UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported):  May 1, 2003

 

 

EXXON MOBIL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

New Jersey

 

1-2256

 

13-5409005

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

 

 

5959 Las Colinas Boulevard
Irving, Texas

 

75039-2298

(Address of principal executive offices)

 

(Zip Code)

 

 

 

Registrant’s telephone number, including area code: (972) 444-1000

 


 

(Former name or former address, if changed since last report)

 

 



 

ITEM 9.          Regulation FD Disclosure

 

 

The following information is furnished pursuant to this Item 9 and also pursuant to “Item 12.  Results of Operations and Financial Condition.”

 

The Registrant hereby furnishes the information set forth in its 2002 Financial and Operating Review, a copy of which is included as Exhibit 99.1.

 

 

2



 

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 hereunto duly authorized.

 

 

 

 

EXXON MOBIL CORPORATION

 

 

 

 

 

 

Date:  May 7, 2003

By:

/s/ Donald D. Humphreys

 

 

Name:

Donald D. Humphreys

 

 

Title:

Vice President, Controller and
Principal Accounting Officer

 

 

3



 

INDEX TO EXHIBITS

 

 

Exhibit No.

 

Description

 

 

 

99.1

 

Exxon Mobil Corporation’s 2002 Financial and Operating Review.

 

 

4




 

 



 

 

 

CORPORATE

1-17

 

 

SAFETY, HEALTH & ENVIRONMENT

18-19

 

 

TECHNOLOGY

20-23

 

 

UPSTREAM

24-61

 

 

DOWNSTREAM

62-75

 

 

CHEMICAL

76-83

 

 

COAL AND MINERALS

84

 

 

FREQUENTLY USED TERMS

85-88

 

 

Projections, targets, expectations, estimates, and business plans in this report are forward-looking statements. Actual future results, including demand growth and energy mix; capacity growth; project plans, dates, and capacities; production rates and resource recoveries; and efficiency gains and savings could differ materially due to, for example, changes in market conditions affecting the oil and gas industry; war and other political or security disturbances; changes in, and adherence by countries to, OPEC quotas; weather; the occurrence and duration of economic recessions; the outcome of commercial negotiations; and other factors discussed in this report and under the the heading “Factors Affecting Future Results” on our web site and in Item 1 of ExxonMobil’s most recent Form 10-K.

 

Definitions of certain financial and operating measures and other terms used in this report are contained in the section titled “Frequently Used Terms” on pages 85 through 88. In the case of financial measures that we believe constitute “non-GAAP financial measures” under SEC Regulation G, the definitions also include a reconciliation to the most comparable GAAP measure and other information required by that rule.

 

Certain prior-period amounts include reclassifications to reflect a previously announced change in segment reporting. Earnings of divested coal and copper mining businesses are reported as discontinued operations.

 

 



 

EXXONMOBIL’S COMPETITIVE STRENGTHS

 

ExxonMobil has a long history of leadership in the petroleum and petrochemical industries. The discipline and commitment we apply in the execution of our business strategies have led to sustainable competitive advantages.

 

Commitment to Technology.   ExxonMobil maintains a uniquely strong commitment to proprietary technology in all of our business functions — consistently investing more than competition.

 

Business Approach

 

Business Integrity.   ExxonMobil’s straightforward approach to ethics and business integrity is reflected in all of our activities. Our goal is to report results that are clear and readily understood by investors.

 

Capital Discipline.   ExxonMobil takes a disciplined, long-term approach to making investment decisions.

 

Operational Excellence.   ExxonMobil has consistently maintained an unwavering focus on the performance of our base business.

 

Global Functional Organization.   ExxonMobil implements our strategies through 10 global functional companies, providing a competitive advantage through global ranking of opportunities and effective deployment of people in ever-changing business conditions.

 

Long-Standing History

 

Employees.   The exceptional quality of ExxonMobil’s workforce has long been valued as a source of competitive advantage.

 

Worldwide Experience.   ExxonMobil’s global presence allows us to build upon existing business experience to capture opportunities in the world’s higher-growth regions, such as the deep waters offshore West Africa and in areas recently opened to private investment, such as the Caspian region and Russia.

 

Diversity of Operations.   The company’s size, geographic diversity, and the complementary nature of the Upstream, Downstream, and Chemical businesses mitigate the corporation’s sensitivity to fluctuations in individual business lines and markets.

 

Outstanding Portfolio of Opportunities.   ExxonMobil’s worldwide businesses are pursuing a broad portfolio of profitable projects.

 

Industry-Leading Results

 

Financial Strength.   A strong cash flow and financial position, combined with a long-standing triple-A credit rating, allow ExxonMobil to pursue all profitable opportunities.

 

Leadership in Return on Capital Employed.   ExxonMobil views return on capital employed as the most critical and best measure of capital productivity in our capital-intensive industry. In 2002, ExxonMobil remained the industry leader, with a 13.5 percent return on capital employed.

