1997
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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 Identification
incorporation or organization) Number)
5959 LAS COLINAS BOULEVARD, IRVING, TEXAS 75039-2298
(Address of principal executive offices) (Zip Code)
(972) 444-1000
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK, WITHOUT PAR VALUE (2,449,656,715 SHARES
OUTSTANDING AT FEBRUARY 27, 1998) NEW YORK STOCK EXCHANGE
REGISTERED SECURITIES GUARANTEED BY REGISTRANT:
SEARIVER MARITIME FINANCIAL HOLDINGS, INC.
TWENTY-FIVE YEAR DEBT SECURITIES DUE OCTOBER 1, 2011 NEW YORK STOCK EXCHANGE
EXXON CAPITAL CORPORATION
TWELVE YEAR 6% NOTES DUE JULY 1, 2005 NEW YORK STOCK EXCHANGE
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
----
The aggregate market value of the voting stock held by non-affiliates of the
registrant on February 27, 1998, based on the closing price on that date of
$63 3/4 on the New York Stock Exchange composite tape, was in excess of $156
billion.
DOCUMENTS INCORPORATED BY REFERENCE:
1997 ANNUAL REPORT TO SHAREHOLDERS (PARTS I, II AND IV)
PROXY STATEMENT DATED MARCH 18, 1998 (PART III)
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EXXON CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
PAGE
NUMBER
------
PART I
Item 1. Business..................................................... 1-2
Item 2. Properties................................................... 2-8
Item 3. Legal Proceedings............................................ 8
Item 4. Submission of Matters to a Vote of Security Holders.......... 8
Executive Officers of the Registrant [pursuant to Instruction 3 to Reg-
ulation S-K, Item 401(b)]............................................. 9
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder
Matters...................................................... 9
Item 6. Selected Financial Data...................................... 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk... 10
Item 8. Financial Statements and Supplementary Data.................. 10
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 10
PART III
Item 10. Directors and Executive Officers of the Registrant........... 10
Item 11. Executive Compensation....................................... 10
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 10
Item 13. Certain Relationships and Related Transactions............... 10
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.......................................................... 10
Signatures............................................................. 11-12
Index to Financial Statements.......................................... 13
Consent of Independent Accountants..................................... 13
Index to Exhibits...................................................... 14
PART I
ITEM 1. BUSINESS.
Exxon Corporation was incorporated in the State of New Jersey in 1882.
Divisions and affiliated companies of Exxon operate or market products in the
United States and over 100 other countries. Their principal business is
energy, involving exploration for, and production of, crude oil and natural
gas, manufacturing of petroleum products and transportation and sale of crude
oil, natural gas and petroleum products. Exxon Chemical Company, a division of
Exxon, is a major manufacturer and marketer of basic petrochemicals, including
olefins and aromatics, and a leading supplier of specialty rubbers and of
additives for fuels and lubricants. Other products manufactured include
polyethylene and polypropylene plastics, plasticizers, specialty resins,
specialty and commodity solvents and performance chemicals for oil field
operations. Exxon is engaged in exploration for, and mining and sale of, coal
and other minerals. Exxon also has interests in electric power generation
facilities. Affiliates of Exxon conduct extensive research programs in support
of these businesses.
Exxon Corporation has five divisions and hundreds of affiliates, many with
names that include Exxon or Esso. For convenience and simplicity, in this
report the terms Exxon and Esso, as well as the terms corporation, company,
our, we and its, are sometimes used as abbreviated references to specific
affiliates or groups of affiliates. The precise meaning depends on the context
in question.
The oil and chemical industries are highly competitive. There is competition
within the industries and also with other industries in supplying the energy,
fuel and chemical needs of commerce, industry and individuals. The corporation
competes with other firms in the sale or purchase of various goods or services
in many national and international markets and employs all methods of
competition which are lawful and appropriate for such purposes.
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; expropriations 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.
The operations and earnings of the corporation and its affiliates throughout
the world are also affected by local, regional and global events or conditions
that affect supply and demand for oil, natural gas and other Exxon products.
These events or conditions are generally not predictable and include, among
other things, the development of new supply sources; supply disruptions;
weather; international political events; technological advances; changes in
demographics and consumer preferences; and the competitiveness of alternative
energy sources or product substitutes. See also Page F5 of the accompanying
financial section of the 1997 Annual Report to shareholders for discussion of
the impact of market risks, inflation and other uncertainties.
In 1997, the corporation spent $1,566 million (of which $524 million were
capital expenditures) on environmental conservation projects and expenses
worldwide, mostly dealing with air and water conservation. Total expenditures
for such activities are expected to be about $1.5 billion in both 1998 and
1999 (with capital expenditures representing about 30 percent of the total).
Operating data and industry segment information for the corporation are
contained on pages F3, F20 and F27, information on oil and gas reserves is
contained on pages F24 and F25 and information on company-sponsored research
and development activities is contained on page F12 of the accompanying
financial section of the 1997 Annual Report to shareholders.*
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*Only the data appearing on pages F1 and F3 through F27 of the accompanying
financial section of the 1997 Annual Report to shareholders, incorporated in
this report as Exhibit 13, are deemed to be filed as part of this Annual
Report on Form 10-K as indicated under Items 1, 2, 3, 5, 6, 7, 7A and 8 and
on page 13.
Projections, estimates and descriptions of Exxon's plans and objectives
included or incorporated in Items 1, 2 and 7 of this report are forward-
looking statements. Actual future project dates, production rates, capital
expenditures, costs and business plans could differ materially due to, among
other things, the outcome of commercial negotiations; changes in operating
conditions and costs; technical difficulties; and other factors discussed
above and elsewhere in this report.
ITEM 2. PROPERTIES.
Part of the information in response to this item and to the Securities
Exchange Act Industry Guide 2 is contained in the accompanying financial
section of the 1997 Annual Report to shareholders in Note 7, which note
appears on page F13, and on pages F3, and F22 through F27.
Information with regard to oil and gas producing activities follows:
1. NET RESERVES OF CRUDE OIL AND NATURAL GAS LIQUIDS (MILLIONS OF BARRELS) AND
NATURAL GAS (BILLIONS OF CUBIC FEET) AT YEAR-END 1997
Estimated proved reserves are shown on pages F24 and F25 of the accompanying
financial section of the 1997 Annual Report to shareholders. No major
discovery or other favorable or adverse event has occurred since December 31,
1997 that would cause a significant change in the estimated proved reserves as
of that date. The oil sands reserves shown separately for Canada represent
synthetic crude oil expected to be recovered from Imperial Oil Limited's 25
percent interest in the net reserves set aside for the Syncrude project, as
presently defined by government permit. For information on the standardized
measure of discounted future net cash flows relating to proved oil and gas
reserves, see page F26 of the accompanying financial section of the 1997
Annual Report to shareholders.
2. ESTIMATES OF TOTAL NET PROVED OIL AND GAS RESERVES FILED WITH OTHER FEDERAL
AGENCIES
During 1997, the company filed proved reserves estimates with the U.S.
Department of Energy on Forms EIA-23 and EIA-28. The information is consistent
with the 1996 Annual Report to shareholders with the exception of EIA-23 which
covered total oil and gas reserves from Exxon-operated properties in the U.S.
and does not include gas plant liquids.
3. AVERAGE SALES PRICES AND PRODUCTION COSTS PER UNIT OF PRODUCTION
Incorporated by reference to page F22 of the accompanying financial section
of the 1997 Annual Report to shareholders. Average sales prices have been
calculated by using sales quantities from our own production as the divisor.
Average production costs have been computed by using net production quantities
for the divisor. The volumes of crude oil and natural gas liquids (NGL)
production used for this computation are shown in the reserves table on page
F24 of the accompanying financial section of the 1997 Annual Report to
shareholders. The net production volumes of natural gas available for sale by
the producing function used in this calculation are shown on page F27 of the
accompanying financial section of the 1997 Annual Report to shareholders. The
volumes of natural gas were converted to oil-equivalent barrels based on a
conversion factor of six thousand cubic feet per barrel.
4. GROSS AND NET PRODUCTIVE WELLS
YEAR-END 1997
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OIL GAS
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GROSS NET GROSS NET
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United States..................................... 17,365 5,948 4,580 1,932
Canada............................................ 6,028 4,014 4,928 2,749
Europe............................................ 1,443 421 1,034 353
Asia-Pacific...................................... 868 448 456 133
Other............................................. 785 100 14 5
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Total............................................ 26,489 10,931 11,012 5,172
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2
5. GROSS AND NET DEVELOPED ACREAGE
YEAR-END 1997
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GROSS NET
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(THOUSANDS OF ACRES)
United States........................................... 5,035 3,488
Canada.................................................. 3,109 1,426
Europe.................................................. 10,279 3,309
Asia-Pacific............................................ 4,047 1,556
Other................................................... 7,345 1,096
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Total.................................................. 29,815 10,875
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Note: Separate acreage data for oil and gas are not maintained because, in
many instances, both are produced from the same acreage.
6. GROSS AND NET UNDEVELOPED ACREAGE
YEAR-END 1997
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GROSS NET
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(THOUSANDS OF ACRES)
United States........................................... 6,269 4,534
Canada.................................................. 3,902 2,270
Europe.................................................. 12,420 5,430
Asia-Pacific............................................ 66,235 34,230
Other................................................... 55,634 22,486
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Total.................................................. 144,460 68,950
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7. SUMMARY OF ACREAGE TERMS IN KEY AREAS
United States
Oil and gas exploration leases are acquired for varying periods of time,
ranging from one to ten years. Production leases normally remain in effect
until production ceases.
Canada
Exploration permits are granted for varying periods of time with renewals
possible. Production leases are held as long as there is production on the
lease.
Cold Lake oil sands leases were taken for an initial 21-year term in 1968-
1969 and renewed for a second 21-year term in 1989-1990. Syncrude holds two
leases with current mining operations and four leases for future development.
All are approved for a 15-year third term based on regulatory approved
development plans. These third terms begin in 1997-2001. Other Athabasca
undeveloped leases began a second 21-year term in 1980-1987.
United Kingdom
Licenses issued prior to 1977 were for an initial period of six years with
an option to extend the license for a further 40 years on no more than half of
the license area. Licenses issued between 1977 and 1979 were for an initial
period of four years, after which one-third of the acreage was required to be
relinquished, followed by a second period of three years, after which an
additional one-third of the acreage was required to be relinquished, with an
option to extend for a total license period of 24 to 36 years on no more than
half the license area. Recent licenses are typically for an initial period of
six to nine years, with a second term of 12 to 15 years which may be extended
a further 18 to 24 years. In the seventeenth license round, the initial period
is three years, with a second term of six years and a third term of 15 years
which can be extended a further 24 years if development approval is imminent.
3
Netherlands
Onshore: Exploration drilling permits are issued for a period of two to five
years. Production concessions are granted after discoveries have been made
under conditions which are negotiated with the government. Normally, they are
field-life concessions covering an area defined by hydrocarbon occurrences.
Offshore: Prospecting licenses issued prior to March 1976 were for a 15-year
period, with relinquishment of about 50 percent of the original area required
at the end of ten years. Subsequent licenses are for ten years with
relinquishment of about 50 percent of the original area required after six
years. For commercial discoveries within a prospecting license, a production
license is issued for a 40-year period.
Norway
Licenses issued prior to 1972 were for a total period of 46 years, with
relinquishment of at least one-fourth of the original area required at the end
of the sixth year and another one-fourth at the end of the ninth year.
Subsequent licenses are for a total period of 36 years, with relinquishment of
at least one-half of the original area required at the end of the sixth year.
France
Exploration permits are granted for periods of three to five years,
renewable up to two times accompanied by substantial acreage relinquishments:
50 percent of the acreage at first renewal; 25 percent of the remaining
acreage at second renewal. A 1994 law requires a bidding process prior to
granting of an exploration permit. Upon discovery of commercial hydrocarbons,
a production concession is granted for up to 50 years, renewable in periods of
25 years each.
Germany
Acreage holdings are generally concessions with indefinite periods subject
to minimum work commitments.
Australia
Onshore: Acreage terms are fixed by the individual state and territory
governments. These terms and conditions vary significantly between the states
and territories. Exploration permits are normally granted for four years with
possible renewals and relinquishments. Production licenses in South Australia
are granted for an initial term of 21 years, with subsequent renewals each for
21 years for the full area. Production licenses in Queensland are granted for
varying periods consistent with expected field lives, with renewals on a
similar basis.
Offshore: Acreage terms are fixed by the federal government. Exploration
permits are granted for six years with possible renewals of five-year periods
to a total of 26 years. A 50 percent relinquishment of remaining area is
mandatory at the end of each renewal period. Production licenses are for 21
years, with one renewal of 21 years. Subsequent 21-year renewals are subject
to negotiation.
Malaysia
Exploration and production activities are governed by production sharing
contracts negotiated with the national oil company. The more recent contracts
have an overall term of 24 to 37 years with possible extensions to the
exploration or development periods. The exploration period is five to seven
years with the possibility of extensions, after which time areas with no
commercial discoveries must be relinquished. The development period is four to
five years from commercial discovery, with the possibility of extensions under
special circumstances. Areas from which commercial production has not started
by the end of the development period must be relinquished. The total
production period is 15 to 25 years from first commercial lifting, not to
exceed the overall term of the contract.
Thailand
The Exxon concessions and the Petroleum Act of 1972 allow production for 30
years (through 2021) with a possible ten-year extension at terms generally
prevalent at the time.
4
Azerbaijan
The production sharing agreement (PSA) for development of the Megastructure
is for an initial period of 30 years starting from the PSA execution date in
1994.
Republic of Yemen
Production sharing agreements (PSAs) negotiated with the government entitle
Exxon to participate in exploration operations within a designated area during
the exploration period. In the event of a commercial oil discovery, the
company is entitled to proceed with development and production operations
during the development period. The length of these periods and other specific
terms are negotiated prior to executing the production sharing agreement.
Existing production operations have a development period extending 20 years
from first commercial declaration made in November 1985 for the Marib PSA and
June 1995 for the Jannah PSA. In addition, agreement was reached in 1997 on
terms for participation in a potential liquified natural gas project utilizing
Marib gas reserves.
8. NUMBER OF NET PRODUCTIVE AND DRY WELLS DRILLED
1997 1996 1995
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A. Net Productive Exploratory Wells Drilled
United States.................................................. 9 7 5
Canada......................................................... 11 8 5
Europe......................................................... 9 7 9
Asia-Pacific................................................... 10 7 15
Other.......................................................... 2 2 2
--- --- ---
Total......................................................... 41 31 36
--- --- ---
B. Net Dry Exploratory Wells Drilled
United States.................................................. 4 5 5
Canada......................................................... 4 4 12
Europe......................................................... 8 9 7
Asia-Pacific................................................... 3 8 7
Other.......................................................... 3 2 2
--- --- ---
Total......................................................... 22 28 33
--- --- ---
C. Net Productive Development Wells Drilled
United States.................................................. 228 190 152
Canada......................................................... 424 356 339
Europe......................................................... 33 36 32
Asia-Pacific................................................... 54 31 40
Other.......................................................... 7 11 11
--- --- ---
Total......................................................... 746 624 574
--- --- ---
D. Net Dry Development Wells Drilled
United States.................................................. 15 13 7
Canada......................................................... 2 2 3
Europe......................................................... -- 2 1
Asia-Pacific................................................... -- 1 --
Other.......................................................... 1 1 --
--- --- ---
Total......................................................... 18 19 11
--- --- ---
Total number of net wells drilled.............................. 827 702 654
=== === ===
5
9. PRESENT ACTIVITIES
A. Wells Drilling -- Year-End 1997
GROSS NET
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United States...................................................... 98 59
Canada............................................................. 5 3
Europe............................................................. 60 21
Asia-Pacific....................................................... 16 7
Other.............................................................. 6 2
--- ---
Total............................................................. 185 92
=== ===
B. Review of Principal Ongoing Activities in Key Areas
UNITED STATES
During 1997, exploration activities were conducted by Exxon Exploration
Company and producing activities by Exxon Company, U.S.A., both divisions of
Exxon Corporation. Some of the more significant ongoing activities are:
. Exploration and delineation of additional hydrocarbon resources
continued. At year-end 1997, Exxon's inventory of undeveloped acreage
totaled 4.5 million net acres. Exxon was active in areas onshore and
offshore in the lower 48 states and in Alaska. A total of 12.7 net
exploration and delineation wells were completed during 1997.
. During 1997, 165.5 net development wells were completed within and
around mature fields in the inland lower 48 states.
. Exxon's net acreage in the Gulf of Mexico at year-end 1997 was 2.0
million acres. A total of 47.2 net exploratory and development wells
were completed during the year.
. The Ram-Powell project started up in 1997. Fabrication and installation
of a tension leg platform in approximately 3,200 feet of water was
completed and production began in 1997.
. Development continued on two Gulf of Mexico projects in 1997. The
Genesis project, scheduled for start-up in late 1998, will utilize a
deep-draft caisson vessel to develop reserves in 2,600 feet of water.
The Ursa project, scheduled for start-up in 1999, will utilize a tension
leg platform development concept in 3,900 feet of water.
. Participation in Alaska production and development continued and a total
of 25.2 net development wells were drilled in 1997.
CANADA
During 1997, exploration and production activities in Canada were conducted
by the Resources Division of Imperial Oil Limited, which is 69.6 percent owned
by Exxon Corporation. Some of the more significant ongoing activities are:
. Gross commercial bitumen production from Cold Lake averaged 114 thousand
barrels per day during 1997.
. The Syncrude plant, 25 percent owned by Imperial and located in northern
Alberta, completed its 19th year of operations. Gross synthetic crude
production averaged 207 thousand barrels per day in 1997.
6
OUTSIDE NORTH AMERICA
During 1997, exploration activities were conducted by Exxon Exploration
Company and producing activities by Exxon Company, International, both
divisions of Exxon Corporation. Some of the more significant ongoing
activities include:
United Kingdom
During the year, Exxon acquired interests in six new blocks. Net acreage was
1.6 million acres at year-end, all offshore. A total of 22.4 net exploration
and development wells were completed during the year. There were successful
start-ups of the Curlew, Gannet E/F and Kingfisher fields. The Brent
redevelopment program was completed, and several major projects were underway,
including Shearwater, Elgin/Franklin, Ketch and Corvette.
Netherlands
Exxon's interest in licenses totaled 2.8 million net acres at year-end 1997.
During 1997, 10.9 net exploration and development wells were drilled. An
underground gas storage project at Norg was started up to supplement Groningen
and Grijpskerk capacity to meet peak European winter gas demands. During 1997,
the new offshore gas field, K14-FB, and new onshore gas fields, Anjum,
Metslawier, Pasop, Sebaldeburen and Barendrecht-Ziedewij, started up.
Construction is in progress on the new offshore gas fields, L9, K7-FC/FD and
D15-FA/FB, and new onshore gas fields, Moddergat and Nes.
Norway
Exxon's net interest in licenses at year-end 1997 totaled 0.5 million net
acres, all offshore. Exxon participated in 11.0 net exploration and production
wells in 1997 and the Vigdis field came on production. Projects for
development of the Balder, Jotun and Snorre North fields are in progress.
France
Exxon's net acreage at year-end 1997 was 1.2 million net acres (0.8 million
offshore, 0.4 million onshore), with 0.2 net exploration and development wells
completed during the year.
Germany
A total of 2.5 million acres were held by Exxon at year-end, with 5.9 net
exploration and development wells drilled and completed during the year. The
Uelsen underground natural gas storage facility went into operation in October
1997.
Australia
Exxon's year-end acreage holdings totaled 6.2 million net acres onshore and
1.0 million net acres offshore, with exploration and production activities
underway in both areas. During 1997, a total of 42.4 net exploration and
development wells were completed. Production was started up from West Tuna in
1997.
Malaysia
Exxon has interests in production sharing contracts covering 7.9 million net
acres offshore Malaysia. During the year, a total of 23.8 net exploration and
development wells were completed.
7
Development drilling was completed at Guntong D and continued on the Lawit
A platform. Platforms were installed in 1997 at Seligi F and Raya/Yong,
projected to start-up in 1998. During 1997, Exxon secured two exploration
blocks in Sabah and four exploration blocks in Sarawak. Negotiations with
PETRONAS, the state-owned oil company, were concluded in 1997 for a major new
natural gas production sharing agreement. This agreement covers the
commercialization of gas previously discovered by Exxon.
Thailand
Exxon's net acreage in the Khorat concession totaled 15 thousand net acres
at year-end, with 0.8 net exploration and development wells completed during
the year.
Azerbaijan
At year-end, Exxon's net acreage totaled 43 thousand acres. During 1997, 0.5
net exploration and development wells were drilled. Construction on the
Northern Route pipeline was completed and the Megastructure was brought on
production in November 1997.
Republic of Yemen
Exxon's net acreage in the Republic of Yemen production sharing areas
totaled 0.9 million acres onshore at year-end. During the year, 8.6 net
exploration and development wells were drilled and completed.
Colombia
At year-end, Exxon's net acreage in Colombia totaled 0.1 million acres.
WORLDWIDE EXPLORATION
Exploration activities were underway in several areas in which Exxon has no
established production operations. A total of 42.9 million net acres were held
at year-end, and 4.2 net exploration wells were completed during the year.
ITEM 3. LEGAL PROCEEDINGS.
On February 11, 1998, the Department of Justice, acting on behalf of the
Environmental Protection Agency, filed suit against the registrant's Exxon
Company, U.S.A. division in U.S. District Court for the Southern District of
Texas. The suit alleges violations of the Clean Air Act at the registrant's
Baytown refinery relating to, among other things, refinery flares. The suit
seeks monetary penalties of up to $25,000 per day and injunctive and other
relief.
Refer to the relevant portions of Note 13 on page F16 of the accompanying
financial section of the 1997 Annual Report to shareholders for additional
information on legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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8
EXECUTIVE OFFICERS OF THE REGISTRANT [pursuant to Instruction 3 to Regulation
S-K, Item 401(b)].
AGE AS OF
MARCH 31,
NAME 1998 TITLE (HELD OFFICE SINCE)
---- --------- ---------------------------------------------
L. R. Raymond....... 59 Chairman of the Board (1993)
R. Dahan............ 56 Senior Vice President (1995)
H. J. Longwell...... 56 Senior Vice President (1995)
R. E. Wilhelm....... 57 Senior Vice President (1990)
A. L. Condray....... 55 Vice President (1995)
D. D. Humphreys..... 50 Vice President and Controller (1997)
C. W. Matthews...... 53 Vice President and General Counsel (1995)
S. R. McGill........ 55 Vice President (1998)
J. T. McMillan...... 61 Vice President (1997)
R. B. Nesbitt....... 64 Vice President (1992)
E. A. Robinson...... 64 Vice President and Treasurer (1983)
P. E. Sullivan...... 54 Vice President and General Tax Counsel (1995)
J. L. Thompson...... 58 Vice President (1991)
T. P. Townsend...... 61 Vice President -- Investor Relations (1990)
and Secretary (1995)
For at least the past five years, Messrs. Raymond, Wilhelm, Robinson and
Townsend have been employed as executives of the registrant. Mr. Raymond also
holds the title of president.
The following executive officers of the registrant have also served as
executives of the subsidiaries, affiliates or divisions of the registrant
shown opposite their names during the five years preceding December 31, 1997.
Esso Benelux B.V. ................... McGill
Esso Holding Company Holland Inc. ... McGill
Esso Malaysia Berhad................. Humphreys
Esso Production Malaysia Inc. ....... Humphreys
Exxon Chemical Company............... Nesbitt
Exxon Coal and Minerals Company...... McMillan
Exxon Company, International......... Dahan and McGill
Exxon Company, U.S.A................. Condray, Humphreys, Longwell, Matthews,
McMillan and Sullivan
Exxon Exploration Company............ Thompson
Officers are generally elected by the Board of Directors at its meeting on
the day of each annual election of directors, each such officer to serve until
his or her successor has been elected and qualified.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS.
Incorporated by reference to the quarterly information which appears on page
F21 of the accompanying financial section of the 1997 Annual Report to
shareholders.
On February 26, 1997, the Board of Directors approved a two-for-one stock
split to shareholders of record on March 14, 1997.**
In accordance with the registrant's 1997 Nonemployee Director Restricted
Stock Plan, each incumbent nonemployee director (8 persons) was granted 600
shares of restricted stock on January 1, 1998. These grants are exempt from
registration under bonus stock interpretations such as the "no-action" letter
to Pacific Telesis Group (June 30, 1992).
- - --------
** All information in this Annual Report on Form 10-K for 1997 including, but
not limited to, information in response to Items 5, 6, 7, 8, 10, 11, 12 and
14(a) and the cover is on a post-split basis.
9
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated by reference to page F3 of the accompanying financial section
of the 1997 Annual Report to shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Incorporated by reference to pages F4 through F7 of the accompanying
financial section of the 1997 Annual Report to shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Incorporated by reference to the first through third paragraphs of the
section entitled "Market Risks, Inflation, and Other Uncertainties" on page F5
and to the tenth paragraph of the section entitled "Liquidity and Capital
Resources" on page F6 of the accompanying financial section of the 1997 Annual
Report to shareholders. All statements other than historical information
incorporated in this Item 7A are forward looking statements. The actual impact
of future market changes could differ materially due to, among other things,
factors discussed in this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the Index to Financial Statements on page 13 of this
Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Incorporated by reference to the relevant portions of pages 2 through 7
(excluding the portions of page 7 entitled "Director Compensation" and "Board
Committees") of the registrant's definitive proxy statement dated March 18,
1998.
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated by reference to the section entitled "Director Compensation" on
page 7 and to pages 14 through 16 of the registrant's definitive proxy
statement dated March 18, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference to page 9 of the registrant's definitive proxy
statement dated March 18, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) and (a) (2) Financial Statements:
See Index to Financial Statements on page 13 of this Annual Report on
Form 10-K.
(a)(3) Exhibits:
See Index to Exhibits on page 14 of this Annual Report on Form 10-K.
(b)Reports on Form 8-K.
The registrant did not file any reports on Form 8-K during the last
quarter of 1997.
10
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 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
By: /s/ LEE R. RAYMOND
---------------------------------
(Lee R. Raymond,
Chairman of the Board)
Dated March 18, 1998
----------------
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS MILLIE P.
