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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
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 by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act). Yes X No
___ ____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 2003
_______________________________ ________________________________
Common stock, without par value 6,679,390,610
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
TABLE OF CONTENTS
Page
Number
______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three months ended March 31, 2003 and 2002
Condensed Consolidated Balance Sheet 4
As of March 31, 2003 and December 31, 2002
Condensed Consolidated Statement of Cash Flows 5
Three months ended March 31, 2003 and 2002
Notes to Condensed Consolidated Financial Statements 6-16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17-21
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
Item 4. Controls and Procedures 22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23-24
Signature 25
Certifications 26-28
Index to Exhibits 29
-2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
Three Months Ended
March 31,
__________________
2003 2002
____ ____
REVENUE
Sales and other operating revenue,
including excise taxes $60,188 $42,592
Earnings from equity interests and other revenue 3,592 801
_______ _______
Total revenue 63,780 43,393
_______ _______
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 28,078 18,017
Operating expenses 5,340 3,773
Selling, general and administrative expenses 3,102 3,137
Depreciation and depletion 2,182 1,998
Exploration expenses, including dry holes 147 218
Merger related expenses 0 83
Interest expense 42 88
Excise taxes 5,831 4,791
Other taxes and duties 8,807 7,945
Income applicable to minority and preferred interests 373 15
_______ _______
Total costs and other deductions 53,902 40,065
_______ _______
INCOME BEFORE INCOME TAXES 9,878 3,328
Income taxes 3,388 1,265
_______ _______
INCOME FROM CONTINUING OPERATIONS 6,490 2,063
Discontinued operations, net of income tax 0 27
Cumulative effect of accounting change,
net of income tax 550 0
_______ _______
NET INCOME $ 7,040 $ 2,090
======= =======
NET INCOME PER COMMON SHARE (DOLLARS)
Income from continuing operations $ 0.97 $ 0.30
Discontinued operations, net of income tax 0.00 0.00
Cumulative effect of accounting change,
net of income tax 0.08 0.00
_______ _______
Net income $ 1.05 $ 0.30
======= =======
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION (DOLLARS)
Income from continuing operations $ 0.97 $ 0.30
Discontinued operations, net of income tax 0.00 0.00
Cumulative effect of accounting change,
net of income tax 0.08 0.00
_______ _______
Net income $ 1.05 $ 0.30
======= =======
DIVIDENDS PER COMMON SHARE $ 0.23 $ 0.23
-3-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
March 31, Dec. 31,
2003 2002
____ ____
ASSETS
Current assets
Cash and cash equivalents $ 12,328 $ 7,229
Notes and accounts receivable - net 22,146 21,163
Inventories
Crude oil, products and merchandise 7,620 6,827
Materials and supplies 1,242 1,241
Prepaid taxes and expenses 2,138 1,831
________ ________
Total current assets 45,474 38,291
Property, plant and equipment - net 96,595 94,940
Investments and other assets 20,426 19,413
________ ________
TOTAL ASSETS $162,495 $152,644
======== ========
LIABILITIES
Current liabilities
Notes and loans payable $ 4,172 $ 4,093
Accounts payable and accrued liabilities 27,592 25,186
Income taxes payable 5,888 3,896
________ ________
Total current liabilities 37,652 33,175
Long-term debt 6,489 6,655
Deferred income tax liability 17,250 16,484
Other long-term liabilities 21,519 21,733
________ ________
TOTAL LIABILITIES 82,910 78,047
________ ________
SHAREHOLDERS' EQUITY
Benefit plan related balances (406) (450)
Common stock, without par value:
Authorized: 9,000 million shares
Issued: 8,019 million shares 4,071 4,217
Earnings reinvested 106,460 100,961
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (2,543) (3,015)
Minimum pension liability adjustment (2,960) (2,960)
Unrealized losses on stock investments (25) (79)
Common stock held in treasury:
1,340 million shares at March 31, 2003 (25,012)
1,319 million shares at December 31, 2002 (24,077)
________ ________
TOTAL SHAREHOLDERS' EQUITY 79,585 74,597
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $162,495 $152,644
======== ========
The number of shares of common stock issued and outstanding at March 31,
2003 and December 31, 2002 were 6,679,390,610 and 6,700,074,272,
respectively.
-4-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
Three Months Ended
March 31,
__________________
2003 2002
____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,040 $ 2,090
Depreciation and depletion 2,182 1,998
Changes in operational working capital, excluding
cash and debt 1,928 872
All other items - net (2,504) (336)
_______ _______
Net cash provided by operating activities 8,646 4,624
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,938) (2,426)
Sales of subsidiaries, investments, and property,
plant and equipment 1,333 768
Other investing activities - net 870 421
_______ _______
Net cash used in investing activities (735) (1,237)
_______ _______
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 7,911 3,387
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 0 31
Reductions in long-term debt (212) (15)
Additions/(reductions) in short-term debt - net 25 (362)
Cash dividends to ExxonMobil shareholders (1,541) (1,563)
Cash dividends to minority interests (61) (58)
Changes in minority interests and sales/(purchases)
of affiliate stock (45) (7)
Net ExxonMobil shares acquired (1,110) (1,310)
_______ _______
Net cash used in financing activities (2,944) (3,284)
_______ _______
Effects of exchange rate changes on cash 132 (28)
_______ _______
Increase/(decrease) in cash and cash equivalents 5,099 75
Cash and cash equivalents at beginning of period 7,229 6,547
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $12,328 $ 6,622
======= =======
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 1,168 $ 1,644
Cash interest paid $ 92 $ 153
-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 2002 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. Stock Option Accounting
Effective January 1, 2003, the corporation adopted the recognition
provisions of Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 123 (FAS 123), "Accounting for
Stock-Based Compensation" for all employee stock-based awards granted
after that date. In accordance with FAS 123, compensation expense for
future awards will be measured by the fair value of the award at the date
of grant and recognized over the vesting period. The fair value of awards
in the form of restricted stock is the market price of the stock. The fair
value of awards in the form of stock options is estimated using an
option-pricing model.
