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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
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 MOBIL CORPORATION
_________________________________________________________
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
_______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5959 Las Colinas Boulevard, Irving, Texas 75039-2298
_____________________________________________________________
(Address of principal executive offices) (Zip Code)
(972) 444-1000
_____________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 2002
_______________________________ ________________________________
Common stock, without par value 6,782,021,295
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
TABLE OF CONTENTS
Page
Number
______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three months ended March 31, 2002 and 2001
Condensed Consolidated Balance Sheet 4
As of March 31, 2002 and December 31, 2001
Condensed Consolidated Statement of Cash Flows 5
Three months ended March 31, 2002 and 2001
Notes to Condensed Consolidated Financial Statements 6-15
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16-21
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 6. Exhibits and Reports on Form 8-K 22
Signature 23
-2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
Three Months Ended
March 31,
__________________
2002 2001
____ ____
REVENUE
Sales and other operating revenue,
including excise taxes $42,718 $56,076
Earnings from equity interests and other revenue 813 1,224
_______ _______
Total revenue 43,531 57,300
_______ _______
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 18,013 24,878
Operating expenses 3,858 4,989
Selling, general and administrative expenses 3,138 3,060
Depreciation and depletion 2,020 1,976
Exploration expenses, including dry holes 218 280
Merger related expenses 83 121
Interest expense 88 77
Excise taxes 4,791 5,294
Other taxes and duties 7,945 8,193
Income applicable to minority and preferred interests 15 212
_______ _______
Total costs and other deductions 40,169 49,080
_______ _______
INCOME BEFORE INCOME TAXES 3,362 8,220
Income taxes 1,272 3,260
_______ _______
INCOME BEFORE EXTRAORDINARY ITEM 2,090 4,960
Extraordinary gain, net of income tax 0 40
_______ _______
NET INCOME $ 2,090 $ 5,000
======= =======
NET INCOME PER COMMON SHARE (DOLLARS)*
Before extraordinary gain $ 0.30 $ 0.71
Extraordinary gain, net of income tax 0.00 0.01
_______ _______
Net income $ 0.30 $ 0.72
======= =======
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION (DOLLARS)*
Before extraordinary gain $ 0.30 $ 0.70
Extraordinary gain, net of income tax 0.00 0.01
_______ _______
Net income $ 0.30 $ 0.71
======= =======
DIVIDENDS PER COMMON SHARE* $ 0.23 $ 0.22
* Prior year amounts restated to reflect two-for-one stock split
effective in June 2001.
-3-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
March 31, Dec. 31,
2002 2001
____ ____
ASSETS
Current assets
Cash and cash equivalents $ 6,622 $ 6,547
Notes and accounts receivable - net 18,640 19,549
Inventories
Crude oil, products and merchandise 7,154 6,743
Materials and supplies 1,167 1,161
Prepaid taxes and expenses 1,872 1,681
________ ________
Total current assets 35,455 35,681
Property, plant and equipment - net 89,253 89,602
Investments and other assets 17,329 17,891
________ ________
TOTAL ASSETS $142,037 $143,174
======== ========
LIABILITIES
Current liabilities
Notes and loans payable $ 3,395 $ 3,703
Accounts payable and accrued liabilities 23,159 22,862
Income taxes payable 3,624 3,549
________ ________
Total current liabilities 30,178 30,114
Long-term debt 7,118 7,099
Deferred income tax liability 16,162 16,359
Other long-term liabilities 16,212 16,441
________ ________
TOTAL LIABILITIES 69,670 70,013
________ ________
SHAREHOLDERS' EQUITY
Benefit plan related balances (139) (159)
Common stock, without par value:
Authorized: 9,000 million shares
Issued: 8,019 million shares 3,828 3,789
Earnings reinvested 96,245 95,718
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (6,077) (5,947)
Minimum pension liability adjustment (535) (535)
Unrealized losses on stock investments (56) (108)
Common stock held in treasury:
1,237 million shares at March 31, 2002 (20,899)
1,210 million shares at December 31, 2001 (19,597)
________ ________
TOTAL SHAREHOLDERS' EQUITY 72,367 73,161
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $142,037 $143,174
======== ========
The number of shares of common stock issued and outstanding at March 31,
2002 and December 31, 2001 were 6,782,021,295 and 6,808,565,611,
respectively.
-4-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
Three Months Ended
March 31,
__________________
2002 2001
____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,090 $ 5,000
Depreciation and depletion 2,020 1,976
Changes in operational working capital, excluding
cash and debt 872 1,678
All other items - net (358) 75
_______ _______
Net cash provided by operating activities 4,624 8,729
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,426) (2,028)
Sales of subsidiaries, investments, and property,
plant and equipment 768 287
Other investing activities - net 421 649
_______ _______
Net cash used in investing activities (1,237) (1,092)
_______ _______
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 3,387 7,637
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 31 243
Reductions in long-term debt (15) (214)
Additions/(reductions) in short-term debt - net (362) (720)
Cash dividends to ExxonMobil shareholders (1,563) (1,522)
Cash dividends to minority interests (58) (63)
Changes in minority interests and sales/(purchases)
of affiliate stock (7) (16)
Net ExxonMobil shares acquired (1,310) (1,370)
_______ _______
Net cash used in financing activities (3,284) (3,662)
_______ _______
Effects of exchange rate changes on cash (28) (149)
_______ _______
Increase/(decrease) in cash and cash equivalents 75 3,826
Cash and cash equivalents at beginning of period 6,547 7,080
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,622 $10,906
======= =======
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 1,644 $ 1,491
Cash interest paid $ 153 $ 166
-5-
EXXON MOBIL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis Of Financial Statement Preparation
These unaudited condensed consolidated financial statements should be
read in the context of the consolidated financial statements and notes
thereto filed with the Securities and Exchange Commission in the
corporation's 2001 Annual Report on Form 10-K. In the opinion of the
corporation, the information furnished herein reflects all known
accruals and adjustments necessary for a fair statement of the results
for the periods reported herein. All such adjustments are of a normal
recurring nature. The corporation's exploration and production
activities are accounted for under the "successful efforts" method.
