Item 3. Legal Proceedings
The information required by this item is incorporated by reference to Item 3 of Amoco Corporation's 1994 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 1994 Compared With 1993
The Company earned $1,878 million in 1994 compared with $1,803 million in 1993. Results for 1994 benefited from settlements of crude oil excise taxes ("COET") of $270 million, a gain of $45 million related to the disposition of certain European oil and gas properties and tax adjustments relating to prior years totaling $63 million. Adversely affecting 1994 earnings were after-tax charges of $60 million pertaining to provisions for future environmental remediation expenditures relating to past operations, and restructuring charges of $149 million. Of this latter amount, $51 million related to costs directly associated with severances of employees expected to occur by year-end 1995. The remaining $98 million was attributable to various facility closings and asset dispositions. 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.
Adjusting both years for special items and accounting changes, 1994 earnings were $1,709 million compared with 1993 earnings of $1,869 million. The decline in earnings primarily reflects the transferring of 95 percent ownership of certain European chemical operations to Amoco Corporation, lower refined product margins in refining, marketing and transportation operations, and lower exploration and production earnings mainly as a result of lower energy prices. Partly offsetting were improved chemical results, attributable to higher margins and volumes in major product lines.
Sales and other operating revenues totaled $23.6 billion for 1994, slightly higher than $22.9 billion for 1993. Chemical revenues improved 23 percent reflecting higher sales for major product lines. Natural gas revenues were 16 percent higher as a result of increased worldwide sales volumes. Partly offsetting were decreased crude oil revenues reflecting
lower prices worldwide. Other income was higher in 1994 compared with last year primarily as a result of the favorable COET settlement.
Purchases of crude oil, petroleum products and merchandise of $12.3 billion for 1994 were 5 percent above the 1993 level of $11.8 billion. Operating expenses were 3 percent higher in 1994. Increased chemical manufacturing costs reflecting the fourth-quarter 1993 acquisition of Phillips Fibers Corporation, and second-quarter 1994 restructuring charges of $150 million, were partly offset by the absence of charges in 1993 associated with the writedown of Congo exploration and production operations to current recoverable value. Exploration expenses for 1994 were 7 percent above 1993, due to higher dry hole expenses of $23 million and higher geological and geophysical costs overseas of $12 million. Selling and administrative expenses were up 16 percent compared with the prior year, mainly due to $79 million in 1994 restructuring charges and $46 million of unfavorable foreign currency effects. Interest expense increased 36 percent primarily related to interest on intercompany notes from affiliates.
Liquidity and Capital Resources Cash flows from operating activities generated $4 billion in 1994, compared with $3.5 billion in 1993.
The debt to debt-plus-equity ratio on outstanding public obligations increased to 18.8 percent in 1994, compared with 16.8 percent in 1993. The Company believes its strong financial position will permit the financing of business needs and opportunities in an orderly manner.
Working capital totaled $1,257 million at December 31, 1994, up from $407 million at December 31, 1993. The Company's current ratio increased to 1.30 to 1 at year-end 1994 from 1.10 to 1 at year-end 1993. 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 the Company guarantee the outstanding public 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: 1994 1993 1992 Debt as a percent of debt-plus-equity . . 18.8 16.8 18.1
Current ratio . . . . . . . . . . . . . . 1.30 1.10 1.18
Ratio of earnings to fixed charges* . . . 20.4 13.2 8.3 _____________ * 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
Page Financial Statements: Basis of Financial Statement Preparation . . . . . . . . . 5
Condensed Consolidated Statement of Income . . . . . . . . 7
Condensed Consolidated Statement of Financial Position . . 8
Condensed Consolidated Statement of Cash Flows . . . . . . 9
Supplemental Information: Supplemental Oil and Gas Exploration and Production Activities . . . . . . . . . . . . . . . . . . . . . . . 10
Quarterly Financial Data . . . . . . . . . . . . . . . . . 10
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 1994 audited consolidated financial statements. Such financial statements, together with the Report of Independent Accountants thereon of Amoco's 1994 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 effect on 1993 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.
AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1994 1993 1992 (millions of dollars) Revenues: Sales and other operating revenues . . . . $23,619 $22,885 $22,818 Consumer excise taxes. . . . . . . . . . . 3,409 2,812 2,722 Other income . . . . . . . . . . . . . . . 813 233 158 Total revenues . . . . . . . . . . . . . 27,841 25,930 25,698
Costs and Expenses: Purchased crude oil, natural gas, petroleum products and merchandise . . . 12,330 11,761 11,407 Operating expenses . . . . . . . . . . . . 4,190 4,075 4,117 Petroleum exploration expenses, including exploratory dry holes. . . . . . . . . . 514 482 590 Selling and administrative expenses. . . . 1,901 1,632 2,002 Taxes other than income taxes. . . . . . . 4,087 3,566 3,663 Depreciation, depletion, amortization, and retirements and abandonments . . . . . . 1,894 1,813 1,968 Interest expense . . . . . . . . . . . . . 237 174 128 Total costs and expenses . . . . . . . . 25,153 23,503 23,875
Income before income taxes . . . . . . . . . 2,688 2,427 1,823 Income taxes . . . . . . . . . . . . . . . . 810 624 597 Income before the cumulative effects of accounting changes . . . . . . . . . . . . 1,878 1,803 1,226 Cumulative effects of accounting changes . . -- -- (702) Net income . . . . . . . . . . . . . . . . . $ 1,878 $ 1,803 $ 524
AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31, 1994 1993 (millions of ASSETS dollars) Current Assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $ 100 Marketable securities--at cost which approximates fair value. . . . . . . . . . . 1,104 482 Accounts and notes receivable (less allowance of $19 at December 31, 1994, and $62 at December 31, 1993). . . . . . . . . . . 2,763 2,443 Inventories. . . . . . . . . . . . . . . . . . . . . 836 947 Prepaid expenses and income taxes. . . . . . . . . . 562 411 Total current assets . . . . . . . . . . . . . . . 5,399 4,383 Investments And Other Assets . . . . . . . . . . . . . 1,085 1,027 Properties --at cost, less accumulated depreciation depletion and amortization of $21,882 at December 31, 1994, and $20,589 at December 31, 1993 (The successful efforts method of accounting is followed for costs incurred in oil and gas producing activities). . . . . . . . . . . . . . . . . . . . . 18,065 18,103 Total assets . . . . . . . . . . . . . . . . . . . . $24,549 $23,513
December 31, 1994 1993 (millions of dollars) LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities: Current portion of long-term obligations . . . . . . $ 24 $ 51 Short-term obligations . . . . . . . . . . . . . . . 112 652 Accounts payable . . . . . . . . . . . . . . . . . . 2,217 2,056 Accrued liabilities. . . . . . . . . . . . . . . . . 1,124 722 Taxes payable (including income taxes) . . . . . . . 665 495 Total current liabilities. . . . . . . . . . . . . 4,142 3,976 Long-Term Debt: Affiliates . . . . . . . . . . . . . . . . . . . . . 4,104 -- Other debt . . . . . . . . . . . . . . . . . . . . . 2,086 1,967 6,190 1,967 Deferred Credits and Other Non-Current Liabilities: Income taxes . . . . . . . . . . . . . . . . . . . . 2,413 2,372 Other. . . . . . . . . . . . . . . . . . . . . . . . 2,171 2,069 4,584 4,441 Minority interest. . . . . . . . . . . . . . . . . . . 5 -- Shareholder's Equity . . . . . . . . . . . . . . . . . 9,628 13,129 Total liabilities and shareholder's equity . . . . . $24,549 $23,513
Annual maturities of long-term debt during the next five years, including the portion classified as current, are $24 million in 1995, $658 million in 1996, $187 million in 1997, $247 million in 1998 and $134 million in 1999.