 

 

 

1



 

FINANCIAL HIGHLIGHTS

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

204,506

 

212,785

 

231,846

 

184,753

 

168,896

 

Net income

 

11,460

 

15,320

 

17,720

 

7,910

 

8,074

 

Cash flow from operations and asset sales

 

24,061

 

23,967

 

28,707

 

15,985

 

18,320

 

Capital and exploration expenditures

 

13,955

 

12,311

 

11,168

 

13,307

 

15,535

 

Cash dividends to ExxonMobil shareholders

 

6,217

 

6,254

 

6,123

 

5,872

 

5,843

 

Research and development costs

 

631

 

603

 

564

 

630

 

753

 

Cash and cash equivalents at year end

 

7,229

 

6,547

 

7,080

 

1,688

 

2,386

 

Total assets at year end

 

152,644

 

143,174

 

149,000

 

144,521

 

139,335

 

Total debt at year end

 

10,748

 

10,802

 

13,441

 

18,972

 

17,016

 

Shareholders’ equity at year end

 

74,597

 

73,161

 

70,757

 

63,466

 

62,120

 

Average capital employed(1)

 

88,342

 

88,000

 

87,463

 

83,836

 

80,079

 

Market valuation at year end

 

234,101

 

267,577

 

301,239

 

280,150

 

245,536

 

 

KEY FINANCIAL RATIOS

 

Net income per common share — assuming dilution (dollars)

 

1.68

 

2.21

 

2.52

 

1.12

 

1.14

 

Return on average capital employed(1) (percent)

 

13.5

 

17.8

 

20.6

 

10.3

 

10.7

 

Net income to average shareholders’ equity (percent)

 

15.5

 

21.3

 

26.4

 

12.6

 

12.9

 

Net income to total revenue (percent)

 

5.6

 

7.2

 

7.6

 

4.3

 

4.8

 

Debt to capital(2) (percent)

 

12.2

 

12.4

 

15.4

 

22.0

 

20.6

 

Net debt to capital (net of all cash — percent)

 

4.4

 

5.3

 

7 9

 

20.4

 

18.2

 

Current assets to current liabilities(3)

 

1.15

 

1.18

 

1.06

 

0.80

 

0.85

 

Fixed charge coverage (times)

 

13.8

 

17.7

 

15.6

 

6.6

 

6.9

 


(1)          Capital employed consists of shareholders’ equity and debt, including ExxonMobil’s share of amounts applicable to equity companies.

See Frequently Used Terms.

(2)          Debt includes short- and long-term debt. Capital includes short- and long-term debt, shareholders’ equity, and minority interests.

(3)          Current liabilities include short-term debt (notes and loans payable).

 

 

 

2



 

ExxonMobil is committed to our proven business approach and the long-standing fundamental strategies that capitalize on our core strengths. Our business approach is straightforward and focused on the long term, as the company achieves superior financial and operating results that enhance long-term returns to our shareholders.

 

 

2002 HIGHLIGHTS

 

Ø                 Record safety performance.

 

Ø                 Proved reserves additions replaced 117 percent of production.

 

Ø                 Oil-equivalent production capacity was up 1 percent.

 

Ø                 Upstream capital and exploration spending grew by $1.6 billion to $10.4 billion.

 

Ø                 Ten new major projects brought onstream with targeted gross daily peak production of more than 490 thousand barrels and 230 million cubic feet of gas.

 

Ø                 Key resource additions from Angola, Nigeria, Australia, Kazakhstan, and North America.

 

Ø                 Downstream continued to capture substantial pre-tax efficiencies of $1.4 billion during the year.

 

Ø                 Record Chemical sales volumes for the fourth consecutive year and 4 percent above last year’s level.

 

Ø                 Substantial earnings from divestments of our Chilean copper business and Colombian coal business.

 

Ø                 Annual dividend payments increased for the 20th consecutive year.

 

2002 INDUSTRY CONDITIONS

 

Ø               •  World GDP grew about 2 percent in 2002 versus 1.4 percent in 2001, extending a period of relatively weak demand growth for oil and gas. World oil demand increased by about 250 thousand barrels per day in 2002.

 

Ø               •  Brent oil prices averaged approximately $25 per barrel in 2002, about 50 cents per barrel higher versus 2001.

 

Ø               •  Natural gas prices in the United States increased through the year, but on average were about 25 percent lower versus 2001. Natural gas prices were down about 15 percent in Europe.

 

Ø               •  Industry refining margins in the U.S. and Europe fell significantly in 2002 due to weak product demand. In Asia-Pacific, excess refinery capacity also contributed to depressed margins.

 

Ø               •  Chemical margins remained near bottom-of-cycle levels in 2002 for most high-volume petrochemicals, reflecting sufficient supply and moderate demand growth.

 

 

Leadership Position in Core Businesses

In the Upstream, ExxonMobil participates in every major producing area in the world. We have a substantial production base in the United States, Europe, and the Asia-Pacific region and are unique in having interests in the four major growth areas of West Africa, the Middle East, the Caspian, and Russia. ExxonMobil has the largest resource base of any nongovernment company in the world with 72 billion oil-equivalent barrels. Our proprietary technology, financial strength, worldwide experience, and disciplined approach make ExxonMobil the partner of choice for host governments and joint-venture partners.

In the Downstream, ExxonMobil is the largest fuels refiner and manufacturer of lubes basestocks in the world. We market retail petroleum products and finished lubricants under three strong brands. Our refineries are 50-percent larger than industry average, with more than 80 percent of capacity integrated with other ExxonMobil manufacturing operations, which results in world-class efficiency. ExxonMobil’s range of market-focused retail formats and customer-targeted lubricant products differentiates us from the competition and provides continued competitive advantage.

In Chemical, ExxonMobil is a leading producer and supplier of primary petrochemicals, including olefins, polyolefins, and aromatics, as well as a number of specialty petrochemicals. Our Chemical business is competitively advantaged by our leading-edge technology, integration of more than 90 percent of our assets with refineries, mix of cyclical and non-cyclical businesses, and superior cost structure.

 

 

3



 

INDUSTRY OUTLOOK

 

World Energy Demand Growing

 

There is a long-standing, proven link between economic growth and energy use. Growing economies will continue to require reliable and affordable energy supplies. We expect hydrocarbons, which currently account for about 80 percent of energy supply, to maintain a significant share of world energy demand.