2. Accounting Changes
As of January 1, 2002, ExxonMobil adopted Financial Accounting Standards
Board Statements of Financial Accounting Standards No. 141 (FAS 141),
"Business Combinations", and No. 142 (FAS 142), "Goodwill and Other
Intangible Assets". Under FAS 141, the pooling of interests method of
accounting is no longer permitted and the purchase method must be used for
business combinations initiated after June 30, 2001. Under FAS 142,
goodwill and certain intangibles will no longer be amortized but will be
subject to annual impairment tests. The effect of adoption of the new
standards on the corporation's financial statements was negligible.
As of January 1, 2002, ExxonMobil adopted Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 144 (FAS 144),
"Accounting for the Impairment or Disposal of Long-Lived Assets". FAS 144
supercedes previous guidance related to the impairment or disposal of
long-lived assets. For long-lived assets to be held and used, it resolves
certain implementation issues of the former standards, but retains the
basic requirements of recognition and measurement of impairment losses.
For long-lived assets to be disposed of by sale, it broadens the
definition of those disposals that should be reported separately as
discontinued operations. There was no impact on the corporation of
adopting FAS 144, except that future sales of long-lived assets may be
required to be presented as discontinued operations, which would be a
different presentation than under previous accounting standards.
3. Recently Issued Statements of Financial Accounting Standards
In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143 (FAS 143), "Accounting for Asset
Retirement Obligations". FAS 143 is required to be adopted by the
corporation no later than January 1, 2003 and its primary impact will be to
change the method of accruing for upstream site restoration costs. These
costs are currently accrued ratably over the productive lives of the
assets. At the end of 2001, the cumulative amount accrued under this policy
was approximately $3.2 billion. Under FAS 143, the fair value of asset
retirement obligations will be recorded as liabilities when they are
incurred, which are typically at the time the assets are installed. Amounts
recorded for the related assets will be increased by the amount of these
obligations. Over time the liabilities will be accreted for the change in
their present value and the initial capitalized costs will be depreciated
over the useful lives of the related assets. The corporation is evaluating
the impact of adopting FAS 143.
-6-
4. Merger of Exxon Corporation and Mobil Corporation
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation merged
with Mobil Corporation so that Mobil became a wholly-owned subsidiary of
Exxon (the "Merger"). At the same time, Exxon changed its name to Exxon
Mobil Corporation. The Merger was accounted for as a pooling of interests.
In the first quarter of 2002, in association with the Merger, $83 million
of before tax costs ($60 million after tax) were recorded as merger related
expenses, including costs for rationalization of facilities and systems. In
the first quarter of 2001, merger related costs were $121 million before
tax ($90 million after tax). The severance reserve balance at the end of
the first quarter of 2002 is expected to be expended in 2002. The following
table summarizes the activity in the severance reserve for the quarter
ended March 31, 2002:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
197 0 75 122
5. Extraordinary Gains on Required Asset Divestitures
First quarter 2002 results included no extraordinary gains. First quarter
2001 included a net after-tax gain of $40 million (including an income tax
credit of $15 million), or $0.01 per common share, from asset divestments
that were required as a condition of the regulatory approval of the Merger.
These net gains on required divestments have been reported as extraordinary
items in accordance with accounting requirements for business combinations
accounted for as a pooling of interests.
6. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various
courts against Exxon Mobil Corporation and certain of its subsidiaries
relating to the accidental release of crude oil from the tanker Exxon
Valdez in 1989. The vast majority of the claims have been resolved leaving
a few compensatory damages cases to be tried. All of the punitive damage
claims were consolidated in the civil trial that began in May 1994.
In that trial, on September 24, 1996, the United States District Court for
the District of Alaska entered a judgment in the amount of $5.058 billion.
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. ExxonMobil appealed the judgment. On
November 7, 2001, the United States Court of Appeals for the Ninth Circuit
vacated the punitive damage award as being excessive under the
Constitution and remanded the case to the District Court for it to
determine the amount of the punitive damage award consistent with the
Ninth Circuit's holding. The Ninth Circuit upheld the compensatory damage
award which has been paid. The letter of credit was terminated on
February 1, 2002.
-7-
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between the corporation and various insurers arising
from the Valdez accident. Under terms of this settlement, ExxonMobil
received $480 million. Final income statement recognition of this
settlement continues to be deferred in view of uncertainty regarding the
ultimate cost to the corporation of the Valdez accident.
The ultimate cost to ExxonMobil from the lawsuits arising from the Exxon
Valdez grounding is not possible to predict and may not be resolved for a
number of years.
