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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 June 30, 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 June 30, 2002
_______________________________ _______________________________
Common stock, without par value 6,757,441,303
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
TABLE OF CONTENTS
Page
Number
______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three and six months ended June 30, 2002 and 2001
Condensed Consolidated Balance Sheet 4
As of June 30, 2002 and December 31, 2001
Condensed Consolidated Statement of Cash Flows 5
Six months ended June 30, 2002 and 2001
Notes to Condensed Consolidated Financial Statements 6-16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17-23
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 4. Submission of Matters to a Vote of Security Holders 25-26
Item 6. Exhibits and Reports on Form 8-K 26
Signature 27
Index to Exhibits 28
-2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
__________________ ________________
2002 2001 2002 2001
________ ________ ________ ________
REVENUE
Sales and other operating revenue,
including excise taxes $ 50,077 $ 55,101 $ 92,795 $111,177
Earnings from equity interests and
other revenue 832 1,083 1,645 2,307
________ ________ ________ ________
Total revenue 50,909 56,184 94,440 113,484
________ ________ ________ ________
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 22,632 25,731 40,645 50,609
Operating expenses 4,274 4,626 8,132 9,615
Selling, general and administrative
expenses 3,310 3,215 6,448 6,275
Depreciation and depletion 2,020 1,871 4,040 3,847
Exploration expenses, including dry holes 229 266 447 546
Merger related expenses 41 167 124 288
Interest expense 51 70 139 147
Excise taxes 5,650 5,226 10,441 10,520
Other taxes and duties 8,391 8,057 16,336 16,250
Income applicable to minority and preferred
interests 17 83 32 295
________ ________ ________ ________
Total costs and other deductions 46,615 49,312 86,784 98,392
________ ________ ________ ________
INCOME BEFORE INCOME TAXES 4,294 6,872 7,656 15,092
Income taxes 1,654 2,587 2,926 5,847
________ ________ ________ ________
INCOME BEFORE EXTRAORDINARY ITEM 2,640 4,285 4,730 9,245
Extraordinary gain, net of income tax 0 175 0 215
________ ________ ________ ________
NET INCOME $ 2,640 $ 4,460 $ 4,730 $ 9,460
======== ======== ======== ========
NET INCOME PER COMMON SHARE (DOLLARS)
Before extraordinary gain $ 0.40 $ 0.64 $ 0.70 $ 1.35
Extraordinary gain, net of income tax 0.00 0.02 0.00 0.03
________ ________ ________ ________
Net income $ 0.40 $ 0.66 $ 0.70 $ 1.38
======== ======== ======== ========
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION (DOLLARS)
Before extraordinary gain $ 0.39 $ 0.63 $ 0.69 $ 1.33
Extraordinary gain, net of income tax 0.00 0.02 0.00 0.03
________ ________ ________ ________
Net income $ 0.39 $ 0.65 $ 0.69 $ 1.36
======== ======== ======== ========
DIVIDENDS PER COMMON SHARE $ 0.23 $ 0.23 $ 0.46 $ 0.45
-3-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
June 30, Dec. 31,
2002 2001
____ ____
ASSETS
Current assets
Cash and cash equivalents $ 5,700 $ 6,547
Notes and accounts receivable - net 19,584 19,549
Inventories
Crude oil, products and merchandise 7,412 6,743
Materials and supplies 1,254 1,161
Prepaid taxes and expenses 2,187 1,681
________ ________
Total current assets 36,137 35,681
Property, plant and equipment - net 93,190 89,602
Investments and other assets 18,905 17,891
________ ________
TOTAL ASSETS $148,232 $143,174
======== ========
LIABILITIES
Current liabilities
Notes and loans payable $ 3,702 $ 3,703
Accounts payable and accrued liabilities 24,140 22,862
Income taxes payable 3,400 3,549
________ ________
Total current liabilities 31,242 30,114
Long-term debt 7,607 7,099
Deferred income tax liability 17,381 16,359
Other long-term liabilities 16,884 16,441
________ ________
TOTAL LIABILITIES 73,114 70,013
________ ________
SHAREHOLDERS' EQUITY
Benefit plan related balances (117) (159)
Common stock, without par value:
Authorized: 9,000 million shares
Issued: 8,019 million shares 3,843 3,789
Earnings reinvested 97,327 95,718
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (3,424) (5,947)
Minimum pension liability adjustment (535) (535)
Unrealized losses on stock investments (17) (108)
Common stock held in treasury:
1,262 million shares at June 30, 2002 (21,959)
1,210 million shares at December 31, 2001 (19,597)
________ ________
TOTAL SHAREHOLDERS' EQUITY 75,118 73,161
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $148,232 $143,174
======== ========
The number of shares of common stock issued and outstanding at June 30, 2002
and December 31, 2001 were 6,757,441,303 and 6,808,565,611, respectively.
-4-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,730 $ 9,460
Depreciation and depletion 4,040 3,847
Changes in operational working capital, excluding
cash and debt 88 1,256
All other items - net (118) (319)
________ ________
Net cash provided by operating activities 8,740 14,244
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (5,263) (4,370)
Sales of subsidiaries, investments, and property,
plant and equipment 878 745
Other investing activities - net 15 311
________ ________
Net cash used in investing activities (4,370) (3,314)
________ ________
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 4,370 10,930
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 368 341
Reductions in long-term debt (33) (357)
Additions/(reductions) in short-term debt - net (146) (2,369)
Cash dividends to ExxonMobil shareholders (3,121) (3,037)
Cash dividends to minority interests (77) (94)
Changes in minority interests and sales/(purchases)
of affiliate stock (189) (274)
Net ExxonMobil shares acquired (2,369) (2,776)
________ ________
Net cash used in financing activities (5,567) (8,566)
________ ________
Effects of exchange rate changes on cash 350 (146)
________ ________
Increase/(decrease) in cash and cash equivalents (847) 2,218
Cash and cash equivalents at beginning of period 6,547 7,080
________ ________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,700 $ 9,298
======== ========
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 3,123 $ 4,182
Cash interest paid $ 208 $ 244
-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. 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.
3. 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 second quarter of 2002, in association with the Merger, $41 million
of before tax costs ($30 million after tax) were recorded as merger
related expenses, including costs for rationalization of facilities and
systems. In the second quarter of 2001, merger related costs were
$167 million before tax ($95 million after tax). For the six months ended
June 30, 2002, merger related expenses totaled $124 million before tax
($90 million after tax). For the six months ended June 30, 2001, merger
related expenses totaled $288 million before tax ($185 million after tax).
-6-
The severance reserve balance at the end of the second quarter of 2002 is
expected to be expended in 2002. The following table summarizes the
activity in the severance reserve for the six months ended June 30, 2002:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
197 0 116 81
4. Extraordinary Gain
Second quarter 2002 results included no extraordinary gains. Second
quarter 2001 included a net after tax gain of $175 million (including an
income tax credit of $6 million), or $0.02 per common share, from asset
divestment activities in the chemicals segment.
Results for the six months ended June 30, 2002, included no extraordinary
gains. For the six months ended June 30, 2001, the net after tax gain from
asset management activities and required asset divestitures totaled
$215 million (including an income tax credit of $21 million), or $0.03 per
common share. These net gains from asset management activities in the
chemicals segment and from required asset divestitures have been reported
as extraordinary items in accordance with accounting requirements for
business combinations accounted for as a pooling of interests.
5. 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 June 30,
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.
