SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended September 30, 2001
BP p.l.c.
(Translation of registrant's name into English)
BRITANNIC HOUSE, 1 FINSBURY CIRCUS, LONDON, EC2M 7BA, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
------------------ ------------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
------------------ ------------------
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO.
333-9790) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM F-3 (FILE NO. 333-65996) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 33-39075) OF BP AMERICA INC. AND BP
p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE
NO. 33-20338) OF BP AMERICA INC. AND BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 33-29102) OF THE STANDARD OIL
COMPANY AND BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM S-8 (FILE NO. 33-21868) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-9020) OF BP p.l.c., THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-9798) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM S-8 (FILE NO. 333-79399) OF BP p.l.c., AND THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-34968) OF BP p.l.c., AND THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-67206) OF BP p.l.c., AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS
REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS
SUBSEQUENTLY FILED OR FURNISHED.
Page 2
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GROUP RESULTS JANUARY - SEPTEMBER 2001
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 43,580 42,631 137,401 103,500
Total replacement cost operating profit - $m 3,757 4,695 14,228 12,993
Replacement cost profit before exceptional items - $m 2,355 2,947 8,824 8,415
Replacement cost profit for the period - $m 2,345 2,807 9,018 8,171
Historical cost profit for the period - $m 1,940 3,351 8,415 9,460
Profit per Ordinary Share - cents 8.66 14.85 37.48 44.32
Dividends per Ordinary Share - cents 5.50 5.25 16.25 15.25
(a) For further information on replacement cost profit see Note 6 of Notes to
Consolidated Financial Statements
The following discussion should be read in conjunction with the consolidated
financial statements provided elsewhere in this Form 6-K and with the
consolidated financial statements and related notes for the year ended December
31, 2000 included in BP p.l.c.'s Annual Report on Form 20-F for the year ended
December 31, 2000. Comparative figures for the three months and nine months
ended September 30, 2000 have been restated to reflect the transfer of BP's
North American NGL business from Refining and Marketing to Gas and Power.
The changes in turnover for the third quarter reflect significant increases in
Gas and Power due to higher gas sales volumes, partially offset by the effect of
lower oil and gas prices in Exploration and Production. Turnover for the nine
months also reflects the inclusion of ARCO for the whole of the nine months in
2001, compared to around six months (from April 14) in 2000, the acquisition of
Burmah Castrol from July 7, 2000 and the consolidation of the European fuels
business with effect from August 1, 2000.
Replacement cost profit before exceptional items (which excludes inventory
holding gains and losses) was $2,355 million for the three months ended
September 30, 2001, compared with $2,947 million for the equivalent period of
2000. These results are after charging special items of $122 million ($91
million after tax) for the three months ended September 30, 2001, and $392
million ($289 million after tax) for the equivalent period of 2000. The results
for the three months ended September 30, 2001 and 2000 are also after charging
acquisition amortization of $603 million and $560 million, respectively.
Acquisition amortization refers to depreciation relating to the fixed asset
revaluation adjustment and amortization of goodwill consequent upon the ARCO and
Burmah Castrol acquisitions. The special charges for the three months ended
September 30, 2001 comprised in Refining and Marketing, Castrol integration
costs of $112 million, in Chemicals, Erdolchemie rationalization costs of $8
million and a bond redemption charge of $2 million. Those for the corresponding
period of 2000 related to ARCO, Vastar and Castrol integration costs,
rationalization costs post the BP/Amoco merger, and an asset writedown.
For the nine months ended September 30, 2001, the replacement cost profit before
exceptional items was $8,824 million, up from $8,415 million in 2000. The
results for 2001 are after charging special items of $344 million ($250 million
after tax) and acquisition amortization of $1,900 million. The results for 2000
include special charges of $1,032 million ($761 million after tax), and
acquisition amortization of $937 million.
The historical cost profit for the three months ended September 30, 2001 was
$1,940 million after inventory holding losses of $405 million and including net
exceptional gains of $184 million ($10 million charge after tax) in respect of
net profits on the sale of fixed assets and businesses and termination of
operations. For the equivalent period of 2000 there was a profit of $3,351
million including inventory holding gains of $544 million, and net exceptional
gains of $138 million ($140 million charge after tax) in respect of net profits
on the sale of fixed assets and businesses and termination of operations.
For the nine months ended September 30, 2001, the historical cost profit was
$8,415 million, after inventory holding losses of $603 million and including net
exceptional gains of $573 million ($194 million after tax) in respect of net
profits on sale of fixed assets and businesses and terminations of operations.
For the nine months ended September 30, 2000, the historical cost profit was
$9,460 million, including inventory holding gains of $1,289 million and net
exceptional gains of $142 million ($244 million charge after tax) in respect of
net profits on sale of fixed assets and businesses and terminations of
operations.
Page 3
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Net taxation, other than production taxes, charged for the three months ended
September 30, 2001 was $1,212 million compared with $1,554 million in the
equivalent period last year. The third quarter 2001 included a tax charge of
$194 million in respect of exceptional items compared with a tax charge of $278
million for the third quarter of 2000. The effective tax rate on replacement
cost profit before exceptional items was 30% for the three months ended
September 30, 2001 and 32% for the nine months, compared with 29% and 28% for
the equivalent period of 2000. The increase in the tax rate for the third
quarter is primarily due to the non-availability of prior year tax credits in
2001. For the nine months, the non-deductibility for tax purposes of the
acquisition amortization was also a factor as 2001 includes a full nine months
of acquisition amortization compared to around six months (from April 14) in
2000.
Interest expense for the three months ended September 30, 2001 was $369 million
(including $2 million relating to a bond redemption charge) compared with $460
million in the equivalent period of 2000 reflecting lower interest rates. For
the nine months ended September 30, 2001 interest expense was $1,256 million
(including $62 million relating to bond redemption charges) compared to $1,159
million a year ago, reflecting inclusion of ARCO for the full nine months of
2001 compared to around six months in 2000, partly offset by lower interest
rates.
Net cash inflow for the three months ended September 30, 2001 was $0.9 billion,
compared with an outflow of $2.4 billion for the equivalent period of 2000. The
third quarter of 2000 included an outflow of $5.1 billion net of cash acquired,
related to the acquisition of Burmah Castrol and the minority interest in
Vastar. In the third quarter of 2001, lower operating cash flow and higher
capital expenditure net of divestment proceeds were partly offset by lower tax
payments due to phasing effects. For the first nine months of 2001, net cash
inflow was $2.0 billion compared with a net cash inflow of $5.4 billion in the
same period in 2000. For the nine months ended September 30, 2001 the overall
decreased cash flow is primarily driven by higher capital expenditure and
significantly lower divestment proceeds (the second quarter of 2000 included the
proceeds from the sale of the ARCO Alaska assets).
Capital expenditure and acquisitions in the third quarter and nine months of
2001 were $3.4 billion and $9.7 billion, respectively. Expenditure for the nine
months of 2001 included the acquisition of Bayer's 50% interest in Erdolchemie.
Excluding acquisitions, capital expenditure for the third quarter and nine
months of 2001 was $3.3 billion and $9.1 billion, up $0.7 billion and $2.4
billion, respectively, on the corresponding periods in 2000. For the three
months and nine months ended September 30, 2000 capital expenditure and
acquisitions were $9.6 billion and $15.1 billion, respectively. Expenditure for
the three months and nine months ended September 30, 2000 included the
acquisition of Burmah Castrol, the Mobil share of the European Joint Venture and
the minority interest in Vastar, and in addition for the nine months ended
September 30, 2000 a 2.2% interest in PetroChina. Excluding the effect of these
acquisitions, capital expenditure for the third quarter and nine months of 2000
was $2.6 billion and $6.7 billion, respectively. BP expects total capital
expenditure for 2001 to be approximately $13 billion excluding acquisitions.
Net debt at September 30, 2001 was $18.5 billion. The ratio of net debt to net
debt plus equity was 19% compared to the 20% rate at June 30, 2001 and 21% at
December 31, 2000. After adjusting for the fixed asset revaluation adjustment
and goodwill consequent upon the ARCO and Burmah Castrol acquisitions, the ratio
of net debt to net debt plus equity was 24% at September 30, 2001 compared with
25% at June 30, 2000 and 27% at December 31, 2000.
BP believes that, taking into account the substantial amounts of undrawn
borrowing facilities available, the Group has sufficient working capital for
foreseeable requirements.
The return on average capital employed for the three months ended September 30,
2001 was 11% compared with 14% for the equivalent period of 2000. For the nine
months ended September 30, 2001, the return on average capital employed was 14%.
For further information on the return on average capital employed calculation
see Note 12 of Notes to Consolidated Financial Statements.
BP purchased for cancellation approximately 49 million of its own shares during
the third quarter of 2001 at a cost of $400 million. Total share purchases over
the nine months to September 30, 2001 amounted to approximately 140 million at a
cost of $1,182 million.
BP announced a third quarterly dividend for 2001 of 5.50 cents per ordinary
share. Holders of ordinary shares will receive 3.805 pence per share and holders
of American Depositary Receipts (ADRs) $0.33 per ADS. The dividend for the nine
months was 16.25 cents per share, up 7%, which is equivalent to 11.381 pence per
share, up 12% over last year. The dividend is payable on December 10, 2001 to
shareholders on the register on November 16, 2001. Participants in the Dividend
Reinvestment Plan or the dividend reinvestment facility in the US Direct Access
Plan will receive the dividend in the form of shares on December 10, 2001.
BP intends to continue to pay dividends in the future of around 50% of its
replacement cost profit before exceptional items after adjusting for special
items and acquisition amortization, adjusted to mid-cycle business conditions.
Mid-cycle conditions are our best estimate of likely average prices and margins
over the long term.
Page 4
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Owing to the significant acquisitions that took place in 2000, in addition to
its reported results, BP is presenting pro forma results adjusted for special
items in order to enable shareholders to assess current performance in the
context of BP's past performance and against that of its competitors. The pro
forma result, adjusted for special items, has been derived from BP's UK GAAP
accounting information but is not in itself a recognized UK or US GAAP measure.
Pro forma
Reconciliation of reported result
profit (loss) to pro forma result Acquisition Special adjusted for
adjusted for special items Reported amortization(a) items(b) special items
--------- ------------ ------- -------------
($ million)
Three months ended September 30, 2001
Exploration and Production 2,641 429 - 3,070
Gas and Power 130 - - 130
Refining and Marketing 1,003 174 112 1,289
Chemicals 105 - 8 113
Other businesses and corporate (122) - - (122)
--------- ---------- --------- ---------
Replacement cost operating profit 3,757 603 120 4,480
Interest expense (369) - 2 (367)
Taxation (1,018) - (31) (1,049)
Minority shareholders' interest (15) - - (15)
--------- ---------- --------- ---------
Replacement cost profit before 2,355 603 91 3,049
exceptional items --------- ========== ========= ---------
per ordinary share (cents) 10.50 13.60
========= =========
Three months ended September 30, 2000
Exploration and Production 3,552 412 192 4,156
Gas and Power 132 - - 132
Refining and Marketing 964 185 110 1,259
Chemicals 263 - 4 267
Other businesses and corporate (216) - 86 (130)
--------- ---------- --------- ---------
Replacement cost operating profit 4,695 597 392 5,684
Interest expense (460) - - (460)
Taxation (1,276) - (103) (1,379)
Minority shareholders' interest (12) (37) - (49)
--------- ---------- --------- ---------
Replacement cost profit before 2,947 560 289 3,796
exceptional items --------- ========== ========= ---------
per ordinary share (cents) 13.04 16.91
========= =========
---------------
(a) Acquisition amortization refers to depreciation relating to the fixed asset
revaluation adjustment and amortization of goodwill consequent upon the
ARCO and Burmah Castrol acquisitions in 2000.
(b) The special items refer to non-recurring charges and credits. The special
items for the third quarter 2001 comprise Castrol integration costs,
Erdolchemie rationalization costs and a bond redemption charge. The special
items for the third quarter 2000 comprise ARCO, Vastar and Castrol
integration costs, rationalization costs post the BP/Amoco merger, and an
asset writedown.