A dispute with a Dutch affiliate concerning an overlift of natural gas by
a German affiliate was resolved by payments by the German affiliate
pursuant to an arbitration award. The German affiliate had paid royalties
on the excess gas and recovered the royalties in 2001. The only
substantive issue remaining is the taxes payable on the final compensation
for the overlift. Resolution of this issue will not have a materially
adverse effect upon the corporation's operations or financial condition.
On December 19, 2000, a jury in Montgomery County, Alabama, returned a
verdict against the corporation in a contract dispute over royalties in
the amount of $87.69 million in compensatory damages and $3.42 billion in
punitive damages in the case of Exxon Corporation v. State of Alabama,
et al. The verdict was upheld by the trial court on May 4, 2001.
ExxonMobil has appealed the judgment and believes it should be set aside
or substantially reduced on factual and constitutional grounds. The
Alabama Supreme Court heard oral arguments on the appeal on April 25,
2002. The ultimate outcome is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
On May 22, 2001, a state court jury in New Orleans, Louisiana, returned a
verdict against the corporation and three other entities in a case brought
by a landowner claiming damage to his property. The property had been
leased by the landowner to a company that performed pipe cleaning and
storage services for customers, including the corporation. The jury
awarded the plaintiff $56 million in compensatory damages (90 percent to
be paid by the corporation) and $1 billion in punitive damages (all to be
paid by the corporation). The damage related to the presence of naturally
occurring radioactive material (NORM) on the site resulting from pipe
cleaning operations. The award has been upheld at the trial court.
ExxonMobil will appeal the judgment to the Louisiana Fourth Circuit Court
of Appeals and believes that the judgment should be set aside or
substantially reduced on factual and constitutional grounds. The ultimate
outcome is not expected to have a materially adverse effect upon the
corporation's operations or financial condition.
The U.S. Tax Court has decided the issue with respect to the pricing of
crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of
the corporation. This decision is subject to appeal. Certain other issues
for the years 1979-1993 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 ExxonMobil and
certain of its consolidated subsidiaries in other pending lawsuits, the
outcome of which is not expected to have a materially adverse effect upon
the corporation's operations or financial condition.
-8-
The corporation and certain of its consolidated subsidiaries are directly
and indirectly contingently liable for amounts similar to those at the
prior year-end relating to guarantees for notes, loans and performance
under contracts, including guarantees of non-U.S. excise taxes and customs
duties of other companies, entered into as a normal business practice,
under reciprocal arrangements.
Additionally, the corporation and its affiliates have numerous long-term
sales and purchase commitments in their various business activities, all
of which are expected to be fulfilled with no adverse consequences
material to the corporation's operations or financial condition. The
corporation's outstanding unconditional purchase obligations at March 31,
2002, were similar to those at the prior year-end period. Unconditional
purchase obligations as defined by accounting standards are those
long-term commitments that are noncancelable or cancelable only under
certain conditions, and that third parties have used to secure financing
for the facilities that will provide the contracted goods or services.
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from
time to time in varying degree by political developments and laws and
regulations, such as forced divestiture of assets; restrictions on
production, imports and exports; price controls; tax increases and
retroactive tax claims; expropriation of property; cancellation of
contract rights and environmental regulations. Both the likelihood of such
occurrences and their overall effect upon the corporation vary greatly
from country to country and are not predictable.
7. Nonowner Changes in Shareholders' Equity
Three Months Ended
March 31,
__________________
2002 2001
____ ____
Net income $ 2,090 $ 5,000
Changes in other nonowner changes in equity
Foreign exchange translation adjustment (130) (1,005)
Minimum pension liability adjustment 0 0
Unrealized gains/(losses) on stock investments 52 (7)
_______ _______
Total nonowner changes in shareholders' equity $ 2,012 $ 3,988
======= =======
-9-
8. Earnings Per Share*
Three Months Ended
March 31,
__________________
2002 2001
____ ____
NET INCOME PER COMMON SHARE
Income before extraordinary item (millions of dollars) $ 2,090 $ 4,960
Weighted average number of common shares
outstanding (millions of shares) 6,793 6,912
Net income per common share (dollars)
Before extraordinary gain $ 0.30 $ 0.71
Extraordinary gain, net of income tax 0.00 0.01
_______ _______
Net income $ 0.30 $ 0.72
======= =======
NET INCOME PER COMMON SHARE - ASSUMING DILUTION
Income before extraordinary item (millions of dollars) $ 2,090 $ 4,960
Adjustment for assumed dilution 0 (3)
_______ _______
Income available to common shares $ 2,090 $ 4,957
======= =======
Weighted average number of common shares
outstanding (millions of shares) 6,793 6,912
Plus: Issued on assumed exercise of stock options 65 77
_______ _______
Weighted average number of common shares outstanding 6,858 6,989
======= =======
Net income per common share
- assuming dilution (dollars)
Before extraordinary gain $ 0.30 $ 0.70
Extraordinary gain, net of income tax 0.00 0.01
_______ _______
Net income $ 0.30 $ 0.71
======= =======
* Prior year amounts restated to reflect two-for-one stock split effective in
June 2001.