6. Nonowner Changes in Shareholders' Equity
(millions of dollars)
Net income $ 2,640 $ 4,460 $ 4,730 $ 9,460
Changes in other nonowner changes
in equity
Foreign exchange translation
adjustment 2,653 (514) 2,523 (1,519)
Minimum pension liability adjustment 0 0 0 0
Unrealized gains/(losses) on stock
investments 39 80 91 73
_______ _______ _______ _______
Total nonowner changes in shareholders'
equity $ 5,332 $ 4,026 $ 7,344 $ 8,014
======= ======= ======= =======
-9-
7. Earnings Per Share
Three Months Ended Six Months Ended
June 30, June 30,
__________________ ________________
2002 2001 2002 2001
____ ____ ____ ____
NET INCOME PER COMMON SHARE
Income before extraordinary item
(millions of dollars) $ 2,640 $ 4,285 $ 4,730 $ 9,245
Weighted average number of common shares
outstanding (millions of shares) 6,767 6,883 6,780 6,898
Net income per common share (dollars)
Before extraordinary gain $ 0.40 $ 0.64 $ 0.70 $ 1.35
Extraordinary gain, net of income tax 0.00 0.02 0.00 0.03
_______ _______ _______ _______
Net income $ 0.40 $ 0.66 $ 0.70 $ 1.38
======= ======= ======= =======
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION
Income before extraordinary item
(millions of dollars) $ 2,640 $ 4,285 $ 4,730 $ 9,245
Adjustment for assumed dilution 0 1 0 (2)
_______ _______ _______ _______
Income available to common shares $ 2,640 $ 4,286 $ 4,730 $ 9,243
======= ======= ======= =======
Weighted average number of common shares
outstanding (millions of shares) 6,767 6,883 6,780 6,898
Plus: Issued on assumed exercise of
stock options 64 80 64 76
_______ _______ _______ _______
Weighted average number of common shares
outstanding 6,831 6,963 6,844 6,974
======= ======= ======= =======
Net income per common share
- assuming dilution (dollars)
Before extraordinary gain $ 0.39 $ 0.63 $ 0.69 $ 1.33
Extraordinary gain, net of income tax 0.00 0.02 0.00 0.03
_______ _______ _______ _______
Net income $ 0.39 $ 0.65 $ 0.69 $ 1.36
======= ======= ======= =======
-10-
8. Disclosures about Segments and Related Information
Three Months Ended Six Months Ended
June 30, June 30,
__________________ ________________
2002 2001 2002 2001
____ ____ ____ ____
(millions of dollars)
EARNINGS AFTER INCOME TAX
Upstream
United States $ 674 $ 1,111 $ 1,118 $ 2,739
Non-U.S. 1,479 1,739 3,044 3,889
Downstream
United States 234 844 248 1,253
Non-U.S. 148 423 106 1,013
Chemicals
United States 87 149 157 194
Non-U.S. 182 168 244 323
All other (164) 26 (187) 49
________ ________ ________ ________
Corporate total $ 2,640 $ 4,460 $ 4,730 $ 9,460
======== ======== ======== ========
Extraordinary gains included above:
Chemicals
United States $ 0 $ 100 $ 0 $ 100
Non-U.S. 0 75 0 75
All other 0 0 0 40
________ ________ ________ ________
Corporate total $ 0 $ 175 $ 0 $ 215
======== ======== ======== ========
SALES AND OTHER OPERATING REVENUE
Upstream
United States $ 982 $ 1,415 $ 1,779 $ 3,701
Non-U.S. 2,803 3,404 5,726 7,901
Downstream
United States 12,642 14,375 22,210 27,104
Non-U.S. 29,259 31,514 55,039 63,442
Chemicals
United States 1,895 1,841 3,371 3,806
Non-U.S. 2,364 2,354 4,382 4,799
All other 132 198 288 424
________ ________ ________ ________
Corporate total $ 50,077 $ 55,101 $ 92,795 $111,177
======== ======== ======== ========
INTERSEGMENT REVENUE
Upstream
United States $ 1,306 $ 1,510 $ 2,419 $ 3,074
Non-U.S. 3,298 3,350 6,046 6,777
Downstream
United States 1,553 1,092 2,762 2,384
Non-U.S. 4,326 4,813 8,216 8,845
Chemicals
United States 676 646 1,217 1,344
Non-U.S. 684 516 1,184 1,102
All other 76 43 142 94
-11-
9. 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 June 30, 2002) and
the 6.125% notes due 2008 ($160 million) of Exxon Capital Corporation and
the deferred interest debentures due 2012 ($955 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.
SeaRiver
Exxon 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 June 30, 2002
_______________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 2,349 $ - $ - $ 47,728 $ - $ 50,077
Earnings from equity
interests and other
revenue 2,680 - (3) 716 (2,561) 832
Intercompany revenue 3,644 10 7 28,338 (31,999) -
________ ________ ________ ________ ________ ________
Total revenue 8,673 10 4 76,782 (34,560) 50,909
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 3,524 - - 48,550 (29,442) 22,632
Operating expenses 1,321 1 1 4,264 (1,313) 4,274
Selling, general and
administrative expenses 476 - - 2,832 2 3,310
Depreciation and
depletion 386 2 - 1,632 - 2,020
Exploration expenses,
including dry holes 38 - - 191 - 229
Merger related expenses 20 - - 28 (7) 41
Interest expense 117 5 28 1,138 (1,237) 51
Excise taxes - - - 5,650 - 5,650
Other taxes and duties 6 - - 8,385 - 8,391
Income applicable to
minority and preferred
interests - - - 17 - 17
________ ________ ________ ________ ________ ________
Total costs and other
deductions 5,888 8 29 72,687 (31,997) 46,615
________ ________ ________ ________ ________ ________
Income before income taxes 2,785 2 (25) 4,095 (2,563) 4,294
Income taxes 145 1 (7) 1,515 - 1,654
________ ________ ________ ________ ________ ________
Income before
extraordinary item 2,640 1 (18) 2,580 (2,563) 2,640
Extraordinary gain, net
of income tax - - - - - -
________ ________ ________ ________ ________ ________
Net income $ 2,640 $ 1 $ (18) $ 2,580 $ (2,563) $ 2,640
======== ======== ======== ======== ======== ========
-12-
SeaRiver
Exxon 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 June 30, 2001
_______________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 9,477 $ - $ - $ 45,624 $ - $ 55,101
Earnings from equity
interests and other
revenue 3,687 - 11 960 (3,575) 1,083
Intercompany revenue 1,234 254 17 27,537 (29,042) -
________ ________ ________ ________ ________ ________
Total revenue 14,398 254 28 74,121 (32,617) 56,184
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 6,062 - - 45,691 (26,022) 25,731
Operating expenses 1,499 - 1 4,361 (1,235) 4,626
Selling, general and
administrative expenses 547 1 - 2,667 - 3,215
Depreciation and
depletion 388 1 - 1,482 - 1,871
Exploration expenses,
including dry holes 39 - - 227 - 266
Merger related expenses 36 - - 131 - 167
Interest expense 323 238 28 1,266 (1,785) 70
Excise taxes 650 - - 4,576 - 5,226
Other taxes and duties 3 - - 8,054 - 8,057
Income applicable to
minority and preferred
interests - - - 83 - 83
________ ________ ________ ________ ________ ________
Total costs and
other deductions 9,547 240 29 68,538 (29,042) 49,312
________ ________ ________ ________ ________ ________
Income before income taxes 4,851 14 (1) 5,583 (3,575) 6,872
Income taxes 566 6 (4) 2,019 - 2,587
________ ________ ________ ________ ________ ________
Income before
extraordinary item 4,285 8 3 3,564 (3,575) 4,285
Extraordinary gain, net
of income tax 175 - - (25) 25 175
________ ________ ________ ________ ________ ________
Net income $ 4,460 $ 8 $ 3 $ 3,539 $ (3,550) $ 4,460
======== ======== ======== ======== ======== ========
Condensed consolidated statement of income for six months ended June 30, 2002
_____________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 4,193 $ - $ - $ 88,602 $ - $ 92,795
Earnings from equity
interests and other
revenue 4,891 5 1 1,343 (4,595) 1,645
Intercompany revenue 6,468 21 14 53,111 (59,614) -
________ ________ ________ ________ ________ ________
Total revenue 15,552 26 15 143,056 (64,209) 94,440
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 6,098 - - 89,401 (54,854) 40,645
Operating expenses 2,444 1 1 8,072 (2,386) 8,132
Selling, general and
administrative expenses 934 1 - 5,513 - 6,448
Depreciation and depletion 776 3 1 3,260 - 4,040
Exploration expenses,
including dry holes 81 - - 366 - 447
Merger related expenses 36 - - 98 (10) 124
Interest expense 255 11 56 2,181 (2,364) 139
Excise taxes - - - 10,441 - 10,441
Other taxes and duties 9 - - 16,327 - 16,336
Income applicable to
minority and preferred
interests - - - 32 - 32
________ ________ ________ ________ ________ ________
Total costs and
other deductions 10,633 16 58 135,691 (59,614) 86,784
________ ________ ________ ________ ________ ________
Income before income taxes 4,919 10 (43) 7,365 (4,595) 7,656
Income taxes 189 4 (15) 2,748 - 2,926
________ ________ ________ ________ ________ ________
Income before
extraordinary item 4,730 6 (28) 4,617 (4,595) 4,730
Extraordinary gain, net
of income tax - - - - - -
________ ________ ________ ________ ________ ________
Net income $ 4,730 $ 6 $ (28) $ 4,617 $ (4,595) $ 4,730
======== ======== ======== ======== ======== ========
-13-
SeaRiver
Exxon 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 six months ended June 30, 2001