Page 5
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Pro forma
Reconciliation of reported result
profit (loss) to pro forma result Acquisition Special adjusted for
adjusted for special items Reported amortization(a) items(b) special items
--------- ------------ ------- -------------
($ million)
Nine months ended September 30, 2001
Exploration and Production 10,762 1,362 - 12,124
Gas and Power 415 - - 415
Refining and Marketing 3,233 538 274 4,045
Chemicals 195 - 8 203
Other businesses and corporate (377) - - (377)
--------- ---------- --------- ---------
Replacement cost operating profit 14,228 1,900 282 16,410
Interest expense (1,256) - 62 (1,194)
Taxation (4,101) - (94) (4,195)
Minority shareholders' interest (47) - - (47)
--------- ---------- --------- ---------
Replacement cost profit before 8,824 1,900 250 10,974
exceptional items --------- ========== ========= ---------
per ordinary share (cents) 39.30 48.88
========= =========
Nine months ended September 30, 2000
Exploration and Production 9,774 761 475 11,010
Gas and Power 388 - - 388
Refining and Marketing 2,731 255 251 3,237
Chemicals 842 - 54 896
Other businesses and corporate (742) - 252 (490)
--------- ---------- --------- ---------
Replacement cost operating profit 12,993 1,016 1,032 15,041
Interest expense (1,159) - - (1,159)
Taxation (3,344) - (271) (3,615)
Minority shareholders' interest (75) (79) - (154)
--------- ---------- --------- ---------
Replacement cost profit before 8,415 937 761 10,113
exceptional items --------- ========== ========= ---------
per ordinary share (cents) 39.42 47.38
========= =========
---------------
(a) Acquisition amortization refers to depreciation relating to the fixed asset
revaluation adjustment and amortization of goodwill consequent upon the
ARCO and Burmah Castrol acquisitions in 2000.
(b) The special items refer to non-recurring charges and credits. The special
items for the nine months 2001 comprise Castrol integration costs,
Erdolchemie rationalization costs and a bond redemption charge. The special
items for the nine months 2000 comprise ARCO, Vastar and Castrol
integration costs, rationalization costs post the BP/Amoco merger, and an
asset writedown.
Page 6
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OPERATING INFORMATION
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Crude oil and natural gas liquids production
(thousand barrels per day), (net of royalties)
UK 457 521 480 540
Rest of Europe 96 86 95 89
USA 741 691 735 730
Rest of World 589 604 592 568
------- ------- ------- -------
Total crude oil and liquids production 1,883 1,902 1,902 1,927
======= ======= ======= =======
Natural gas production (million cubic feet per day),
(net of royalties)
UK 1,305 1,340 1,713 1,571
Rest of Europe 139 104 143 129
USA 3,577 3,362 3,531 2,950
Rest of World 3,298 2,991 3,200 2,619
------- ------- ------- -------
Total natural gas production 8,319 7,797 8,587 7,269
======= ======= ======= =======
Total production (a)
(thousand barrels of oil equivalent per day),
(net of royalties)
UK 682 752 775 811
Rest of Europe 120 104 120 111
USA 1,358 1,271 1,344 1,239
Rest of World 1,157 1,119 1,144 1,019
------- ------- ------- -------
Total production 3,317 3,246 3,383 3,180
======= ======= ======= =======
Natural gas sales volumes (million cubic
feet per day)
UK 2,170 2,289 2,682 2,360
Rest of Europe 170 151 207 162
USA 8,692 6,845 8,403 5,960
Rest of World 7,331 5,535 7,191 4,916
------- ------- ------- -------
Total natural gas sales volumes (b) 18,363 14,820 18,483 13,398
======= ======= ======= =======
NGL sales volumes (thousand barrels per day)
UK - - - -
Rest of Europe - - - -
USA 233 195 220 149
Rest of World 162 171 180 179
------- ------- ------- -------
Total NGL sales volumes 395 366 400 328
======= ======= ======= =======
---------------
(a) Expressed in thousand barrels of oil equivalent per day (mboe/d). Natural
gas is converted to oil equivalent at 5.8 billion cubic feet: 1 million
barrels.
(b) Encompasses sales by Exploration and Production and Gas and Power,
including marketing, trading and supply sales.
Page 7
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OPERATING INFORMATION
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Oil sales volumes (thousand barrels per day)
Refined products
UK 269 276 266 242
Rest of Europe 1,058 981 1,055 843
USA 1,863 1,911 1,897 1,719
Rest of World 612 489 599 461
------- ------- ------- -------
Total marketing sales 3,802 3,657 3,817 3,265
Trading/supply sales 2,744 1,843 2,308 1,845
------- ------- ------- -------
Total refined product sales 6,546 5,500 6,125 5,110
Crude oil 4,680 5,725 4,431 6,164
------- ------- ------- -------
Total oil sales 11,226 11,225 10,556 11,274
======= ======= ======= =======
Refinery throughputs (thousand barrels per day)
UK 414 359 347 302
Rest of Europe 646 627 654 560
USA 1,568 1,765 1,578 1,637
Rest of World 375 362 379 359
------- ------- ------- -------
Total throughput 3,003 3,113 2,958 2,858
======= ======= ======= =======
Chemicals production (thousand tonnes)
UK 804 779 2,333 2,304
Rest of Europe 2,164 1,680 5,648 5,012
USA 2,299 2,438 6,664 7,619
Rest of World 703 591 2,023 1,745
------- ------- ------- -------
Total production 5,970 5,488 16,668 16,680
======= ======= ======= =======
Page 8
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
DETAILED REVIEW OF BUSINESSES (EXCLUDING EXCEPTIONAL ITEMS)
EXPLORATION AND PRODUCTION
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 6,335 8,195 22,893 21,977
Total replacement cost operating profit - $m 2,641 3,552 10,762 9,774
Results included:
Exploration expense - $m 86 143 336 442
Key Statistics:
Average prices :Crude oil (a) - $/bbl 23.08 27.84 24.22 26.13
realized by BP
:Natural gas - $/mcf 2.49 3.01 3.66 2.57
Brent oil price - $/bbl 25.30 30.42 26.14 28.07
West Texas intermediate oil price - $/bbl 26.72 31.71 27.77 29.84
Henry Hub gas price (b) - $/mmBtu 2.93 4.27 4.88 3.41
---------------
(a) Crude oil and natural gas liquids
(b) Henry Hub First of the Month Index
Total replacement cost operating profit for the three months and nine months
ended September 30, 2001 were $2,641 million and $10,762 million, respectively.
This compares with $3,552 million and $9,774 million for the corresponding
periods in 2000. Significantly lower oil and gas prices are reflected in both
turnover and replacement cost operating profit for the third quarter 2001. The
turnover and replacement cost operating profit results for the nine months ended
September 30, 2001 also reflect the inclusion of ARCO and other portfolio
changes for the whole nine months, compared to only around six months (from
April 14) for the same period in 2000. Lower exploration expense reflects a more
focused exploration programme and lower write-offs in 2001. In addition, the
results are after charging depreciation and amortization arising from the fixed
asset revaluation adjustment and goodwill consequent upon the ARCO acquisition
of $429 million for the three months and $1,362 million for the nine months
ended September 30, 2001. For the equivalent periods in 2000, the amounts were
$412 million and $761 million, respectively. Special items in the three months
ended September 30, 2000 principally comprised ARCO and Vastar integration costs
and an asset write-down. The special items for the nine months ended September
30, 2000 also included the settlement of a lawsuit.
Total hydrocarbon production for the third quarter was up 2% on the third
quarter of 2000, with natural gas up 7% and liquids broadly flat. On a
consistent current portfolio basis, total hydrocarbon production increased by
around 3% over a year ago. Crude oil production from the deepwater Gulf of
Mexico increased by 25% as new capacity continues to be added. The increase in
natural gas resulted from strong output growth in our joint venture in
Argentina, up 40%, and in North America, up 6%. For the first nine months of
2001, total production was up 6% with natural gas up 18%. On a consistent
current portfolio basis the total hydrocarbon production increase for the nine
months was 1%.
In support of continued growth, capital expenditure during the quarter was $2.4
billion, 31% higher than the same quarter a year ago, and $6.7 billion for the
nine months, up 58% on a year ago. BP approved the Clair development (BP 28.6%
and operator) in the UK Continental Shelf, and agreed with its partners to
invest $940 million to develop the field. Other developments approved were
Jasmin, a Girassol satellite offshore Angola, and the first stage of the Cuenca
Marina Austral field in Argentina. In early November, the third phase of
Schiehallion, west of Shetland was also approved.
Page 9
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
GAS AND POWER
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 9,241 5,481 31,756 12,460
Total replacement cost operating profit - $m 130 132 415 388
On January 1, 2001, the natural gas liquids (NGL) business located in North
America was moved to Gas and Power from Refining and Marketing. Comparative
information has been restated.
The increase in turnover for the third quarter and nine months of 2001 is
primarily due to higher sales volumes in the natural gas marketing and trading
business. The replacement cost operating profit for the third quarter and nine
months was $130 million and $415 million, respectively, compared with $132
million and $388 million a year ago. In the third quarter, natural gas marketing
and trading performance has improved on the back of a continued increase in
activity with gas sales volumes up 24% on a year ago. This has largely offset
the effect of lower margins in the NGL business. The nine months profit
reflected improved marketing and trading performance, partly offset by a
reduction in the NGL result.
In September, BP announced that it had agreed to purchase a set of natural gas
marketing and trading assets from TransCanada PipeLines Limited, subject to
regulatory approval in Canada. This acquisition will reinforce BP's position as
a leader in the North American energy marketing and merchant business.
Page 10
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
REFINING AND MARKETING
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 30,925 31,311 93,705 75,175
Total replacement cost operating profit - $m 1,003 964 3,233 2,731
Global Indicator Refining - $/bbl 3.83 4.83 4.62 3.99
Margin (a)
---------------
(a) The Global Indicator Refining Margin (GIM) is the average of seven regional
indicator margins weighted for BP's crude refining capacity in each region.
Each regional indicator margin is based on a single representative crude
with product yields characteristic of the typical level of upgrading
complexity.
Turnover for the nine months primarily reflects the inclusion of ARCO for the
whole of the nine months in 2001, compared to around six months (from April 14)
in 2000, the acquisition of Burmah Castrol on July 7, 2000 and the consolidation
of the European fuels business with effect from August 1, 2000.
The replacement cost operating profit for the three months and nine months ended
September 30, 2001 was $1,003 million and $3,233 million, respectively. This
compares with $964 million and $2,731 million for the equivalent periods in
2000. The results include acquisition amortization of $174 million and $538
million for the three months and nine months ended September 30, 2001. For the
equivalent periods in 2000 the acquisition amortization was $185 million and
$255 million, respectively. Special items for the three months and nine months
ended September 30, 2001 were $112 million and $274 million, respectively. The
special items comprised Castrol integration costs. Specials for the nine months
also include rationalization costs in the European downstream commercial
business. Specials for the nine months also include rationalization costs in the
European downstream commercial business. Special items in the three months and
nine months ended September 30, 2000 comprised rationalization costs post the
BP/Amoco merger, ARCO and Burmah Castrol integration costs and litigation costs.
The main drivers of the improvement on the corresponding quarter last year were
higher retail margins and volumes. Retail margins reflected lower wholesale
prices in several regions. Refining margins were volatile throughout the quarter
and were down $1 per barrel versus the prior year as particularly strong US
Midwest refining margins only partially offset lower refining margins in other
areas. The nine months result benefited from higher refining margins and volume
improvements compared to a year ago.
Third quarter refinery throughputs decreased by 3.5% compared to a year ago as a
result of the impact of refinery disposals, which more than offset underlying
throughput increases (for the nine months throughput increased by 3% over the
same period in 2000). Third quarter marketing sales increased by 4% compared to
a year ago (the nine months ended September 30, 2001 showed a 17% increase over
the same period in 2000) and store sales were up 7% in the third quarter
reflecting the consolidation of the European fuels business and the increasing
number of BP Connect stores. We are on track to deliver our unit cost reduction
target of 2.5% in 2001.
The roll-out of BP Connect continued during the quarter with over 230 BP Connect
stores now open in the UK, USA, Australia and New Zealand. BP's leadership
position in clean fuels continues to grow as BP is now providing clean fuels to
76 cities.
In September 2001, BP completed the sale of its Salt Lake City, Utah, and
Mandan, North Dakota, refineries in the USA.
Page 11
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
CHEMICALS
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 3,272 2,798 9,034 8,493
Total replacement cost operating profit - $m 105 263 195 842
Chemicals Indicator Margin (a) - $/te 110(b) 128 107(b) 130
---------------
(a) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins reflecting industry supply/demand
conditions. It is based on market data collected by Chem Systems in their
quarterly market analyses, then weighted based on BP's product portfolio.
The products and businesses covered in the CIM are olefins and derivatives,
aromatics and derivatives, linear alpha olefins, acetic acid, vinyl acetate
monomer and nitriles. Not included are fabrics and fibres, plastic
fabrications, poly alpha olefins, anhydrides, speciality intermediates, and
the remaining parts of the solvents and acetyls businesses. This quarter
the margin indicator has been adjusted to reflect the Erdolchemie purchase
and the impact of recently divested businesses. Prior quarters have been
restated.
(b) Provisional. The data for the quarter and nine months is based on two
months' and eight months' actual data, respectively, and one month of
provisional data.