 

Responsible Development

 

Today, roughly 85 percent of the world’s population lives in developing countries, where GDP per capita is only about 6 percent of that in the developed world. Some 1.6 billion people have no access to electricity, and more than 1 billion people lack access to safe drinking water. Such needs provide a tremendous opportunity and responsibility to help improve the quality of life for people around the world.

 

 

Efficiency and Conservation Important to Meeting Future Energy Needs

 

 

Economic growth will remain the primary driver of energy demand. The global economy has grown at an average rate of about 3 percent per year since 1970. We expect growth to continue at that pace, on average, for the next couple of decades as developing nations play a greater role in the global economy, and increases in productivity offset lower population growth.

 

We expect worldwide energy demand to grow at about 2 percent per year, reflecting significant but yet-to-be-achieved advances in energy efficiency. Contributing to these efficiency gains will be the development and deployment of new technologies such as natural gas combined-cycle turbines for power generation, and advanced internal combustion engine and hybrid vehicles. We expect world energy demand will be close to 290 million oil-equivalent barrels per day by 2020 — or about 40 percent more than today.

 

 

Oil and Gas Will Remain Predominant Energy Sources

 

We anticipate that hydrocarbon fuels will remain the dominant energy source, at least through the middle of the century. Wind and solar power will continue to grow rapidly, due to significant government policies and incentives, not market economics. To put this in perspective, solar power can cost somewhere between $100 and $250 per oil-equivalent barrel.

 

 

 

4



 

The intermittent nature of solar energy can result in additional costs for backup supplies. Starting from a low base today, wind and solar energy are unlikely to exceed a 1-percent share of the world’s energy needs by 2020, even with double-digit growth rates.

 

This view recognizes the role and scope of hydrocarbon supplies today, including their enduring competitive advantages in terms of cost and ease of use in multiple applications. The oil and gas share of the world’s energy supply — close to 60 percent today — is expected to remain at that level over the next two decades.

 

Some 50 years ago, natural gas represented about 10 percent of the world’s energy demand. Today it exceeds 20 percent of demand. Over the next couple of decades, we expect this trend to continue, with natural gas capturing about one-third of all incremental energy growth. Driving this growth is the fact that natural gas remains the fuel of choice to meet increasing electricity demand around the world. By 2020, gas is likely to supply about one-quarter of global energy requirements — second only to oil.

 

Growing Oil and Gas Demand Requires New Supplies

 

The ongoing task of our industry is to find, produce, and deliver energy products in an economic and environmentally sound manner. By 2015, the petroleum industry will likely need to add some 100 million oil-equivalent barrels per day to meet demand — an amount close to 80 percent of today’s production levels.

 

Meeting growing energy demand will require access to resources, technology advances, significant investments, timely development, and the cooperation of host governments. As indigenous supplies of oil and gas within mature market areas decline while demand grows, the dependency between importing and exporting countries is expected to increase. We expect growing supplies from West Africa, Russia, the Caspian region, and the Middle East to support higher imports into the United States, Europe, and Asia.

 

The prospect of higher import levels continues to raise concerns about security of supply. The key to security will be found in diversity of supply. Governments can do much to help this effort by promoting diversity through access to resource acreage in all regions.

 

 

Technology Gains Required to Help Meet Future Needs

 

New technologies will continue to help improve the recovery of hydrocarbon resources, as demonstrated in the past by improvements in 3-D seismic imaging and reservoir modeling, advanced drilling, and arctic and deepwater resource development. ExxonMobil’s commitment to new technology will help reduce the cost of producing difficult-to-reach resources and increase the potential for discovering resources that will contribute to future energy supplies.

 

ExxonMobil will continue to improve on the legacy of our technology successes. Our industry-leading resource base, technology advantages, project-management discipline and financial strength provide us with a sustainable competitive advantage to capitalize on the opportunities ahead.

 

 

5



 

COMPETITIVE ADVANTAGES BUILD SHAREHOLDER VALUE

 

Unparalleled Execution of Business Strategies

 

ExxonMobil’s fundamental approach to our business is disciplined, straightforward, and focused on the long term. Although other companies may take a similar approach, it is the execution of our strategies that distinguishes us from competition. It is this superior execution that delivers industry-leading results in all aspects of our business.

 

Unwavering Capital Discipline

 

In our industry, where large capital investments are required, it is important to demonstrate the prudent use of capital resources. ExxonMobil’s relentless drive to maximize the value of our assets begins with the investment decision. We apply a disciplined approach to selecting and pursuing the most-attractive opportunities, and this discipline continues through execution of all phases of the project from design through start-up and ongoing operations. We continuously work to control costs. Once investments are made, a rigorous re-appraisal process is completed to ensure relevant lessons are learned and improvements are incorporated into future projects. This rigorous approach ensures that we are achieving the maximum value for our assets and clearly distinguishes us from our competition.

 

 

Operational Excellence Delivers Superior Results

 

The same disciplined approach we take to making investment decisions is applied to managing our operations. We call this Operational Excellence. ExxonMobil believes that Operational Excellence starts with safety. When a company is committed to safety, as we are, the same discipline and commitment are applied in all aspects of business. In 2002, ExxonMobil set another record in safety performance, and led the industry again in this area.

 

Additionally, ExxonMobil management’s commitment to proven, structured management systems ensures consistent quality of work in the 200 countries and territories where the company operates. We have achieved strong results by focusing on continuous productivity improvements and cost efficiencies.

 

 

Global Functional Organization Creates Efficiencies

ExxonMobil is the only multinational integrated oil company organized to operate the functional business lines on a global basis. Through the functional organization, global opportunities are ranked and people are promptly deployed to ever-changing business conditions. The functional organization also helps to more promptly identify and prioritize high-impact technology needs, and it facilitates the rapid sharing of ideas and best practices across our global operations.

