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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to________
Commission File Number 1-2256
EXXON CORPORATION
________________________________________________________
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5959 Las Colinas Bouelvard, Irving, Texas 75039-2298
_______________________________________________________________
(Address of principal executive offices) (Zip Code)
(214) 444-1000
__________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 1996
________________________________ _____________________________________
Common stock, without par value 1,242,075,783
EXXON CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Page
Number
______
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three months ended March 31, 1996 and 1995
Condensed Consolidated Balance Sheet 4
As of March 31, 1996 and December 31, 1995
Condensed Consolidated Statement of Cash Flows 5
Three months ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EXXON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
Three Months Ended
March 31,
___________________
1996 1995
REVENUE _______ _______
Sales and other operating revenue,
including excise taxes $30,474 $29,197
Earnings from equity interests and other revenue 731 582
_______ _______
Total revenue 31,205 29,779
_______ _______
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 12,597 12,433
Operating expenses 3,288 3,112
Selling, general and administrative expenses 1,936 1,863
Depreciation and depletion 1,372 1,336
Exploration expenses, including dry holes 140 168
Interest expense 76 125
Excise taxes 3,310 3,070
Other taxes and duties 5,506 5,087
Income applicable to minority and preferred interests 139 74
_______ _______
Total costs and other deductions 28,364 27,268
_______ _______
INCOME BEFORE INCOME TAXES 2,841 2,511
Income taxes 956 851
_______ _______
NET INCOME $ 1,885 $ 1,660
======= =======
Net income per common share* $ 1.51 $ 1.33
Dividends per common share $ 0.75 $ 0.75
Average number common shares outstanding (millions) 1,242.0 1,241.9
* Computed as income less dividends on preferred stock divided by the weighted
average number of common shares outstanding.
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EXXON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
March 31, Dec. 31,
1996 1995
________ _______
ASSETS
Current assets
Cash and cash equivalents $ 3,523 $ 1,508
Other marketable securities 140 281
Notes and accounts receivable - net 8,928 8,925
Inventories
Crude oil, products and merchandise 4,525 4,865
Materials and supplies 814 816
Prepaid taxes and expenses 1,034 923
________ _______
Total current assets 18,964 17,318
Property, plant and equipment - net 65,183 65,446
Investments and other assets 8,432 8,532
________ _______
TOTAL ASSETS $92,579 $91,296
======= =======
LIABILITIES
Current liabilities
Notes and loans payable $ 2,433 $ 2,247
Accounts payable and accrued liabilities 13,756 14,113
Income taxes payable 3,012 2,376
________ _______
Total current liabilities 19,201 18,736
Long-term debt 7,679 7,778
Annuity reserves, deferred credits and other liabilities 24,677 24,346
________ _______
TOTAL LIABILITIES 51,557 50,860
________ _______
SHAREHOLDERS' EQUITY
Preferred stock, without par value:
Authorized: 200 million shares
Outstanding: 7 million shares at Mar. 31, 1996 431
7 million shares at Dec. 31, 1995 454
Guaranteed LESOP obligation (501) (501)
Common stock, without par value:
Authorized: 2,000 million shares
Issued: 1,813 million shares 2,822 2,822
Earnings reinvested 54,487 53,539
Cumulative foreign exchange translation adjustment 1,029 1,339
Common stock held in treasury:
571 million shares at Mar. 31, 1996 (17,246)
571 million shares at Dec. 31, 1995 (17,217)
________ _______
TOTAL SHAREHOLDERS' EQUITY 41,022 40,436
________ _______
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $92,579 $91,296
======= =======
The number of shares of common stock issued and outstanding at March 31, 1996
and December 31, 1995 were 1,242,075,783 and 1,241,771,829, respectively.