BRADLEY, RICHARD E. GUTMAN AND FRANK A. RISCH, AND EACH OF THEM, HIS OR HER
TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF SUBSTITUTION
AND RESUBSTITUTION, FOR HIM OR HER AND IN HIS OR HER NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS TO THIS ANNUAL REPORT
ON FORM 10-K, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER
DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM,
FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE AND NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS AND PURPOSES AS HE
OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT
SAID ATTORNEYS-IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS OR HER
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
----------------
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
/s/ LEE R. RAYMOND Chairman of the Board March 18, 1998
- - ------------------------------------------- (Principal Executive Officer)
(Lee R. Raymond)
/s/ MICHAEL J. BOSKIN Director March 18, 1998
- - -------------------------------------------
(Michael J. Boskin)
/s/ D. WAYNE CALLOWAY Director March 18, 1998
- - -------------------------------------------
(D. Wayne Calloway)
11
/s/ RENE DAHAN Director March 18, 1998
- - -------------------------------------------
(Rene Dahan)
/s/ JESS HAY Director March 18, 1998
- - -------------------------------------------
(Jess Hay)
/s/ JAMES R. HOUGHTON Director March 18, 1998
- - -------------------------------------------
(James R. Houghton)
/s/ WILLIAM R. HOWELL Director March 18, 1998
- - -------------------------------------------
(William R. Howell)
/s/ REATHA CLARK KING Director March 18, 1998
- - -------------------------------------------
(Reatha Clark King)
/s/ PHILIP E. LIPPINCOTT Director March 18, 1998
- - -------------------------------------------
(Philip E. Lippincott)
/s/ HARRY J. LONGWELL Director March 18, 1998
- - -------------------------------------------
(Harry J. Longwell)
/s/ MARILYN CARLSON NELSON Director March 18, 1998
- - -------------------------------------------
(Marilyn Carlson Nelson)
/s/ ROBERT E. WILHELM Director March 18, 1998
- - -------------------------------------------
(Robert E. Wilhelm)
/s/ DONALD D. HUMPHREYS Controller (Principal March 18, 1998
- - ------------------------------------------- Accounting Officer)
(Donald D. Humphreys)
/s/ EDGAR A. ROBINSON Treasurer (Principal March 18, 1998
- - ------------------------------------------- Financial Officer)
(Edgar A. Robinson)
12
INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the report thereon of
Price Waterhouse LLP dated February 25, 1998, appearing on pages F8 to F20;
the Quarterly Information appearing on page F21; and the Supplemental
Information on Oil and Gas Exploration and Production Activities appearing on
pages F22 to F26 of the accompanying financial section of the 1997 Annual
Report to shareholders are incorporated in this Annual Report on Form 10-K as
Exhibit 13. With the exception of the aforementioned information, no other
data appearing in the accompanying financial section of the 1997 Annual Report
to shareholders is deemed to be filed as part of this Annual Report on Form
10-K under Item 8. Consolidated Financial Statement Schedules have been
omitted because they are not applicable or the required information is shown
in the consolidated financial statements or notes thereto.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the following
Prospectuses constituting part of the Registration Statements on:
Form S-3 (Nos. 333-27489 --Exxon Corporation Shareholder Investment Program;
and 33-60677)
Form S-3 (No. 33-48919) --Guaranteed Debt Securities and Warrants to Purchase
Guaranteed Debt Securities of Exxon Capital Corporation;
Form S-3 (No. 33-8922) --Guaranteed Debt Securities of SeaRiver Maritime
Financial Holdings, Inc. (formerly Exxon Shipping
Company)
and we hereby consent to the incorporation by reference in the Registration
Statements on:
Form S-8 (Nos. 333-38917 --1993 Incentive Program of Exxon Corporation (together
and 33-51107) with 1988 Long Term Incentive Plan of Exxon
Corporation);
Form S-8 (No. 33-19057) --Thrift Plans of Exxon Corporation and Participating
Affiliated Employers
of our report dated February 25, 1998 appearing on page F11 of the
accompanying financial section of the 1997 Annual Report to shareholders of
Exxon Corporation which is incorporated as Exhibit 13 in this Annual Report on
Form 10-K.
Price Waterhouse LLP
Dallas, Texas
March 18, 1998
13
INDEX TO EXHIBITS
3(i). Registrant's Restated Certificate of Incorporation, as
restated March 17, 1997 (incorporated by reference to
Exhibit 3(i) to the registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997).
3(ii). Registrant's By-Laws, as revised to January 31, 1996
(incorporated by reference to Exhibit 3(ii) to the
registrant's Annual Report on Form 10-K for 1995).
10(iii)(a). Registrant's 1993 Incentive Program, as amended
(incorporated by reference to Exhibit 10(iii)(a) to the
registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).*
10(iii)(b). Registrant's Plan for Deferral of Nonemployee Director
Compensation and Fees, as amended (incorporated by
reference to Exhibit 10(iii)(b) to the registrant's
Annual Report on Form 10-K for 1993).*
10(iii)(c). Registrant's Restricted Stock Plan for Nonemployee
Directors, as amended (incorporated by reference to
Exhibit 10(iii)(c) to the registrant's Annual Report on
Form 10-K for 1996).*
10(iii)(d). Supplemental life insurance.*
10(iii)(e). Registrant's Short Term Incentive Program, as amended
(incorporated by reference to Exhibit 10(iii)(e) to the
registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).*
10(iii)(f). Registrant's 1997 Nonemployee Director Restricted Stock
Plan (incorporated by reference to Exhibit 10(iii)(f) to
the registrant's Annual Report on Form 10-K for 1996).*
12. Computation of ratio of earnings to fixed charges.
13. Pages F1 and F3 through F27 of the Financial Section of
the registrant's 1997 Annual Report to shareholders.
21. Subsidiaries of the registrant.
23. Consent of Independent Accountants (contained on page 13
of this Annual Report on Form 10-K).
27.1 Financial Data Schedule (included only in the electronic
filing of this document).
27.2 Restated Financial Data Schedules (restated to reflect
adoption of Statement of Financial Accounting Standards
No. 128, "Earnings per Share" for 1997 interim periods).
27.3 Restated Financial Data Schedules (restated to reflect
adoption of Statement of Financial Accounting Standards
No. 128, "Earnings per Share" for 1996 interim periods
and 1996 and 1995 annual periods).
- - --------
* Compensatory plan or arrangement required to be identified pursuant to Item
14(a)(3) of this Annual Report on Form 10-K.
The registrant has not filed with this report copies of the instruments
defining the rights of holders of long-term debt of the registrant and its
subsidiaries for which consolidated or unconsolidated financial statements are
required to be filed. The registrant agrees to furnish a copy of any such
instrument to the Securities and Exchange Commission upon request.
14
EXHIBIT 10(iii)(d)
Mailing Address: Hartford, Connecticut 06152
Home Office: Bloomfield, Connecticut
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
POLICYHOLDER: EXXON CORPORATION
ADDRESS: Dallas, Texas
ACCOUNT NUMBER: 2518033
Group Insurance Effective Anniversary
Policy and Policy Number Date Date
- - ------------------------ ---- ----
Group Term Life Insurance 11-1-95 1-1
2518033-01
This policy is issued in Louisiana and shall be governed by its laws.
BA: Michael Horan
These Policies contain the terms under which the Insurance Company agrees to
insure certain Employees and pay benefits.
The Insurance Company and the Policyholder have agreed to all of the terms of
these policies.
/s/ DAVID C. KOPP /s/ JOHN WILKINSON
- - ---------------------------- --------------------------
Corporate Secretary President
/s/ MICHAEL HORAN January 5, 1996
- - ---------------------------- ---------------
Registrar Date Registered
Countersigned by /s/ BARBRA BEITZ
---------------------------------
Licensed Resident Agent
GM5800 1C3
V-1
Connecticut General Life Insurance Company
------------------------------------------
CONTENTS
Section
-------
THE SCHEDULE
THE INSURANCE SCHEDULE...................................3
ALL OTHER SCHEDULE SECTIONS..............................Certificate
DEFINITIONS...................................................Certificate
ELIGIBILITY...................................................Certificate
EFFECTIVE DATE................................................Certificate
BENEFITS
Life Insurance...........................................Certificate
BENEFICIARY DESIGNATION.......................................Certificate
PAYMENT OF BENEFITS...........................................Certificate
TERMINATION OF INSURANCE......................................Certificate
LIFE CONVERSION PRIVILEGE.....................................Certificate
PREMIUMS......................................................28 and 34
CANCELLATION OF POLICY........................................36
MISCELLANEOUS PROVISIONS......................................38 and Certificate
GM5800 2LI1 Section V-11
2 Spec.
Connecticut General Life Insurance Company
------------------------------------------
THE INSURANCE SCHEDULE
The terms set forth herein and in the Certificate(s) listed below describe the
insurance underwritten by the Insurance Company. These Certificates are included
in and made a part of the policy(ies). Each Certificate is identified by a
Certificate Number (CN).
Any reference in the certificate to "you" or "yours" refers to the Employee.
An Employee in any of the classes shown below may be insured but only for the
policy(ies) listed for his Employee Class. The Effective Date shown below is the
date on which a policy becomes effective for an Employee Class.
An Employee will become eligible and insured in accordance with the terms of the
"Eligibility" and "Effective Date" sections of the Certificate.
GROUP POLICY(IES) EMPLOYEE CLASS
- - -------------------------- ---------------------------------
Certificate Eligible Effective
Number Policy(ies) Employees Date
- - ------ ----------- --------- ----
CN001 Life Insurance Each Covered Employee and 11-1-95
2518033-01 each Covered Annuitant
GM5800 3IS1 Section
3
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS
PREMIUM PAYMENT. The first premium will be due on the Effective Date. After
that, premium will be due monthly unless the Policyholder and the Insurance
Company agree on some other method of premium payment. The Policyholder and the
Insurance Company may agree to change the method of premium payment from time to
time. Premiums are payable at the Home Office of the Insurance Company or to an
authorized agent of the Insurance Company. In the event that the Policyholder
receives notice of an injunction or order of rehabilitation or liquidation of
the Insurance Company, premiums are payable to the State of Louisiana.
PREMIUM DUE DATE. After the Effective Date, the Premium Due Date will be the
first of the month. The Anniversary Date will be the first of the month when the
policy becomes effective. If the Policyholder and the insurance Company agree
that premiums will be paid on a quarterly, semiannual or annual basis, the
Premium Due Date will be at the appropriate regular interval, quarterly,
semiannually or annually. Premiums must be received at the Home Office or by an
authorized agent of the Insurance Company on the Premium due Date or the policy
will be cancelled except as set forth in the Grace Period.
MONTHLY STATEMENT DATE. If premiums are to be paid monthly, the Monthly
Statement Date will be the same as the Premium Due Date. If premiums are to be
paid on a quarterly, semiannual or annual basis, the Monthly Statement Date will
be the day in each month with the same number as the Premium Due Date.
MONTHLY PREMIUM STATEMENT. If premiums are due monthly, a Monthly Premium
Statement will be prepared as of the Premium Due Date. This Monthly Premium
Statement will show the premium due. If premiums are due quarterly, semiannually
or annually, a Monthly Premium Statement will be prepared as of the Monthly
Statement Date for the time from the Monthly Statement Date to the next Premium
Due Date. This Monthly Statement will reflect any pro rata premium charges and
credits due to changes in the number of insured persons and changes in insurance
amounts that took place in the preceding month.
SIMPILFIED ACCOUNTING. To simplify the accounting process, premium adjustments
will be made on the Monthly Statement Date.
GM5800 34Cl Section V-29
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS (Continued)
LIFE INSURANCE PREMIUM. The monthly premium for Life Insurance will be a certain
percentage of the Policyholder's monthly payroll. That percentage will be
calculated by the Insurance Company based on the experience of this Life
Insurance policy. That percentage will be subject to approval by the
Policyholder.
GM5800 34LI2 Section V-7
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS (Continued)
CHANGE IN METHOD OF PREMIUM PAYMENT. If premiums are to be paid other than
monthly, the method of calculation is the same. However, the rate for each class
is first changed to quarterly, semiannual or annual rates by multiplying them by
2.9852, 5.9557 or 11.8227 respectively. All results are taken to the nearer
cent. If the Policyholder and the Insurance Company agree to a change in the
method of premium payment or to a change in the Anniversary Date, a pro rata
adjustment will be made in the premium due.
CHANGES IN PREMIUM RATES. The premium rates may be changed by the Insurance
Company from time to time with at least 31 days advance written notice. An
increase will not be made more often than once in a 12-month period without
approval by the Policyholder. If an increase in premium rates takes place on a
date that is not a Premium Due Date, a pro rata premium will be due on the date
of the increase. The pro rata premium will apply for the increase from the date
of the increase to the next Premium Due Date. If a decrease in premium rates
takes place on a date that is not a Premium Due Date, a pro rata credit will be
granted. The pro rata credit will apply for the decrease from the date of the
decrease to the next Premium Due Date.
The Insurance Company may change rates immediately if, following the latter of
the effective date or renewal date, the enrolled population either increases or
decreases by 15% or more.
As of any Anniversary Date after the policy has been in force for 12 months, the
Insurance Company may grant a credit in such amount as it may determine, based
on experience.
GM5800 34Cl Section V-59
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
CANCELLATION OF POLICY
The Policyholder may cancel the policy as of any Premium Due Date by giving
written notice to the Insurance Company before that date.
The Insurance Company may cancel the policy as of any Premium Date if the number
of insured Employees is less than 60% of those eligible.
The Insurance Company may cancel the policy as of any Anniversary Date by giving
written notice of cancellation to the Policyholder at least thirty days prior to
such Anniversary Date.
If a premium is not received at the Home Office or by an authorized agent of the
Insurance Company when due, the policy will automatically be cancelled as of the
Premium Due Date, except as set forth below.
GRACE PERIOD. If, before a Premium Due Date, the Policyholder has not given
written notice to the Insurance Company that the policy is to be cancelled, a
Grace Period of 31 days will be granted for the payment of each premium after
the initial premium. The policy will stay in effect during that time. If any
premium is not received at the Home Office or by an authorized agent of the
Insurance Company by the end of the Grace Period, the policy will automatically
be cancelled at the end of the Grace Period; except that, if the Policyholder
has given written notice in advance of an earlier date of cancellation, the
policy will be cancelled as of the earlier date. The Policyholder will be liable
to the Insurance Company for any unpaid premium for the time the policy was in
force.
GM5800 36C5 Section V-12
36 Spec.
Connecticut General Life Insurance Company
------------------------------------------
MISCELLANEOUS PROVISIONS
EXECUTION OF POLICY. The policy is executed at the Home Office of the Insurance
Company. The Post Office address of the Insurance Company is Hartford,
Connecticut.
CONSIDERATION. The policy is issued to the Policyholder in consideration of the
application and payment of premiums.
INSURANCE DATA. The Policyholder will give the Insurance Company all of the data
that it needs to calculate the premium and all other data that it may reasonably
require. Failure of the Policyholder to give this data will not void or continue
an Employee's insurance. The Insurance Company has the right to examine the
Policyholder's records relative to these benefits at any reasonable time while
the policy is in effect. It also has this right until all rights and obligations
under the policy are finally determined.
ASSIGNMENTS. An Employee may assign all of his rights in and to this Life
Insurance with the written approval of the Policyholder. An assignment will
transfer the interest of the Employee and any Beneficiary to the assignee. Any
such assignment will remain in force until changed by the assignee. No
assignment will be in effect until a copy is filed with the Insurance Company.
However, the assignment may be filed with the Policyholder if the Insurance
Company agrees in advance. The Insurance Company is not responsible for the
validity or sufficiency of any assignment.
GM5800 38LI1 Section
38 Spec.
Connecticut General Life Insurance Company
------------------------------------------
MISCELLANEOUS PROVISIONS (Continued)
MISSTATEMENT OF AGE. The misstatement of an Employee's age will not affect his
amount of insurance. Premiums will be adjusted so that the Policyholder will pay
the Insurance Company the premiums at the true age of the Employee.
INCONTESTABILITY. The Insurance Company will not contest the validity of the
policy after two years from the date of issue except for non-payment of
premiums. No statement made by an Employee as to his insurability will be used
to contest the validity of the insurance after it has been in force prior to the
contest for a period of two years during the Employee's life. No statement made
by an Employee will be used unless it is made in writing and signed by him.
ENTIRE CONTRACT. The entire contract will be made up of the policy, the
application of the Policyholder, a copy of which is attached to the policy, and
the applications, if any, of the Employees.
POLICY CHANGES. Changes may be made in the policy only by amendment signed by
the Policyholder and by the Insurance Company acting through its President, Vice
President, Secretary or Assistant Secretary. No agent may change or waive any
terms of the policy.
STATEMENTS NOT WARRANTIES. All statements made by the Policyholder or by an
insured Employee will, in the absence of fraud, be deemed representations and
not warranties. No statement made by the Policyholder or by the Employee to
obtain insurance will be used to avoid or reduce the insurance unless it is made
in writing, and is signed by the Policyholder or the Employee and a copy is sent
to the Policyholder, the Employee or his Beneficiary.
CERTIFICATES. The Insurance Company will issue to the Policyholder for delivery
to each insured Employee an individual certificate. The Policyholder will be
responsible for distributing the certificates to its Employees. The certificate
will show the benefits provided under the policy. It will set forth any changes
in benefits due to age, to whom benefits will be paid and the terms of the
Conversion Privilege. Nothing in the certificate will change or void the terms
of the policy.
GM5800 38LI2 Section
38
EXXON CORPORATION
Executive Contributory Life
Insurance Certificate
Effective 11/l/95
CNOOI
TABLE OF CONTENTS
Page
Certification............................. 3
The Schedule.............................. 5
Eligibility - Effective Date.............. 6
Life Insurance............................ 7
Payment of Benefits....................... 9
Termination of Insurance.................. 11
Definitions............................... 12
1
PAGE INTENTIONALLY LEFT BLANK
2
Home Office: Bloomfield, Connecticut
Mailing Address: Hartford, Connecticut 06152
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
A CIGNA company (called CG) certifies that it insures certain Employees for the
benefits provided by the following policy(s):
POLICYHOLDER: EXXON CORPORATION
GROUP POLICY(IES) - COVERAGE
2518033-01 Life Insurance
This certificate describes the main features of the insurance. It does not waive
or alter any of the terms of the policy(s). If questions arise, the policy(s)
will govern.
This certificate takes the place of any other issued to you on a prior date
which described the insurance.
/s/ DAVID C. KOPP
----------------------------
Corporate Secretary
GM6000 C2 V-2
3 CER7
Explanation of Terms
You will find terms starting with capital letters throughout your certificate.
To help you understand your benefits, most of these terms are defined in the
Definitions section of your certificate.
- - ----------------------------------THE SCHEDULE----------------------------------
The Schedule is a brief outline of your maximum benefits which may be payable
under your Insurance. For a full description of each benefit, refer to the
appropriate section listed in the Table of Contents.
4
- - ----------------------------------THE SCHEDULE----------------------------------
LIFE INSURANCE (EXECUTIVE CONTRIBUTORY LIFE INSURANCE)
For You
Amount of Life Insurance
One-half times your annual Normal Compensation, if you are insured under any
Contributory Group Life Insurance Plan available to employees in general,
applicable to a Participating Employer
or
You may elect either one-half times, one times or one and one-half times your
annual Normal Compensation, if you are not insured under any Contributory Group
Life Insurance Plan available to employees in general, applicable to a
Participating Employer
Initial Amount of Life Insurance
Your amount of Life Insurance on the day you become insured is based on your
annual Normal Compensation on that day. If you are not insured under any
Contributory Group Life Insurance Plan available to employees in general,
applicable to a Participating Employer, your amount of Life Insurance is also
based on the amount you elect (one-half, one or one and one-half times your
annual Normal Compensation). However, in order for your insurance to become
effective, you may be required to satisfy the Insurability Requirement on or
before that day.
Changes In Amount of Life Insurance
Any change in your amount of Life Insurance due to a change in Normal
Compensation or a change in your election will be scheduled to take place on the
date your Normal Compensation changes or the date you would like your election
change to take effect, respectively. However, before any increase in your
insurance becomes effective on account of an increase in your election, you may
be required to satisfy the Insurability Requirement and be accepted by CG for
the increased amount on or before the date you would like your election change
to take effect.
Insurability Requirement
You will be considered to have satisfied the Insurability Requirement for an
amount of Life Insurance on the date the Employer receives from CG its written
acknowledgement that it accepts you as insurable for that amount. To determine
your acceptability for an amount of Life Insurance, CG will require evidence of
good health and may require that it be provided at your expense.
5
ELIGIBILITY - EFFECTIVE DATE
You will become eligible for insurance on the day you become a Covered Employee.
Employee Insurance
This plan is offered to you as an Employee. To be insured, you will have to pay
the entire cost of the Life Insurance described in this certificate.
Effective Date of Your Insurance
You will become insured on the date you elect the insurance by signing an
approved payroll deduction form, but no earlier than the date you become
eligible. If you are a Late Entrant, your insurance will not become effective
until the Employer receives from CG its written acknowledgement that it agrees
to insure you.
Late Entrant - Employee
You are a Late Entrant if:
. you elect the insurance more than 60 days after you become.
eligible; or
. you again elect it after you cancel your payroll deduction.
If you are a Late Entrant, CG will require evidence of good health and may
require that it be provided at your expense.
GM6000 EL I V-20
GM6000 EF 1
6 EL13 M
LIFE INSURANCE
Death Benefit
CG will pay the amount of your Life Insurance when it receives due proof that
you died while insured for this benefit. The amount payable is determined from
The Schedule and the other terms of the policy.
GM6000 LI 23
7 LIF89
LIFE INSURANCE
Conversion Privilege
When your Life Insurance ceases, you may apply to CG for an individual converted
life policy. It will be issued to you if you are entitled to convert and if you
apply in writing and pay the first premium to CG within 31 days after the date
your Life Insurance ceases. Evidence of good health is not needed.
Entitled To Convert
You are entitled to convert your Life Insurance only if:
. your insurance ceases because you are no longer in Active Service or
no longer eligible for Life Insurance.
. your insurance ceases or is reduced because of retirement.
. the policy is cancelled for your class of Employees and you have been
insured under the policy for at least five years before it is
cancelled.
The amount of Life Insurance that you are entitled to convert will not be more
than the amount of group Life Insurance that you lose. If all insurance under
the policy is cancelled on the class of Employees to which you belong, the
amount of insurance under the converted life policy will be the smaller of: (a)
the amount of your insurance which ceases less any amount of group life
insurance for which you become eligible within 31 days after the insurance
ceases; or (b) $2,000.
The converted policy will be one of CG's current offerings based on its rules
for converted life policies. It will be issued at your attained age for the
premium that applies to the class of risk to which you then belong. It will take
effect on the 32nd day after your Life Insurance ceases. Neither term insurance
nor disability benefits are offered under the converted life policy.
Payment During Conversion Period
If you die during the 31 days in which you may convert to an individual life
policy, CG will pay to the Beneficiary designated under your group policy, the
amount of insurance you could have converted. In this case, no payment will be
made under the converted policy.
GM6000 L156 V-20
GM6000 L157
8 LIF131 M
PAYMENT OF BENEFITS
To Whom Payable
Any benefits for loss of your life will be paid to your named Beneficiary.
Any amount of your loss of life benefits for which there is no designated or
surviving Beneficiary will be paid, in a single sum to the first class of the
following classes of Successive Preference Beneficiaries as shown below.
Successive Preference Beneficiaries
Successive Preference Beneficiaries are the following persons:
. your spouse.
. your children. The single sum will be divided equally among your
children who either survive you or die before you leaving children of
their own who survive you. In the case of your child or each of your
children who dies before you leaving children who survive you, that
child's share will be divided equally among their child or children.
. your surviving parents. The single sum will be divided equally
between your parents if both your parents survive you.
. your surviving brothers and sisters. The single sum will be divided
equally among your brothers and sisters who either survive you or die
before you leaving children of their own who survive you. In the case
of each brother or sister who dies before you leaving children who
survive you, that brothers or sisters share will be divided equally
among their child or children.
. your executors or administrators.
If any person to whom benefits are payable is a minor, or in CG's opinion, is
not able to give valid receipt for any payment due him, such payment will be
made to his legal guardian.
Payment in the manner described above will release CG from all liability to the
extent of any payment made.
GM6000 POB 8 V-10
9 PMT25 M
PAYMENT OF BENEFITS
Time of Payment
All benefits will be paid by CG when it receives due proof of loss.
Life Payment Option
At your written request, your amount of Life Insurance will be paid in
installments after your death rather than in one sum, based on CG's installment
plans then available. If you do not make this request, your Beneficiary may do
so, in writing, after your death.
Installment payments are not available if your amount of Life Insurance is less
than $2500.
If your Beneficiary dies while receiving installment payments, the remaining
installments, unless otherwise disposed of, will be commuted at the rate of 3%
compound interest per year. Payment will then be made in one sum to the
executors or administrators of your Beneficiary's estate.
Beneficiary Designation
Beneficiary
When you become insured, you should name someone as your Beneficiary to receive
your Life Insurance benefits. Your Beneficiary designation will be filed with
CG, or if agreed to in advance by CG, with the Policyholder.
Change of Beneficiary
You may change your Beneficiary at any time by completing a form satisfactory to
CG and signed by you. No change will take effect until this form is received by
CG (or by the Policyholder if CG has agreed to this in advance). When the form
is received, the change will take effect as of the date on the form. If you die
before the form is received, CG will not be liable for any payment it has
already made.
Consent of Beneficiary
Your Beneficiary's consent will not be required to change the Beneficiary or to
effect any other changes.
GM6000 POB 9
GM6000 POB 10 V-11
10 PMT90 M
TERMINATION OF INSURANCE - EMPLOYEES
Your insurance will cease on the earliest date below:
. the date you cease to be in a class of Covered Employees or cease to
qualify for the insurance.
. the last day for which you have made any required contribution for
the insurance.
. the date the policy is cancelled.
. the date your Active Service ends except-as described below.
Any continuation of insurance must be based on a plan which precludes individual
selection.
If your Active Service ceases due to sickness, injury, leave of absence or
temporary lay-off, the terms of the policy may provide for continuance of
insurance for a limited period. You should consult your Employer who is in a
position to inform you as to the terms of the policy in this respect.
GM6000 TERI
GM6000 TER2
11 TRM19Vl M
TRM57 V-43 M
DEFINITIONS:
Active Service
You will be considered in Active Service:
. on any of your Employer's scheduled work days if you are performing
the regular duties of your work on that day either at your Employer's
place of business or at some location to which you are required to
travel for your Employers business.
. on a day which is not one of your Employer's scheduled work days if
you were in Active Service on the preceding scheduled work day.
Benefit Plan Service
Benefit Plan Service means service credited by a Participating Employer for the
purpose of the applicable Benefit Plan.
Compensation
Compensation means remuneration for employment by a Participating Employer, as
determined by the Participating Employer, payable in money. Remuneration
includes base pay and other items of compensation as determined by the
Participating Employer.
Covered Annuitant
Covered Annuitant means a person who acquired annuitant status under the
applicable Benefit Plan of a Participating Employer, and still has it, and was
insured for the insurance described in this certificate as a Covered Employee
immediately before acquiring annuitant status.
Covered Employee
Covered Employee means a Qualifying Employee of a Participating Employer
. who, in the case of a Covered Employee who first became eligible on
or after April 1, 1990, has a classification of 36 or higher under
Exxon's salary classification system, or who, in the case of a
Covered Employee who first became eligible prior to April 1, 1990,
satisfied the applicable salary requirement described below, and
. who has reached the first day of the calendar year
month in which the individual attains age 50.
An individual meets the pre-April 1, 1990 salary requirements if the
individual's annual Normal Compensation rounded to the nearest $5,000 is -not
less than
. a dollar amount equal to the midpoint of Exxon's salary
classification 36, in the case of a Covered Employee who first became
eligible on or after October 1, 1979 but prior to April 1, 1990,
DEF1 12
DEFINITIONS:
. $90,000 - in the case of a Covered Employee who became eligible on or
after January 1, 1978 but prior to October 1, 1979,
. $75,000 - in the case of a Covered Employee who became eligible on or
after August 1, 1975 but prior to January 1, 1978,
. $60,000 - in the case of a Covered Employee who became eligible on or
after October 10, 1974 but prior to August 1, 1975,
. $50,000 - in the case of a Covered Employee who became eligible prior
to October 10, 1974,
Employee
Employee means a Covered Employee.
Employer
The term Employer means the Policyholder and all Affiliated Employers.
Normal Compensation
Normal Compensation means compensation that the Participating Employer
determines would be paid in normal circumstances.
Participating Employer
Participating Employer means EXXON CORPORATION or any operating unit or
affiliated organization thereof that is participating in the insurance provided
under the policy as certified to CG by either one of the organizations
comprising the Employer.
Qualifying Employee
Qualifying Employee has the meaning stated in the contemporary text of the
Benefit Plan(s) applicable to the Participating Employer.
CN004
S38662N
DEF2 13
Mailing Address: Hartford, Connecticut 06152
Home Office: Bloomfield Connecticut
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
POLICYHOLDER: EXXON CORPORATION
ADDRESS: Dallas, Texas
ACCOUNT NUMBER: 2044589
Group Insurance Effective Anniversary
Policy and Policy Number Date Date
- - ------------------------ ---- ----
Group Term Life Insurance 11-1-95 1-1
2044589-01
2044589-02
Survivor Income Insurance 11-1-95 1-1
(Family Income Insurance)
2044589-01
Group Accidental Death 11-1-95 1-1
and Dismemberment
Insurance
2044589-03
This policy is issued in Louisiana and shall be governed by its laws.
