<PAGE>
1998
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-2256
EXXON CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
5959 LAS COLINAS BOULEVARD, IRVING, TEXAS 75039-2298
(Address of principal executive offices) (Zip Code)
(972) 444-1000
(Registrant's telephone number, including area code)
----------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -----------------------
<S> <C>
Common Stock, without par value (2,427,925,038 shares
outstanding at February 26, 1999) New York Stock Exchange
Registered securities guaranteed by Registrant:
SeaRiver Maritime Financial Holdings, Inc.
Twenty-Five Year Debt Securities due October 1, 2011 New York Stock Exchange
Exxon Capital Corporation
Twelve Year 6% Notes due July 1, 2005 New York Stock Exchange
</TABLE>
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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
---
The aggregate market value of the voting stock held by non-affiliates of the
registrant on February 26, 1999, based on the closing price on that date of
$66 9/16 on the New York Stock Exchange composite tape, was in excess of $161
billion.
Documents Incorporated by Reference:
1998 Annual Report to Shareholders (Parts I, II and IV)
Proxy Statement for the 1999 Annual Meeting of Shareholders (Part III)
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
EXXON CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
PART I
<C> <S> <C>
Item 1. Business..................................................... 1-2
Item 2. Properties................................................... 2-9
Item 3. Legal Proceedings............................................ 9
Item 4. Submission of Matters to a Vote of Security Holders.......... 9
Executive Officers of the Registrant [pursuant to Instruction 3 to Reg-
ulation S-K, Item 401(b)]............................................. 9
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder
Matters...................................................... 10
Item 6. Selected Financial Data...................................... 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk... 10
Item 8. Financial Statements and Supplementary Data.................. 10
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 10
PART III
Item 10. Directors and Executive Officers of the Registrant........... 10
Item 11. Executive Compensation....................................... 10
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 11
Item 13. Certain Relationships and Related Transactions............... 11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.......................................................... 11
Signatures............................................................. 12-13
Index to Financial Statements.......................................... 14
Consent of Independent Accountants..................................... 14
Index to Exhibits...................................................... 15
</TABLE>
<PAGE>
PART I
Item 1. Business.
Exxon Corporation was incorporated in the State of New Jersey in 1882.
Divisions and affiliated companies of Exxon operate or market products in the
United States and over 100 other countries. Their principal business is
energy, involving exploration for, and production of, crude oil and natural
gas, manufacturing of petroleum products and transportation and sale of crude
oil, natural gas and petroleum products. Exxon Chemical Company, a division of
Exxon, is a major manufacturer and marketer of basic petrochemicals, including
olefins and aromatics, and a leading supplier of specialty rubbers and of
additives for fuels and lubricants. Other products manufactured include
polyethylene and polypropylene plastics, plasticizers, specialty resins,
specialty and commodity solvents and performance chemicals for oil field
operations. Exxon is engaged in exploration for, and mining and sale of, coal,
copper and other minerals. Exxon also has interests in electric power
generation facilities. Affiliates of Exxon conduct extensive research programs
in support of these businesses.
Exxon Corporation has five divisions and hundreds of affiliates, many with
names that include Exxon or Esso. For convenience and simplicity, in this
report the terms Exxon and Esso, as well as the terms corporation, company,
our, we and its, are sometimes used as abbreviated references to specific
affiliates or groups of affiliates. The precise meaning depends on the context
in question.
On December 1, 1998, Exxon Corporation and Mobil Corporation signed an
agreement to merge the two companies subject to shareholder approval,
regulatory reviews and other conditions. Under the terms of the agreement,
each common share of Mobil will be converted into 1.32015 common shares of
Exxon. As a result of the merger, Exxon shareholders will own about 70 percent
of the combined company and Mobil shareholders will own about 30 percent. Upon
completion of the merger, the company's name will be Exxon Mobil Corporation.
It is intended that the merger will qualify as a tax-free reorganization in
the U.S., and that it will be accounted for on a "pooling of interests" basis.
In addition, the merger agreement provides for payment of termination fees of
$1.5 billion under certain circumstances. Exxon and Mobil also have entered
into an option agreement that grants Exxon the option under specified
circumstances to purchase up to approximately 14.9 percent of the authorized
but unissued common stock of Mobil.
The oil and chemical industries are highly competitive. There is competition
within the industries and also with other industries in supplying the energy,
fuel and chemical needs of commerce, industry and individuals. The corporation
competes with other firms in the sale or purchase of various goods or services
in many national and international markets and employs all methods of
competition which are lawful and appropriate for such purposes.
The operations and earnings of the corporation and its affiliates throughout
the world have been, and may in the future be, affected from time to time in
varying degree by political developments and laws and regulations, such as
forced divestiture of assets; restrictions on production, imports and exports;
price controls; tax increases and retroactive tax claims; expropriations of
property; cancellation of contract rights and environmental regulations. Both
the likelihood of such occurrences and their overall effect upon the
corporation vary greatly from country to country and are not predictable.
The operations and earnings of the corporation and its affiliates throughout
the world are also affected by local, regional and global events or conditions
that affect supply and demand for oil, natural gas and other Exxon products.
These events or conditions are generally not predictable and include, among
other things, the development of new supply sources; supply disruptions;
weather; international political events; technological advances; changes in
demographics and consumer preferences; and the competitiveness of alternative
energy sources or product substitutes. See also page F6 and F7 of the
accompanying financial section of the 1998 Annual Report to shareholders for
discussion of the impact of market risks, inflation and other uncertainties.
In 1998, the corporation spent $1,321 million (of which $432 million were
capital expenditures) on environmental conservation projects and expenses
worldwide, mostly dealing with air and water
<PAGE>
conservation. Total expenditures for such activities are expected to be about
$1.5 billion in both 1999 and 2000 (with capital expenditures representing
about 40 percent of the total).
Operating data and industry segment information for the corporation are
contained on pages F3, F24, F25 and F31, information on oil and gas reserves
is contained on pages F28 and F29 and information on company-sponsored
research and development activities is contained on page F16 of the
accompanying financial section of the 1998 Annual Report to shareholders.*
Projections, estimates and descriptions of Exxon's plans and objectives
included or incorporated in Items 1, 2 and 7 of this report are forward-
looking statements. Actual future project dates, production rates, capital
expenditures, costs and business plans could differ materially due to, among
other things, the outcome of commercial negotiations; changes in operating
conditions and costs; technical difficulties; and other factors discussed
above and elsewhere in this report.
Item 2. Properties.
Part of the information in response to this item and to the Securities
Exchange Act Industry Guide 2 is contained in the accompanying financial
section of the 1998 Annual Report to shareholders in Note 10, which note
appears on page F18, and on pages F3, and F26 through F31.
Information with regard to oil and gas producing activities follows:
1. Net Reserves of Crude Oil and Natural Gas Liquids (millions of barrels) and
Natural Gas (billions of cubic feet) at Year-End 1998
Estimated proved reserves are shown on pages F28 and F29 of the accompanying
financial section of the 1998 Annual Report to shareholders. No major
discovery or other favorable or adverse event has occurred since December 31,
1998 that would cause a significant change in the estimated proved reserves as
of that date. For information on the standardized measure of discounted future
net cash flows relating to proved oil and gas reserves, see page F30 of the
accompanying financial section of the 1998 Annual Report to shareholders.
2. Estimates of Total Net Proved Oil and Gas Reserves Filed with Other Federal
Agencies
During 1998, the company filed proved reserves estimates with the U.S.
Department of Energy on Forms EIA-23 and EIA-28. The information is consistent
with the 1997 Annual Report to shareholders with the exception of EIA-23 which
covered total oil and gas reserves from Exxon-operated properties in the U.S.
and does not include gas plant liquids. The difference between the oil
reserves reported on EIA-23 and those reported in the 1997 Annual Report
exceeds five percent. The difference in gas reserves does not exceed five
percent.
3. Average Sales Prices and Production Costs per Unit of Production
Incorporated by reference to page F26 of the accompanying financial section
of the 1998 Annual Report to shareholders. Average sales prices have been
calculated by using sales quantities from our own production as the divisor.
Average production costs have been computed by using net production quantities
for the divisor. The volumes of crude oil and natural gas liquids (NGL)
production used for this computation are shown in the reserves table on page
F28 of the accompanying financial section of the 1998 Annual Report to
shareholders. The net production volumes of natural gas available for sale by
the producing function used in this calculation are shown on page F31 of the
accompanying financial section of the 1998 Annual Report to shareholders. The
volumes of natural gas were converted to oil-equivalent barrels based on a
conversion factor of six thousand cubic feet per barrel.
- - --------
*Only the data appearing on pages F1 and F3 through F31 of the accompanying
financial section of the 1998 Annual Report to shareholders, incorporated in
this report as Exhibit 13, are deemed to be filed as part of this Annual
Report on Form 10-K as indicated under Items 1, 2, 3, 5, 6, 7, 7A, 8 and 14
and on page 14.
2
<PAGE>
4. Gross and Net Productive Wells
<TABLE>
<CAPTION>
Year-End 1998
-------------------------
Oil Gas
------------- -----------
Gross Net Gross Net
------ ------ ----- -----
<S> <C> <C> <C> <C>
United States...................................... 15,978 5,490 4,116 1,742
Canada............................................. 5,915 3,946 4,014 1,880
Europe............................................. 1,485 438 1,088 366
Asia-Pacific....................................... 890 462 530 149
Other.............................................. 751 86 13 5
------ ------ ----- -----
Total............................................. 25,019 10,422 9,761 4,142
====== ====== ===== =====
</TABLE>
5. Gross and Net Developed Acreage
<TABLE>
<CAPTION>
Year-End 1998
--------------------
Gross Net
--------- ---------
(Thousands of acres)
<S> <C> <C>
United States........................................... 5,037 3,505
Canada.................................................. 3,066 1,222
Europe.................................................. 10,518 3,327
Asia-Pacific............................................ 2,949 1,130
Other................................................... 7,452 1,105
---------- ---------
Total.................................................. 29,022 10,289
========== =========
Note: Separate acreage data for oil and gas are not maintained because, in
many instances, both are produced from the same acreage.
6. Gross and Net Undeveloped Acreage
<CAPTION>
Year-End 1998
--------------------
Gross Net
--------- ---------
(Thousands of acres)
<S> <C> <C>
United States........................................... 6,739 4,839
Canada.................................................. 3,821 2,174
Europe.................................................. 13,117 5,522
Asia-Pacific............................................ 57,841 30,277
Other................................................... 57,563 24,685
---------- ---------
Total.................................................. 139,081 67,497
========== =========
</TABLE>
7. Summary of Acreage Terms in Key Areas
United States
Oil and gas exploration leases are acquired for varying periods of time,
ranging from one to ten years. Producing leases normally remain in effect
until production ceases.
Canada
Exploration permits are granted for varying periods of time with renewals
possible. Production leases are held as long as there is production on the
lease.
Cold Lake oil sands leases were taken for an initial 21-year term in 1968-
1969 and renewed for a second 21-year term in 1989-1990.
3
<PAGE>
France
Exploration permits are granted for periods of three to five years,
renewable up to two times accompanied by substantial acreage relinquishments:
50 percent of the acreage at first renewal; 25 percent of the remaining
acreage at second renewal. A 1994 law requires a bidding process prior to
granting of an exploration permit. Upon discovery of commercial hydrocarbons,
a production concession is granted for up to 50 years, renewable in periods of
25 years each.
Germany
Acreage holdings are generally concessions with indefinite periods subject
to minimum work commitments.
Netherlands
Onshore: Exploration drilling permits are issued for a period of two to five
years. Production concessions are granted after discoveries have been made
under conditions which are negotiated with the government. Normally, they are
field-life concessions covering an area defined by hydrocarbon occurrences.
Offshore: Prospecting licenses issued prior to March 1976 were for a 15-year
period, with relinquishment of about 50 percent of the original area required
at the end of ten years. Subsequent licenses are for ten years with
relinquishment of about 50 percent of the original area required after six
years. For commercial discoveries within a prospecting license, a production
license is issued for a 40-year period.
Norway
Licenses issued prior to 1972 were for a total period of 46 years, with
relinquishment of at least one-fourth of the original area required at the end
of the sixth year and another one-fourth at the end of the ninth year.
Subsequent licenses are for a total period of 36 years, with relinquishment of
at least one-half of the original area required at the end of the sixth year.
United Kingdom
Licenses issued prior to 1977 were for an initial period of six years with
an option to extend the license for a further 40 years on no more than half of
the license area. Licenses issued between 1977 and 1979 were for an initial
period of four years, after which one-third of the acreage was required to be
relinquished, followed by a second period of three years, after which an
additional one-third of the acreage was required to be relinquished, with an
option to extend for a total license period of 24 to 36 years on no more than
half the license area. The more recent licenses were typically for an initial
period of six to nine years, with a second term of 12 to 15 years which may be
extended a further 18 to 24 years. In the most recent eighteenth license
round, the initial period was six years, with a second term of 12 years which
may be extended a further 18 years.
Australia
Onshore: Acreage terms are fixed by the individual state and territory
governments. These terms and conditions vary significantly between the states
and territories. Exploration permits are normally
4
<PAGE>
granted for four years with possible renewals and relinquishments. Production
licenses in South Australia are granted for an initial term of 21 years, with
subsequent renewals each for 21 years for the full area. Production licenses
in Queensland are granted for varying periods consistent with expected field
lives, with renewals on a similar basis.
Offshore: Acreage terms are fixed by the federal government. Exploration
permits are granted for six years with possible renewals of five-year periods
to a total of 26 years. A 50 percent relinquishment of remaining area is
mandatory at the end of each renewal period. Existing production licenses
include initial license periods of 21 years and a first renewal of an
additional 21 years. From September 1, 1998, new licenses and renewals of
existing licenses will be granted for the life of the field plus five years.
For licenses issued before September 1, 1998, first renewals shall be granted;
second renewals may be granted subject to compliance with conditions of the
license and regulations.
Malaysia
Exploration and production activities are governed by production sharing
contracts negotiated with the national oil company. The more recent contracts
have an overall term of 24 to 37 years with possible extensions to the
exploration or development periods. The exploration period is five to seven
years with the possibility of extensions, after which time areas with no
commercial discoveries must be relinquished. The development period is four to
five years from commercial discovery, with the possibility of extensions under
special circumstances. Areas from which commercial production has not started
by the end of the development period must be relinquished. If no extension is
granted, the total production period is 15 to 25 years from first commercial
lifting, not to exceed the overall term of the contract.
Thailand
The Exxon concessions and the Petroleum Act of 1972 allow production for 30
years (through 2021) with a possible ten-year extension at terms generally
prevalent at the time.
Angola
Exploration and production activities are governed by production sharing
agreements negotiated with the national oil company. The exploration period
generally consists of four years and an optional phase of two years, with no
relinquishment requirement after the first phase. The production period, which
includes development, is for 25 years.
Azerbaijan
The production sharing agreement (PSA) for development of the Megastructure
is for an initial period of 30 years starting from the PSA execution date in
1994.
Republic of Yemen
Production sharing agreements (PSAs) negotiated with the government entitle
Exxon to participate in exploration operations within a designated area during
the exploration period. In the event of a commercial oil discovery, the
company is entitled to proceed with development and production operations
during the development period. The length of these periods and other specific
terms are negotiated prior to executing the production sharing agreement.
Existing production operations have a development period extending 20 years
from first commercial declaration made in November 1985 for the Marib PSA and
June 1995 for the Jannah PSA. In addition, agreement was reached in 1997 on
terms for participation in a potential liquified natural gas project utilizing
Marib gas reserves.
5
<PAGE>
8. Number of Net Productive and Dry Wells Drilled
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
A. Net Productive Exploratory Wells Drilled
United States................................................. 7 9 7
Canada........................................................ 3 11 8
Europe........................................................ 7 9 7
Asia-Pacific.................................................. 4 10 7
Other......................................................... 3 2 2
--- --- ---
Total........................................................ 24 41 31
--- --- ---
B. Net Dry Exploratory Wells Drilled
United States................................................. 7 4 5
Canada........................................................ 2 4 4
Europe........................................................ 8 8 9
Asia-Pacific.................................................. 4 3 8
Other......................................................... 5 3 2
--- --- ---
Total........................................................ 26 22 28
--- --- ---
C. Net Productive Development Wells Drilled
United States................................................. 175 228 190
Canada........................................................ 100 424 356
Europe........................................................ 40 33 36
Asia-Pacific.................................................. 55 54 31
Other......................................................... 4 7 11
--- --- ---
Total........................................................ 374 746 624
--- --- ---
D. Net Dry Development Wells Drilled
United States................................................. 20 15 13
Canada........................................................ -- 2 2
Europe........................................................ 2 -- 2
Asia-Pacific.................................................. 1 -- 1
Other......................................................... -- 1 1
--- --- ---
Total........................................................ 23 18 19
--- --- ---
Total number of net wells drilled............................. 447 827 702
=== === ===
9. Present Activities
A. Wells Drilling -- Year-End 1998
<CAPTION>
Gross Net
----- ---
<S> <C> <C>
United States................................................. 108 46
Canada........................................................ 3 1
Europe........................................................ 36 11
Asia-Pacific.................................................. 16 7
Other......................................................... 10 3
--- ---
Total........................................................ 173 68
=== ===
</TABLE>
6
<PAGE>
B. Review of Principal Ongoing Activities in Key Areas
UNITED STATES
During 1998, exploration activities were conducted by Exxon Exploration
Company, selected development activities by Exxon Upstream Development Company
and producing and other development activities by Exxon Company, U.S.A. Some
of the more significant ongoing activities are:
. Exploration and delineation of additional hydrocarbon resources
continued. At year-end 1998, Exxon's inventory of undeveloped acreage
totaled 4.8 million net acres. Exxon was active in areas onshore and
offshore in the lower 48 states and in Alaska. A total of 13.5 net
exploration and delineation wells were completed during 1998.
. During 1998, 141.3 net development wells were completed within and
around mature fields in the inland lower 48 states.
. Exxon's net acreage in the Gulf of Mexico at year-end 1998 was 2.2
million acres. A total of 27.2 net exploratory and development wells
were completed during the year.
. Development continued on two Gulf of Mexico projects in 1998. The
Genesis project started up in early 1999 utilizing a deep-draft caisson
vessel (DDCV) to develop reserves in 2,600 feet of water. The Ursa
project, scheduled for start-up in 1999, will utilize a tension leg
platform development concept in 3,900 feet of water.