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EXXON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
Three Months Ended
March 31,
___________________
1996 1995
_______ _______
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,885 $1,660
Depreciation and depletion 1,372 1,336
Changes in operational working capital, excluding
cash and debt 528 212
All other items - net 292 74
_______ _______
Net Cash Provided By Operating Activities 4,077 3,282
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and additions to property,
plant and equipment (1,413) (1,399)
Sales of subsidiaries and property, plant and
equipment 27 115
Other investing activities - net 353 490
_______ _______
Net Cash Used In Investing Activities (1,033) (794)
_______ _______
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 3,044 2,488
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 302 527
Reductions in long-term debt (267) (82)
Additions/(reductions) in short-term debt - net 28 (399)
Cash dividends to Exxon shareholders (940) (942)
Cash dividends to minority interests (87) (76)
Additions/(reductions) to minority interests and
sales/(redemptions) of affiliate preferred stock 2 14
Acquisitions of Exxon shares - net (52) (21)
_______ _______
Net Cash Used In Financing Activities (1,014) (979)
_______ _______
Effects Of Exchange Rate Changes On Cash (15) 104
_______ _______
Increase/(Decrease) In Cash And Cash Equivalents 2,015 1,613
Cash And Cash Equivalents At Beginning Of Period 1,508 1,157
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,523 $2,770
====== ======
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 210 $ 441
Cash interest paid $ 183 $ 224
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EXXON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis Of Financial Statement Preparation
These unaudited condensed consolidated financial statements should be read
in the context of the consolidated financial statements and notes thereto
filed with the S.E.C. in the corporation's 1995 Annual Report on Form 10-K.
In the opinion of the corporation, the information furnished herein
reflects all known accruals and adjustments necessary for a fair statement
of the results for the periods reported herein. All such adjustments are
of a normal recurring nature. The corporation's exploration and production
activities are accounted for under the "successful efforts" method.
Certain costs and other deductions for 1995 have been reclassified to
conform to the 1996 presentation.
2. Accounting Changes
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" was implemented effective as of January 1, 1996. This Statement had no
impact on the corporation's results of operations or financial position
upon adoption.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" was implemented effective as of January 1, 1996. As
permitted by the Statement, Exxon retained its current method of accounting
for stock compensation upon adoption.
3. Litigation and Other Contingencies
A number of lawsuits, including class actions, have been brought in various
courts against Exxon Corporation and certain of its subsidiaries relating
to the accidental release of crude oil from the tanker Exxon Valdez in
1989. Most of these lawsuits seek unspecified compensatory and punitive
damages. Several lawsuits seek damages in varying specified amounts.
A civil trial in the United States District Court for the District of
Alaska commenced on May 2, 1994 on punitive damage claims made by a class
composed of all persons and entities seeking punitive damages from the
corporation as a result of the Exxon Valdez grounding. On
September 16, 1994, the jury returned a verdict awarding the class punitive
damages of $5 billion. The verdict is not final. The corporation plans to
appeal this verdict following entry of a final judgment by the District
Court. The corporation believes that this verdict is unjustified and
should be set aside or substantially reduced by the District Court or
appellate courts.
Many of the claims of individuals have been dismissed by the courts but
have been appealed. A number of claims have been settled. With respect to
the remaining compensatory damage claims against the corporation arising
from the grounding, many of these claims have been or will be addressed in
the same federal civil trial proceeding, which is still ongoing. On
August 11, 1994, the jury returned a verdict finding that fisher plaintiffs
were damaged in the amount of $286.8 million. On August 31, 1995, the
District Court issued an order that reduced this verdict to about $70
million to reflect payments already made to the plaintiffs by the
corporation and others. The corporation expects this lesser amount to be
further reduced. Additional claims for compensatory damages, scheduled for
determination in the final phase of the trial, have been settled.
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EXXON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The remaining class action claims are included in a $3.5 million settlement
of this final phase. The class settlement is subject to approval by the
court. The total amount of the settlement will be satisfied by recognition
of prior payments made to the plaintiffs by the corporation and others. If
the settlement is approved, the federal trial will be concluded. There are
a number of additional cases pending in state court in Alaska where the
compensatory damages claimed have not been fully specified.
The ultimate cost to the corporation from the lawsuits arising from the
Exxon Valdez grounding is not possible to predict and may not be resolved
for a number of years.
German and Dutch affiliated companies are the concessionaires of a natural
gas field subject to a treaty between the governments of Germany and the
Netherlands under which the gas reserves in an undefined border or common
area are to be shared equally. Entitlement to the reserves is determined
by calculating the amounts of gas which can be recovered from this area.
Based on the final reserve determination, the German affiliate has lifted
more gas than its entitlement. Arbitration proceedings, as provided in the
agreements, have commenced to determine the manner of resolving the
imbalance in liftings between the German and Dutch affiliated companies.
Financial effects to the corporation related to resolution of this
imbalance would be influenced by different tax regimes and ownership
interests. The net impact of the ultimate outcome is not expected to have
a materially adverse effect upon the corporation's operations or financial
condition.