AMOCO COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31, 1994 1993 1992 (millions of dollars) Cash Flows from Operating Activities: Net income . . . . . . . . . . . . . . . . . $ 1,878 $ 1,803 $ 524 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments. . . . . . . 1,894 1,813 1,968 (Increase) decrease in receivables. . . . . (361) (131) 402 Increase (decrease) in payables and accrued liabilities . . . . . . . . . . . . . . . 553 (573) (957) Other . . . . . . . . . . . . . . . . . . . 44 555 152 Cumulative effects of accounting changes. . -- -- 702 Net cash provided by operating activities. . 4,008 3,467 2,791
Cash Flows from Investing Activities: Capital expenditures . . . . . . . . . . . . (2,131) (2,472) (2,113) Proceeds from dispositions of property and other assets . . . . . . . . . . . . . . . 316 217 248 Other. . . . . . . . . . . . . . . . . . . . (145) (87) (2) Net cash used in investing activities . . . (1,960) (2,342) (1,867)
Cash Flows from Financing Activities: New long-term obligations. . . . . . . . . . 118 473 438 Repayment of long-term obligations . . . . . (133) (1,358) (359) Distributions to Amoco Corporation . . . . . (837) (1,284) (1,258) Increase (decrease) in short-term obligations . . . . . . . . . . . . . . . (540) 651 (52) Net cash used in financing activities . . . (1,392) (1,518) (1,231)
Increase (decrease) in Cash and Marketable Securities. . . . . . . . . . . . . . . . . 656 (393) (307) Cash and Marketable Securities--Beginning of Year. . . . . . . . . . . . . . . . . . . . 582 975 1,282 Cash and Marketable Securities--End of Year . $ 1,238 $ 582 $ 975
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 1994 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, 1994 and 1993 are as follows:
Revenues Operating Profit Net Income* 1994 1993 1994 1993 1994 1993 First . . . . . . . . . . $6,136 $6,296 $ 509 $ 430 $ 377 $ 277 Second. . . . . . . . . . 7,397 6,578 596 738 561 509 Third . . . . . . . . . . 7,204 6,413 711 659 488 486 Fourth. . . . . . . . . . 7,104 6,643 654 768 452 531
* Earnings for the second quarter of 1994 included benefits attributable to the COET settlement of $270 million, and charges related to restructuring of $149 million. 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.
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 schedule, together with the report thereon of Price Waterhouse dated February 28, 1995, appearing in Amoco Corporation's 1994 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 1994 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.
No reports on Form 8-K were filed during the quarter ended December 31, 1994.
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 21st day of March, 1995.
Amoco Company (Registrant)
John L Carl John L. Carl (President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 21, 1995.
Signatures Titles
John L. Carl President and Director John L. Carl (Principal Executive Officer)
W. R. Hutchinson Vice President, Treasurer, and W. R. Hutchinson Director (Principal Financial Officer)
J. R. Reid Vice President and Controller J. R. Reid (Principal Accounting Officer)
Daniel B. Pinkert Vice President, Secretary, and Director Daniel B. Pinkert
AMOCO COMPANY
INDEX TO EXHIBITS Exhibit Sequentially Number Exhibit Numbered Page 3(a) The Certificate of Incorporation of the registrant is incorporated herein by reference to Exhibit 3(a) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1989. --
3(b) By-laws of the registrant are incorporated herein by reference to Exhibit 3(b) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1989. --
4 The registrant will provide to the Securities and Exchange Commission upon request copies of instruments defining the rights of holders of long- term debt of the registrant and its consolidated subsidiaries. --
9 None. --
10 None. --
11 None required. --
12 Statement Setting Forth Computation of Ratio of Earnings to Fixed Charges for the five years ended December 31, 1994.
13 Amoco Corporation's 1994 Annual Report on Form 10-K is incorporated herein by reference as described in this 1994 Form 10-K. --
16 None. --
18 None. --
19 None. --
21 None required. --
23 None required. --
24 None. --
27 Financial Data Schedule for the year ended December 31, 1994.
28 None. --