As permitted by FAS 123, the corporation has retained its prior method of
accounting for stock-based awards granted before January 1, 2003. Under
this method, compensation expense for awards granted in the form of stock
options is measured at the intrinsic value of the options (the difference
between the market price of stock and the exercise price of the options)
on the date of grant. Since these two prices are the same on the date of
grant, no compensation expense was recognized in income for these awards.
Additionally, compensation expense for awards granted in the form of
restricted stock is based on the price of the stock when it is granted and
is recognized over the vesting period, which is the same method of
accounting as under FAS 123.
If the provisions of FAS 123 had been adopted in the prior year quarter,
the impact on compensation expense, net income, and net income per share
would have been as follows:
Three Months Ended
March 31,
__________________
2003 2002
____ ____
(millions of dollars)
Net income, as reported $ 7,040 $ 2,090
Add: Stock-based compensation, net of tax,
included in reported net income 22 3
Deduct: Stock-based compensation, net of tax,
determined under fair value method (24) (53)
______ ______
Pro forma net income $ 7,038 $ 2,040
======= =======
Net income per share: (dollars per share)
Basic - as reported $ 1.05 $ 0.30
Basic - pro forma 1.05 0.30
Diluted - as reported 1.05 0.30
Diluted - pro forma 1.05 0.30
-6-
3. Discontinued Operations
In 2002, the copper business in Chile and the coal operations in Colombia
were sold. Prior periods include reclassifications to reflect the
earnings of these businesses as discontinued operations. Income taxes
related to discontinued operations in the first quarter of 2002 were
$7 million. Revenues and earnings for these businesses were historically
reported in the "All Other" line in the segment disclosures located in
note 10 on page 12.
4. Accounting Change
As of January 1, 2003 the corporation adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No.
143 (FAS 143), "Accounting for Asset Retirement Obligations." The
primary impact of FAS 143 is to change the method of accruing for
upstream site restoration costs. These costs were previously accrued
ratably over the productive lives of the assets in accordance with
Statement of Financial Accounting Standards No. 19 (FAS 19), "Financial
Accounting and Reporting by Oil and Gas Producing Companies." At the end
of 2002, the cumulative amount accrued under FAS 19 was approximately
$3.5 billion. Under FAS 143, the fair values of asset retirement
obligations are recorded as liabilities on a discounted basis when they
are incurred, which is 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 cumulative adjustment for the change in accounting principle reported
in the first quarter of 2003 was after-tax income of $550 million
(net of $434 million of income tax effects, including ExxonMobil's share
of related equity company income taxes of $51 million), or $0.08 per
common share. The effect of this accounting change on the balance sheet
was a $0.3 billion increase to property, plant and equipment, a
$0.6 billion reduction to the accrued liability and a $0.4 billion
increase in deferred income tax liabilities.
This adjustment is due to the difference in the method of accruing site
restoration costs under FAS 143 compared with the method required by
FAS 19, the accounting standard that the corporation has been required to
follow since 1978. Under FAS 19, site restoration costs are accrued on a
unit-of-production basis of accounting as the oil and gas is produced. The
FAS 19 method matches the accruals with the revenues generated from
production and results in most of the costs being accrued early in field
life, when production is at the highest level. Because FAS 143 requires
accretion of the liability as a result of the passage of time using an
interest method of allocation, the majority of the costs will be accrued
towards the end of field life, when production is at the lowest level. The
cumulative income adjustment described above resulted from reversing the
higher liability accumulated under FAS 19 in order to adjust it to the
lower present value amount resulting from transition to FAS 143. This
amount being reversed in transition, which was previously charged to
operating earnings under FAS 19, will again be charged to those earnings
under FAS 143 in future years.
If FAS 143 had been in effect in the first quarter of 2002, net income
that would have been reported in that quarter would not have been
materially different from the net income that was reported under
FAS 19. The effect of FAS 143 on net income in the current quarter is
also not material.
-7-
5. Recently Issued Statements of Financial Accounting Standards
In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest
Entities," which provides guidance on when certain entities should be
consolidated or the interests in those entities should be disclosed by
enterprises that do not control them through majority voting interest.
Under FIN 46, entities are required to be consolidated by enterprises
that lack majority voting interest when equity investors of those
entities have insignificant capital at risk or they lack voting rights,
the obligation to absorb expected losses, or the right to receive
expected returns. Entities identified with these characteristics
are called variable interest entities and the interests that enterprises
have in these entities are called variable interests. These interests can
derive from certain guarantees, leases, loans or other arrangements that
result in risks and rewards that are disproportionate to the voting
interests in the entities.
The provisions of FIN 46 must be immediately applied for variable interest
entities created after January 31, 2003. For variable interest entities
created before February 1, 2003, FIN 46 must be adopted in the first
reporting period beginning after June 15, 2003.
There have been no variable interest entities created after
January 31, 2003 in which the corporation has an interest. The corporation
is reviewing its financial arrangements entered into before
February 1, 2003 to identify any that might qualify as variable interest
entities. There is a reasonable possibility that certain joint ventures in
which the corporation has an interest might be variable interest entities.
These joint ventures are operating entities and the other equity investors
are third parties independent from the corporation. The corporation's
share of net income of these entities is included in the consolidated
statement of income. The variable interests arise primarily because of
certain guarantees extended by the corporation to the joint ventures.
These guarantees are disclosed in note 7 beginning on page 9.
The corporation does not expect any impact on net income if it is
required to consolidate any of these possible variable interest entities
because it already is recording its share of net income of these entities.