_____________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 18,733 $ - $ - $ 92,444 $ - $111,177
Earnings from equity
interests and other
revenue 8,039 - 27 2,023 (7,782) 2,307
Intercompany revenue 2,362 548 38 54,883 (57,831) -
________ ________ ________ ________ ________ ________
Total revenue 29,134 548 65 149,350 (65,613) 113,484
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 11,550 - - 91,093 (52,034) 50,609
Operating expenses 3,178 1 1 8,601 (2,166) 9,615
Selling, general and
administrative expenses 1,056 1 - 5,218 - 6,275
Depreciation and depletion 764 2 1 3,080 - 3,847
Exploration expenses,
including dry holes 83 - - 463 - 546
Merger related expenses 71 - - 217 - 288
Interest expense 703 513 59 2,503 (3,631) 147
Excise taxes 1,258 - - 9,262 - 10,520
Other taxes and duties 7 - - 16,243 - 16,250
Income applicable to
minority and preferred
interests - - - 295 - 295
________ ________ ________ ________ ________ ________
Total costs and
other deductions 18,670 517 61 136,975 (57,831) 98,392
________ ________ ________ ________ ________ ________
Income before income taxes 10,464 31 4 12,375 (7,782) 15,092
Income taxes 1,219 12 (8) 4,624 - 5,847
________ ________ ________ ________ ________ ________
Income before
extraordinary item 9,245 19 12 7,751 (7,782) 9,245
Extraordinary gain, net
of income tax 215 - - - - 215
________ ________ ________ ________ ________ ________
Net income $ 9,460 $ 19 $ 12 $ 7,751 $ (7,782) $ 9,460
======== ======== ======== ======== ======== ========
-14-
SeaRiver
Exxon 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 June 30, 2002
________________________________________________________
Cash and cash equivalents $ 754 $ - $ - $ 4,946 $ - $ 5,700
Notes and accounts
receivable - net 2,528 - - 17,056 - 19,584
Inventories 1,040 - - 7,626 - 8,666
Prepaid taxes and expenses 126 - 21 2,040 - 2,187
________ ________ ________ ________ ________ ________
Total current assets 4,448 - 21 31,668 - 36,137
Property, plant and
equipment - net 16,815 106 5 76,264 - 93,190
Investments and other
assets 99,084 - 553 325,316 (406,048) 18,905
Intercompany receivables 9,431 1,377 1,439 271,368 (283,615) -
________ ________ ________ ________ _________ ________
Total assets $129,778 $ 1,483 $ 2,018 $704,616 $(689,663) $148,232
======== ======== ======== ======== ========= ========
Notes and loan payables $ - $ 10 $ 10 $ 3,682 $ - $ 3,702
Accounts payable and
accrued liabilities 2,665 11 - 21,464 - 24,140
Income taxes payable 486 - - 2,914 - 3,400
________ ________ ________ ________ ________ ________
Total current
liabilities 3,151 21 10 28,060 - 31,242
Long-term debt 1,285 266 1,060 4,996 - 7,607
Deferred income tax
liabilities 2,931 32 300 14,118 - 17,381
Other long-term liabilities 4,442 - - 12,442 - 16,884
Intercompany payables 42,851 267 382 240,115 (283,615) -
________ ________ ________ ________ ________ ________
Total liabilities 54,660 586 1,752 299,731 (283,615) 73,114
Earnings reinvested 97,327 91 (128) 53,241 (53,204) 97,327
Other shareholders'
equity (22,209) 806 394 351,644 (352,844) (22,209)
________ ________ ________ ________ ________ ________
Total shareholders'
equity 75,118 897 266 404,885 (406,048) 75,118
________ ________ ________ ________ ________ ________
Total liabilities
and shareholders'
equity $129,778 $ 1,483 $ 2,018 $704,616 $(689,663) $148,232
======== ======== ======== ======== ========= ========
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
======== ======== ======== ======== ========= ========
-15-
SeaRiver
Exxon 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 six months ended June 30, 2002
_________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 1,575 $ (22) $ 8 $ 7,456 $ (277) $ 8,740
________ ________ ________ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (833) - - (4,430) - (5,263)
Sales of long-term assets 74 - - 804 - 878
Net intercompany
investing 4,053 (12) (8) (4,114) 81 -
All other investing, net - - - 15 - 15
________ ________ ________ ________ ________ ________
Net cash provided by/
(used in) investing
activities 3,294 (12) (8) (7,725) 81 (4,370)
________ ________ ________ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 368 - 368
Reductions in long-term
debt - - - (33) - (33)
Additions/(reductions)
in short-term debt
- net - (25) - (121) - (146)
Cash dividends (3,121) - - (277) 277 (3,121)
Net ExxonMobil shares
sold/(acquired) (2,369) - - - - (2,369)
Net intercompany
financing activity - 59 - 22 (81) -
All other financing, net - - - (266) - (266)
________ ________ ________ ________ ________ ________
Net cash provided
by/(used in) financing
activities (5,490) 34 - (307) 196 (5,567)
________ ________ ________ ________ ________ ________
Effects of exchange rate
changes on cash - - - 350 - 350
________ ________ ________ ________ ________ ________
Increase/(decrease) in
cash and cash equivalents $ (621) $ - $ - $ (226) $ - $ (847)
======== ======== ======== ======== ======== ========
Condensed consolidated statement of cash flows for six months ended June 30, 2001
_________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 3,214 $ 31 $ 37 $ 11,446 $ (484) $ 14,244
________ ________ ________ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (1,040) - - (3,330) - (4,370)
Sales of long-term assets 514 - - 231 - 745
Net intercompany
investing 2,268 (1,559) (8) (680) (21) -
All other investing, net (23) - - 334 - 311
________ ________ ________ ________ ________ ________
Net cash provided
by/(used in)investing
activities 1,719 (1,559) (8) (3,445) (21) (3,314)
________ ________ ________ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 341 - 341
Reductions in long-term
debt (1) (15) - (341) - (357)
Additions/(reductions)
in short-term debt
- net (60) (51) - (2,258) - (2,369)
Cash dividends (3,037) - - (484) 484 (3,037)
Net ExxonMobil shares
sold/(acquired) (2,776) - - - - (2,776)
Net intercompany
financing activity - 1,594 (29) (1,586) 21 -
All other financing, net - - - (368) - (368)
________ ________ ________ ________ ________ ________
Net cash provided
by/(used in) financing
activities (5,874) 1,528 (29) (4,696) 505 (8,566)
________ ________ ________ ________ ________ ________
Effects of exchange rate
changes on cash - - - (146) - (146)
________ ________ ________ ________ ________ ________
Increase/(decrease) in
cash and cash equivalents $ (941) $ - $ - $ 3,159 $ - $ 2,218
======== ======== ======== ======== ======== ========
-16-
EXXON MOBIL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
Second Quarter First Six Months
______________ ________________
2002 2001 2002 2001
____ ____ ____ ____
(millions of dollars)
Earnings including merger effects and special items
___________________________________________________
Upstream
United States $ 674 $ 1,111 $ 1,118 $ 2,739
Non-U.S. 1,479 1,739 3,044 3,889
Downstream
United States 234 844 248 1,253
Non-U.S. 148 423 106 1,013
Chemicals
United States 87 149 157 194
Non-U.S. 182 168 244 323
Other operations 86 128 239 269
Corporate and financing (220) (7) (336) (75)
Merger expenses (30) (95) (90) (185)
Gain from required asset divestitures 0 0 0 40
_______ _______ _______ _______
NET INCOME $ 2,640 $ 4,460 $ 4,730 $ 9,460
======= ======= ======= =======
Net income per common share $ 0.40 $ 0.66 $ 0.70 $ 1.38
Net income per common share
- assuming dilution $ 0.39 $ 0.65 $ 0.69 $ 1.36
Merger effects and special items
________________________________
Chemicals
United States (extraordinary item) $ 0 $ 100 $ 0 $ 100
Non-U.S. (extraordinary item) 0 75 0 75
Merger expenses (30) (95) (90) (185)
Gain from required asset divestitures
(extraordinary item) 0 0 0 40
_______ _______ _______ _______
TOTAL $ (30) $ 80 $ (90) $ 30
======= ======= ======= =======
Earnings excluding merger effects and special items
___________________________________________________
Upstream
United States $ 674 $ 1,111 $ 1,118 $ 2,739
Non-U.S. 1,479 1,739 3,044 3,889
Downstream
United States 234 844 248 1,253
Non-U.S. 148 423 106 1,013
Chemicals
United States 87 49 157 94
Non-U.S. 182 93 244 248
Other operations 86 128 239 269
Corporate and financing (220) (7) (336) (75)
_______ _______ _______ _______
TOTAL $ 2,670 $ 4,380 $ 4,820 $ 9,430
======= ======= ======= =======
Earnings per common share $ 0.40 $ 0.65 $ 0.71 $ 1.38
Earnings per common share
- assuming dilution $ 0.39 $ 0.64 $ 0.70 $ 1.36
-17-
REVIEW OF SECOND QUARTER 2002 RESULTS
Excluding merger effects and special items, estimated second quarter 2002
earnings were $2,670 million ($0.39 per share), a decrease of $1,710 million
from the record second quarter of 2001. Including merger effects and special
items, estimated net income of $2,640 million ($0.39 per share) decreased
$1,820 million.