Increased turnover for the third quarter and the nine months primarily reflects
the inclusion of 100% of Erdolchemie results in 2001. Chemicals' replacement
cost operating profit for the three months and nine months ended September 30,
2001 was $105 million and $195 million, respectively, after special charges of
$8 million related to Erdolchemie rationalization. For the corresponding periods
in 2000 the replacement cost operating profit was $263 million and $842 million,
after special charges of $4 million and $54 million, respectively. The third
quarter result was a decrease of $158 million over the equivalent quarter in
2000. The lower result was caused by a deterioration in the trading environment
associated with weaker economic growth. The nine months result was significantly
lower than a year ago due to the poor margin environment, higher restructuring
costs and the effect of unscheduled shutdowns.
Third quarter production of 5,970kte is 9% above the same quarter of 2000. This
record production benefits from full ownership of Erdolchemie for the whole
quarter and restored operations at three major cracker sites. Production for the
first nine months of 2001 is flat compared to 2000.
BP continues to progress the restructuring programme, announced in August, which
is fundamental to its chemicals business. This is designed to lower
significantly the business' cost structure and to focus its portfolio. Actions
taken during the third quarter included announcement of the cessation of
production of polybutenes and panasols at Texas City in the USA and of butyl
acetate at Hull, England. We also announced the closure of our low-density
polyethylene manufacturing operation at Wilton, England. The third quarter and
nine months results include $27 million and $67 million, respectively, of
restructuring costs, in addition to the special item relating to Erdolchemie.
In early November, BP completed its deal with Solvay, originally announced in
late 2000. This deal will significantly strengthen BP's polyolefins business in
Europe and in the USA. As a result of the deal BP has added Solvay's global
polypropylene business to its existing business and the two companies have
combined their high-density polyethylene businesses into two joint ventures - BP
Solvay Polyethylene Europe (50% BP, 50% Solvay) and BP Solvay Polyethylene North
America (49% BP, 51% Solvay). BP has also transferred its non-core engineering
polymers business to Solvay.
Page 12
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OTHER BUSINESSES AND CORPORATE
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 204 106 567 198
Replacement cost operating profit - $m (122) (216) (377) (742)
Other Businesses and Corporate comprises Finance, BP Solar, the Group's coal
asset, aluminium asset, its investments in PetroChina and Sinopec, interest
income and costs relating to corporate activities.
Replacement cost operating loss for the three months and nine months ended
September 30, 2001 was $122 million and $377 million, respectively. This
compares with $216 million and $742 million for the corresponding periods in
2000. There were special items of $86 and $252 million in the third quarter and
nine months of 2000, respectively, relating primarily to rationalization costs
post the BP Amoco merger and ARCO integration costs. There were no special items
for the three months and nine months ended September 30, 2001.
BP Solar production for the nine months ended September 30, 2001 was 25% higher
than a year ago. A total of 38 megawatts of solar panel generating capacity was
sold in the nine months ended September 30, 2001.
EXCEPTIONAL ITEMS
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Profit (loss) on sale of fixed assets and
businesses and termination of operations - $m 184 138 573 142
Taxation credit (charge) - $m (194) (278) (379) (386)
------- ------- ------- ------
Exceptional items after taxation - $m (10) (140) 194 (244)
------- ------- ------- ------
Exceptional items for the three months ended September 30, 2001 include profit
from the sale of the Salt Lake City and Mandan refineries in the USA and losses
associated with the closure of certain chemical operations. Exceptional items
for the nine months ended September 30, 2001 also include profit on the sale of
the Kashagan discovery in Kazakhstan, loss on the sale of the Carbon Fibers
business in the USA, and profit on the sale of the Alliance Refinery pipeline
system. Exceptional items for the three months ended September 30, 2000
primarily represent the profit on sale of the Alliance Refinery. In addition,
exceptional items for the nine months ended September 30, 2000 include the
profit on sale of BP's interest in Altura Energy, the losses on sale of certain
Venezuelan upstream interests and the subvention of Singapore Aromatics Company
bank loans.
OUTLOOK
Oil prices have softened as demand has weakened, particularly for aviation fuel,
after the tragic events of 11 September, while OPEC has continued to produce
beyond its quotas. The critical issue, as we look forward, is whether OPEC will
curb that output sufficiently to pull the crude price back within its target
range.
US natural gas prices have settled at more normal levels, though we should
expect the usual seasonal variations. Refining margins continue to show
significant regional differences but, overall, are likely to be down on last
year because of lower product demand. Retail margins have benefited recently
from falling product prices, but chemicals margins look set to stay pretty flat
due to weakening demand and excess capacity.
While the climate is unsettled, the world is still open for business. For our
part we are intensifying our focus on cost and investment discipline to ensure
we sustain underlying performance, keep growth fully profitable and maintain our
robust financial health. Production growth remains on target, at a very
competitive level.
Page 13
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - concluded
RECENT DEVELOPMENTS
BP announced on November 13, 2001 that it will restructure operations at the
Company's Grangemouth refining and petrochemical complex in Scotland. The move
is part of a series of initiatives and investments to radically improve the
plant's ability to compete in an increasingly difficult international refining
and chemicals environment. It will lead to the loss of up to 1,000 jobs over the
next two years.
The decision follows a fundamental ten-week review of the site's organisation,
asset structure and, most particularly, its financial performance, which has
been severely impacted by the economic downturn, unprecedentedly depressed
chemicals markets, and a series of operational problems.
The reorganization will streamline Grangemouth's three main businesses -
refining, petrochemicals and the Forties pipeline terminal - into a single
organization, designed to simplify site operations while increasing reliability
and efficiency.
FORWARD-LOOKING STATEMENTS
In order to utilize the 'Safe Harbor' provisions of the United States Private
Securities Litigation Reform Act of 1995, BP is providing the following
cautionary statement. The foregoing discussion, in particular, although not
limited to, the statements under `Outlook', with regard to trends in the trading
environment, oil and gas prices, refining, marketing, NGL and chemicals margins,
inventory and product stock levels, supply capacity, capital expenditure,
working capital, profitability, results of operation, dividend payments
liquidity or financial position and statements regarding our targets are all
forward-looking in nature. Forward-looking statements are identified by such
phrases as `will', `expects', `is expected to', `may', `is likely to', `intends'
and `believes'. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future and are outside the control of BP. Actual results may differ
materially from those expressed in such statements, depending on a variety of
factors, including the specific factors identified in the discussions
accompanying such forward-looking statements; future levels of industry product
supply, demand and pricing; political stability and economic growth in relevant
areas of the world; development and use of new technology and successful
partnering; the actions of competitors; natural disasters and other changes to
business conditions; and other factors discussed elsewhere in this report. In
addition to factors set forth elsewhere in this report, the factors set forth
above are important factors, although not exhaustive, that may cause actual
results and developments to differ materially from those expressed or implied by
these forward-looking statements. Additional information, including information
on factors which may affect BP's business, is contained in BP's Annual Report
and Accounts for 2000 and in the Annual Report on Form 20-F for 2000 filed with
the US Securities and Exchange Commission.
2001 DIVIDENDS
On November 6, 2001, BP p.l.c. announced a third quarterly dividend for 2001 of
5.5 cents per ordinary share of 25 cents (ordinary shares), representing $0.33
per American Depositary Share (ADS) amounting to $1,232 million in total. The
record date for qualifying US resident holders of American Depositary Shares as
well as holders of ordinary shares was November 16, 2001, with payment to be
made on December 10, 2001.
The dividend payable on December 10, 2001 entitles qualifying US ADS
shareholders to a refund of the 1/9th UK tax credit (approximately $0.037)
attaching to the dividend less a UK withholding tax limited to the amount of the
tax credit. The effect of these arrangements for ADS holders is currently a cash
payment of $0.330, a gross dividend for tax purposes of $0.367 and a potential
tax credit of $0.037 per ADS.
There is a Dividend Reinvestment Plan whereby holders of ordinary shares can
elect to reinvest the net cash dividend in shares purchased on the London Stock
Exchange. This plan is not available to any person resident in the USA or
Canada, or in any jurisdiction outside the UK where such an offer requires
compliance by the Company with any governmental or regulatory procedures or any
similar formalities. A dividend reinvestment facility is, however, available for
holders of ADSs through the Direct Access Plan of Morgan Guaranty Trust Company
of New York. Participants in the Dividend Reinvestment Plan or the dividend
reinvestment facility included in the US Direct Access Plan will receive the
dividend in the form of shares on December 10, 2001.
Page 14
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million, except per share amounts)
Turnover - Note 3 43,886 44,862 138,275 116,980
Less: joint ventures 306 2,231 874 13,480
------- ------ ------- -------
Group turnover 43,580 42,631 137,401 103,500
Replacement cost of sales 36,994 35,365 114,444 84,689
Production taxes - Note 4 337 511 1,353 1,497
------- ------ ------- -------
Gross profit 6,249 6,755 21,604 17,314
Distribution and administration expenses 2,865 2,466 8,419 5,660
Exploration expense - Note 5 86 143 336 442
------- ------ ------- -------
3,298 4,146 12,849 11,212
Other income 179 73 486 533
------- ------ ------- -------
Group replacement cost operating profit 3,477 4,219 13,335 11,745
Share of profits of joint ventures 125 283 352 716
Share of profits of associated undertakings 155 193 541 532
------- ------ ------- -------
Total replacement cost operating profit - Notes 6 & 7 3,757 4,695 14,228 12,993
Profit (loss) on sale of fixed assets and businesses
and termination of operations - Note 8 184 138 573 142
------- ------ ------- -------
Replacement cost profit before interest and tax - Note 6 3,941 4,833 14,801 13,135
Inventory holding gains (losses) - Note 9 (405) 544 (603) 1,289
------- ------ ------- -------
Historical cost profit before interest and tax 3,536 5,377 14,198 14,424
Interest expense - Note 10 369 460 1,256 1,159
------- ------ ------- -------
Profit before taxation 3,167 4,917 12,942 13,265
Taxation - Note 11 1,212 1,554 4,480 3,730
------- ------ ------- -------
Profit after taxation 1,955 3,363 8,462 9,535
Minority shareholders' interest 15 12 47 75
------- ------ ------- -------
Profit for the period 1,940 3,351 8,415 9,460
======= ====== ======= =======
Earnings per ordinary share - cents (a)
Basic 8.66 14.85 37.48 44.32
Diluted 8.59 14.75 37.24 44.01
------- ------ ------- -------
Earnings per American depositary share - cents (a)
Basic 51.96 89.10 224.88 265.92
Diluted 51.54 88.50 223.44 264.06
------- ------ ------- -------
Average number of outstanding ordinary shares (millions) 22,425 22,597 22,449 21,343
======= ====== ======= =======
---------------
(a) A summary of the material adjustments to profit for the period which would
be required if generally accepted accounting principles in the United
States had been applied instead of those generally accepted in the United
Kingdom is given in Note 16.
Page 15
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 2001 December 31, 2000
(Unaudited)
($ million)
Fixed assets
Intangible assets 16,353 16,893
Tangible assets 77,624 75,173
Investments 11,542 11,753
-------- --------
105,519 103,819
Current assets
Business held for resale - 636
Inventories 9,027 9,234
Receivables 28,151 28,418
Investments 519 661
Cash at bank and in hand 1,438 1,170
-------- --------
39,135 40,119
-------- --------
Current liabilities - falling due
within one year
Finance debt 6,625 6,418
Accounts payable and accrued liabilities 30,449 30,729
-------- --------
37,074 37,147
-------- --------
Net current assets 2,061 2,972
-------- --------
Total assets less current liabilities 107,580 106,791
Noncurrent liabilities
Finance debt 13,849 14,772
Accounts payable and accrued liabilities 3,803 5,223
Provisions for liabilities and charges 12,819 12,795
-------- --------
30,471 32,790
-------- --------
Net assets 77,109 74,001
Minority shareholders' interest 646 585
-------- --------
BP shareholders' interest (a) - Note 15 76,463 73,416
======== ========
Represented by:
Capital shares
Preference 21 21
Ordinary 5,611 5,632
Paid-in surplus 3,995 3,770
Merger reserve 26,982 26,869
Retained earnings 39,630 36,668
Other reserves 224 456
-------- --------
76,463 73,416
======== ========
---------------
(a) A summary of the material adjustments to BP shareholders' interest which
would be required if generally accepted accounting principles in the United
States had been applied instead of those generally accepted in the United
Kingdom is given in Note 16.