The impact to the balance sheet would be an increase in both assets and
liabilities, estimated to be in the range of $500 million to $750 million
(less than one-half of 1 percent of total assets). However, there would be
no change to the calculation of return on average capital employed because
the corporation already includes its share of joint venture debt in the
determination of average capital employed.
6. 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.
There were no merger related expenses in the first quarter of 2003
reflecting the completion of the merger related activities in 2002. In the
first quarter of 2002, merger related costs were $83 million before tax
($60 million after tax). The severance reserve balance at the end of the
first quarter of 2003 is expected to be expended mainly in 2003 and 2004.
The following table summarizes the activity in the severance reserve for
the three months ended March 31, 2003:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
101 0 14 87
-8-
7. 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 resolved. 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 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. 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. On December 6, 2002, the District Court reduced
the punitive damages award from $5 billion to $4 billion. This case will
return to the Ninth Circuit for its determination. The corporation has
posted a $4.8 billion letter of credit.
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. On
December 20, 2002, the Alabama Supreme Court vacated the $3.5 billion jury
verdict. The decision sends the case back to a lower court for a new
trial. 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 has appealed the judgment to the Louisiana Fourth Circuit Court
of Appeals and believes that the judgment should
-9-
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.
The corporation and certain of its consolidated subsidiaries were
contingently liable at March 31, 2003, for $3.4 billion, primarily
relating to guarantees for notes, loans and performance under contracts.
This included $0.8 billion representing guarantees of non-U.S. excise
taxes and customs duties of other companies, entered into as a normal
business practice, under reciprocal arrangements. Also included in this
amount were guarantees by consolidated affiliates of $2.2 billion,
representing ExxonMobil's share of obligations of certain equity companies.
Additionally, the corporation and its affiliates have numerous long-term
sales and purchase commitments in their various business activities, all
of which are expected to be fulfilled with no adverse consequences
material to the corporation's operations or financial condition. The
corporation's outstanding unconditional purchase obligations at
March 31, 2003 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.
8. Nonowner Changes in Shareholders' Equity
Three Months Ended
March 31,
__________________
2003 2002
____ ____
(millions of dollars)
Net income $ 7,040 $ 2,090
Changes in other nonowner changes in equity
Foreign exchange translation adjustment 472 (130)
Minimum pension liability adjustment 0 0
Unrealized gains/(losses) on stock investments 54 52
_______ _______
Total nonowner changes in shareholders' equity $ 7,566 $ 2,012
======= =======
-10-
9. Earnings Per Share
Three Months Ended
March 31,
__________________
2003 2002
____ ____
NET INCOME PER COMMON SHARE
Income from continuing operations (millions of dollars) $ 6,490 $ 2,063
Weighted average number of common shares
outstanding (millions of shares) 6,683 6,793
Net income per common share (dollars)
Income from continuing operations $ 0.97 $ 0.30
Discontinued operations, net of income tax 0.00 0.00
Cumulative effect of accounting change,
net of income tax 0.08 0.00
_______ _______
Net income $ 1.05 $ 0.30
======= =======
NET INCOME PER COMMON SHARE - ASSUMING DILUTION
Income from continuing operations (millions of dollars) $ 6,490 $ 2,063
Weighted average number of common shares outstanding
-assuming dilution (millions of shares) 6,683 6,793
Effect of employee stock-based awards 31 65
_______ _______
Weighted average number of common shares outstanding
-assuming dilution 6,714 6,858
======= =======
Net income per common share
-assuming dilution (dollars)
Income from continuing operations $ 0.97 $ 0.30
Discontinued operations, net of income tax 0.00 0.00
Cumulative effect of accounting change,
net of income tax 0.08 0.00
_______ _______
Net income $ 1.05 $ 0.30
======= =======
-11-
10. Disclosures about Segments and Related Information
Consistent with a change in internal organization in 2002, earnings from
the electric power business and U.S. coal operations, previously reported
in the All Other line, are now shown in the U.S. upstream for coal and
non-U.S. upstream for electric power. Earnings from the coal and minerals
businesses divested in 2002, reported as discontinued operations, are
included in the All Other line. Earnings and revenues for prior periods
have been reclassified to reflect these 2002 events consistent with current
period reporting.
Three Months Ended
March 31,
__________________
2003 2002
____ ____
(millions of dollars)
EARNINGS AFTER INCOME TAX
Upstream
United States $ 1,259 $ 448
Non-U.S. 4,434 1,641
Downstream
United States 174 14
Non-U.S. 549 (42)
Chemicals
United States 16 70
Non-U.S. 271 62
All Other 337 (103)
________ ________
Corporate Total $ 7,040 $ 2,090
======== ========
Included in All Other above:
Discontinued operations $ 0 $ 27
Cumulative effect of accounting change $ 550 $ 0
SALES AND OTHER OPERATING REVENUE
Upstream
United States $ 1,768 $ 818
Non-U.S. 4,073 2,923
Downstream
United States 14,198 9,568
Non-U.S. 34,976 25,780
Chemicals
United States 2,029 1,476
Non-U.S. 3,135 2,018
All Other 9 9
________ ________
Corporate Total $ 60,188 $ 42,592
======== ========
INTERSEGMENT REVENUE
Upstream
United States $ 1,600 $ 1,113
Non-U.S. 4,265 2,748
Downstream
United States 1,660 1,209
Non-U.S. 5,464 3,890
Chemicals
United States 734 541
Non-U.S. 838 500
All Other 77 66
-12-
11. Condensed Consolidating Financial Information Related to Guaranteed
Securities Issued by Subsidiaries
Exxon Mobil Corporation has fully and unconditionally guaranteed the 6.0%
notes due 2005 ($106 million of long-term debt at March 31, 2003) and the
6.125% notes due 2008 ($160 million) of Exxon Capital Corporation and the
deferred interest debentures due 2012 ($1,035 million) and the debt
securities due 2004-2011 ($95 million long-term and $10 million
short-term) of SeaRiver Maritime Financial Holdings, Inc. Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc. are 100
percent owned subsidiaries of Exxon Mobil Corporation.