 

ExxonMobil’s functional approach is delivering savings to the bottom line through operating cost efficiencies and revenue enhancements. In 2002, ExxonMobil businesses delivered almost $1.9 billion before-tax in efficiencies, and we expect to deliver an additional $1 billion in 2003.

 

Ethics and Business Integrity Remain Core Values

At ExxonMobil, we have long recognized the importance and value of ethics and business integrity. We believe they are key to long-term, sustainable results. Our approach is straightforward and is reflected in all of our activities. We strive to ensure our results are clear and readily understood by our investors.

 

 

6



 

Geographic and Functional Diversity Provides Balance

 

The company’s size, geographic diversity, and the complementary nature of the Upstream, Downstream, and Chemical businesses mitigate the corporation’s sensitivity to fluctuations in individual business lines and markets. By taking advantage of synergies among these businesses, ExxonMobil is able to optimize total company performance.

 

 

Strong Cash Flow Results from Business Approach

 

In 2002, we generated $24 billion in cash flow from operations and asset sales. We invested $14 billion in capital and exploration expenditures, and distributed more than $10 billion to shareholders through dividend payments and share repurchases.

 

During the last three years, we have generated nearly $77 billion in cash flow from operations and asset sales, invested $37 billion in capital and exploration expenditures, and distributed $29 billion to shareholders in the form of dividends and share buybacks. The company also reduced debt outstanding and grew cash balances during this time period.

 

 

Financial Strength Enables Pursuit of all Profitable Opportunities

ExxonMobil is one of few U.S. industrial companies with a triple-A credit rating — a rating that has been sustained for 84 years. Our financial strength allows us to readily access capital markets and fund the capital needed to pursue any and all profitable opportunities. Strong business results and a prudent and well-tested approach to financial management ensure we maintain this financial strength at any stage of the industry cycle.

 

Net debt to capital (net of cash) ended the year at about 4 percent. Fixed charge coverage was almost 14 times for 2002, and cash flow to net debt was near 700 percent. This performance demonstrates the rigorous commitment to financial and capital investment discipline that has yielded a productive capital base throughout the business cycle.

 

The company’s financial position, size, and geographic and functional diversity provide a natural hedge to mitigate risk from changes in commodity prices, foreign exchange, and interest rates. As a result, the company seldom uses derivatives, and only does so to offset exposures from existing transactions.

 

 

 

7



 

Competitive Advantages (continued)

 

Industry Leader in Return on Capital Employed

 

ExxonMobil views return on capital employed as the most critical and best measure of historical capital productivity in our capital-intensive, long-term industry. ExxonMobil has a long history of leadership in return on capital employed. The combination of our disciplined investments and operational excellence leads to consistent industry-leading returns. In 2002, ExxonMobil remained the industry leader in return on capital employed, with a return of 13.5 percent.

 

ExxonMobils Approach Grows Shareholder Value

 

Long-term growth in shareholder value is our core, fundamental objective, and our track record demonstrates we continue to provide substantial benefits for our shareholders. ExxonMobil has paid a dividend every year for more than a century, and dividend payments have increased in each of the past 20 years, reaching $0.92 per share in 2002. During 2002, we distributed more than $10 billion to shareholders through dividend payments and share repurchases, representing a total yield of about 4 percent of the company’s equity market capitalization at the beginning of the year. During the last three years, $29 billion in dividends and share buybacks has been distributed to shareholders, representing more than 10 percent of ExxonMobil’s year-end 1999 market value.

 

Returns on ExxonMobil shares have consistently outpaced those of the S&P 500 index. ExxonMobil shareholders have earned annualized returns of 16.9 percent and 14.8 percent during the last 20 and 30 years, respectively, compared with returns from the S&P 500 index of 12.7 percent and 10.7 percent in the same time periods.

 

The volatility of ExxonMobil’s stock price, a measure of the fluctuation of monthly returns around its average and a key indication of risk, has equaled the volatility of the diversified S&P 500 index during the past five years, and has been well below that of peers in our industry during that same time period.

 

 

Disciplined Management of Annuity Plans

 

ExxonMobil and its affiliates manage more than 100 pension plans. The funding arrangement for each plan depends on the prevailing practices and regulations of the countries where the company operates.

 

Ø        In several countries, such as the United States, Canada, and the United Kingdom, the prevailing practice is to fund most pension obligations through separate assets or insurance arrangements. These plans are managed in compliance with the requirements of governmental authorities, and meet or exceed required funding levels as measured by relevant actuarial and government standards at the mandated measurement dates.

 

Ø        Book reserves are established for plans in other countries, as well as certain smaller plans in the U.S., because tax conventions and regulatory practices do not encourage funding. Book reserves are added as additional pension costs are incurred with company service, and benefit payments are made from corporate cash flow.

 

The approach to managing the financial assets associated with these plans is consistent with the core principles followed in all ExxonMobil businesses. Our fund management reflects careful assessment of the risks of various asset classes, diversification to minimize the portfolio’s risk, and a long-term orientation that minimizes transaction costs and takes advantage of more-predictable, long-term asset returns.

 

ExxonMobil is a capital-intensive, rather than a labor-intensive, business. Pension expense represented only 2 percent of total operating costs in 2002. Pension expense is calculated based on U.S. Generally Accepted Accounting Principles, which require certain assumptions, such as discount rate and long-term expected earnings. Assumptions are developed conservatively, are reviewed by outside actuaries and senior management, and are within the range of peer practice and actual experience. For example, our long-term earnings rate assumption has been, and will continue to be, consistent with historical returns. The 2003 assumption is 9 percent for the U.S. pension plan versus 9.5 percent in 2002. Returns over the past 10- and 20-year periods were 10 percent and 11 percent, respectively.