Page 16
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Net cash inflow from operating activities 5,046 6,604 16,862 14,637
------- ------- ------- -------
Dividends from joint ventures 26 118 92 645
------- ------- ------- -------
Dividends from associated undertakings 155 100 424 274
------- ------- ------- -------
Servicing of finance and returns on investments
Interest received 23 195 173 344
Interest paid (308) (315) (1,053) (883)
Dividends received 59 9 97 12
Dividends paid to minority shareholders (11) (12) (16) (20)
------- ------- ------- -------
Net cash outflow from servicing of financing
and returns on investments (237) (123) (799) (547)
------- ------- ------- -------
Taxation
UK corporation tax (231) (177) (604) (441)
Overseas tax (486) (2,532) (2,634) (3,758)
------- ------- ------- -------
Tax paid (717) (2,709) (3,238) (4,199)
------- ------- ------- -------
Capital expenditure
Payments for fixed assets (2,933) (2,226) (8,526) (6,412)
Proceeds from the sale of fixed assets 824 1,524 1,750 2,112
------- ------- ------- -------
Net cash outflow for capital expenditure (2,109) (702) (6,776) (4,300)
------- ------- ------- -------
Acquisitions and disposals
Investments in associated undertakings (139) (456) (407) (897)
Acquisitions, net of cash acquired (48) (5,095) (608) (4,704)
Net investment in joint ventures (144) (95) (277) (218)
Proceeds from the sale of businesses 307 1,106 307 7,931
------- ------- ------- -------
Net cash (outflow) inflow for acquisitions and disposals (24) (4,540) (985) 2,112
------- ------- ------- -------
Equity dividends paid (1,235) (1,128) (3,595) (3,232)
------- ------- ------- -------
Net cash inflow (outflow) 905 (2,380) 1,985 5,390
======= ======= ======= =======
Financing 630 1,068 1,827 4,472
Management of liquid resources (44) (1,755) (146) 610
Increase (decrease) in cash 319 (1,693) 304 308
------- ------- ------- -------
905 (2,380) 1,985 5,390
======= ======= ======= =======
---------------
(a) This cash flow statement has been prepared in accordance with UK GAAP. A
cash flow statement prepared on the basis of US GAAP is included in Note
16.
Page 17
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - continued
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Reconciliation of historical cost profit before interest
and tax to net cash inflow from operating activities
Historical cost profit before interest and tax 3,536 5,377 14,198 14,424
Depreciation and amounts provided 2,077 2,093 6,320 5,221
Exploration expenditure written off 23 51 153 191
Share of profits of joint ventures and
associated undertakings (278) (515) (891) (1,503)
Interest and other income (116) (121) (346) (281)
(Profit) loss on sale of fixed assets and businesses (184) (136) (573) (118)
Charge for provisions 115 232 821 669
Utilization of provisions (263) (210) (898) (543)
Decrease (increase) in stocks 135 (398) 122 (1,264)
Decrease (increase) in debtors 2,216 (49) 748 (3,635)
Increase (decrease) in creditors (2,215) 280 (2,792) 1,476
------- ------- ------- -------
Net cash inflow from operating activities 5,046 6,604 16,862 14,637
======= ======= ======= =======
Financing
Long-term borrowing (7) (132) (1,029) (1,584)
Repayments of long-term borrowing 988 483 2,168 994
Short-term borrowing (743) (345) (3,493) (1,048)
Repayments of short-term borrowing 40 610 3,167 4,673
------- ------- ------- -------
278 616 813 3,035
Issue of ordinary share capital (48) (102) (168) (241)
Repurchase of ordinary share capital 400 554 1,182 1,383
Stamp duty reserve tax - - - 295
------- ------- ------- -------
Net cash outflow from financing 630 1,068 1,827 4,472
======= ======= ======= =======
---------------
(a) This cash flow statement has been prepared in accordance with UK GAAP. A
cash flow statement prepared on the basis of US GAAP is included in Note
16.
Page 18
BP p.l.c. AND SUBSIDIARIES
CAPITAL EXPENDITURE AND ACQUISITIONS
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
By business
Exploration and Production
UK 326 159 783 599
Rest of Europe 79 50 230 110
USA 1,123 1,082 3,293 2,282
Rest of World 891 562 2,402 1,267
------- ------- ------- -------
2,419 1,853 6,708 4,258
------- ------- ------- -------
Gas and Power
UK (a) 37 78 51 108
Rest of Europe 16 1 37 3
USA (b) 11 37 48 68
Rest of World 10 9 14 30
------- ------- ------- -------
74 125 150 209
------- ------- ------- -------
Refining and Marketing
UK (c) (d) 89 4,098 267 5,016
Rest of Europe (d) 10 1,275 171 1,384
USA 281 30 688 440
Rest of World 62 90 173 253
------- ------- ------- -------
442 5,493 1,299 7,093
------- ------- ------- -------
Chemicals
UK 50 122 179 410
Rest of Europe (e) 69 28 623 95
USA 119 92 293 183
Rest of World 112 60 237 385
------- ------- ------- -------
350 302 1,332 1,073
------- ------- ------- -------
Other businesses and corporate (f) 78 1,814 207 2,514
------- ------- ------- -------
3,363 9,587 9,696 15,147
======= ======= ======= =======
By geographical area
UK 541 4,547 1,383 6,294
Rest of Europe 181 1,354 1,078 1,598
USA 1,564 2,965 4,402 4,735
Rest of World 1,077 721 2,833 2,520
------- ------- ------- -------
3,363 9,587 9,696 15,147
======= ======= ======= =======
---------------
(a) 3Q and nine months 2000 included $63 million for the first instalment on
two LNG ships and nine months 2000 also included investment in Great
Yarmouth Power Station.
(b) Nine months 2000 included investment in Green Mountain Energy Company.
(c) 3Q 2000 included $3,817 million and nine months 2000 included $4,686
million for the purchase of Burmah Castrol's issued share capital.
(d) 3Q and nine months 2000 included $1,450 million for the acquisition of the
Mobil share of the European Joint Venture.
(e) Nine months 2001 included the acquisition of Bayer's 50% interest in
Erdolchemie.
(f) 3Q and nine months 2000 included $1,688 million for the acquisition of the
minority interest in Vastar. Nine months 2000 also included $578 million
for the acquisition of a 2.2% interest in PetroChina.
Page 19
BP p.l.c. AND SUBSIDIARIES
ENVIRONMENTAL INDICATORS
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Average oil realizations (a) - $/bbl
UK 24.34 28.46 25.33 27.01
USA 22.38 27.44 23.58 25.22
Rest of World 22.71 27.54 23.40 26.15
BP average 23.08 27.84 24.22 26.13
Brent oil price 25.30 30.42 26.14 28.07
West Texas Intermediate oil price 26.72 31.71 27.77 29.84
Alaska North Slope US West Coast 24.05 29.82 25.01 27.99
Average natural gas realizations - $/mcf
UK 2.52 2.33 3.05 2.18
USA 2.63 3.87 4.68 3.17
Rest of World 2.27 2.29 2.73 2.11
BP average 2.49 3.01 3.66 2.57
Henry Hub gas price (b) ($/mmBtu) 2.93 4.27 4.88 3.41
Global Indicator Refining Margins (c) - $/bbl
Northwest Europe 1.74 3.44 2.48 3.26
US Gulf Coast 3.24 3.87 5.87 3.92
Midwest 7.20 3.06 7.20 4.18
US West Coast 8.17 12.54 9.40 8.31
Singapore 0.75 3.19 0.80 2.08
BP average 3.83 4.83 4.62 3.99
Chemicals Indicator Margin (d) - $/te 110 (e) 128 107 (e) 130
---------------
(a) Crude oil and natural gas liquids.
(b) Henry Hub First of Month Index.
(c) The Global Indicator Refining Margin (GIM) is the average of seven regional
indicator margins weighted for BP's crude refining capacity in each region.
Each regional indicator margin is based on a single representative crude
with product yields characteristic of the typical level of upgrading
complexity.
(d) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins reflecting industry supply/demand
conditions. It is based on market data collected by Chem Systems in their
quarterly market analyses, then weighted based on BP's product portfolio.
The products and businesses covered in the CIM are olefins and derivatives,
aromatics and derivatives, linear alpha olefins, acetic acid, vinyl acetate
monomer and nitriles. Not included are fabrics and fibres, plastic
fabrications, poly alpha olefins, anhydrides, engineering polymers and
carbon fibres, speciality intermediates, and the remaining parts of the
solvents and acetyls businesses. This quarter the margin indicator has been
adjusted to reflect the Erdolchemie purchase and the impact of recently
divested businesses. Prior quarters have been restated.
(e) Provisional. The data for the third quarter is based on two months' actual
and one month of provisional data.
US dollar/sterling exchange rates
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
Average rates for the period 1.44 1.48 1.44 1.54
Period-end rates 1.48 1.46 1.48 1.46
======= ======= ====== =======
Page 19
BP p.l.c. AND SUBSIDIARIES
SPECIAL ITEMS AND ACQUISITION AMORTIZATION BY SEGMENT (PRE-TAX)
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Special items
Exploration and Production
UK - 42 - 112
Rest of Europe - - - -
USA - 135 - 287
Rest of World - 15 - 76
------- ------- ------- -------
- 192 - 475
------- ------- ------- -------
Gas and Power
UK - - - -
Rest of Europe - - - -
USA - - - -
Rest of World - - - -
------- ------- ------- -------
- - - -
------- ------- ------- -------
Refining and Marketing
UK 18 14 61 14
Rest of Europe 33 22 123 51
USA 11 58 19 170
Rest of World 50 16 71 16
------- ------- ------- -------
112 110 274 251
------- ------- ------- -------
Chemicals
UK - 2 - 5
Rest of Europe 8 1 8 2
USA - 1 - 47
Rest of World - - - -
------- ------- ------- -------
8 4 8 54
------- ------- ------- -------
Other businesses and corporate
UK - 37 - 56
Rest of Europe - - - -
USA - 49 - 196
Rest of World - - - -
------- ------- ------- -------
- 86 - 252
------- ------- ------- -------
Total special items before interest 120 392 282 1,032
Interest - bond redemption charges 2 - 62 -
------- ------- ------- -------
Total 122 392 344 1,032
======= ======= ======= =======
Acquisition amortization
Exploration and Production
UK 42 29 110 55
USA 353 372 1,151 685
Rest of World 34 11 101 21
------- ------- ------- -------
429 412 1,362 761
------- ------- ------- -------
Refining and Marketing
UK 93 104 295 104
USA 81 81 243 151
------- ------- ------- -------
174 185 538 255
======= ======= ======= =======
Total 603 597 1,900 1,016
======= ======= ======= =======
Page 21
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results for the interim periods are unaudited and in the opinion of
management include all adjustments necessary for a fair presentation of the
results for the periods presented. The interim financial statements and
notes included in this Report should be read in conjunction with the
consolidated financial statements and related notes for the year ended
December 31, 2000 included in BP's Annual Report on Form 20-F filed with
the Securities and Exchange Commission.
2. Business held for resale
The sale of Foseco was completed during the third quarter of 2001. The
other former Burmah Castrol chemicals businesses originally categorized as
businesses held for resale will for now be retained and have been included
within the Chemicals segment from July 1, 2001.
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
3. Turnover
By business
Exploration and Production 6,335 8,195 22,893 21,977
Gas and Power 9,241 5,481 31,756 12,460
Refining and Marketing 30,925 31,311 93,705 75,175
Chemicals 3,272 2,798 9,034 8,493
Other businesses and corporate 204 106 567 198
------- ------ -------- --------
49,977 47,891 157,955 118,303
Less: sales between businesses 6,397 5,260 20,554 14,803
------- ------ -------- --------
Group excluding joint ventures 43,580 42,631 137,401 103,500
Sales of joint ventures 306 2,231 874 13,480
------- ------ -------- --------
43,886 44,862 138,275 116,980
======= ====== ======== ========
By geographical area
UK 12,272 11,956 36,186 33,418
Rest of Europe 9,026 5,603 28,044 9,336
USA 21,375 21,513 68,657 52,061
Rest of World 8,006 8,271 26,626 21,608
------- ------ -------- --------
50,679 47,343 159,513 116,423
Less: Sales between areas 7,099 4,712 22,112 12,923
------- ------ -------- --------
Group excluding joint ventures 43,580 42,631 137,401 103,500
======= ====== ======== ========
Sales of joint ventures
UK - 540 - 3,314
Rest of Europe - 1,951 - 12,316
USA 49 24 236 183
Rest of World 257 240 638 489
------- ------ -------- --------
306 2,755 874 16,302
Less: sales between areas - 524 - 2,822
------- ------ -------- --------
306 2,231 874 13,480
======= ====== ======== ========
4. Production taxes
UK petroleum revenue tax 80 171 453 545
Overseas production taxes 257 340 900 952
------- ------ -------- --------
337 511 1,353 1,497
======= ====== ======== ========
Page 22
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
5. Exploration expense
Exploration and Production
UK 1 - 5 23
Rest of Europe 10 20 15 32
USA 41 60 174 185
Rest of World 34 63 142 202
------- ------ ------- -------
86 143 336 442
======= ====== ======= =======
6. Replacement cost profit
Replacement cost profits reflect the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from the
historical cost profit inventory holding gains and losses. These are the
difference between the amount that is charged to cost of sales on a
first-in, first-out (FIFO) basis of inventory valuation and the amount
charged to cost of sales based on the average cost of supplies incurred
during the period. The former basis is used in arriving at the historical
cost result whereas the latter basis is used in arriving at the replacement
cost result. For further discussion of replacement cost operating profit
see Item 3 of BP`s Annual Report on Form 20-F for the year ended December
31, 2000.