BA: Michael Horan
These Policies contain the terms under which the Insurance Company agrees to
insure certain Employees and pay benefits.
The Insurance Company and the Policyholder have agreed to all of the terms of
these policies.
/s/ DAVID C. KOPP /s/ JOHN WILKINSON
- - ---------------------------- -----------------------------
Corporate Secretary President
/s/ MICHAEL HORAN January 5, 1996
- - --------------------------- ---------------
Registrar Date Registered
Countersigned by /s/ BARBRA BEITZ
---------------------------------
Licensed Resident Agent
CM5800 lC3
V-1
Connecticut General Life Insurance Company
------------------------------------------
CONTENTS
Section
THE SCHEDULE
THE INSURANCE SCHEDULE........................................3
ALL OTHER SCHEDULE SECTIONS...................................Certificate
DEFINITIONS.....................................................Certificate
ELIGIBILITY.....................................................Certificate
EFFECTIVE DATE..................................................Certificate
BENEFITS
Life Insurance................................................Certificate
Family Income Insurance.......................................Certificate
Rider
Accidental Death and Dismemberment Insurance..................Certificate
BENEFICIARY DESIGNATION.........................................Certificate
PAYMENT OF BENEFITS.............................................Certificate
TERMINATION OF INSURANCE........................................Certificate
LIFE CONVERSION PRIVILEGE.......................................Certificate
PREMIUMS........................................................28 and 34
CANCELLATION OF POLICY..........................................36
MISCELLANEOUS PROVISIONS........................................38, 40, and
Certificate
GM5800 2L-I1 Section V-15
2 Spec.
Connecticut General Life Insurance Company
------------------------------------------
THE INSURANCE SCHEDULE
The terms set forth herein and in the Certificate(s) listed below describe the
insurance underwritten by the Insurance Company. These Certificates are included
in and made a part of the policy(ies). Each Certificate is identified by a
Certificate Number (CN).
Any reference in the certificate to "you" or "yours" refers to the Employee.
An Employee in any of the classes shown below may be insured but only for the
policy(ies) listed for his Employee Class. The Effective Date shown below is the
date on which a policy becomes effective for an Employee Class.
An Employee will become eligible and insured in accordance with the terms of the
"Eligibility' and "Effective Date" sections of the Certificate.
GROUP POLICY(IES) EMPLOYEE CLASS
- - ------------------------- ---------------------------------
Certificate Eligible Effective
Number Policy(ies) Employees Date
- - ------ ----------- --------- ----
CN001 Life Insurance Each Covered Employee and 1-1-93
2044589-01 each Covered Annuitant
CN002 Accidental Death Each Covered Employee 1-1-93
and Dismemberment
Insurance
2044589-03
CN003 Life Insurance Each Covered Employee and 11-1-95
2044589-02 each Covered Annuitant
CN006 Life Insurance Each Covered Employee 1-1-93
2044589-01 (RSE Regular Employee)
CN007 Accidental Death Each Covered Employee 1-1-93
and Dismemberment (RSE Regular Employee)
Insurance
2044589-03
CR7BNO01-1 Survivor Income Each Covered Employee 1-1-93
Insurance (Family
Income Insurance)
2044589-01
GM5800 3IS1 Section
3
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS
PREMIUM PAYMENT. The first premium will be due on the Effective Date. After
that, premium will be due monthly unless the Policyholder and the Insurance
Company agree on some other method of premium payment. The Policyholder and the
Insurance Company may agree to change the method of premium payment from time to
time. Premiums are payable at the Home Office of the Insurance Company or to an
authorized agent of the Insurance Company. in the event that the Policyholder
receives notice of an injunction or order of rehabilitation or liquidation of
the Insurance Company, premiums are payable to the State of Louisiana.
PREMIUM DUE DATE. After the Effective Date, the Premium Due Date will be the
first of the month. The Anniversary Date will be the first of the month when the
policy becomes effective. If the Policyholder and the Insurance Company agree
that premiums will be paid on a quarterly, semiannual or annual basis, the
Premium Due Date will be at the appropriate regular interval, quarterly,
semiannually or annually. Premiums must be received at the Home Office or by an
authorized agent of the Insurance Company on the Premium Due Date or the policy
will be cancelled except as set forth in the Grace Period.
MONTHLY STATEMENT DATE. If premiums are to be paid monthly, the Monthly
Statement Date will be the same as the Premium Due Date. If premiums are to be
paid on a quarterly, semiannual or annual basis, the Monthly Statement Date will
be the day in each month with the same number as the Premium Due Date.
MONTHLY PREMIUM STATEMENT. if premiums are due monthly, a Monthly Premium
Statement will be prepared as of the Premium Due Date. This Monthly Premium
Statement will show the premium due. If premiums are due quarterly, semiannually
or annually, a Monthly Premium Statement will be prepared as of the Monthly
Statement Date for the time from the Monthly Statement Date to the next Premium
Due Date. This Monthly Statement will reflect any pro rata premium charges and
credits due to changes in the number of insured persons and changes in insurance
amounts that took place in the preceding month.
SIMPLIFIED ACCOUNTING. To simplify the accounting process, premium adjustments
will be made on the Monthly Statement Date.
GM5800 34Cl Section V-29
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS (Continued)
LIFE INSURANCE PREMIUM. The monthly premium for Life Insurance will be a certain
percentage of the Policyholder's monthly payroll. That percentage will be
calculated by the Insurance Company based on the experience of this Life
Insurance policy. That percentage will be subject to approval by the
Policyholder.
GM5800 34LI2 Section V-7
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS (Continued)
MONTHLY PREMIUM RATE FOR ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE. The
monthly premium rate for Accidental Death and Dismemberment Insurance will be a
certain percentage of the Policyholder's monthly payroll. That percentage will
be calculated by the Insurance Company based on the experience of this
Accidental Death and Dismemberment Insurance policy. That percentage will be
subject to approval by the Policyholder.
GM5800 34DD1 Section V-10
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PREMIUMS (Continued)
CHANGE IN METHOD OF PREMIUM PAYMENT. If premiums are to be paid other than
monthly, the method of calculation is the same. However, the rate for each class
is first changed to quarterly, semiannual or annual rates by multiplying them by
2.9852, 5.9557 or 11.8227 respectively. All results are taken to the nearer
cent. If the Policyholder and the Insurance Company agree to a change in the
method of premium payment or to a. change in the Anniversary Date, a pro rata
adjustment will be made in the premium due.
CHANGES IN PREMIUM RATES. The premium rates may be changed by the Insurance
Company from time to time with at least 31 days advance written notice. An
increase will not be made more often than once in a 12 month period without
approval by the Policyholder. If an increase in premium rates takes place on a
date that is not a Premium Due Date, a pro rata premium will be due on the date
of the increase. The pro rata premium will apply for the increase from the date
of the increase to the next Premium Due Date. If a decrease in premium rates
takes place on a date that is not a Premium Due Date, a pro rata credit will be
granted. The pro rata credit will apply for the decrease from the date of the
decrease to the next Premium Due Date.
The Insurance Company may change rates immediately if, following the latter of
the effective date or renewal date, the enrolled population either increases or
decreases by 15% or more.
As of any Anniversary Date after the policy has been in force for 12 months, the
Insurance Company may grant a credit in such amount as it may determine, based
on experience.
GM5800 34Cl Section V-59
34 Spec.
Connecticut General Life Insurance Company
------------------------------------------
CANCELLATION OF POLICY
The Policyholder may cancel the policy as of any Premium Due Date by giving
written notice to the Insurance Company before that date.
The Insurance Company may cancel the policy as of any Anniversary Date by giving
written notice of cancellation to the Policyholder at least thirty days prior to
such Anniversary Date.
If a premium is not received at the Home Office or by an authorized agent of the
Insurance Company when due, the policy will automatically be cancelled as of the
Premium Due Date, except as set forth below.
GRACE PERIOD. If, before a Premium Due Date, the Policyholder has not given
written notice to the Insurance Company that the policy is to be cancelled, a
Grace Period of 31 days will be granted for the payment of each premium after
the initial premium. The policy will stay in effect during that time. If any
premium is not received at the Home Office or by an authorized agent of the
insurance Company by the end of the Grace Period, the policy will automatically
be cancelled at the end of the Grace Period; except that, if the Policyholder
has given written notice in advance of an earlier date of cancellation, the
policy will be cancelled as of the earlier date. The Policyholder will be liable
to the Insurance Company for any unpaid premium for the time the policy was in
force.
GM5800 36C5 Section V-12
36 Spec.
Connecticut General Life Insurance Company
------------------------------------------
MISCELLANEOUS PROVISIONS
EXECUTION OF POLICY. The policy is executed at the Home Office of the Insurance
Company. The Post Office address of the Insurance Company is Hartford,
Connecticut.
CONSIDERATION. The policy is issued to the Policyholder in consideration of the
application and payment of premiums.
INSURANCE DATA. The Policyholder will give the Insurance Company all of the data
that it needs to calculate the premium and all other data that it may reasonably
require. Failure of the Policyholder to give this data will not void or continue
an Employee's insurance. The Insurance Company has the right to examine the
Policyholder's records relative to these benefits at any reasonable time while
the policy is in effect. It also has this right until all rights and obligations
under the policy are finally determined.
MALE PRONOUN. The male pronoun as used herein will be deemed to include the
female.
(The following is applicable only to Life Insurance)
MISSTATEMENT OF AGE. The misstatement of an Employee's age will not affect his
amount of insurance. Premiums will be adjusted so that the Policyholder will pay
the Insurance Company the premiums at the true age of the Employee.
INCONTESTABILITY. The Insurance Company will not contest the validity of the
policy after two years from the date of issue except for non-payment of
premiums. No statement made by an Employee as to his insurability will be used
to contest the validity of the insurance after it has been in f6rce prior to the
contest for a period of two years during the Employee's life. No statement made
by an Employee will be used unless it is made in writing and signed by him.
(The following is applicable to all insurance)
ASSIGNMENTS
Life Insurance
An Employee may assign all of his rights in and to this Life Insurance with the
written approval of the Policyholder. An assignment will transfer the interest
of the Employee and any Beneficiary to the assignee. Any such assignment will
remain in force until changed by the assignee. No assignment will be in effect
until a copy is filed with the Insurance Company. However, the assignment may be
filed with the Policyholder if the Insurance Company agrees in advance. The
Insurance Company is not responsible for the validity or sufficiency of any
assignment.
Survivor Income Insurance (Family Income Insurance)
No assignment of the Survivor Income Insurance (Family Income Insurance) on any
Employee under the policy will be valid
Accidental Death and Dismemberment Insurance
No assignment of the Accidental Death and Dismemberment Insurance on any
Employee under the policy will be valid.
GM5800 38Cl Section V-17
38 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PROVISIONS
ENTIRE CONTRACT. The entire contract will be made up of the policy, the
application of the Policyholder, a copy of which is attached to the policy, and
the applications, if any, of the Employees.
POLICY CHANGES. Changes may be made in the policy only by amendment signed by
the Policyholder and by the Insurance Company acting through its President, Vice
President, Assistant Vice President or Director. No agent may change or waive
any terms of the policy.
STATEMENTS NOT WARRANTIES. All statements made by the Policyholder or by an
insured Employee will, in the absence of fraud, be deemed representations and
not warranties. No statement made by the Policyholder or by the Employee to
obtain insurance will be used to avoid or reduce the insurance unless it is made
in writing and is signed by the Policyholder or the Employee and a copy is sent
to the Policyholder, the Employee or his Beneficiary.
(The following is applicable to all Insurance except Life Insurance)
NOTICE OF CLAIM. Notice of claim must be given to the Insurance Company within
one year after the occurrence or start of the loss on which claim is based.
If notice is not given in that time, the claim will not be invalidated or
reduced if it is shown that notice was given as soon as was reasonably possible.
PHYSICAL EXAMINATION. The Insurance Company, at its own expense, will have the
right to examine any person for whom claim is pending as often as it may
reasonably require.
GM5800 4OC1 Section V-19
40 Spec.
Connecticut General Life Insurance Company
------------------------------------------
PROVISIONS (Continued)
(The following is applicable to all Insurance except Life Insurance)
CLAIM FORMS. When the Insurance Company receives the notice of claim, it will
give to the claimant, or to the Policyholder for the claimant, the claim forms
it uses for filing proof of loss. This proof must describe the occurrence,
character and extent of the loss for which claim is made.
PROOF OF LOSS. Written proof of loss must be given to the Insurance Company
within 90 days after the date Notice of Claim is given to CG. If written proof
of loss is not given in that time, the claim will not be invalidated nor reduced
if it is shown that written proof of loss was given as soon as was reasonably
possible.
LEGAL ACTIONS. No action at law or in equity will be brought to recover on the
policy until at least 60 days after proof of loss has been filed with the
Insurance Company. No action will be brought at all unless brought within 3
years after the time within which proof of loss is required by the policy.
TIME LIMITATIONS. If any time limit set forth in the policy for giving notice of
claim or proof of loss, or for bringing any action at law or in equity is less
than that permitted by the law of the state in which the Employee lives when the
policy is issued, then the time limit provided in the policy is extended to
agree with the minimum permitted by the law of that state.
PHYSICIAN/PATIENT RELATIONSHIP. The Employee will have the right to choose any
physician who is practicing legally. The Insurance Company will in no way
disturb the physician/patient relationship.
(The following is applicable to all Insurance)
CERTIFICATES. The Insurance Company will issue to the Policyholder for delivery
to each insured Employee an individual certificate. The Policyholder will be
responsible for distributing the certificates to its Employees. The certificate
will show the benefits provided under the policy. It will set forth any changes
in benefits due to age and to whom benefits will be paid. Nothing in the
certificate will change or void the terms of the policy.
GM5800 4OC2 Section V-19
40 Spec.
EXXON CORPORATION
Supplemental Life Insurance Certificate
Effective 11/1/95
CN003
TABLE OF CONTENTS
Page
Certification................. 3
The Schedule.................. 5
Eligibility - Effective Date.. 6
Life Insurance................ 7
Payment of Benefits........... 9
Termination of Insurance...... 11
Definitions................... 12
1
PAGE INTENTIONALLY LEFT BLANK
2
Home Office: Bloomfield, Connecticut
Mailing Address: Hartford, Connecticut 06152
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
A CIGNA company (called CG) certifies that it insures certain Employees for the
benefits provided by the following policy(s):
POLICYHOLDER: EXXON CORPORATION
GROUP POLICY(IES) - COVERAGE
2044589-02 Life Insurance
This certificate describes the main features of the insurance. It does not waive
or alter any of the terms of the policy(s). If questions arise, the policy(ies)
will govern.
This certificate takes the place of any other issued to you on a prior date
which described the insurance.
/s/ DAVID C. KOPP
----------------------------
Corporate Secretary
GM6000 C2 V-2
3 CER7
Explanation of Terms
You will find terms starting with capital letters throughout your certificate.
To help you understand your benefits, most of these terms are defined in the
Definitions section of your certificate.
- - ---------------------------------THE SCHEDULE--------------------------------
The Schedule is a brief outline of your maximum benefits which may be payable
under your Insurance. For a full description of each benefit, refer to the
appropriate section listed In the Table of Contents.
4
- - -------------------------------THE SCHEDULE-----------------------------------
LIFE INSURANCE (SUPPLEMENTAL GROUP LIFE INSURANCE)
For You
Amount of Life Insurance
One or two times your annual Normal Compensation if
you are a Covered Employee
One times your annual Normal Compensation if you are
a Covered Annuitant
Changes in Amount of Life Insurance
Any change in your amount of Life Insurance due to a change in Normal
Compensation will take place on the date your Normal Compensation changes.
Any increase in the amount of your Life Insurance due to your election to
increase the amount of your Life Insurance will take place on the date your
Employer receives from CG its written acknowledgement that it agrees to insure
you. In this circumstance, CG will require evidence of good health and may
require that it be provided at your expense.
Any decrease in the amount of your Life Insurance due to your election to
decrease the amount of insurance will take place on the date you submit the
election to your Employer.
5
ELIGIBILITY - EFFECTIVE DATE
You will become eligible for insurance on the day you become a Covered Employee.
If you are a Covered Annuitant, you will become eligible for insurance on the
day you become a Covered Annuitant.
Employee Insurance
This plan is offered to you as an Covered Employee or Covered Annuitant. Exxon
pays the entire the cost of the Life Insurance described in this certificate.
Effective Date of Your Insurance
You will become insured on the date you elect the insurance by signing an
approved election form, but no earlier than the date you become eligible. If you
are a Late Entrant, your insurance will not become effective until your Employer
receives from CG its written acknowledgement that it agrees to insure you.
Late Entrant
You are a Late Entrant if you elect the insurance more than 60 days after you
become eligible. If you are a Late Entrant, CG will require evidence of good
health and may require that it be provided at your expense.
GM6000 EL 1 V-20
GM6000 EF 1 V-2
6 EL13 M
LIFE INSURANCE
Death Benefit
CG will pay the amount of your Life Insurance when it receives due proof that
you died while- insured for this benefit. The amount payable is determined from
The Schedule and the other terms of the policy.
GM6000 LI 23
7
LIF89
LIFE INSURANCE
Conversion Privilege
When your Life Insurance ceases, you may apply to CG for an individual converted
life policy. It will be issued to you if you are Entitled to Convert and if you
apply in writing and pay the first premium to CG within 31 days after the date
your Life Insurance ceases. Evidence of good health is not needed.
Entitled To Convert
You are Entitled to Convert your Life Insurance only if:
. your insurance ceases because you are no longer in Active Service or
no longer eligible for Life Insurance.
. your insurance ceases or is reduced because of retirement.
. the policy is cancelled for your class of Employees and you have
been insured under the policy for at least five years before it is
cancelled.
The amount of Life Insurance that you are Entitled to Convert will not be more
than the amount of group Life Insurance that you lose. If all insurance under
the policy is cancelled on the class of Employees to which you belong, the
amount of insurance under the converted life policy will be the smaller of: (a)
the amount of your insurance which ceases less any amount of group life
insurance for which you become eligible within 31 days after the insurance
ceases; or (b) $2,000.
The converted policy will be one of CG's- current offerings based on its rules
for converted life policies. It will be issued at your attained age for the
premium that applies to the class of risk to which you then belong. It will take
effect on the 32nd day after your Life Insurance ceases. Neither term insurance
nor disability benefits are offered under the converted life policy.
Payment During Conversion Period
If you die during the 31 days in which you may convert to an individual life
policy, CG will pay to the Beneficiary designated under your group policy, the
amount of insurance you could have converted. In this case, no payment will be
made under the converted policy.
GM6000 L156 V-20
GM6000 L157
8 LIF131 M
PAYMENT OF BENEFITS
To Whom Payable
Any benefits for loss of your life will be paid to your named Beneficiary.
Any amount of your loss of life benefits for which there is no designated or
surviving Beneficiary will be paid, in a single sum to the first class of the
following classes of Successive Preference Beneficiaries as shown below.
Successive Preference Beneficiaries
Successive Preference Beneficiaries are the following persons:
. your spouse.
. your children. The single sum will be divided equally among your
children who either survive you or die before you leaving children of
their own who survive you. In the case of your child or each of your
children who dies before you leaving children who survive you, that
child's share will be divided equally among their child or children.
. your surviving parents. The single sum will be divided equally
between your parents if both your parents survive you.
. your surviving brothers and sisters. The single sum will be divided
equally among your brothers and sisters who either survive you or die
before you leaving children of their own who survive you. In the case
of each brother or sister who dies before you leaving children who
survive you, that brothers or sisters share will be divided equally
among their child or children.
. your executors or administrators.
If any person to whom benefits are payable is a minor, or in CG's opinion, is
not able to give valid receipt for any payment due him, such payment will be
made to his legal guardian.
Payment in the manner described above will release CG from all liability to the
extent of any payment made.
GM6000 POB 8 V-10
9 PMT25 M
PAYMENT OF BENEFITS
Time of Payment
All benefits will be paid by CG when it receives due proof of loss.
Life Payment Option
At your written request, your amount of Life Insurance will be paid in
installments after your death rather than in one sum, based on CG's installment
plans then available. If you do not make this request, your Beneficiary may do
so, in writing, after your death.
Installment payments are not available if your amount of Life Insurance is less
than $2500.
If your Beneficiary dies while receiving installment payments, the remaining
installments, unless otherwise disposed of, will be commuted at the rate of 3%
compound interest per year. Payment will then be made in one sum to the
executors or administrators of your Beneficiary's estate.
Beneficiary Designation
Beneficiary
When you become insured, you should name someone as your Beneficiary to receive
your Life Insurance benefits. Your Beneficiary designation will be filed with
CG, or if agreed to in advance by CG, with the Policyholder.
Change of Beneficiary
You may change your Beneficiary at any time by completing a form satisfactory to
CG and signed by you. No change will take effect until this form is received by
CG (or by the Policyholder if CG has agreed to this in advance). When the form
is received, the change will take effect as of the date on the form. If you die
before the form is received, CG will not be liable for any payment it has
already made.
Consent of Beneficiary
Your Beneficiary's consent will not be required to change the Beneficiary or to
effect any other changes.
GM6000 POB 9 V-1 1
GM6000 POB 10
10 PMT90 M
TERMINATION OF INSURANCE - EMPLOYEES
Your insurance will cease on the earliest date below:
. the date you cease to be in a class of Covered Employees or cease
to qualify for the insurance.
. the date the policy is cancelled.
. the date your Active Service ends except as described below.
Any continuation of insurance must be based on a plan which precludes individual
selection.
If your Active Service ceases due to sickness, injury, leave of absence or
temporary lay-off, the terms of the policy may provide for continuance of
insurance for a limited period. You should consult your Employer who is in a
position to inform you as to the terms of the policy in this respect.
Retirement
If your Active Service ends because you retire as a Covered Annuitant, your
insurance will be continued until your Employer cancels the insurance.
The amount of life insurance continued in force on you after your retirement
will be one times your Normal Compensation determined on your last day of Active
Service.
GM6000 TER1
GM6000 TER2
TRM19V1 M
11 TRM57V-43 M
DEFINITIONS:
Active Service
You will be considered in Active Service:
. on any of your Employees scheduled work days if you are performing the
regular duties of your work on that day either at your Employees place
of business or at some location to which you are required to travel for
your Employees business.
. on a day which is not one of your Employees scheduled work days if you
were in Active Service on the preceding scheduled work day.
Benefit Plan Service
Benefit Plan Service means service credited by a Participating Employer for the
purpose of the applicable Benefit Plan.
Compensation
Compensation means remuneration for employment by a Participating Employer, as
determined by the Participating Employer, payable in money. Remuneration
includes base pay and other items of compensation as determined by the
Participating Employer.
Covered Annuitant
Covered Annuitant means a person who acquired annuitant status under the
applicable Benefit Plan of a Participating Employer, and still has it.
Covered Employee
Covered Employee means a Qualifying Employee of a Participating Employer
. who, in the case of a Covered Employee who first became eligible on
or after April 1, 1990, has a classification of 36 or higher under
Exxon's salary classification system, or who, in the case of a
Covered Employee who first became eligible prior to April 1, 1990,
satisfied the applicable salary requirement described below, and
. who has reached the first day of the calendar year month in which the
individual attains age 50.
An individual meets the pre-April 1, 1990 salary requirements if the
individual's annual Normal Compensation rounded to the nearest $5,000 is not
less than
. a dollar amount equal to the midpoint of Exxon's salary
classification 36, in the case of a Covered Employee who first became
eligible on or after October 1, 1979 but prior to April 1, 1990,
DEF1 12
DEFINITIONS:
. $90,000 - in the case of a Covered Employee who became eligible on
or after January 1, 1978 but prior to October 1, 1979,
. $75,000 - in the case of a Covered Employee who became eligible on
or after August 1, 1975 but prior to January 1, 1978,
. $60,000 - in the case of a Covered Employee who became eligible on
or after October 10, 1974 but prior to August 1, 1975,
. $50,000 - in the case of a Covered Employee who became eligible
prior to October 10, 1974,
Employee
Employee means a Covered Employee.
Employer
The term Employer means the Policyholder and all Affiliated Employers.
Normal Compensation
Normal Compensation means compensation that the Participating Employer
determines would be paid in normal circumstances.
Participating Employer
Participating Employer means EXXON CORPORATION or any operating unit or
affiliated organization thereof that is participating in the insurance provided
under the policy as certified to CG by either one of the organizations
comprising the Employer.
Qualifying Employee
Qualifying Employee has the meaning stated in the contemporary text of the
Benefit Plan(s) applicable to the Participating Employer.
CN003
S38659N
DEF2 13
INSTRUMENT ADOPTING EXECUTIVE
CONTRIBUTORY GROUP LIFE INSURANCE PLAN
EXXON CORPORATION hereby adopts, effective as of November 1, 1995, the
Executive Contributory Life Insurance Plan to read in its entirety like the
document entitled "Executive Contributory Group Life Insurance Plan," Edition of
November 1, 1995, that is attached hereto.
IN WITNESS OF, EXXON CORPORATION, acting by and through its duly authorized
officer, has caused this Instrument to be executed on December 15, 1997.
EXXON CORPORATION
By: /s/ LEE R. RAYMOND
-------------------------------------
L. R. Raymond, Chairman
ATTEST:
/s/ RON A. JARVIS
- - --------------------------
Assistant Secretary
EDITION OF NOVEMBER 1, 1995
EXECUTIVE CONTRIBUTORY GROUP LIFE INSURANCE PLAN
------------------------------------------------
Parts
-----
1. Coverage
2. Amount of Insurance
3. Contributions by Covered Executives
4. Payment of Benefit
5. Designation of Beneficiary
6. Miscellaneous
EXECUTIVE CONTRIBUTORY GROUP LIFE INSURANCE PLAN
------------------------------------------------
1. Coverage
--------
1.1 Eligibility to Participate
--------------------------
Each covered executive is eligible to participate in this Plan.
-----------------
1.2 Election of Coverage
--------------------
A covered executive may at any time elect a level of coverage, elect
-----------------
to change a level of coverage, or elect to discontinue coverage under this
Plan. Any election made under this Section 1.2 shall be made on such forms
and in such manner as prescribed by the employer.
--------
1.3 Effective Date of Coverage
--------------------------
(A) Immediate Effective Date
------------------------
A covered executive's coverage under this Plan becomes effective
-------------------
immediately upon the receipt by the employer of a properly completed
--------
election form electing such coverage if:
(1) The election form is received by the employer within 60 days of
--------
the covered executive first receiving notification of
-----------------
eligibility to participate in this Plan, or
(2) In the case of an election to change the level of coverage, the
new election is for a level of coverage that is less than the
previous level of coverage.
(B) Delayed Effective Date
----------------------
In cases other than those described in Paragraph (A), a covered
-------
executive's coverage or change in the level of coverage becomes
-----------
effective on the date the employer receives notification from the
--------
insurer that the insurer has, in its discretion, approved evidence of
--------
insurability submitted by the covered executive.
-----------------
2
(C) Termination of Coverage
-----------------------
A covered executive's coverage under this Plan ceases at the earliest
-------------------
of the following times:
(1) When the covered executive's election to discontinue coverage is
-------------------
received by the employer,
--------
(2) 31 days after the individual terminates employment with the
employer without a disability,
--------
(3) The earlier of
(a) one year after the individual terminates employment with the
employer with a disability, or
--------
(b) when such disability ends, or
(4) When a contribution for such coverage becomes overdue as
determined under Section 1.4(C) below.
1.4 Covered Executive's Contribution
--------------------------------
(A) Contributions
-------------
A covered executive shall make contributions for the cost of coverage,
-----------------
as determined under Part 3 hereof.
(B) Withholding
-----------
Whenever a covered executive elects a level of coverage, the covered
----------------- -------
executive thereby effectively authorizes the employer to withhold from
--------- --------
the covered executive's compensation the required employee
-------------------
contribution that is applicable to that level of coverage.