-10-
9. Disclosures about Segments and Related Information
Three Months Ended
March 31,
__________________
2002 2001
____ ____
(millions of dollars)
EARNINGS AFTER INCOME TAX
Upstream
United States $ 444 $ 1,628
Non-U.S. 1,565 2,150
Downstream
United States 14 409
Non-U.S. (42) 590
Chemicals
United States 70 45
Non-U.S. 62 155
All Other (23) 23
________ ________
Corporate Total $ 2,090 $ 5,000
======== ========
Extraordinary gains included above:
All Other $ 0 $ 40
SALES AND OTHER OPERATING REVENUE
Upstream
United States $ 797 $ 2,286
Non-U.S. 2,923 4,497
Downstream
United States 9,568 12,729
Non-U.S. 25,780 31,928
Chemicals
United States 1,476 1,965
Non-U.S. 2,018 2,445
All Other 156 226
________ ________
Corporate Total $ 42,718 $ 56,076
======== ========
INTERSEGMENT REVENUE
Upstream
United States $ 1,113 $ 1,564
Non-U.S. 2,748 3,427
Downstream
United States 1,209 1,292
Non-U.S. 3,890 4,032
Chemicals
United States 541 698
Non-U.S. 500 586
All Other 66 51
-11-
10. Condensed Consolidating Financial Information Related to Guaranteed
Securities Issued by Subsidiaries
Exxon Mobil Corporation has fully and unconditionally guaranteed the 6.0%
notes due 2005 ($106 million of long-term debt at March 31, 2002) and the
6.125% notes due 2008 ($160 million) of Exxon Capital Corporation and the
deferred interest debentures due 2012 ($929 million) and the debt
securities due 2003-2011 ($105 million long-term and $10 million
short-term) of SeaRiver Maritime Financial Holdings, Inc. Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc. are
100 percent owned subsidiaries of Exxon Mobil Corporation.
The following condensed consolidating financial information is provided
for Exxon Mobil Corporation, as guarantor, and for Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc., as issuers,
as an alternative to providing separate financial statements for the
issuers. The accounts of Exxon Mobil Corporation, Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc. are presented
utilizing the equity method of accounting for investments in
subsidiaries.
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ____________
(millions of dollars)
Condensed consolidated statement of income for three months ended March 31, 2002
________________________________________________________________________________
Revenue
Sales and other operating
revenue, including
excise taxes $1,844 $ - $ - $ 40,874 $ - $ 42,718
Earnings from equity
interests and other
revenue 2,211 5 4 627 (2,034) 813
Intercompany revenue 2,824 11 7 24,773 (27,615) -
______ ______ ______ ________ _________ ________
Total revenue 6,879 16 11 66,274 (29,649) 43,531
______ ______ ______ ________ _________ ________
Costs and other
deductions
Crude oil and product
purchases 2,574 - - 40,851 (25,412) 18,013
Operating expenses 1,123 - - 3,808 (1,073) 3,858
Selling, general and
administrative
expenses 458 1 - 2,681 (2) 3,138
Depreciation and
depletion 390 1 1 1,628 - 2,020
Exploration expenses,
including dry holes 43 - - 175 - 218
Merger related
expenses 16 - - 70 (3) 83
Interest expense 138 6 28 1,043 (1,127) 88
Excise taxes - - - 4,791 - 4,791
Other taxes and duties 3 - - 7,942 - 7,945
Income applicable to
minority and
preferred interests - - - 15 - 15
_______ ______ ______ _______ _________ ________
Total costs and
other deductions 4,745 8 29 63,004 (27,617) 40,169
_______ ______ ______ ______ _________ ________
Income before income
taxes 2,134 8 (18) 3,270 (2,032) 3,362
Income taxes 44 3 (8) 1,233 - 1,272
_______ ______ ______ _______ _________ ________
Income before
extraordinary item 2,090 5 (10) 2,037 (2,032) 2,090
Extraordinary gain,
net of income tax - - - - - -
_______ ______ ______ _______ _________ ________
Net income $ 2,090 $ 5 $ (10) $ 2,037 $ (2,032) $ 2,090
======= ====== ====== ======= ========= ========
-12-
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ____________
(millions of dollars)
Condensed consolidated statement of income for three months ended March 31, 2001
________________________________________________________________________________
Revenue
Sales and other operating
revenue, including
excise taxes $ 9,256 $ - $ - $ 46,820 $ - $ 56,076
Earnings from equity
interests and other
revenue 4,352 - 16 1,063 (4,207) 1,224
Intercompany revenue 1,128 294 21 27,346 (28,789) -
________ _______ _______ ________ _______ ________
Total revenue 14,736 294 37 75,229 (32,996) 57,300
_______ _______ _______ ________ _______ ________
Costs and other
deductions
Crude oil and product
purchases 5,488 - - 45,402 (26,012) 24,878
Operating expenses 1,679 1 - 4,240 (931) 4,989
Selling, general and
administrative
expenses 509 - - 2,551 - 3,060
Depreciation and
depletion 376 1 1 1,598 - 1,976
Exploration expenses,
including dry holes 44 - - 236 - 280
Merger related
expenses 35 - - 86 - 121
Interest expense 380 275 31 1,237 (1,846) 77
Excise taxes 608 - - 4,686 - 5,294
Other taxes and duties 4 - - 8,189 - 8,193
Income applicable to
minority and
preferred interests - - - 212 - 212
_______ _______ _______ ________ _______ ________
Total costs and
other deductions 9,123 277 32 68,437 (28,789) 49,080
_______ _______ _______ ________ _______ ________
Income before income
taxes 5,613 17 5 6,792 (4,207) 8,220
Income taxes 653 6 (4) 2,605 - 3,260
________ _______ _______ ________ _______ ________
Income before