7. Total replacement cost operating profit
By business
Exploration and Production
UK 729 997 2,853 2,961
Rest of Europe 188 221 604 594
USA 850 1,247 4,189 3,436
Rest of World 874 1,087 3,116 2,783
------- ------ ------- -------
2,641 3,552 10,762 9,774
------- ------ ------- -------
Gas and Power
UK 36 14 87 13
Rest of Europe 24 28 120 94
USA 89 14 220 75
Rest of World (19) 76 (12) 206
------- ------ ------- -------
130 132 415 388
------- ------ ------- -------
Refining and Marketing
UK (51) 63 (278) 244
Rest of Europe 222 233 535 399
USA 696 600 2,578 1,823
Rest of World 136 68 398 265
------- ------ ------- -------
1,003 964 3,233 2,731
------- ------ ------- -------
Chemicals
UK (58) (17) (141) (81)
Rest of Europe 87 75 186 271
USA 59 161 71 525
Rest of World 17 44 79 127
------- ------ ------- -------
105 263 195 842
------- ------ ------- -------
Other businesses and corporate (122) (216) (377) (742)
------- ------ ------- -------
3,757 4,695 14,228 12,993
======= ======= ======= =======
By geographical area
UK 552 999 2,293 2,939
Rest of Europe 512 578 1,426 1,405
USA 1,582 1,856 6,806 5,270
Rest of World 1,111 1,262 3,703 3,379
------- ------- ------- -------
3,757 4,695 14,228 12,993
======= ======= ======= =======
Page 23
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
8. Analysis of exceptional items
Profit (loss) on sale of fixed assets and
businesses and termination of operations
Exploration and Production 3 9 280 215
Gas and Power - (1) (1) (1)
Refining and Marketing 247 161 453 185
Chemicals (81) (30) (167) (240)
Other businesses and corporate 15 (1) 8 (17)
------- ------- ------- -------
Exceptional items before taxation 184 138 573 142
Taxation charge (194) (278) (379) (386)
------- ------- ------- -------
Exceptional items after taxation (10) (140) 194 (244)
======= ======= ======= =======
9. Inventory holding gains (losses)
Exploration and Production (1) 3 (1) 5
Gas and Power (17) - (61) 22
Refining and Marketing (301) 524 (445) 1,140
Chemicals (86) 17 (96) 122
------- ------- ------- -------
(405) 544 (603) 1,289
======= ======= ======= =======
10.Interest expense
Group interest payable (a) 292 384 1,022 950
Capitalized (19) (32) (74) (77)
------- ------- ------- -------
273 352 948 873
Joint ventures 16 24 49 59
Associated undertakings 33 36 109 98
Unwinding of discount on provisions 47 48 150 129
------- ------- ------- -------
369 460 1,256 1,159
======= ======= ======= =======
(a) Includes charges relating
to the early redemption of debt 2 - 62 -
------- ------- ------- -------
11.Charge for taxation
United Kingdom 244 269 766 873
Overseas 968 1,285 3,714 2,857
------- ------- ------- -------
1,212 1,554 4,480 3,730
======= ======= ======= =======
Page 24
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
12.Return on average capital employed (ROACE)
Replacement cost basis
Replacement cost profit before exceptional items 2,355 2,947 8,824 8,415
Interest 369 460 1,256 1,159
Minority shareholders' interest 15 12 47 75
------ ------- ------- -------
2,739 3,419 10,127 9,649
====== ======= ======= =======
Average capital employed 96,906 96,333 96,387 *
ROACE 11.3% 14.2% 14.0% *
------ ------- ------- -------
Acquisitions and special items adjustments
Acquisition amortization 603 560 1,900 937
Special items (post tax) 89 289 204 761
Average capital employed 19,677 22,172 20,325 *
ROACE - pro forma basis adjusted for special items 17.8% 23.0% 21.4% *
------ ------- ------- -------
Historical cost basis
Historical cost profit after exceptional items 1,940 3,351 8,415 9,460
Interest 369 460 1,256 1,159
Minority shareholders' interest 15 12 47 75
------ ------- ------- -------
2,324 3,823 9,718 10,694
====== ======= ======= =======
ROACE 9.6% 16.4% 13.4% *
====== ======= ======= =======
* As the acquisition of ARCO was completed in April and of Burmah Castrol in
July, it is not meaningful to show ROACE for the nine months ended
September 30, 2000.
13.Analysis of changes in net debt
Opening balance
Finance debt 20,498 19,187 21,190 14,544
Less: Cash 1,103 3,313 1,170 1,331
Current asset investments 563 2,616 661 220
------ ------- ------- -------
Opening net debt 18,832 13,258 19,359 12,993
------ ------- ------- -------
Closing balance
Finance debt 20,474 19,688 20,474 19,688
Less: Cash 1,438 1,607 1,438 1,607
Current asset investments 519 862 519 862
------ ------- ------- -------
Closing net debt 18,517 17,219 18,517 17,219
------ ------- ------- -------
Decrease (increase) in net debt 315 (3,961) 842 (4,226)
======= ======= ======= =======
Movement in cash/bank overdrafts 319 (1,693) 304 308
(Decrease) increase in current asset investments (43) (1,755) (145) 610
Net cash (inflow) outflow from financing
(excluding share capital) 278 616 813 3,035
Other movements (102) (27) (20) (20)
Debt acquired - (949) (47) (8,072)
------ ------- ------- -------
Movements in net debt before exchange effects 452 (3,808) 905 (4,139)
Exchange adjustments (137) (153) (63) (87)
------ ------- ------- -------
Decrease (increase) in net debt 315 (3,961) 842 (4,226)
======= ======= ======= =======
Page 25
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
14.Net debt ratio - net debt: net debt + equity
Gross debt 20,474 19,688 20,474 19,688
Cash and current asset investments 1,957 2,469 1,957 2,469
------- ------- ------- -------
Net debt 18,517 17,219 18,517 17,219
Equity 77,109 73,673 77,109 73,673
------- ------- ------- -------
Net debt ratio 19% 19% 19% 19%
Acquisition adjustment (a) 19,375 21,137 19,375 21,137
------- ------- ------- -------
Net debt ratio - pro forma basis (b) 24% 25% 24% 25%
======= ======= ======= =======
---------------
(a) Acquisition adjustment refers to the fixed asset revaluation adjustment and
goodwill consequent upon the ARCO and Burmah Castrol acquisitions.
(b) Based on equity excluding the fixed asset revaluation adjustment and
goodwill resulting from the ARCO and Burmah Castrol acquisitions.
15. Movement in BP shareholders' interest $ million
(Unaudited)
Balance at December 31, 2000 73,416
Profit for the period 8,415
Distribution to shareholders (3,646)
Currency translation differences (592)
Employee share schemes 168
Share buyback (1,182)
Redemption of ARCO preference shares (116)
-------
Balance at September 30, 2001 76,463
=======
Page 26
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. US generally accepted accounting principles
The following is a summary of the adjustments to profit for the period and
to BP shareholders' interest which would be required if generally accepted
accounting principles in the United States (US GAAP) had been applied
instead of those generally accepted in the United Kingdom.
Profit for the period Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Profit as reported in the consolidated
statement of income 1,940 3,351 8,415 9,460
Adjustments:
------- ------- ------- --------
Depreciation charge (265) (138) (844) (258)
Decommissioning and environmental expense (129) (48) (313) (214)
Onerous property leases (7) (9) (41) (21)
Derivative financial instruments (58) - (257) -
Interest expense 47 48 150 129
Deferred taxation 238 48 185 (665)
Other 4 14 14 45
------- ------- ------- --------
(170) (85) (1,106) (984)
------- ------- ------- --------
Profit for the period before cumulative effect of
accounting change as adjusted to accord with US GAAP 1,770 3,266 7,309 8,476
Cumulative effect of accounting change:
Derivative financial instruments - - (18) -
------- ------- ------- --------
Profit for the period as adjusted to 1,770 3,266 7,291 8,476
accord with US GAAP ======= ====== ======= =======
Profit for the period as adjusted:
Per ordinary share - cents
Basic - before cumulative effect of accounting change 7.89 14.48 32.56 39.71
Cumulative effect of accounting change - - (0.08) -
------- ------- ------- --------
7.89 14.48 32.48 39.71
------- ------- ------- --------
Diluted - before cumulative effect of accounting change 7.85 14.37 32.35 39.44
Cumulative effect of accounting change - - (0.08) -
------- ------- ------- --------
7.85 14.37 32.27 39.44
------- ------- ------- --------
Per American Depositary Share - cents (a)
Basic - before cumulative effect of accounting change 47.34 86.88 195.36 238.26
Cumulative effect of accounting change - - (0.48) -
------- ------- ------- --------
47.34 86.88 194.88 238.26
------- ------- ------- --------
Diluted - before cumulative effect of accounting change 47.10 86.22 194.10 236.64
Cumulative effect of accounting change - - (0.48) -
------- ------- ------- --------
47.10 86.22 193.62 236.64
------- ------- ------- --------
Page 27
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16.US generally accepted accounting principles - continued
BP shareholders' interest September 30, 2001 December 31, 2000 (b)
(Unaudited)
----------------- --------------------
($ million)
BP shareholders' interest as reported
in the consolidated balance sheet 76,463 73,416
Adjustments: ------ ------
Fixed assets 7,926 8,777
Ordinary shares held for future awards to employees (293) (360)
Sale and leaseback of Chicago office building (413) (413)
Decommissioning and environmental provisions (1,106) (921)
Onerous property leases 67 105
Derivative financial instruments (273) -
Deferred taxation (15,700) (15,843)
Quarterly dividend 1,232 1,178
Pension liability adjustment (145) (145)
Other (112) (128)
------ ------
(8,817) (7,750)
------ ------
BP shareholders' interest as adjusted
to accord with US GAAP 67,646 65,666
====== ======
---------------
(a) One American Depositary Share is equivalent to six ordinary shares.
(b) As reported in Note 43 of Notes to Financial Statements included in BP's
Annual Report on Form 20-F for the year ended December 31, 2000.
Page 28
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16.US generally accepted accounting principles - continued
The consolidated statement of cash flows presented in accordance with SFAS 95
is as follows:
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Operating activities
Profit after taxation 1,955 3,363 8,462 9,535
Adjustments to reconcile profits after tax to
net cash provided by operating activities
Depreciation and amounts provided 2,077 2,093 6,320 5,221
Exploration expenditure written off 23 51 153 191
Share of profits of joint ventures and
associates less dividends received 17 (187) (8) (299)
(Profit) loss on sale of businesses and fixed assets (184) (136) (573) (118)
Working capital movement (see analysis below) 561 281 (768) (2,270)
Other (145) (1,431) (154) (1,257)
------- ------- ------- -------
Net cash provided by operating activities 4,304 4,034 13,432 11,003
------- ------- ------- -------
Investing activities
Capital expenditures (2,952) (2,258) (8,600) (6,489)
Acquisitions, net of cash acquired (48) (5,095) (608) (4,704)
Investment in associated undertakings (139) (456) (407) (897)
Net investment in joint ventures (144) (95) (277) (218)
Proceeds from disposal of assets 1,131 2,630 2,057 10,043
------- ------- ------- -------
Net cash used in investing activities (2,152) (5,274) (7,835) (2,265)
------- ------- ------- -------
Financing activities
Net proceeds from shares (repurchased) issued (352) (452) (1,014) (1,437)
Proceeds from long-term financing 7 132 1,029 1,584
Repayments of long-term financing (988) (483) (2,168) (994)
Net increase (decrease) in short-term debt 703 (265) 326 (3,625)
Dividends paid - BP shareholders (1,235) (1,128) (3,595) (3,232)
- Minority shareholders (11) (12) (16) (20)
------- ------- ------- -------
Net cash used in financing activities (1,876) (2,208) (5,438) (7,724)
------- ------- ------- -------
Currency translation differences relating to
cash and cash equivalents 15 (12) (33) -
------- ------- ------- -------
(Decrease) increase in cash and cash equivalents 291 (3,460) 126 1,014
------- ------- ------- -------
Cash and cash equivalents at beginning of period 1,666 5,929 1,831 1,455
------- ------- ------- -------
Cash and cash equivalents at end of period 1,957 2,469 1,957 2,469
======= ======= ======= =======
Analysis of working capital movement
Decrease (increase) in inventories 135 (398) 122 (1,264)
Decrease (increase) in receivables 2,249 (57) 703 (3,597)
(Decrease) increase in current liabilities
(excluding finance debt) (1,823) 736 (1,593) 2,591
------- ------- ------- -------
Total working capital movement 561 281 (768) (2,270)
======= ======= ======= =======
Page 29
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. US generally accepted accounting principles - continued
Earnings per share
Basic earnings per share excludes the dilutive effects of options, warrants
and convertible securities. Diluted earnings per share reflects the
potential dilution that could occur if options, warrants or convertible
securities were exercised or converted into ordinary shares that shared in
the earnings of the Group. The dilutive effect of outstanding share options
is as follows:
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
(shares million)
Weighted average number of ordinary shares 22,425 22,560 22,449 21,344
Ordinary shares issuable under employee share schemes 134 168 142 148
-------- ------- ------- -------
22,559 22,728 22,591 21,492
======== ======= ======= =======
Comprehensive income
The components of comprehensive income, net of related tax are as follows:
Three months ended Nine months ended
September 30 September 30
(Unaudited) (Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Profit for the period as adjusted
to accord with US GAAP 1,770 3,266 7,291 8,476
Currency translation differences 1,007 (1,163) (592) (2,379)
Derivative financial instruments (7) - 8 -
Pension liability - - - -
-------- ------- ------- -------
Comprehensive income 2,770 2,103 6,707 6,097
======== ======= ======= =======
Accumulated other comprehensive income at September 30, 2001 and December 31,
2000 comprised losses of $4,611 million and $4,027 million, respectively.