The following condensed consolidating financial information is provided
for Exxon Mobil Corporation, as guarantor, and for Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc., as issuers,
as an alternative to providing separate financial statements for the
issuers. The accounts of Exxon Mobil Corporation, Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc. are presented
utilizing the equity method of accounting for investments in
subsidiaries.
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ____________
(millions of dollars)
Condensed consolidated statement of income for three months ended March 31, 2003
________________________________________________________________________________
Revenue
Sales and other operating
revenue, including
excise taxes $3,061 $ - $ - $ 57,127 $ - $ 60,188
Earnings from equity
interests and other
revenue 6,772 - 2 3,476 (6,658) 3,592
Intercompany revenue 4,639 9 5 37,361 (42,014) -
______ ______ ______ ________ _________ ________
Total revenue 14,472 9 7 97,964 (48,672) 63,780
______ ______ ______ ________ _________ ________
Costs and other
deductions
Crude oil and product
purchases 4,688 - - 63,287 (39,897) 28,078
Operating expenses 1,674 1 - 4,630 (965) 5,340
Selling, general and
administrative
expenses 426 - - 2,676 - 3,102
Depreciation and
depletion 385 1 1 1,795 - 2,182
Exploration expenses,
including dry holes 30 - - 117 - 147
Merger related
expenses - - - - - -
Interest expense 161 5 30 1,000 (1,154) 42
Excise taxes - - - 5,831 - 5,831
Other taxes and duties 1 - - 8,806 - 8,807
Income applicable to
minority and
preferred interests - - - 373 - 373
_______ ______ ______ _______ _________ ________
Total costs and
other deductions 7,365 7 31 88,515 (42,016) 53,902
_______ ______ ______ _______ _________ ________
Income before income
taxes 7,107 2 (24) 9,449 (6,656) 9,878
Income taxes 617 1 (9) 2,779 - 3,388
_______ ______ ______ _______ _________ ________
Income from continuing
operations 6,490 1 (15) 6,670 (6,656) 6,490
Discontinued operations - - - - - -
Accounting change 550 - - 481 (481) 550
_______ ______ ______ _______ _________ ________
Net income $ 7,040 $ 1 $ (15) $ 7,151 $ (7,137) $ 7,040
======= ====== ====== ======= ========= ========
-13-
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ____________
(millions of dollars)
Condensed consolidated statement of income for three months ended March 31, 2002
________________________________________________________________________________
Revenue
Sales and other operating
revenue, including
excise taxes $ 1,844 $ - $ - $ 40,748 $ - $ 42,592
Earnings from equity
interests and other
revenue 2,184 5 4 615 (2,007) 801
Intercompany revenue 2,824 11 7 24,773 (27,615) -
________ _______ _______ ________ _______ ________
Total revenue 6,852 16 11 66,136 (29,622) 43,393
_______ _______ _______ ________ _______ ________
Costs and other
deductions
Crude oil and product
purchases 2,574 - - 40,855 (25,412) 18,017
Operating expenses 1,123 - - 3,723 (1,073) 3,773
Selling, general and
administrative
expenses 458 1 - 2,680 (2) 3,137
Depreciation and
depletion 390 1 1 1,606 - 1,998
Exploration expenses,
including dry holes 43 - - 175 - 218
Merger related
expenses 16 - - 70 (3) 83
Interest expense 138 6 28 1,043 (1,127) 88
Excise taxes - - - 4,791 - 4,791
Other taxes and duties 3 - - 7,942 - 7,945
Income applicable to
minority and
preferred interests - - - 15 - 15
_______ _______ _______ _________ _______ ________
Total costs and
other deductions 4,745 8 29 62,900 (27,617) 40,065
_______ _______ _______ ________ _______ ________
Income before income
taxes 2,107 8 (18) 3,236 (2,005) 3,328
Income taxes 44 3 (8) 1,226 - 1,265
________ _______ _______ _________ _______ _______
Income from continuing
operations 2,063 5 (10) 2,010 (2,005) 2,063
Discontinued operations 27 - - 27 (27) 27
Accounting change - - - - - -
________ _______ _______ ________ _______ _______
Net income $ 2,090 $ 5 $ (10) $ 2,037 $(2,032) $2,090
======== ======= ======= ======== ======= ======
-14-
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ___________
(millions of dollars)
Condensed consolidated balance sheet as of March 31, 2003
_________________________________________________________
Cash and cash
equivalents $ 2,568 $ - $ - $ 9,760 $ - $ 12,328
Notes and accounts
receivable - net 4,332 - - 17,814 - 22,146
Inventories 973 - - 7,889 - 8,862
Prepaid taxes and
expenses 204 - 12 1,922 - 2,138
________ ________ ________ ________ _________ ________
Total current
assets 8,077 - 12 37,385 - 45,474
Property, plant and
equipment - net 17,009 102 3 79,481 - 96,595
Investments and other
assets 111,254 - 522 341,855 (433,205) 20,426
Intercompany receivables 10,840 1,367 1,493 301,490 (315,190) -
________ ________ ________ ________ _________ ________
Total assets $147,180 $ 1,469 $ 2,030 $760,211 $(748,395) $162,495
======== ======== ======== ======== ========= ========
Notes and loan payables $ - $ 19 $ 10 $ 4,143 $ - $ 4,172
Accounts payable and
accrued liabilities 2,941 7 - 24,644 - 27,592
Income taxes payable 1,519 1 - 4,368 - 5,888
________ ________ ________ _______ _________ ________
Total current
liabilities 4,460 27 10 33,155 - 37,652
Long-term debt 1,325 266 1,130 3,768 - 6,489
Deferred income tax
liabilities 3,136 31 303 13,780 - 17,250
Other long-term
liabilities 5,861 - - 15,658 - 21,519
Intercompany payables 52,813 359 382 261,636 (315,190) -
________ ________ ________ ________ _________ ________
Total liabilities 67,595 683 1,825 327,997 (315,190) 82,910
Earnings reinvested 106,460 1 (189) 61,049 (60,861) 106,460
Other shareholders'
equity (26,875) 785 394 371,165 (372,344) (26,875)
________ ________ ________ ________ _________ ________
Total shareholders'
equity 79,585 786 205 432,214 (433,205) 79,585
________ ________ ________ ________ _________ ________
Total liabilities
and shareholders'
equity $147,180 $ 1,469 $ 2,030 $760,211 $(748,395) $162,495
======== ======== ======== ======== ========= ========
Condensed consolidated balance sheet as of December 31, 2002