. The Hoover and Diana fields in the Gulf of Mexico are being jointly
developed using a DDCV positioned in 4,800 feet of water over the Hoover
field. The Diana field will be produced via subsea development wells
tied back to the DDCV. Start-up is expected in 2000.
. Participation in Alaska production and development continued and a total
of 27.3 net development wells were drilled in 1998.
CANADA
During 1998, exploration and production activities in Canada were conducted
by the Resources Division of Imperial Oil Limited, which is 69.6 percent owned
by Exxon Corporation. Some of the more significant ongoing activities are:
. Gross commercial bitumen production from Cold Lake averaged 137 thousand
barrels per day during 1998.
. Facilities construction and drilling began in 1998 on the Sable Offshore
Energy Project. Production is expected to begin by 2000.
OUTSIDE NORTH AMERICA
During 1998, exploration activities were conducted by Exxon Exploration
Company, selected development activities by Exxon Upstream Development Company
and producing and other development activities by Exxon Company,
International. Some of the more significant ongoing activities include:
France
Exxon's net acreage at year-end 1998 was 1.0 million net acres (0.7 million
offshore, 0.3 million onshore), with 2.5 net exploration and development wells
completed during the year. During 1998, production started up from the Tamaris
field and development activity is progressing in the Courbey field.
7
<PAGE>
Germany
A total of 2.5 million acres were held by Exxon at year-end, with 4.6 net
exploration and development wells drilled and completed during the year.
Netherlands
Exxon's interest in licenses totaled 2.9 million net acres at year-end 1998.
During 1998, 11.5 net exploration and development wells were drilled. During
1998, the new offshore gas fields K7-FC/FD, L9 and Q16-FA started up.
Construction is in progress on the new offshore gas field, D15-FA/FB, and new
onshore gas fields, Moddergat, Nes and Gaag.
Norway
Exxon's net interest in licenses at year-end 1998 totaled 0.5 million net
acres, all offshore. Exxon participated in 14.7 net exploration and production
wells in 1998. Projects for development of the Balder, Jotun and Snorre North
fields are in progress.
United Kingdom
During the year, Exxon acquired interests in 36 new blocks. Net acreage was
1.9 million acres at year-end, all offshore. A total of 24.6 net exploration
and development wells were completed during the year. There were successful
start-ups of the Mallard, ETAP and Galleon PG projects. Low pressure
operations were being implemented at Brent, and several major projects were
underway, including Shearwater, Ketch, Corvette and Triton.
Australia
Exxon's year-end acreage holdings totaled 5.7 million net acres onshore and
0.6 million net acres offshore, with exploration and production activities
underway in both areas. During 1998, a total of 28.3 net exploration and
development wells were completed.
Malaysia
Exxon has interests in production sharing contracts covering 7.6 million net
acres offshore Malaysia. During the year, a total of 34.0 net exploration and
development wells were completed. Development drilling was completed at
Lawit A and Raya A and continued on the Seligi F platform. The Tapis E platform
was installed in 1998. An agreement with PETRONAS, the state-owned oil company,
was signed in 1998 for a major new natural gas production sharing contract. This
contract covers the commercialization of gas previously discovered by Exxon.
Thailand
Exxon's net acreage in the Khorat concession totaled 15 thousand net acres
at year-end.
Angola
Exxon has interests in production sharing agreements covering 2.1 million
net acres, all offshore. During 1998, a total of 2.8 net exploration and
development wells were completed. Development is in progress on the Girassol
field in Block 17.
Azerbaijan
At year-end, Exxon's net acreage totaled 43 thousand acres. During 1998, 0.4
net exploration and development wells were drilled. Construction on the
Western Route pipeline is in progress.
Republic of Yemen
Exxon's net acreage in the Republic of Yemen production sharing areas
totaled 0.9 million acres onshore at year-end. During the year, 4.4 net
exploration and development wells were drilled and completed.
8
<PAGE>
WORLDWIDE EXPLORATION
Exploration activities were underway in several areas in which Exxon has no
established production operations. A total of 40.0 million net acres were held
at year-end, and 6.5 net exploration wells were completed during the year.
Item 3. Legal Proceedings.
Refer to the relevant portions of Note 18 on page F23 of the accompanying
financial section of the 1998 Annual Report to shareholders for information on
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
----------------
Executive Officers of the Registrant [pursuant to Instruction 3 to Regulation
S-K, Item 401(b)].
<TABLE>
<CAPTION>
Age as of
March 31,
Name 1999 Title (Held Office Since)
---- --------- ---------------------------------------------
<S> <C> <C>
L. R. Raymond....... 60 Chairman of the Board (1993)
R. Dahan............ 57 Senior Vice President (1995)
H. J. Longwell...... 57 Senior Vice President (1995)
R. E. Wilhelm....... 58 Senior Vice President (1990)
A. L. Condray....... 56 Vice President (1995)
D. D. Humphreys..... 51 Vice President and Controller (1997)
C. W. Matthews...... 54 Vice President and General Counsel (1995)
S. R. McGill........ 56 Vice President (1998)
J. T. McMillan...... 62 Vice President (1997)
F. A. Risch......... 56 Vice President and Treasurer (1999)
D. S. Sanders....... 59 Vice President (1999)
P. E. Sullivan...... 55 Vice President and General Tax Counsel (1995)
J. L. Thompson...... 59 Vice President (1991)
T. P. Townsend...... 62 Vice President -- Investor Relations (1990)
and Secretary (1995)
</TABLE>
For at least the past five years, Messrs. Raymond, Wilhelm, Risch and
Townsend have been employed as executives of the registrant. Mr. Raymond also
holds the title of president.
The following executive officers of the registrant have also served as
executives of the subsidiaries, affiliates or divisions of the registrant
shown opposite their names during the five years preceding December 31, 1998.
<TABLE>
<S> <C>
Esso Benelux B.V. ..................... McGill
Esso Holding Company Holland Inc. ..... McGill
Esso Malaysia Berhad................... Humphreys
Esso Production Malaysia Inc. ......... Humphreys
Exxon Chemical Company................. Sanders
Exxon Coal and Minerals Company........ McMillan
Exxon Company, International........... Dahan and McGill
Exxon Company, U.S.A................... Condray, Longwell, Matthews, McMillan
and Sullivan
Exxon Exploration Company.............. Thompson
</TABLE>
Officers are generally elected by the Board of Directors at its meeting on
the day of each annual election of directors, each such officer to serve until
his or her successor has been elected and qualified.
9
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters.
Incorporated by reference to the quarterly information which appears on page
F4 of the accompanying financial section of the 1998 Annual Report to
shareholders.
In accordance with the registrant's 1997 Nonemployee Director Restricted
Stock Plan, each incumbent nonemployee director (9 persons) was granted 600
shares of restricted stock on January 1, 1999. These grants are exempt from
registration under bonus stock interpretations such as the "no-action" letter
to Pacific Telesis Group (June 30, 1992).
Item 6. Selected Financial Data.
Incorporated by reference to page F3 of the accompanying financial section
of the 1998 Annual Report to shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Incorporated by reference to pages F5 through F9 of the accompanying
financial section of the 1998 Annual Report to shareholders.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Incorporated by reference to the first through sixth paragraphs of the
section entitled "Market Risks, Inflation, and Other Uncertainties" beginning
on page F6 and to the tenth paragraph of the section entitled "Liquidity and
Capital Resources" on page F8 of the accompanying financial section of the
1998 Annual Report to shareholders. All statements other than historical
information incorporated in this Item 7A are forward looking statements. The
actual impact of future market changes could differ materially due to, among
other things, factors discussed in this report.
Item 8. Financial Statements and Supplementary Data.
Reference is made to the Index to Financial Statements on page 14 of this
Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Incorporated by reference to the sections entitled "Board of Directors
Proposal: Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in Chapter Four of the registrant's definitive proxy
statement for the 1999 annual meeting of shareholders (the "1999 Proxy
Statement").
Item 11. Executive Compensation.
Incorporated by reference to the section entitled "Director Compensation"
and the section entitled "Executive Compensation Tables" in Chapter Four of
the registrant's 1999 Proxy Statement.
10
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated by reference to the section entitled "Director and Executive
Officer Stock Ownership" in Chapter Four of the registrant's 1999 Proxy
Statement.
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) and (a) (2) Financial Statements:
See Index to Financial Statements on page 14 of this Annual Report on
Form 10-K.
(a)(3) Exhibits:
See Index to Exhibits on page 15 of this Annual Report on Form 10-K.
(b)Reports on Form 8-K.
The registrant filed a Form 8-K dated December 1, 1998 concerning the
announcement by Exxon Corporation and Mobil Corporation of the signing
of an agreement to merge the two companies. Refer to the section
entitled "Exxon and Mobil Merger Agreement" on page F6 of the
accompanying financial section of the 1998 Annual Report to
shareholders for further information regarding this announcement.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
EXXON CORPORATION
By: /s/ LEE R. RAYMOND
----------------------------------
(Lee R. Raymond,
Chairman of the Board)
Dated March 30, 1999
----------------
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Millie P.
Bradley, Richard E. Gutman and Brian A. Maher, and each of them, his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments to this Annual Report
on Form 10-K, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
----------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ LEE R. RAYMOND Chairman of the Board March 30, 1999
______________________________________ (Principal Executive
(Lee R. Raymond) Officer)
/s/ MICHAEL J. BOSKIN Director March 30, 1999
______________________________________
(Michael J. Boskin)
/s/ RENE DAHAN Director March 30, 1999
______________________________________
(Rene Dahan)
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
/s/ WILLIAM T. ESREY Director March 30, 1999
______________________________________
(William T. Esrey)
/s/ JESS HAY Director March 30, 1999
______________________________________
(Jess Hay)
/s/ JAMES R. HOUGHTON Director March 30, 1999
______________________________________
(James R. Houghton)
/s/ WILLIAM R. HOWELL Director March 30, 1999
______________________________________
(William R. Howell)
/s/ REATHA CLARK KING Director March 30, 1999
______________________________________
(Reatha Clark King)
/s/ PHILIP E. LIPPINCOTT Director March 30, 1999
______________________________________
(Philip E. Lippincott)
/s/ HARRY J. LONGWELL Director March 30, 1999
______________________________________
(Harry J. Longwell)
/s/ MARILYN CARLSON NELSON Director March 30, 1999
______________________________________
(Marilyn Carlson Nelson)
/s/ WALTER V. SHIPLEY Director March 30, 1999
______________________________________
(Walter V. Shipley)
/s/ ROBERT E. WILHELM Director March 30, 1999
______________________________________
(Robert E. Wilhelm)
/s/ DONALD D. HUMPHREYS Controller (Principal March 30, 1999
______________________________________ Accounting Officer)
(Donald D. Humphreys)
/s/ FRANK A. RISCH Treasurer (Principal March 30, 1999
______________________________________ Financial Officer)
(Frank A. Risch)
</TABLE>
13
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated February 24, 1999, appearing on pages F10 to
F25; the Quarterly Information appearing on page F4; and the Supplemental
Information on Oil and Gas Exploration and Production Activities appearing on
pages F26 to F30 of the accompanying financial section of the 1998 Annual
Report to shareholders are incorporated in this Annual Report on Form 10-K as
Exhibit 13. With the exception of the aforementioned information, no other
data appearing in the accompanying financial section of the 1998 Annual Report
to shareholders is deemed to be filed as part of this Annual Report on Form
10-K under Item 8. Consolidated Financial Statement Schedules have been
omitted because they are not applicable or the required information is shown
in the consolidated financial statements or notes thereto.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the following
Prospectuses constituting part of the Registration Statements on:
<TABLE>
<S> <C>
Form S-3 (Nos. 333-27489 --Exxon Corporation Shareholder Investment Program;
and 33-60677)
Form S-3 (No. 33-48919) --Guaranteed Debt Securities and Warrants to Purchase
Guaranteed Debt Securities of Exxon Capital Corporation;
Form S-3 (No. 33-8922) --Guaranteed Debt Securities of SeaRiver Maritime
Financial Holdings, Inc. (formerly Exxon Shipping
Company)
</TABLE>
and we hereby consent to the incorporation by reference in the Registration
Statements on:
<TABLE>
<S> <C>
Form S-8 (Nos. 333-38917 --1993 Incentive Program of Exxon Corporation (together
and 33-51107) with 1988 Long Term Incentive Plan of Exxon
Corporation);
Form S-8 (No. 333-72955) --Thrift Plans of Exxon Corporation and Participating
Affiliated Employers
</TABLE>
of our report dated February 24, 1999 appearing on page F10 of the
accompanying financial section of the 1998 Annual Report to shareholders of
Exxon Corporation which is incorporated as Exhibit 13 in this Annual Report on
Form 10-K.
PricewaterhouseCoopers LLP
Dallas, Texas
March 30, 1999
14
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S> <C>
3(i). Registrant's Restated Certificate of Incorporation, as
restated March 17, 1997 (incorporated by reference to
Exhibit 3(i) to the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997).
3(ii). Registrant's By-Laws, as revised to January 31, 1996
(incorporated by reference to Exhibit 3(ii) to the
registrant's Annual Report on Form 10-K for 1995).
10(iii)(a). Registrant's 1993 Incentive Program, as amended
(incorporated by reference to Exhibit 10(iii)(a) to the
registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).*
10(iii)(b). Registrant's Plan for Deferral of Nonemployee Director
Compensation and Fees, as amended.*
10(iii)(c). Registrant's Restricted Stock Plan for Nonemployee
Directors, as amended (incorporated by reference to
Exhibit 10(iii)(c) to the registrant's Annual Report on
Form 10-K for 1996).*
10(iii)(d). Supplemental life insurance (incorporated by reference to
Exhibit 10(iii)(d) to the registrant's Annual Report on
Form 10-K for 1997).*
10(iii)(e). Registrant's Short Term Incentive Program, as amended
(incorporated by reference to Exhibit 10(iii)(e) to the
registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).*
10(iii)(f). Registrant's 1997 Nonemployee Director Restricted Stock
Plan (incorporated by reference to Exhibit 10(iii)(f) to
the registrant's Annual Report on Form 10-K for 1996).*
12. Computation of ratio of earnings to fixed charges.
13. Pages F1 and F3 through F31 of the Financial Section of
the registrant's 1998 Annual Report to shareholders.
21. Subsidiaries of the registrant.
23. Consent of Independent Accountants (contained on page 14
of this Annual Report on Form 10-K).
27.1 Financial Data Schedule (included only in the electronic
filing of this document).
27.2 Restated Financial Data Schedules (included only in the
electronic filing of this document. Restated 1998 interim
periods to reflect adoption in the fourth quarter of 1998
of the American Institute of Certified Public
Accountants' Statement of Position 98-5, "Reporting on
the Costs of Start-up Activities", effective as of
January 1, 1998, and the de-consolidation in the fourth
quarter of 1998 of majority owned power segment companies
retroactive to January 1, 1998 in compliance with
Financial Accounting Standards Board Emerging Issues Task
Force ruling on Issue No. 96-16).
</TABLE>
- - --------
* Compensatory plan or arrangement required to be identified pursuant to Item
14(a)(3) of this Annual Report on Form 10-K.
The registrant has not filed with this report copies of the instruments
defining the rights of holders of long-term debt of the registrant and its
subsidiaries for which consolidated or unconsolidated financial statements are
required to be filed. The registrant agrees to furnish a copy of any such
instrument to the Securities and Exchange Commission upon request.
15
<PAGE>
EXHIBIT 10(iii)(b)
EXXON CORPORATION
PLAN FOR DEFERRAL OF NONEMPLOYEE DIRECTOR COMPENSATION AND FEES
(AS AMENDED BY THE BOARD OF DIRECTORS ON JANUARY 28, 1987)
1. PURPOSE:
The purpose of the Exxon Corporation Plan for Deferral of Nonemployee
Director Compensation and Fees (the "Plan") is to provide nonemployee Directors
of Exxon Corporation (the "Corporation") with an opportunity to defer
compensation as a Director.
2. EFFECTIVE DATE OF THE PLAN:
The Plan shall become effective May 15, 1980.
3. PARTICIPANTS:
Any Director of the Corporation who is not, at the time of filing the
election referred to in Section 4, an employee of the Corporation or of an
affiliate of the Corporation is eligible to participate in the Plan.
4. ELECTION TO DEFER COMPENSATION:
(a) TIME OF ELECTION: An election to defer compensation shall be made by a
Director at, or prior to, the time of election to the Board for the
relevant elected term and prior to the right to receive any
compensation for such term. An election shall continue in effect until
the end of the participant's service as a Director or until the end of
the elected term during which the Director gives to the Corporation
written notice of the discontinuance of the election, whichever shall
occur first. Such a notice of discontinuance shall operate
prospectively from its effective date and compensation payable during
any subsequent term of office shall not be deferred, but compensation
theretofore deferred shall continue to be withheld and shall be paid in
accordance with the notice of election pursuant to which it was
withheld.
(b) AMOUNT OF DEFERRAL: A participant may elect to defer receipt of all or
a specified portion of the compensation otherwise thereafter payable to
such participant for serving on the Board of Directors of the
Corporation and attending meetings or Committee meetings thereof.
(c) MANNER OF ELECTING DEFERRAL: A participant shall elect to defer
compensation by giving written notice to the Corporation in the form
attached hereto as Exhibit A or such other form as is approved by the
Board. Such notice shall include:
(1) the percentage or amount of compensation to be deferred,
(2) an election of a lump-sum payment or of a number of annual
installments (not to exceed five) for the payment of the deferred
compensation, and
(3) the date of the lump-sum payment or the first installment payment
(which shall not be earlier than January 15 of the year following
the year in which service as a Director terminates nor later than
January 15 first following the participant's 72nd birthday or such
other date as may be approved by the Board).
5. DEFERRED COMPENSATION ACCOUNT:
For each participant there shall be established a deferred compensation
account ("Account") which will be credited (i) at the time such amount would
otherwise by payable, with the amount of any compensation receipt of which the
participant has elected to defer, and (ii) at the end of each year or initial or
terminal portion of a year, with deemed interest, at an annual rate equivalent
to the weighted average prime lending rate of Citibank N.A. for the relevant
year or portion thereof ("interest equivalents"), upon the average daily balance
in the Account during such year or portion thereof.