extraordinary item 4,960 11 9 4,187 (4,207) 4,960
Extraordinary gain,
net of income tax 40 - - 25 (25) 40
________ _______ _______ ________ _______ _______
Net income $ 5,000 $ 11 $ 9 $ 4,212 $(4,232) $ 5,000
======== ======= ======= ======== ======= =======
-13-
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ___________
(millions of dollars)
Condensed consolidated balance sheet as of March 31, 2002
_________________________________________________________
Cash and cash
equivalents $ 937 $ - $ - $ 5,685 $ - $ 6,622
Notes and accounts
receivable - net 2,292 - - 16,348 - 18,640
Inventories 1,047 - - 7,274 - 8,321
Prepaid taxes and
expenses 180 2 14 1,676 - 1,872
________ ________ ________ ________ _________ ________
Total current
assets 4,456 2 14 30,983 - 35,455
Property, plant and
equipment - net 16,827 107 6 72,313 - 89,253
Investments and other
assets 94,544 - 556 326,445 (404,216) 17,329
Intercompany receivables 6,752 1,409 1,435 285,244 (294,840) -
________ ________ ________ ________ _________ ________
Total assets $122,579 $ 1,518 $ 2,011 $714,985 $(699,056) $142,037
======== ======== ======== ======== ========= ========
Notes and loan payables $ - $ 10 $ 10 $ 3,375 $ - $ 3,395
Accounts payable and
accrued liabilities 2,583 7 1 20,568 - 23,159
Income taxes payable 730 - - 2,894 - 3,624
________ ________ ________ ________ _________ ________
Total current
liabilities 3,313 17 11 26,837 - 30,178
Long-term debt 1,271 266 1,034 4,547 - 7,118
Deferred income tax
liabilities 2,976 32 301 12,853 - 16,162
Other long-term
liabilities 4,371 - - 11,841 - 16,212
Intercompany payables 38,281 307 382 255,870 (294,840) -
________ ________ ________ ________ _________ ________
Total liabilities 50,212 622 1,728 311,948 (294,840) 69,670
Earnings reinvested 96,245 90 (111) 50,833 (50,812) 96,245
Other shareholders'
equity (23,878) 806 394 352,204 (353,404) (23,878)
________ ________ ________ ________ _________ ________
Total shareholders'
equity 72,367 896 283 403,037 (404,216) 72,367
________ ________ ________ ________ _________ ________
Total liabilities
and shareholders'
equity $122,579 $ 1,518 $ 2,011 $714,985 $(699,056) $142,037
======== ======== ======== ======== ========= ========
Condensed consolidated balance sheet as of December 31, 2001
____________________________________________________________
Cash and cash
equivalents $ 1,375 $ - $ - $ 5,172 $ - $ 6,547
Notes and accounts
receivable - net 2,458 - - 17,091 - 19,549
Inventories 996 - - 6,908 - 7,904
Prepaid taxes and
expenses 155 5 8 1,513 - 1,681
________ ________ ________ ________ _________ ________
Total current
assets 4,984 5 8 30,684 - 35,681
Property, plant and
equipment - net 16,843 108 6 72,645 - 89,602
Investments and other
assets 92,844 - 552 323,689 (399,194) 17,891
Intercompany receivables 8,466 1,365 1,431 266,527 (277,789) -
________ ________ ________ ________ _________ ________
Total assets $123,137 $ 1,478 $ 1,997 $693,545 $(676,983) $143,174
======== ======== ======== ======== ========= ========
Notes and loan payables $ - $ 35 $ 10 $ 3,658 $ - $ 3,703
Accounts payable and
accrued liabilities 2,735 6 1 20,120 - 22,862
Income taxes payable 767 - - 2,782 - 3,549
________ ________ ________ ________ _________ ________
Total current
liabilities 3,502 41 11 26,560 - 30,114
Long-term debt 1,258 266 1,008 4,567 - 7,099
Deferred income tax
liabilities 2,989 33 302 13,035 - 16,359
Other long-term
liabilities 4,373 - - 12,068 - 16,441
Intercompany payables 37,854 248 382 239,305 (277,789) -
________ ________ ________ ________ _________ ________
Total liabilities 49,976 588 1,703 295,535 (277,789) 70,013
Earnings reinvested 95,718 84 (100) 48,907 (48,891) 95,718
Other shareholders'
equity (22,557) 806 394 349,103 (350,303) (22,557)
________ ________ ________ ________ _________ ________
Total shareholders'
equity 73,161 890 294 398,010 (399,194) 73,161
________ ________ ________ ________ _________ ________
Total liabilities
and shareholders'
equity $123,137 $ 1,478 $ 1,997 $693,545 $(676,983) $143,174
======== ======== ======== ======== ========= ========
-14-
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ____________
(millions of dollars)
Condensed consolidated statement of cash flows for three months ended March 31, 2002
____________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 662 $ 10 $ 4 $ 4,057 $ (109) $ 4,624
_______ _______ _______ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (415) - - (2,011) - (2,426)
Sales of long-term assets 26 - - 742 - 768
Net intercompany
investing 2,162 (44) (4) (2,290) 176 -
All other investing, net - - - 421 - 421
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
investing activities 1,773 (44) (4) (3,138) 176 (1,237)
_______ _______ _______ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 31 - 31
Reductions in long-term
debt - - - (15) - (15)
Additions/(reductions)
in short-term
debt - net - (25) - (337) - (362)
Cash dividends (1,563) - - (109) 109 (1,563)
Net ExxonMobil shares
(acquired) (1,310) - - - - (1,310)
Net intercompany
financing activity - 59 - 117 (176) -
All other financing, net - - - (65) - (65)
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
financing activities (2,873) 34 - (378) (67) (3,284)
_______ _______ _______ ________ ________ ________
Effects of exchange rate
changes on cash - - - (28) - (28)