Revenue for the second quarter of 2002 totaled $50,909 million compared with
$56,184 million in 2001. Capital and exploration expenditures of $3,393 million
in the second quarter of 2002 were up $559 million, or 20 percent, compared
with $2,834 million last year and were 14 percent higher than in the first
quarter.
Excluding merger effects, ExxonMobil's second quarter 2002 earnings of
$2,670 million were up $520 million from first quarter 2002 earnings of
$2,150 million. Upstream earnings improved $144 million from the first quarter,
reflecting an upward trend in crude oil prices, which more than offset seasonal
reductions in natural gas volumes. Downstream earnings increased $410 million
from the very weak first quarter of 2002. Industry refining and marketing
margins improved in some geographic areas, but remained depressed overall.
Chemicals earnings were double the first quarter of 2002. Prime product sales
volumes set a quarterly record, which along with improved margins led to the
earnings increase.
First half operating expenses declined $1.4 billion versus the same period last
year. The decline was related to lower energy prices and additional
efficiencies captured in all business lines partially offset by expenses
related to new business opportunities.
Compared with last year's record second quarter, ExxonMobil's second quarter
2002 earnings, excluding merger effects and special items, were $2,670 million,
down $1,710 million. The reduction in earnings reflected weakened conditions in
most business segments, including lower price levels of crude oil and natural
gas, significantly weaker refining margins and adverse foreign exchange
effects.
Upstream earnings were $2,153 million, a decrease of $697 million from the
record second quarter 2001 results. Average realizations on crude oil sales
were lower than the prior year, and natural gas prices fell as well, especially
in North America. Liquids production, excluding the impact of OPEC-driven quota
restrictions, was up slightly with new production from fields in the Gulf of
Mexico, Canada and Angola offset by natural field decline. Natural gas volumes
were up 1 percent, reflecting the net result of resumed operations at the Arun
field in Indonesia partly offset by weather-related demand in Europe which
reduced gas volumes by about 5 percent. On an oil-equivalent basis, excluding
the effect of OPEC-driven quota restrictions and reduced weather-related demand
in Europe, production increased 3 percent. Project schedules for long-term
volume increases remain on track as reflected by higher capital spending.
Downstream earnings were $382 million, down $885 million from last year's
record second quarter, reflecting weak industry-wide margins. Refining margins
dropped in most areas worldwide, with the sharpest declines in the U.S. and
Europe. Improved refining operations provided a partial offset to the margin
decline. Marketing margins remained weak.
-18-
Excluding $175 million of net gains on asset management activities reported as
a special item last year, chemicals earnings of $269 million were nearly double
last year's second quarter due mainly to record sales volumes. Earnings from
other operations of $86 million decreased $42 million from last year, primarily
reflecting the absence of coal operations in Colombia which were sold during
the first quarter of 2002.
Second quarter results were negatively affected by movement in foreign exchange
rates. The impact was more than $100 million, or $0.02 per share versus the
same period last year.
Second quarter 2002 net income of $2,640 million included after-tax merger
expenses of $30 million.
In the second quarter, ExxonMobil continued its active investment program,
spending $3,393 million on capital and exploration projects, compared with
$2,834 million last year, reflecting continued growth in upstream spending.
Capital and exploration expenditures of $6,367 million for the first half of
2002 were up $1,017 million, or 19 percent, compared with $5,350 million last
year. Upstream capital spending was up 25 percent, consistent with long term
investment plans which result in expanding profitable production.
First half 2002 cash flow from operations, including asset management
activities, was $9.6 billion, below last year's record $15 billion level
reflecting lower earnings, but sufficiently large to exceed cash requirements
to fund the corporation's growing capital expenditure program and shareholder
dividends.
During the quarter, the corporation acquired 27 million shares at a gross cost
of $1,105 million to offset the dilution associated with benefit plans and to
reduce common stock outstanding. Shares outstanding were reduced from
6,782 million at the end of the first quarter of 2002 to 6,757 million at the
end of the second quarter. Since the post-merger program was started in August
2000, the corporation has acquired 255 million shares at a gross cost of
$10.6 billion. Purchases may be made in both the open market and through
negotiated transactions and may be discontinued at any time.
ExxonMobil's financial results for the second quarter fairly reflect our
straightforward business model and have been prepared with the same rigor and
discipline that have been consistently applied to our financial statements and
disclosures. The company's comprehensive, well-controlled financial reporting
process positions appropriate senior management to make the newly required
certifications. Certifications meeting the requirements of the Securities and
Exchange Commission's Order No. 4-460 were filed on August 1, 2002 with regard
to ExxonMobil's 2001 Form 10-K, first quarter 2002 Form 10-Q and 2002 Proxy
Statement. Written statements complying with Section 906 of the Sarbanes-Oxley
Act of 2002 accompany this second quarter 2002 Form 10-Q.
OTHER COMMENTS ON SECOND QUARTER 2002 COMPARED TO SECOND QUARTER 2001
Upstream earnings were $2,153 million, down $697 million from the second
quarter record achieved in 2001 reflecting a 6 percent decline in crude oil
realizations, a 35 percent reduction in North American natural gas prices and
lower natural gas liquids realizations.
-19-
Liquids production of 2,492 kbd (thousands of barrels per day) decreased from
2,539 kbd in the second quarter of 2001. Higher production in Angola,
Venezuela, Malaysia and Canada was offset by OPEC-driven quota restrictions and
natural field declines in mature areas. Second quarter natural gas production
of 9,169 mcfd (millions of cubic feet per day) compared with 9,090 mcfd last
year. Improvements in Asia-Pacific volumes, mainly from the return to full
production levels at the Arun field in Indonesia following last year's
curtailments due to security concerns, were partly offset by reduced weather-
related demand in Europe and natural field decline in the U.S. Total oil and
natural gas producible volumes increased 3 percent versus the second quarter of
last year, as resumption of production at Arun and contributions from new
projects and work programs more than offset natural field declines. Taking into
account OPEC-driven quota restrictions and weather-related demand changes in
Europe, actual oil-equivalent production was down 1 percent.
Earnings from U.S. upstream operations were $674 million, a decrease of
$437 million from the prior year, reflecting the sharp decline in natural gas
prices. Upstream earnings outside the U.S. were $1,479 million, a decrease of
$260 million, reflecting lower crude oil and natural gas prices.