(C) Other Contributions
-------------------
Paragraph (B) shall not apply in the event a covered executive cancels
-----------------
an authorization for the payment of contributions through payroll
withholding or when the insurance for a covered executive is not owned
-----------------
by the covered executive. In such cases, the Administrator shall
----------------- -------------
establish a procedure for collecting contributions from the covered
-------
executive or from the owner of the insurance and shall determine when
---------
any such
3
contributions become overdue for purposes of determining when
insurance coverage ceases on account of non-payment of contributions.
(D) Timing
------
The payment of contributions, either through withholding or otherwise,
shall commence with the first full pay period after which a level of
coverage becomes effective and shall continue for each pay period
thereafter until and including the last pay period during which the
covered executive's coverage ceases to be effective under Section
-------------------
1.3(C) above; provided that the administrator may wave the
-------------
contribution for the last period as necessary to accommodate the
employer's payroll systems.
----------
1.5 Transition Coverage
-------------------
Notwithstanding any other provision of this Part 1, unless and until a
different election is made by the covered executive, insurance coverage
----------------- ------------------
shall be automatically effective as of the effective date with respect to
--------------
any covered executive who immediately prior to the effective date has
------- --------- --------------
insurance coverage in effect under the Alternate Contributory Group Life
Insurance Plan or the Additional Contributory Group Life Insurance Plan.
The level of such insurance coverage shall be at the level provided under
------------------
both such Plans prior to the effective date.
--------------
2. Amount of Insurance
-------------------
2.1 In General
----------
The levels of coverage that a covered executive may elect under the Plan
-----------------
are 1/2, 1, and 1-1/2 times the covered executive's annual base salary;
-------------------
provided, however, that a covered executive may elect 1 or 1-1/2 times
-----------------
coverage only if the covered executive is not insured under any other
-----------------
contributory group life insurance plan sponsored by the employer.
--------
4
2.2 Changes in Amount
-----------------
Any change in a covered executive's amount of coverage attributable to a
-------------------
change in the covered executive's annual base salary will be effective on
-------------------
the date the change in base salary is effective.
3. Contributions by Covered Executives
-----------------------------------
The amount of the required contribution for a covered executive's coverage for
------------------- --------
any month is equal to the amount of coverage then in effect for the covered
-------- -------
executive, divided by 1,000, and multiplied by the cost factor set out in the
- - ---------
following table that is applicable to the covered executive's age as of the
-------------------
beginning of such month.
----------------------------------------------------------------------
Covered Executive Age Cost Factor
--------------------- -----------
----------------------------------------------------------------------
50 0.324
51 0.363
52 0.402
53 0.441
54 0.475
55 0.529
56 0.583
57 0.637
58 0.691
59 0.745
60 0.828
61 0.911
62 0.994
63 1.077
64 1.160
----------------------------------------------------------------------
5
4. Payment of Benefit
------------------
4.1 Conditions for Payment of Benefit
---------------------------------
If a covered executive dies while coverage for that covered executive is in
----------------- -----------------
effect, then, upon providing proof of death satisfactory to the insurer,
-------
the amount of coverage then in effect for the covered executive becomes
-----------------
payable.
4.2 Form of Payment
---------------
A benefit payable under this Plan shall be paid in a lump sum; provided,
however, that the insurer may, at its discretion, permit the covered
------- -------
executive or a beneficiary to elect a different form of payment.
---------
4.3 To Whom Paid
------------
A benefit payable upon a covered executive's death shall be paid as
-------------------
follows:
(A) If a beneficiary designation is in effect at the time of the covered
-------
executive's death, the benefit shall be paid in accordance with such
-----------
designation.
(B) If no beneficiary designation is in effect, the benefit shall be paid
to the first of the following groups that has at least one member that
survives the covered executive:
-----------------
(1) The covered executive's spouse.
-------------------
(2) The covered executive's children. In this event, the benefit
-------------------
will be divided equally among the children who survive the
covered executive as well as the children who die before the
-----------------
covered executive leaving children of their own who survive the
-----------------
covered executive. In the case of a covered executive's child
----------------- -------------------
who dies before the covered executive leaving children of his or
-----------------
her own who survive the covered executive, such child's share
-----------------
shall be divided equally among his or her surviving children.
(3) The covered executive's parents. In this event, the benefit will
-------------------
be divided equally among the parents if they both survive the
covered executive.
-----------------
6
(4) The covered executive's brothers and sisters. In this event, the
-------------------
benefit will be divided equally among the brothers and sisters
who survive the covered executive as well as the brothers and
-----------------
sisters who die before the covered executive leaving children of
-----------------
their own who survive the covered executive. In the case of a
-----------------
brother or sister who dies before the covered executive leaving
-----------------
children of his or her own who survive the covered executive,
-----------------
such brother or sister's share shall be divided equally among his
or her surviving children.
(5) The covered executive's executors or administrators.
-------------------
For purposes of this Paragraph (B), a spouse, child, parent, brother,
or sister of a covered executive shall include only someone having a
-----------------
legal relationship with the covered executive.
-----------------
5. Designation of Beneficiary
--------------------------
A covered executive may designate one or more beneficiaries to receive the
-----------------
payment of benefits upon the death of the covered executive, or may at any time
-----------------
change or cancel a previously made beneficiary designation. Any beneficiary
designation or change or cancellation thereof shall be made on such forms and in
such manner as is satisfactory to the insurer. No beneficiary designation or
-------
change or cancellation thereof shall become effective until received by the
insurer or its designated agent.
- - -------
6. Miscellaneous
-------------
6.1 Policies of Insurance
---------------------
Benefits shall be provided under this Plan through one or more policies of
insurance issued by an insurer selected by the employer.
------- --------
7
6.2 Assignment of Insurance
-----------------------
(A) Assignment
----------
A covered executive may assign to another owner the covered
----------------- -------
executive's interest in the insurance coverage in effect on the life
------------
of the covered executive as provided under this Plan. Such assignment
-----------------
shall be made on such forms and in such manner as is acceptable to the
employer and the insurer.
-------- -------
(B) Effect of Assignment
--------------------
When an assignment of a covered executive's insurance coverage is in
-------------------
effect as described in Paragraph (A) above, the assignee under such
assignment shall have the right to take all actions under the terms of
this Program that the covered executive would otherwise have the right
-----------------
to take, including, without limitation, the right to elect coverage,
change levels of coverage, discontinue coverage, designate a
beneficiary, and elect a form of payment.
6.3 Amendment and Termination
-------------------------
Exxon Corporation at any time, by action of any duly authorized officer,
may amend or terminate this Plan in whole or in part.
6.4 Responsibilities and Authority of Administrator
-----------------------------------------------
The administrator shall fulfill all duties and responsibilities of a "plan
-------------
administrator" required by the Employee Retirement Income Security Act of
1974, as amended. The administrator shall have the authority to control
-------------
and manage the operation and administration of this Plan, including,
without limitation:
(A) discretionary and final authority to determine eligibility and to
administer this Plan in its application to each participant and
-----------
beneficiary; and
(B) discretionary and final authority to interpret this Plan, in whole or
in part, including but not limited to, exercising such authority in
conducting a full and fair review, with such interpretation being
conclusive for all participants and beneficiaries under this Plan.
------------
8
6.5 Claim Appeal Process
--------------------
(A) Submission of Appeal
--------------------
In the event a claim for benefits is denied, the claimant has the
right to appeal to the administrator. A written request to review a
-------------
denied claim must be received by the administrator within 90 days
-------------
after the claim denial. The request may state the reasons the
claimant believes he or she is entitled to Plan benefits, and may be
accompanied by supporting information and documentation for the
administrator's consideration.
---------------
(B) Decision
--------
The administrator shall decide appeals in accordance with the
-------------
administrator's fiduciary authority set out in Section 6.4. Appeal
---------------
decisions will be made within 60 days of the receipt of the claim by
the administrator unless special circumstances warrant an extension of
-------------
time. If an extension of time is required, the administrator will
-------------
notify the claimant of the extension. In all cases, the decision will
be made no later than 120 days after the receipt of the claim by the
administrator. The appeal decision shall be in writing, specify the
-------------
reasons for the decision, and refer to the relevant Plan provision(s)
on which the decision is based.
6.6 Definitions
-----------
The following terms shall have the following meanings ascribed to them:
(A) "Administrator" means the Manager of the Compensation and Executive
Programs division of the Human Resources department of Exxon
Corporation.
(B) "Covered Employee" has the meaning set out in the General Provisions
of the Benefit Plan of Exxon Corporation and Participating Affiliates.
(C) "Covered Executive" means a covered employee who
----------------
(1) in the case of an individual who first qualified as a covered
-------
executive on or after April 1, 1990, has a classification level
---------
of 36 or higher and is at least 50 years old; or
9
(2) in the case of an individual who first qualified as a covered
-------
executive prior to April 1, 1990, qualified under the provisions
---------
of the Executive Life Insurance Program in existence at such
time.
(D) "Effective date" means November 1, 1995.
(E) "Employer" has the meaning set out in the General Provisions of the
Benefit Plan of Exxon Corporation and Participating Affiliates.
(F) "Insurer" means the insurance company that is the issuer of the policy
of insurance described in Section 6.1 above.
10
INSTRUMENT ADOPTING SUPPLEMENTAL
GROUP LIFE INSURANCE PLAN
EXXON CORPORATION hereby adopts, effective as of November 1, 1995, the
Supplemental Group Life Insurance Plan to read in its entirety like the document
entitled "Supplemental Group Life Insurance Plan," Edition of November 1, 1995,
that is attached hereto.
IN WITNESS OF, EXXON CORPORATION, acting by and through its duly authorized
officer, has caused this Instrument to be executed on December 15, 1997.
EXXON CORPORATION
By: /s/ LEE R. RAYMOND
-----------------------------------
L. R. Raymond, Chairman
ATTEST:
/s/ RON A. JARVIS
- - ---------------------------
Assistant Secretary
EDITION OF NOVEMBER 1, 1995
SUPPLEMENTAL
------------
GROUP LIFE INSURANCE PLAN
-------------------------
Articles
--------
1. Participation and Coverage
2. Levels of Insurance Coverage
3. Payment of Benefit
4. Designation of Beneficiary
5. Miscellaneous
SUPPLEMENTAL
------------
GROUP LIFE INSURANCE PLAN
-------------------------
1. Participation and Coverage
--------------------------
1.1 Eligibility to Participate
--------------------------
(A) Covered Executive
-----------------
Each covered executive is automatically a participant in this Plan.
----------------- -----------
(B) Covered Annuitant
-----------------
Each person who becomes a covered annuitant on or after the effective
----------------- ---------
date, and who is a covered executive immediately prior to becoming a
---- -----------------
covered annuitant is automatically a participant in this Plan. In
----------------- -----------
addition, each person who
(1) became a covered annuitant prior to the effective date, and
----------------- --------------
(2) was covered under the Alternate Group Life Insurance Plan
immediately prior to the effective date,
--------------
is automatically a participant in the Plan.
-----------
1.2 Election of Insurance Coverage
------------------------------
A participant may at any time elect a level of insurance coverage, may
-----------
elect to change a level of insurance coverage, or may elect to discontinue
insurance coverage under the Plan. Any election made under this Section
1.2 shall be made on such forms and in such manner as prescribed by the
employer.
--------
1.3 Effective Date of Insurance Coverage
------------------------------------
(A) Immediate Effective Date
------------------------
A participant's insurance coverage becomes effective immediately upon
-------------
the receipt by the employer of a properly completed election form
--------
electing such insurance coverage if:
(1) The election form is received by the employer within 60 days of
--------
the participant first receiving notification of eligibility to
-----------
participate in this Plan, or
2
(2) In the case of an election to change the level of insurance
coverage, the new election is for a level of coverage that is
less than the previous level of coverage.
(B) Delayed Effective Date
----------------------
In cases other than those described in Paragraph (A), a participant's
-------------
insurance coverage or change in the level of insurance coverage
becomes effective on the date the employer receives notification from
--------
the insurer that the insurer has, in its discretion, approved evidence
------- -------
of insurability submitted by the participant.
-----------
(C) Termination of Insurance Coverage
---------------------------------
A participant's insurance coverage ceases at the earliest of the
-------------
following times:
(1) When the participant's election to discontinue insurance coverage
-------------
is received by the employer,
--------
(2) 31 days after a covered executive terminates employment with the
-----------------
employer without becoming a covered annuitant or without a
-------- -----------------
disability, or
(3) The earlier of
(a) one year after a covered executive terminates employment
-----------------
with the employer without becoming a covered annuitant but
-------- -----------------
with a disability, or
(b) when such disability ends.
1.4 Transition Coverage
-------------------
Notwithstanding any other provision of this Article 1, the following rules
shall apply with respect to a participant's insurance coverage as of the
-------------
effective date unless and until a different election is made by the
--------------
participant.
-----------
(A) Covered Executive
-----------------
Insurance coverage shall be automatically effective as of the
effective date with respect to any covered executive who immediately
-------------- -----------------
prior to the effective date has insurance coverage in effect under the
--------------
Supplemental Group Life Insurance Plan. The level of such coverage
shall be at the same level as prior to the effective date.
--------------
3
(B) Covered Annuitant
-----------------
Insurance coverage shall be automatically effective as of the
effective date with respect to any covered annuitant who immediately
-------------- -----------------
prior to the effective date has insurance coverage in effect under the
--------------
Alternate Group Life Insurance Plan.
2. Levels of Insurance Coverage
----------------------------
2.1 In General
----------
The levels of insurance coverage that a covered executive may elect under
-----------------
the Plan are 1 and 2 times the covered executive's annual base pay. The
-------------------
level of insurance coverage that a participant who is a covered annuitant
----------- -----------------
has under the Plan is 1 times the covered annuitant's annual base pay
-------------------
immediately prior to becoming a covered annuitant.
-----------------
2.2 Changes in Amount
-----------------
Any change in a covered executive's amount of insurance coverage
-------------------
attributable to a change in the covered executive's annual base pay will be
-------------------
effective on the date the change in base pay is effective.
3. Payment of Benefit
------------------
3.1 Conditions for Payment of Benefit
---------------------------------
If a participant dies while insurance coverage for that participant is in
----------- -----------
effect, then the amount of insurance coverage then in effect for the
participant becomes payable; provided, that proof of death satisfactory to
-----------
the insurer must be provided before any benefit becomes payable.
-------
3.2 Form of Payment
---------------
A benefit payable under Section 3.1 above upon a participant's death shall
-------------
be paid in a lump sum; provided, however, that the insurer may, at its
-------
discretion, permit a participant or a beneficiary to elect a different form
-----------
of payment.
4
3.3 To Whom Paid
------------
A benefit payable under Section 3.1 above upon a participant's death shall
-------------
be paid as follows:
(A) If a beneficiary designation is in effect at the time of the
participant's death, the benefit shall be paid in accordance with such
-------------
designation.
(B) If no beneficiary designation is in effect, the benefit shall be paid
to the first of the following groups that has at least one member that
survives the participant:
-----------
(1) The participant's spouse.
-------------
(2) The participant's children. In this event, the benefit will be
-------------
divided equally among the children who survive the participant as
-----------
well as the children who die before the participant leaving
-----------
children of their own who survive the participant. In the case
-----------
of a participant's child who dies before the participant leaving
------------- -----------
children of his or her own who survive the participant, such
-----------
child's share shall be divided equally among his or her surviving
children.
(3) The participant's parents. In this event, the benefit will be
-------------
divided equally among the parents if they both survive the
participant.
-----------
(4) The participant's brothers and sisters. In this event, the
-------------
benefit will be divided equally among the brothers and sisters
who survive the participant as well as the brothers and sisters
-----------
who die before the participant leaving children of their own who
-----------
survive the participant. In the case of a brother or sister who
-----------
dies before the participant leaving children of his or her own
-----------
who survive the participant, such brother or sister's share shall
-----------
be divided equally among his or her surviving children.
(5) The participant's executors or administrators.
-------------
For purposes of this Paragraph (B), a spouse, child, parent, brother,
or sister of a participant shall include only someone having a legal
-----------
relationship with the participant.
-----------
5
4. Designation of Beneficiary
--------------------------
4.1 Designation
-----------
A participant may designate one or more beneficiaries to receive the
-----------
payment of benefits upon the death of the participant, or may at any time
-----------
change or cancel a previously made beneficiary designation.
4.2 Forms and Submission
--------------------
Any beneficiary designation or change or cancellation thereof shall be made
on such forms and in such manner as is satisfactory to the insurer. No
-------
beneficiary designation or change or cancellation thereof shall become
effective until received by the insurer or its designated agent.
-------
4.3 Designation Made Under Supplemental Death Benefit Plan
------------------------------------------------------
If a participant elects coverage under this Plan in lieu of death benefit
-----------
coverage under the Supplemental Death Benefit Plan, any beneficiary
designation in effect for the participant under the Supplemental Death
-----------
Benefit Plan at the time of such election shall continue as a valid
beneficiary designation under this Plan unless and until it is properly
superceded.
5. Miscellaneous
-------------
5.1 Plan Funding
------------
Benefits under this Plan shall be provided through one or more policies of
insurance issued by an insurer selected by the employer. The funding for
------- --------
such policies shall be paid for by the employer; no participant
-------- -----------
contributions will be required.
5.2 Assignment of Insurance
-----------------------
(A) Assignment
----------
A participant may assign to another owner the participant's interest
----------- --------------
in the insurance coverage in effect on the life of the participant
-----------
under this Plan. Such assignment shall be made on such forms and in
such manner as is acceptable to the employer and the insurer.
-------- -------
6
(B) Effect of Assignment
--------------------
(1) In General
----------
When an assignment of a participant's insurance coverage is in
-------------
effect as described in Paragraph (A) above, then, except as
provided in paragraph (2) below, the assignee under the
assignment shall have the right to take all actions under the
terms of this Plan with respect to such insurance coverage that
the participant would otherwise have the right to take,
-----------
including, without limitation, the right to elect insurance
coverage, change levels of insurance coverage, designate a
beneficiary, and elect a form of payment.
(2) Exception
---------
An assignee under an assignment shall not have the right under
this Plan to elect to discontinue insurance coverage.
5.3 Amendment and Termination
-------------------------
Exxon Corporation at any time, by action of any duly authorized officer,
may amend or terminate this Plan in whole or in part.
5.4 Responsibilities and Authority of Administrator
-----------------------------------------------
The administrator shall fulfill all duties and responsibilities of a "plan
administrator" required by the Employee Retirement Income Security Act of
1974, as amended. The administrator shall have the authority to control
and manage the operation and administration of this Plan, including,
without limitation:
(A) discretionary and final authority to determine eligibility and to
administer this Plan in its application to each participant and
beneficiary; and
(B) discretionary and final authority to interpret this Plan, in whole or
in part, including but not limited to, exercising such authority in
conducting a full and fair review, with such interpretation being
conclusive for all participants and beneficiaries under this Plan.
7
5.5 Claim Appeal Process
--------------------
(A) Submission of Appeal
--------------------
In the event a claim for benefits is denied, the claimant has the
right to appeal to the administrator. A written request to review a
-------------
denied claim must be received by the administrator within 90 days
-------------
after the claim denial. The request may state the reasons the
claimant believes he or she is entitled to Plan benefits, and may be
accompanied by supporting information and documentation for the
administrator's consideration.
---------------
(B) Decision
--------
The administrator shall decide appeals in accordance with the
-------------
administrator's fiduciary authority set out in Section 5.4. Appeal
---------------
decisions will be made within 60 days of the receipt of the claim by
the administrator unless special circumstances warrant an extension of
-------------
time. If an extension of time is required, the administrator will
-------------
notify the claimant of the extension. In all cases, the decision will
be made no later than 120 days after the receipt of the claim by the
administrator. The appeal decision shall be in writing, specify the
-------------
reasons for the decision, and refer to the relevant Plan provision(s)
on which the decision is based.
5.6 Definitions
-----------
The following terms shall have the following meanings ascribed to them:
(A) "Administrator" means the Manager of the Compensation and Executive
Plans division of the Human Resources Department of Exxon Corporation.
(B) "Covered Annuitant" means someone who has acquired annuitant status
under the Benefit Plan of Exxon Corporation and Participating
Affiliates.
(C) "Covered Employee" has the meaning set out in the General Provisions
of the Benefit Plan of Exxon Corporation and Participating Affiliates.
(D) "Covered Executive" means a covered employee who
----------------
(1) in the case of an individual who first qualified as a covered
-------
executive on or after April 1, 1990, has a classification level
---------
of 36 or higher and is at least 50 years old; or
8
(2) in the case of an individual who first qualified as a covered
-------
executive prior to April 1, 1990, qualified under the provisions
---------
of the Executive Insurance Program in existence at such time.
(E) "Effective Date" means November 1, 1995.
(F) "Employer" has the meaning set out in the General Provisions of the
Benefit Plan of Exxon Corporation and Participating Affiliates.
(G) "Insurer" means the insurance company that is the issuer of the policy
of insurance described in Section 5.1 above.
(H) "Participant" means a covered executive, covered annuitant, or both,
----------------- -----------------
as the context requires.
9
INSTRUMENT ADOPTING THE
SUPPLEMENTAL DEATH BENEFIT PLAN
EXXON CORPORATION hereby adopts, effective as of November 1, 1995, the
Supplemental Death Benefit Plan to read in its entirety like the document
entitled "Supplemental Death Benefit Plan," Edition of November 1, 1995, that is
attached hereto.
IN WITNESS OF, EXXON CORPORATION, acting by and through its duly authorized
officer, has caused this Instrument to be executed on January 23, 1998.
EXXON CORPORATION
By: /s/ LEE R RAYMOND
-----------------------------------
L. R. Raymond, Chairman
ATTEST:
/s/ RON A. JARVIS
- - --------------------------
Assistant Secretary
EDITION OF NOVEMBER 1, 1995
SUPPLEMENTAL DEATH BENEFIT PLAN
-------------------------------
Articles
--------
1. Participation and Coverage
2. Payment of Benefit
3. Designation of Beneficiary
4. Miscellaneous
SUPPLEMENTAL DEATH BENEFIT PLAN
-------------------------------
1. Participation and Coverage
--------------------------
1.1 Eligibility to Participate
--------------------------
(A) Covered Executive
-----------------
Each covered executive is automatically a participant in this Plan.
----------------- -----------
(B) Covered Annuitant
-----------------
Each person who becomes a covered annuitant on or after the effective
----------------- ---------
date, and who is a covered executive immediately prior to becoming a
---- -----------------
covered annuitant is automatically a participant in this Plan. In
----------------- -----------
addition, each person who
(1) became a covered annuitant prior to the effective date, and
----------------- --------------
(2) was covered under the Alternate Group Life Insurance Plan
immediately prior to the effective date,
--------------
is automatically a participant in the Plan.
-----------
1.2 Death Benefit Coverage
----------------------
(A) When Coverage Is Effective
--------------------------
Death benefit coverage is effective for any participant for any period
-----------
of time during which insurance coverage under the Exxon Supplemental
Group Life Insurance Plan is not in effect for the participant.
-----------
(B) Termination of Coverage
-----------------------
A participant's death benefit coverage ceases at the earliest of the
-------------
following times:
(1) When the participant's election for insurance coverage under the
-------------
Exxon Supplemental Group Life Insurance Plan becomes effective,
(2) When a covered executive terminates employment with the employer
----------------- --------
without becoming a covered annuitant or without a disability, or
-----------------
2
(3) The earlier of
(a) one year after a covered executive terminates employment
-----------------
with the employer without becoming a covered annuitant but
-------- -----------------
with a disability, or
(b) when such disability ends.
1.3 Levels of Coverage
------------------
The level of death benefit coverage that a covered executive has under the
-----------------
Plan is 2 times the covered executive's annual base pay. The level of
-------------------
death benefit coverage that a participant who is a covered annuitant has
----------- -----------------
under the Plan is 1 times the covered annuitant's annual base pay
-------------------
immediately prior to becoming a covered annuitant.
-----------------
2. Payment of Benefit
------------------
2.1 Conditions for Payment of Benefit
---------------------------------
If a participant dies while death benefit coverage for that participant is
----------- -----------
in effect, then the amount of death benefit coverage then in effect for the
participant becomes payable; provided, that proof of death satisfactory to
-----------
the administrator must be provided before any benefit becomes payable.
-------------
2.2 Form of Payment
---------------
A benefit payable under Section 2.1 above upon a participant's death shall
-------------
be paid in a lump sum; provided, however, that the administrator may, at
-------------
his or her discretion, permit a participant or a beneficiary to elect a
-----------
different form of payment.
2.3 To Whom Paid
------------
A benefit payable under Section 2.1 above upon a participant's death shall
-------------
be paid as follows:
(A) If a beneficiary designation is in effect at the time of the
participant's death, the benefit shall be paid in accordance with such
-------------
designation.
(B) If no beneficiary designation is in effect, the benefit shall be paid
to the first of the following groups that has at least one member that
survives the participant:
-----------
3
(1) The participant's spouse.
-------------
(2) The participant's children. In this event, the benefit will be
-------------
divided equally among the children who survive the participant as
-----------
well as the children who die before the participant leaving
-----------
children of their own who survive the participant. In the case
-----------
of a participant's child who dies before the participant leaving
------------- -----------
children of his or her own who survive the participant, such
-----------
child's share shall be divided equally among his or her surviving
children.
(3) The participant's parents. In this event, the benefit will be
-------------
divided equally among the parents if they both survive the
participant.
-----------
(4) The participant's brothers and sisters. In this event, the
-------------
benefit will be divided equally among the brothers and sisters
who survive the participant as well as the brothers and sisters
-----------
who die before the participant leaving children of their own who
-----------
survive the participant. In the case of a brother or sister who
-----------
dies before the participant leaving children of his or her own
-----------
who survive the participant, such brother or sister's share shall
-----------
be divided equally among his or her surviving children.
(5) The participant's executors or administrators.
-------------
For purposes of this Paragraph (B), a spouse, child, parent, brother,
or sister of a participant shall include only someone having a legal
-----------
relationship with the participant.
-----------
3. Designation of Beneficiary
--------------------------
3.1 Designation
-----------
A participant may designate one or more beneficiaries to receive the
-----------
payment of benefits upon the death of the participant, or may at any time
-----------
change or cancel a previously made beneficiary designation.
4
3.2 Forms and Submission
--------------------
Any beneficiary designation or change or cancellation thereof shall be made
on such forms and in such manner as is satisfactory to the administrator.
-------------
No beneficiary designation or change or cancellation thereof shall become
effective until received by the administrator.
-------------
3.3 Designation Made Under Supplemental Death Benefit Plan
------------------------------------------------------
If a participant commences coverage under this Plan as a result of a
-----------
discontinuation of coverage under the Supplemental Group Life Insurance
Plan, any beneficiary designation in effect for the participant under the
-----------
Supplemental Group Life Insurance Plan at such time shall continue as a
valid beneficiary designation under this Plan unless and until it is
properly superceded
4. Miscellaneous
-------------
4.1 Plan Funding
------------
Death benefits payable under this Plan shall be paid out of the general
assets of the employer; no participant contributions will be required or
-------- -----------
permitted.
4.2 No Assignment
-------------
No assignment of benefits under this Plan shall be permitted.
4.3 Amendment and Termination
-------------------------
Exxon Corporation at any time, by action of any duly authorized officer,
may amend or terminate this Plan in whole or in part.
4.4 Responsibilities and Authority of Administrator
-----------------------------------------------
The administrator shall fulfill all duties and responsibilities of a "plan
-------------
administrator" required by the Employee Retirement Income Security Act of
1974, as amended. The administrator shall have the authority to control
-------------
and manage the operation and administration of this Plan, including,
without limitation:
(A) discretionary and final authority to determine eligibility and to
administer this Plan in its application to each participant and
-----------
beneficiary; and
(B) discretionary and final authority to interpret this Plan, in whole or
in part, including but not limited to, exercising such authority in
conducting a full
5
and fair review, with such interpretation being conclusive for all
participants and beneficiaries under this Plan.