Page 30
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16.US generally accepted accounting principles - continued
Accounting for associated undertakings and joint ventures
Under the provisions of UK Financial Reporting Standard No.9 `Associates and
Joint Ventures', the Company includes its share of the results of associated
undertakings and joint ventures (JVs) within various captions in the
consolidated statement of income. Under US GAAP, the Company's share of the
after tax profit or loss of associated undertakings and joint ventures would
be recognized as a single amount. The following summarizes the
reclassifications necessary to accord with US GAAP.
Three months ended September 30, 2001
(Unaudited)
------------------------------------------
As US GAAP
Reported Reclassification Presentation
------------------------------------------
($ million)
Consolidated statement of income
Other income 179 164 343
Share of profits of JVs and
associated undertakings 280 (280) -
Exceptional items before taxation 184 - 184
Inventory holding gains (losses) (405) 2 (403)
Interest expense 369 (49) 320
Taxation 1,212 (65) 1,147
Profit for the period 1,940 - 1,940
Nine months ended September 30, 2001
(Unaudited)
------------------------------------------
As US GAAP
Reported Reclassification Presentation
------------------------------------------
($ million)
Consolidated statement of income
Other income 486 524 1,010
Share of profits of JVs and
associated undertakings 893 (893) -
Exceptional items before taxation 573 1 574
Inventory holding gains (losses) (603) 1 (602)
Interest expense 1,256 (158) 1,098
Taxation 4,480 (209) 4,271
Profit for the period 8,415 - 8,415
Three months ended September 30, 2000
(Unaudited)
------------------------------------------
As US GAAP
Reported Reclassification Presentation
------------------------------------------
($ million)
Consolidated statement of income
Other income 73 405 478
Share of profits of JVs and
associated undertakings 476 (476) -
Exceptional items before taxation 138 (2) 136
Inventory holding gains (losses) 544 (37) 507
Interest expense 460 (60) 400
Taxation 1,554 (50) 1,504
Profit for the period 3,351 - 3,351
Nine months ended September 30, 2000
(Unaudited)
------------------------------------------
As US GAAP
Reported Reclassification Presentation
------------------------------------------
($ million)
Consolidated statement of income
Other income 533 1,218 1,751
Share of profits of JVs and
associated undertakings 1,248 (1,248) -
Exceptional items before taxation 142 (24) 118
Inventory holding gains (losses) 1,289 (231) 1,058
Interest expense 1,159 (157) 1,002
Taxation 3,730 (128) 3,602
Profit for the period 9,460 - 9,460
Page 31
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16.US generally accepted accounting principles - continued
Derivative instruments and hedging activities
On January 1, 2001 the Group adopted Statement of Financial Accounting
Standards No. 133 `Accounting for Derivative Instruments and Hedging
Activities' (SFAS 133) as amended by Statement Nos. 137 and 138, for US GAAP
reporting.
SFAS 133, as amended, requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part
of a hedge transaction and, if it is, the type of hedge transaction. To the
extent certain criteria are met, SFAS 133 permits, but does not require,
hedge accounting.
The Group's accounting policies under UK GAAP do not satisfy the criteria for
hedge accounting under SFAS 133. The Group does not intend to modify its
practice under UK GAAP.
In the normal course of business the Group is a party to derivative financial
instruments with off-balance sheet risk, primarily to manage its exposure to
fluctuations in foreign currency exchange rates and interest rates, including
management of the balance between floating rate and fixed rate debt. The
Group also manages certain of its exposures to movements in oil and natural
gas prices. In addition, the Group trades derivatives in conjunction with
these risk management activities.
All oil price derivatives and all derivatives held for trading are carried on
the Group's balance sheet at fair value with changes in that value recognized
in earnings of the period. For those derivative instruments, there was no
impact of adopting SFAS 133 on the Group's results of operations and
financial position, as adjusted to accord with US GAAP. Certain financial
derivatives used to manage foreign currency and interest rate risk that
qualify for hedge accounting under UK GAAP are marked to market under SFAS
133. For these derivatives, the cumulative effect of adopting SFAS 133
resulted in a pre tax charge to income, as adjusted to accord with US GAAP,
of $27 million ($18 million after tax) and a pre tax credit to other
comprehensive income of $57 million ($37 million after tax). The net gain
included in other comprehensive income as of January 1, 2001 is expected to
be reclassified into earnings during 2001. During the first nine months of
2001 a pre-tax credit of $45 million ($29 million after tax) included in
other comprehensive income was reclassified into earnings. Under US GAAP the
fair values of derivative financial instruments is shown as current assets
and liabilities as appropriate.
Because the Company does not intend to modify its accounting practice to
satisfy the criteria for hedge accounting under SFAS 133, the Group's results
of operations, as adjusted to accord with US GAAP, will not necessarily be
representative of the results it would report if US GAAP were used to prepare
the consolidated financial statements of the Group and the Group sought to
meet the hedge criteria of SFAS 133.
Page 32
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16.US generally accepted accounting principles - concluded
Recently issued accounting standards
In June 2001 the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No.141 `Business Combinations' (SFAS 141)
and No. 142 `Goodwill and Other Intangible Assets' (SFAS 142). Under SFAS
141, the pooling of interest method of accounting is no longer permitted; the
purchase method must be used for all business combinations initiated after
June 30, 2001. SFAS 142, which is effective for accounting periods beginning
after December 15, 2001, eliminates the requirement to amortize goodwill and
indefinite lived intangible assets. Rather, such assets are subject to
periodic impairment testing. Intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their estimated useful
lives.
It is estimated that application of these new standards would increase the
Group's results of operations, as adjusted to accord with US GAAP, by
approximately $1,300 million for the year ended December 31, 2002, assuming
no impairment of goodwill.
Also in June 2001 the FASB issued Statement of Financial Accounting Standards
No. 143 `Accounting for Asset Retirement Obligations' (SFAS 143). SFAS 143
requires companies to record liabilities equal to the fair value of their
asset retirement obligations when they are incurred (typically when the asset
is installed at the production location). When the liability is initially
recorded, companies capitalize an equivalent amount as part of the cost of
the asset. Over time the liability is accreted for the change in its present
value each period, and the initial capitalized cost is depreciated over the
useful life of the related asset. SFAS 143 is effective for accounting
periods beginning after June 15, 2002.
The provisions of SFAS 143 are similar to the accounting policy used by the
Group in preparing its financial statements under UK GAAP. The Company has
not yet determined the effect of adopting SFAS 143 on its results of
operations or shareholders' interest as adjusted to accord with US GAAP.
In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 144, `Accounting for the Impairment or Disposal of Long-Lived Assets'
(SFAS 144). SFAS 144 retains the requirement to recognize an impairment loss
only where the carrying value of a long-lived asset is not recoverable from
its undiscounted cash flows and to measure such loss as the difference
between the carrying amount and fair value of the asset. SFAS 144, among
other things, changes the criteria that have to be met in order to classify
an asset as held-for-sale and requires that operating losses from
discontinued operations be recognized in the period that the losses are
incurred rather than as of the measurement date. SFAS 144 is effective for
accounting periods beginning after December 15, 2001.
The Company has not yet determined the effect of adopting SFAS 144 on its
results of operations and shareholders' interest as adjusted to accord with
US GAAP.
Page 33
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17.Restatement of 2000 segment information
On January 1, 2001 the natural gas liquids (NGL) operations located in the
USA and Canada, were moved to the Gas and Power business from Refining and
Marketing. Comparative information for 2000 has been restated as shown below.
First Second Third Fourth
Quarter Quarter Quarter Quarter 2000
-------------------------------------------------
($ million)
Replacement cost operating profit
Previously reported Refining and Marketing total 674 1,271 1,048 915 3,908
Previously reported Gas and Power total 52 26 48 60 186
=================================================
Restated as:
Refining and Marketing
UK 33 148 63 (71) 173
Rest of Europe 36 130 233 354 753
USA 409 814 600 388 2,211
Rest of World 106 91 68 121 386
------------------------------------------------
584 1,183 964 792 3,523
=================================================
Gas and Power
UK (5) 4 14 1 14
Rest of Europe 55 11 28 54 148
USA 14 47 14 29 104
Rest of World 78 52 76 99 305
------------------------------------------------
142 114 132 183 571
=================================================
Turnover
Previously reported Refining and Marketing total 20,778 25,120 32,555 34,362 112,815
Previously reported Gas and Power total 2,173 2,772 4,237 6,899 16,081
=================================================
Restated as:
Refining and Marketing 19,696 24,168 31,311 32,708 107,883
Gas and Power 3,255 3,724 5,481 8,553 21,013
=================================================
Page 34
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17.Restatement of 2000 segment information - concluded
First Second Third Fourth
Quarter Quarter Quarter Quarter 2000
-------------------------------------------------
($ million)
Exceptional items
Previously reported Refining and Marketing total 19 5 160 (85) 99
Previously reported Gas and Power total - - - - -
=================================================
Restated as:
Refining and Marketing 19 5 161 (87) 98
Gas and Power - - (1) 2 1
=================================================
Capital expenditure and acquisitions
Previously reported Refining and Marketing total 1,102 518 5,504 1,626 8,750
Previously reported Gas and Power total 7 57 114 101 279
=================================================
Restated as:
Refining and Marketing
UK 889 29 4,098 393 5,409
Rest of Europe 44 65 1,275 328 1,712
USA 76 334 30 652 1,092
Rest of World 87 76 90 227 480
-------------------------------------------------
1,096 504 5,493 1,600 8,693
=================================================
Gas and Power
UK 2 28 78 86 194
Rest of Europe 1 1 1 13 16
USA 1 30 37 5 73
Rest of World 9 12 9 23 53
-------------------------------------------------
13 71 125 127 336
=================================================
18.Condensed Consolidating Information
The following information is presented in accordance with the financial
reporting rules of the Securities and Exchange Commission regarding issuers
and guarantors of guaranteed securities.
Page 35
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Income statement BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Three months ended September 30, 2001
Turnover 549 300 - 43,337 (300) 43,886
Less: Joint ventures - - - 306 - 306
----------------------------------------------------------------------------------------
Group turnover 549 300 - 43,031 (300) 43,580
Replacement cost of sales 541 231 - 36,526 (304) 36,994
Production taxes - 44 - 293 - 337
----------------------------------------------------------------------------------------
Gross profit 8 25 - 6,212 4 6,249
Distribution and administration expenses - - (2) 2,867 - 2,865
Exploration expense - 5 - 81 - 86
----------------------------------------------------------------------------------------
8 20 2 3,264 4 3,298
Other income 3 - 368 176 (368) 179
----------------------------------------------------------------------------------------
Group replacement cost operating profit 11 20 370 3,440 (364) 3,477
Share of profits of joint ventures - - - 125 - 125
Share of profits of associated undertakings - - - 155 - 155
Equity accounted income of subsidiaries 3,108 335 3,738 - (7,181) -
----------------------------------------------------------------------------------------
Total replacement cost operating profit 3,119 355 4,108 3,720 (7,545) 3,757
Profit (loss) on sale of fixed assets and
businesses and termination of operations 168 - 184 184 (352) 184
----------------------------------------------------------------------------------------
Replacement cost profit
before interest and tax 3,287 355 4,292 3,904 (7,897) 3,941
Inventory holding gains (losses) (205) (6) (405) (404) 615 (405)
----------------------------------------------------------------------------------------
Historical cost profit before
interest and tax 3,082 349 3,887 3,500 (7,282) 3,536
Interest expense 367 8 735 739 (1,480) 369
----------------------------------------------------------------------------------------
Profit before taxation 2,715 341 3,152 2,761 (5,802) 3,167
Taxation 825 7 1,212 1,293 (2,125) 1,212
----------------------------------------------------------------------------------------
Profit after taxation 1,890 334 1,940 1,468 (3,677) 1,955
Minority shareholders' interest - - - 15 - 15
----------------------------------------------------------------------------------------
Profit for the period 1,890 334 1,940 1,453 (3,677) 1,940
========================================================================================
Page 36
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Income statement (continued)
The following is a summary of the adjustments to profit for the period which
would be required if generally accepted accounting principles in the United
States (US GAAP) had been applied instead of those generally accepted in the
United Kingdom.