____________________________________________________________
Cash and cash
equivalents $ 710 $ - $ - $ 6,519 $ - $ 7,229
Notes and accounts
receivable - net 3,827 - - 17,336 - 21,163
Inventories 964 - - 7,104 - 8,068
Prepaid taxes and
expenses 65 - - 1,766 - 1,831
________ ________ ________ ________ _________ ________
Total current
assets 5,566 - - 32,725 - 38,291
Property, plant and
equipment - net 16,922 104 3 77,911 - 94,940
Investments and other
assets 104,115 - 521 340,821 (426,044) 19,413
Intercompany receivables 16,234 1,395 1,490 295,909 (315,028) -
________ ________ ________ ________ _________ ________
Total assets $142,837 $ 1,499 $ 2,014 $747,366 $(741,072) $152,644
======== ======== ======== ======== ========= ========
Notes and loan payables $ - $ 6 $ 10 $ 4,077 $ - $ 4,093
Accounts payable and
accrued liabilities 2,844 6 - 22,336 - 25,186
Income taxes payable 916 1 - 2,979 - 3,896
________ ________ ________ ________ _________ ________
Total current
liabilities 3,760 13 10 29,392 - 33,175
Long-term debt 1,311 266 1,101 3,977 - 6,655
Deferred income tax
liabilities 3,163 31 301 12,989 - 16,484
Other long-term
liabilities 5,820 - - 15,913 - 21,733
Intercompany payables 54,186 290 382 260,170 (315,028) -
________ ________ ________ ________ _________ ________
Total liabilities 68,240 600 1,794 322,441 (315,028) 78,047
Earnings reinvested 100,961 93 (174) 54,547 (54,466) 100,961
Other shareholders'
equity (26,364) 806 394 370,378 (371,578) (26,364)
________ ________ ________ ________ _________ ________
Total shareholders'
equity 74,597 899 220 424,925 (426,044) 74,597
________ ________ ________ ________ _________ ________
Total liabilities
and shareholders'
equity $142,837 $ 1,499 $ 2,014 $747,366 $(741,072) $152,644
======== ======== ======== ======== ========= ========
-15-
Exxon SeaRiver
Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ __________ ____________ _____________ ____________
(millions of dollars)
Condensed consolidated statement of cash flows for three months ended March 31, 2003
____________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 1,163 $ 4 $ 3 $ 8,218 $ (742) $ 8,646
_______ _______ _______ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (434) - - (2,504) - (2,938)
Sales of long-term assets 13 - - 1,320 - 1,333
Net intercompany
investing 3,767 28 (3) (3,737) (55) -
All other investing, net - - - 870 - 870
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
investing activities 3,346 28 (3) (4,051) (55) (735)
_______ _______ _______ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - - - -
Reductions in long-term
debt - - - (212) - (212)
Additions/(reductions)
in short-term
debt - net - 13 - 12 - 25
Cash dividends (1,541) (93) - (649) 742 (1,541)
Net ExxonMobil shares
sold/(acquired) (1,110) - - - - (1,110)
Net intercompany
financing activity - 69 - (103) 34 -
All other financing, net - (21) - (106) 21 (106)
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
financing activities (2,651) (32) - (1,058) 797 (2,944)
_______ _______ _______ ________ ________ ________
Effects of exchange rate
changes on cash - - - 132 - 132
_______ _______ _______ ________ ________ ________
Increase/(decrease) in
cash and cash
equivalents $ 1,858 $ - $ - $ 3,241 $ - $ 5,099
======= ======= ======= ======== ======== ========
Condensed consolidated statement of cash flows for three months ended March 31, 2002
____________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 662 $ 10 $ 4 $ 4,057 $ (109) $ 4,624
_______ _______ _______ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (415) - - (2,011) - (2,426)
Sales of long-term assets 26 - - 742 - 768
Net intercompany
investing 2,162 (44) (4) (2,290) 176 -
All other investing, net - - - 421 - 421
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
investing activities 1,773 (44) (4) (3,138) 176 (1,237)
_______ _______ _______ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 31 - 31
Reductions in long-term
debt - - - (15) - (15)
Additions/(reductions)
in short-term
debt - net - (25) - (337) - (362)
Cash dividends (1,563) - - (109) 109 (1,563)
Net ExxonMobil shares
sold/(acquired) (1,310) - - - - (1,310)
Net intercompany
financing activity - 59 - 117 (176) -
All other financing, net - - - (65) - (65)
_______ _______ _______ ________ ________ ________
Net cash provided
by/(used in)
financing activities (2,873) 34 - (378) (67) (3,284)
_______ _______ _______ ________ ________ ________
Effects of exchange rate
changes on cash - - - (28) - (28)
_______ _______ _______ ________ ________ ________
Increase/(decrease) in
cash and cash
equivalents $ (438) $ - $ - $ 513 $ - $ 75
======= ======= ======= ======== ======== =======
-16-
EXXON MOBIL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
First Quarter
____________________
2003 2002
____ ____
(millions of dollars)
Net income (U.S. GAAP)
_________________________________
Upstream
United States $ 1,259 $ 448
Non-U.S. 4,434 1,641
Downstream
United States 174 14
Non-U.S. 549 (42)
Chemicals
United States 16 70
Non-U.S. 271 62
Corporate and financing (213) (70)
Merger expenses 0 (60)
_______ _______
Income from continuing operations 6,490 2,063
Discontinued operations 0 27
Accounting change 550 0
_______ _______
Net Income (U.S. GAAP) $ 7,040 $ 2,090
======= =======
Net income per common share $ 1.05 $ 0.30
Net income per common share
- assuming dilution $ 1.05 $ 0.30
Other special items included in net income
Upstream
Non-U.S. (gain on transfer of Ruhrgas shares) $ 1,700 $ 0
-17-
REVIEW OF FIRST QUARTER 2003 RESULTS
Exxon Mobil Corporation estimated net income of $7,040 million ($1.05 per
share) in the first quarter of 2003, an increase of $4,950 million from the
first quarter of 2002. Net income included a $550 million positive impact from
the required adoption of FAS 143 relating to accounting for asset retirement
obligations. Net income also included a one-time gain of $1,700 million in the
non-U.S. upstream from the transfer of shares in Ruhrgas AG, a German gas
transmission company. The Ruhrgas shares were acquired by E.ON AG in March
2003.