------------
4.5 Claim Appeal Process
--------------------
(A) Submission of Appeal
--------------------
In the event a claim for benefits is denied, the claimant has the
right to appeal to the administrator. A written request to review a
-------------
denied claim must be received by the administrator within 90 days
-------------
after the claim denial. The request may state the reasons the
claimant believes he or she is entitled to Plan benefits, and may be
accompanied by supporting information and documentation for the
administrator's consideration.
---------------
(B) Decision
--------
The administrator shall decide appeals in accordance with the
-------------
administrator's fiduciary authority set out in Section 5.4. Appeal
---------------
decisions will be made within 60 days of the receipt of the claim by
the administrator unless special circumstances warrant an extension of
-------------
time. If an extension of time is required, the administrator will
-------------
notify the claimant of the extension. In all cases, the decision will
be made no later than 120 days after the receipt of the claim by the
administrator. The appeal decision shall be in writing, specify the
-------------
reasons for the decision, and refer to the relevant Plan provision(s)
on which the decision is based.
4.6 Definitions
-----------
The following terms shall have the following meanings ascribed to them:
(A) "Administrator" means the Manager of the Compensation and Executive
Plans division of the Human Resources Department of Exxon Corporation.
(B) "Covered Annuitant" means someone who has acquired annuitant status
under the Benefit Plan of Exxon Corporation and Participating
Affiliates.
(C) "Covered Employee" has the meaning set out in the General Provisions
of the Benefit Plan of Exxon Corporation and Participating Affiliates.
6
(D) "Covered Executive" means a covered employee who
----------------
(1) in the case of an individual who first qualified as a covered
-------
executive on or after April 1, 1990, has a classification level
---------
of 36 or higher and is at least 50 years old; or
(2) in the case of an individual who first qualified as a covered
-------
executive prior to April 1, 1990, qualified under the provisions
---------
of the Executive Insurance Program in existence at such time.
(E) "Effective Date" means November 1, 1995.
(F) "Employer" has the meaning set out in the General Provisions of the
Benefit Plan of Exxon Corporation and Participating Affiliates.
(G) "Participant" means a covered executive, covered annuitant, or both,
----------------- -----------------
as the context requires.
7
EXHIBIT 12
EXXON CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(MILLIONS OF DOLLARS)
YEAR ENDED DECEMBER 31,
-----------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------ ------
Income before cumulative effect of
accounting changes................. $ 8,460 $ 7,510 $ 6,470 $5,100 $5,280
Excess/(shortfall) of dividends over
earnings of affiliates owned less
than 50% accounted for by the
equity method...................... 35 33 25 (20) (24)
Provision for income taxes(1)....... 4,777 4,893 4,428 3,025 3,113
Capitalized interest................ (347) (389) (418) (306) (291)
Minority interests in earnings of
consolidated subsidiaries.......... 403 382 299 231 246
------- ------- ------- ------ ------
13,328 12,429 10,804 8,030 8,324
------- ------- ------- ------ ------
Fixed Charges:(1)
Interest expense--borrowings....... 298 359 478 530 533
Capitalized interest............... 494 520 533 405 374
Rental expense representative of
interest factor................... 469 447 416 401 387
Dividends on preferred stock....... 5 3 3 3 7
------- ------- ------- ------ ------
1,266 1,329 1,430 1,339 1,301
------- ------- ------- ------ ------
Total adjusted earnings available
for payment of fixed charges....... $14,594 $13,758 $12,234 $9,369 $9,625
======= ======= ======= ====== ======
Number of times fixed charges are
earned............................. 11.5 10.4 8.6 7.0 7.4
- - ---------------------
Note:
(1) The provision for income taxes and the fixed charges include Exxon
Corporation's share of non-consolidated companies 50% owned.
1
EXHIBIT 13
- - --------------------------------------------------------------------------------
FINANCIAL SECTION
- - --------------------------------------------------------------------------------
Financial Review
Financial Summary........................................................ F3
Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. F4-F7
Consolidated Financial Statements
Balance Sheet............................................................ F8
Statement of Income...................................................... F9
Statement of Shareholders' Equity........................................ F9
Statement of Cash Flows................................................. F10
Report of Independent Accountants.......................................... F11
Notes to Consolidated Financial Statements............................. F11-F20
1.Summary of Accounting Policies....................................... F11
2.Miscellaneous Financial Information.................................. F12
3.Cash Flow Information................................................ F12
4.Additional Working Capital Data...................................... F12
5.Equity Company Information........................................... F12
6.Investments and Advances............................................. F13
7.Investment in Property, Plant and Equipment.......................... F13
8.Incentive Program.................................................... F14
9.Leased Facilities.................................................... F14
10.Interest Rate Swap, Currency Exchange and Commodity Contracts........ F15
11.Fair Value of Financial Instruments.................................. F15
12.Long-Term Debt....................................................... F15
13.Litigation and Other Contingencies................................... F16
14.Annuity Benefits..................................................... F16
15.Other Postretirement Benefits........................................ F18
16.Income, Excise and Other Taxes....................................... F18
17.Capital.............................................................. F19
18.Leveraged Employee Stock Ownership Plan (LESOP)...................... F19
19.Distribution of Earnings and Assets.................................. F20
Quarterly Information...................................................... F21
Supplemental Information on Oil and Gas Exploration and Production
Activities.......................................................... F22-F26
Operating Summary.......................................................... F27
F1
- - --------------------------------------------------------------------------------
FINANCIAL SUMMARY
- - --------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars, except per share amounts)
Sales and other operating revenue
Petroleum and natural gas $ 120,644 $ 118,012 $ 107,749 $ 100,409 $ 98,808
Chemicals 12,195 11,430 11,737 9,544 8,641
Other and eliminations 2,303 2,101 2,318 2,175 2,083
-----------------------------------------------------------------
Total sales and other operating revenue $ 135,142 $ 131,543 $ 121,804 $ 112,128 $ 109,532
Earnings from equity interests and other revenue 2,100 2,706 2,116 1,776 1,679
-----------------------------------------------------------------
Revenue $ 137,242 $ 134,249 $ 123,920 $ 113,904 $ 111,211
=================================================================
Earnings
Petroleum and natural gas
Exploration and production $ 4,693 $ 5,058 $ 3,412 $ 2,782 $ 3,313
Refining and marketing 2,063 885 1,272 1,389 2,015
-----------------------------------------------------------------
Total petroleum and natural gas $ 6,756 $ 5,943 $ 4,684 $ 4,171 $ 5,328
Chemicals 1,368 1,199 2,018 954 411
Other operations 434 433 479 409 138
Corporate and financing (98) (65) (711) (434) (597)
-----------------------------------------------------------------
Net income $ 8,460 $ 7,510 $ 6,470 $ 5,100 $ 5,280
=================================================================
Net income per common share* $ 3.41 $ 3.01 $ 2.59 $ 2.04 $ 2.10
Net income per common share - assuming dilution* $ 3.37 $ 2.99 $ 2.58 $ 2.03 $ 2.09
Cash dividends per common share* $ 1.625 $ 1.560 $ 1.500 $ 1.455 $ 1.440
Net income to average shareholders' equity (percent) 19.4 17.9 16.6 14.1 15.4
Net income to total revenue (percent) 6.2 5.6 5.2 4.5 4.7
Working capital $ 1,538 $ 405 $ (1,418) $ (3,033) $ (3,731)
Ratio of current assets to current liabilities 1.08 1.02 0.92 0.84 0.80
Total additions to property, plant and equipment $ 7,392 $ 7,132 $ 7,201 $ 6,568 $ 6,919
Property, plant and equipment, less allowances $ 66,414 $ 66,607 $ 65,446 $ 63,425 $ 61,962
Total assets $ 96,064 $ 95,527 $ 91,296 $ 87,862 $ 84,145
Exploration expenses, including dry holes $ 753 $ 763 $ 693 $ 666 $ 648
Research and development costs $ 529 $ 520 $ 525 $ 558 $ 593
Long-term debt $ 7,050 $ 7,236 $ 7,778 $ 8,831 $ 8,506
Total debt $ 9,952 $ 9,746 $ 10,025 $ 12,689 $ 12,615
Fixed charge coverage ratio 11.5 10.4 8.6 7.0 7.4
Debt to capital (percent) 17.8 17.7 19.0 24.3 25.3
Shareholders' equity at year-end $ 43,660 $ 43,542 $ 40,436 $ 37,415 $ 34,792
Shareholders' equity per common share* $ 17.77 $ 17.53 $ 16.28 $ 15.07 $ 14.01
Average number of common shares outstanding (millions)* 2,473 2,484 2,484 2,483 2,483
Number of registered shareholders at year-end (thousands) 641 610 603 608 622
Wages, salaries and employee benefits $ 5,695 $ 5,710 $ 5,799 $ 5,881 $ 5,916
Number of employees at year-end (thousands) 80 79 82 86 91
*Prior period amounts restated for two-for-one stock split effective March 14,
1997.
F3
- - --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- - --------------------------------------------------------------------------------
REVIEW OF 1997 RESULTS
Record net income of $8,460 million in 1997 compared with the previous record of
$7,510 million in 1996. Despite lower crude oil prices, earnings growth resulted
from improved downstream margins, higher petroleum product and chemical sales,
and lower unit operating expenses. Results in 1997 included $305 million of non-
recurring credits (all in the fourth quarter) primarily related to foreign
exchange and tax-related items, while 1996 included $535 million of non-
recurring credits ($410 million in the fourth quarter) from tax-related items.
Revenue for 1997 totaled $137 billion, up 2 percent from 1996. The cost of
crude and product purchases increased 3 percent. The combined total of operating
costs (including operating, selling, general, administrative, exploration,
depreciation and depletion expenses from the consolidated statement of income
and Exxon's share of similar costs for equity companies) in 1997 was $29
billion, flat with 1996. Lower operating costs resulting from a stronger U.S.
dollar were offset by expenses from higher sales volumes, higher exploration and
production venture spending and additional reported costs from consolidation of
a Japanese affiliate following Exxon's acquisition of a controlling interest.
Exxon's operating efficiencies continued to offset the impact of inflation. Unit
operating expenses were reduced in most business segments on higher sales
volumes in 1997. Interest expense in 1997 was $415 million compared to $464
million in 1996.
Exploration and Production
Exploration and production earnings declined from last year reflecting lower
crude prices which on average were about $1.50 per barrel lower than 1996.
Liquids production of 1,599 kbd (thousand barrels per day) was similar to last
year. Increased Canadian heavy oil production and volumes from new developments,
primarily in the North Sea and Australia, were offset by scheduled maintenance,
field declines, and property sales. Natural gas production of 6,339 mcfd
(million cubic feet per day) was down somewhat from 1996, reflecting warmer
European weather. Earnings from U.S. exploration and production were $1,634
million, down from $1,781 million during 1996. Outside the U.S., exploration and
production earnings were $2,869 million, down $178 million, after excluding non-
recurring credits of $190 million in 1997 and $230 million in 1996.
Refining and Marketing
Downstream industry margins improved from the low levels seen in 1996. Refining
margins in the U.S. and Europe strengthened in 1997 and marketing margins
benefited from an improved U.K. retail environment. Petroleum product sales of
5,430 kbd were the highest in 23 years and up 4 percent from 1996, with volume
growth in all major geographic areas. Refinery throughput was 4,011 kbd, up 6
percent from last year, and the highest since 1980. In the U.S., refining and
marketing earnings were $593 million, up $424 million from the prior year.
Refining and marketing operations outside the U.S. earned $1,470 million, an
increase of $754 million from 1996.
Chemicals
Earnings from chemical operations totaled $1,368 million, up $169 million or 14
percent from 1996. Exxon achieved prime product sales of 17,301 thousand metric
tons, an increase of 10 percent over 1996 and a fourth consecutive record sales
year. Chemical commodity margins also improved in 1997 on generally higher
prices and lower feedstock costs.
Other Operations
Earnings from other operating segments of $434 million were flat with 1996.
Copper and coal production from continuing operations were at record levels.
Copper realizations were higher, while coal prices were lower.
Corporate and Financing
Full year corporate and financing expenses, excluding one-time credits of $115
million in 1997 and $305 million in 1996, declined $157 million to $213 million
reflecting lower tax and debt-related charges.
REVIEW OF 1996 RESULTS
Net income of $7,510 million in 1996 compared with $6,470 million in 1995.
Earnings growth resulted from increased natural gas, petroleum product and
chemical sales, stronger crude oil and natural gas prices and continued progress
in reducing unit operating expenses. These factors more than offset weaker
industry margins in the chemicals, downstream and minerals businesses. Results
for 1996 included $535 million in non-recurring credits ($410 million in the
fourth quarter) as a result of the resolution of outstanding tax issues with a
number of governments, while 1995 included $90 million of non-recurring credits
(all in the fourth quarter).
Revenue for 1996 totaled $134 billion, up 8 percent from 1995, and the cost of
crude oil and product purchases increased 12 percent. The combined total of
operating costs increased only 1 percent in 1996 despite higher volumes. Unit
operating expenses were reduced in all operating segments after excluding the
effects of higher fuel prices and the generally stronger U.S. dollar. Interest
expense in 1996 declined from the prior year as impacts of lower debt levels and
interest rates more than offset foreign exchange effects.
Exploration and Production
Worldwide crude oil prices were on average about $3.75 per barrel above the
prior year, and natural gas prices were stronger, particularly in North America.
Liquids production was 1,615 kbd compared with 1,726 kbd in 1995. Increased
production from new developments in the North Sea was offset by the near-term
effect of a revised production sharing agreement in Malaysia and lower volumes
in North America and Australia. Natural gas production of 6,577 mcfd was the
highest level in the last 15 years and up 9 percent from 1995, due to colder
weather in Europe and the U.S. and increased sales in Malaysia. Earnings from
U.S. exploration and production operations were $1,781 million, up from $1,061
million in 1995, as a result of stronger crude oil and natural gas prices and
reduced operating expenses. Outside the U.S., earnings from exploration and
production operations were $3,277 million versus $2,351 million in 1995. Non-
U.S. results benefited from higher gas sales as well as increased crude oil and
natural gas prices.
F4
Refining and Marketing
Petroleum product sales of 5,211 kbd were the highest in 17 years and up 3
percent from 1995, on the strength of increased clean product volumes in most
major geographic areas. Refinery throughput was 3,792 kbd, up 4 percent from
1995, and the highest level since 1982. U.S. refining and marketing earnings
were $169 million, compared with $229 million in 1995. Industry refining margins
in the U.S. improved relative to 1995's low level, but were offset by increases
in scheduled refinery maintenance activity and higher costs for fuel consumed.
Refining and marketing operations outside the U.S. earned $716 million, down
from $1,043 million in 1995, and were affected by weak industry conditions in
the U.K. and Japan.
Chemicals
Earnings from chemical operations totaled $1,199 million, down from 1995's
record of $2,018 million. Exxon achieved record prime product sales of 15,712
thousand metric tons in 1996, up 9 percent from the prior year, but industry
product prices were lower and feedstock costs higher than 1995 levels.
Other Operations
Earnings from other operating segments were $433 million, down from $479 million
in 1995. Copper and coal production from continuing operations were at record
levels. International coal prices were higher, but copper prices were down
significantly from the prior year.
Corporate and Financing
Corporate and financing expenses of $65 million declined from $711 million in
1995 due to $305 million in non-recurring credits and lower tax-related charges
and interest costs.
MARKET RISKS, INFLATION, AND OTHER UNCERTAINTIES
In the past, crude and product prices have fluctuated widely in response to
changing market forces. The impacts of these price fluctuations on earnings from
exploration and production operations, refining and marketing operations and
chemical operations have been varied, tending at times to be offsetting. The
corporation makes very limited use of commodity forwards, swaps and futures
contracts of short duration to mitigate the risk of unfavorable price movements
on certain crude and petroleum product purchases and sales. Commodity price
exposure related to these contracts is not material.
The corporation conducts business in many foreign currencies and is subject to
foreign currency exchange rate risk on cash flows related to sales, expenses,
financing and investment transactions. The impacts of fluctuations in foreign
currency exchange rates on Exxon's geographically diverse operations are often
varied, at times offsetting in amount. As discussed in note 10 to the
consolidated financial statements, the corporation makes very limited use of
currency exchange contracts to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Exposure from
market rate fluctuations related to these contracts is not material. Aggregate
foreign exchange transaction gains and losses included in net income are
discussed in note 2 to the consolidated financial statements.
The corporation is exposed to changes in interest rates, primarily as a result
of its short-term and long-term debt with both fixed and floating interest
rates. The corporation makes very limited use of interest rate swap agreements
to adjust the ratio of fixed and floating rates in the debt portfolio, as
discussed in note 10 to the consolidated financial statements. The impact of a
100 basis point change in interest rates affecting the corporation's debt would
not be material to earnings, cash flow or fair value.
The general rate of inflation in most major countries of operation has been
relatively low in recent years, and the associated impact on operating costs has
been countered by cost reductions from efficiency and productivity improvements.
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.
SITE RESTORATION AND OTHER ENVIRONMENTAL COSTS
Over the years the corporation has accrued provisions for estimated site
restoration costs to be incurred at the end of the operating life of certain of
its facilities and properties. In addition, the corporation accrues provisions
for environmental liabilities in the many countries in which it does business
when it is probable that obligations have been incurred and the amounts can be
reasonably estimated. This policy applies to assets or businesses currently
owned or previously disposed. The corporation has accrued provisions for
probable environmental remediation obligations at various sites, including
multi-party sites where Exxon has been identified as one of the potentially
responsible parties by the U.S. Environmental Protection Agency. The involvement
of other financially responsible companies at these multi-party sites mitigates
Exxon's actual joint and several liability exposure. At present, no individual
site is expected to have losses material to Exxon's operations, financial
condition or liquidity.
Charges made against income for site restoration and environmental liabilities
were $140 million in 1997, $146 million in 1996 and $215 million in 1995. At the
end of 1997, accumulated site restoration and environmental provisions, after
reduction for amounts paid, amounted to $2.5 billion. Exxon believes that any
cost in excess of the amounts already provided for in the financial statements
would not have a materially adverse effect upon the corporation's operations,
financial condition or liquidity.
In 1997, the corporation spent $1,566 million (of which $524 million were
capital expenditures) on environmental conservation projects and expenses
worldwide, mostly dealing with air and water conservation. Total expenditures
for such activities are expected to be about $1.5 billion in both 1998 and 1999
(with capital expenditures representing about 30 percent of the total).
TAXES
Income, excise and all other taxes and duties totaled $43.9 billion in
1997, essentially unchanged from 1996. Income tax expense, both cur-
F5
- - --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- - --------------------------------------------------------------------------------
rent and deferred, was $4.3 billion compared to $4.4 billion in 1996, reflecting
higher pre-tax income and a lower effective tax rate -- 36.4 percent in 1997
versus 39.9 percent in 1996. Excise and all other taxes and duties at $39.6
billion compared to $39.4 billion in 1996.
Income, excise and all other taxes and duties totaled $43.8 billion in 1996,
an increase of $2.6 billion or 6 percent. Income tax expense, both current and
deferred, was $4.4 billion compared to $4.0 billion in 1995, reflecting higher
pre-tax income in 1996 and a lower effective tax rate -- 39.9 percent in 1996
versus 41.4 percent in 1995. Excise and all other taxes and duties were $2.1
billion higher reflecting increased sales.
LIQUIDITY AND CAPITAL RESOURCES
In 1997, cash provided by operating activities totaled $14.7 billion, up $1.5
billion from 1996. Major sources of funds were net income of $8.5 billion and
non-cash provisions of $5.4 billion for depreciation and depletion.
Cash used in investing activities totaled $6.8 billion, up $0.3 billion from
1996 primarily as a result of higher additions to property, plant and equipment.
Cash used in financing activities was $6.7 billion. Dividend payments on
common shares were increased from $1.560 per share to $1.625 per share and
totaled $4.0 billion, a payout of 48 percent. Total consolidated debt increased
by $0.2 billion to $10.0 billion.
Shareholders' equity increased by $0.2 billion to $43.7 billion. The ratio of
debt to capital remained at 18 percent in 1997, the same as 1996. During 1997,
Exxon purchased 43.2 million shares of its common stock for the treasury at a
cost of $2.6 billion. These purchases reflect both the increased share
repurchases announced in the first quarter of 1997, as well as purchases to
offset shares issued in conjunction with the company's benefit plans and
programs. Purchases were made in both the open market and through negotiated
transactions. Purchases may be discontinued at any time.
In 1996, cash provided by operating activities totaled $13.2 billion, down
$0.6 billion from 1995. Major sources of funds were net income of $7.5 billion
and non-cash provisions of $5.3 billion for depreciation and depletion.
Cash used in investing activities totaled $6.5 billion in 1996, up from $6.4
billion in 1995, primarily as a result of higher additions to property, plant
and equipment.
Cash used in financing activities was $5.2 billion in 1996. Dividend payments
on common shares were increased from $1.500 per share to $1.560 per share and
totaled $3.9 billion, a payout of 52 percent. Total consolidated debt decreased
$0.3 billion to $9.7 billion.
Shareholders' equity increased by $3.1 billion to $43.5 billion. The ratio of
debt to capital decreased to 18 percent in 1996 compared to 19 percent in 1995.
In 1997 and 1996, the corporation strengthened its financial position and
flexibility to meet future financial needs. 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.
As discussed in note 10 to the consolidated financial statements, the
corporation's financial derivative activities are limited to simple risk
management strategies. The corporation does not trade in financial derivatives
nor does it use financial derivatives with leveraged features. The corporation
maintains a system of controls that includes a policy covering the
authorization, reporting and monitoring of derivative activity. The
corporation's derivative activities pose no material credit or market risks to
Exxon's operations, financial condition or liquidity.
As discussed in note 13 to the consolidated financial statements, a number of
lawsuits, including class actions, were 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. Essentially all of these
lawsuits have now been resolved or are subject to appeal.
On September 24, 1996, the United States District Court for the District of
Alaska entered a judgment in the amount of $5.058 billion in the Exxon Valdez
civil trial that began in May 1994. The District Court awarded approximately
$19.6 million in compensatory damages to fisher plaintiffs, $38 million in
prejudgment interest on the compensatory damages and $5 billion in punitive
damages to a class composed of all persons and entities who asserted claims for
punitive damages from the corporation as a result of the Exxon Valdez grounding.
The District Court also ordered that these awards shall bear interest from and
after entry of the judgment. The District Court stayed execution on the judgment
pending appeal based on a $6.75 billion letter of credit posted by the
corporation. Exxon has appealed the judgment. The corporation continues to
believe that the punitive damages in this case are unwarranted and that the
judgment should be set aside or substantially reduced by the appellate courts.
Since it is impossible to estimate what the ultimate earnings impact will be, no
charge was taken in 1996 or 1997 related to these verdicts.
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between Exxon and various insurers arising from the Valdez
accident. Under terms of this settlement, Exxon received $480 million. Final
income statement recognition of this settlement will be deferred in view of
uncertainty regarding the ultimate cost to the corporation of the Valdez
accident.
The U.S. Tax Court has decided the issue with respect to the pricing of crude
oil purchased from Saudi Arabia for the years 1979-1981 in favor of the
corporation. This decision is subject to appeal. Ultimate resolution of this
issue and several other tax and legal issues, notably a settlement of gas
lifting imbalances in the common border area between the Netherlands and
Germany, is not expected to have a material adverse effect upon the
corporation's operations, financial condition or liquidity.
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.
CAPITAL AND EXPLORATION EXPENDITURES
Capital and exploration expenditures in 1997 were $8.8 billion, down from $9.2
billion in 1996 reflecting the impact of a generally stronger U.S. dollar.
Despite the effects of the stronger dollar, exploration and production
spending was up 8 percent to $5.3 billion in 1997, from $4.9 billion in 1996,
reflecting higher spending for exploration and development drilling. Capital
investments in refining and marketing totaled $2.0 billion in 1997, the same
level as in 1996.
F6
Chemicals capital expenditures were $1.0 billion in 1997, down from $1.6
billion in 1996 which included higher plant capacity investments in the U.S. and
acquisitions in Europe.
Investments in the power and other operating segments were $0.5 billion in
1997, down $0.2 billion from 1996 following start-up in 1996 of four units of
the Black Point Power Station in Hong Kong.
Capital and exploration expenditures in the U.S. totaled $2.6 billion in 1997,
an increase of 7 percent from 1996, primarily in exploration and production.
Spending outside the U.S. of $6.2 billion in 1997 compared to $6.8 billion in
1996, reflecting the stronger U.S. dollar and the absence of chemicals
acquisitions. Capital and exploration expenditures in 1998, excluding foreign
exchange rate fluctuations, are anticipated to increase about 10 percent as
attractive investment opportunities continue to be developed in each of the
major business segments.
Firm commitments related to capital projects totaled approximately $5.6
billion at the end of 1997, with the largest single commitment being $2.0
billion associated with the development of natural gas resources in Malaysia.
Similar commitments totaled $2.4 billion at the end of 1996. The corporation
expects to fund the majority of these commitments through internally generated
funds.
YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define a specific year. Absent corrective actions, a
computer program that has date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions to various activities and
operations.
The corporation initiated assessments in prior years to identify the work
efforts required to assure that systems supporting the business successfully
operate beyond the turn of the century. Comprehensive plans for achieving Year
2000 compliance were finalized during 1997, and implementation work was underway
at year-end. While plans are in place, significant work remains to be done. Most
required systems modifications are expected to be completed in 1998. Also during
1998, attention will continue to be focused on compliance attainment efforts of
vendors and others, including key system interfaces with customers and
suppliers. Notwithstanding the substantive work efforts described above, the
corporation could potentially experience disruptions to some aspects of its
various activities and operations as a result of non-compliant systems utilized
by unrelated third party governmental and business entities. Contingency plans
are therefore under development in order to attempt to mitigate the extent of
such potential disruption to business operations. The total cost to the
corporation of achieving Year 2000 compliant systems is not expected to be
material to Exxon's operations, financial condition or liquidity.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
++++++ +++++++ ++++++ +++++++ ++++++ +++++++
+ + + + + +
+ + + + + +
+ GRAPH #1 + + GRAPH #2 + + GRAPH #3 +
+ + + + + +
+ + + + + +
++++++ +++++++ ++++++ +++++++ ++++++ +++++++
GRAPH #1 - FUNCTIONAL EARNINGS. Five-year history of earnings by function
(Exploration & Production, Refining & Marketing, Chemicals and Other)
and net income
GRAPH #2 - SOURCES AND USES OF CASH. Five-year history of cash sources (Cash
from Operations and Asset Sales) compared to cash uses (Plant
Additions and Dividends/Changes in Debt/Other.
GRAPH #3 - CAPITAL AND EXPLORATION EXPENDITURES. Five-year history of capital
and exploration expenditures by function (Exploration & Production,
Refining & Marketing, Chemicals and Other).
F7
- - --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
- - --------------------------------------------------------------------------------
Dec. 31 Dec. 31
1997 1996
- - --------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Assets
Current assets
Cash and cash equivalents $ 4,047 $ 2,951
Other marketable securities 15 18
Notes and accounts receivable, less estimated doubtful amounts 10,702 10,499
Inventories
Crude oil, products and merchandise 4,725 4,501
Materials and supplies 762 784
Prepaid taxes and expenses 941 1,157
---------------------
Total current assets $21,192 $19,910
Investments and advances 5,205 6,010
Property, plant and equipment, at cost, less accumulated depreciation and depletion 66,414 66,607
Other assets, including intangibles, net 3,253 3,000
---------------------
Total assets $96,064 $95,527
=====================
Liabilities
Current liabilities
Notes and loans payable $ 2,902 $ 2,510
Accounts payable and accrued liabilities 14,683 14,510
Income taxes payable 2,069 2,485
---------------------
Total current liabilities $19,654 $19,505
Long-term debt 7,050 7,236
Annuity reserves and accrued liabilities 9,302 9,195
Deferred income tax liabilities 13,452 13,475
Deferred credits 575 660
Equity of minority and preferred shareholders in affiliated companies 2,371 1,914
---------------------
Total liabilities $52,404 $51,985
---------------------
Shareholders' Equity
Preferred stock without par value (authorized 200 million shares) $ 190 $ 303
Guaranteed LESOP obligation (225) (345)
Common stock without par value (2,984 million issued 1997 and 3,626 million issued 1996) 2,323 2,822
Earnings reinvested 52,214 57,156
Cumulative foreign exchange translation adjustment (1,119) 1,126
Common stock held in treasury (527 million shares in 1997 and 1,142 million shares in 1996) (9,723) (17,520)
---------------------
Total shareholders' equity $43,660 $43,542
---------------------
Total liabilities and shareholders' equity $96,064 $95,527
=====================
The information on pages F11 through F20 is an integral part of these
statements.