The U.S. Tax Court has decided the issue with respect to the pricing of
crude oil purchased from Saudi Arabia for the years 1979 to 1981 in favor
of the corporation. This decision is subject to appeal. Certain other
issues for the years 1979-1982 remain pending before the Tax Court. The
ultimate resolution of these issues is not expected to have a materially
adverse effect upon the corporation's operations or financial condition.
Claims for substantial amounts have been made against Exxon and certain of
its consolidated subsidiaries in other pending lawsuits, the outcome of
which is not expected to have a materially adverse effect upon the
corporation's operations or financial condition.
The corporation and certain of its consolidated subsidiaries are directly
and indirectly contingently liable for amounts similar to those at the
prior year-end relating to guarantees for notes, loans and performance
under contracts, including guarantees of non-U.S. excise taxes and customs
duties of other companies, entered into as a normal business practice,
under reciprocal arrangements.
Additionally, the corporation and its affiliates have numerous long-term
sales and purchase commitments in their various business activities, all of
which are expected to be fulfilled with no adverse consequences material to
the corporation's operations or financial condition.
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from
time to time in varying degree by political developments and laws and
regulations, such as forced divestiture of assets; restrictions on
production, imports and exports; price controls; tax increases and
retroactive tax claims; expropriation of property; cancellation of contract
rights and environmental regulations. Both the likelihood of such
occurrences and their overall effect upon the corporation vary greatly from
country to country and are not predictable.
-7-
EXXON CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FUNCTIONAL EARNINGS SUMMARY
First Quarter
_____________
1996 1995
____ ____
(millions of dollars)
Petroleum and natural gas
Exploration and production
United States $ 419 $ 209
Non-U.S. 1,004 757
Refining and marketing
United States (16) 16
Non-U.S. 190 184
_____ _____
Total petroleum and natural gas 1,597 1,166
Chemicals
United States 153 230
Non-U.S. 134 317
Other operations 117 113
Corporate and financing (116) (166)
_____ _____
NET INCOME $1,885 $1,660
===== =====
FIRST QUARTER 1996 COMPARED WITH FIRST QUARTER 1995
Exxon Corporation estimated first quarter 1996 net income at $1,885 million,
an increase of 14 percent from $1,660 million in the first quarter of 1995.
On a per share basis, net income was $1.51 in the 1996 first quarter, up from
$1.33 in the same period a year ago. Revenue totaled $31,205 million compared
with $29,779 million in the first quarter last year.
Exxon's net income of $1.9 billion was the highest first quarter since the
Gulf War year of 1991. Production and sales volumes increased in most
business segments, and earnings benefited from improved market conditions in
the upstream. Relative to the first quarter of last year, earnings from
exploration and production increased significantly. Worldwide crude oil
prices were volatile during the quarter, but on average were stronger than a
year ago. Colder weather had a favorable impact on natural gas volumes and
prices, and natural gas production was the highest in 15 years. Downstream
earnings declined from the weak first quarter of 1995, despite the highest
first quarter sales volumes in over 15 years. Industry margins were severely
depressed in the U.S., Europe and Japan partly as a result of the escalation
in crude prices. Despite record sales volumes, chemicals earnings were below
last year primarily due to lower commodity chemical prices and margins.
However, prices did stabilize and begin to strengthen late in the period.
Capital and exploration expenditures of $2.0 billion were up 13 percent
from a year ago, as Exxon continues to focus on attractive growth
opportunities.
-8-
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OTHER COMMENTS ON FIRST QUARTER COMPARISON
Worldwide crude production was 1,682 kbd (thousand barrels per day), compared
to 1,772 kbd in 1995. Increased production from developments in the North Sea
and the U.S. was offset by the near term effect of a revised production
sharing agreement in Malaysia and natural field declines in Australia and
Canada. Natural gas production of 8,352 mcfd (million cubic feet per day) was
up 16 percent compared with the first quarter of last year, reflecting colder
than normal weather in the U.S. and Europe. Production earnings also
benefited from higher worldwide crude and North American natural gas prices.
First quarter earnings from U.S. exploration and production operations were
$419 million, up from $209 million last year. Outside the U.S., earnings from
exploration and production were $1,004 million versus $757 million in 1995.
Worldwide petroleum product sales of 5,133 kbd rose 90 kbd from last year's
first quarter. Refining and marketing earnings were affected by continued
weakness in petroleum product margins, partly as a result of rising crude
prices, and increased scheduled refinery maintenance activity in both the U.S.
and Europe. In the U.S., refining and marketing operations incurred a loss of
$16 million in the first quarter 1996, compared to earnings of $16 million in
the year ago quarter. Earnings from refining and marketing operations outside
the U.S. of $190 million were up from $184 million in last year's first
quarter, as improved margins in Southeast Asia were partially offset by the
weak industry environment in Europe and Japan.