 

 

8



 

NUMBER OF REGULAR EMPLOYEES AT YEAR END

 

(thousands)

 

2002

 

2001

 

2000

 

1999

 

1998

 

United States

 

36

 

36

 

36

 

39

 

44

 

Outside United States

 

56

 

62

 

64

 

68

 

68

 

Total regular employees

 

92

 

98

 

100

 

107

 

112

 

CORS(1) employees not included above

 

17

 

20

 

19

 

16

 

13

 


(1)          CORS employees are employees of company-operated retail sites.

 

DIVIDEND AND OTHER SHAREHOLDER INFORMATION

 

 

 

2002

 

2001

 

2000

 

1999

 

1998

 

Net income per common share (dollars)

 

1.69

 

2.23

 

2.55

 

1.14

 

1.15

 

Net income per common share — assuming dilution (dollars)

 

1.68

 

2.21

 

2.52

 

1.12

 

1.14

 

Dividends per common share(1) (dollars)

 

 

 

 

 

 

 

 

 

 

 

First quarter

 

0.23

 

0.22

 

0.22

 

0.208

 

0.208

 

Second quarter

 

0.23

 

0.23

 

0.22

 

0.208

 

0.208

 

Third quarter

 

0.23

 

0.23

 

0.22

 

0.208

 

0.208

 

Fourth quarter

 

0.23

 

0.23

 

0.22

 

0.220

 

0.209

 

Total

 

0.92

 

0.91

 

0.88

 

0.844

 

0.833

 

Annual dividend growth (percent)

 

1.1

 

3.4

 

4.3

 

1.3

 

2.8

 

Number of common shares outstanding (millions)

 

 

 

 

 

 

 

 

 

 

 

Average

 

6,753

 

6,868

 

6,953

 

6,906

 

6,937

 

Average — assuming dilution

 

6,803

 

6,941

 

7,033

 

7,036

 

7,067

 

Year end

 

6,700

 

6,809

 

6,930

 

6,955

 

6,916

 

Number of registered shareholders at year-end (thousands)

 

678

 

699

 

719

 

779

 

812

 

Annual total shareholder returns(2) (percent)

 

(8.9

)

(7.6

)

10.2

 

12.5

 

22.4

 

Market quotations for common stock(3) (dollars)

 

 

 

 

 

 

 

 

 

 

 

High

 

44.58

 

45.84

 

47.72

 

43.63

 

38.66

 

Low

 

29.75

 

35.01

 

34.94

 

32.16

 

28.31

 

Average daily close

 

37.70

 

41.29

 

41.42

 

38.40

 

34.60

 

Year-end close

 

34.94

 

39.30

 

43.47

 

40.28

 

36.57

 

Cash dividends paid on common stock (millions of dollars)

 

6,217

 

6,254

 

6,123

 

5,836

 

5,783

 

Cash dividends paid on preferred stock (millions of dollars)

 

 

 

 

36

 

60

 

Total cash dividends paid (millions of dollars)

 

6,217

 

6,254

 

6,123

 

5,872

 

5,843

 

Cash dividends paid to net income (percent)

 

54.2

 

40.8

 

34.6

 

74.2

 

72.4

 

Cash dividends paid to cash flow(4) (percent)

 

25.8

 

26.1

 

21.3

 

36.7

 

31.9

 


(1)          Dividends per common share for 1998 and 1999 reflect the sum of the dividends paid by Exxon and Mobil divided by the number of shares that would have been outstanding for the periods, after adjusting the Mobil shares for the exchange ratio of 1.32015 shares of ExxonMobil common stock.

(2)          Total shareholder returns are the appreciation of the stock price over a year plus the value of the dividends, with dividend reinvestment, and excluding trading commissions and taxes. See Frequently Used Terms.

(3)          Market quotations for common stock reflect Exxon share prices through November 30, 1999, the effective date of the merger, and ExxonMobil share prices thereafter.

(4)          Cash flow includes cash from operations and asset sales. See Frequently Used Terms.

 

 

9



 

FUNCTIONAL EARNINGS

 

 

 

2002 Quarters

 

 

 

 

 

 

 

 

 

 

 

(millions of dollars)

 

First

 

Second

 

Third

 

Fourth

 

2002

 

2001

 

2000

 

1999

 

1998

 

Net Income (U.S. GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

448

 

677

 

642

 

757

 

2,524

 

3,933

 

4,542

 

1,873

 

869

 

Non-U.S.

 

1,641

 

1,553

 

1,635

 

2,245

 

7,074

 

6,803

 

8,143

 

4,371

 

2,837

 

Total

 

2,089

 

2,230

 

2,277

 

3,002

 

9,598

 

10,736

 

12,685

 

6,244

 

3,706

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

14

 

234

 

42

 

403

 

693

 

1,924

 

1,561

 

577

 

1,199

 

Non-U.S.

 

(42

)

148

 

83

 

418

 

607

 

2,303

 

1,857

 

650

 

2,275

 

Total

 

(28

)

382

 

125

 

821

 

1,300

 

4,227

 

3,418

 

1,227

 

3,474

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

70

 

87

 

156

 

71

 

384

 

398

 

644

 

738

 

792

 

Non-U.S.