F8
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME
- - --------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------
(millions of dollars)
Revenue
Sales and other operating revenue, including excise taxes $135,142 $131,543 $121,804
Earnings from equity interests and other revenue 2,100 2,706 2,116
---------------------------------
Total revenue $137,242 $134,249 $123,920
---------------------------------
Costs and other deductions
Crude oil and product purchases $ 57,971 $ 56,406 $ 50,320
Operating expenses 13,045 13,255 12,772
Selling, general and administrative expenses 8,406 7,961 7,802
Depreciation and depletion 5,474 5,329 5,386
Exploration expenses, including dry holes 753 763 693
Interest expense 415 464 485
Excise taxes 14,863 14,815 13,911
Other taxes and duties 23,111 22,956 21,808
Income applicable to minority and preferred interests 406 384 301
---------------------------------
Total costs and other deductions $124,444 $122,333 $113,478
---------------------------------
Income before income taxes $ 12,798 $ 11,916 $ 10,442
Income taxes 4,338 4,406 3,972
---------------------------------
Net income $ 8,460 $ 7,510 $ 6,470
=================================
Net income per common share (dollars) $ 3.41 $ 3.01 $ 2.59
Net income per common share - assuming dilution (dollars) $ 3.37 $ 2.99 $ 2.58
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- - --------------------------------------------------------------------------------
1997 1996 1995
-------------------------------------------------------------
Shares Dollars Shares Dollars Shares Dollars
- - -------------------------------------------------------------------------------------------------------------------
(millions)
Preferred stock outstanding at end of year 3 $ 190 5 $ 303 7 $ 454
Guaranteed LESOP obligation (225) (345) (501)
Common stock issued at end of year (See note 17) 2,984 2,323 3,626 2,822 3,626 2,822
Earnings reinvested
At beginning of year $ 57,156 $ 53,539 $ 50,821
Net income for year 8,460 7,510 6,470
Dividends - common and preferred shares (4,032) (3,893) (3,752)
Cancellation of common stock held in treasury (9,370) 0 0
--------------------------------------------------------------
At end of year $ 52,214 $ 57,156 $ 53,539
--------------------------------------------------------------
Cumulative foreign exchange translation adjustment
At beginning of year $ 1,126 $ 1,339 $ 848
Change during the year (2,245) (213) 491
--------------------------------------------------------------
At end of year $ (1,119) $ 1,126 $ 1,339
--------------------------------------------------------------
Common stock held in treasury
At beginning of year (1,142) $(17,520) (1,142) $(17,217) (1,142) $(17,017)
Acquisitions, at cost (43) (2,586) (18) (801) (17) (628)
Dispositions 16 514 18 498 17 428
Cancellation, returned to unissued 642 9,869 0 0 0 0
--------------------------------------------------------------
At end of year (527) $ (9,723) (1,142) $(17,520) (1,142) $(17,217)
--------------------------------------------------------------
Shareholders' equity at end of year $ 43,660 $ 43,542 $ 40,436
--------------------------------------------------------------
Common shares outstanding at end of year 2,457 2,484 2,484
==============================================================
The information on pages F11 through F20 is an integral part of these
statements.
F9
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
- - --------------------------------------------------------------------------------
1997 1996 1995
- - ----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Cash flows from operating activities
Net income
Accruing to Exxon shareholders $ 8,460 $ 7,510 $ 6,470
Accruing to minority and preferred interests 406 384 301
Adjustments for non-cash transactions
Depreciation and depletion 5,474 5,329 5,386
Deferred income tax charges 346 835 1,043
Annuity and accrued liability provisions 385 514 843
Dividends received greater than/(less than) equity in current earnings of equity companies 141 11 (22)
Changes in operational working capital, excluding cash and debt
Reduction/(increase) - Notes and accounts receivable 120 (1,702) (702)
- Inventories (253) 246 37
- Prepaid taxes and expenses (5) (81) 109
Increase/(reduction) - Accounts and other payables (833) 495 546
All other items - net 435 (379) (164)
---------------------------------
Net cash provided by operating activities $14,676 $13,162 $13,847
---------------------------------
Cash flows from investing activities
Additions to property, plant and equipment $(7,393) $(7,209) $(7,128)
Sales of subsidiaries and property, plant and equipment 1,110 719 666
Additional investments and advances (820) (810) (530)
Sales of investments and collection of advances 310 522 285
Additions to other marketable securities (37) (159) (380)
Sales of other marketable securities 39 422 732
---------------------------------
Net cash used in investing activities $(6,791) $(6,515) $(6,355)
---------------------------------
Net cash generation before financing activities $ 7,885 $ 6,647 $ 7,492
---------------------------------
Cash flows from financing activities
Additions to long-term debt $ 589 $ 659 $ 1,092
Reductions in long-term debt (249) (806) (1,492)
Additions to short-term debt 531 261 423
Reductions in short-term debt (991) (607) (901)
Additions/(reductions) in debt with less than 90 day maturity 128 239 (1,827)
Cash dividends to Exxon shareholders (4,038) (3,902) (3,765)
Cash dividends to minority interests (313) (291) (282)
Changes in minority interests and sales/(purchases) of affiliate stock (123) (338) (84)
Common stock acquired (2,586) (801) (628)
Common stock sold 340 347 328
---------------------------------
Net cash used in financing activities $(6,712) $(5,239) $(7,136)
---------------------------------
Effects of exchange rate changes on cash $ (77) $ 35 $ (5)
---------------------------------
Increase in cash and cash equivalents $ 1,096 $ 1,443 $ 351
Cash and cash equivalents at beginning of year 2,951 1,508 1,157
---------------------------------
Cash and cash equivalents at end of year $ 4,047 $ 2,951 $ 1,508
=================================
The information on pages F11 through F20 is an integral part of these
statements.
F10
- - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- - --------------------------------------------------------------------------------
Price Waterhouse LLP
Dallas, Texas
February 25, 1998
To the Shareholders of Exxon Corporation
In our opinion, the consolidated financial statements appearing on pages F8
through F20 present fairly, in all material respects, the financial position of
Exxon Corporation and its subsidiary companies at December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the corporation's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
The corporation's principal business is energy, involving the worldwide
exploration, production, transportation and sale of crude oil and natural gas
and the manufacture, transportation and sale of petroleum products. The
corporation is also a major worldwide manufacturer and marketer of
petrochemicals and participates in coal and minerals mining and electric power
generation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates.
The accompanying consolidated financial statements and the supporting and
supplemental material are the responsibility of the management of Exxon
Corporation.
1. Summary of Accounting Policies
Principles of Consolidation. The consolidated financial statements include
the accounts of those significant subsidiaries owned directly or indirectly more
than 50 percent.
Amounts representing the corporation's percentage interest in the underlying
net assets of less than majority-owned companies in which a significant equity
ownership interest is held are included in "Investments and advances." The
corporation's share of the net income of these companies is included in the
consolidated statement of income caption "Earnings from equity interests and
other revenue."
Investments in all other companies, none of which is significant, are
included in "Investments and advances" at cost or less. Dividends from these
companies are included in income as received.
Financial Instruments. Interest rate swap agreements are used to modify the
interest rates on certain debt obligations. The interest differentials to be
paid or received under such swaps are recognized over the life of the agreements
as adjustments to interest expense. Currency exchange contracts are used to
reduce the risk of adverse foreign currency movements related to certain foreign
currency debt obligations. The gains or losses arising from currency exchange
contracts offset foreign exchange gains or losses on the underlying assets or
liabilities and are recognized as offsetting adjustments to the carrying
amounts. Commodity swap and futures contracts are used to mitigate the risk of
unfavorable price movements on certain crude and petroleum product purchases and
sales. Gains or losses on these contracts are recognized as adjustments to
purchase costs or to sales revenue. Related amounts payable to or receivable
from counterparties are included in current assets and liabilities.
Investments in marketable debt securities are expected to be held to maturity
and are stated at amortized cost.
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate.
Inventories. Crude oil, products and merchandise inventories are carried at the
lower of current market value or cost (generally determined under the last-in,
first-out method-LIFO). Costs include applicable purchase costs and operating
expenses but not general and administrative expenses or research and development
costs. Inventories of materials and supplies are valued at cost or less.
Property, Plant and Equipment. Depreciation, depletion and amortization, based
on cost less estimated salvage value of the asset, are primarily determined
under either the unit-of-production method or the straight-line method. Unit-of-
production rates are based on oil, gas and other mineral reserves estimated to
be recoverable from existing facilities. The straight-line method of
depreciation is based on estimated asset service life taking obsolescence into
consideration.
Maintenance and repairs are expensed as incurred. Major renewals and
improvements are capitalized, and the assets replaced are retired.
F11
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
The corporation's exploration and production activities are accounted for
under the "successful efforts" method. Under this method, costs of productive
wells and development dry holes, both tangible and intangible, as well as
productive acreage are capitalized and amortized on the unit-of-production
method. Costs of that portion of undeveloped acreage likely to be unproductive,
based largely on historical experience, are amortized over the period of
exploration. Other exploratory expenditures, including geophysical costs, other
dry hole costs and annual lease rentals, are expensed as incurred.
Environmental Conservation and Site Restoration Costs. Liabilities for
environmental conservation are recorded when it is probable that obligations
have been incurred and the amounts can be reasonably estimated. These
liabilities are not reduced by possible recoveries from third parties, and
projected cash expenditures are not discounted.
Site restoration costs that may be incurred by the corporation at the end of
the operating life of certain of its facilities and properties are reserved
ratably over the asset's productive life.
Foreign Currency Translation. The "functional currency" for translating the
accounts of the majority of refining, marketing and chemical operations outside
the U.S. is the local currency. Local currency is also used for exploration and
production operations that are relatively self-contained and integrated within a
particular country, such as in Australia, Canada, the United Kingdom, Norway and
Continental Europe. The U.S. dollar is used for operations in highly
inflationary economies and for some exploration and production operations,
primarily in Malaysia and the Middle East.
Recently Issued Statements Of Financial Accounting Standards. In June 1997, the
Financial Accounting Standards Board released Statement No. 130, "Reporting
Comprehensive Income," and Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information." These statements require disclosure of
certain components of changes in equity and certain information about operating
segments and geographic areas of operation. These statements, which will be
adopted in 1998, will not have any effect upon the corporation's consolidated
financial condition or operations.
2. Miscellaneous Financial Information
Research and development costs totaled $529 million in 1997, $520 million in
1996 and $525 million in 1995.
Net income included aggregate foreign exchange transaction gains of $153
million in 1997, losses of $37 million in 1996 and gains of $26 million in 1995.
In 1997, 1996 and 1995, net income included gains of $35 million, $14 million
and $12 million, respectively, attributable to the combined effects of LIFO
inventory accumulations and draw-downs. The aggregate replacement cost of
inventories was estimated to exceed their LIFO carrying values by $2,673 million
and $4,151 million at December 31, 1997 and 1996, respectively.
3. Cash Flow Information
The consolidated statement of cash flows provides information about changes in
cash and cash equivalents. All short-term marketable securities, with original
maturities of three months or less, that are readily convertible to known
amounts of cash and are so near maturity that they present insignificant risk of
changes in value because of changes in interest rates, are classified as cash
equivalents.
Cash payments for interest were: 1997 - $613 million, 1996 - $669 million and
1995 - $776 million. Cash payments for income taxes were: 1997 - $3,943 million,
1996 - $3,420 million and 1995 - $2,797 million.
4. Additional Working Capital Data
Dec. 31 Dec. 31
1997 1996
- - --------------------------------------------------------------------------------
(millions of dollars)
Notes and accounts receivable
Trade, less reserves of $80 million
and $81 million $ 7,989 $ 7,993
Other, less reserves of $21 million
and $17 million 2,713 2,506
--------------------
$10,702 $10,499
====================
Notes and loans payable
Bank loans $ 1,309 $ 1,359
Commercial paper 707 645
Long-term debt due within one year 770 463
Other 116 43
--------------------
$ 2,902 $ 2,510
====================
Accounts payable and accrued liabilities
Trade payables $ 8,246 $ 8,343
Obligations to equity companies 730 926
Accrued taxes other than income taxes 3,283 2,880
Other 2,424 2,361
--------------------
$14,683 $14,510
====================
On December 31, 1997, unused credit lines for short-term financing totaled
approximately $6.3 billion. Of this total, $4.3 billion support commercial paper
programs under terms negotiated when drawn. The weighted average interest rate
on short-term borrowings outstanding at December 31, 1997 and 1996 was 5.8
percent and 5.9 percent, respectively.
5. Equity Company Information
The following summarized financial information includes those less than
majority-owned companies for which Exxon's share of net income is included in
consolidated net income (see note 1). These companies are primarily engaged in
natural gas production and distribution in the Netherlands and Germany, refining
and marketing operations in Japan and several chemical operations.
During the third quarter of 1997, Exxon increased ownership in General Sekiyu
K.K. (GSK) from 49.0 percent to 50.1 percent. These financial statements reflect
the consolidation of GSK retroactive to January 1, 1997. GSK was previously
accounted for as an equity company. GSK's balance sheet as of January 1, 1997
had total assets of $3.9 billion and total liabilities of $3.2 billion.
F12
Equity Company Financial Summary 1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------------------
Exxon Exxon Exxon
Total share Total share Total share
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Total revenues
Percent of revenues from companies included in the Exxon
consolidation was 20% in 1997, 16% in 1996 and 16% in 1995 $29,639 $ 8,740 $33,719 $10,901 $32,187 $10,506
-----------------------------------------------------------
Income before income taxes $ 3,096 $ 1,475 $ 3,852 $ 1,831 $ 4,227 $ 1,974
Less: Related income taxes (1,103) (499) (1,229) (576) (1,306) (596)
-----------------------------------------------------------
Net income $ 1,993 $ 976 $ 2,623 $ 1,255 $ 2,921 $ 1,378
===========================================================
Current assets $ 6,618 $ 2,030 $ 9,231 $ 3,097 $ 9,789 $ 3,261
Property, plant and equipment, less accumulated depreciation 12,619 4,704 15,586 5,987 14,272 5,671
Other long-term assets 2,818 1,028 3,695 1,400 3,633 1,312
-----------------------------------------------------------
Total assets $22,055 $ 7,762 $28,512 $10,484 $27,694 $10,244
-----------------------------------------------------------
Short-term debt $ 1,256 $ 363 $ 1,661 $ 541 $ 1,233 $ 371
Other current liabilities 5,481 1,760 8,736 3,111 8,128 2,864
Long-term debt 2,163 580 2,857 918 2,660 839
Other long-term liabilities 3,556 1,497 4,319 1,820 4,424 1,818
Advances from shareholders 2,139 1,105 1,006 469 1,000 577
-----------------------------------------------------------
Net assets $ 7,460 $ 2,457 $ 9,933 $ 3,625 $10,249 $ 3,775
===========================================================
6. Investments and Advances Dec. 31 Dec. 31
1997 1996
- - --------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
In less than majority-owned companies
Carried at equity in underlying assets
Investments $2,457 $3,625
Advances 1,105 751
-----------------
$3,562 $4,376
Carried at cost or less 193 154
-----------------
$3,755 $4,530
Long-term receivables and miscellaneous investments at cost or less 1,450 1,480
-----------------
Total $5,205 $6,010
=================
7. Investment in Property, Plant and Equipment Dec. 31, 1997 Dec. 31, 1996
-----------------------------------------------
Cost Net Cost Net
- - --------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Petroleum and natural gas
Exploration and production $ 69,106 $31,715 $ 69,748 $ 32,685
Refining and marketing 32,663 18,269 31,524 17,858
-----------------------------------------------
Total petroleum and natural gas $101,769 $49,984 $101,272 $ 50,543
Chemicals 11,336 6,144 10,785 5,880
Other 14,673 10,286 14,309 10,184
-----------------------------------------------
Total $127,778 $66,414 $126,366 $ 66,607
===============================================
Accumulated depreciation and depletion totaled $61,364 million at the end of
1997 and $59,759 million at the end of 1996. Interest capitalized in 1997, 1996
and 1995 was $494 million, $520 million and $533 million, respectively.
F13
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
8. Incentive Program
The 1993 Incentive Program provides for grants of stock options, stock
appreciation rights (SARs), restricted stock and other forms of award. Awards
may be granted over the 10-year period ending April 28, 2003 to eligible
employees of the corporation and those affiliates at least 50 percent owned. The
number of shares of stock which may be awarded each year under the 1993
Incentive Program may not exceed seven tenths of one percent (0.7%) of the total
number of shares of common stock of the corporation outstanding (excluding
shares held by the corporation) on December 31 of the preceding year. If the
total number of shares effectively granted in any year is less than the maximum
number of shares allowable, the balance may be carried over thereafter.
Outstanding awards are subject to certain forfeiture provisions contained in the
program or award instrument.
As under earlier programs, options and SARs may be granted at prices not less
than 100 percent of market value on the date of grant and have a maximum life of
10 years. Most of the options and SARs thus far granted first become exercisable
after one year of continuous employment following the date of grant. Of the
options outstanding at December 31, 1997 and 1996, 2,365 thousand and 4,994
thousand, respectively, included SARs. Exercise of either a related option or a
related SAR cancels the other to the extent exercised. No SARs have been granted
since 1992.
Shares available for granting were 38,947 thousand at the beginning of 1997
and 27,337 thousand at the end of 1997. At December 31, 1997 and 1996,
respectively, 613 thousand and 416 thousand shares of restricted common stock
were outstanding.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," was implemented in January 1996. As permitted by the
Standard, Exxon retained its prior method of accounting for stock compensation.
If the provisions of Statement No. 123 had been adopted, net income and earnings
per share (on both a basic and diluted bases) would have been reduced by $76
million, or $0.03 per share in 1997 and $53 million, or $0.02 per share in 1996.
The average fair value of each option granted during 1997 and 1996 was $11.36
and $7.43, respectively. The fair value was estimated at the grant date using an
option-pricing model with the following weighted average assumptions for 1997
and 1996, respectively: risk-free interest rates of 5.8 percent and 6.1 percent;
expected life of 6 years for both years; volatility of 12 percent for both years
and a dividend growth rate of 3.3 percent and 4.0 percent.
Changes that occurred in options outstanding in 1997, 1996 and 1995 are
summarized below (shares in thousands):
1997 1996 1995
---------------------------------------------------------------------------
Avg. Exercise Avg. Exercise Avg. Exercise
Shares Price Shares Price Shares Price
- - -------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year 73,897 $33.20 75,510 $29.70 78,070 $27.04
Granted 11,019 61.41 11,968 47.06 11,786 39.47
Exercised (12,153) 26.95 (13,295) 25.69 (13,983) 23.12
Expired/Canceled (323) 46.61 (286) 37.63 (363) 28.69
------- ------- -------
Outstanding at end of year 72,440 38.48 73,897 33.20 75,510 29.70
Exercisable at end of year 61,179 34.32 61,939 30.53 63,724 27.90
The following table summarizes information about stock options outstanding at
December 31, 1997 (shares in thousands):
Options Outstanding Options Exercisable
- - ---------------------------------------------------------------- ---------------------
Exercise Price Avg. Remaining Avg. Exercise Avg. Exercise
Range Shares Contractual Life Price Shares Price
- - ---------------------------------------------------------------- ---------------------
$21.50-30.25 29,898 4.7 years $28.40 29,898 $28.40
31.78-61.41 42,542 8.3 45.57 31,281 39.98
------ ------
Total 72,440 6.8 38.48 61,179 34.32
- - ------------------------------------------------------------------------------------------
9. Leased Facilities
At December 31, 1997, the corporation and its consolidated subsidiaries held
non-cancelable operating charters and leases covering drilling equipment,
tankers, service stations and other properties with minimum lease commitments as
indicated in the table.
Net rental expenditures for 1997, 1996 and 1995 totaled $1,595 million, $1,284
million and $1,212 million, respectively, after being reduced by related rental
income of $182 million, $133 million and $157 million, respectively. Minimum
rental expenditures totaled $1,692 million in 1997, $1,330 million in 1996 and
$1,280 million in 1995.
Minimum Related
commitment rental income
- - ---------------------------------------------------
(millions of dollars)
1998 $ 919 $ 82
1999 684 67
2000 495 41
2001 406 33
2002 332 28
2003 and beyond 1,191 127
F14
10. Interest Rate Swap, Currency Exchange and Commodity Contracts
The corporation limits its use of financial derivative instruments to simple
risk management activities. The corporation does not hold or issue financial
derivative instruments for trading purposes nor does it use financial
derivatives with leveraged features. Derivative instruments are matched to
existing assets, liabilities or transactions with the objective of mitigating
the impact of adverse movements in interest rates, currency exchange rates or
commodity prices. These instruments normally equal the amount of the underlying
assets, liabilities or transactions and are held to maturity. Instruments are
either traded over authorized exchanges or with counterparties of high credit
standing. As a result of the above factors, the corporation's exposure to market
and credit risks from financial derivative instruments is considered to be
negligible.
Interest rate swap agreements are used to adjust the ratio of fixed and
floating rates in the corporation's debt portfolio. Interest rate swap
agreements, maturing in 1999, had an aggregate notional principal amount of $100
million and $500 million at year-end 1997 and 1996, respectively. Currency
exchange contracts are used to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Currency
exchange contracts, maturing 1998-2005, totaled $1,140 million at year-end 1997
and $1,585 million at year-end 1996. These amounts included contracts in which
affiliates held positions which were effectively offsetting totaling $544
million in 1997 and $794 million in 1996. Excluding these, the remaining
currency exchange contracts totaled $596 million and $791 million at year-end
1997 and 1996, respectively.
The corporation makes very limited use of commodity swap and futures contracts
of short duration to mitigate the risk of unfavorable price movements on certain
crude and petroleum product purchases and sales. The aggregate notional amount
for these contracts at year-end 1997 and 1996 was not material.
11. Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate. Long-term debt is the
only category of financial instruments whose fair value differs materially from
the recorded book value. The estimated fair value of total long-term debt,
including capitalized lease obligations, at December 31, 1997 and 1996 was $7.9
billion and $7.8 billion, respectively, as compared to recorded book values of
$7.1 billion and $7.2 billion.
12. Long-Term Debt
At December 31, 1997, long-term debt consisted of $6,235 million due in U.S.
dollars and $815 million representing the U.S. dollar equivalent at year-end
exchange rates of amounts payable in foreign currencies. These amounts exclude
that portion of long-term debt, totaling $770 million, which matures within one
year and is included in current liabilities. The amounts of long-term debt
maturing, together with sinking fund payments required, in each of the four
years after December 31, 1998, in millions of dollars, are: 1999 - $619, 2000 -
$469, 2001 - $730 and 2002 - $331. Certain of the borrowings described may from
time to time be assigned to other Exxon affiliates. At December 31, 1997, the
corporation had $823 million in unused long-term credit lines.
The total outstanding balance of defeased debt at year-end 1997 was $713
million.
Summarized long-term borrowings at year-end 1997 and 1996 were as follows:
Dec. 31 Dec. 31
1997 1996
- - -------------------------------------------------------------------
(millions of dollars)
Exxon Capital Corporation
7.45% Guaranteed notes due 2001 $ 246 $ 246
Guaranteed zero coupon notes due 2004
-Face value ($1,146) net of
unamortized discount 538 482
6.0% Guaranteed notes due 2005 246 246
6.125% Guaranteed notes due 2008 250 250
Exxon Funding B.V.
8.0% Guaranteed notes due 1998 0 250
SeaRiver Maritime Financial Holdings, Inc.
Guaranteed debt securities due 1999-2011 143 150
Guaranteed deferred interest
debentures due 2012
- Face value ($771) net of
unamortized discount 586 526
Exxon Energy Limited
8.3% Hong Kong dollar loan due 1999-2008 144 159
7.16% Export credit loans due 1999-2012 856 763
Floating rate term loan due 2000-2006 591 565
6.87% notes due 2003 173 173
Imperial Oil Limited
9.875% Canadian dollar notes due 1999 171 173
8.3% notes due 2001 200 200
Variable rate notes due 2004 600 650
8.75% notes due 2019 219 219
Industrial revenue bonds due 2012-2033 951 926
Guaranteed LESOP notes due 1999 125 235
Other U.S. dollar obligations 511 506
Other foreign currency obligations 428 472
Capitalized lease obligations* 72 45
-------------------
Total long-term debt $7,050 $7,236
===================
*At an average imputed interest rate of 7.4% in 1997 and 9.3% in 1996.
F15
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
13. Litigation and Other Contingencies
A number of lawsuits, including class actions, were 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.
Essentially all of these lawsuits have now been resolved or are subject to
appeal.
On September 24, 1996, the United States District Court for the District of
Alaska entered a judgment in the amount of $5.058 billion in the Exxon Valdez
civil trial that began in May 1994. The District Court awarded approximately
$19.6 million in compensatory damages to fisher plaintiffs, $38 million in
prejudgment interest on the compensatory damages and $5 billion in punitive
damages to a class composed of all persons and entities who asserted claims for
punitive damages from the corporation as a result of the Exxon Valdez grounding.
The District Court also ordered that these awards shall bear interest from and
after entry of the judgment. The District Court stayed execution on the judgment
pending appeal based on a $6.75 billion letter of credit posted by the
corporation. Exxon has appealed the judgment. The corporation continues to
believe that the punitive damages in this case are unwarranted and that the
judgment should be set aside or substantially reduced by the appellate courts.
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.
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between Exxon and various insurers arising from the Valdez
accident. Under terms of this settlement, Exxon received $480 million. Final
income statement recognition of this settlement will be deferred in view of
uncertainty regarding the ultimate cost to the corporation of the Valdez
accident.
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
amount of gas which can be recovered from this area. Based on the final reserve
determination, the German affiliate has received more gas than its entitlement.
Arbitration proceedings, as provided in the agreements, have been underway to
determine the manner of resolving the issues between the German and Dutch
affiliated companies.
On July 8, 1996, an interim ruling was issued establishing a provisional
compensation payment for the excess gas received. Additional compensation, if
any, remains subject to further arbitration proceedings or negotiation. Other
substantive matters remain outstanding, including recovery of royalties paid on
such excess gas and the taxes payable on the final compensation amount. The net
financial impact on the corporation is not possible to predict at this time
given these outstanding issues. However, the ultimate outcome is not expected to
have a materially adverse effect upon the corporation's consolidated financial
condition or operations.
The U.S. Tax Court has decided the issue with respect to the pricing of crude
oil purchased from Saudi Arabia for the years 1979-1981 in favor of the
corporation. This decision is subject to appeal. Certain other issues for the
years 1979-1988 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 consolidated
financial condition or operations.
The corporation and certain of its consolidated subsidiaries were contingently
liable at December 31, 1997 for $1,286 million, primarily relating to guarantees
for notes, loans and performance under contracts. This includes $888 million
representing guarantees of non-U.S. excise taxes and customs duties of other
companies, entered into as a normal business practice, under reciprocal
arrangements. Not included in this figure are guarantees by consolidated
affiliates of $908 million, representing Exxon's share of obligations of
certain equity companies.
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.