Worldwide chemical earnings were $287 million, down from $547 million in the
first quarter 1995. Record prime product sales of 3,670 kt (thousand metric
tons) were up 10 percent from the prior year's quarter. However, industry
product prices and margins were significantly lower than those in the year ago
period.
Earnings from other operating segments, including coal, minerals, and power
were $117 million, up from $113 million in 1995's first quarter. Coal
production and prices were higher, while copper prices declined.
Corporate and financing expenses of $116 million compared with $166 million in
the first quarter of last year, with the decline due primarily to reduced
interest costs on a lower level of debt.
Net income in first quarter 1996 included a credit of $125 million from tax
related items.
-9-
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OTHER COMMENTS ON FIRST QUARTER COMPARISON
Net cash generation before financing activities was $3,044 million in the
first three months of 1996 versus $2,488 million in the same period last year.
Operating activities provided net cash of $4,077 million, an increase of $795
million from 1995's first three months, influenced by higher net income and
settlement of tax and insurance related items. Investing activities used net
cash of $1,033 million, or $239 million more than a year ago, including the
effect of lower proceeds from asset dispositions.
Net cash used in financing activities was $1,014 million in the first quarter
of 1996 versus $979 million in the same quarter last year. During the first
quarter of 1996, Exxon purchased 1.6 million shares of its common stock for
the treasury at a cost of $130 million. Purchases are made in both the open
market and through negotiated transactions. Purchases may be discontinued at
any time.
Capital and exploration expenditures totaled $1,991 million in the first
quarter 1996 versus $1,762 million in the first quarter of 1995. Total
capital and exploration expenditures in 1996 should exceed the 1995 level as
Exxon maintains its focus on profitable growth opportunities in each of the
major operating segments.
Total debt of $10.1 billion at March 31, 1996 was essentially unchanged from
year-end 1995. The corporation's debt to total capital ratio was 19.0 percent
at the end of the first quarter of 1996, unchanged from year-end 1995.
Over the twelve months ended March 31, 1996, return on average shareholder's
equity was 16.7 percent. Return on average capital employed, which includes
debt, was 14.0 percent over the same time period.
Although the corporation issues long-term debt from time to time and maintains
a revolving commercial paper program, internally generated funds cover the
majority of its financial requirements.
Litigation and other contingencies are discussed in note 3 to the unaudited
condensed consolidated financial statements. There are no events or
uncertainties known to management beyond those already included in reported
financial information that would indicate a material change in future
operating results or future financial condition.
The corporation, as part of its ongoing asset management program, continues to
evaluate its mix of assets for potential upgrade. Because of the ongoing
nature of this program, dispositions will continue to be made from time to
time which will result in either gains or losses.
-10-
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SPECIAL ITEMS
First Quarter
_______________
1996 1995
____ ____
(millions of dollars)
EXPLORATION & PRODUCTION
Non-U.S.
Tax related $125 -
____ ____
TOTAL $125 -
==== ====
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PART II - OTHER INFORMATION
EXXON CORPORATION
FOR THE QUARTER ENDED MARCH 31, 1996
Item 1. Legal Proceedings
_________________________
The registrant has agreed to a settlement with the California Air Resources
Board under which the registrant will pay a civil penalty of $190,000 for
self-reported violations of certain California Clean Air Act regulations
relating to distribution of under-additized gasoline.
The registrant has agreed to enter into a consent decree with the U.S.
Environmental Protection Agency and the U.S. Department of Justice under which
the registrant will pay civil penalties totaling $209,600 to settle alleged
violations of the Clean Air Act, the Clean Water Act and the Resource
Conservation and Recovery Act at the registrant's Baton Rouge refinery. This
decree will settle the proceeding anticipated in the registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
Item 6. Exhibits and Reports on Form 8-K
________________________________________
a) Exhibits
Exhibit 27, Financial Data Schedule (included only in the electronic
filing of this document).
b) Reports on Form 8-K
The registrant has not filed any reports on Form 8-K during the
quarter.
-12-
EXXON CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXXON CORPORATION
Date: May 14, 1996 /s/ W. BRUCE COOK
_________________________________________
W. Bruce Cook, Vice President, Controller
and Principal Accounting Officer
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