Downstream earnings of $382 million decreased substantially from the record
second quarter of last year, reflecting significantly lower refining margins in
the U.S. and Europe, with continued weakness in Asia-Pacific. Marketing margins
remained depressed. Petroleum product sales were 7,571 kbd, 362 kbd lower than
last year's second quarter in large part due to reduced demand for aviation
fuel and lower fuel oil sales.
U.S. downstream earnings were $234 million, down $610 million. Non-U.S.
downstream earnings of $148 million were $275 million lower than last year's
second quarter.
Excluding special items reported last year, chemicals earnings of $269 million
were up $127 million from the same quarter a year ago reflecting higher
volumes. Prime product sales volumes of 6,785 kt (thousands of metric tons)
established a new quarterly record, supported by recent capacity additions in
Singapore, and reflected higher demand in key commodity businesses across most
regions which led to higher capacity utilization rates.
Earnings from other operations, including coal, minerals and power, totaled
$86 million, down $42 million from last year, due to the absence of Colombian
coal operations which were sold in the first quarter of 2002 and higher
insurance costs. Corporate and financing expenses of $220 million increased
primarily due to the impact of foreign exchange losses and also from higher
pension costs.
Corporate-wide, the negative impact of foreign exchange movement on second
quarter earnings, including the continuing currency devaluations in Argentina
and Venezuela and the effect of a weaker U.S. dollar on financing activities,
was more than $100 million, or $0.02 per share, versus the same period last
year.
During the period, the company continued to benefit from the favorable
resolution of tax related issues, although such benefits were greater in last
year's second quarter. With a larger portion of the corporation's earnings from
the non-U.S. upstream, which is subject to higher tax rates, the corporation's
effective tax rate in the second quarter of 2002 showed a modest increase.
Higher upstream taxes in the U.K. will result from the recent North Sea tax
rate increase. The impact of the U.K. 10 percent supplementary tax will be
reported in the third quarter consistent with U.S. accounting standards.
-20-
Second quarter net income included $30 million of after-tax merger expenses,
including costs for rationalization of facilities and systems.
FIRST SIX MONTHS 2002 COMPARED WITH FIRST SIX MONTHS 2001
Excluding merger effects and special items, first half 2002 earnings of
$4,820 million ($0.70 per share) decreased $4,610 million from the record first
half of last year. Including merger effects and special items, first half net
income of $4,730 million ($0.69 per share) decreased $4,730 million. Included
in this year's first half net income was $90 million in after-tax merger
expenses, while last year's first half included net favorable merger effects
and special items of $30 million after-tax.
Upstream earnings decreased primarily due to lower natural gas realizations,
particularly in North America, which reached historical highs at the beginning
of 2001. Crude oil realizations were also lower. Liquids production of
2,515 kbd decreased 64 kbd from the first half of 2001. Higher production in
Angola, Venezuela and Malaysia was offset by OPEC-driven quota restrictions and
natural field declines in mature areas. Excluding the effect of OPEC-driven
quota restrictions, liquids production in 2002 was flat with the first half of
2001. First half 2002 worldwide natural gas production of 10,450 mcfd compared
with 10,596 mcfd in 2001. Improvements in Asia-Pacific volumes, mainly from the
return to full production levels at the Arun field in Indonesia following last
year's curtailments due to security concerns, were more than offset by reduced
weather-related demand in Europe and natural field decline in the U.S.
Weather-related demand in Europe reduced volumes by about 4 percent. Total oil
and natural gas producible volumes increased 1 percent versus the first half of
last year, as resumption of production at Arun and contributions from new
projects and work programs more than offset natural field declines. Taking into
account OPEC-driven quota restrictions and weather-related demand changes in
Europe, actual oil-equivalent production was down 2 percent.
Earnings from U.S. upstream operations for the first half of 2002 were
$1,118 million, a decrease of $1,621 million. Earnings outside the U.S. were
$3,044 million, $845 million lower than last year.
Downstream earnings decreased substantially from the first half of 2001,
reflecting significantly lower refining margins in the U.S. and Europe, and
continued weakness in marketing margins. Petroleum product sales of 7,623 kbd
compared with 7,959 kbd in the first half of 2001.
U.S. downstream earnings were $248 million, down $1,005 million. Earnings
outside the U.S. of $106 million were $907 million lower than last year.
Excluding special items recorded in 2001, first half chemicals earnings of
$401 million were $59 million higher than last year reflecting increased prime
product sales volumes. Sales volumes of 13,505 kt were 4 percent above last
year's level.
Earnings from other operations totaled $239 million, a decrease of $30 million
due primarily to the absence of Colombian coal operations which were sold in
the first quarter of 2002. Corporate and financing expenses increased
$261 million to $336 million, reflecting unfavorable foreign exchange effects
and higher pension expenses.
-21-
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 second quarter of 2002, in association with the Merger, $41 million of
before tax costs ($30 million after tax) were recorded as merger related
expenses, including costs for rationalization of facilities and systems. In the
second quarter of 2001, merger related expenses were $167 million before tax
($95 million after tax). For the six months ended June 30, 2002, merger related
expenses totaled $124 million before tax ($90 million after tax). For the six
months ended June 30, 2001, merger related expenses totaled $288 million before
tax ($185 million after tax).
The severance reserve balance at the end of the second quarter of 2002 is
expected to be expended in 2002. The following table summarizes the activity in
the severance reserve for the six months ended June 30, 2002:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
197 0 116 81
Cumulative merger related expenses total $2.9 billion before tax. Additional
expense for facilities rationalization and systems are anticipated in the
second half of 2002. Merger synergy initiatives are on track.
Results for the six months ended June 30, 2002, included no extraordinary
gains. For the six months ended June 30, 2001, the net after tax gain from
required asset divestments, all in the first quarter, totaled $40 million
(including an income tax credit of $15 million), or $0.01 per common share.
These net gains from required asset divestments have been reported as
extraordinary items in accordance with accounting requirements for business
combinations accounted for as a pooling of interests.
LIQUIDITY AND CAPITAL RESOURCES
Net cash generation before financing activities was $4,370 million in the first
six months of 2002 versus $10,930 million in the same period last year.
Operating activities provided net cash of $8,740 million, a decrease of
$5,504 million from the prior year, influenced by lower net income. Investing
activities used net cash of $4,370 million, compared to cash used of
$3,314 million in the prior year, reflecting higher additions to property,
plant and equipment.
Net cash used in financing activities was $5,567 million in the first half of
2002 versus $8,566 million in the same period last year reflecting the absence
of debt reductions in the prior year.
-22-
During the first half of 2002, Exxon Mobil Corporation purchased 63 million
shares of its common stock for the treasury at a gross cost of $2,555 million.
These purchases were to offset shares issued in conjunction with company
benefit plans and programs and to reduce the number of shares outstanding.
Purchases may be made in both the open market and through negotiated
transactions, and may be discontinued at any time.
Revenue for the first half of 2002 totaled $94,440 million compared to
$113,484 million in the first half of 2001 reflecting lower prices.
Capital and exploration expenditures were $6,367 million in the first half
2002 compared to $5,350 million in last year's first half. 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 $11.3 billion at June 30, 2002 increased $0.5 billion from
year-end 2001. The corporation's debt to total capital ratio was 12.7 percent
at the end of the first half 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 5 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 half of 2002 included the sale of coal operations in Colombia in
the first quarter. 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 is subject to the completion
of outstanding due diligence, the completion of a definitive sale and
purchase agreement and required regulatory approvals, with such work
continuing into the third quarter 2002.
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. We assume no duty to update these statements as of any future
date.
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EXXON MOBIL CORPORATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the six months ended June 30,
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
On July 25, 2002, ExxonMobil Oil Corporation ("EMOC") entered into a
settlement agreement with the California South Coast Air Quality
Management District (the "District") relating to allegations that EMOC
failed to properly calculate and/or timely transmit daily air
emissions data for EMOC's Torrance refinery for compliance years 1995
through 2000, resulting in violations of various District regulations.
The settlement agreement provides for the payment of a civil fine in
the amount of $1.75 million.