 

62

 

182

 

197

 

5

 

446

 

484

 

517

 

616

 

602

 

Total

 

132

 

269

 

353

 

76

 

830

 

882

 

1,161

 

1,354

 

1,394

 

Corporate and financing

 

(70

)

(222

)

(41

)

(109

)

(442

)

(142

)

(538

)

(511

)

(443

)

Merger expenses

 

(60

)

(30

)

(85

)

(100

)

(275

)

(525

)

(920

)

(469

)

0

 

Gain from required asset divestitures

 

0

 

0

 

0

 

0

 

0

 

40

 

1,730

 

0

 

0

 

Discontinued operations

 

27

 

11

 

11

 

400

 

449

 

102

 

184

 

65

 

13

 

Accounting change

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(70

)

Net income (U.S. GAAP)

 

2,090

 

2,640

 

2,640

 

4,090

 

11,460

 

15,320

 

17,720

 

7,910

 

8,074

 

Net income per common share (dollars)

 

0.30

 

0.40

 

0.39

 

0.60

 

1.69

 

2.23

 

2.55

 

1.14

 

1.15

 

Net income per common share — assuming dilution (dollars)

 

0.30

 

0.39

 

0.39

 

0.60

 

1.68

 

2.21

 

2.52

 

1.12

 

1.14

 


Merger Effects, Discontinued Operations, and Other Special Items

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(185

)

Non-U.S.

 

0

 

0

 

(215

)

0

 

(215

)

0

 

0

 

119

 

(176

)

Total

 

0

 

0

 

(215

)

0

 

(215

)

0

 

0

 

119

 

(361

)

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

8

 

Non-U.S.

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(120

)

(412

)

Total

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(120

)

(404

)

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

0

 

0

 

0

 

0

 

0

 

100

 

0

 

0

 

(8

)

Non-U.S.

 

0

 

0

 

0

 

0

 

0

 

75

 

0

 

0

 

(1

)

Total

 

0

 

0

 

0

 

0

 

0

 

175

 

0

 

0

 

(9

)

Corporate and financing

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

112

 

Merger expenses

 

(60

)

(30

)

(85

)

(100

)

(275

)

(525

)

(920

)

(469

)

0

 

Gain from required asset divestitures

 

0

 

0

 

0

 

0

 

0

 

40

 

1,730

 

0

 

0

 

Discontinued operations

 

27

 

11

 

11

 

400

 

449

 

102

 

184

 

65

 

13

 

Accounting change

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(70

)

Corporate total

 

(33

)

(19

)

(289

)

300

 

(41

)

(208

)

994

 

(405

)

(719

)


Earnings Excluding Merger Effects, Discontinued Operations, and Other Special Items

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

448

 

677

 

642

 

757

 

2,524

 

3,933

 

4,542

 

1,873

 

1,054

 

Non-U.S.

 

1,641

 

1,553

 

1,850

 

2,245

 

7,289

 

6,803

 

8,143

 

4,252

 

3,013

 

Total

 

2,089

 

2,230

 

2,492

 

3,002

 

9,813

 

10,736

 

12,685

 

6,125

 

4,067

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

14

 

234

 

42

 

403

 

693

 

1,924

 

1,561

 

577

 

1,191

 

Non-U.S.

 

(42

)

148

 

83

 

418

 

607

 

2,303

 

1,857

 

770

 

2,687

 

Total

 

(28

)

382

 

125

 

821

 

1,300

 

4,227

 

3,418

 

1,347

 

3,878

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

70

 

87

 

156

 

71

 

384

 

298

 

644

 

738

 

800

 

Non-U.S.

 

62

 

182

 

197

 

5

 

446

 

409

 

517

 

616

 

603

 

Total

 

132

 

269

 

353

 

76

 

830

 

707

 

1,161

 

1,354

 

1,403

 

Corporate and financing

 

(70

)

(222

)

(41

)

(109

)

(442

)

(142

)

(538

)

(511

)

(555

)

Corporate total

 

2,123

 

2,659

 

2,929

 

3,790

 

11,501

 

15,528

 

16,726

 

8,315

 

8,793

 

Earnings per common share (dollars)

 

0.30

 

0.40

 

0.44

 

0.56

 

1.70

 

2.27

 

2.40

 

1.20

 

1.25

 

Earnings per common share — assuming dilution (dollars)

 

0.30

 

0.39

 

0.44

 

0.56

 

1.69

 

2.25

 

2.37

 

1.18

 

1.24

 

 

 

10



 

RETURN ON AVERAGE CAPITAL EMPLOYED(1) BY BUSINESS

 

(percent)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

19.0

 

30.4

 

35.3

 

14.7

 

6.9

 

Non-U.S.

 

23.7

 

25.1

 

28.7

 

15.4

 

11.4

 

Total

 

22.3

 

26.8

 

30.8

 

15.2

 

9.9

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

8.6

 

25.0

 

19.6

 

6.9

 

14.1

 

Non-U.S.

 

3.4

 

12.4

 

9.4

 

3.3

 

12.0

 

Total

 

5.0

 

16.1

 

12.3

 

4.4

 

12.6

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

United States

 

7.3

 

7.2

 

11.4

 

13.5

 

15.0

 

Non-U.S.

 

5.3

 

5.8

 

6.3

 

8.8

 

10.9

 

Total

 

6.1

 

6.4

 

8.4

 

10.9

 

12.9

 

Corporate and financing

 

 

 

 

 

 

Discontinued operations

 

63.2

 

7.2

 

12.3

 

4.0

 

0.8

 

Corporate total

 

13.5

 

17.8

 

20.6

 

10.3

 

10.7

 


(1)          Capital employed consists of shareholders’ equity and debt, including ExxonMobil’s share of amounts applicable to equity companies.  See Frequently Used Terms.

 

 

AVERAGE CAPITAL EMPLOYED(2) BY BUSINESS

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

13,264

 

12,952

 

12,864

 

12,728

 

12,522

 

Non-U.S.