_______ _______ _______ ________ ________ ________
Increase/(decrease) in
cash and cash
equivalents $ (438) $ - $ - $ 513 $ - $ 75
======= ======= ======= ======== ======== ========
Condensed consolidated statement of cash flows for three months ended March 31, 2001
____________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 2,052 $ 14 $ 27 $ 6,921 $ (285) $ 8,729
_______ _______ _______ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (445) - - (1,583) - (2,028)
Sales of long-term assets 110 - - 177 - 287
Net intercompany
investing 2,492 (2,887) 3 437 (45) -
All other investing, net (12) - - 661 - 649
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
investing activities 2,145 (2,887) 3 (308) (45) (1,092)
_______ _______ _______ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 243 - 243
Reductions in long-term
debt (1) (12) - (201) - (214)
Additions/(reductions)
in short-term
debt - net 2 (23) - (699) - (720)
Cash dividends (1,522) - - (285) 285 (1,522)
Net ExxonMobil shares
(acquired) (1,370) - - - - (1,370)
Net intercompany
financing activity - 2,908 (30) (2,923) 45 -
All other financing, net - - - (79) - (79)
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
financing activities (2,891) 2,873 (30) (3,944) 330 (3,662)
_______ _______ _______ ________ ________ ________
Effects of exchange rate
changes on cash - - - (149) - (149)
_______ _______ _______ ________ ________ ________
Increase/(decrease) in
cash and cash
equivalents $ 1,306 $ - $ - $ 2,520 $ - $ 3,826
======= ======= ======= ======== ======== ========
-15-
EXXON MOBIL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
First Quarter
____________________
2002 2001
____ ____
(millions of dollars)
Earnings including merger effects
_________________________________
Upstream
United States $ 444 $ 1,628
Non-U.S. 1,565 2,150
Downstream
United States 14 409
Non-U.S. (42) 590
Chemicals
United States 70 45
Non-U.S. 62 155
Other operations 153 141
Corporate and financing (116) (68)
Merger expenses (60) (90)
Gain from required asset divestitures 0 40
_______ _______
NET INCOME $ 2,090 $ 5,000
======= =======
Net income per common share* $ 0.30 $ 0.72
Net income per common share
- assuming dilution* $ 0.30 $ 0.71
Merger effects
______________
Merger expenses $ (60) $ (90)
Gain from required asset divestitures 0 40
_______ _______
TOTAL $ (60) $ (50)
======= =======
Earnings excluding merger effects
_________________________________
Upstream
United States $ 444 $ 1,628
Non-U.S. 1,565 2,150
Downstream
United States 14 409
Non-U.S. (42) 590
Chemicals
United States 70 45
Non-U.S. 62 155
Other operations 153 141
Corporate and financing (116) (68)
_______ _______
TOTAL $ 2,150 $ 5,050
======= =======
Earnings per common share* $ 0.31 $ 0.73
Earnings per common share
- assuming dilution* $ 0.31 $ 0.72
* Prior year amounts restated to reflect two-for-one stock split effective in
June 2001.
-16-
REVIEW OF FIRST QUARTER 2002 RESULTS
Excluding merger effects, estimated first quarter 2002 earnings were
$2,150 million ($0.31 per share), a decrease of $2,900 million from the record
first quarter of 2001. Including merger effects, net income of $2,090 million
($0.30 per share) decreased $2,910 million.
Revenue for the first quarter of 2002 totaled $43,531 million compared with
$57,300 million in 2001. Capital and exploration expenditures of $2,974 million
in the first quarter of 2002 were up $458 million, or 18 percent, compared with
$2,516 million last year. Upstream capital spending was up 28 percent
consistent with plans to grow profitable production levels.
Excluding merger effects, ExxonMobil's first quarter 2002 earnings of
$2,150 million were down $730 million from fourth quarter 2001 earnings of
$2,880 million.
Compared with the fourth quarter of 2001, upstream earnings improved
$339 million, reflecting an upward trend in crude oil prices. Liquids volumes
were also higher as production from new operations more than offset OPEC quota
restrictions and natural field decline. Gas volumes were up 3 percent
reflecting higher production in Indonesia and seasonal demand patterns in
Europe.
Downstream results fell $1,047 million from the fourth quarter of 2001.
Severely compressed industry refining and marketing margins were experienced
worldwide and were the primary driver in the decline. Additionally, the absence
of benefits from planned inventory reductions that occurred in the fourth
quarter contributed to the decrease.
Industry conditions have improved in both the upstream and downstream thus far
in the second quarter. Oil prices have remained above first quarter levels and
natural gas prices in North America have also improved. Early in the quarter,
we have seen recovery in some refining and marketing margins, although they
remain at low levels, particularly in the Asia-Pacific region.
Excluding merger effects, ExxonMobil's first quarter 2002 earnings of
$2,150 million were down $2,900 million from the record set last year. Net
income was $2,090 million. The reduction in earnings reflected weakened
conditions in all business segments, including lower crude oil prices, a sharp
decline in natural gas realizations, and significantly weaker refining and
marketing margins. Ample inventories, weakened demand and rapidly rising raw
materials costs created the worst downstream conditions since the mid-80s.