Revenue for the first quarter of 2003 totaled $63,780 million compared with
$43,393 million in 2002. In the first quarter, ExxonMobil continued its active
investment program, spending $3,496 million on capital and exploration
projects, compared with $2,974 million last year, reflecting continued growth
in upstream spending.
First quarter earnings were strong and improved in all parts of the business.
Capex continued to grow consistent with our long-term investment plans. Asset
management steps continued to produce positive results.
Upstream earnings, including the Ruhrgas gain, were a record $5,693 million, an
increase of $3,604 million from first quarter 2002 results reflecting higher
realizations on sales of crude oil and natural gas. Average crude prices for
the quarter were at historical highs reflecting the temporary effects of the
national strike in Venezuela and civil unrest in Nigeria as well as market
speculation on the impacts from war in Iraq. Natural gas prices were higher
primarily due to cold weather in the United States. Both crude and natural gas
prices fell during March and are significantly lower thus far in the second
quarter. On an oil-equivalent basis, production increased 2 percent excluding
the effects of the national strike in Venezuela, lower entitlements caused by
higher prices and changes in OPEC quotas. Actual oil-equivalent production,
including these impacts, was flat. Plans for long-term capacity increases
remain on track as reflected by higher capital spending.
Downstream earnings were $723 million, an increase of $751 million from last
year's very weak first quarter, reflecting improved industry-wide conditions.
Refining and marketing margins were higher in most areas worldwide. Chemicals
earnings of $287 million were up $155 million from last year's first quarter.
Earnings benefited from record volumes, which were up 4 percent from last year.
During the quarter, the corporation acquired 35 million shares at a gross cost
of $1,191 million to offset the dilution associated with benefit plans and to
reduce common stock outstanding.
OTHER COMMENTS ON FIRST QUARTER 2003 COMPARED TO FIRST QUARTER 2002
Upstream earnings, including the $1,700 million Ruhrgas gain, were $5,693
million, an increase of $3,604 million from the first quarter 2002 reflecting
higher crude oil and natural gas realizations. Liquids production of 2,506 kbd
(thousands of barrels per day) decreased from 2,541 kbd in the first quarter of
2002. Higher production in Nigeria and Canada, and reduced OPEC quota
restrictions in Abu Dhabi, were more than offset by supply disruptions in
Venezuela, lower entitlements and natural field declines in mature areas.
Excluding the strike-related effects in Venezuela and entitlement/quota
impacts, liquids production was flat in the first quarter versus last year.
First quarter natural gas production increased to 12,048 mcfd (millions of
cubic feet per day), compared with 11,740 mcfd last year. Higher
weather-related demand in Europe more than offset natural field decline in
mature areas.
-18-
Earnings from U.S. upstream operations were $1,259 million, up $811 million.
Non-U.S. upstream earnings of $4,434 million were $2,793 million higher than
last year's first quarter including the $1,700 million Ruhrgas gain.
Downstream earnings of $723 million, representing about 2 cents per gallon,
increased $751 million from the first quarter of last year reflecting the
recovery in worldwide refining and marketing margins from very weak conditions.
Petroleum product sales were 7,861 kbd, 186 kbd higher than last year's first
quarter.
U.S. downstream earnings were $174 million, up $160 million due to higher
refining and marketing margins. Non-U.S. downstream earnings of $549 million
were $591 million higher than last year's first quarter. In addition to margin
effects, non-U.S. downstream results benefited from the absence of negative
foreign exchange effects in Argentina in the first quarter of 2002.
Chemicals earnings of $287 million were up $155 million from the same quarter a
year ago due to higher volumes, improved non-U.S. margins and favorable foreign
exchange effects. Prime product sales of 7,000 kt (thousands of metric tons)
were up 280 kt, reflecting higher demand in key commodity businesses across
most regions.
Corporate and financing expenses of $213 million increased $143 million mainly
due to higher U.S. pension costs.
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.