14. Annuity Benefits
Exxon and most of its affiliates have defined benefit retirement plans which
cover substantially all of their employees. Plan benefits are generally based on
years of service and employees' compensation during their last years of
employment.
Assets are contributed to trustees and insurance companies to provide benefits
for many of Exxon's retirement plans and are primarily invested in equity and
fixed income securities. All funded U.S. plans meet the full funding
requirements of the Department of Labor and the Internal Revenue Service as
detailed in the table at the end of this note. Certain smaller U.S. plans, and a
number of non-U.S. plans, are not funded because of local tax conventions and
regulatory practices which do not encourage funding of these plans. Book
reserves have been established for these plans to provide for future benefit
payments.
F16
U.S. Plans Non-U.S. Plans
------------------------- ----------------------
Annuity plans net pension cost/(credit) 1997 1996 1995 1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Cost of benefits earned by employees during the year $137 $147 $111 $176 $162 $148
Interest accrual on benefits earned in prior years 364 361 362 515 523 540
Actual (gain)/loss on plan assets (646) (544) (796) (769) (641) (625)
Deferral of actual versus assumed return on assets 295 193 486 324 229 254
Amortization of actuarial (gain)/loss and prior service cost (23) 13 (23) 82 40 20
Net pension enhancement and curtailment/settlement expense (6) 6 (9) (11) 17 11
-----------------------------------------------------------
Net pension cost for the year $121 $176 $131 $317 $330 $348
===========================================================
U.S. Plans Non-U.S. Plans
------------------- ------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
Annuity plans status 1997 1996 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Actuarial present value of benefit obligations
Benefits based on service to date and present pay levels
Vested $4,153 $3,887 $6,649 $6,219
Non-vested 540 497 177 211
------------------- ------------------
Total accumulated benefit obligation $4,693 $4,384 $6,826 $6,430
Additional benefits related to projected pay increases 703 693 1,027 1,040
------------------- ------------------
Total projected benefit obligation $5,396 $5,077 $7,853 $7,470
------------------- ------------------
Funded assets (market values) $4,016 $3,815 $5,367 $5,025
Book reserves 1,366 1,299 1,954 2,127
------------------- ------------------
Total funded assets and book reserves $5,382 $5,114 $7,321 $7,152
------------------- ------------------
Assets and reserves in excess of/(less than) projected benefit obligation $ (14) $ 37 $ (532) $ (318)
Unrecognized net gain/(loss) at transition $ 136 $ 192 $ (26) $ (10)
Unrecognized net actuarial loss since transition (66) (62) (361) (196)
Unrecognized prior service costs incurred since transition (84) (93) (145) (112)
Assets and reserves in excess of accumulated benefit obligation $ 689 $ 730 $ 495 $ 722
Assumptions in projected benefit obligation and expense (percent)
Discount rate 7.00 7.50 4.0- 8.5 4.5- 8.5
Long-term rate of compensation increase 3.50 4.00 2.5- 8.5 3.0- 6.5
Long-term annual rate of return on funded assets 9.75 9.75 5.0-10.0 6.0-10.0
- - --------------------------------------------------------------------------------
Pension data, as shown above, is reported as required by current accounting
standards which specify use of a discount rate at which pension liabilities
could be effectively settled. The discount rate stipulated for use in
calculating year-end pension liabilities is based on the year-end rate of
interest on high quality bonds. For determining the funding requirements of U.S.
pension plans in accordance with applicable federal government regulations,
Exxon uses the expected long-term rate of return of the pension fund's actual
portfolio as the discount rate. This rate has historically been higher than
bonds as the majority of pension assets are invested in equities. On this basis,
all of Exxon's U.S. funded plans meet the full funding criteria of the
government as shown below. In fact, the actual rate earned over the past decade
has been 13 percent.
Dec. 31 Dec. 31
Status of U.S. plans subject to federal government funding requirements 1997 1996
- - ----------------------------------------------------------------------------------------------------------
(millions of dollars)
Funded assets at market value less total projected benefit obligation $(1,380) $(1,262)
Differences between accounting and funding basis:
Certain smaller plans unfunded due to lack of tax and
regulatory incentives 512 519
Use of long-term rate of return on fund assets as the
discount rate 1,062 900
Use of government required assumptions and other
actuarial adjustments 127 54
-------------------
Funded assets in excess of obligations under government regulations $ 321 $ 211
F17
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
15. Other Postretirement Benefits
The corporation and several of its affiliates make contributions toward the cost
of providing certain health care and life insurance benefits to retirees, their
beneficiaries and covered dependents. The corporation determines the level of
its contributions to these plans annually; no commitments have been made
regarding the level of such contributions in the future.
The accumulated postretirement benefit obligation is based on the existing
level of the corporation's contribution toward these plans. Plan assets include
investments in equity and fixed income securities.
1997 1996 1995
------------------------- ------------------------- -------------------------
Other postretirement benefits expense Total Health Life/Other Total Health Life/Other Total Health Life/Other
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Service cost $ 28 $12 $16 $ 28 $12 $16 $ 22 $11 $11
Interest cost 136 46 90 130 45 85 133 46 87
Actual (gain) on plan assets (88) - (88) (57) - (57) (99) - (99)
Deferral of actual versus assumed return on assets 53 - 53 21 - 21 71 - 71
Amortization of actuarial loss 10 8 2 15 7 8 1 - 1
-----------------------------------------------------------------------------
Net expense $139 $66 $73 $137 $64 $73 $128 $57 $71
=============================================================================
Dec. 31, 1997 Dec. 31, 1996
------------------------- -------------------------
Other postretirement benefit plans status Total Health Life/Other Total Health Life/Other
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Accumulated postretirement benefit obligation
Retirees $1,451 $467 $ 984 $1,372 $460 $ 912
Fully eligible participants 162 56 106 121 42 79
Other active participants 439 191 248 386 147 239
----------------------------------------------------------
$2,052 $714 $1,338 $1,879 $649 $1,230
Funded assets (market values) (447) - (447) (422) - (422)
Unrecognized prior service costs (20) (20) - (22) (22) -
Unrecognized net loss (219) (170) (49) (133) (95) (38)
----------------------------------------------------------
Book reserves $1,366 $524 $ 842 $1,302 $532 $ 770
==========================================================
Assumptions in accumulated postretirement benefit
obligation and expense (percent)
Discount rate 7.00 7.50
Long-term rate of compensation increase 3.50 4.00
Long-term annual rate of return on funded assets 9.75 9.75
- - ------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
16. Income, Excise and Other Taxes
- - --------------------------------------------------------------------------------
1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------------
United Non- United Non- United Non-
States U.S. Total States U.S. Total States U.S. Total
------------------------------------------------------------------------------------
(millions of dollars)
Income taxes
Federal or non-U.S.
Current $1,199 $ 2,365 $ 3,564 $ 988 $ 2,751 $ 3,739 $ 854 $ 1,966 $ 2,820
Deferred - net 163 429 592 314 164 478 199 789 988
U.S. tax on non-U.S. operations 20 - 20 47 - 47 45 - 45
-------------------------------------------------------------------------------------
$1,382 $ 2,794 $ 4,176 $1,349 $ 2,915 $ 4,264 $1,098 $ 2,755 $ 3,853
State 162 - 162 142 - 142 119 - 119
-------------------------------------------------------------------------------------
Total income tax expense $1,544 $ 2,794 $ 4,338 $1,491 $ 2,915 $ 4,406 $1,217 $ 2,755 $ 3,972
Excise taxes 2,605 12,258 14,863 2,494 12,321 14,815 2,356 11,555 13,911
All other taxes and duties 816 23,855 24,671 853 23,689 24,542 870 22,458 23,328
-------------------------------------------------------------------------------------
Total $4,965 $ 38,907 $43,872 $4,838 $38,925 $43,763 $4,443 $36,768 $41,211
=====================================================================================
All other taxes and duties include taxes reported in operating and selling,
general and administrative expenses. The above provisions for deferred income
taxes include net (charges)/credits for the effect of changes in tax laws and
rates of $147 million in 1997, $26 million in 1996 and $(83) million in 1995.
Income taxes of $301 million in 1997, $(78) million in 1996 and $(14) million in
1995 were (charged)/credited directly to shareholders' equity.
F18
The reconciliation between income tax expense and a theoretical U.S. tax
computed by applying a rate of 35 percent for 1997, 1996 and 1995, is as
follows:
1997 1996 1995
- - --------------------------------------------------------------------------------
(millions of dollars)
Earnings before Federal and
non-U.S. income taxes
United States $ 4,413 $ 3,706 $ 2,619
Non-U.S. 8,223 8,068 7,704
--------------------------------
Total $12,636 $11,774 $10,323
--------------------------------
Theoretical tax $ 4,423 $ 4,121 $ 3,613
Effect of equity method accounting (342) (439) (482)
Adjustment for non-U.S. taxes in
excess of theoretical U.S. tax 258 530 541
U.S. tax on non-U.S. operations 20 47 45
Other U.S. (183) 5 136
--------------------------------
Federal and non-U.S. income
tax expense $ 4,176 $ 4,264 $ 3,853
================================
Total effective tax rate 36.4% 39.9% 41.4%
The effective income tax rate includes state income taxes and the
corporation's share of income taxes of equity companies. Equity company taxes
totaled $499 million in 1997, $576 million in 1996 and $596 million in 1995,
essentially all outside the U.S.
Deferred income taxes reflect the impact of temporary differences between the
amount of assets and liabilities recognized for financial reporting purposes and
such amounts recognized for tax purposes.
Deferred tax liabilities/(assets) are comprised of the following at
December 31:
Tax effects of temporary differences for: 1997 1996
- - --------------------------------------------------------------------------------
(millions of dollars)
Depreciation $10,324 $10,574
Intangible development costs 3,036 3,177
Capitalized interest 1,309 1,187
Other liabilities 2,215 1,824
----------------------
Total deferred tax liabilities $16,884 $16,762
----------------------
Pension and other postretirement benefits $(1,187) $(1,102)
Site restoration reserves (809) (850)
Tax loss carryforwards (850) (718)
Other assets (1,092) (1,259)
----------------------
Total deferred tax assets $(3,938) $(3,929)
----------------------
Asset valuation allowances 296 327
----------------------
Net deferred tax liabilities $13,242 $13,160
======================
The corporation had $6.6 billion of indefinitely reinvested, undistributed
earnings from subsidiary companies outside the U.S. Unrecognized deferred taxes
on remittance of these funds are not expected to be material.
- - --------------------------------------------------------------------------------
17. Capital
On March 14, 1997 authorized common stock was increased from two billion shares
without par value to three billion shares without par value and the issued
shares were split on a two-for-one basis. Prior to the common share split,
321,000,000 shares (pre-split basis) of common stock held by the corporation as
treasury shares were cancelled and returned to the status of authorized but
unissued shares. Accordingly, the restated number of common stock shares issued
(on a post-split basis) at December 31, 1996 and 1995 is not meaningful. All
common stock data and per share amounts presented in this report have been
adjusted for the stock split.
In 1989, the corporation sold 16.3 million shares of a new issue of
convertible Class A Preferred Stock to its leveraged employee stock ownership
plan (LESOP) trust for $61.50 per share. The proceeds of the issuance were used
by the corporation for general corporate purposes. The corporation recorded a
"Guaranteed LESOP Obligation" of $1,000 million as debt and as a reduction in
shareholders' equity, representing company-guaranteed borrowings by the LESOP
trust to purchase the preferred stock. As the debt is repaid, the Guaranteed
LESOP Obligation will be extinguished. After adjusting for the 1997 common stock
split, if the common share price exceeds $30.75, one share of preferred stock is
convertible into two shares of common stock. If the price is $30.75 or less, one
share of preferred is convertible into common shares having a value of $61.50.
Dividends are cumulative and payable in an amount per share equal to $4.680 per
annum. Dividends paid per preferred share were $4.680 in 1997, 1996 and 1995.
Preferred dividends of $17 million, $27 million and $38 million were paid during
1997, 1996 and 1995, respectively.
After adjusting for the 1997 common stock split, dividends paid per common
share were $1.625 in 1997, $1.560 in 1996 and $1.500 in 1995.
Statement of Financial Accounting Standards No. 128, "Earnings Per Share," was
implemented in December, 1997. Net income per common share is based on net
income less preferred stock dividends and the weighted average number of
outstanding common shares, adjusted for stock splits. Net income per common
share - assuming dilution is based on net income and the weighted average number
of outstanding common shares, including the additional common shares that would
have been outstanding if dilutive potential common shares had been issued.
Dilutive potential common shares include outstanding incentive program stock
options and convertible preferred stock. The weighted average number of
outstanding common shares - assuming dilution included 32 million shares in
1997, 28 million shares in 1996 and 28 million shares in 1995 for assumed
conversion of dilutive potential common shares.
18. Leveraged Employee Stock Ownership Plan (LESOP)
In 1989, the corporation's employee stock ownership plan trust borrowed $1,000
million under the terms of notes guaranteed by the corporation maturing between
1990 and 1999. The principal due on the notes increases from $75 million in 1990
to $125 million in 1999. As further described in note 17, the LESOP trust used
the proceeds of the borrowing to purchase shares of convertible Class A
Preferred Stock.
Employees eligible to participate in the corporation's thrift plan may elect
to participate in the LESOP. Corporation contributions to the plan, plus
dividends, are used to make principal and interest payments on the notes. As
contributions and dividends are credited, shares of preferred stock are
proportionately converted into common stock, with no cash flow impact to the
corporation, and allocated to participants' accounts. In 1997, 1996 and 1995,
1.8 million, 2.5 million and 1.6 million shares of preferred stock totaling $112
million, $151 million and $100 million, respectively, were converted to common
stock. Preferred dividends of
F19
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
$17 million, $27 million and $38 million were paid during 1997, 1996 and 1995,
respectively, and covered interest payments on the notes. The 1997, 1996 and
1995 principal payments were made from employer contributions, dividends
reinvested within the LESOP trust and proceeds from the sale of common stock
received upon conversion of preferred shares.
Accounting for the plan follows the principles which were in effect in 1989
when the plan was established. The amount of plan related compensation expense
recorded by the corporation during the periods was immaterial. The LESOP trust
held 3.1 million and 4.9 million shares of preferred stock and 40.0 million and
39.4 million shares of common stock at the end of 1997 and 1996, respectively,
when adjusted for the 1997 two-for-one common stock split.
- - --------------------------------------------------------------------------------
19. Distribution of Earnings and Assets
- - --------------------------------------------------------------------------------
Segment 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------------------
Corporate Corporate Corporate
Petroleum Chemicals total Petroleum Chemicals total Petroleum Chemicals total
---------------------------------------------------------------------------------------------------
(millions of dollars)
Sales and operating revenue
Non-affiliated $120,644 $12,195 $135,142 $118,012 $11,430 $131,543 $107,749 $11,737 $121,804
Intersegment 3,183 1,829 - 3,049 1,683 - 2,539 1,609 -
---------------------------------------------------------------------------------------------------
Total $123,827 $14,024 $135,142 $121,061 $13,113 $131,543 $110,288 $13,346 $121,804
===================================================================================================
Operating profit $ 9,675 $ 2,078 $ 12,517 $ 8,717 $ 1,662 $ 11,134 $ 6,654 $ 2,734 $ 10,185
Add/(deduct):
Income taxes (3,711) (739) (4,534) (3,735) (592) (4,420) (3,060) (896) (4,065)
Minority interests (227) (35) (500) (215) (14) (458) (129) (27) (365)
Earnings of
equity companies 1,019 64 1,075 1,176 143 1,319 1,219 207 1,426
Corporate and financing - - (98) - - (65) - - (711)
---------------------------------------------------------------------------------------------------
Earnings $ 6,756 $ 1,368 $ 8,460 $ 5,943 $ 1,199 $ 7,510 $ 4,684 $ 2,018 $ 6,470
===================================================================================================
Identifiable assets $ 69,254 $10,829 $ 96,064 $ 70,035 $10,715 $ 95,527 $ 68,852 $ 9,595 $ 91,296
Depreciation and depletion $ 4,439 $ 456 $ 5,474 $ 4,394 $ 430 $ 5,329 $ 4,474 $ 399 $ 5,386
Additions to plant $ 5,726 $ 828 $ 7,392 $ 5,161 $ 987 $ 7,132 $ 5,055 $ 782 $ 7,201
Geographic Sales and other operating revenue Earnings Identifiable assets
- - ------------------------------------------------------------------------------------------------------------------------------------
Non-affiliated Interarea Total
---------------------------------------------------------------------
(millions of dollars)
1997 Petroleum and chemicals
United States $ 28,041 $ 1,003 $ 29,044 $3,052 $25,504
Other Western Hemisphere 21,139 125 21,264 651 9,947
Eastern Hemisphere 83,659 768 84,427 4,421 44,632
Other/eliminations 2,303 (1,896) 407 336 15,981
-------------------------------------------------------------
Corporate total $ 135,142 - $135,142 $8,460 $96,064
=============================================================
1996 Petroleum and chemicals
United States $ 27,513 $ 857 $ 28,370 $2,651 $25,161
Other Western Hemisphere 20,197 158 20,355 559 10,768
Eastern Hemisphere 81,732 771 82,503 3,932 44,821
Other/eliminations 2,101 (1,786) 315 368 14,777
-------------------------------------------------------------
Corporate total $ 131,543 - $131,543 $7,510 $95,527
=============================================================
1995 Petroleum and chemicals
United States $ 24,024 $ 854 $ 24,878 $2,307 $24,606
Other Western Hemisphere 18,354 328 18,682 444 10,664
Eastern Hemisphere 77,108 1,842 78,950 3,951 43,177
Other/eliminations 2,318 (3,024) (706) (232) 12,849
-------------------------------------------------------------
Corporate total $ 121,804 - $121,804 $6,470 $91,296
=============================================================
Transfers between business activities or areas are at estimated market prices.
F20
- - --------------------------------------------------------------------------------
QUARTERLY INFORMATION
- - --------------------------------------------------------------------------------
1997 1996
------------------------------------------------------------------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Year Quarter Quarter Quarter Quarter Year
- - ---------------------------------------------------------------------------------- -----------------------------------------------
Volumes
Production of crude oil (thousands of barrels daily)
and natural gas liquids 1,625 1,584 1,558 1,631 1,599 1,683 1,595 1,570 1,615 1,615
Refinery throughput 4,006 3,962 4,041 4,036 4,011 3,753 3,754 3,828 3,833 3,792
Petroleum product sales 5,350 5,404 5,415 5,548 5,430 5,149 5,067 5,223 5,404 5,211
Natural gas production (millions of cubic feet daily)
available for sale 7,500 5,649 5,189 7,037 6,339 8,330 5,674 5,084 7,227 6,577
(thousands of metric tons)
Chemical prime product sales 4,161 4,329 4,433 4,378 17,301 3,911 3,978 3,909 3,914 15,712
Summarized financial data
Sales and other operating (millions of dollars)
revenue $34,720 33,679 32,381 34,362 135,142 $30,474 31,625 32,938 36,506 131,543
Gross profit* $14,596 14,619 14,277 15,160 58,652 $13,217 13,724 14,403 15,209 56,553
Net income $ 2,175 1,965 1,820 2,500 8,460 $ 1,885 1,570 1,560 2,495 7,510
Per share data** (dollars per share)
Net income per common share $ 0.87 0.79 0.74 1.01 3.41 $ 0.76 0.63 0.62 1.00 3.01
Net income per common share
- assuming dilution $ 0.86 0.78 0.73 1.00 3.37 $ 0.75 0.62 0.62 1.00 2.99
Dividends per common share $ 0.395 0.410 0.410 0.410 1.625 $ 0.375 0.395 0.395 0.395 1.560
Dividends per preferred share $ 1.170 1.170 1.170 1.170 4.680 $ 1.170 1.170 1.170 1.170 4.680
Common Stock prices**
High $55.625 65.125 67.250 66.875 67.250 $43.000 44.375 45.063 50.625 50.625
Low $48.250 49.875 58.625 54.750 48.250 $38.813 39.938 40.000 41.438 38.813
* Gross profit equals sales and other operating revenue less estimated costs
associated with products sold.
** Certain prior period amounts restated for two-for-one stock split effective
March 14, 1997.
The price range of Exxon Common Stock is based on the composite tape of the
several U.S. exchanges where Exxon Common Stock is traded. The principal market
where Exxon Common Stock (XON) is traded is the New York Stock Exchange,
although the stock is traded on other exchanges in and outside the United
States.
At January 31, 1998, there were 642,466 holders of record of Exxon Common
Stock.
On January 28, 1998, the corporation declared a $0.410 dividend per common
share, payable March 10, 1998.
F21
- - --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
- - --------------------------------------------------------------------------------
Consolidated Subsidiaries
--------------------------------------------------------------
Non-
United Consolidated Total
Results of Operations States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
1997 - Revenue
Sales to third parties $1,815 $ 459 $2,742 $1,694 $ 71 $ 6,781 $ 2,540 $ 9,321
Transfers 3,300 537 1,979 751 112 6,679 51 6,730
-------------------------------------------------------------------------------------
$5,115 $ 996 $4,721 $2,445 $ 183 $13,460 $ 2,591 $16,051
Production costs excluding taxes 1,044 344 995 341 111 2,835 225 3,060
Exploration expenses 130 23 197 150 247 747 87 834
Depreciation and depletion 1,084 325 1,204 423 90 3,126 211 3,337
Taxes other than income 438 24 91 371 - 924 866 1,790
Related income tax 888 109 1,011 219 (48) 2,179 512 2,691
-------------------------------------------------------------------------------------
Results of producing activities $1,531 $ 171 $1,223 $ 941 $ (217) $ 3,649 $ 690 $ 4,339
Other earnings* 101 65 104 21 (6) 285 69 354
-------------------------------------------------------------------------------------
Total earnings $1,632 $ 236 $1,327 $ 962 $ (223) $ 3,934 $ 759 $ 4,693
=====================================================================================
1996 - Revenue
Sales to third parties $1,706 $ 443 $2,581 $1,998 $ 119 $ 6,847 $ 2,974 $ 9,821
Transfers 3,846 682 2,360 736 125 7,749 47 7,796
-------------------------------------------------------------------------------------
$5,552 $1,125 $4,941 $2,734 $ 244 $14,596 $ 3,021 $17,617
Production costs excluding taxes 1,116 376 1,050 391 70 3,003 250 3,253
Exploration expenses 116 32 224 140 255 767 73 840
Depreciation and depletion 1,139 342 1,130 426 102 3,139 195 3,334
Taxes other than income 476 24 96 477 - 1,073 1,038 2,111
Related income tax 990 83 1,182 492 (13) 2,734 603 3,337
-------------------------------------------------------------------------------------
Results of producing activities $1,715 $ 268 $1,259 $ 808 $ (170) $ 3,880 $ 862 $ 4,742
Other earnings* 63 51 103 36 5 258 58 316
-------------------------------------------------------------------------------------
Total earnings $1,778 $ 319 $1,362 $ 844 $ (165) $ 4,138 $ 920 $ 5,058
=====================================================================================
1995 - Revenue
Sales to third parties $1,021 $ 320 $2,253 $1,724 $ 138 $ 5,456 $ 2,657 $ 8,113
Transfers 3,140 715 1,782 734 113 6,484 159 6,643
-------------------------------------------------------------------------------------
$4,161 $1,035 $4,035 $2,458 $ 251 $11,940 $ 2,816 $14,756
Production costs excluding taxes 1,138 366 1,093 390 88 3,075 254 3,329
Exploration expenses 108 55 166 168 194 691 83 774
Depreciation and depletion 1,245 380 1,060 464 126 3,275 250 3,525
Taxes other than income 434 26 101 349 1 911 899 1,810
Related income tax 457 89 841 477 36 1,900 540 2,440
-------------------------------------------------------------------------------------
Results of producing activities $ 779 $ 119 $ 774 $ 610 $ (194) $ 2,088 $ 790 $ 2,878
Other earnings* 277 - 169 40 (3) 483 51 534
-------------------------------------------------------------------------------------
Total earnings $1,056 $ 119 $ 943 $ 650 $ (197) $ 2,571 $ 841 $ 3,412
=====================================================================================
Average sales prices and production costs per unit of production
- - ----------------------------------------------------------------------------------------------------------------------------------
During 1997
Average sales prices
Crude oil and NGL, per barrel $15.82 $12.29 $19.14 $21.08 $ 18.06 $ 17.32 $ 19.20 $ 17.39
Natural gas, per thousand cubic feet 2.43 1.88 3.13 1.39 - 2.37 3.46 2.67
Average production costs, per barrel** 3.17 4.19 3.98 2.21 10.87 3.43 1.78 3.21
During 1996
Average sales prices
Crude oil and NGL, per barrel $17.24 $16.38 $19.93 $21.04 $ 20.50 $ 18.69 $ 20.36 $ 18.75
Natural gas, per thousand cubic feet 2.35 1.48 2.83 2.52 - 2.49 3.48 2.80
Average production costs, per barrel** 3.26 5.08 4.07 2.68 5.83 3.61 1.72 3.33
During 1995
Average sales prices
Crude oil and NGL, per barrel $13.09 $12.92 $16.43 $18.19 $ 17.16 $ 15.11 $ 16.73 $ 15.16
Natural gas, per thousand cubic feet 1.64 0.95 2.98 1.44 - 1.89 3.81 2.45
Average production costs, per barrel** 3.31 4.09 4.55 2.41 5.87 3.62 1.97 3.40
* Earnings related to transportation of oil and gas, sale of third party
purchases, oil sands operations and technical services agreements (reduced
by minority interests).
** Natural gas included by conversion to crude oil equivalent; production
costs exclude all taxes.
F22
Oil and Gas Exploration and Production Costs
The amounts shown for net capitalized costs of consolidated subsidiaries are
$3,208 million less at year-end 1997 and $3,242 million less at year-end 1996
than the amounts reported as investments in property, plant and equipment for
exploration and production in note 7, page F13. This is due to the exclusion
from capitalized costs of certain transportation and research assets and assets
relating to the oil sands operations, and to the inclusion of accumulated
provisions for site restoration costs, all as required in Statement of Financial
Accounting Standards No. 19.
The amounts reported as costs incurred include both capitalized costs and
costs charged to expense during the year. Total worldwide costs incurred in 1997
were $4,872 million, up $429 million from 1996, due primarily to higher
development costs. 1996 costs were $4,443 million, up $126 million from 1995,
due primarily to higher exploration costs.