Capital expenditures increased in line with higher full-year spending plans,
consistent with a disciplined, long-term focus on investing for profitable
growth.
Upstream earnings were $2,009 million, a decrease of $1,769 million from the
record first quarter 2001 results. Average realizations on crude oil sales were
20 percent lower than the prior year, and natural gas prices in North America
fell about 70 percent from the historic highs reached during the same period
last year. Liquids production, excluding the impact of OPEC quota restrictions,
was consistent with plans. Natural gas volumes were down 3 percent due to a
reduction in weather related demand in Europe and also were consistent with
plans.
Downstream losses were $28 million, versus $999 million of earnings in last
year's first quarter, reflecting historically weak industry-wide margin as
product prices did not keep pace with rising crude prices. Refining margins
dropped sharply in the U.S. and Europe, and remained depressed in Asia-Pacific
with particular weakness in Japan.
-17-
First quarter marketing margins in the U.S. were down significantly from a year
earlier, and also declined in other major markets worldwide. In total, the
confluence of margin weakness in both the refining and marketing sectors led to
a downstream margin environment that was the worst seen since the mid-80s.
Worldwide sales volumes decreased 4 percent reflecting reduced weather related
demand for heating oil and lower jet fuels sales. Earnings were also adversely
affected by foreign exchange losses in Argentina.
Chemicals earnings of $132 million declined despite higher sales volumes which
exceeded the record first quarter levels achieved last year. Margins remained
depressed, with continuing pressure on product realizations. Outside the U.S.,
higher volumes reflecting capacity additions in Singapore and Saudi Arabia were
more than offset by weaker margins. Earnings from other operations of
$153 million increased slightly.
First quarter net income of $2,090 million included merger expenses of
$60 million.
Although first quarter earnings were negatively affected by declines in prices
and margins, ExxonMobil continued its vigorous pursuit of plans and programs to
enhance shareholder value. Each of the businesses captured additional
efficiencies in line with planned full-year targets. Capital and exploration
expenditures increased 18 percent, including a 28 percent increase in the
upstream, laying the groundwork for future profitable production growth.
In the first quarter, the Corporation acquired 35 million shares at a gross
cost of $1,450 million to offset the dilution associated with benefit plans and
to reduce common stock outstanding.
OTHER COMMENTS ON FIRST QUARTER 2002 COMPARED WITH FIRST QUARTER 2001
Upstream earnings were $2,009 million, significantly lower than the first
quarter record achieved in 2001 reflecting a 20 percent decline in crude oil
realizations and a 70 percent reduction in North America natural gas prices
from their historic highs last year.
Liquids production of 2,538 kbd (thousands of barrels per day) decreased from
2,620 kbd in the first quarter of 2001. Higher production in Angola and
Malaysia was offset by OPEC quota restrictions and natural field declines in
mature areas. First quarter natural gas production of 11,744 mcfd (millions of
cubic feet per day) compared with 12,119 mcfd last year. Improvements in
Asia-Pacific volumes, partly from the absence of production curtailments due to
security concerns at the Arun field in Indonesia, were offset by reduced demand
in Europe and natural field decline in mature areas.
Earnings from U.S. upstream operations were $444 million, a decrease of
$1,184 million from the prior year, reflecting the sharp decline in natural gas
prices. Upstream earnings outside the U.S. were $1,565 million, a decrease of
$585 million.
Downstream earnings decreased substantially from the first quarter of last
year, reflecting significantly lower refining margins in the U.S. and Europe,
with continued weakness in Asia-Pacific. Refining margins in Japan dropped
sharply and marketing margins were depressed worldwide. Petroleum product sales
were 7,697 kbd, 288 kbd lower than last year's first quarter due to lower
demand in Asia-Pacific and Europe.
-18-
U.S. downstream earnings were $14 million, down $395 million. Non-U.S.
downstream losses of $42 million were $632 million lower than last year's first
quarter earnings of $590 million. In addition to refining and marketing margin
effects, non-U.S. downstream results included negative foreign exchange effects
in Argentina.
Chemicals earnings were $132 million, down $68 million from the same quarter a
year ago reflecting continuing pressure on product realizations in the U.S.
manufacturing sector as well as margin declines outside the U.S. Prime product
sales volumes of 6,720 kt (thousands of metric tons) exceeded last year's
record level, as declines in the U.S. were more than offset by increased sales
outside of the U.S., helped by recent capacity additions.
Earnings from other operations, including coal, minerals and power, totaled
$153 million, compared with $141 million last year. Corporate and financing
expenses of $116 million compared with $68 million in 2001. The increase
reflected the impact of higher pension expenses.
During the period, the company continued to benefit from favorable tax effects.
First quarter net income included $60 million of after-tax merger expenses,
including costs for rationalization of facilities and systems.
MERGER OF EXXON CORPORATION AND MOBIL CORPORATION
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation merged
with Mobil Corporation so that Mobil became a wholly-owned subsidiary of Exxon
(the "Merger"). At the same time, Exxon changed its name to Exxon Mobil
Corporation. The Merger was accounted for as a pooling of interests.