There were no merger related expenses in the first quarter of 2003 reflecting
the completion of the merger related activities in 2002. In the first quarter
of 2002, merger related costs were $83 million before tax ($60 million after
tax). The severance reserve balance at the end of the first quarter of 2003 is
expected to be expended mainly in 2003 and 2004. The following table summarizes
the activity in the severance reserve for the three months ended
March 31, 2003:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
101 0 14 87
LIQUIDITY AND CAPITAL RESOURCES
Net cash generation before financing activities was $7,911 million in the first
three months of 2003 versus $3,387 million in the same period last year.
Operating activities provided net cash of $8,646 million, an increase of $4,022
million from the prior year, influenced by higher net income.
Investing activities used net cash of $735 million, compared to a net use of
$1,237 million in the prior year, reflecting higher proceeds from asset
divestments and higher additions to property, plant, and equipment.
-19-
Net income in 2003 included a one-time gain of $1,700 million from the transfer
of ExxonMobil's interests in the Ruhrgas AG shares. The shares were valued at
approximately $2.6 billion. In the third quarter of 2002, a loan of $1.5
billion was received in connection with the restructuring of BEB Erdgas und
Erdoel GmbH that allowed for the transfer of the Ruhrgas shares. The remainder
was received upon completion of the share transaction and has been reported as
proceeds from sales of investments in the current period. The "All other items
- -- net" line in the current year includes an adjustment of the non-cash net
income gain included in first quarter 2003 for the cash received and reported
in the third quarter of 2002 and the cash received and reported in cash flows
from investing activities this quarter.
Net cash used in financing activities was $2,944 million in the first
quarter of 2003 versus $3,284 million in the same quarter last year
reflecting a lower level of debt reductions and purchases of ExxonMobil
stock in the current year.
During the first quarter of 2003, Exxon Mobil Corporation purchased 35 million
shares of its common stock for the treasury at a gross cost of $1,191 million.
These purchases were to offset shares issued in conjunction with company
benefit plans and programs and to reduce the number of shares outstanding.
Shares outstanding were reduced from 6,700 million at the end of 2002 to 6,679
million at the end of the first quarter 2003. Purchases may be made in both the
open market and through negotiated transactions, and may be discontinued at any
time.
Revenue for the first quarter of 2003 totaled $63,780 million compared to
$43,393 million in the first quarter 2002 reflecting significantly higher
prices.
Income and other taxes for the first quarter of $18,684 million were up
$4,121 million compared to last year. First quarter 2003 income tax expense
was $3,388 million and the effective tax rate was 36.4 percent, compared to
$1,265 million and 41.9 percent, respectively, in the prior year quarter.
The increase in income tax expense reflects higher pre-tax income. Excluding
the income tax effects of the gain on the Ruhrgas share transfer, the
effective rate in the current quarter was similar to the prior year quarter.
During both periods, the corporation continued to benefit from the favorable
resolution of tax related issues.
Capital and exploration expenditures were $3,496 million in the first quarter
2003 compared to $2,974 million in last year's first quarter. In 2003,
capital and exploration investments are expected to be about $14 billion,
similar to 2002 and reflecting the continued spending on ExxonMobil's large
portfolio of upstream projects.
Total debt of $10.7 billion at March 31, 2003 was comparable to year-end
2002. The corporation's debt to total capital ratio was 11.5 percent at the
end of the first quarter of 2003, compared to 12.2 percent at year-end 2002.
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 7 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.
-20-
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.
FORWARD-LOOKING STATEMENTS
Statements in this discussion regarding expectations, plans and future
events or conditions are forward-looking statements. Actual future
results; production growth; financing sources; the resolution of
contingencies; the effect of changes in prices, interest rates and other
market conditions; and environmental and capital and exploration
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 2002
Form 10-K.
-21-
EXXON MOBIL CORPORATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the three months ended
March 31, 2003 does not differ materially from that discussed
under Item 7A of the registrant's Annual Report on Form 10-K for
2002.
Item 4. Controls and Procedures
As indicated in the certifications on pages 26 through 28 of this
report, the corporation's principal executive officer, principal
accounting officer and principal financial office have evaluated the
corporation's disclosure controls and procedures as of March 31, 2003.
Based on that evaluation, these officers have concluded that the
corporation's disclosure controls and procedures are effective for the
purpose of ensuring that material information required to be in this
quarterly report is made known to them by others on a timely basis.
There have not been changes in the corporation's internal controls or
in other factors that could significantly affect these controls
subsequent to the date of this evaluation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Texas Commission on Environmental Quality (TCEQ) has issued a
Notice of Enforcement Action dated March 27, 2003, alleging violations
of certain reporting, calculation, and documentation requirements
under the Texas Clean Air Act and related implementing and operating
permit regulations in connection with upset events at the
corporation's Means Gas Conditioning Facility in Andrews County,
Texas. These administrative issues have been corrected. The Notice
also alleges that emissions associated with the identified events
violated the facility's air permit. The corporation does not believe
the events identified in the Notice constitute permit violations. TCEQ
has offered to settle the alleged violations for $177,100 but
negotiations are ongoing.
The Massachusetts Department of Environmental Protection (MDEP) has
issued a Notice of Enforcement received on January 22, 2003, alleging
that certain reports relating to remediation activities at certain
service stations and distribution terminals in Massachusetts were not
submitted within the deadlines provided under the Massachusetts
Contingency Plan. The corporation believes a penalty is not warranted
in this matter. The MDEP has indicated it may seek aggregate
penalties in excess of $500,000 but discussions with the agency are at
an early stage.
Refer to the relevant portions of note 7 on pages 9 and 10 of this
Quarterly Report on Form 10-Q for further information on legal
proceedings.
-22-
Item 5. Other Information
Due to a change in the administrator for the ExxonMobil Savings Plan,
there were limitations on ExxonMobil stock transactions within the
Plan during a brief transition period at the end of April, 2003. While
this transition period may not have met the definition of a "blackout
period" under Rule 102 of Regulation BTR, securities transactions by
ExxonMobil directors and officers were restricted as if Regulation
BTR did apply. Notice to this effect was provided to ExxonMobil's
directors and officers and was also furnished to the SEC under Item 9
of a Current Report on Form 8-K on March 10, 2003.