Consolidated Subsidiaries
----------------------------------------------------------------- Non-
United Consolidated Total
Capitalized costs States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
As of December 31, 1997
Property (acreage) costs-Proved $ 3,109 $2,441 $ 85 $ 557 $ 828 $ 7,020 $ 16 $ 7,036
-Unproved 390 96 26 163 114 789 13 802
--------------------------------------------------------------------------------------------
Total property costs $ 3,499 $2,537 $ 111 $ 720 $ 942 $ 7,809 $ 29 $ 7,838
Producing assets 23,218 2,915 19,345 7,229 753 53,460 2,240 55,700
Support facilities 328 78 469 865 46 1,786 113 1,899
Incomplete construction 589 86 1,968 609 359 3,611 308 3,919
--------------------------------------------------------------------------------------------
Total capitalized costs $ 27,634 $5,616 $21,893 $9,423 $2,100 $66,666 $2,690 $69,356
Accumulated depreciation and depletion 16,391 2,803 12,181 5,568 1,216 38,159 2,060 40,219
--------------------------------------------------------------------------------------------
Net capitalized costs $ 11,243 $2,813 $ 9,712 $3,855 $ 884 $28,507 $ 630 $29,137
============================================================================================
As of December 31, 1996
Property (acreage) costs-Proved $ 3,195 $2,914 $ 90 $ 631 $ 827 $ 7,657 $ 12 $ 7,669
-Unproved 323 100 27 236 105 791 20 811
--------------------------------------------------------------------------------------------
Total property costs $ 3,518 $3,014 $ 117 $ 867 $ 932 $ 8,448 $ 32 $ 8,480
Producing assets 22,405 3,690 20,009 7,022 726 53,852 2,451 56,303
Support facilities 369 78 520 699 41 1,707 130 1,837
Incomplete construction 537 98 1,726 971 207 3,539 346 3,885
--------------------------------------------------------------------------------------------
Total capitalized costs $ 26,829 $6,880 $22,372 $9,559 $1,906 $67,546 $2,959 $70,505
Accumulated depreciation and depletion 15,761 3,418 12,302 5,498 1,124 38,103 2,240 40,343
--------------------------------------------------------------------------------------------
Net capitalized costs $ 11,068 $3,462 $10,070 $4,061 $ 782 $29,443 $ 719 $30,162
============================================================================================
Costs incurred in property acquisitions, exploration and development activities
- - ------------------------------------------------------------------------------------------------------------------------------------
During 1997
Property acquisition costs-Proved $ 2 $ - $ - $ 1 $ 1 $ 4 $ - $ 4
-Unproved 80 1 - - 9 90 - 90
Exploration costs 231 29 280 160 321 1,021 122 1,143
Development costs 1,112 213 1,504 512 112 3,453 182 3,635
--------------------------------------------------------------------------------------------
Total $ 1,425 $ 243 $ 1,784 $ 673 $ 443 $ 4,568 $ 304 $ 4,872
============================================================================================
During 1996
Property acquisition costs-Proved $ 2 $ 1 $ - $ 2 $ 81 $ 86 $ - $ 86
-Unproved 16 3 - 7 46 72 - 72
Exploration costs 156 50 258 153 283 900 117 1,017
Development costs 817 165 1,498 563 83 3,126 142 3,268
--------------------------------------------------------------------------------------------
Total $ 991 $ 219 $ 1,756 $ 725 $ 493 $ 4,184 $ 259 $ 4,443
============================================================================================
During 1995
Property acquisition costs-Proved $ 1 $ 6 $ 2 $ - $ 87 $ 96 $ 1 $ 97
-Unproved 19 3 1 3 2 28 - 28
Exploration costs 131 60 251 200 207 849 89 938
Development costs 624 139 1,653 551 60 3,027 227 3,254
--------------------------------------------------------------------------------------------
Total $ 775 $ 208 $ 1,907 $ 754 $ 356 $ 4,000 $ 317 $ 4,317
============================================================================================
F23
- - --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
- - --------------------------------------------------------------------------------
Oil and Gas Reserves
The following information describes changes during the years and balances of
proved oil and gas reserves at year-end 1995, 1996 and 1997.
The definitions used are in accordance with applicable Securities and
Exchange Commission regulations.
Proved reserves are the estimated quantities of oil and gas which geological
and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. In some cases, substantial new investments in additional wells and
related facilities will be required to recover these proved reserves.
Proved reserves include 100 percent of each majority-owned affiliate's
participation in proved reserves and Exxon's ownership percentage of the proved
reserves of equity companies, but exclude royalties and quantities due others.
Gas reserves exclude the gaseous equivalent of liquids expected to be removed
from the gas on leases, at field facilities and at gas processing plants. These
liquids are included in net proved reserves of crude oil and natural gas
liquids.
Consolidated Subsidiaries
-------------------------------------------------------- Non-
United Consolidated Total
Crude Oil and Natural Gas Liquids States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of barrels)
Net proved developed and undeveloped reserves
January 1, 1995 2,324 1,168 1,341 759 80 5,672 476 6,148
Revisions 124 (29) 16 67 1 179 (11) 168
Purchases - - - - 47 47 - 47
Sales (8) (5) (1) - (5) (19) (7) (26)
Improved recovery 3 71 9 - - 83 - 83
Extensions and discoveries 93 9 297 31 2 432 - 432
Production (219) (73) (176) (109) (15) (592) (22) (614)
----------------------------------------------------------------------------------
December 31, 1995 2,317 1,141 1,486 748 110 5,802 436 6,238
Revisions 139 10 59 83 38 329 3 332
Purchases 2 - - - 50 52 - 52
Sales (31) (7) - - (5) (43) - (43)
Improved recovery 26 1 9 - - 36 - 36
Extensions and discoveries 53 1 231 13 2 300 - 300
Production (214) (63) (178) (89) (12) (556) (20) (576)
-----------------------------------------------------------------------------------
December 31, 1996 2,292 1,083 1,607 755 183 5,920 419 6,339
Revisions 190 2 33 45 13 283 2 285
Purchases 1 - - - - 1 - 1
Sales (6) (63) (6) - - (75) - (75)
Improved recovery 25 4 2 - - 31 - 31
Extensions and discoveries 79 16 42 21 - 158 2 160
Production (204) (70) (171) (91) (10) (546) (21) (567)
-----------------------------------------------------------------------------------
December 31, 1997 (excluding oil sands) 2,377 972 1,507 730 186 5,772 402 6,174
Oil sands reserves
At December 31, 1995 - 432 - - - 432 - 432
At December 31, 1996 - 443 - - - 443 - 443
At December 31, 1997 - 616 - - - 616 - 616
====================================================================================================================================
Worldwide net proved developed and
undeveloped reserves (including oil sands)
At December 31, 1995 2,317 1,573 1,486 748 110 6,234 436 6,670
At December 31, 1996 2,292 1,526 1,607 755 183 6,363 419 6,782
At December 31, 1997 2,377 1,588 1,507 730 186 6,388 402 6,790
====================================================================================================================================
Developed reserves, included above
(excluding oil sands)
At December 31, 1995 1,942 526 805 610 60 3,943 410 4,353
At December 31, 1996 1,925 512 815 582 44 3,878 396 4,274
At December 31, 1997 2,064 494 802 609 41 4,010 384 4,394
F24
Net proved developed reserves are those volumes which are expected to be
recovered through existing wells with existing equipment and operating methods.
Undeveloped reserves are those volumes which are expected to be recovered as a
result of future investments to drill new wells, to recomplete existing wells
and/or to install facilities to collect and deliver the production from existing
and future wells.
Reserves attributable to certain oil and gas discoveries were not considered
proved as of year-end 1997 due to geological, technological or economic
uncertainties and therefore are not included in the tabulation.
Crude oil and natural gas liquids and natural gas production quantities shown
are the net volumes withdrawn from Exxon's oil and gas reserves. The natural gas
quantities differ from the quantities of gas delivered for sale by the producing
function as reported on page F27 due to volumes consumed or flared and inventory
changes. Such quantities amounted to approximately 189 billion cubic feet in
1995, 236 billion cubic feet in 1996, and 268 billion cubic feet in 1997.
Consolidated Subsidiaries
--------------------------------------------------------
Non-
United Consolidated Total
Natural Gas States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - ---------------------------------------------------------------------------------------------------------------------------------
(billions of cubic feet)
Net proved developed and undeveloped reserves
January 1, 1995 9,538 2,302 7,469 5,874 104 25,287 16,941 42,228
Revisions 838 (72) 65 175 (1) 1,005 228 1,233
Purchases - - - - 10 10 - 10
Sales (27) (79) - - (3) (109) (88) (197)
Improved recovery - 19 56 - - 75 - 75
Extensions and discoveries 407 104 375 67 - 953 117 1,070
Production (809) (156) (412) (352) (8) (1,737) (646) (2,383)
-----------------------------------------------------------------------------------
December 31, 1995 9,947 2,118 7,553 5,764 102 25,484 16,552 42,036
Revisions 422 (118) 101 107 13 525 196 721
Purchases 4 11 - - 13 28 11 39
Sales (36) (76) - - (1) (113) (3) (116)
Improved recovery 39 18 5 - - 62 - 62
Extensions and discoveries 615 61 506 53 - 1,235 166 1,401
Production (841) (142) (525) (380) (8) (1,896) (747) (2,643)
-----------------------------------------------------------------------------------
December 31, 1996 10,150 1,872 7,640 5,544 119 25,325 16,175 41,500
Revisions (53) (43) (1) 433 - 336 107 443
Purchases 2 - - - - 2 - 2
Sales (27) (122) (6) - - (155) - (155)
Improved recovery (2) 19 17 - - 34 - 34
Extensions and discoveries 450 24 363 1,687 - 2,524 363 2,887
Production (831) (138) (531) (441) (8) (1,949) (633) (2,582)
-----------------------------------------------------------------------------------
December 31, 1997 9,689 1,612 7,482 7,223 111 26,117 16,012 42,129
===============================================================================================================================
Worldwide net proved developed
and undeveloped reserves
At December 31, 1995 9,947 2,118 7,553 5,764 102 25,484 16,552 42,036
At December 31, 1996 10,150 1,872 7,640 5,544 119 25,325 16,175 41,500
At December 31, 1997 9,689 1,612 7,482 7,223 111 26,117 16,012 42,129
===============================================================================================================================
Developed reserves, included above
At December 31, 1995 8,394 1,586 4,555 4,349 92 18,976 7,210 26,186
At December 31, 1996 8,216 1,392 4,872 3,995 83 18,558 6,754 25,312
At December 31, 1997 7,625 1,236 5,334 5,191 76 19,462 6,463 25,925
F25
- - -------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
- - -------------------------------------------------------------------------------
Standardized Measure of Discounted Future Cash Flows
As required by the Financial Accounting Standards Board, the standardized
measure of discounted future net cash flows is computed by applying year-end
prices, costs, legislated tax rates and a discount factor of 10 percent to net
proved reserves. The corporation believes that the standardized measure is not
meaningful and may be misleading.
Consolidated Subsidiaries
------------------------------------------------------------ Non-
United Consolidated Total
States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
As of December 31, 1995
Future cash inflows from sales of oil and gas $49,920 $15,418 $43,602 $21,214 $2,015 $132,169 $63,444 $195,613
Future production and development costs 19,871 6,353 19,647 10,084 836 56,791 28,521 85,312
Future income tax expenses 10,204 3,840 11,298 4,117 456 29,915 13,928 43,843
-----------------------------------------------------------------------------------
Future net cash flows $19,845 $ 5,225 $12,657 $ 7,013 $ 723 $ 45,463 $20,995 $ 66,458
Effect of discounting net cash flows at 10% 9,616 2,592 4,445 3,292 353 20,298 13,089 33,387
-----------------------------------------------------------------------------------
Discounted future net cash flows $10,229 $ 2,633 $ 8,212 $ 3,721 $ 370 $ 25,165 $ 7,906 $ 33,071
===================================================================================
As of December 31, 1996
Future cash inflows from sales of oil and gas $78,728 $21,969 $56,745 $26,336 $4,094 $187,872 $66,078 $253,950
Future production and development costs 20,918 6,654 19,024 11,941 1,435 59,972 30,015 89,987
Future income tax expenses 20,772 6,444 18,845 5,436 627 52,124 14,961 67,085
-----------------------------------------------------------------------------------
Future net cash flows $37,038 $ 8,871 $18,876 $ 8,959 $2,032 $ 75,776 $21,102 $ 96,878
Effect of discounting net cash flows at 10% 18,022 4,808 6,703 3,955 1,203 34,691 13,066 47,757
-----------------------------------------------------------------------------------
Discounted future net cash flows $19,016 $ 4,063 $12,173 $ 5,004 $ 829 $ 41,085 $ 8,036 $ 49,121
===================================================================================
As of December 31, 1997
Future cash inflows from sales of oil and gas $50,295 $ 8,449 $41,523 $25,800 $3,114 $129,181 $55,650 $184,831
Future production and development costs 18,683 5,319 16,200 13,587 1,171 54,960 27,472 82,432
Future income tax expenses 11,159 1,444 11,483 4,890 490 29,466 10,856 40,322
-----------------------------------------------------------------------------------
Future net cash flows $20,453 $ 1,686 $13,840 $ 7,323 $1,453 $ 44,755 $17,322 $ 62,077
Effect of discounting net cash flows at 10% 10,135 834 5,159 3,679 761 20,568 11,067 31,635
-----------------------------------------------------------------------------------
Discounted future net cash flows $10,318 $ 852 $ 8,681 $ 3,644 $ 692 $ 24,187 $ 6,255 $ 30,442
===================================================================================
Change in Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves
Consolidated Subsidiaries 1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Value of reserves added during the year due to extensions, discoveries, improved recovery
and net purchases less related costs $ 1,443 $ 3,581 $ 3,057
Changes in value of previous-year reserves due to:
Sales and transfers of oil and gas produced during the year, net of production (lifting) costs (9,675) (10,875) (8,101)
Development costs incurred during the year 3,300 3,082 2,850
Net change in prices, lifting and development costs (31,818) 25,677 9,257
Revisions of previous reserves estimates 1,568 3,157 1,581
Accretion of discount 5,542 3,330 2,495
Net change in income taxes 12,742 (12,032) (5,613)
-----------------------------------
Total change in the standardized measure during the year $(16,898) $15,920 $ 5,526
===================================
F26
- - --------------------------------------------------------------------------------
OPERATING SUMMARY
- - --------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- - ------------------------------------------------------------------------------------------------------------------------------------
(thousands of barrels daily)
Production of crude oil and natural gas liquids
Net production
United States 559 587 600 562 553 591 619 640 693 760 756
Canada 238 211 242 251 254 268 278 302 312 249 222
Europe 483 499 498 484 423 396 363 313 351 444 456
Asia-Pacific 250 244 302 325 347 346 342 331 328 345 338
Other Non-U.S. 69 74 84 87 90 104 113 126 120 121 63
------------------------------------------------------------------------------------
Worldwide 1,599 1,615 1,726 1,709 1,667 1,705 1,715 1,712 1,804 1,919 1,835
====================================================================================
(millions of cubic feet daily)
Natural gas production available for sale
Net production
United States 2,062 2,094 2,055 2,021 1,764 1,607 1,655 1,778 1,827 1,805 1,698
Canada 203 194 281 286 328 326 355 413 417 209 147
Europe 3,038 3,361 2,804 2,842 3,049 3,097 3,010 2,694 2,707 2,787 3,012
Asia-Pacific 1,036 928 873 827 678 577 411 369 376 332 308
Other Non-U.S. - - - 2 6 54 66 64 58 59 62
------------------------------------------------------------------------------------
Worldwide 6,339 6,577 6,013 5,978 5,825 5,661 5,497 5,318 5,385 5,192 5,227
====================================================================================
(thousands of barrels daily)
Refinery throughput
United States 1,070 988 1,004 994 970 1,017 1,017 950 1,093 1,055 1,066
Canada 448 433 424 428 416 399 419 484 486 351 354
Europe 1,529 1,522 1,416 1,503 1,492 1,489 1,490 1,425 1,387 1,335 1,264
Asia-Pacific 850 733 697 633 619 602 556 586 556 522 426
Other Non-U.S. 114 116 118 122 119 112 103 101 102 105 101
------------------------------------------------------------------------------------
Worldwide 4,011 3,792 3,659 3,680 3,616 3,619 3,585 3,546 3,624 3,368 3,211
====================================================================================
Petroleum product sales
United States 1,342 1,261 1,198 1,196 1,152 1,203 1,210 1,109 1,147 1,113 1,057
Canada 561 542 526 520 517 513 527 597 625 433 430
Europe 1,930 1,925 1,869 1,898 1,872 1,847 1,863 1,796 1,718 1,680 1,634
Asia-Pacific and other Eastern Hemisphere 1,145 1,046 1,042 988 962 935 878 869 847 784 619
Latin America 452 437 441 426 422 411 391 384 383 386 388
------------------------------------------------------------------------------------
Worldwide 5,430 5,211 5,076 5,028 4,925 4,909 4,869 4,755 4,720 4,396 4,128
====================================================================================
Gasoline, naphthas 2,014 1,939 1,903 1,849 1,818 1,822 1,821 1,742 1,708 1,572 1,488
Heating oils, kerosene, diesel oils 1,743 1,718 1,655 1,644 1,569 1,557 1,561 1,491 1,498 1,424 1,344
Aviation fuels 457 442 414 403 379 376 372 382 382 344 338
Heavy fuels 539 498 488 530 558 546 535 543 507 466 419
Specialty petroleum products 677 614 616 602 601 608 580 597 625 590 539
------------------------------------------------------------------------------------
Worldwide 5,430 5,211 5,076 5,028 4,925 4,909 4,869 4,755 4,720 4,396 4,128
====================================================================================
(thousands of metric tons)
Chemical prime product sales 17,301 15,712 14,377 13,969 13,393 13,463 12,560 12,453 12,324 12,152 11,613
====================================================================================
(millions of metric tons)
Coal production 15 15 16 36 36 37 39 40 36 32 30
====================================================================================
(thousands of metric tons)
Copper production 205 203 202 191 183 133 108 112 119 134 101
====================================================================================
Operating statistics include 100 percent of operations of majority-owned
subsidiaries; for other companies, gas, crude production, petroleum product and
chemical prime product sales include Exxon's ownership percentage, and refining
throughput includes quantities processed for Exxon. Net production excludes
royalties and quantities due others when produced, whether payment is made in
kind or cash.
F27
EXHIBIT 21
Subsidiaries of the Registrant (1), (2) and (3)
AT DECEMBER 31, 1997
PERCENTAGE OF
VOTING SECURITIES
OWNED BY STATE OR
IMMEDIATE COUNTRY OF
PARENT(S) ORGANIZATION
----------------- ------------
Ancon Insurance Company, Inc. ................... 100 Vermont
Esso Australia Resources Ltd. ................... 100 Delaware
Delhi Petroleum Pty. Ltd. ...................... 100 Australia
Esso Eastern Inc. ............................... 100 Delaware
Esso Malaysia Berhad............................ 65 Malaysia
Esso Production Malaysia Inc. .................. 100 Delaware
Esso Sekiyu Kabushiki Kaisha.................... 100 Japan
Esso Singapore Private Limited.................. 100 Singapore
Esso (Thailand) Public Company Limited.......... 87.5 Thailand
Exxon Energy Limited............................ 100 Hong Kong
Exxon Yemen Inc................................. 100 Delaware
General Sekiyu K.K.(6).......................... 50.103 Japan
Tonen Kabushiki Kaisha(5)....................... 25 Japan
Esso Italiana S.p.A.(7).......................... 100 Italy
Esso Standard Oil S.A. Limited................... 100 Bahamas
Exxon Asset Management Company................... 75.5 Delaware
Exxon Capital Holdings Corporation............... 100 Delaware
Exxon Capital Corporation....................... 100 New Jersey
Exxon Capital Investment, Inc................. 100 Delaware
Exxon Chemical Asset Management Partnership(8)... 100 Delaware
Exxon Mobile Bay Limited Partnership(9)......... 100 Delaware
Paxon Polymer Company, L.P. II(10)............ 100 Delaware
Exxon Chemical Eastern Inc....................... 100 Delaware
Exxon Chemical Singapore Private Limited........ 100 Singapore
Singapore Aromatics Company Private (5)....... 50 Singapore
Exxon Chemical HDPE Inc. ........................ 100 Delaware
Exxon Chemical InterAmerica Inc. ................ 100 Delaware
Exxon (Barbados) Foreign Sales Corp............. 100 Barbados
1
PERCENTAGE OF
VOTING SECURITIES
OWNED BY
IMMEDIATE STATE OR COUNTRY OF
PARENT(S) ORGANIZATION
----------------- --------------------
Exxon International Holdings, Inc. ..... 100 Delaware
Esso Aktiengesellschaft(11)............ 100 Germany
BRIGITTA Erdgas und Erdoel GmbH,
Hannover(4)(5)...................... 50 Germany
Elwerath Erdgas und Erdoel GmbH, Han-
nover(4)(5)......................... 50 Germany
Mineraloelraffinerie Oberrhein GmbH &
Co. KG(5)........................... 25 Germany
Esso Austria Aktiengesellschaft(12).... 100 Austria
Esso Exploration and Production Norway
AS.................................... 100 Norway
Esso Holding Company Holland Inc....... 100 Delaware
Esso Holding B.V. ................... 100 Netherlands/Delaware
Esso N.V./S.A. (13)................. 100 Belgium/Delaware
Exxon Chemical Antwerp Ethylene
N.V. (14).......................... 100 Belgium
Fina Antwerp Olefins N.V.(5)....... 35 Belgium
Esso Nederland B.V. ................. 100 Netherlands
Exxon Chemical Holland Inc. ......... 100 Delaware
Exxon Chemical Holland B.V. ........ 100 Netherlands
Nederlandse Aardolie Maatschappij
B.V. (4)(5)......................... 50 Netherlands
Esso Holding Company U.K. Inc. ........ 100 Delaware
Esso UK plc.......................... 100 England
Esso Exploration and Production UK
Limited............................ 100 England
Esso Petroleum Company, Limited..... 100 England
Exxon Chemical Limited............... 100 England
Exxon Chemical Olefins Inc. ......... 100 Delaware
Esso Norge AS ......................... 100 Norway
Esso Sociedad Anonima Petrolera Argen-
tina.................................. 100 Argentina
Esso Societe Anonyme Francaise......... 81.548 France
Esso (Switzerland)..................... 100 Switzerland
Exxon Land Development, Inc. ........... 100 Arizona
Exxon Minerals International Inc........ 100 Delaware
Compania Minera Disputada de Las
Condes S.A. .......................... 99.9252 Chile
Exxon Overseas Corporation.............. 100 Delaware
Exxon Chemical Arabia Inc.............. 100 Delaware
Al-Jubail Petrochemical Compa-
ny(4)(5)............................ 50 Saudi Arabia
Exxon Equity Holding Company........... 100 Delaware
Exxon Overseas Investment Corporation.. 100 Delaware
Exxon Financial Services Company Lim-
ited................................ 100 Bahamas
Exxon Ventures Inc. ................. 100 Delaware
Exxon Azerbaijan Limited............ 100 Bahamas
Mediterranean Standard Oil Co.......... 100 Delaware
Esso Trading Company of Abu Dhabi.... 100 Delaware
Exxon Pipeline Holdings, Inc. .......... 100 Delaware
Exxon Pipeline Company................. 100 Delaware
Exxon Rio Holding Inc................... 100 Delaware
Esso Brasileira de Petroleo
Limitada(15).......................... 100 Brazil
Exxon Sao Paulo Holding Inc. ........... 100 Delaware
Imperial Oil Limited.................... 69.6 Canada
International Colombia Resources Corpo-
ration(16)............................. 100 Delaware
SeaRiver Maritime Financial Holdings,
Inc. .................................. 100 Delaware
SeaRiver Maritime, Inc. ............... 100 Delaware
Societe Francaise EXXON CHEMICAL........ 99.359 France
Exxon Chemical France.................. 100 France
Exxon Chemical Polymeres SNC(17)....... 100 France
2
- - ---------------------
NOTES:
(1) For purposes of this list, if the registrant owns directly or indirectly
approximately 50 percent of the voting securities of any person and
approximately 50 percent of the voting securities of such person is owned
directly or indirectly by another interest, or if the registrant includes
its share of net income of any other unconsolidated person in
consolidated net income, such person is deemed to be a subsidiary.
(2) With respect to certain companies, shares in names of nominees and
qualifying shares in names of directors are included in the above
percentages.
(3) The names of other subsidiaries have been omitted from the above list
since considered in the aggregate, they would not constitute a
significant subsidiary.
(4) The registrant owns directly or indirectly approximately 50 percent of
the securities of this person and approximately 50 percent of the voting
securities of this person is owned directly or indirectly by another
single interest.
(5) The investment in this unconsolidated person is represented by the
registrant's percentage interest in the underlying net assets of such
person.
(6) Dual ownership; of the 50.103%, 48.571% is owned by Esso Eastern Inc. and
1.532% is owned by Esso Sekiyu Kabushiki Kaisha.
(7) Dual ownership; of the 100%, 90% is owned by Exxon Corporation and 10% by
Exxon Overseas Corporation.
(8) Dual ownership; of the 100%, 68.4% is owned by Exxon Corporation and
31.6% is owned by Exxon Asset Management Company.
(9) Dual ownership; of the 100%, 81.4% is owned by Exxon Chemical Asset
Management Partnership and 18.6% is owned by Exxon Corporation.
(10) Dual ownership; of the 100%, 98% is owned by Exxon Mobile Bay Limited
Partnership and 2% is owned by Exxon Chemical HDPE Inc.
(11) Dual ownership; of the 100%, 99.998% is owned by Exxon International
Holdings, Inc. and 0.002% is owned by Exxon Corporation.
(12) Dual ownership; of the 100%, 99.9996% is owned by Exxon International
Holdings, Inc. and 0.0004% is owned by Exxon Corporation.
(13) Dual ownership; of the 100%, 99.99997% is owned by Esso Holding B.V. and
0.00003% is owned by Exxon Chemical Holland Inc.
(14) Dual ownership; of the 100%, 99.9994% is owned by Esso Holding B.V. and
0.0006% is owned by Exxon Chemical Holland Inc.
(15) Dual ownership; of the 100%, 90% is owned by Exxon Rio Holding Inc. and
10% is owned by Exxon Sao Paulo Holding Inc.
(16) Dual ownership; of the 100%, 55% is owned by Exxon Corporation and 45% is
owned by Esso Holding Company Holland Inc.
(17) Dual ownership; of the 100%, 98% is owned by Societe Francaise EXXON
CHEMICAL and 2% is owned by Exxon Chemical France.
3
5
1,000,000
12-MOS
DEC-31-1997
DEC-31-1997
4,047
15
8,069
101
5,487
21,192
127,778
61,364
96,064
19,654
7,050
0
190
2,323
41,147
96,064
135,142
137,242
57,971
57,971
19,272
0
415
12,798
4,338
8,460
0
0
0
8,460
3.41
3.37
5
1,000,000
3-MOS 6-MOS 9-MOS
DEC-31-1997 DEC-31-1997 DEC-31-1997
MAR-31-1997 JUN-30-1997 SEP-30-1997
5,513 4,943 4,781
19 22 18
8,525 7,799 7,580
96 95 92
5,489 5,520 5,486
23,348 22,163 21,686
128,621 129,218 129,176
61,301 61,682 62,168
98,731 97,970 97,123
20,959 20,459 20,250
7,334 7,161 7,281
0 0 0
284 221 206
2,322 2,322 2,322
41,064 41,272 40,828
98,731 97,970 97,123
34,720 68,399 100,780
35,203 69,431 102,180
15,427 29,838 43,457
15,427 29,838 43,457
4,862 9,652 14,311
0 0 0
76 182 289
3,539 6,696 9,462
1,364 2,556 3,502
2,175 4,140 5,960
0 0 0
0 0 0
0 0 0
2,175 4,140 5,960
0.87 1.66 2.40
0.86 1.64 2.37
RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 128, "EARNINGS PER SHARE"
5
1,000,000
3-MOS 6-MOS 9-MOS 12-MOS 12-MOS
DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1995
MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996 DEC-31-1995
3,523 3,222 2,910 2,951 1,508
140 102 23 18 281
7,065 6,753 7,181 8,074 7,055
103 99 98 98 104
5,339 5,355 5,468 5,258 5,681
18,964 18,401 18,578 19,910 17,318
122,747 124,045 125,100 126,366 122,337
57,564 58,558 59,186 59,759 56,891
92,579 92,396 93,468 95,527 91,296
19,201 18,667 19,698 19,505 18,736
7,679 7,566 7,224 7,236 7,778
0 0 0 0 0
431 345 322 303 454
2,822 2,822 2,822 2,822 2,822
37,769 38,211 38,647 40,417 37,160
92,579 92,396 93,468 95,527 91,296
30,474 62,099 95,037 131,543 121,804
31,205 63,416 96,737 134,249 123,920
12,597 25,922 39,948 56,406 50,320
12,597 25,922 39,948 56,406 50,320
4,800 9,525 14,229 19,347 18,851
0 0 0 0 0
76 212 309 464 485
2,841 5,493 8,040 11,916 10,442
956 2,038 3,025 4,406 3,972
1,885 3,455 5,015 7,510 6,470
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
1,885 3,455 5,015 7,510 6,470
0.76 1.39 2.01 3.01 2.59
0.75 1.37 1.99 2.99 2.58
RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 128, "EARNINGS PER SHARE".