The New York State Department of Environmental Conservation ("NYSDEC")
has issued multiple Notices of Hearing and Complaint ("Notices"). The
NYSDEC served a Notice on EMOC on June 21, 2002 with respect to a
distribution terminal in New Windsor, New York. The Notice alleges
discharges of petroleum into waters of the state which were allegedly
neither timely reported nor immediately contained, in violation of the
Navigation Law and the Environmental Conservation Law. The NYSDEC is
seeking payment of a civil penalty in the amount of $750,000.
The NYSDEC served a Notice on EMOC on June 14, 2002 with respect to a
service station in Smithtown, New York. The NYSDEC alleges that
petroleum was discharged from the station into waters of the state.
EMOC entered into a stipulation agreement in 1999 providing for
performance of remedial activities at the site. The NYSDEC is now
seeking a penalty of $1,500,000 for alleged violations of the New York
Navigation Law and of the stipulation agreement.
On June 5, 2002, the NYSDEC served 23 identical Notices on EMOC, one
for each of 23 service stations in New York. The NYSDEC alleges that
all of the subject stations operated without being properly registered
for a period of two days, in violation of the Environmental
Conservation Law, and it seeks civil penalties of between $10,000 and
$15,000 for each station.
The NYSDEC served a Notice on EMOC on January 14, 2002 with respect to
a service station in New York, New York. The NYSDEC alleges that the
service station discharged petroleum into the waters of the state and
failed to provide, test and maintain cathodic protection for
underground tanks and piping, in violation of the Navigation Law and
the Environmental Conservation Law. The NYSDEC is seeking payment of a
civil penalty in the amount of $200,000.
Settlement discussions with the NYSDEC to resolve all these matters
are ongoing. The amounts of the penalties for which the corporation
might ultimately be liable are unknown at this time.
Refer to the relevant portions of Note 5 on pages 7 through 9 of
this Quarterly Report on Form 10-Q for additional information on
legal proceedings.
-24-
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders on May 29, 2002, the following
proposals were voted upon. Percentages are based on the total of the
shares voted for and against.
Concerning Election of Directors
Votes Votes
Nominees for Directors Cast for Withheld
______________________ __________ __________
Michael J. Boskin 5,520,822,890 58,194,731
William T. Esrey 5,489,925,001 89,092,620
Donald V. Fites 5,517,743,793 61,273,828
James R. Houghton 5,489,281,262 89,736,359
William R. Howell 5,485,665,488 93,352,133
Helene L. Kaplan 5,465,399,826 113,617,795
Reatha Clark King 5,489,135,076 89,882,545
Philip E. Lippincott 5,520,915,608 58,102,013
Harry J. Longwell 5,522,372,394 56,645,227
Marilyn Carlson Nelson 5,489,851,766 89,165,855
Lee R. Raymond 5,519,271,164 59,746,457
Walter V. Shipley 5,521,582,462 57,435,159
Concerning Ratification of Independent Auditors
Votes Cast For: 5,333,006,315 96.2%
Votes Cast Against: 208,760,975 3.8%
Abstentions: 37,250,331
Broker Non-Votes: 0
Concerning Government Service
Votes Cast For: 113,815,749 2.5%
Votes Cast Against: 4,506,322,570 97.5%
Abstentions: 124,553,855
Broker Non-Votes: 834,325,447
Concerning Policy on Board Diversity
Votes Cast For: 334,527,021 7.2%
Votes Cast Against: 4,288,990,427 92.8%
Abstentions: 121,184,726
Broker Non-Votes: 834,315,447
Concerning Human Rights Policy
Votes Cast For: 306,767,747 6.8%
Votes Cast Against: 4,228,298,424 93.2%
Abstentions: 209,626,003
Broker Non-Votes: 834,325,447
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Concerning Executive Compensation Factors
Votes Cast For: 363,389,223 7.9%
Votes Cast Against: 4,248,497,358 92.1%
Abstentions: 132,805,593
Broker Non-Votes: 834,325,447
Concerning Additional Report on ANWR Drilling
Votes Cast For: 302,960,394 6.6%
Votes Cast Against: 4,285,054,813 93.4%
Abstentions: 156,676,967
Broker Non-Votes: 834,325,447
Concerning Renewable Energy Sources
Votes Cast For: 930,638,438 20.2%
Votes Cast Against: 3,679,226,275 79.8%
Abstentions: 134,827,461
Broker Non-Votes: 834,325,447
Concerning Amendment of EEO Policy
Votes Cast For: 1,089,160,651 23.9%
Votes Cast Against: 3,471,805,525 76.1%
Abstentions: 183,725,998
Broker Non-Votes: 834,325,447
Concerning Shareholder Vote on Poison Pills
Votes Cast For: 2,087,168,148 44.9%
Votes Cast Against: 2,564,477,371 55.1%
Abstentions: 93,046,655
Broker Non-Votes: 834,325,447
See also pages 3 through 7 and pages 24 through 44 of the registrant's
definitive proxy statement dated April 17, 2002.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 3(ii) - By-Laws, as revised to July 31, 2002.
b) Reports on Form 8-K
On August 1, 2002, the registrant filed a Current Report on
Form 8-K about the sworn statements filed with the Securities and
Exchange Commission by the principal executive officer and
principal financial officer in accordance with Order No. 4-460
and pursuant to Section 21(a)(1) of the Securities Exchange
Act of 1934.
-26-
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: August 13, 2002 /s/ DONALD D. HUMPHREYS
_______________________________________________
Donald D. Humphreys, Vice President, Controller
and Principal Accounting Officer
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EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
INDEX TO EXHIBITS
3(ii). By-Laws, as revised to July 31, 2002.
-28-
EXHIBIT 3(ii)
EXXON MOBIL CORPORATION
INCORPORATED IN NEW JERSEY
BY-LAWS
ARTICLE I
Meetings of Shareholders
1. Meetings of shareholders may be held on such date and at such time and
place, within or without the State of New Jersey, as may be fixed by the board
of directors and stated in the notice of meeting.
2. The date for each annual meeting of shareholders, fixed as provided in
Section 1 of this Article I, shall be a date not more than thirteen months
after the date on which the last annual meeting of shareholders was held. The
directors shall be elected at the annual meeting of shareholders.
3. Special meetings of the shareholders may be called by the board of
directors, the chairman of the board or the president.
4. Except as otherwise provided by statute, written notice of the date, time,
place and purpose or purposes of every meeting of shareholders shall be given
not less than ten nor more than sixty days before the date of the meeting,
either personally or by mail, to each shareholder of record entitled to vote at
the meeting. The business transacted at meetings shall be confined to the
purposes specified in the notice.
5. Unless otherwise provided by statute the holders of shares entitled to
cast a majority of votes at a meeting, present either in person or by proxy,
shall constitute a quorum at such meeting. Less than a quorum may adjourn.
6. For the purpose of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or for the
purpose of determining shareholders entitled to receive payment of any dividend
or allotment of any right, or for the purpose of any other action, the board of
directors may fix in advance a date as the record date for any such
determination of shareholders. Such date shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action.
7. The board of directors may, in advance of any shareholders' meeting,
appoint one or more inspectors to act at the meeting or any adjournment
thereof. If inspectors are not so appointed by the board or shall fail to
qualify, the person presiding at a shareholders' meeting may, and at the
request of any shareholder entitled to vote thereat, shall, make such
appointment. In case any person appointed as inspector fails to appear or act,
the vacancy may be filled by appointment made by the board in advance of the
meeting or at the meeting by the person presiding at the meeting. Each
inspector, before entering upon the discharge of the duties of inspector, shall
take and sign an oath faithfully to execute such duties at such meeting with
strict impartiality and according to the best of the inspector's ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all shareholders. If there
are three or more inspectors, the act of a majority shall govern. On request of
the person presiding at the meeting or any shareholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them. Any report made by them shall be prima
facie evidence of the facts therein stated, and such report shall be filed with
the minutes of the meeting.