1
<PAGE>
6. VALUE OF DEFERRED COMPENSATION ACCOUNT:
The value of each participant's Account shall consist of compensation
deferred and the interest equivalents described in Section 5. All credits to an
Account shall be credited with interest equivalents in relation to the period
from the date credited to the date of withdrawal. For this purpose the date of
withdrawal shall be deemed to be (i) the close of business December 31st of the
year preceding payment or (ii) if payment is made because of death, then the
date of death. As promptly as practicable following the close of each calendar
year a statement will be sent to each participant as to the balance in the
participant's Account as of the end of such year.
7. PAYMENT OF DEFERRED COMPENSATION:
No withdrawal may be made from a participant's Account except as provided
in this Section.
The balance in a participant's Account is payable in cash in the manner
elected as provided in Section 4. If annual installments are elected, the amount
of the first payment shall be a fraction of the balance in the participant's
Account as of December 31st of the year preceding such payment, the numerator of
which is one and the denominator of which is the total number of installments
elected. The amount of each subsequent payment shall be a fraction of the
balance in the participant's Account as of December 31st of the year preceding
each subsequent payment, the numerator of which is one and the denominator of
which is the total number of installments elected minus the number of
installments previously paid.
In the event of a participant's death, the balance in the participant's
Account (including interest equivalents in relation to the elapsed portion of
the year of death) shall be determined as of the date of death and such balance
shall be paid in a single payment to the participant's estate as soon as
reasonably possible thereafter.
8. PARTICIPANT'S RIGHTS UNSECURED:
The right of a participant to receive any unpaid portion of the
participant's Account shall be an unsecured claim against the general assets of
the Corporation.
9. NON-ASSIGNABILITY:
The right of a participant to receive any unpaid portion of the
participant's Account shall not be assigned, transferred, pledged or encumbered
or be subject in any manner to alienation or anticipation.
10. ADMINISTRATION:
The Administrator of the Plan shall be the Secretary of the Corporation.
The Administrator shall have authority to adopt rules and regulations for
carrying out the Plan and to interpret, construe and implement the provisions
thereof.
11. AMENDMENT AND TERMINATION:
This Plan may at any time be amended, modified or terminated by the Board
of Directors of the Corporation. No amendment, modification or termination
shall, without the consent of a participant, adversely affect such participant's
rights with respect to amounts accrued in the participant's Account.
2
<PAGE>
EXHIBIT A
EXXON CORPORATION
PLAN FOR DEFERRAL OF NONEMPLOYEE DIRECTOR COMPENSATION AND FEES
ELECTION FORM
TO: CORPORATE SECRETARY
In accordance with the provisions of the Plan for Deferral of Nonemployee
Director Compensation and Fees, I hereby elect to defer future compensation
(excluding expense reimbursements) otherwise payable to me for services as a
Director of Exxon Corporation.
Amount of Deferral: % of Board compensation or $
% of committee compensation or $
% of Board meeting fees.
% of committee meeting fees.
The compensation deferred is to be paid to me in (insert number not to
exceed five) annual installments, the first of which is to commence on (choose
one):
_____ January 15th of the calendar year following the year
in which my services as a Director terminate.
_____ January 15, 19 (a date subsequent to expected
termination but preceding my 73rd birthday).
In the event of my death before receiving the entire balance in my Account,
the unpaid balance shall be paid as soon as reasonably possible to my estate in
a single payment.
This election is subject to the terms of the Exxon Plan for Deferral of
Nonemployee Director Compensation and Fees, adopted to become effective May 15,
1980, and on file with the records of the Corporation.
Date:____________________ _______________________________________
Signature of Director
Received on this _____ day of _____________________, 19 ____ on behalf of
Exxon Corporation.
By __________________________
Secretary
<PAGE>
EXHIBIT 12
EXXON CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Income before cumulative effect of
accounting changes................ $ 6,440 $ 8,460 $ 7,510 $ 6,470 $5,100
Excess/(shortfall) of dividends
over earnings of affiliates owned
less than 50% accounted for by the
equity method..................... 14 35 33 25 (20)
Provision for income taxes(1)...... 3,026 4,777 4,893 4,428 3,025
Capitalized interest............... (326) (347) (389) (418) (306)
Minority interests in earnings of
consolidated subsidiaries......... 181 403 382 299 231
------- ------- ------- ------- ------
9,335 13,328 12,429 10,804 8,030
------- ------- ------- ------- ------
Fixed Charges:(1)
Interest expense--borrowings...... 190 298 359 478 530
Capitalized interest.............. 490 494 520 533 405
Rental expense representative of
interest factor.................. 482 469 447 416 401
Dividends on preferred stock...... 6 5 3 3 3
------- ------- ------- ------- ------
1,168 1,266 1,329 1,430 1,339
------- ------- ------- ------- ------
Total adjusted earnings available
for payment of fixed charges...... $10,503 $14,594 $13,758 $12,234 $9,369
======= ======= ======= ======= ======
Number of times fixed charges are
earned(2)......................... 9.0 11.5 10.4 8.6 7.0
</TABLE>
- - ---------------------
Note:
(1) The provision for income taxes and the fixed charges include Exxon
Corporation's share of 50% owned companies and majority owned subsidiaries
that are not consolidated.
(2) The 1998 ratio of earnings to fixed charges reflects the de-consolidation
of majority owned power companies in Hong Kong and China. Refer to the
relevant portions of Note 8 on page F17 of the accompanying financial
section of the 1998 Annual Report to shareholders for additional
information.
1
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL SECTION
TABLE OF CONTENTS
<S> <C>
Financial Review
Financial Summary ......................................................... F3
Quarterly Information ..................................................... F4
Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................... F5-F9
Report of Independent Accountants ........................................... F10
Consolidated Financial Statements
Statement of Income ....................................................... F11
Balance Sheet ............................................................. F12
Statement of Shareholders' Equity ......................................... F13
Statement of Cash Flows ................................................... F14
Notes to Consolidated Financial Statements
1. Summary of Accounting Policies ........................................ F15
2. Accounting Change ..................................................... F16
3. Exxon and Mobil Merger Agreement ...................................... F16
4. Miscellaneous Financial Information ................................... F16
5. Cash Flow Information ................................................. F16
6. Leased Facilities ..................................................... F16
7. Additional Working Capital Data ....................................... F17
8. Equity Company Information ............................................ F17
9. Investments and Advances .............................................. F18
10. Investment in Property, Plant and Equipment ........................... F18
11. Capital ............................................................... F19
12. Leveraged Employee Stock Ownership Plan (LESOP) ....................... F19
13. Interest Rate Swap, Currency Exchange and Commodity Contracts ......... F20
14. Fair Value of Financial Instruments ................................... F20
15. Long-Term Debt ........................................................ F20
16. Incentive Program ..................................................... F21
17. Annuity Benefits and Other Postretirement Benefits .................... F21
18. Litigation and Other Contingencies .................................... F23
19. Disclosures about Segments and Related Information .................... F24
20. Income, Excise and Other Taxes ........................................ F25
Supplemental Information on Oil and Gas Exploration and Production Activities F26-F30
Operating Summary ........................................................... F31
</TABLE>
F1
<PAGE>
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Sales and other operating revenue
Petroleum and natural gas $ 104,051 $ 120,644 $ 118,012 $ 107,749 $ 100,409
Chemicals 10,504 12,195 11,430 11,737 9,544
Other 862 2,303 2,101 2,318 2,175
-------------------------------------------------------------
Sales and other operating revenue,
including excise taxes $ 115,417 $ 135,142 $ 131,543 $ 121,804 $ 112,128
Earnings from equity interests and other revenue 2,355 2,100 2,706 2,116 1,776
-------------------------------------------------------------
Total revenue $ 117,772 $ 137,242 $ 134,249 $ 123,920 $ 113,904
=============================================================
Earnings
Petroleum and natural gas
Exploration and production $ 2,708 $ 4,693 $ 5,058 $ 3,412 $ 2,782
Refining and marketing 2,458 2,063 885 1,272 1,389
-------------------------------------------------------------
Total petroleum and natural gas $ 5,166 $ 6,756 $ 5,943 $ 4,684 $ 4,171
Chemicals 1,213 1,368 1,199 2,018 954
Other operations 384 434 433 479 409
Corporate and financing (323) (98) (65) (711) (434)
-------------------------------------------------------------
Income before cumulative effect of accounting change $ 6,440 $ 8,460 $ 7,510 $ 6,470 $ 5,100
Cumulative effect of accounting change (70) -- -- -- --
-------------------------------------------------------------
Net income $ 6,370 $ 8,460 $ 7,510 $ 6,470 $ 5,100
=============================================================
Net income per common share
Before cumulative effect of accounting change $ 2.64 $ 3.41 $ 3.01 $ 2.59 $ 2.04
Cumulative effect of accounting change (0.03) -- -- -- --
-------------------------------------------------------------
Net income $ 2.61 $ 3.41 $ 3.01 $ 2.59 $ 2.04
=============================================================
Net income per common share -- assuming dilution
Before cumulative effect of accounting change $ 2.61 $ 3.37 $ 2.99 $ 2.58 $ 2.03
Cumulative effect of accounting change (0.03) -- -- -- --
-------------------------------------------------------------
Net income $ 2.58 $ 3.37 $ 2.99 $ 2.58 $ 2.03
=============================================================
Cash dividends per common share $ 1.640 $ 1.625 $ 1.560 $ 1.500 $ 1.455
Net income to average shareholders' equity (percent) 14.6 19.4 17.9 16.6 14.1
Net income to total revenue (percent) 5.4 6.2 5.6 5.2 4.5
Working capital $ (1,819) $ 1,538 $ 405 $ (1,418) $ (3,033)
Ratio of current assets to current liabilities 0.91 1.08 1.02 0.92 0.84
Total additions to property, plant and equipment $ 8,310 $ 7,392 $ 7,132 $ 7,201 $ 6,568
Property, plant and equipment, less allowances $ 65,199 $ 66,414 $ 66,607 $ 65,446 $ 63,425
Total assets* $ 92,630 $ 96,064 $ 95,527 $ 91,296 $ 87,862
Exploration expenses, including dry holes $ 863 $ 753 $ 763 $ 693 $ 666
Research and development costs $ 549 $ 529 $ 520 $ 525 $ 558
Long-term debt* $ 4,530 $ 7,050 $ 7,236 $ 7,778 $ 8,831
Total debt* $ 8,778 $ 9,952 $ 9,746 $ 10,025 $ 12,689
Fixed charge coverage ratio* 9.0 11.5 10.4 8.6 7.0
Debt to capital (percent)* 16.2 17.8 17.7 19.0 24.3
Shareholders' equity at year-end $ 43,750 $ 43,660 $ 43,542 $ 40,436 $ 37,415
Shareholders' equity per common share $ 18.02 $ 17.77 $ 17.53 $ 16.28 $ 15.07
Average number of common shares outstanding (millions) 2,440 2,473 2,484 2,484 2,483
Number of registered shareholders at year-end (thousands) 633 641 610 603 608
Wages, salaries and employee benefits $ 5,577 $ 5,695 $ 5,710 $ 5,799 $ 5,881
Number of employees at year-end (thousands) 79 80 79 82 86
</TABLE>
* 1998 amounts reflect the de-consolidation of majority owned power companies in
Hong Kong and China retroactive to January 1, 1998 (see note 8).
F3
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY INFORMATION
1998 1997
------------------------------------------- -------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Year Quarter Quarter Quarter Quarter Year
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Volumes
Production of crude oil (thousands of barrels daily)
and natural gas liquids 1,624 1,609 1,553 1,484 1,567 1,625 1,584 1,558 1,631 1,599
Refinery throughput 3,901 3,934 3,941 3,936 3,928 4,006 3,962 4,041 4,036 4,011
Petroleum product sales 5,400 5,409 5,431 5,491 5,433 5,350 5,404 5,415 5,548 5,430
Natural gas production (millions of cubic feet daily)
available for sale 7,209 5,564 5,207 7,317 6,322 7,500 5,649 5,189 7,037 6,339
(thousands of metric tons)
Chemical prime product sales 4,243 4,339 4,325 4,297 17,204 4,161 4,329 4,433 4,378 17,301
Summarized financial data
Sales and other operating (millions of dollars)
revenue $ 29,332 28,808 27,907 29,370 115,417 34,720 33,679 32,381 34,362 135,142
Gross profit* $ 12,977 13,308 12,900 14,332 53,517 14,596 14,619 14,277 15,160 58,652
Net income as reported $ 1,890 1,620 1,400 1,530 6,440 2,175 1,965 1,820 2,500 8,460
Cumulative effect of
accounting change $ (70) - - - (70) - - - - -
Net income as restated $ 1,820 1,620 1,400 1,530 6,370 2,175 1,965 1,820 2,500 8,460
Per share data
Net income per common share (dollars per share)
as reported $ 0.77 0.66 0.58 0.63 2.64 0.87 0.79 0.74 1.01 3.41
Cumulative effect of
accounting change $ (0.03) - - - (0.03) - - - - -
Net income per common share
as restated $ 0.74 0.66 0.58 0.63 2.61 0.87 0.79 0.74 1.01 3.41
Net income per common share
- assuming dilution $ 0.73 0.65 0.58 0.62 2.58 0.86 0.78 0.73 1.00 3.37
Dividends per common share $ 0.410 0.410 0.410 0.410 1.640 0.395 0.410 0.410 0.410 1.625
Dividends per preferred share $ 1.170 1.170 1.170 1.170 4.680 1.170 1.170 1.170 1.170 4.680
Common stock prices
High $ 70.000 76.000 73.813 77.313 77.313 55.625 65.125 67.250 66.875 67.250
Low $ 56.625 65.375 62.000 69.438 56.625 48.250 49.875 58.625 54.750 48.250
</TABLE>
*Gross profit equals sales and other operating revenue less estimated costs
associated with products sold.
The price range of Exxon Common Stock is based on the composite tape of the
several U.S. exchanges where Exxon Common Stock is traded. The principal market
where Exxon Common Stock (XON) is traded is the New York Stock Exchange,
although the stock is traded on other exchanges in and outside the United
States.
At January 31, 1999, there were 633,151 holders of record of Exxon Common
Stock.
On January 27, 1999, the corporation declared a $0.410 dividend per common
share, payable March 10, 1999.
F4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
REVIEW OF 1998 RESULTS
Net income of $6,370 million was down $2,090 million or 25 percent from last
year's record of $8,460 million. The decline was driven by weaker crude oil
prices, which on average were over $6.00 per barrel or 33 percent lower than
last year. Average crude oil prices for the year were at their lowest level in
over twenty years. Earnings were also adversely affected by lower natural gas
prices, weaker chemicals margins and depressed copper and coal prices. However,
downstream operations achieved their second highest level of earnings ever in
1998, partly offsetting the weakness seen in the other operating segments.
Results in 1998 included a $70 million charge relating to an accounting change,
while 1997 net income included $305 million of non-recurring credits.
Revenue for 1998 totaled $118 billion, down 14 percent from 1997, and
the cost of crude and product purchases declined 22 percent. The combined total
of operating costs (including operating, selling, general, administrative,
exploration, depreciation and depletion expenses from the consolidated statement
of income and Exxon's share of similar costs for equity companies) in 1998 was
$28 billion, down over one billion dollars from 1997. Lower operating costs
resulted primarily from a stronger U.S. dollar, reduced energy costs and the
de-consolidation of majority owned power companies in Hong Kong and China
mentioned below. Excluding these effects, Exxon's operating efficiencies
continued to offset the impact of inflation and new business activity growth.
Interest expense in 1998 declined $315 million to $100 million, principally due
to the de-consolidation of power companies mentioned below and favorable foreign
exchange effects.
During the fourth quarter of 1998, Exxon de-consolidated the majority
owned power companies in Hong Kong and China retroactive to January 1, 1998.
Although Exxon's 1998 net income was not affected by the de-consolidation, there
were several impacts to the 1998 balance sheet (see note 8). These power
companies are now accounted for as equity companies, since the minority
shareholder in these companies has substantive participating management rights.
These rights include the minority shareholder's approval of operating policies,
expense budgets, financing and investment plans and management compensation and
succession plans.
Exploration and Production
Exploration and production earnings of $2,708 million declined substantially
from last year reflecting lower crude prices which on average were over $6.00
per barrel lower than 1997. Earnings were also adversely affected by lower U.S.
and international natural gas prices. Liquids production was 1,567 kbd
(thousands of barrels daily) compared to 1,599 kbd last year. The fourth quarter
Longford plant outage in Australia, along with natural field declines in mature
areas, were only partly offset by increased Canadian heavy oil production,
increased production from new developments in the North Sea and Azerbaijan and
increased Malaysian output. Natural gas production of 6,322 mcfd (millions of
cubic feet daily) was essentially unchanged from 1997. Earnings from U.S.
exploration and production were $839 million, down from $1,634 million during
1997. Outside the U.S., exploration and production earnings were $1,869 million,
down $1,000 million, after excluding non-recurring credits of $190 million in
1997.
Refining and Marketing
Refining and marketing earnings increased $395 million to $2,458 million.
Downstream industry margins in 1998 were generally higher than 1997. European
refining margins were stronger, but were partly offset by weaker margins in the
U.S. and Asia-Pacific. Marketing margins improved in most geographic areas,
particularly the U.K. and the U.S. Petroleum product sales of 5,433 kbd were up
from 1997 and were the highest in 24 years, despite the impact of weaker
economic conditions in Asia-Pacific. Refinery throughput was 3,928 kbd compared
to 4,011 kbd in 1997. In the U.S., refining and marketing earnings were $625
million, up $32 million from the prior year. Refining and marketing operations
outside the U.S. earned $1,833 million, an increase of $363 million from 1997.
Chemicals
Earnings from chemicals operations totaled $1,213 million, down $155 million or
11 percent from 1997. Chemicals margins declined during the year as the result
of weaker industry commodity prices. Chemical prime product sales of 17,204
thousand metric tons were down slightly from last year's record levels as higher
sales in North America and Europe were offset by lower demand in Asia-Pacific
markets.
Other Operations
Earnings from other operating segments totaled $384 million, a decrease of $50
million from last year, reflecting significantly lower copper prices, as well as
lower international coal prices. The effect of lower prices was partly offset by
record copper and coal production, lower operating expenses and favorable
foreign exchange effects.
Corporate and Financing
Corporate and financing expenses, after excluding non-recurring credits of $115
million in 1997, increased $110 million to $323 million in 1998, reflecting
higher tax-related charges.