In accordance with the interim guidance provided in
Release No. 34-47583, the registrant is providing information under
this item that would otherwise be provided under Item 11 "Temporary
Suspension of Trading Under Registrant's Employee Benefit Plans" of a
Current Report on Form 8-K. Information responsive to such Item 11 is
incorporated herein by reference to the registrant's current report on
Form 8-K furnished to the commission under Item 9 on March 10, 2003.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
99.1 Section 1350 Certification (pursuant to Sarbanes-Oxley
Section 906) by Chief Executive Officer.
99.2 Section 1350 Certification (pursuant to Sarbanes-Oxley
Section 906) by Principal Accounting Officer.
99.3 Section 1350 Certification (pursuant to Sarbanes-Oxley
Section 906) by Principal Financial Officer.
b) Reports on Form 8-K
On January 3, 2003, the registrant filed a Current Report on
Form 8-K under Item 5 about a court ruling related to the Mobile
Bay royalties dispute in Alabama.
On January 28, 2003, the registrant filed a Current Report on
Form 8-K furnishing under Item 9 its News Release, dated
January 28, 2003, announcing 2002 additions to worldwide proved
oil and gas reserves and the related reserve replacement
percentage.
On January 30, 2003, the registrant filed a Current Report on
Form 8-K furnishing under Item 9 its News Release, dated
January 30, 2003, announcing fourth quarter results.
On March 7, 2003, the registrant filed a Current Report on
Form 8-K furnishing under Item 9 information concerning transfers
of Ruhrgas AG shares, held by jointly owned subsidiaries, to
E.ON AG.
On March 10, 2003, the registrant filed a Current Report on Form
8-K furnishing under item 9 the information that would otherwise
have been provided under Item 11 "Temporary Suspension of Trading
Under Registrant's Employee Benefit Plans".
-23-
b) Reports on Form 8-K (continued)
On May 1, 2003, the registrant filed a Current Report on Form 8-K
furnishing under Item 9, and also pursuant to Item 12, its News
Release, dated May 1, 2003, announcing first quarter results and the
information in the related 1Q03 Investor Relations Data Summary.
On May 7, 2003, the registrant filed a Current Report on Form 8-K
furnishing under Item 9, and also pursuant to Item 12, its 2002
Financial and Operating Review.
Reports listed above as "furnished" under Item 9 are not deemed
"filed" with the SEC and are not incorporated by reference herein
or in any other SEC filings
-24-
EXXON MOBIL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXXON MOBIL CORPORATION
Date: May 14, 2003
/s/ DONALD D. HUMPHREYS
_______________________________________________
Donald D. Humphreys, Vice President, Controller
and Principal Accounting Officer
-25-
CERTIFICATIONS
Certification by Lee R. Raymond
Pursuant to Securities Exchange Act Rule 13a-14
I, Lee R. Raymond, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Exxon Mobil
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ Lee R. Raymond
_________________________________
Lee R. Raymond
Chief Executive Officer
-26-
Certification by Donald D. Humphreys
Pursuant to Securities Exchange Act Rule 13a-14
I, Donald D. Humphreys, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Exxon Mobil
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ Donald D. Humphreys
_______________________________
Donald D. Humphreys
Vice President and Controller
(Principal Accounting Officer)
-27-
Certification by Frank A. Risch
Pursuant to Securities Exchange Act Rule 13a-14
I, Frank A. Risch, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Exxon Mobil
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ Frank A. Risch
______________________________
Frank A. Risch
Vice President and Treasurer
(Principal Financial Officer)
-28-
INDEX TO EXHIBITS
Exhibit No. Description
__________ ___________
99.1 Section 1350 Certification (pursuant to Sarbanes-Oxley
Section 906) by Chief Executive Officer.
99.2 Section 1350 Certification (pursuant to Sarbanes-Oxley
Section 906) by Principal Accounting Officer.
99.3 Section 1350 Certification (pursuant to Sarbanes-Oxley
Section 906) by Principal Financial Officer.
-29-
EXHIBIT 99.1
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, the undersigned,
Lee R. Raymond, the chief executive officer of Exxon Mobil Corporation
(the "Company"), hereby certifies that, to his knowledge:
(i) the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the "Report") fully
complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date: May 14, 2003
/s/ Lee R. Raymond
_______________________________
Lee R. Raymond
Chief Executive Officer
A signed original of this written statement required by Section 906
has been provided to Exxon Mobil Corporation and will be retained by
Exxon Mobil Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.
EXHIBIT 99.2
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, the undersigned,
Donald D. Humphreys, the principal accounting officer of Exxon Mobil
Corporation (the "Company"), hereby certifies that, to his knowledge:
(i) the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the "Report") fully
complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date: May 14, 2003
/s/ Donald D. Humphreys
____________________________
Donald D. Humphreys
Vice President and Controller
(Principal Accounting Officer)
A signed original of this written statement required by Section 906
has been provided to Exxon Mobil Corporation and will be retained by
Exxon Mobil Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.
EXHIBIT 99.3
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, the undersigned, Frank A. Risch,
the principal financial officer of Exxon Mobil Corporation (the
"Company"), hereby certifies that, to his knowledge:
(i) the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the "Report") fully
complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date: May 14, 2003
/s/ Frank A. Risch
______________________________
Frank A. Risch
Vice President and Treasurer
(Principal Financial Officer)
A signed original of this written statement required by Section 906
has been provided to Exxon Mobil Corporation and will be retained by
Exxon Mobil Corporation and furnished to the Securities and Exchange
Commission or its staff upon request.