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Three months ended September 30, 2001
Profit as reported 1,890 334 1,940 1,453 (3,677) 1,940
Adjustments:
Depreciation charge (283) (9) (265) (256) 548 (265)
Decommissioning and environmental expense (127) (2) (129) (127) 256 (129)
Onerous property leases (25) - (7) (7) 32 (7)
Derivative financial instruments 14 - (58) (34) 20 (58)
Interest expense 24 2 47 45 (71) 47
Sale and leaseback of fixed assets - - - - - -
Deferred taxation (143) (32) 238 268 (93) 238
Other 1 - 4 4 (5) 4
----------------------------------------------------------------------------------------
Profit for the period as adjusted to
accord with US GAAP 1,351 293 1,770 1,346 (2,990) 1,770
========================================================================================
Page 37
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Income statement (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Three months ended September 30, 2000
Turnover - 722 - 44,862 (722) 44,862
Less: Joint ventures - - - 2,231 - 2,231
---------------------------------------------------------------------------------------
Group turnover - 722 - 42,631 (722) 42,631
Replacement cost of sales - 274 - 35,821 (730) 35,365
Production taxes - 68 - 443 - 511
---------------------------------------------------------------------------------------
Gross profit - 380 - 6,367 8 6,775
Distribution and administration expenses - - 72 2,394 - 2,466
Exploration expense - 4 - 139 - 143
---------------------------------------------------------------------------------------
- 376 (72) 3,834 8 4,146
Other income - 15 45 55 (42) 73
---------------------------------------------------------------------------------------
Group replacement cost operating profit - 391 (27) 3,889 (34) 4,219
Share of profits of joint ventures - - - 283 - 283
Share of profits of associated undertakings - - - 193 - 193
Equity accounted income of subsidiaries 3,895 161 4,855 - (8,911) -
---------------------------------------------------------------------------------------
Total replacement cost operating profit 3,895 552 4,828 4,365 (8,945) 4,695
Profit (loss) on sale of fixed assets and
businesses and termination of operations 192 (1) 138 138 (329) 138
---------------------------------------------------------------------------------------
Replacement cost profit
before interest and tax 4,087 551 4,966 4,503 (9,274) 4,833
Inventory holding gains (losses) 276 (5) 544 544 (815) 544
---------------------------------------------------------------------------------------
Historical cost profit before
interest and tax 4,363 546 5,510 5,047 (10,089) 5,377
Interest expense 455 3 494 501 (993) 460
---------------------------------------------------------------------------------------
Profit before taxation 3,908 543 5,016 4,546 (9,096) 4,917
Taxation 1,178 182 1,554 1,395 (2,755) 1,554
---------------------------------------------------------------------------------------
Profit after taxation 2,730 361 3,462 3,151 (6,341) 3,363
Minority shareholders' interest - - - 12 - 12
---------------------------------------------------------------------------------------
Profit for the period 2,730 361 3,462 3,139 (6,341) 3,351
=======================================================================================
Page 38
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Income statement (continued)
The following is a summary of the adjustments to profit for the period which
would be required if generally accepted accounting principles in the United
States (US GAAP) had been applied instead of those generally accepted in the
United Kingdom.
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Three months ended September 30, 2000
Profit as reported 2,730 361 3,462 3,139 (6,341) 3,351
Adjustments:
Depreciation charge (123) (12) (138) (126) 261 (138)
Decommissioning and environmental expense (10) (2) (48) (46) 58 (48)
Onerous property leases (16) - (9) (9) 25 (9)
Interest expense 26 2 48 46 (74) 48
Sale and leaseback of fixed assets - - - - - -
Deferred taxation (192) (74) 48 108 158 48
Other - - 14 14 (14) 14
---------------------------------------------------------------------------------------
Profit for the period as adjusted 2,415 275 3,377 3,126 (5,927) 3,266
to accord with US GAAP
=======================================================================================
Page 39
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Income statement (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Nine months ended September 30, 2001
Turnover 878 1,428 - 137,397 (1,428) 138,275
Less: Joint ventures - - - 874 - 874
---------------------------------------------------------------------------------------
Group turnover 878 1,428 - 136,523 (1,428) 137,401
Replacement cost of sales 870 753 - 114,268 (1,447) 114,444
Production taxes - 153 - 1,200 - 1,353
---------------------------------------------------------------------------------------
Gross profit 8 522 - 21,055 19 21,604
Distribution and administration expenses - - 115 8,304 - 8,419
Exploration expense - 17 - 319 - 336
---------------------------------------------------------------------------------------
8 505 115 12,432 19 12,849
Other income 16 - 1,069 470 (1,069) 486
---------------------------------------------------------------------------------------
Group replacement cost operating profit 24 505 954 12,902 (1,050) 13,335
Share of profits of joint ventures - - - 352 - 352
Share of profits of associated undertakings - - - 541 - 541
Equity accounted income of subsidiaries 11,595 610 14,279 - (26,484) -
---------------------------------------------------------------------------------------
Total replacement cost operating profit 11,619 1,115 15,233 13,795 (27,534) 14,228
Profit (loss) on sale of fixed assets and
businesses and termination of operations 326 1 573 572 (899) 573
---------------------------------------------------------------------------------------
Replacement cost profit
before interest and tax 11,945 1,116 15,806 14,367 (28,433) 14,801
Inventory holding gains (losses) (414) (12) (603) (602) 1,028 (603)
---------------------------------------------------------------------------------------
Historical cost profit before
interest and tax 11,531 1,104 15,203 13,765 (27,405) 14,198
Interest expense 1,251 27 2,308 2,314 (4,644) 1,256
---------------------------------------------------------------------------------------
Profit before taxation 10,280 1,077 12,895 11,451 (22,761) 12,942
Taxation 3,424 214 4,480 4,437 (8,075) 4,480
---------------------------------------------------------------------------------------
Profit after taxation 6,856 863 8,415 7,014 (14,686) 8,462
Minority shareholders' interest - - - 47 - 47
---------------------------------------------------------------------------------------
Profit for the period 6,856 863 8,415 6,967 (14,686) 8,415
=======================================================================================
Page 40
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Income statement (continued)
The following is a summary of the adjustments to profit for the period which
would be required if generally accepted accounting principles in the United
States (US GAAP) had been applied instead of those generally accepted in the
United Kingdom.
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Nine months ended September 30, 2001
Profit as reported 6,856 863 8,415 6,967 (14,686) 8,415
Adjustments:
Depreciation charge (851) (28) (844) (816) 1,695 (844)
Decommissioning and
environmental expense (188) (7) (313) (306) 501 (313)
Onerous property leases (41) - (41) (41) 82 (41)
Derivative financial instruments (124) - (257) (229) 353 (257)
Interest expense 93 6 150 144 (243) 150
Sale and leaseback of fixed assets - - - - - -
Deferred taxation (66) (103) 185 281 (112) 185
Other 3 - 14 14 (17) 14
---------------------------------------------------------------------------------------
Profit for the period before cumulative
effect of accounting change
as adjusted to accord with US GAAP 5,682 731 7,309 6,014 (12,427) 7,309
Cumulative effect of accounting change:
Derivative financial instruments (13) - (18) (5) 18 (18)
---------------------------------------------------------------------------------------
Profit for the period as adjusted to
accord with US GAAP 5,669 731 7,291 6,009 (12,409) 7,291
=======================================================================================
Page 41
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Income statement (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Nine months ended September 30, 2000
Turnover - 2,035 - 116,980 (2,035) 116,980
Less: Joint ventures - - - 13,480 - 13,480
---------------------------------------------------------------------------------------
Group turnover - 2,035 - 103,500 (2,035) 103,500
Replacement cost of sales - 823 - 85,923 (2,057) 84,689
Production taxes - 202 - 1,295 - 1,497
---------------------------------------------------------------------------------------
Gross profit - 1,010 - 16,282 22 17,314
Distribution and administration expenses - - 158 5,502 - 5,660
Exploration expense - 26 - 416 - 442
---------------------------------------------------------------------------------------
- 984 (158) 10,364 22 11,212
Other income 1 (12) 321 540 (317) 533
---------------------------------------------------------------------------------------
Group replacement cost operating profit 1 972 163 10,904 (295) 11,745
Share of profits of joint ventures - - - 716 - 716
Share of profits of associated undertakings - - - 532 - 532
Equity accounted income of subsidiaries 10,072 220 13,161 - (23,453) -
---------------------------------------------------------------------------------------
Total replacement cost operating profit 10,073 1,192 13,324 12,152 (23,748) 12,993
Profit (loss) on sale of fixed assets and
businesses and termination of operations 309 (1) 142 160 (468) 142
---------------------------------------------------------------------------------------
Replacement cost profit before
interest and tax 10,382 1,191 13,466 12,312 (24,216) 13,135
Inventory holding gains (losses) 682 58 1,289 1,289 (2,029) 1,289
---------------------------------------------------------------------------------------
Historical cost profit before
interest and tax 11,064 1,249 14,755 13,601 (26,245) 14,424
Interest expense 1,032 25 1,454 1,459 (2,811) 1,159
---------------------------------------------------------------------------------------
Profit before taxation 10,032 1,224 13,301 12,142 (23,434) 13,265
Taxation 2,717 420 3,730 3,406 (6,543) 3,730
---------------------------------------------------------------------------------------
Profit after taxation 7,315 804 9,571 8,736 (16,891) 9,535
Minority shareholders' interest - - - 75 - 75
---------------------------------------------------------------------------------------
Profit for the period 7,315 804 9,571 8,661 (16,891) 9,460
=======================================================================================
Page 42
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Income statement (concluded)
The following is a summary of the adjustments to profit for the period which
would be required if generally accepted accounting principles in the United
States (US GAAP) had been applied instead of those generally accepted in the
United Kingdom.
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Nine months ended September 30, 2000
Profit as reported 7,315 804 9,571 8,661 (16,891) 9,460
Adjustments:
Depreciation charge (235) (40) (258) (218) 493 (258)
Decommissioning and environmental expense (83) (28) (214) (186) 297 (214)
Onerous property leases (28) - (21) (21) 49 (21)
Interest expense 73 7 129 122 (202) 129
Sale and leaseback of fixed assets 2 - - - (2) -
Deferred taxation (713) 24 (665) (661) 1,350 (665)
Other - - 45 45 (45) 45
----------------------------------------------------------------------------------------
Profit for the period as adjusted to
accord with US GAAP 6,331 767 8,587 7,742 (14,951) 8,476
========================================================================================
Page 43
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Balance sheet BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
At September 30, 2001
Fixed assets
Intangible assets - 510 - 15,843 - 16,353
Tangible assets 7 6,325 - 71,292 - 77,624
Investments
Subsidiaries - equity accounted basis 70,725 1,040 84,486 - (156,251) -
Other - - 296 11,246 - 11,542
----------------------------------------------------------------------------------------
70,725 1,040 84,782 11,246 (156,251) 11,542
----------------------------------------------------------------------------------------
Total fixed assets 70,732 7,875 84,782 98,381 (156,251) 105,519
----------------------------------------------------------------------------------------
Current assets
Business held for resale - - - - - -
Inventories 5 71 - 8,951 - 9,027
Receivables 7,524 8,783 21,652 43,223 (53,031) 28,151
Investments - - - 519 - 519
Cash at bank and in hand (3) - - 1,441 - 1,438
----------------------------------------------------------------------------------------
7,526 8,854 21,652 54,134 (53,031) 39,135
----------------------------------------------------------------------------------------
Current liabilities -falling due within
one year
Finance debt 6,473 137 - 6,625 (6,610) 6,625
Accounts payable and accrued liabilities 381 336 4,379 29,300 (3,947) 30,449
----------------------------------------------------------------------------------------
Net current assets (liabilities) 672 8,381 17,273 18,209 (42,474) 2,061
----------------------------------------------------------------------------------------
Total assets less current liabilities 71,404 16,256 102,055 116,590 (198,725) 107,580
Noncurrent liabilities
Finance debt - - - 13,849 - 13,849
Accounts payable and accrued liabilities 1,423 4,632 162 37,960 (40,374) 3,803
Provisions for liabilities and charges 50 274 217 12,278 - 12,819
----------------------------------------------------------------------------------------
Net assets 69,931 11,350 101,676 52,503 (158,351) 77,109
Minority shareholders' interest - - - 646 - 646
----------------------------------------------------------------------------------------
BP shareholders' interest 69,931 11,350 101,676 51,857 (158,351) 76,463
========================================================================================
Page 44
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Balance sheet (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
At September 30, 2001
Capital and reserves
Capital shares 8 - 5,632 - (8) 5,632
Paid in surplus 30,865 3,145 3,575 - (34,010) 3,575
Merger reserve - - 26,285 697 - 26,982
Other reserves - - 644 - - 644
Retained earnings 39,058 8,205 65,540 51,160 (124,333) 39,630
---------------------------------------------------------------------------------------
69,931 11,350 101,676 51,857 (158,351) 76,463
=======================================================================================
The following is a summary of the adjustments to BP shareholders' interest which
would be required if generally accepted accounting principles in the United
States (US GAAP) had been applied instead of those generally accepted in the
United Kingdom.