REVIEW OF 1997 RESULTS
Record net income of $8,460 million in 1997 compared with the previous record of
$7,510 million in 1996. Despite lower crude oil prices, earnings growth resulted
from improved downstream margins, higher petroleum product and chemical sales
and lower unit operating expenses. Results in 1997 included $305 million of non-
recurring credits (all in the fourth quarter). Of these, $190 million were the
result of foreign exchange impacts on deferred income tax liabilities. The
remainder ($115 million) was U.S. tax related. 1996 included $535 million of
non-recurring credits from tax settlements ($125 million in the
F5
<PAGE>
first quarter and $410 million in the fourth quarter). Of the $535 million, $305
million was in the U.S. and $230 million was non-U.S.
Revenue for 1997 totaled $137 billion, up 2 percent from 1996. The cost of
crude and product purchases increased 3 percent. The combined total of operating
costs in 1997 was $29 billion, flat with 1996. Lower operating costs resulting
from a stronger U.S. dollar were offset by expenses from higher sales volumes,
higher exploration and production venture spending, and additional reported
costs from consolidation of a Japanese affiliate following Exxon's acquisition
of a controlling interest. Exxon's operating efficiencies continued to offset
the impact of inflation. Unit operating expenses were reduced in most business
segments on higher sales volumes in 1997. Interest expense in 1997 was $415
million compared to $464 million in 1996.
Exploration and Production
Exploration and production earnings declined from the prior year reflecting
lower crude prices which on average were about $1.50 per barrel lower than 1996.
Liquids production of 1,599 kbd was similar to the prior year. Increased
Canadian heavy oil production and volumes from new developments, primarily in
the North Sea and Australia, were offset by scheduled maintenance, field
declines, and property sales. Natural gas production of 6,339 mcfd was down
somewhat from 1996, reflecting warmer European weather. Earnings from U.S.
exploration and production were $1,634 million, down from $1,781 million during
1996. Outside the U.S., exploration and production earnings were $2,869 million,
down $178 million, after excluding non-recurring credits of $190 million in 1997
related to foreign exchange impacts on deferred taxes and $230 million in 1996
associated with non-U.S. tax settlements.
Refining and Marketing
Downstream industry margins improved from the low levels seen in 1996. Refining
margins in the U.S. and Europe strengthened in 1997 and marketing margins
benefited from an improved U.K. retail environment. Petroleum product sales of
5,430 kbd were up 4 percent from 1996, with volume growth in all major
geographic areas. Refinery throughput was 4,011 kbd, up 6 percent from 1996, and
the highest since 1980. In the U.S., refining and marketing earnings were $593
million, up $424 million from the prior year. Refining and marketing operations
outside the U.S. earned $1,470 million, an increase of $754 million from 1996.
Chemicals
Earnings from chemical operations totaled $1,368 million, up $169 million or 14
percent from 1996. Exxon achieved prime product sales of 17,301 thousand metric
tons, an increase of 10 percent over 1996 and a fourth consecutive record sales
year. Chemical commodity margins also improved in 1997 on generally higher
prices and lower feedstock costs.
Other Operations
Earnings from other operating segments of $434 million were flat with 1996.
Copper and coal production from continuing operations were at record levels.
Copper realizations were higher, while coal prices were lower.
Corporate and Financing
Full year corporate and financing expenses, excluding one-time credits related
to tax settlements of $115 million in 1997 and $305 million in 1996, declined
$157 million to $213 million reflecting lower tax and debt-related charges.
EXXON AND MOBIL MERGER AGREEMENT
On December 1, 1998, Exxon Corporation and Mobil Corporation signed an agreement
to merge the two companies subject to shareholder approval, regulatory reviews
and other conditions. Under the terms of the agreement, each common share of
Mobil will be converted into 1.32015 common shares of Exxon. As a result of the
merger, Exxon shareholders will own about 70 percent of the combined company and
Mobil shareholders will own about 30 percent. Upon completion of the merger, the
company's name will be Exxon Mobil Corporation.
It is intended that the merger will qualify as a tax-free reorganization in
the U.S., and that it will be accounted for on a "pooling of interests" basis.
In addition, the merger agreement provides for payment of termination fees of
$1.5 billion under certain circumstances. Exxon and Mobil also have entered into
an option agreement that grants Exxon the option under specified circumstances
to purchase up to approximately 14.9 percent of the authorized but unissued
common stock of Mobil.
MARKET RISKS, INFLATION AND OTHER UNCERTAINTIES
In the past, crude, product and chemical prices have fluctuated widely in
response to changing market forces. The impacts of these price fluctuations on
earnings from exploration and production operations, refining and marketing
operations and chemical operations have been varied, tending at times to be
offsetting.
In 1998, average annual oil prices were the lowest in two decades because
of lower energy demand caused by the economic downturn in Asia, milder winter
weather and continued high levels of production by the world's major oil
producing countries. The markets for crude oil and natural gas have a history of
significant price volatility. Although prices will occasionally drop
precipitously, industry prices over the long term will continue to be driven by
market supply and demand fundamentals. Accordingly, the corporation tests the
viability of its oil and gas operations based on long-term price projections.
The corporation's assessment is that its operations will continue to be
successful in a variety of market conditions. This is the outcome of disciplined
investment and asset management programs.
F6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Investment opportunities are tested against a variety of market conditions,
including low price scenarios. As a result, investments that would succeed only
in highly favorable price environments are screened out of the investment plan.
In addition, the corporation has had an aggressive asset management program, in
which under-performing assets are either improved to acceptable levels or
divested. The asset management program involves a disciplined, regular review to
ensure that all assets are contributing to the corporation's strategic and
financial objectives. The result has been the creation of a very efficient
capital base. In 1998, no oil or gas assets required impairment. The
effectiveness of this investment and asset management process is reflected by
the fact that the corporation has long been an industry leader in Return on
Capital Employed and Return on Shareholders' Equity.
The corporation makes very limited use of commodity forwards, swaps and
futures contracts of short duration to mitigate the risk of unfavorable price
movements on certain crude, natural gas and petroleum product purchases and
sales. Commodity price exposure related to these contracts is not material.
The corporation conducts business in many foreign currencies and is subject
to foreign currency exchange rate risk on cash flows related to sales, expenses,
financing and investment transactions. The impacts of fluctuations in foreign
currency exchange rates on Exxon's geographically diverse operations are often
varied and at times offsetting in amount. As discussed in note 13 to the
consolidated financial statements, the corporation makes very limited use of
currency exchange contracts to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Exposure from
market rate fluctuations related to these contracts is not material. Aggregate
foreign exchange transaction gains and losses included in net income are
discussed in note 4 to the consolidated financial statements.
The corporation is exposed to changes in interest rates, primarily as a
result of its short-term and long-term debt with both fixed and floating
interest rates. The corporation makes very limited use of interest rate swap
agreements to adjust the ratio of fixed and floating rates in the debt
portfolio, as discussed in note 13 to the consolidated financial statements. The
impact of a 100 basis point change in interest rates affecting the corporation's
debt would not be material to earnings, cash flow or fair value.
The general rate of inflation in most major countries of operation has
been relatively low in recent years, and the associated impact on operating
costs has been countered by cost reductions from efficiency and productivity
improvements.
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from time to
time in varying degree by political developments and laws and regulations, such
as forced divestiture of assets; restrictions on production, imports and
exports; price controls; tax increases and retroactive tax claims; expropriation
of property; cancellation of contract rights and environmental regulations. Both
the likelihood of such occurrences and their overall effect upon the corporation
vary greatly from country to country and are not predictable.
SITE RESTORATION AND OTHER ENVIRONMENTAL COSTS
Over the years the corporation has accrued provisions for estimated site
restoration costs to be incurred at the end of the operating life of certain of
its facilities and properties. In addition, the corporation accrues provisions
for environmental liabilities in the many countries in which it does business
when it is probable that obligations have been incurred and the amounts can be
reasonably estimated. This policy applies to assets or businesses currently
owned or previously disposed. The corporation has accrued provisions for
probable environmental remediation obligations at various sites, including
multi-party sites where Exxon has been identified as one of the potentially
responsible parties by the U.S. Environmental Protection Agency. The involvement
of other financially responsible companies at these multi-party sites mitigates
Exxon's actual joint and several liability exposure. At present, no individual
site is expected to have losses material to Exxon's operations, financial
condition or liquidity.
Charges made against income for site restoration and environmental
liabilities were $162 million in 1998, $140 million in 1997 and $146 million in
1996. At the end of 1998, accumulated site restoration and environmental
provisions, after reduction for amounts paid, amounted to $2.6 billion. Exxon
believes that any cost in excess of the amounts already provided for in the
financial statements would not have a materially adverse effect upon the
corporation's operations, financial condition or liquidity.
In 1998, the corporation spent $1,321 million (of which $432 million were
capital expenditures) on environmental conservation projects and expenses
worldwide, mostly dealing with air and water conservation. Total expenditures
for such activities are expected to be about $1.5 billion in both 1999 and 2000
(with capital expenditures representing about 40 percent of the total).
TAXES
Income, excise and all other taxes and duties totaled $41.3 billion in 1998, a
decrease of $2.6 billion or 6 percent from 1997. Income tax expense, both
current and deferred, was $2.6 billion compared to $4.3 billion in 1997,
reflecting lower pre-tax income in 1998, the impact of lower foreign tax rates
and favorable resolution of tax-related issues. The effective tax rate was 32.1
percent in 1998 versus 36.4 percent in 1997. Excise and all other taxes and
duties declined $0.9 billion to $38.6 billion, reflecting lower prices.
F7
<PAGE>
Income, excise and all other taxes and duties totaled $43.9 billion in
1997, essentially unchanged from 1996. Income tax expense, both current and
deferred, was $4.3 billion compared to $4.4 billion in 1996, reflecting higher
pre-tax income and a lower effective tax rate -- 36.4 percent in 1997 versus
39.9 percent in 1996. Excise and all other taxes and duties at $39.5 billion
compared to $39.4 billion in 1996.
LIQUIDITY AND CAPITAL RESOURCES
In 1998, cash provided by operating activities totaled $11.1 billion, down $3.6
billion from 1997. Major sources of funds were net income of $6.4 billion and
non-cash provisions of $5.3 billion for depreciation and depletion.
Cash used in investing activities totaled $8.0 billion, up $1.2 billion
from 1997 primarily as a result of higher additions to property, plant and
equipment.
Cash used in financing activities was $5.7 billion. Dividend payments on
common shares increased from $1.625 per share to $1.640 per share and totaled
$4.0 billion, a payout of 63 percent. Total consolidated debt decreased by $1.2
billion to $8.8 billion, reflecting the de-consolidation of majority owned
companies in Hong Kong and China discussed in note 8 to the consolidated
financial statements, partially offset by $1.3 billion of increased debt.
Shareholders' equity increased by $0.1 billion to $43.8 billion. The ratio
of debt to capital decreased to 16 percent, reflecting lower debt levels. During
1998, Exxon purchased 44.6 million shares of its common stock for the treasury
at a cost of $3.1 billion. These purchases reflect both the increased share
repurchases announced in the first quarter of 1997, as well as purchases to
offset shares issued in conjunction with the company's benefit plans and
programs. Purchases were made in both the open market and through negotiated
transactions. As a consequence of the proposed merger of Exxon and Mobil
announced in December, the repurchase program to reduce the number of Exxon
shares outstanding was discontinued.
In 1997, cash provided by operating activities totaled $14.7 billion, up
$1.5 billion from 1996. Major sources of funds were net income of $8.5 billion
and non-cash provisions of $5.4 billion for depreciation and depletion.
Cash used in investing activities totaled $6.8 billion, up $0.3 billion
from 1996 primarily as a result of higher additions to property, plant and
equipment.
Cash used in financing activities was $6.7 billion in 1997. Dividend
payments on common shares increased from $1.560 per share to $1.625 per share
and totaled $4.0 billion, a payout of 48 percent. Total consolidated debt
increased by $0.2 billion to $10.0 billion.
Shareholders' equity increased by $0.2 billion to $43.7 billion. The ratio
of debt to capital remained at 18 percent in 1997, the same as 1996. During
1997, Exxon purchased 43.2 million shares of its common stock for the treasury
at a cost of $2.6 billion. These purchases reflect both the increased share
repurchases announced in the first quarter of 1997, as well as purchases to
offset shares issued in conjunction with the company's benefit plans and
programs. Purchases were made in both the open market and through negotiated
transactions.
In 1998 and 1997, the corporation strengthened its financial position and
flexibility to meet future financial needs. Although the corporation issues
long-term debt from time to time and maintains a revolving commercial paper
program, internally generated funds cover the majority of its financial
requirements.
As discussed in note 13 to the consolidated financial statements, the
corporation's financial derivative activities are limited to simple risk
management strategies. The corporation does not trade in financial derivatives
nor does it use financial derivatives with leveraged features. The corporation
maintains a system of controls that includes a policy covering the
authorization, reporting and monitoring of derivative activity. The
corporation's derivative activities pose no material credit or market risks to
Exxon's operations, financial condition or liquidity.
As discussed in note 18 to the consolidated financial statements, a number
of lawsuits, including class actions, were brought in various courts against
Exxon Corporation and certain of its subsidiaries relating to the accidental
release of crude oil from the tanker Exxon Valdez in 1989. Essentially all of
these lawsuits have now been resolved or are subject to appeal.
On September 24, 1996, the United States District Court for the District of
Alaska entered a judgment in the amount of $5.058 billion in the Exxon Valdez
civil trial that began in May 1994. The District Court awarded approximately
$19.6 million in compensatory damages to fisher plaintiffs, $38 million in
prejudgment interest on the compensatory damages and $5 billion in punitive
damages to a class composed of all persons and entities who asserted claims for
punitive damages from the corporation as a result of the Exxon Valdez grounding.
The District Court also ordered that these awards shall bear interest from and
after entry of the judgment. The District Court stayed execution on the judgment
pending appeal based on a $6.75 billion letter of credit posted by the
corporation. Exxon has appealed the judgment. Exxon has also appealed the
District Court's denial of its renewed motion for a new trial. The corporation
continues to believe that the punitive damages in this case are unwarranted and
that the judgment should be set aside or substantially reduced by the appellate
courts. The ultimate cost to the corporation from the lawsuits arising from the
Valdez grounding is not possible to predict and may not be resolved for a number
of years.
The U.S. Tax Court has decided the issue with respect to the pricing of
crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of the
corporation. This decision is subject to appeal. Certain other issues for the
years 1979-1988 remain pending before the Tax Court. Ultimate resolution of
these issues and several other tax and legal issues, notably final resolution of
the gas lifting imbalance in the Common Area (along the German/Dutch border), is
not expected to
F8
<PAGE>
have a material adverse effect upon the corporation's operations, financial
condition or liquidity.
There are no events or uncertainties known to management beyond those
already included in reported financial information that would indicate a
material change in future operating results or future financial condition.
CAPITAL AND EXPLORATION EXPENDITURES
Capital and exploration expenditures in 1998 were $10 billion, up from $8.8
billion in 1997, reflecting the corporation's active investment program.
Exploration and production spending was up 13 percent to $6.0 billion in
1998, from $5.3 billion in 1997, primarily reflecting increased spending for
development projects in the Gulf of Mexico and North Sea. Capital investments in
refining and marketing totaled $2.0 billion in 1998, the same level as in 1997.
Chemicals capital expenditures were $1.7 billion in 1998, up from $1.0 billion
in 1997, with the increase due to higher plant capacity investments in the
Asia-Pacific area.
Capital and exploration expenditures in the U.S. totaled $2.8 billion in
1998, an increase of 10 percent from 1997, primarily in exploration and
production. Spending outside the U.S. of $7.2 billion in 1998 compared to $6.2
billion in 1997, reflecting higher expenditures in both exploration and
production and chemicals.
Firm commitments related to capital projects totaled approximately $6.0
billion at the end of 1998, compared with $5.6 billion at year-end 1997. The
largest single commitment was $2.0 billion associated with the development of
natural gas resources in Malaysia. The corporation expects to fund the majority
of these commitments through internally generated funds.
YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define a specific year. Absent corrective actions, a
computer program that has date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions to various activities and
operations.
The corporation initiated assessments in prior years to identify the work
efforts required to assure that systems supporting the business successfully
operate beyond the turn of the century. The scope of this work effort
encompasses business information systems, infrastructure, and technical and
field systems, including systems utilizing embedded technology, such as
microcontrollers. The program places particular emphasis on mission critical
systems, defined as those which could have a significant safety, environmental
or financial impact, should Year 2000 issues arise.
Plans for achieving Year 2000 compliance were finalized during 1997, and
implementation work was underway at year-end 1997. The initial phases of this
work, an inventory and assessment of potential problem areas, have been
essentially completed. Modification and testing phases continue, with
approximately 90 percent of required system modifications to mission critical
systems completed by year-end 1998. Some work is continuing into 1999, including
final testing of some systems and scheduled implementation of new systems with
Year 2000 impacts. Attention has also been focused on compliance attainment
efforts of vendors and others, including key system interfaces with customers
and suppliers. Most key suppliers and business partners have been contacted for
clarification of their Year 2000 plans and approximately three-fourths have
confirmed that compliance plans are in place. Follow-up discussions are being
held with key suppliers when necessary to gain satisfaction on their state of
readiness. These reviews will continue through 1999. Testing of critical third
party products and services is underway, including such areas as process control
systems, credit card processing, banking transactions and telecommunications.
Notwithstanding the substantive work efforts described above, the
corporation could potentially experience disruptions to some mission critical
operations or deliveries to customers as a result of Year 2000 issues,
particularly in the first few weeks of the year 2000. Such disruptions could
include impacts from potentially non-compliant systems utilized by suppliers,
customers, government entities or others. Given the diverse nature of Exxon's
operations, the varying state of readiness of different countries and suppliers,
and the interdependence of Year 2000 impacts, the potential financial impact or
liability associated with such disruptions cannot be reasonably estimated.
Exxon operating sites around the world, including those in developing
countries, are working with key suppliers in their respective countries to
address Year 2000 issues. In addition, Year 2000 Business Contingency Guidelines
are being used by all operating organizations and affiliates, and include
specific reference to areas such as transportation, telecommunications and
utility services. Existing site contingency plans are being updated in order to
attempt to mitigate the extent of potential disruption to business operations.
This work is targeted to be essentially complete by mid-1999.