ARTICLE II
Board of Directors
1. The business and affairs of the corporation shall be managed by its board
of directors consisting of not less than ten nor more than nineteen members,
who shall hold office until the next annual meeting and until their successors
shall have been elected and qualified. The actual number of directors shall be
determined from time to time by resolution of the board. If at any time, except
at the annual meeting, the number of directors shall be increased, the
additional director or directors may be elected by the board, to hold office
until the next annual meeting and until their successors shall have been
elected and qualified.
2. The organization meeting of the board of directors, for the purpose of
organization or otherwise, shall be held without further notice on the day of
the annual meeting of shareholders, at such time and place as shall be fixed
from time to time pursuant to resolution of the board. Other regular meetings
of the board may be held without further notice at such times and places as
shall be fixed from time to time pursuant to resolution of the board. The
chairman of the board, the president, any vice president who is a member of the
board, or the secretary may change the day or hour or place of any single
regular meeting from that determined by the board upon causing that prior
notice of such change be transmitted to all directors.
Special meetings of the board may be called at the direction of the
chairman of the board, of the president or of any vice president who is a
member of the board, or, in the absence of such officers, at the direction of
any one of the directors. Any such meeting shall be held on such date and at
such time and place as may be designated in the notice of the meeting.
Notices required under this section may be transmitted in person, in
writing, or by telephone, telegram, cable or radio, and shall be effective
whether or not actually received, provided they are duly transmitted not less
than forty-eight hours in advance of the meeting. Notice may be waived in
writing before or after a meeting. No notice or waiver need specify the
business scheduled for any board meeting and any business may be transacted at
either a regular or special meeting.
3. Five directors shall constitute a quorum for the transaction of business,
except that any directorship not filled at the annual meeting and any vacancy,
however caused, occurring in the board may be filled by the affirmative vote of
a majority of the remaining directors even though less than a quorum of the
board, or by a sole remaining director. At any meeting of the board, whether or
not a quorum is present, a majority of those present may adjourn the meeting.
Notice of an adjourned meeting need not be given if the time and place are
fixed at the meeting adjourning and if the period of adjournment does not
exceed ten days in any one adjournment.
4. (a) The provisions of this Section 4 of Article II shall be operative
during any emergency in the conduct of the business of the corporation
resulting from an attack on the United States or any nuclear or atomic disaster
or from the imminent threat of such an attack or disaster. For the purpose of
this Section 4 of Article II, such an emergency is defined
-2-
as any period following (i) an enemy attack on the continental United States or
any nuclear or atomic disaster as a result and during the period of which the
means of communication or travel within the continental United States are
disrupted or made uncertain or unsafe, or (ii) a determination as herein
provided that such an attack or disaster is imminent or has occurred. The
commencement and termination of the period of any such emergency may be
determined by the chairman of the board or, in the event of the death, absence
or disability of the chairman of the board, by the president, or in the event
of the death, absence or disability of both the chairman of the board and the
president, by such person or persons as the board of directors may from time to
time designate, but in the absence of such specific designation, by the
executive or senior vice president who has been designated pursuant to the
authority of Section 6 of Article IV of these by-laws to exercise the powers
and perform the duties of the chairman of the board and the president. To the
extent not inconsistent with the provisions of this Section 4 of Article II,
the by-laws in their entirety shall remain in effect during any such emergency.
(b) Before or during any such emergency, the board may change the head
office or designate several alternative head offices or regional offices, or
authorize the officers to do so, said change to be effective during the
emergency.
(c) The officers or other persons designated by title in a list approved
by the board before or during the emergency, all who are known to be alive and
available to act in such order of priority and subject to such conditions and
for such period of time, not longer than reasonably necessary after the
termination of the emergency, as may be provided in the resolution of the board
approving the list, shall, to the extent required to provide a quorum at any
meeting of the board, be deemed and shall have all the powers of directors for
such meeting. Unless so designated, an officer who is not a director shall not
be deemed a director for the foregoing purpose.
(d) Meetings of the board may be called by any officer or director or in
the absence of all officers and directors by any person designated in a list
approved by the board pursuant to subsection (c) of this Section 4. Any such
meeting shall be held on such date and at such time and place as may be
designated in the notice of the meeting. Notice of any such meeting need be
given only to such of the directors as it may be feasible to reach at the time
and such of the persons designated in such list as is considered advisable
in the judgment of the person calling the meeting. Any such notice may be
transmitted in person, in writing, or by telephone, telegram, cable or radio,
or by such other means as may be feasible at the time, shall be effective
whether or not actually received and shall be given at such time in advance of
the meeting as, in the judgment of the person calling the meeting,
circumstances permit.
(e) Three directors shall constitute a quorum for the transaction of
business.
(f) Before or during any such emergency, the board by resolution may
(i) appoint one or more committees in addition to or in substitution for one or
more of those appointed pursuant to the provisions of Article III of these
by-laws to act during such emergency and (ii) take any of the actions listed in
Section 2 of Article III of these by-laws in regard to any committee
established pursuant to (i) of this subsection (f). Each such committee shall
have at least three members, none of whom need be a director. To the extent
provided in such resolution, each such committee shall have and may exercise
all the authority of the board, except that no such committee shall take the
action which Section 1 of Article III of these by-laws prohibits committees of
the board to take.
-3-
(g) Before or during any such emergency, the board may provide and from
time to time modify, lines of succession in the event that during such an
emergency any or all officers or agents of the corporation or any or all
members of any committee of the board shall for any reason be rendered
incapable of discharging their duties.
(h) No officer, director or employee acting in accordance with this
Section 4 of Article II shall be liable except for willful misconduct. No
officer, director or employee shall be liable for any action taken in good
faith in such an emergency in furtherance of the ordinary business affairs of
the corporation even though not authorized by the by-laws then in effect.
(i) Persons may conclusively rely upon a determination made pursuant to
subsection (a) of this Section 4 that an emergency as therein defined exists
regardless of the correctness of such determination.
5. No contract or other transaction between the corporation and one or more
of its directors or between the corporation and any other corporation, firm or
association of any type or kind in which one or more of its directors are
directors or are otherwise interested, shall be void or voidable solely by
reason of such common directorship or interest, or solely because such director
or directors are present at the meeting of the board or a committee thereof
which authorizes or approves the contract or transaction, or solely because
such director's or directors' votes are counted for such purpose, if (a) the
contract or other transaction is fair and reasonable as to this corporation at
the time it is authorized, approved or ratified, or (b) the fact of the common
directorship or interest is disclosed or known to the board or committee and
the board or committee authorizes, approves or ratifies the contract or
transaction by unanimous written consent, provided at least one director so
consenting is disinterested, or by affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum, or (c) the fact of the common directorship or interest is disclosed or
known to the shareholders and they authorize, approve or ratify the contract or
transaction.
ARTICLE III
Committees of the Board
1. The board, by resolution adopted by a majority of the entire board, may
appoint from among its members an executive committee and one or more other
committees, each of which shall have at least three members. To the extent
provided in such resolution, each such committee shall have and may exercise
all the authority of the board, except that no such committee shall (a) make,
alter or repeal any by-law of the corporation; (b) elect any director, or
remove any officer or director; (c) submit to shareholders any action that
requires shareholders' approval; or (d) amend or repeal any resolution
theretofore adopted by the board which by its terms is amendable or repealable
only by the board.
2. The board, by resolution adopted by a majority of the entire board, may
(a) fill any vacancy in any such committee; (b) appoint one or more directors
to serve as alternate members of any such committee, to act in the absence or
disability of members of any such committee with all the powers of such absent
or disabled members; (c) abolish any such committee at its pleasure; (d) remove
any director from membership on such committee at any time, with or without
cause; and (e) establish as a quorum for any such committee less than a
majority of the entire committee, but in no case less than the greater of two
persons or one-third of the entire committee.
-4-
3. Actions taken at a meeting of any such committee shall be reported to the
board at its next meeting following such committee meeting; except that, when
the meeting of the board is held within two days after the committee meeting,
such report shall, if not made at the first meeting, be made to the board at
its second meeting following such committee meeting.
ARTICLE IV
Officers
1. The board of directors at the organization meeting on the day of the
annual election of directors shall elect a chairman of the board, a president,
one or more vice presidents as the board may determine, any one or more of whom
may be designated as executive vice president or as senior vice president or in
such special or limiting style as the board may determine, a secretary, a
treasurer, a controller, a general counsel, and a general tax counsel. The
chairman of the board and the president shall each be a director, but the other
officers need not be members of the board.