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Shareholders' interest as reported 69,931 11,350 101,676 51,857 (158,351) 76,463
Adjustments:
Fixed assets 7,878 510 7,926 7,424 (15,812) 7,926
Ordinary shares held for future
awards to employees - - (293) - - (293)
Sale and leaseback of Chicago
office building (413) - (413) (413) 826 (413)
Decommissioning and environmental
provisions (1,041) (314) (1,106) (778) 2,133 (1,106)
Onerous property leases 67 - 67 67 (134) 67
Derivative financial instruments (144) - (273) (226) 370 (273)
Deferred taxation (14,737) (1,879) (15,700) (13,933) 30,549 (15,700)
Quarterly dividend - - 1,232 - - 1,232
Pension liability adjustment (38) - (145) (145) 183 (145)
Other (31) - (112) (112) 143 (112)
---------------------------------------------------------------------------------------
Shareholders' interest as adjusted
to accord with US GAAP 61,472 9,667 92,859 43,741 (140,093) 67,646
=======================================================================================
Page 45
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Balance sheet (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
At December 31, 2000
Fixed assets
Intangible assets - 512 - 16,381 - 16,893
Tangible assets 7 5,942 - 69,224 - 75,173
Investments
Subsidiaries - equity accounted basis 63,718 619 77,826 - (142,163) -
Other - - 363 11,390 - 11,753
----------------------------------------------------------------------------------------
63,718 619 78,189 11,390 (142,163) 11,753
----------------------------------------------------------------------------------------
Total fixed assets 63,725 7,073 78,189 96,995 (142,163) 103,819
----------------------------------------------------------------------------------------
Current assets
Business held for resale - - - 636 - 636
Inventories - 75 - 9,159 - 9,234
Receivables 7,007 10,033 23,395 28,868 (40,885) 28,418
Investments - - - 661 - 661
Cash at bank and in hand (2) (32) 2 1,202 - 1,170
----------------------------------------------------------------------------------------
7,005 10,076 23,397 40,526 (40,885) 40,119
----------------------------------------------------------------------------------------
Current liabilities -falling due within
one year
Finance debt 6,848 - - 6,418 (6,848) 6,418
Accounts payable and accrued liabilities 85 973 2,582 35,556 (8,467) 30,729
----------------------------------------------------------------------------------------
Net current assets (liabilities) 72 9,103 20,815 (1,448) (25,570) 2,972
----------------------------------------------------------------------------------------
Total assets less current liabilities 63,797 16,176 99,004 95,547 (167,733) 106,791
Noncurrent liabilities
Finance debt - 1,150 - 14,772 (1,150) 14,772
Accounts payable and accrued liabilities 1,099 4,275 178 24,091 (24,420) 5,223
Provisions for liabilities and charges 49 264 197 12,285 - 12,795
----------------------------------------------------------------------------------------
Net assets 62,649 10,487 98,629 44,399 (142,163) 74,001
Minority shareholders' interest - - - 585 - 585
----------------------------------------------------------------------------------------
BP shareholders' interest 62,649 10,487 98,629 43,814 (142,163) 73,416
========================================================================================
Page 46
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Balance sheet (concluded) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
At December 31, 2000
Capital and reserves
Capital shares 8 - 5,653 - (8) 5,653
Paid in surplus 30,440 3,145 3,770 - (33,585) 3,770
Merger reserve - - 26,172 697 - 26,869
Other reserves - - 456 - - 456
Retained earnings 32,201 7,342 62,578 43,117 (108,570) 36,668
---------------------------------------------------------------------------------------
62,649 10,487 98,629 43,814 (142,163) 73,416
=======================================================================================
The following is a summary of the adjustments to BP shareholders' interest which
would be required if generally accepted accounting principles in the United
States (US GAAP) had been applied instead of those generally accepted in the
United Kingdom.
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Shareholders' interest as reported 62,649 10,487 98,629 43,814 (142,163) 73,416
Adjustments:
Fixed assets 8,757 566 8,777 8,215 (17,538) 8,777
Ordinary shares held for future
awards to employees - - (360) - - (360)
Sale and leaseback of Chicago
office building (413) - (413) (413) 826 (413)
Decommissioning and environmental
provisions (927) (317) (921) (586) 1,830 (921)
Onerous property leases 105 - 105 105 (210) 105
Deferred taxation (14,805) (1,784) (15,843) (14,168) 30,757 (15,843)
Quarterly dividend - - 1,178 - - 1,178
Pension liability adjustment (38) - (145) (145) 183 (145)
Other (34) - (128) (128) 162 (128)
-----------------------------------------------------------------------------------------
Shareholders' interest as adjusted
to accord with US GAAP 55,294 8,952 90,879 36,694 (126,153) 65,666
=========================================================================================
Page 47
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Cash flow statement BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Three months ended September 30, 2001
Net cash inflow (outflow) from
operating activities 39 163 1,027 3,818 (1) 5,046
Dividends from joint ventures - - - 26 - 26
Dividends from associated undertakings - - - 155 - 155
Dividends from subsidiaries 231 - 97 - (328) -
Net cash inflow (outflow) from servicing
of finance and returns on investment 2 - 370 (609) - (237)
Tax (paid) refund (282) (32) - (403) - (717)
Net cash inflow (outflow) for capital
expenditure and financial investment (40) (197) 94 (1,966) - (2,109)
Net cash inflow (outflow) for
acquisitions and disposals - - (1) (24) 1 (24)
Equity dividends paid - - (1,235) (328) 328 (1,235)
-------------------------------------------------------------------------------------------
Net cash inflow (outflow) (50) (66) 352 669 - 905
===========================================================================================
Financing (48) (99) 352 425 - 630
Management of liquid resources - - - (44) - (44)
Increase (decrease) in cash (2) 33 - 288 - 319
-------------------------------------------------------------------------------------------
(50) (66) 352 669 - 905
===========================================================================================
The consolidated statement of cash flows presented in accordance with SFAS 95 is
as follows:
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Net cash provided by (used in)
operating activities (10) 131 1,494 2,988 (299) 4,304
Net cash provided by (used in)
investing activities (40) (197) 93 (1,990) (18) (2,152)
Net cash provided by (used in)
financing activities 48 99 (1,587) (753) 317 (1,876)
Currency translation differences relating to
cash and cash equivalents - - - 15 - 15
---------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents (2) 33 - 260 - 291
Cash and cash equivalents at
beginning of period (1) (33) - 1,700 - 1,666
---------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period (3) - - 1,960 - 1,957
=======================================================================================
Page 48
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Cash flow statement (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Three months ended September 30, 2000
Net cash inflow (outflow) from
operating activities (31) 525 5,880 4,664 (4,434) 6,604
Dividends from joint ventures - - - 118 - 118
Dividends from associated undertakings - - - 100 - 100
Dividends from subsidiaries 463 - - - (463) -
Net cash inflow (outflow) from servicing of
finance and returns on investments 1 - 34 (267) 109 (123)
Tax (paid) refund 14 (28) 3 (2,698) - (2,709)
Net cash inflow (outflow) for capital
expenditure and financial investment - (127) (16) (559) - (702)
Net cash inflow (outflow) for
acquisitions and disposals - 1 (4,325) (4,541) 4,325 (4,540)
Equity dividends paid - - (1,128) (463) 463 (1,128)
----------------------------------------------------------------------------------------
Net cash inflow (outflow) 447 371 448 (3,646) - (2,380)
========================================================================================
Financing 447 367 452 (198) - 1,068
Management of liquid resources - - - (1,755) - (1,755)
Increase (decrease) in cash - 4 (4) (1,693) - (1,693)
----------------------------------------------------------------------------------------
447 371 448 (3,646) - (2,380)
=========================================================================================
The consolidated statement of cash flows presented in accordance with SFAS 95 is
as follows:
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Net cash provided by (used in)
operating activities 446 497 5,916 1,917 (4,742) 4,034
Net cash provided by (used in)
investing activities 1 (126) (4,340) (5,100) 4,291 (5,274)
Net cash provided by (used in)
financing activities (447) (367) (1,580) (265) 451 (2,208)
Currency translation differences relating
to cash and cash equivalents - - - (12) - (12)
----------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents - 4 (4) (3,460) - (3,460)
Cash and cash equivalents at
beginning of period (1) (20) 4 5,946 - 5,929
----------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period (1) (16) - 2,486 - 2,469
========================================================================================
Page 49
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18.Condensed consolidating information - continued
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Cash flow statement (continued) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Nine months ended September 30, 2001
Net cash inflow (outflow) from
operating activities 364 714 3,487 12,314 (17) 16,862
Dividends from joint ventures - - - 92 - 92
Dividends from associated undertakings - - - 424 - 424
Dividends from subsidiaries 925 - 113 - (1,038) -
Net cash inflow (outflow) from servicing
of finance and returns on investments 2 - 1,052 (1,853) - (799)
Tax (paid) refund (1,248) (345) (1) (1,644) - (3,238)
Net cash inflow (outflow) for capital
expenditure and financial investment (740) (598) (26) (5,412) - (6,776)
Net cash inflow (outflow) for
acquisitions and disposals - - (17) (985) 17 (985)
Equity dividends paid - - (3,595) (1,038) 1,038 (3,595)
-----------------------------------------------------------------------------------------
Net cash inflow (outflow) (697) (229) 1,013 1,898 - 1,985
=========================================================================================
Financing (696) (260) 1,015 1,768 - 1,827
Management of liquid resources - - - (146) - (146)
Increase (decrease) in cash (1) 31 (2) 276 - 304
----------------------------------------------------------------------------------------
(697) (229) 1,013 1,898 - 1,985
========================================================================================
The consolidated statement of cash flows presented in accordance with SFAS 95 is
as follows:
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Net cash provided by (used in)
operating activities 43 370 4,650 9,333 (964) 13,432
Net cash provided by (used in)
investing activities (740) (598) (43) (6,397) (57) (7,835)
Net cash provided by (used in)
financing activities 696 260 (4,609) (2,806) 1,021 (5,438)
Currency translation differences
relating to cash and cash equivalents - - - (33) - (33)
---------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents (1) 32 (2) 97 - 126
Cash and cash equivalents at
beginning of period (2) (32) 2 1,863 - 1,831
---------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period (3) - - 1,960 - 1,957
=======================================================================================
Page 50
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - concluded
18.Condensed consolidating information - concluded
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
Cash flow statement (concluded) BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Nine months ended September 30, 2000
Net cash inflow (outflow) from (120) 1,486 10,345 9,010 (6,084) 14,637
operating activities
Dividends from joint ventures - - - 645 - 645
Dividends from associated undertakings - - - 274 - 274
Dividends from subsidiaries 463 - 18 - (481) -
Net cash inflow (outflow) from servicing
of finance and returns on investments (2) - 293 (974) 136 (547)
Tax (paid) refund 44 (736) 7 (3,514) - (4,199)
Net cash inflow (outflow) for capital
expenditure and financial investment - (387) (49) (3,864) - (4,300)
Net cash inflow (outflow) for acquisitions
and disposals 13 23 (5,948) 2,076 5,948 2,112
Equity dividends paid - - (3,232) (481) 481 (3,232)
---------------------------------------------------------------------------------------
Net cash inflow (outflow) 398 386 1,434 3,172 - 5,390
========================================================================================
Financing 396 384 1,437 2,255 - 4,472
Management of liquid resources - - - 610 - 610
Increase (decrease) in cash 2 2 (3) 307 - 308
----------------------------------------------------------------------------------------
398 386 1,434 3,172 - 5,390
========================================================================================
The consolidated statement of cash flows presented in accordance with SFAS 95 is
as follows:
Issuer Issuer Guarantor
-----------------------------------------
BP Eliminations
BP America Exploration Other and BP
Inc. (Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
---------------------------------------------------------------------------------------
($ million)
Net cash provided by (used in)
operating activities 384 750 10,662 5,537 (6,330) 11,003
Net cash provided by (used in)
investing activities 14 (364) (5,996) (1,788) 5,869 (2,265)
Net cash provided by (used in)
financing activities (396) (384) (4,669) (2,736) 461 (7,724)
Currency translation differences
relating to cash and cash equivalents - - - - - -
---------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 2 2 (3) 1,013 - 1,014
Cash and cash equivalents at
beginning of period (3) (18) 3 1,473 - 1,455
----------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period (1) (16) - 2,486 - 2,469
========================================================================================
Page 51
SIGNATURES
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.
BP p.l.c.
(Registrant)
Dated: November 21, 2001
........................
D. J. PEARL
Deputy Company Secretary