 

29,800

 

27,077

 

28,354

 

28,383

 

24,900

 

Total

 

43,064

 

40,029

 

41,218

 

41,111

 

37,422

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

8,060

 

7,711

 

7,976

 

8,354

 

8,509

 

Non-U.S.

 

17,985

 

18,610

 

19,756

 

19,679

 

18,986

 

Total

 

26,045

 

26,321

 

27,732

 

28,033

 

27,495

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

United States

 

5,235

 

5,506

 

5,644

 

5,471

 

5,293

 

Non-U.S.

 

8,410

 

8,333

 

8,170

 

6,991

 

5,523

 

Total

 

13,645

 

13,839

 

13,814

 

12,462

 

10,816

 

Corporate and financing

 

4,878

 

6,399

 

3,198

 

605

 

2,638

 

Discontinued operations

 

710

 

1,412

 

1,501

 

1,625

 

1,708

 

Corporate total

 

88,342

 

88,000

 

87,463

 

83,836

 

80,079

 

Average capital employed applicable to equity companies included above

 

14,001

 

13,902

 

15,330

 

14,694

 

11,461

 


(2)          Average capital employed is the average of beginning and end of year business segment capital employed.

See Frequently Used Terms.

 

 

11



 

NET INVESTMENT IN PROPERTY, PLANT, AND EQUIPMENT AT YEAR END

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

16,924

 

16,697

 

16,216

 

16,249

 

16,141

 

Non-U.S.

 

34,772

 

29,980

 

29,600

 

31,940

 

30,849

 

Total

 

51,696

 

46,677

 

45,816

 

48,189

 

46,990

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

9,238

 

9,012

 

9,048

 

9,443

 

9,284

 

Non-U.S.

 

17,682

 

16,548

 

17,682

 

19,531

 

20,128

 

Total

 

26,920

 

25,560

 

26,730

 

28,974

 

29,412

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

United States

 

5,155

 

5,079

 

5,045

 

5,124

 

5,134

 

Non-U.S.

 

4,754

 

4,611

 

4,890

 

4,845

 

4,367

 

Total

 

9,909

 

9,690

 

9,935

 

9,969

 

9,501

 

Other/Discontinued operations

 

6,415

 

7,675

 

7,348

 

6,911

 

6,680

 

Corporate total

 

94,940

 

89,602

 

89,829

 

94,043

 

92,583

 

 

 

DEPRECIATION AND DEPLETION EXPENSES

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

1,597

 

1,447

 

1,426

 

1,342

 

1,694

 

Non-U.S.

 

3,551

 

3,221

 

3,469

 

3,497

 

3,330

 

Total

 

5,148

 

4,668

 

4,895

 

4,839

 

5,024

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

United States

 

583

 

598

 

594

 

697

 

706

 

Non-U.S.

 

1,399

 

1,476

 

1,489

 

1,670

 

1,516

 

Total

 

1,982

 

2,074

 

2,083

 

2,367

 

2,222

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

United States

 

414

 

408

 

397

 

402

 

402

 

Non-U.S.

 

348

 

289

 

281

 

274

 

338

 

Total

 

762

 

697

 

678

 

676

 

740

 

Other

 

418

 

409

 

345

 

293

 

241

 

Corporate total

 

8,310

 

7,848

 

8,001

 

8,175

 

8,227

 

 

 

OPERATING COSTS EXCLUDING MERGER EXPENSES AND DISCONTINUED OPERATIONS

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Operating

 

17,831

 

17,743

 

17,600

 

16,264

 

17,120

 

Selling, general, and administrative

 

12,356

 

12,898

 

12,044

 

13,132

 

12,917

 

Depreciation and depletion

 

8,310

 

7,848

 

8,001

 

8,175

 

8,227

 

Exploration

 

920

 

1,175

 

936

 

1,246

 

1,506

 

Subtotal

 

39,417

 

39,664

 

38,581

 

38,817

 

39,770

 

ExxonMobil’s share of equity company expenses

 

3,800

 

3,832

 

4,355

 

4,835

 

4,276

 

Total operating costs

 

43,217

 

43,496

 

42,936

 

43,652

 

44,046

 

 

 

12



 

CONSOLIDATED BALANCE SHEET AT YEAR END

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

7,229

 

6,547

 

7,080

 

1,688

 

2,386

 

Notes and accounts receivable — net

 

21,163

 

19,549

 

22,996

 

19,155

 

15,829

 

Inventories

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

1,854

 

1,849

 

2,155

 

2,414

 

2,369

 

Products and merchandise

 

4,973

 

4,894

 

5,089

 

4,956

 

5,168

 

Materials and supplies

 

1,241

 

1,161

 

1,060

 

1,122

 

1,155

 

Prepaid taxes and expenses

 

1,831

 

1,681

 

2,019

 

1,806

 

1,687

 

Total current assets

 

38,291

 

35,681

 

40,399

 

31,141

 

28,594

 

Investments and advances

 

12,111

 

10,768

 

12,618

 

14,544

 

13,915

 

Property, plant, and equipment, at cost, less accumulated depreciation and depletion

 

94,940

 

89,602

 

89,829

 

94,043

 

92,583

 

Other assets, including intangibles — net

 

7,302

 

7,123

 

6,154

 

4,793

 

4,243

 

Total assets

 

152,644

 

143,174

 

149,000

 

144,521

 

139,335

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Notes and loans payable

 

4,093

 

3,703

 

6,161

 

10,570

 

8,484

 

Accounts payable

 

14,984

 

13,328

 

15,943

 

14,132

 

11,413

 

Accrued liabilities

 

10,202

 

9,534

 

10,812

 

11,360

 