Through December 31, 1998, about $170 million of costs had been incurred in
the corporation's efforts to achieve Year 2000 compliant systems. The total cost
to the corporation of achieving Year 2000 compliant systems is currently
estimated to be $225 to $250 million, primarily over the 1997-1999 timeframe,
and is not expected to be a material incremental cost impacting Exxon's
operations, financial condition or liquidity.
F9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Dallas, Texas
February 24, 1999
To the Shareholders of Exxon Corporation
In our opinion, the consolidated financial statements appearing on pages F11
through F25 present fairly, in all material respects, the financial position of
Exxon Corporation and its subsidiary companies at December 31, 1998 and 1997,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the corporation's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in note 2 to the consolidated financial statements, the corporation
changed its method of accounting for the cost of start-up activities in 1998.
/s/ PricewaterhouseCoopers LLP
F10
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
1998 1997 1996
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
Revenue
Sales and other operating revenue, including excise taxes $ 115,417 $ 135,142 $ 131,543
Earnings from equity interests and other revenue 2,355 2,100 2,706
--------------------------------------------
Total revenue $ 117,772 $ 137,242 $ 134,249
--------------------------------------------
Costs and other deductions
Crude oil and product purchases $ 45,020 $ 57,971 $ 56,406
Operating expenses 11,540 13,045 13,255
Selling, general and administrative expenses 8,372 8,406 7,961
Depreciation and depletion 5,340 5,474 5,329
Exploration expenses, including dry holes 863 753 763
Interest expense 100 415 464
Excise taxes 14,720 14,863 14,815
Other taxes and duties 22,576 23,111 22,956
Income applicable to minority and preferred interests 185 406 384
--------------------------------------------
Total costs and other deductions $ 108,716 $ 124,444 $ 122,333
--------------------------------------------
Income before income taxes $ 9,056 $ 12,798 $ 11,916
Income taxes 2,616 4,338 4,406
--------------------------------------------
Income before cumulative effect of accounting change $ 6,440 $ 8,460 $ 7,510
Cumulative effect of accounting change (70) -- --
--------------------------------------------
Net income $ 6,370 $ 8,460 $ 7,510
--------------------------------------------
Net income per common share (dollars)
Before cumulative effect of accounting change $ 2.64 $ 3.41 $ 3.01
Cumulative effect of accounting change (0.03) -- --
--------------------------------------------
Net income $ 2.61 $ 3.41 $ 3.01
--------------------------------------------
Net income per common share - assuming dilution (dollars)
Before cumulative effect of accounting change $ 2.61 $ 3.37 $ 2.99
Cumulative effect of accounting change (0.03) -- --
--------------------------------------------
Net income $ 2.58 $ 3.37 $ 2.99
--------------------------------------------
</TABLE>
The information on pages F15 through F25 is an integral part of these
statements.
F11
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Dec. 31 Dec. 31
1998 1997
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 1,441 $ 4,047
Other marketable securities 20 15
Notes and accounts receivable, less estimated doubtful amounts 9,512 10,702
Inventories
Crude oil, products and merchandise 4,896 4,725
Materials and supplies 709 762
Prepaid taxes and expenses 1,015 941
---------------------
Total current assets $ 17,593 $ 21,192
Investments and advances 6,434 5,205
Property, plant and equipment, at cost, less accumulated depreciation and depletion 65,199 66,414
Other assets, including intangibles, net 3,404 3,253
---------------------
Total assets $ 92,630 $ 96,064
=====================
Liabilities
Current liabilities
Notes and loans payable $ 4,248 $ 2,902
Accounts payable and accrued liabilities 13,825 14,683
Income taxes payable 1,339 2,069
---------------------
Total current liabilities $ 19,412 $ 19,654
Long-term debt 4,530 7,050
Annuity reserves and accrued liabilities 9,514 9,302
Deferred income tax liabilities 13,142 13,452
Deferred credits 475 575
Equity of minority and preferred shareholders in affiliated companies 1,807 2,371
---------------------
Total liabilities $ 48,880 $ 52,404
=====================
Shareholders' Equity
Preferred stock without par value (authorized 200 million shares) $ 105 $ 190
Guaranteed LESOP obligation (125) (225)
Common stock without par value (3,000 million shares authorized, 2,984 million shares issued) 2,323 2,323
Earnings reinvested 54,575 52,214
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (641) (1,119)
Minimum pension liability adjustment (282) --
Common stock held in treasury (556 million shares in 1998 and 527 million shares in 1997) (12,205) (9,723)
---------------------
Total shareholders' equity $ 43,750 $ 43,660
---------------------
Total liabilities and shareholders' equity $ 92,630 $ 96,064
=====================
</TABLE>
The information on pages F15 through F25 is an integral part of these
statements.
F12
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------------------------------------------------------------
Nonowner Nonowner Nonowner
Shareholders' Changes in Shareholders' Changes in Shareholders' Changes in
Equity Equity Equity Equity Equity Equity
-------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Preferred stock outstanding at end of year $ 105 $ 190 $ 303
Guaranteed LESOP obligation (125) (225) (345)
Common stock issued at end of year (see note 11) 2,323 2,323 2,822
Earnings reinvested
At beginning of year $ 52,214 $ 57,156 $ 53,539
Net income for year 6,370 $ 6,370 8,460 $ 8,460 7,510 $ 7,510
Dividends - common and preferred shares (4,009) (4,032) (3,893)
Cancellation of common stock held in treasury -- (9,370) --
-------- -------- --------
At end of year $ 54,575 $ 52,214 $ 57,156
-------- -------- --------
Accumulated other nonowner changes in equity
At beginning of year $ (1,119) $ 1,126 $ 1,339
Foreign exchange translation adjustment 478 478 (2,245) (2,245) (213) (213)
Minimum pension liability adjustment (282) (282) -- -- -- --
-------- -------- --------
At end of year $ (923) $ (1,119) $ 1,126
-------- -------- -------- -------- -------- --------
Total $ 6,566 $ 6,215 $ 7,297
======== ======== ========
Common stock held in treasury
At beginning of year $ (9,723) $(17,520) $(17,217)
Acquisitions, at cost (3,055) (2,586) (801)
Dispositions 573 514 498
Cancellation, returned to unissued -- 9,869 --
-------- -------- --------
At end of year $(12,205) $ (9,723) $(17,520)
-------- -------- --------
Shareholders' equity at end of year $ 43,750 $ 43,660 $ 43,542
======== ======== ========
<CAPTION>
Share Activity
----------------------------------------------------------------
1998 1997 1996
----------------------------------------------------------------
(millions of shares)
<S> <C> <C> <C>
Preferred stock outstanding at end of year 2 3 5
Common stock
Issued at end of year (see note 11) 2,984 2,984 3,626
Held in treasury
At beginning of year (527) (1,142) (1,142)
Acquisitions (45) (43) (18)
Dispositions 16 16 18
Cancellation, returned to unissued -- 642 --
----- ------ ------
At end of year (556) (527) (1,142)
----- ------ ------
Common shares outstanding at end of year 2,428 2,457 2,484
===== ====== ======
</TABLE>
The information on pages F15 through F25 is an integral part of these
statements.
F13
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1998 1997 1996
- - -------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
Cash flows from operating activities
Net income
Accruing to Exxon shareholders $ 6,370 $ 8,460 $ 7,510
Accruing to minority and preferred interests 185 406 384
Adjustments for non-cash transactions
Depreciation and depletion 5,340 5,474 5,329
Deferred income tax charges 408 346 835
Annuity and accrued liability provisions (296) 385 514
Dividends received greater than/(less than) equity in current earnings of
equity companies 103 141 11
Changes in operational working capital, excluding cash and debt
Reduction/(increase) - Notes and accounts receivable 1,321 120 (1,702)
- Inventories 6 (253) 246
- Prepaid taxes and expenses (89) (5) (81)
Increase/(reduction) - Accounts and other payables (2,060) (833) 495
All other items - net (232) 435 (379)
------------------------------------------
Net cash provided by operating activities $ 11,056 $ 14,676 $ 13,162
------------------------------------------
Cash flows from investing activities
Additions to property, plant and equipment $ (8,359) $ (7,393) $ (7,209)
Sales of subsidiaries and property, plant and equipment 556 1,110 719
Additional investments and advances (641) (820) (810)
Sales of investments and collection of advances 456 310 522
Additions to other marketable securities (61) (37) (159)
Sales of other marketable securities 57 39 422
------------------------------------------
Net cash used in investing activities $ (7,992) $ (6,791) $ (6,515)
------------------------------------------
Net cash generation before financing activities $ 3,064 $ 7,885 $ 6,647
------------------------------------------
Cash flows from financing activities
Additions to long-term debt $ 64 $ 589 $ 659
Reductions in long-term debt (132) (249) (806)
Additions to short-term debt 270 531 261
Reductions in short-term debt (1,136) (991) (607)
Additions/(reductions) in debt with less than 90 day maturity 2,110 128 239
Cash dividends to Exxon shareholders (4,012) (4,038) (3,902)
Cash dividends to minority interests (115) (313) (291)
Changes in minority interests and sales/(purchases) of affiliate stock (95) (123) (338)
Common stock acquired (3,055) (2,586) (801)
Common stock sold 403 340 347
------------------------------------------
Net cash used in financing activities $ (5,698) $ (6,712) $ (5,239)
------------------------------------------
Effects of exchange rate changes on cash $ 28 $ (77) $ 35
------------------------------------------
Increase/(decrease) in cash and cash equivalents $ (2,606) $ 1,096 $ 1,443
Cash and cash equivalents at beginning of year 4,047 2,951 1,508
------------------------------------------
Cash and cash equivalents at end of year $ 1,441 $ 4,047 $ 2,951
==========================================
</TABLE>
The information on pages F15 through F25 is an integral part of these
statements.
F14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The corporation's principal business is energy, involving the worldwide
exploration, production, transportation and sale of crude oil and natural gas
and the manufacture, transportation and sale of petroleum products. The
corporation is also a major worldwide manufacturer and marketer of
petrochemicals and participates in coal and minerals mining and electric power
generation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that affect
the reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates.
The accompanying consolidated financial statements and the supporting
and supplemental material are the responsibility of the management of Exxon
Corporation.
1. Summary of Accounting Policies
Principles of Consolidation. The consolidated financial statements include the
accounts of those significant subsidiaries owned directly or indirectly more
than 50 percent by the corporation and for which minority shareholders do not
possess the right to participate in significant management decisions. Amounts
representing the corporation's percentage interest in the underlying net assets
of other significant subsidiaries and less than majority owned companies in
which a significant equity ownership interest is held, are included in
"Investments and advances"; the corporation's share of the net income of these
companies is included in the consolidated statement of income caption "Earnings
from equity interests and other revenue."
Investments in all other companies, none of which is significant, are
included in "Investments and advances" at cost or less. Dividends from these
companies are included in income as received.
Revenue Recognition. Revenues associated with sales of crude oil, natural gas,
petroleum and chemical products and all other items are recorded when title
passes to the customer.
Revenues from the production of natural gas properties in which Exxon
has an interest with other producers are recognized on the basis of the
company's net working interest. Differences between actual production and net
working interest volumes are not significant.
Financial Instruments. Interest rate swap agreements are used to modify the
interest rates on certain debt obligations. The interest differentials to be
paid or received under such swaps are recognized over the life of the agreements
as adjustments to interest expense. Currency exchange contracts are used to
reduce the risk of adverse foreign currency movements related to certain foreign
currency debt obligations. The gains or losses arising from currency exchange
contracts offset foreign exchange gains or losses on the underlying assets or
liabilities and are recognized as offsetting adjustments to the carrying
amounts. Commodity swap and futures contracts are used to mitigate the risk of
unfavorable price movements on certain crude and petroleum product purchases and
sales. Gains or losses on these contracts are recognized as adjustments to
purchase costs or to sales revenue. Related amounts payable to or receivable
from counterparties are included in current assets and liabilities.
Investments in marketable debt securities are expected to be held to
maturity and are stated at amortized cost.
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques as appropriate.
Inventories. Crude oil, products and merchandise inventories are carried at the
lower of current market value or cost (generally determined under the last-in,
first-out method-LIFO). Costs include applicable purchase costs and operating
expenses but not general and administrative expenses or research and development
costs. Inventories of materials and supplies are valued at cost or less.
Property, Plant and Equipment. Depreciation, depletion and amortization, based
on cost less estimated salvage value of the asset, are primarily determined
under either the unit-of-production method or the straight-line method.
Unit-of-production rates are based on oil, gas and other mineral reserves
estimated to be recoverable from existing facilities. The straight-line method
of depreciation is based on estimated asset service life taking obsolescence
into consideration.
Maintenance and repairs are expensed as incurred. Major renewals and
improvements are capitalized and the assets replaced are retired.
The corporation's exploration and production activities are accounted for
under the "successful efforts" method. Under this method, costs of productive
wells and development dry holes, both tangible and intangible, as well as
productive acreage are capitalized and amortized on the unit-of-production
method. Costs of that portion of undeveloped acreage likely to be unproductive,
based largely on historical experience, are amortized over the period of
exploration. Other exploratory expenditures, including geophysical costs, other
dry hole costs and annual lease rentals, are expensed as incurred. Exploratory
wells that find oil and gas in an area requiring a major capital expenditure
before production could begin are evaluated annually to assure that commercial
quantities of reserves have been found or that additional exploration work is
underway or planned. Exploratory well costs not meeting either of these tests
are charged to expense.
Oil, gas and other properties held and used by the corporation are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amounts may not be recoverable. The corporation estimates the future
undiscounted cash flows of the affected properties to judge the recoverability
of carrying amounts. In general, analysis are based on proved reserves, except
in circumstances where it is probable that additional resources will be
developed and contribute to cash flows in the future.
Environmental Conservation and Site Restoration Costs. Liabilities for
environmental conservation are recorded when it is probable that obligations
have been incurred and the amounts can be reasonably estimated. These
liabilities are not reduced by possible recoveries from third parties, and
projected cash expenditures are not discounted.
Site restoration costs that may be incurred by the corporation at the end
of the operating life of certain of its facilities and properties are reserved
ratably over the asset's productive life.
F15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign Currency Translation. The "functional currency" for translating the
accounts of the majority of refining, marketing and chemical operations outside
the U.S. is the local currency. Local currency is also used for exploration and
production operations that are relatively self-contained and integrated within a
particular country, such as in Australia, Canada, the United Kingdom, Norway and
Continental Europe. The U.S. dollar is used for operations in highly
inflationary economies and for some exploration and production operations,
primarily in Malaysia and the Middle East.
Recently Issued Statements Of Financial Accounting Standards. In June 1998, the
Financial Accounting Standards Board released Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities Information." This statement,
which must be adopted beginning no later than 2000, establishes accounting and
reporting standards for derivative instruments. The statement requires that an
entity recognize all derivatives as either assets or liabilities in the
financial statements and measure those instruments at fair value, and it defines
the accounting for changes in the fair value of the derivatives depending on the
intended use of the derivative. No decision has been made as to whether the
corporation will adopt this standard before 2000. Adoption of this statement is
not expected to have a material effect upon the corporation's operations or
financial condition.
2. Accounting Change
The American Institute of Certified Public Accountants' Statement of Position
98-5, "Reporting on the Costs of Start-up Activities" was implemented in the
fourth quarter of 1998, effective as of January 1, 1998. This statement requires
that costs of start-up activities and organizational costs be expensed as
incurred. The cumulative effect of this accounting change on years prior to 1998
was a charge of $70 million (net of $70 million income tax effect), or $0.03 per
common share, that was reflected in the first quarter of 1998. This new
accounting requirement did not have a significant effect on 1998 income before
the cumulative effect of the accounting change.
3. Exxon and Mobil Merger Agreement
On December 1, 1998, Exxon Corporation and Mobil Corporation signed an agreement
to merge the two companies subject to shareholder approval, regulatory reviews
and other conditions. Under the terms of the agreement, each common share of
Mobil will be converted into 1.32015 common shares of Exxon. As a result of the
merger, Exxon shareholders will own about 70 percent of the combined company and
Mobil shareholders will own about 30 percent. Upon completion of the merger, the
company's name will be Exxon Mobil Corporation.
It is intended that the merger will qualify as a tax-free reorganization in
the U.S., and that it will be accounted for on a "pooling of interests" basis.
In addition, the merger agreement provides for payment of termination fees of
$1.5 billion under certain circumstances. Exxon and Mobil also have entered into
an option agreement that grants Exxon the option under specified circumstances
to purchase up to approximately 14.9 percent of the authorized but unissued
common stock of Mobil.
4. Miscellaneous Financial Information
Research and development costs totaled $549 million in 1998, $529 million in
1997 and $520 million in 1996.
Net income included aggregate foreign exchange transaction gains of $71
million in 1998 and $153 million in 1997 and losses of $37 million in 1996.
In 1998, 1997 and 1996, net income included gains of $7 million, $35
million and $14 million, respectively, attributable to the combined effects of
LIFO inventory accumulations and draw-downs. The aggregate replacement cost of
inventories was estimated to exceed their LIFO carrying values by $884 million
and $2,673 million at December 31, 1998 and 1997, respectively.
5. Cash Flow Information
The consolidated statement of cash flows provides information about changes in
cash and cash equivalents. All short-term marketable securities, with original
maturities of three months or less, that are readily convertible to known
amounts of cash and are so near maturity that they present insignificant risk of
changes in value because of changes in interest rates, are classified as cash
equivalents.
Cash payments for interest were: 1998 - $581 million, 1997 - $613 million
and 1996 - $669 million. Cash payments for income taxes were: 1998 - $2,718
million, 1997 - $3,943 million and 1996 - $3,420 million.
6. Leased Facilities
At December 31, 1998, the corporation and its consolidated subsidiaries held
non-cancelable operating charters and leases covering drilling equipment,
tankers, service stations and other properties with minimum lease commitments as
indicated in the table.
Net rental expenditures for 1998, 1997 and 1996 totaled $1,640 million,
$1,595 million and $1,284 million, respectively, after being reduced by related
rental income of $199 million, $182 million and $133 million, respectively.
Minimum rental expenditures totaled $1,748 million in 1998, $1,692 million in
1997 and $1,330 million in 1996.
