.5 billion in 1993, compared with $2.8 billion in 1992.
The debt to debt-plus-equity ratio decreased to 16.8 percent in 1993, compared with 18.1 percent in 1992. The Company believes its strong financial position will permit the financing of business needs and opportunities in an orderly manner.
Working capital totaled $407 million at December 31, 1993, down from $695 million at December 31, 1992. The Company's current ratio decreased to 1.10 to 1 at year-end 1993 from 1.18 to 1 at year-end 1992. As a matter of policy, Amoco Company practices asset and liability management techniques that are designed to minimize its investment in non-cash working capital. This does not impair operational capability or flexibility since the Company has ready access to both short-term and long-term debt markets.
Amoco Company's short-term liquidity position is better than the reported figures indicate since the inventory component of working capital is valued in part under the LIFO method, whereas other elements of working capital are reported at amounts more indicative of their current values. If inventories were valued at current replacement costs, the level of working capital would rise and an increase in the current ratio would result.
Amoco Corporation and Amoco Company guarantee the notes and debentures of Amoco Canada Petroleum Company Ltd., except for the 7 3/8% Subordinated Exchangeable Debentures due 2013.
The following table summarizes selected liquidity information for the last three years as of December 31:
1993 1992 1993 Debt as a percent of debt-plus-equity . . 16.8 18.1 17.4 Current ratio . . . . . . . . . . . . . . 1.10 1.18 1.05 Ratio of earnings to fixed charges* . . . 13.2 8.3 9.2
* Earnings consist of income before income taxes and fixed charges; fixed charges include interest on indebtedness, rental expense representative of an interest factor, and adjustments for certain companies accounted for by the equity method.
Item 8.
Item 8. Financial Statements and Supplemental Information
Index to Financial Statements and Supplemental Information
Separate financial statements of 50 percent or less owned companies accounted for by the equity method have been omitted since, if considered in the aggregate, they would not constitute a significant subsidiary.
Financial Statements
Basis of Financial Statement Preparation
The Company is a wholly owned subsidiary of Amoco and its presently outstanding public debt securities are guaranteed by Amoco. Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 53, summarized financial data of the Company appear in a note to Amoco's 1993 audited consolidated financial statements. Such financial statements, together with the Report of Independent Accountants thereon of Amoco's 1993 Annual Report on Form 10-K and are incorporated herein by reference.
The unaudited condensed financial statements of the Company contained herein do not include all information and footnotes necessary for a complete presentation of results of operations and financial position in conformity with generally accepted accounting principles and should be read in conjunction with Amoco's audited consolidated financial statements.
Effective January 1, 1992, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 109, "Accounting for Income Taxes." The cumulative effect of adoption relating to years prior to 1992, was a non-cash charge of $702 million. This represents after-tax charges of $749 million for the adoption of SFAS No. 106 partially offset by an after-tax credit of $47 million for the adoption of SFAS No. 109. In addition, the current-year effect on net income of adopting these standards was a charge of $51 million related to the adoption of SFAS No. 106 and a benefit of $62 million associated with the adoption of SFAS No. 109. The Company had adopted SFAS No. 96, "Accounting for Income Taxes," effective January 1, 1991. The cumulative effect of that accounting change was to decrease deferred tax liabilities and increase 1991 net income by $1,143 million.
AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Annual maturities of long-term debt during the next five years, including the portion classified as current, are $43 million in 1994, $135 million in 1995, $246 million in 1996, $202 million in 1997 and $263 million in 1998.
AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Supplemental Information
1. Supplemental Oil and Gas Exploration and Production Activities
The supplemental information about oil and gas exploration and production activities for the Company is essentially the same as reported by Amoco, if Canadian exploration and production information is excluded. Therefore, the information with respect to supplemental oil and gas exploration and production activities is incorporated by reference to Amoco Corporation's 1993 Annual Report on Form 10-K. Information related to Canadian petroleum operations is identified separately therein and is not incorporated herein.
2. Quarterly Financial Data
Summarized quarterly financial data for the years ended December 31, 1993 and 1992 are as follows:
* Net income in the first quarter of 1993 included charges of $170 million related to the writedown of Congo exploration and production operations to current recoverable value and tax benefits of $56 million resulting from disposition of certain operations. First-quarter 1992 net income excluded charges of $702 million associated with the cumulative effects of accounting changes. Results for the second quarter of 1992 included charges of $546 million representing anticipated losses on asset dispositions and the cost of restructuring and work force reductions. Also included was a $90 million benefit related to the settlement of natural gas contracts in Sharjah.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Not required.
Item 11.
Item 11. Executive Compensation
Not required.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Not required.
Item 13.
Item 13. Certain Relationships and Related Transactions
Not required. ______________ PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1 and 2. The financial statements, supplemental financial information and financial statement schedules, together with the report thereon of Price Waterhouse dated February 22, 1994, appearing in Amoco Corporation's 1993 Annual Report on Form-10-K are incorporated by reference in Item 8 of this Form 10-K. Information related to Canadian petroleum operations is identified separately therein and is not incorporated herein. With the exception of the aforementioned information and the information incorporated in Items 1, 2, and 3 hereof, Amoco Corporation's 1993 Annual Report on Form 10-K is not deemed to be filed as part of this report.
3. Exhibits - See attached Index to Exhibits on page 13.
(b) Reports on Form 8-K.
A current report on Form 8-K dated December 1, 1993, was filed related to a jury verdict against Amoco Production Company, a subsidiary of Amoco Company and Amoco Corporation, in RUBICON PETROLEUM INC. VS. AMOCO PRODUCTION COMPANY & AMOCO CORPORATION. In that case Rubicon alleged that in 1990 it entered into an oral contract with Amoco Production to purchase two Wyoming oil properties for $18 million. Rubicon sued for breach of contract, violation of
the Texas Consumer Protection Statute and various other torts. The Matagorda County jury entered two alternative actual damage awards of $125 million and $45 million, respectively, a punitive damage award of $250 million, and attorneys' fees of one-third of Plaintiff's recovery. No judgment has yet been entered. See Item 3. Legal Proceedings.
A current report on Form 8-K dated December 10, 1993, was filed related to jury verdicts in favor of Amoco Chemical Company, a subsidiary of Amoco Company and Amoco Corporation, against certain underwriters at Lloyd's of London and various other British and European insurance carriers, in AMOCO CHEMICAL COMPANY et al, vs. CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, et al. A current report on Form 8-K dated February 8, 1994, was filed related to a judgment entered by the Superior Court of the State of California, County of Los Angeles, in favor of Amoco Chemical Company and Amoco Reinforced Plastics Company, subsidiaries of Amoco Company and Amoco Corporation. See Item 3. Legal Proceedings.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, and State of Illinois, on the 22nd day of March, 1994.
Amoco Company (Registrant)
F. S. Addy F. S. Addy (President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 22, 1994.
Signatures Titles
F. S. Addy President and Director F. S. Addy (Principal Executive Officer)
W. R. Hutchinson Vice President, Treasurer, and Director W. R. Hutchinson (Principal Financial Officer)
John L. Carl Vice President and Controller John L. Carl (Principal Accounting Officer)
Daniel B. Pinkert Vice President, Secretary, and Director Daniel B. Pinkert
AMOCO COMPANY
INDEX TO EXHIBITS