11,741

 

Income taxes payable

 

3,896

 

3,549

 

5,275

 

2,671

 

2,143

 

Total current liabilities

 

33,175

 

30,114

 

38,191

 

38,733

 

33,781

 

Long-term debt

 

6,655

 

7,099

 

7,280

 

8,402

 

8,532

 

Annuity reserves and accrued liabilities

 

16,454

 

12,475

 

11,934

 

12,902

 

13,002

 

Deferred income tax liabilities

 

16,484

 

16,359

 

16,442

 

16,251

 

16,749

 

Deferred credits and other long-term obligations

 

2,511

 

1,141

 

1,166

 

1,079

 

1,524

 

Equity of minority and preferred shareholders in affiliated companies

 

2,768

 

2,825

 

3,230

 

3,688

 

3,627

 

Total liabilities

 

78,047

 

70,013

 

78,243

 

81,055

 

77,215

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

746

 

Benefit plan related balances

 

(450

)

(159

)

(235

)

(298

)

(793

)

Common stock

 

4,217

 

3,789

 

3,661

 

3,403

 

4,870

 

Earnings reinvested

 

100,961

 

95,718

 

86,652

 

75,055

 

75,109

 

Accumulated other nonowner changes in equity

 

 

 

 

 

 

 

 

 

 

 

Cumulative foreign exchange translation adjustment

 

(3,015

)

(5,947

)

(4,862

)

(2,300

)

(1,573

)

Minimum pension liability adjustment

 

(2,960

)

(535

)

(310

)

(299

)

(408

)

Unrealized gains/(losses) on stock investments

 

(79

)

(108

)

(17

)

31

 

 

Common stock held in treasury

 

(24,077

)

(19,597

)

(14,132

)

(12,126

)

(15,831

)

Total shareholders’ equity

 

74,597

 

73,161

 

70,757

 

63,466

 

62,120

 

Total liabilities and shareholders’ equity

 

152,644

 

143,174

 

149,000

 

144,521

 

139,335

 


The consolidated financial statements shown on pages 13 through 15 should be read in the context of the notes thereto provided in Appendix A of the corporation’s 2003 Proxy Statement. The notes are an integral part of these statements.

 

 

13



 

CONSOLIDATED STATEMENT OF INCOME

 

(millions of dollars)

 

2002

 

2001

 

2000

 

1999

 

1998

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Sales and other operating revenue

 

 

 

 

 

 

 

 

 

 

 

Petroleum and natural gas

 

 

 

 

 

 

 

 

 

 

 

Petroleum products, including excise taxes

 

149,526

 

153,335

 

164,510

 

134,846

 

120,841

 

Crude oil

 

20,406

 

22,423

 

29,532

 

20,252

 

17,848

 

Natural gas

 

10,315

 

12,292

 

11,472

 

7,969

 

7,625

 

Other

 

4,269

 

4,702

 

4,558

 

4,843

 

4,886

 

Total petroleum and natural gas

 

184,516

 

192,752

 

210,072

 

167,910

 

151,200

 

Chemical products(1)

 

16,408

 

15,943

 

17,501

 

13,777

 

13,589

 

Other

 

25

 

20

 

23

 

72

 

94

 

Total sales and operating revenue

 

200,949

 

208,715

 

227,596

 

181,759

 

164,883

 

Earnings from equity interests and other revenue

 

3,557

 

4,070

 

4,250

 

2,994

 

4,013

 

Total revenue

 

204,506

 

212,785

 

231,846

 

184,753

 

168,896

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Other Deductions

 

 

 

 

 

 

 

 

 

 

 

Crude oil and product purchases

 

90,950

 

92,257

 

108,913

 

76,991

 

62,099

 

Operating expenses

 

17,831

 

17,743

 

17,600

 

16,264

 

17,120

 

Selling, general, and administrative expenses

 

12,356

 

12,898

 

12,044

 

13,132

 

12,917

 

Depreciation and depletion

 

8,310

 

7,848

 

8,001

 

8,175

 

8,227

 

Exploration expenses

 

 

 

 

 

 

 

 

 

 

 

Dry holes

 

345

 

495

 

223

 

403

 

585

 

Other

 

575

 

680

 

713

 

843

 

921

 

Total exploration expenses

 

920

 

1,175

 

936

 

1,246

 

1,506

 

Merger related expenses

 

410

 

748

 

1,406

 

625

 

 

Interest expense

 

398

 

293

 

589

 

694

 

568

 

Excise taxes

 

22,040

 

21,907

 

22,356

 

21,646

 

20,926

 

Other taxes and duties

 

33,572

 

33,377

 

32,708

 

34,765

 

33,203

 

Income applicable to minority and preferred interests

 

209

 

569

 

412

 

145

 

265

 

Total costs and other deductions

 

186,996

 

188,815

 

204,965

 

173,683

 

156,831

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

17,510

 

23,970

 

26,881

 

11,070

 

12,065

 

Income taxes

 

 

 

 

 

 

 

 

 

 

 

U.S. federal

 

1,048

 

2,532

 

3,132

 

608

 

1,040

 

Other

 

5,451

 

6,435

 

7,943

 

2,617

 

2,894

 

Total income taxes

 

6,499

 

8,967

 

11,075

 

3,225

 

3,934

 

Income from continuing operations

 

11,011

 

15,003

 

15,806

 

7,845

 

8,131

 

Discontinued operations, net of income tax

 

449

 

102

 

184

 

65

 

13

 

Extraordinary gain, net of income tax

 

 

215

 

1,730

 

 

 

Cumulative effect of accounting change, net of income tax

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

11,460

 

15,320

 

17,720

 

7,910

 

8,074