- - --------------------------------------------------------------------------------
Minimum Related
commitment rental income
- - --------------------------------------------------------------------------------
(millions of dollars)
1999 $ 864 $ 82
2000 713 59
2001 564 38
2002 488 28
2003 373 23
2004 and beyond 1,448 117
F16
<PAGE>
7. Additional Working Capital Data Dec. 31 Dec. 31
1998 1997
- - --------------------------------------------------------------------------------
Notes and accounts receivable (millions of dollars)
Trade, less reserves of $95 million
and $80 million $ 6,616 $ 7,989
Other, less reserves of $13 million
and $21 million 2,896 2,713
----------------------
$ 9,512 $10,702
======================
Notes and loans payable
Bank loans $ 1,069 $ 1,309
Commercial paper 2,489 707
Long-term debt due within one year 496 770
Other 194 116
----------------------
$ 4,248 $ 2,902
======================
Accounts payable and accrued liabilities
Trade payables $ 7,369 $ 8,246
Obligations to equity companies 785 730
Accrued taxes other than income taxes 3,158 3,283
Other 2,513 2,424
----------------------
$13,825 $14,683
======================
On December 31, 1998, unused credit lines for short-term financing totaled
approximately $6.0 billion. Of this total, $4.0 billion supported commercial
paper programs under terms negotiated when drawn. The weighted average interest
rate on short-term borrowings outstanding at December 31, 1998 and 1997 was 4.9
percent and 5.8 percent, respectively.
8. Equity Company Information
The summarized financial information on page F18 includes amounts related to
certain less than majority owned companies and majority owned subsidiaries where
minority shareholders possess the right to participate in significant management
decisions (see note 1). These companies are primarily engaged in natural gas
production and distribution in the Netherlands and Germany, refining and
marketing operations in Japan, power generation in Hong Kong and China and
several chemical operations.
During the fourth quarter of 1998, Exxon de-consolidated the majority owned
power companies in Hong Kong and China. These financial statements reflect the
de-consolidation of these companies retroactive to January 1, 1998. These
affiliates are now accounted for as equity companies, in compliance with the
Financial Accounting Standards Board Emerging Issues Task Force ruling on Issue
No. 96-16, which requires equity company reporting for a majority owned
affiliate when minority shareholders possess the right to participate in
significant management decisions. Exxon's 1998 net income was not affected by
the de-consolidation. Below is a summary of the effect on Exxon's January 1,
1998 consolidated balance sheet related to the de-consolidation of the power
generation companies in Hong Kong and China:
Increase/(Decrease)
- - --------------------------------------------------------------------------------
(millions of dollars)
Net property, plant and equipment $(4,156)
Other assets (174)
Investments and advances 757
--------
Total assets $(3,573)
Short and long-term debt $(2,475)
Other liabilities (586)
Minority interest (512)
--------
Total liabilities $(3,573)
During the third quarter of 1997, Exxon increased ownership in General
Sekiyu K.K. (GSK) from 49.0 percent to 50.1 percent. These financial statements
reflect the consolidation of GSK retroactive to January 1, 1997. GSK was
previously accounted for as an equity company. GSK's balance sheet as of
January 1, 1997, had total assets of $3.9 billion and total liabilities of $3.2
billion, including $0.3 billion of short-term and long-term debt.
F17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1998 1997 1996
----------------------------------------------------------------
Exxon Exxon Exxon
Equity Company Financial Summary Total Share Total Share Total Share
- - ----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Total revenues
Percent of revenues from companies included in the Exxon
consolidation was 18% in 1998, 20% in 1997 and 16% in 1996 $ 27,310 $ 8,527 $ 29,639 $ 8,740 $ 33,719 $ 10,901
----------------------------------------------------------------
Income before income taxes $ 3,315 $ 1,654 $ 3,096 $ 1,475 $ 3,852 $ 1,831
Less: Related income taxes (834) (422) (1,103) (499) (1,229) (576)
----------------------------------------------------------------
Net income $ 2,481 $ 1,232 $ 1,993 $ 976 $ 2,623 $ 1,255
================================================================
Current assets $ 6,917 $ 2,159 $ 6,618 $ 2,030 $ 9,231 $ 3,097
Property, plant and equipment, less accumulated depreciation 17,874 7,662 12,619 4,704 15,586 5,987
Other long-term assets 2,795 1,047 2,818 1,028 3,695 1,400
----------------------------------------------------------------
Total assets $ 27,586 $ 10,868 $ 22,055 $ 7,762 $ 28,512 $ 10,484
----------------------------------------------------------------
Short-term debt $ 1,710 $ 570 $ 1,256 $ 363 $ 1,661 $ 541
Other current liabilities 5,790 1,866 5,481 1,760 8,736 3,111
Long-term debt 4,138 1,801 2,163 580 2,857 918
Other long-term liabilities 4,396 1,897 3,556 1,497 4,319 1,820
Advances from shareholders 3,734 1,976 2,139 1,105 1,006 469
----------------------------------------------------------------
Net assets $ 7,818 $ 2,758 $ 7,460 $ 2,457 $ 9,933 $ 3,625
================================================================
<CAPTION>
9. Investments and Advances Dec. 31 Dec. 31
1998 1997
- - --------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C>
Companies carried at equity in underlying assets
Investments $2,758 $2,457
Advances 1,976 1,105
--------------------------
$4,734 $3,562
Companies carried at cost or less 184 193
--------------------------
$4,918 $3,755
Long-term receivables and miscellaneous investments at cost or less 1,516 1,450
--------------------------
Total $6,434 $5,205
==========================
<CAPTION>
10. Investment in Property, Plant and Equipment Dec. 31, 1998 Dec. 31, 1997
--------------------------------------------------------------------
Cost Net Cost Net
- - ------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C>
Petroleum and natural gas
Exploration and production $ 71,415 $ 32,481 $ 69,106 $ 31,715
Refining and marketing 34,869 19,386 32,663 18,269
--------------------------------------------------------------------
Total petroleum and natural gas $106,284 $ 51,867 $101,769 $ 49,984
Chemicals 12,340 7,019 11,336 6,144
Other 9,624 6,313 14,673 10,286
--------------------------------------------------------------------
Total $128,248 $ 65,199 $127,778 $ 66,414
====================================================================
</TABLE>
Accumulated depreciation and depletion totaled $63,049 million at the end of
1998 and $61,364 million at the end of 1997. Interest capitalized in 1998, 1997
and 1996 was $471 million, $494 million and $520 million, respectively.
F18
<PAGE>
11. Capital
On March 14, 1997, authorized common stock was increased from two billion shares
without par value to three billion shares without par value and the issued
shares were split on a two-for-one basis. Prior to the common share split, 321
million shares (pre-split basis) of common stock held by the corporation as
treasury shares were cancelled and returned to the status of authorized but
unissued shares. Accordingly, the restated number of common stock shares issued
(on a post-split basis) at December 31, 1996 is not meaningful. All common stock
data and per share amounts presented in this report have been adjusted for the
stock split.
In 1989, the corporation sold 16.3 million shares of a new issue of
convertible Class A Preferred Stock to its leveraged employee stock ownership
plan (LESOP) trust for $61.50 per share. The proceeds of the issuance were used
by the corporation for general corporate purposes. The corporation recorded a
"Guaranteed LESOP Obligation" of $1,000 million as debt and as a reduction in
shareholders' equity, representing company-guaranteed borrowings by the LESOP
trust to purchase the preferred stock. As the debt is repaid, the Guaranteed
LESOP Obligation will be extinguished. After adjusting for the 1997 common stock
split, if the common share price exceeds $30.75, one share of preferred stock is
convertible into two shares of common stock. If the price is $30.75 or less, one
share of preferred is convertible into common shares having a value of $61.50.
Dividends are cumulative and payable in an amount per share equal to $4.680 per
annum. Dividends paid per preferred share were $4.680 in 1998, 1997 and 1996.
Preferred dividends of $10 million, $17 million and $27 million were paid during
1998, 1997 and 1996, respectively.
After adjusting for the 1997 common stock split, dividends paid per
common share were $1.640 in 1998, $1.625 in 1997 and $1.560 in 1996.
The table below summarizes the earnings per share calculations.
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------
<S> <C> <C> <C>
Net income per common share
- - ---------------------------
Income before cumulative effect of accounting change (millions of dollars) $ 6,440 $ 8,460 $ 7,510
Less: Preferred stock dividends (10) (17) (27)
------------------------------------------
Income available to common shares $ 6,430 $ 8,443 $ 7,483
==========================================
Weighted average number of common shares outstanding (millions of shares) 2,440 2,473 2,484
Net income per common share
Before cumulative effect of accounting change $ 2.64 $ 3.41 $ 3.01
Cumulative effect of accounting change (0.03) -- --
------------------------------------------
Net income $ 2.61 $ 3.41 $ 3.01
==========================================
Net income per common share - assuming dilution
- - -----------------------------------------------
Income before cumulative effect of accounting change (millions of dollars) $ 6,440 $ 8,460 $ 7,510
Weighted average number of common shares outstanding (millions of shares) 2,440 2,473 2,484
Plus: Issued on assumed exercise of stock options 25 26 18
Plus: Assumed conversion of preferred stock 3 6 10
------------------------------------------
Weighted average number of common shares outstanding 2,468 2,505 2,512
==========================================
Net income per common share
Before cumulative effect of accounting change $ 2.61 $ 3.37 $ 2.99
Cumulative effect of accounting change (0.03) -- --
------------------------------------------
Net income $ 2.58 $ 3.37 $ 2.99
==========================================
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12. Leveraged Employee Stock Ownership Plan (LESOP)
In 1989, the corporation's employee stock ownership plan trust borrowed $1,000
million under the terms of notes guaranteed by the corporation maturing between
1990 and 1999. The principal due on the notes increases from $75 million in 1990
to $125 million in 1999. As further described in note 11, the LESOP trust used
the proceeds of the borrowing to purchase shares of convertible Class A
Preferred Stock.
Employees eligible to participate in the corporation's thrift plan may
elect to participate in the LESOP. Corporation contributions to the plan, plus
dividends, are used to make principal and interest payments on the notes. As
contributions and dividends are credited, shares of preferred stock are
proportionately converted into common stock, with no cash flow impact to the
corporation, and allocated to participants' accounts. In 1998, 1997 and 1996,
1.4 million, 1.8 million and 2.5 million shares of preferred stock totaling $85
million, $113 million and $151 million, respectively, were converted to common
stock. Preferred dividends of $10 million, $17 million and $27 million were paid
during 1998, 1997 and 1996, respectively, and covered interest payments on the
notes. The 1998, 1997 and 1996 principal payments were made from employer
contributions, dividends reinvested within the LESOP trust and proceeds from the
sale of common stock received upon conversion of preferred shares.
Accounting for the plan follows the principles which were in effect in
1989 when the plan was established. The amount of plan related compensation
expense recorded by the corporation during the periods was immaterial. The LESOP
trust held 1.7 million and 3.1 million shares of preferred stock and 39.2
million and 40.0 million shares of common stock at the end of 1998 and 1997,
respectively.
F19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Interest Rate Swap, Currency Exchange and Commodity Contracts
The corporation limits its use of financial derivative instruments to simple
risk management activities. The corporation does not hold or issue financial
derivative instruments for trading purposes nor does it use financial
derivatives with leveraged features. Derivative instruments are matched to
existing assets, liabilities or transactions with the objective of mitigating
the impact of adverse movements in interest rates, currency exchange rates or
commodity prices. These instruments normally equal the amount of the underlying
assets, liabilities or transactions and are held to maturity. Instruments are
either traded over authorized exchanges or with counterparties of high credit
standing. As a result of the above factors, the corporation's exposure to market
and credit risks from financial derivative instruments is considered to be
negligible.
Interest rate swap agreements are used to adjust the ratio of fixed and
floating rates in the corporation's debt portfolio. Interest rate swap
agreements had an aggregate notional principal amount of $126 million and $100
million at year-end 1998 and 1997, respectively, nearly all maturing in 1999.
Currency exchange contracts are used to reduce the risk of adverse foreign
currency movements related to certain foreign currency debt obligations.
Currency exchange contracts, maturing no later than 2005, totaled $783 million
at year-end 1998 and $1,140 million at year-end 1997. These amounts included
contracts in which affiliates held positions which were effectively offsetting
totaling $548 million in 1998 and $544 million in 1997. Excluding these, the
remaining currency exchange contracts totaled $235 million and $596 million at
year-end 1998 and 1997, respectively.
The corporation makes very limited use of commodity swap and futures
contracts of short duration to mitigate the risk of unfavorable price movements
on certain crude, natural gas and petroleum product purchases and sales. The
aggregate notional amount for these contracts at year-end 1998 and 1997 was not
material.
14. Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate. Long-term debt is the
only category of financial instruments whose fair value differs materially from
the recorded book value. The estimated fair value of total long-term debt,
including capitalized lease obligations, at December 31, 1998 and 1997 was $5.4
billion and $7.9 billion, respectively, as compared to recorded book values of
$4.5 billion and $7.1 billion.
15. Long-Term Debt
At December 31, 1998, long-term debt consisted of $4,278 million due in U.S.
dollars and $252 million representing the U.S. dollar equivalent at year-end
exchange rates of amounts payable in foreign currencies. These amounts exclude
that portion of long-term debt, totaling $496 million, which matures within one
year and is included in current liabilities. The amounts of long-term debt
maturing, together with sinking fund payments required, in each of the four
years after December 31, 1999, in millions of dollars, are: 2000 - $207, 2001
- - - $497, 2002 - $75 and 2003 - $35. Certain of the borrowings described may
from time to time be assigned to other Exxon affiliates. At December 31, 1998,
the corporation's unused long-term credit lines were not material.
The total outstanding balance of defeased debt at year-end 1998 was $718
million.
Summarized long-term borrowings at year-end 1998 and 1997 were as follows:
1998 1997
- - --------------------------------------------------------------------------------
(millions of dollars)
Exxon Corporation
7.45% Guaranteed notes due 2001(1) $ 246 $ 246
Guaranteed zero coupon notes due 2004(1)
- Face value ($1,146) net of
unamortized discount 601 538
Exxon Capital Corporation
6.0% Guaranteed notes due 2005 246 246
6.125% Guaranteed notes due 2008 250 250
SeaRiver Maritime Financial Holdings, Inc.
Guaranteed debt securities due 2000-2011(2) 129 143
Guaranteed deferred interest
debentures due 2012
- Face value ($771) net of
unamortized discount 653 586
Exxon Energy Limited(3)
8.3% Hong Kong dollar loan due 2000-2008 -- 144
7.16% Export credit loans due 2000-2012 -- 856
Floating rate term loan due 2000-2006 -- 591
6.87% notes due 2003 -- 173
Other obligations -- 362
Imperial Oil Limited
9.875% Canadian dollar notes due 1999 -- 171
8.3% notes due 2001 200 200
Variable rate notes due 2004(4) 600 600
8.75% notes due 2019 220 219
Industrial revenue bonds due 2012-2033(5) 960 951
Guaranteed LESOP notes due 1999 -- 125
Other U.S. dollar obligations 173 352
Other foreign currency obligations 195 225
Capitalized lease obligations(6) 57 72
--------------------
Total long-term debt $4,530 $7,050
====================
1. Notes transferred from Exxon Capital Corporation to Exxon Corporation in
1998.
2. Average effective interest rate of 5.5% in 1998 and 5.5% in 1997.
3. Reflects de-consolidation of majority owned power companies in Hong Kong
and China (see note 8).
4. Average effective interest rate of 5.5% in 1998 and 5.5% in 1997.
5. Average effective interest rate of 4.1% in 1998 and 4.5% in 1997.
6. Average imputed interest rate of 7.1% in 1998 and 7.4% in 1997.
F20
<PAGE>
16. Incentive Program
The 1993 Incentive Program provides for grants of stock options, stock
appreciation rights (SARs), restricted stock and other forms of award. Awards
may be granted over the 10-year period ending April 28, 2003 to eligible
employees of the corporation and those affiliates at least 50 percent owned. The
number of shares of stock which may be awarded each year under the 1993
Incentive Program may not exceed seven tenths of one percent (0.7%) of the total
number of shares of common stock of the corporation outstanding (excluding
shares held by the corporation) on December 31 of the preceding year. If the
total number of shares effectively granted in any year is less than the maximum
number of shares allowable, the balance may be carried over thereafter.
Outstanding awards are subject to certain forfeiture provisions contained in the
program or award instrument.
As under earlier programs, options and SARs may be granted at prices
not less than 100 percent of market value on the date of grant and have a
maximum life of 10 years. Most of the options and SARs thus far granted first
become exercisable after one year of continuous employment following the date of
grant.
Shares available for granting were 27,337 thousand at the beginning
of 1998 and 34,900 thousand at the end of 1998. At December 31, 1998 and 1997,
respectively, 777 thousand and 613 thousand shares of restricted common stock
were outstanding.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," was implemented in January 1996. As permitted by the
Standard, Exxon retained its prior method of accounting for stock compensation.
If the provisions of Statement No. 123 had been adopted, net income and earnings
per share (on both a basic and diluted basis) would have been reduced by $101
million, or $0.04 per share in 1998; $76 million, or $0.03 per share in 1997 and
$53 million, or $0.02 per share in 1996. The average fair value of each option
granted during 1998, 1997 and 1996 was $12.80, $11.36 and $7.43, respectively.
The fair value was estimated at the grant date using an option-pricing model
with the following weighted average assumptions for 1998, 1997 and 1996,
respectively: risk-free interest rates of 4.8 percent, 5.8 percent and 6.1
percent; expected life of 6 years for all years; volatility of 13 percent, 12
percent and 12 percent and a dividend yield of 2.3 percent, 2.7 percent and 3.4
percent.