2. The board of directors may from time to time elect, or authorize an
officer of the corporation to appoint in writing, assistant secretaries,
assistant treasurers, assistant controllers, and such other officers as the
board may designate.
3. All officers of the corporation, as between themselves and the
corporation, shall have such authority and perform such duties in the
management of the corporation as may be provided in these by-laws, or as may be
determined by resolution of the board not inconsistent with these by-laws.
4. The chairman of the board shall be chief executive officer of the
corporation and shall preside at all meetings of shareholders and directors.
Subject to the board of directors, the chairman of the board shall have general
care and supervision of the business and affairs of the corporation. In the
absence of the president, the chairman of the board shall exercise the powers
and perform the duties of the president.
5. The president shall, subject to the board of directors, direct the current
administration of the business and affairs of the corporation. In the absence
of the chairman of the board, the president shall preside at meetings of the
shareholders and directors and exercise the other powers and duties of the
chairman.
6. In the event of the death, absence, or disability of the chairman of the
board and the president, an executive or senior vice president may be
designated by the board to exercise the powers and perform the duties of those
offices.
7. The secretary shall give notice of all meetings of the shareholders and of
the board of directors. The secretary shall keep records of the votes at
elections and of all other proceedings of the shareholders and of the board.
The secretary shall have all the authority and perform all the duties normally
incident to the office of secretary and shall perform such additional duties as
may be assigned to the secretary by the board, the chairman of the board or the
president.
The assistant secretaries shall perform such of the duties of the
secretary as may be delegated to them by the secretary.
8. The treasurer shall be the principal financial officer of the corporation.
The treasurer shall have charge and custody of all funds and securities of the
corporation; receive and give receipts for monies paid to
-5-
the corporation, and deposit such monies in the corporation's name in such
banks or other depositories as shall be selected for the purpose; and shall
cause money to be paid out as the corporation may require. The treasurer shall
have all the authority and perform all the duties normally incident to the
office of treasurer and shall perform such additional duties as may be assigned
to the treasurer by the board of directors, the chairman of the board or the
president.
The assistant treasurers shall perform such of the duties of the treasurer
as may be delegated to them by the treasurer.
9. The controller shall be the principal accounting and financial control
officer of the corporation. The controller shall be responsible for the system
of financial control of the corporation, including internal audits, the
maintenance of its accounting records, and the preparation of the corporation's
financial statements. The controller shall periodically inform the board of
directors of the corporation's financial results and position. The controller
shall have all the authority and perform all the duties normally incident to
the office of controller and shall perform such additional duties as may be
assigned to the controller by the board of directors, the chairman of the board
or the president.
The assistant controllers shall perform such of the duties of the
controller as may be delegated to them by the controller.
10. The general counsel shall advise the board of directors and officers on
legal matters, except those relating to taxes. The general tax counsel shall
advise the board of directors and officers on legal matters relating to taxes.
Each shall perform such additional duties as may be assigned to either of them
by the board of directors, the chairman of the board or the president.
11. Any vacancy occurring among the officers, however caused, may be filled
by the board of directors except that any vacancy in the office of an assistant
secretary, assistant treasurer or assistant controller appointed by an officer
of the corporation may be filled by the officer, if any, then authorized by the
board to make appointments to such office.
12. Any officer may be removed by the board with or without cause, and any
assistant secretary, assistant treasurer or assistant controller appointed by
an officer of the corporation may be removed with or without cause by the
officer, if any, then authorized by the board to make appointments to such
office.
ARTICLE V
Divisions and Division Officers
1. The board of directors may from time to time establish one or more
divisions of the corporation and assign to such divisions responsibilities for
such of the corporation's business, operations and affairs as the board may
designate.
2. The board of directors may appoint or authorize an officer of the
corporation to appoint in writing officers of a division. Unless elected or
appointed an officer of the corporation by the board of directors or pursuant
to authority granted by the board, an officer of a division shall not as such
be an officer of the corporation, except that such person shall be an officer
of the corporation for the purposes of executing and delivering documents on
behalf of the corporation or for other specific purposes, if and to the extent
that such person may be authorized to do so by the board of directors. Unless
otherwise provided in the writing appointing an officer of a division, such
person's term of office shall be
-6-
for one year and until that person's successor is appointed and qualified. Any
officer of a division may be removed with or without cause by the board of
directors or by the officer, if any, of the corporation then authorized by the
board of directors to appoint such officer of a division.
3. The board of directors may prescribe or authorize an officer of the
corporation or an officer of a division to prescribe in writing the duties and
powers and authority of officers of divisions.
ARTICLE VI
Transfer of Shares
1. Shares of the corporation shall be transferable on the records of the
corporation in accordance with the provisions of Chapter 8 of the Uniform
Commercial Code (New Jersey Statutes 12A:8-101 et seq.), as amended from time
to time, except as otherwise provided in the New Jersey Business Corporation
Act (New Jersey Statutes 14A:l-l et seq.).
2. In the case of lost, destroyed or wrongfully taken certificates, transfer
shall be made only after the receipt of a sufficient indemnity bond, if
required by the board of directors, and satisfaction of other reasonable
requirements imposed by the board.
3. The board of directors may from time to time appoint one or more transfer
agents and one or more registrars of transfers. All share certificates shall
bear the signature, which may be a facsimile, of a transfer agent and of a
registrar. The functions of transfer agents and registrars shall conform to
such regulations as the board may from time to time prescribe. The board may at
any time terminate the appointment of any transfer agent or registrar.
ARTICLE VII
Fiscal Year
The fiscal year of the corporation shall be the calendar year.
ARTICLE VIII
Corporate Seal
1. The corporate seal is, and until otherwise ordered by the board of
directors shall be, a circle containing the words "EXXON MOBIL CORPORATION,
CORPORATE SEAL, 1882, NEW JERSEY" and may be an impression thereof or printed
or other facsimile reproduction.
2. The impression of the seal may be made and attested by either the
secretary or an assistant secretary for the authentication of contracts and
other papers requiring the seal.
ARTICLE IX
Amendments
The board of directors shall have the power to make, alter and repeal the
by-laws of the corporation, but by-laws made by the board may be altered or
repealed, and new by-laws made, by the shareholders.
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ARTICLE X
Indemnification
1. The corporation shall indemnify to the full extent from time to time
permitted by law any director or former director or officer or former officer
made, or threatened to be made, a party to, or a witness or other participant
in, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, legislative, investigative, or of
any other kind, by reason of the fact that such person is or was a director,
officer, employee or other corporate agent of the corporation or any subsidiary
of the corporation or serves or served any other enterprise at the request of
the corporation (including service as a fiduciary with respect to any employee
benefit plan of the corporation or any subsidiary of the corporation) against
expenses (including attorneys' fees), judgments, fines, penalties, excise taxes
and amounts paid in settlement, actually and reasonably incurred by such person
in connection with such action, suit or proceeding, or any appeal therein. No
indemnification pursuant to this Article X shall be required with respect to
any settlement or other nonadjudicated disposition of any threatened or pending
action or proceeding unless the corporation has given its prior consent to such
settlement or other disposition.
2. As any of the foregoing expenses are incurred, they shall be paid by the
corporation for the director or former director or officer or former officer in
advance of the final disposition of the action, suit or proceeding promptly
upon receipt of an undertaking by or on behalf of such person to repay such
payments if it shall ultimately be determined that such person is not entitled
to be indemnified by the corporation.
3. The foregoing indemnification and advancement of expenses shall not be
deemed exclusive of any other rights to which any person indemnified may be
entitled.
4. The rights provided to any person by this Article X shall be enforceable
against the corporation by such person, who shall be presumed to have relied
upon it in serving or continuing to serve as a director or in any of the other
capacities set forth in this Article X. No elimination of or amendment to this
Article X shall deprive any person of rights hereunder arising out of alleged
or actual occurrences, acts or failures to act occurring prior to notice to
such person of such elimination or amendment. The rights provided to any person
by this Article X shall inure to the benefit of such person's legal
representative.
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