In the first quarter of 2002, in association with the Merger, $83 million of
before tax costs ($60 million after tax) were recorded as merger related
expenses, including costs for rationalization of facilities and systems. In the
first quarter of 2001, merger related costs were $121 million before tax
($90 million after tax). The severance reserve balance at the end of the first
quarter of 2002 is expected to be expended in 2002. The following table
summarizes the activity in the severance reserve for the quarter ended
March 31, 2002:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
197 0 75 122
Merger related expenses are expected to grow to approximately $2.9 billion
before tax on a cumulative basis by the end of 2002. Merger synergy
initiatives, including cost savings, efficiency gains, and revenue
enhancements, are on track.
First quarter 2002 results included no extraordinary gains. First quarter 2001
included a net after-tax gain of $40 million (including an income tax credit of
$15 million), or $0.01 per common share, from asset divestments that were
required as a condition of the regulatory approval of the Merger. These net
gains on required divestments have been reported as extraordinary items in
accordance with accounting requirements for business combinations accounted for
as a pooling of interests.
-19-
LIQUIDITY AND CAPITAL RESOURCES
Net cash generation before financing activities was $3,387 million in the first
three months of 2002 versus $7,637 million in the same period last year.
Operating activities provided net cash of $4,624 million, a decrease of
$4,105 million from the prior year, influenced by lower net income. Investing
activities used net cash of $1,237 million, compared to a net use of
$1,092 million in the prior year, reflecting higher additions to property,
plant, and equipment and higher asset divestment proceeds.
Net cash used in financing activities was $3,284 million in the first quarter
of 2002 versus $3,662 million in the same quarter last year reflecting a lower
level of debt reductions in the current year.
During the first quarter of 2002, Exxon Mobil Corporation purchased 35 million
shares of its common stock for the treasury at a gross cost of $1,450 million.
These purchases were to offset shares issued in conjunction with company
benefit plans and programs and to reduce the number of shares outstanding.
Shares outstanding were reduced from 6,809 million at the end of 2001 to
6,782 million at the end of the first quarter 2002. Purchases may be made in
both the open market and through negotiated transactions, and may be
discontinued at any time.
Revenue for the first quarter of 2002 totaled $43,531 million compared to
$57,300 million in the first quarter 2001 reflecting significantly lower
prices.
Capital and exploration expenditures were $2,974 million in the first quarter
2002 compared to $2,516 million in last year's first quarter. In 2002,
capital and exploration investments are expected to increase by 10 percent
over 2001 primarily driven by ExxonMobil's large portfolio of upstream
projects.
Total debt of $10.5 billion at March 31, 2002 decreased $0.3 billion from
year-end 2001. The corporation's debt to total capital ratio was 12.3 percent
at the end of the first quarter of 2002, compared to 12.4 percent at year-end
2001.
Although the corporation issues long-term debt from time to time and
maintains a revolving commercial paper program, internally generated funds
cover the majority of its financial requirements.
Litigation and other contingencies are discussed in note 6 to the unaudited
condensed consolidated financial statements. There are no events or
uncertainties known to management beyond those already included in reported
financial information that would indicate a material change in future
operating results or future financial condition.
The corporation, as part of its ongoing asset management program, continues
to evaluate its mix of assets for potential upgrade. Because of the ongoing
nature of this program, dispositions will continue to be made from time to
time which will result in either gains or losses. Asset management activities
in the first quarter of 2002 included the sale of coal operations in
Colombia. On May 2, 2002, the corporation announced that it has reached
agreement to sell its affiliated companies that hold all of the interests in
Compania Minera Disputada de las Condes Limitada (a Chile copper mining
business) for $1.3 billion, plus future contingent payments in the event of
higher future copper prices. The sale, which is subject to the completion of
outstanding due diligence, the completion of a definitive sale and purchase
agreement and required regulatory approvals, is expected to be completed by
June 30, 2002.
-20-
FORWARD-LOOKING STATEMENTS
Statements in this discussion regarding expectations, plans and future
events or conditions are forward-looking statements. Actual future
results, including merger related expenses and synergies; financing
sources; the resolution of contingencies; the effect of changes in prices,
interest rates and other market conditions; and environmental and capital
expenditures could differ materially depending on a number of factors,
such as the outcome of commercial negotiations; changes in the supply of
and demand for crude oil, natural gas and petroleum and petrochemical
products; and other factors discussed above and discussed under the
caption "Factors Affecting Future Results" in Item 1 of ExxonMobil's 2001
Form 10-K.
-21-
EXXON MOBIL CORPORATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the three months ended
March 31, 2002 does not differ materially from that discussed
under Item 7A of the registrant's Annual Report on Form 10-K for
2001.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Bay Area Air Quality Management District ("BAAQMD") issued
approximately 17 notices of violations for alleged violations in
1998 and 1999 of various local, state and federal laws relating
to control of air contaminants at the Benicia refinery that was
formerly owned by the corporation. The amount of the penalty for
which the corporation might ultimately be liable is unknown at
this time, but penalties could be in excess of $100,000.
Settlement discussions with the BAAQMD to resolve these matters
are ongoing.
Refer to the relevant portions of Note 6 on pages 7 through 9 of
this Quarterly Report on Form 10-Q for further information on
legal proceedings.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
The registrant has no exhibits for the three month period ended
March 31, 2002.
b) Reports on Form 8-K
The registrant has not filed any reports on Form 8-K during the
quarter.
-22-
EXXON MOBIL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXXON MOBIL CORPORATION
Date: May 14, 2002
/s/ DONALD D. HUMPHREYS
_______________________________________________
Donald D. Humphreys, Vice President, Controller
and Principal Accounting Officer
-23-