Changes that occurred in options outstanding in 1998, 1997 and 1996 are
summarized below (shares in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------------------------------------------------------------
Avg. Exercise Avg. Exercise Avg. Exercise
Shares Price Shares Price Shares Price
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 72,440 $38.48 73,897 $33.20 75,510 $29.70
Granted 10,785 72.38 11,019 61.41 11,968 47.06
Exercised (13,024) 29.74 (12,153) 26.95 (13,295) 25.69
Expired/Canceled (302) 58.61 (323) 46.61 (286) 37.63
------- ------- -------
Outstanding at end of year 69,899 45.25 72,440 38.48 73,897 33.20
Exercisable at end of year 58,425 40.12 61,179 34.32 61,939 30.53
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1998 (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- - ------------------------------------------------------------------- -------------------------
Exercise Price Avg. Remaining Avg. Exercise Avg. Exercise
Range Shares Contractual Life Price Shares Price
- - ------------------------------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
$23.63-31.78 27,559 4.3 years $29.71 27,559 $29.71
39.47-47.06 20,834 7.4 43.47 20,597 43.42
61.41-72.38 21,506 9.4 66.90 10,269 61.41
------ ------
Total 69,899 6.8 45.25 58,425 40.12
</TABLE>
<TABLE>
<CAPTION>
17. Annuity Benefits and Other Postretirement Benefits
Annuity Benefits
- - ---------------------------------------------------------------------------------------------------- Other Postretirement
U.S. Non-U.S. Benefits
-------------------------- --------------------------- --------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
--------------------------------------------------------------------------------------
Components of net benefit cost (millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost $ 148 $ 137 $ 147 $ 182 $ 176 $ 162 $ 26 $ 28 $ 28
Interest cost 361 364 361 482 515 523 135 136 130
Expected return on plan assets (358) (351) (351) (467) (445) (412) (41) (35) (36)
Amortization of actuarial loss/(gain)
and prior service cost (11) (23) 13 83 82 40 13 10 15
Net pension enhancement and
curtailment/settlement expense 1 (6) 6 (1) (11) 17 -- -- --
--------------------------------------------------------------------------------------
Net benefit cost $ 141 $ 121 $ 176 $ 279 $ 317 $ 330 $ 133 $ 139 $ 137
======================================================================================
</TABLE>
Costs for defined contribution plans were $54 million, $58 million and $100
million in 1998, 1997 and 1996, respectively.
F21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Annuity Benefits
------------------------------------------ Other Postretirement
U.S. Non-U.S. Benefits
------------------- ------------------- --------------------
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------
Change in benefit obligation (millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Benefit obligation at January 1 $ 5,396 $ 5,077 $ 7,853 $ 7,470 $ 2,052 $ 1,879
Service cost 148 137 182 176 26 28
Interest cost 361 364 482 515 135 136
Actuarial loss/(gain) 204 291 871 466 2 144
Benefits paid (528) (493) (502) (557) (152) (135)
Foreign exchange rate changes -- -- 131 (642) (18) (11)
Other 30 20 107 425 12 11
-----------------------------------------------------------------
Benefit obligation at December 31 $ 5,611 $ 5,396 $ 9,124 $ 7,853 $ 2,057 $ 2,052
=================================================================
Change in plan assets
Fair value at January 1 $ 4,016 $ 3,815 $ 5,367 $ 5,025 $ 447 $ 422
Actual return on plan assets 651 646 682 769 117 88
Foreign exchange rate changes -- -- (4) (363) -- --
Payments directly to participants 75 62 141 184 110 97
Company contribution -- -- 193 152 34 32
Benefits paid (528) (493) (502) (557) (152) (135)
Other -- (14) 7 157 (44) (57)
-----------------------------------------------------------------
Fair value at December 31 $ 4,214 $ 4,016 $ 5,884 $ 5,367 $ 512 $ 447
=================================================================
Assets in excess of/(less than) benefit obligation
Balance at December 31 $(1,397) $(1,380) $(3,240) $(2,486) $(1,545) $(1,605)
Unrecognized net transition liability/(asset) (87) (136) 22 26 -- --
Unrecognized net actuarial loss/(gain) (19) 66 1,076 361 135 219
Unrecognized prior service cost 71 84 325 145 18 20
Intangible asset (14) -- (49) -- -- --
Equity of minority shareholders -- -- (55) -- -- --
Minimum pension liability adjustment (68) -- (495) -- -- --
-----------------------------------------------------------------
Prepaid/(accrued) benefit cost $(1,514) $(1,366) $(2,416) $(1,954) $(1,392) $(1,366)
=================================================================
Annuity assets and reserves in excess of accumulated benefit
obligation $ 889 $ 689 $ 347 $ 495
Assumptions as of December 31 (percent)
-----------------------------------------------------------------
Discount rate 6.75 7.00 2.7-8.3 4.0-8.5 6.75 7.00
Long-term rate of compensation increase 3.50 3.50 2.3-6.5 2.5-8.5 3.50 3.50
Long-term rate of return on funded assets 9.50 9.75 5.0-10.0 5.0-10.0 9.50 9.75
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The data shown above is reported as required by current accounting standards
which specify use of a discount rate at which postretirement liabilities could
be effectively settled. The discount rate stipulated for use in calculating
year-end postretirement liabilities is based on the year-end rate of interest on
high quality bonds. For determining the funding requirements of U.S. annuity
plans in accordance with applicable federal government regulations, Exxon uses
the expected long-term rate of return of the annuity fund's actual portfolio as
the discount rate. This rate has historically been higher than bonds as the
majority of pension assets are invested in equities. In fact, the actual rate
earned over the past decade has been 13 percent. On this basis, all funded U.S.
plans meet the full funding requirements of the Department of Labor and the
Internal Revenue Service as detailed in the table below. Certain smaller U.S.
plans and a number of non-U.S. plans are not funded because of local tax
conventions and regulatory practices which do not encourage funding of these
plans. Book reserves have been established for these plans to provide for future
benefit payments.
<TABLE>
<CAPTION>
Status of U.S. annuity plans subject to federal government funding requirements 1998 1997
- - -------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C>
Funded assets at market value less total projected benefit obligation $(1,397) $(1,380)
Differences between accounting and funding basis:
Certain smaller plans unfunded due to lack of tax and regulatory incentives 553 512
Use of long-term rate of return on fund assets as the discount rate 1,229 1,062
Use of government required assumptions and other actuarial adjustments 118 127
-----------------------
Funded assets in excess of obligations under government regulations $ 503 $ 321
</TABLE>
F22
<PAGE>
18. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various courts
against Exxon Corporation and certain of its subsidiaries relating to the
accidental release of crude oil from the tanker Exxon Valdez in 1989.
Essentially all of these lawsuits have now been resolved or are subject to
appeal.
On September 24, 1996, the United States District Court for the
District of Alaska entered a judgment in the amount of $5.058 billion in the
Exxon Valdez civil trial that began in May 1994. The District Court awarded
approximately $19.6 million in compensatory damages to fisher plaintiffs, $38
million in prejudgment interest on the compensatory damages and $5 billion in
punitive damages to a class composed of all persons and entities who asserted
claims for punitive damages from the corporation as a result of the Exxon Valdez
grounding. The District Court also ordered that these awards shall bear interest
from and after entry of the judgment. The District Court stayed execution on the
judgment pending appeal based on a $6.75 billion letter of credit posted by the
corporation. Exxon has appealed the judgment. Exxon has also appealed the
District Court's denial of its renewed motion for a new trial. The corporation
continues to believe that the punitive damages in this case are unwarranted and
that the judgment should be set aside or substantially reduced by the appellate
courts.
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between Exxon and various insurers arising from the Valdez
accident. Under terms of this settlement, Exxon received $480 million. Final
income statement recognition of this settlement continues to be deferred in view
of uncertainty regarding the ultimate cost to the corporation of the Valdez
accident.
The ultimate cost to the corporation from the lawsuits arising from the
Exxon Valdez grounding is not possible to predict and may not be resolved for a
number of years.
In each of the years 1998, 1997 and 1996, $70 million in payments were
made under the October 8, 1991 civil agreement and consent decree with the U.S.
and Alaska governments. These payments were charged against the provision that
was previously established to cover the costs of the settlement.
German and Dutch affiliated companies are the concessionaires of a
natural gas field subject to a treaty between the governments of Germany and the
Netherlands under which the gas reserves in an undefined border or common area
are to be shared equally. Entitlement to the reserves is determined by
calculating the amount of gas which can be recovered from this area. Based on
the final reserve determination, the German affiliate has received more gas than
its entitlement. Arbitration proceedings, as provided in the agreements, have
been underway to determine the manner of resolving the issues between the German
and Dutch affiliated companies.
On July 8, 1996, an interim ruling was issued establishing a
provisional compensation payment for the excess gas received. Additional
compensation, if any, remains subject to further arbitration proceedings or
negotiation. Other substantive matters remain outstanding, including recovery of
royalties paid on such excess gas and the taxes payable on the final
compensation amount. The net financial impact on the corporation is not possible
to predict at this time given these outstanding issues. However, the ultimate
outcome is not expected to have a materially adverse effect upon the
corporation's 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 1979-1988 remain pending before the Tax Court. The ultimate resolution of
these issues is not expected to have a materially adverse effect upon the
corporation's operations or financial condition.
Claims for substantial amounts have been made against Exxon and certain
of its consolidated subsidiaries in other pending lawsuits, the outcome of which
is not expected to have a materially adverse effect upon the corporation's
operations or financial condition.
The corporation and certain of its consolidated subsidiaries were
contingently liable at December 31, 1998, for $1,336 million, primarily relating
to guarantees for notes, loans and performance under contracts. This includes
$963 million representing guarantees of non-U.S. excise taxes and customs duties
of other companies, entered into as a normal business practice, under reciprocal
arrangements. Not included in this figure are guarantees by consolidated
affiliates of $947 million, representing Exxon's share of obligations of certain
equity companies.
Additionally, the corporation and its affiliates have numerous
long-term sales and purchase commitments in their various business activities,
all of which are expected to be fulfilled with no adverse consequences material
to the corporation's operations or financial condition.
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from time to
time in varying degree by political developments and laws and regulations, such
as forced divestiture of assets; restrictions on production, imports and
exports; price controls; tax increases and retroactive tax claims; expropriation
of property; cancellation of contract rights and environmental regulations. Both
the likelihood of such occurrences and their overall effect upon the corporation
vary greatly from country to country and are not predictable.
F23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Disclosures about Segments and Related Information
The functional segmentation of operations reflected below is consistent with
Exxon's internal reporting. Earnings are before the cumulative effect of
accounting changes. Transfers are at estimated market prices. The interest
revenue amount relates to interest earned on cash deposits and marketable
securities. Interest expense includes non-debt related interest expense of $74
million, $111 million and $93 million in 1998, 1997 and 1996, respectively. All
Other includes smaller operating segments and corporate and financing
activities.
<TABLE>
<CAPTION>
Exploration Refining
& Production & Marketing Chemicals
------------------ ----------------- --------------- All Corporate
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Other Total
---------------------------------------------------------------------------------------
(millions of dollars) <C> <C>
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1998
Earnings after income tax $ 839 $ 1,869 $ 625 $ 1,833 $ 722 $ 491 $ 61 $ 6,440
Earnings of equity companies
included above -- 959 26 21 7 27 192 1,232
Sales and other operating revenue 2,239 6,596 15,778 79,438 4,605 5,899 862 115,417
Intersegment revenue 2,408 2,629 1,438 1,970 1,725 760 135 --
Depreciation and depletion expense 1,077 2,049 287 1,031 296 239 361 5,340
Interest revenue -- -- -- -- -- -- 151 151
Interest expense -- -- -- -- -- -- 100 100
Income taxes 501 456 360 1,023 323 157 (204) 2,616
Additions to property, plant
and equipment 1,442 2,998 663 1,272 384 1,039 561 8,359
Investments in equity companies -- 835 -- 820 365 691 47 2,758
Total assets 13,987 23,539 6,493 27,259 5,450 6,502 9,400 92,630
=======================================================================================
As of December 31, 1997
Earnings after income tax $ 1,634 $ 3,059 $ 593 $ 1,470 $ 825 $ 543 $ 336 $ 8,460
Earnings of equity companies
included above 3 964 19 33 12 52 (107) 976
Sales and other operating revenue 2,650 8,222 19,995 89,777 5,396 6,799 2,303 135,142
Intersegment revenue 3,960 4,211 1,827 2,404 2,145 833 163 --
Depreciation and depletion expense 1,113 1,984 259 1,083 268 188 579 5,474
Interest revenue -- -- -- -- -- -- 324 324
Interest expense -- -- -- -- -- -- 415 415
Income taxes 972 1,620 333 786 409 330 (112) 4,338
Additions to property, plant
and equipment 1,341 2,551 579 1,256 357 471 838 7,393
Investments in equity companies 3 782 2 823 217 600 30 2,457
Total assets 13,752 22,911 6,349 26,242 5,403 5,426 15,981 96,064
=======================================================================================
As of December 31, 1996
Earnings after income tax $ 1,781 $ 3,277 $ 169 $ 716 $ 701 $ 498 $ 368 $ 7,510
Earnings of equity companies
included above 3 1,104 22 47 26 117 (64) 1,255
Sales and other operating revenue 2,532 8,725 20,012 86,743 4,969 6,461 2,101 131,543
Intersegment revenue 4,486 4,714 1,641 2,174 1,969 810 177 --
Depreciation and depletion expense 1,174 1,928 268 1,024 250 180 505 5,329
Interest revenue -- -- -- -- -- -- 226 226
Interest expense -- -- -- -- -- -- 464 464
Income taxes 1,055 2,116 90 474 335 257 79 4,406
Additions to property, plant
and equipment 927 2,576 472 1,263 731 256 984 7,209
Investments in equity companies 4 1,040 11 1,547 207 782 34 3,625
Total assets 13,740 23,757 6,221 26,317 5,200 5,515 14,777 95,527
=======================================================================================
</TABLE>
F24
<PAGE>
Geographic
Sales and other operating revenue 1998 1997 1996
- - -------------------------------------------------------------------------------
(millions of dollars)
United States $ 22,739 $ 28,148 $ 27,656
Non-U.S 92,678 106,994 103,887
----------------------------------------
Total $115,417 $135,142 $131,543
Significant non-U.S. revenue sources include:
United Kingdom $14,375 $ 14,834 $ 13,926
Germany 12,017 13,672 15,323
Japan 10,999 12,954 8,044
Italy 10,411 10,565 10,780
Canada 8,886 11,192 11,171
Long-lived assets 1998 1997 1996
- - -------------------------------------------------------------------------------
(millions of dollars)
United States $25,105 $ 24,454 $ 23,939
Non-U.S. 40,094 41,960 42,668
---------------------------------------
Total $65,199 $ 66,414 $ 66,607
Significant non-U.S. long-lived assets include:
United Kingdom $ 9,382 $ 9,155 $ 9,373
Canada 5,000 5,527 6,320
20. Income, Excise and Other Taxes
<TABLE>
<CAPTION>
1998 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------------
United Non- United Non- United Non-
States U.S. Total States U.S. Total States U.S. Total
------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income taxes
Federal or non-U.S.
Current $ 451 $ 1,632 $ 2,083 $ 1,199 $ 2,365 $ 3,564 $ 988 $ 2,751 $ 3,739
Deferred - net 330 72 402 163 429 592 314 164 478
U.S. tax on non-U.S. operations 16 -- 16 20 -- 20 47 -- 47
------------------------------------------------------------------------------------
$ 797 $ 1,704 $ 2,501 $ 1,382 $ 2,794 $ 4,176 $ 1,349 $ 2,915 $ 4,264
State 115 -- 115 162 -- 162 142 -- 142
------------------------------------------------------------------------------------
Total income taxes $ 912 $ 1,704 $ 2,616 $ 1,544 $ 2,794 $ 4,338 $ 1,491 $ 2,915 $ 4,406
Excise taxes 2,747 11,973 14,720 2,605 12,258 14,863 2,494 12,321 14,815
All other taxes and duties 638 23,280 23,918 816 23,855 24,671 853 23,689 24,542
------------------------------------------------------------------------------------
Total $ 4,297 $36,957 $41,254 $ 4,965 $38,907 $43,872 $ 4,838 $38,925 $43,763
------------------------------------------------------------------------------------
</TABLE>
All other taxes and duties include taxes reported in operating and selling,
general and administrative expenses. The above provisions for deferred income
taxes include net credits for the effect of changes in tax laws and rates of
$107 million in 1998, $147 million in 1997 and $26 million in 1996. Income taxes
(charged)/credited directly to shareholders' equity were: $(15) million in 1998,
$234 million in 1997 and $(87) million in 1996 for the cumulative foreign
exchange translation adjustment; $281 million in 1998 for the minimum pension
liability adjustment; and $88 million, $67 million and $9 million in 1998, 1997
and 1996, respectively, for other components of shareholders' equity.
The reconciliation between income tax expense and a theoretical U.S.
tax computed by applying a rate of 35 percent for 1998, 1997 and 1996, is as
follows:
1998 1997 1996
- - --------------------------------------------------------------------------
(millions of dollars)
Earnings before Federal and
non-U.S. income taxes
United States $ 2,506 $ 4,413 $ 3,706
Non-U.S 6,435 8,223 8,068
-----------------------------------
Total $ 8,941 $ 12,636 $ 11,774
-----------------------------------
Theoretical tax $ 3,129 $ 4,423 $ 4,121
Effect of equity method accounting (431) (342) (439)
Non-U.S. taxes greater/(less) than
theoretical U.S. tax (117) 258 530
U.S. tax on non-U.S. operations 16 20 47
Other U.S. (96) (183) 5
-----------------------------------
Federal and non-U.S. income
tax expense $ 2,501 $ 4,176 $ 4,264
===================================
Total effective tax rate 32.1% 36.4% 39.9%
The effective income tax rate includes state income taxes and the
corporation's share of income taxes of equity companies. Equity company taxes
totaled $422 million in 1998, $499 million in 1997 and $576 million in 1996,
essentially all outside the U.S.
Deferred income taxes reflect the impact of temporary differences
between the amount of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes.
Deferred tax liabilities/(assets) are comprised of the following at
December 31:
Tax effects of temporary differences for: 1998 1997
- - ------------------------------------------------------------------
(millions of dollars)
Depreciation $10,128 $10,324
Intangible development costs 3,022 3,036
Capitalized interest 1,432 1,309
Other liabilities 2,174 2,215
-----------------------
Total deferred tax liabilities $16,756 $16,884
-----------------------
Pension and other postretirement benefits $(1,498) $(1,187)
Site restoration reserves (817) (809)
Tax loss carryforwards (964) (850)
Other assets (673) (1,092)
-----------------------
Total deferred tax assets $(3,952) $(3,938)
-----------------------
Asset valuation allowances 256 296
-----------------------
Net deferred tax liabilities $13,060 $13,242
-----------------------
The corporation had $8.4 billion of indefinitely reinvested, undistributed
earnings from subsidiary companies outside the U.S. Unrecognized deferred taxes
on remittance of these funds are not expected to be material.
F25
<PAGE>
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
<TABLE>
<CAPTION>
Consolidated Subsidiaries
----------------------------------------------------------
Non-
United Consolidated Total
Results of Operations States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 - Revenue
Sales to third parties $1,522 $ 328 $2,374 $1,131 $ 62 $ 5,417 $2,061 $ 7,478
Transfers 1,843 323 1,261 405 79 3,911 29 3,940
-------------------------------------------------------------------------------------
$3,365 $ 651 $3,635 $1,536 $ 141 $ 9,328 $2,090 $11,418
Production costs excluding taxes 946 279 1,158 280 138 2,801 233 3,034
Exploration expenses 190 24 177 118 348 857 69 926
Depreciation and depletion 1,044 282 1,275 481 94 3,176 208 3,384
Taxes other than income 244 26 81 162 -- 513 595 1,108
Related income tax 349 (24) 241 123 (159) 530 399 929
-------------------------------------------------------------------------------------
Results of producing activities $ 592 $ 64 $ 703 $ 372 $ (280) $ 1,451 $ 586 $ 2,037
Other earnings* 248 42 285 26 (3) 598 73 671
-------------------------------------------------------------------------------------
Total earnings $ 840 $ 106 $ 988 $ 398 $ (283) $ 2,049 $ 659 $ 2,708
=====================================================================================
1997 - Revenue
Sales to third parties $1,815 $ 459 $2,742 $1,694 $ 71 $ 6,781 $2,540 $ 9,321
Transfers 3,300 537 1,979 751 112 6,679 51 6,730
-------------------------------------------------------------------------------------
$5,115 $ 996 $4,721 $2,445 $ 183 $13,460 $2,591 $16,051
Production costs excluding taxes 1,044 344 995 341 111 2,835 225 3,060
Exploration expenses 130 23 197 150 247 747 87 834
Depreciation and depletion 1,084 325 1,204 423 90 3,126 211 3,337
Taxes other than income 438 24 91 371 -- 924 866 1,790
Related income tax 888 109 1,011 219 (48) 2,179 512 2,691
-------------------------------------------------------------------------------------
Results of producing activities $1,531 $ 171 $1,223 $ 941 $ (217) $ 3,649 $ 690 $ 4,339
Other earnings* 101 65 104 21 (6) 285 69 354
-------------------------------------------------------------------------------------
Total earnings $1,632 $ 236 $1,327 $ 962 $ (223) $ 3,934 $ 759 $ 4,693
=====================================================================================
1996 - Revenue
Sales to third parties $1,706 $ 443 $2,581 $1,998 $ 119 $ 6,847 $2,974 $ 9,821
Transfers 3,846 682 2,360 736 125 7,749 47 7,796
-------------------------------------------------------------------------------------
$5,552 $1,125 $4,941 $2,734 $ 244 $14,596 $3,021 $17,617
Production costs excluding taxes 1,116 376 1,050 391 70 3,003 250 3,253
Exploration expenses 116 32 224 140 255 767 73 840
Depreciation and depletion 1,139 342 1,130 426 102 3,139 195 3,334
Taxes other than income 476 24 96 477 -- 1,073 1,038 2,111
Related income tax 990 83 1,182 492 (13) 2,734 603 3,337
-------------------------------------------------------------------------------------
Results of producing activities $1,715 $ 268 $1,259 $ 808 $ (170) $ 3,880 $ 862 $ 4,742
Other earnings* 63 51 103 36 5 258 58 316
-------------------------------------------------------------------------------------
Total earnings $1,778 $ 319 $1,362 $ 844 $ (165) $ 4,138 $ 920 $ 5,058
=====================================================================================
Average sales prices and production costs per unit of production
- - -----------------------------------------------------------------------------------------------------------------------------------
During 1998
Average sales prices
Crude oil and NGL, per barrel $ 9.69 $ 7.43 $12.64 $13.24 $11.11 $ 10.97 $12.44 $ 11.03
Natural gas, per thousand cubic feet 2.03 1.34 2.68 1.09 -- 1.99 3.11 2.28
Average production costs, per barrel** 3.05 3.24 4.41 1.91 10.82 3.42 1.96 3.24
During 1997
Average sales prices
Crude oil and NGL, per barrel $15.82 $12.29 $19.14 $21.08 $18.06 $ 17.32 $19.20 $ 17.39
Natural gas, per thousand cubic feet 2.43 1.88 3.13 1.39 -- 2.37 3.46 2.67
Average production costs, per barrel** 3.17 4.19 3.98 2.21 10.87 3.43 1.78 3.21
During 1996
Average sales prices
Crude oil and NGL, per barrel $17.24 $16.38 $19.93 $21.04 $20.50 $ 18.69 $20.36 $ 18.75
Natural gas, per thousand cubic feet 2.35 1.48 2.83 2.52 -- 2.49 3.48 2.80
Average production costs, per barrel** 3.26 5.08 4.07 2.68 5.83 3.61 1.72 3.33
</TABLE>
* Includes earnings from transportation operations, oil sands operations,
technical services agreements, other non-operating activities and
adjustments for minority interests.
** Production costs exclude depreciation and depletion and all taxes. Natural
gas included by conversion to crude oil equivalent.
F26
<PAGE>
Oil and Gas Exploration and Production Costs
The amounts shown for net capitalized costs of consolidated subsidiaries are
$3,285 million less at year-end 1998 and $3,208 million less at year-end 1997
than the amounts reported as investments in property, plant and equipment for
exploration and production in note 10. This is due to the exclusion from
capitalized costs of certain transportation and research assets and assets
relating to the oil sands operations, and to the inclusion of accumulated
provisions for site restoration costs, all as required in Statement of Financial
Accounting Standards No. 19.
The amounts reported as costs incurred include both capitalized costs
and costs charged to expense during the year. Total worldwide costs incurred in
1998 were $5,451 million, up $579 million from 1997, due primarily to higher
development costs. 1997 costs were $4,872 million, up $429 million from 1996,
due primarily to higher development costs.
<TABLE>
<CAPTION>
Consolidated Subsidiaries
--------------------------------------------------------------
Non-
United Consolidated Total
Capitalized costs States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1998
Property (acreage) costs - Proved $ 3,096 $ 2,232 $ 86 $ 535 $ 816 $ 6,765 $ 14 $ 6,779
- Unproved 404 76 29 141 250 900 13 913
----------------------------------------------------------------------------------------
Total property costs $ 3,500 $ 2,308 $ 115 $ 676 $ 1,066 $ 7,665 $ 27 $ 7,692
Producing assets 23,719 2,798 19,786 7,560 826 54,689 2,622 57,311
Support facilities 369 75 495 856 65 1,860 111 1,971
Incomplete construction 1,150 117 2,469 547 519 4,802 298 5,100
----------------------------------------------------------------------------------------
Total capitalized costs $28,738 $ 5,298 $22,865 $ 9,639 $ 2,476 $69,016 $ 3,058 $72,074
Accumulated depreciation and depletion 17,241 2,810 12,510 5,954 1,305 39,820 2,311 42,131
----------------------------------------------------------------------------------------
Net capitalized costs $11,497 $ 2,488 $10,355 $ 3,685 $ 1,171 $29,196 $ 747 $29,943
========================================================================================
As of December 31, 1997
Property (acreage) costs - Proved $ 3,109 $ 2,441 $ 85 $ 557 $ 828 $ 7,020 $ 16 $ 7,036
- Unproved 390 96 26 163 114 789 13 802
----------------------------------------------------------------------------------------
Total property costs $ 3,499 $ 2,537 $ 111 $ 720 $ 942 $ 7,809 $ 29 $ 7,838
Producing assets 23,218 2,915 19,345 7,229 753 53,460 2,240 55,700
Support facilities 328 78 469 865 46 1,786 113 1,899
Incomplete construction 589 86 1,968 609 359 3,611 308 3,919
----------------------------------------------------------------------------------------
Total capitalized costs $27,634 $ 5,616 $21,893 $ 9,423 $ 2,100 $66,666 $ 2,690 $69,356
Accumulated depreciation and depletion 16,391 2,803 12,181 5,568 1,216 38,159 2,060 40,219
----------------------------------------------------------------------------------------
Net capitalized costs $11,243 $ 2,813 $ 9,712 $ 3,855 $ 884 $28,507 $ 630 $29,137
========================================================================================
Costs incurred in property acquisitions, exploration and development activities
- - ------------------------------------------------------------------------------------------------------------------------------
During 1998
Property acquisition costs - Proved $ 1 $ 2 $ -- $ 1 $ -- $ 4 $ -- $ 4
- Unproved 29 1 3 1 150 184 -- 184
Exploration costs 248 30 255 135 448 1,116 125 1,241
Development costs 1,250 158 1,846 412 156 3,822 200 4,022
-------------------------------------------------------------------------------------
Total $ 1,528 $ 191 $ 2,104 $ 549 $ 754 $ 5,126 $ 325 $ 5,451
=====================================================================================
During 1997
Property acquisition costs - Proved $ 2 $ -- $ -- $ 1 $ 1 $ 4 $ -- $ 4
- Unproved 80 1 -- -- 9 90 -- 90
Exploration costs 231 29 280 160 321 1,021 122 1,143
Development costs 1,112 213 1,504 512 112 3,453 182 3,635
-------------------------------------------------------------------------------------
Total $ 1,425 $ 243 $ 1,784 $ 673 $ 443 $ 4,568 $ 304 $ 4,872
=====================================================================================
During 1996
Property acquisition costs - Proved $ 2 $ 1 $ -- $ 2 $ 81 $ 86 $ -- $ 86
- Unproved 16 3 -- 7 46 72 -- 72
Exploration costs 156 50 258 153 283 900 117 1,017
Development costs 817 165 1,498 563 83 3,126 142 3,268
-------------------------------------------------------------------------------------
Total $ 991 $ 219 $ 1,756 $ 725 $ 493 $ 4,184 $ 259 $ 4,443
=====================================================================================
</TABLE>
F27
<PAGE>
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
Oil and Gas Reserves
The following information describes changes during the years and balances of
proved oil and gas reserves at year-end 1996, 1997 and 1998.
The definitions used are in accordance with applicable Securities and
Exchange Commission regulations.
Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas and natural gas liquids which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions, i.e., prices
and costs as of the date the estimate is made. Prices include consideration of
changes in existing prices provided only by contractual arrangements, but not on
escalations based upon future conditions. In some cases, substantial new
investments in additional wells and related facilities will be required to
recover these proved reserves.
Proved reserves include 100 percent of each majority owned affiliate's
participation in proved reserves and Exxon's ownership percentage of the proved
reserves of equity companies, but exclude royalties and quantities due others.
Gas reserves exclude the gaseous equivalent of liquids expected to be removed
from the gas on leases, at field facilities and at gas processing plants. These
liquids are included in net proved reserves of crude oil and natural gas
liquids.
<TABLE>
<CAPTION>
Consolidated Subsidiaries
----------------------------------------------------------------
Non-
United Consolidated Total
Crude Oil and Natural Gas Liquids States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - ------------------------------------------------------------------------------------------------------------------------------
(millions of barrels)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net proved developed and undeveloped
reserves
January 1, 1996 2,317 1,141 1,486 748 110 5,802 436 6,238
Revisions 139 10 59 83 38 329 3 332
Purchases 2 -- -- -- 50 52 -- 52
Sales (31) (7) -- -- (5) (43) -- (43)
Improved recovery 26 1 9 -- -- 36 -- 36
Extensions and discoveries 53 1 231 13 2 300 -- 300
Production (214) (63) (178) (89) (12) (556) (20) (576)
--------------------------------------------------------------------------------------
December 31, 1996 2,292 1,083 1,607 755 183 5,920 419 6,339
Revisions 190 2 33 45 13 283 2 285
Purchases 1 -- -- -- -- 1 -- 1
Sales (6) (63) (6) -- -- (75) -- (75)
Improved recovery 25 4 2 -- -- 31 -- 31
Extensions and discoveries 79 16 42 21 -- 158 2 160
Production (204) (70) (171) (91) (10) (546) (21) (567)
--------------------------------------------------------------------------------------
December 31, 1997 2,377 972 1,507 730 186 5,772 402 6,174
Revisions 111 (12) 14 34 4 151 (15) 136
Purchases -- -- -- -- -- -- -- --
Sales (3) -- -- -- -- (3) -- (3)
Improved recovery 15 4 9 -- -- 28 -- 28
Extensions and discoveries 24 10 25 24 349 432 1 433
Production (184) (72) (177) (86) (13) (532) (21) (553)
--------------------------------------------------------------------------------------
December 31, 1998 2,340 902 1,378 702 526 5,848 367 6,215
Developed reserves, included above
At December 31, 1996 1,925 512 815 582 44 3,878 396 4,274
At December 31, 1997 2,064 494 802 609 41 4,010 384 4,394
At December 31, 1998 2,033 435 724 609 48 3,849 351 4,200
============================================================================================================================
</TABLE>
F28
<PAGE>
Net proved developed reserves are those volumes which are expected to
be recovered through existing wells with existing equipment and operating
methods. Undeveloped reserves are those volumes which are expected to be
recovered as a result of future investments to drill new wells, to recomplete
existing wells and/or to install facilities to collect and deliver the
production from existing and future wells.
Reserves attributable to certain oil and gas discoveries were not
considered proved as of year-end 1998 due to geological, technological or
economic uncertainties and therefore are not included in the tabulation.
Crude oil and natural gas liquids and natural gas production quantities
shown are the net volumes withdrawn from Exxon's oil and gas reserves. The
natural gas quantities differ from the quantities of gas delivered for sale by
the producing function as reported on page F31 due to volumes consumed or flared
and inventory changes. Such quantities amounted to approximately 236 billion
cubic feet in 1996, 268 billion cubic feet in 1997 and 242 billion cubic feet in
1998.
<TABLE>
<CAPTION>
Consolidated Subsidiaries
----------------------------------------------------------------
Non-
United Consolidated Total
Natural Gas States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - ----------------------------------------------------------------------------------------------------------------------------------
(billions of cubic feet)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net proved developed and undeveloped reserves
January 1, 1996 9,947 2,118 7,553 5,764 102 25,484 16,552 42,036
Revisions 422 (118) 101 107 13 525 196 721
Purchases 4 11 -- -- 13 28 11 39
Sales (36) (76) -- -- (1) (113) (3) (116)
Improved recovery 39 18 5 -- -- 62 -- 62
Extensions and discoveries 615 61 506 53 -- 1,235 166 1,401
Production (841) (142) (525) (380) (8) (1,896) (747) (2,643)
-----------------------------------------------------------------------------------------
December 31, 1996 10,150 1,872 7,640 5,544 119 25,325 16,175 41,500
Revisions (53) (43) (1) 433 -- 336 107 443
Purchases 2 -- -- -- -- 2 -- 2
Sales (27) (122) (6) -- -- (155) -- (155)
Improved recovery (2) 19 17 -- -- 34 -- 34
Extensions and discoveries 450 24 363 1,687 -- 2,524 363 2,887
Production (831) (138) (531) (441) (8) (1,949) (633) (2,582)
-----------------------------------------------------------------------------------------
December 31, 1997 9,689 1,612 7,482 7,223 111 26,117 16,012 42,129
Revisions 922 65 161 386 2 1,536 176 1,712
Purchases -- 2 -- -- -- 2 -- 2
Sales (23) (23) (10) -- -- (56) -- (56)
Improved recovery 1 13 6 -- -- 20 -- 20
Extensions and discoveries 160 221 113 362 111 967 69 1,036
Production (832) (138) (565) (420) (7) (1,962) (587) (2,549)
-----------------------------------------------------------------------------------------
December 31, 1998 9,917 1,752 7,187 7,551 217 26,624 15,670 42,294
Developed reserves, included above
At December 31, 1996 8,216 1,392 4,872 3,995 83 18,558 6,754 25,312
At December 31, 1997 7,625 1,236 5,334 5,191 76 19,462 6,463 25,925
At December 31, 1998 7,812 1,231 5,034 5,424 75 19,576 6,740 26,316
==================================================================================================================================
</TABLE>
F29
<PAGE>
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
Standardized Measure of Discounted Future Cash Flows
As required by the Financial Accounting Standards Board, the standardized
measure of discounted future net cash flows is computed by applying year-end
prices, costs and legislated tax rates and a discount factor of 10 percent to
net proved reserves. The corporation believes the standardized measure is not
meaningful and may be misleading.
<TABLE>
<CAPTION>
Consolidated Subsidiaries
------------------------------------------------------------ Non-
United Consolidated Total
States Canada Europe Asia-Pacific Other Total Interests Worldwide
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1996
Future cash inflows from sales of oil and gas $ 78,728 $ 21,969 $ 56,745 $ 26,336 $ 4,094 $187,872 $ 66,078 $253,950
Future production costs 17,523 5,145 13,198 9,309 842 46,017 28,324 74,341
Future development costs 3,395 1,509 5,826 2,632 593 13,955 1,691 15,646
Future income tax expenses 20,772 6,444 18,845 5,436 627 52,124 14,961 67,085
---------------------------------------------------------------------------------
Future net cash flows $ 37,038 $ 8,871 $ 18,876 $ 8,959 $ 2,032 $ 75,776 $ 21,102 $ 96,878
Effect of discounting net cash flows at 10% 18,022 4,808 6,703 3,955 1,203 34,691 13,066 47,757
---------------------------------------------------------------------------------
Discounted future net cash flows $ 19,016 $ 4,063 $ 12,173 $ 5,004 $ 829 $ 41,085 $ 8,036 $ 49,121
=================================================================================
As of December 31, 1997
Future cash inflows from sales of oil and gas $ 50,295 $ 8,449 $ 41,523 $ 25,800 $ 3,114 $129,181 $ 55,650 $184,831
Future production costs 14,978 3,833 11,166 9,277 787 40,041 26,131 66,172
Future development costs 3,705 1,486 5,034 4,310 384 14,919 1,341 16,260
Future income tax expenses 11,159 1,444 11,483 4,890 490 29,466 10,856 40,322
---------------------------------------------------------------------------------
Future net cash flows $ 20,453 $ 1,686 $ 13,840 $ 7,323 $ 1,453 $ 44,755 $ 17,322 $ 62,077
Effect of discounting net cash flows at 10% 10,135 834 5,159 3,679 761 20,568 11,067 31,635
---------------------------------------------------------------------------------
Discounted future net cash flows $ 10,318 $ 852 $ 8,681 $ 3,644 $ 692 $ 24,187 $ 6,255 $ 30,442
=================================================================================
As of December 31, 1998
Future cash inflows from sales of oil and gas $ 35,102 $ 8,228 $ 29,584 $ 17,613 $ 5,641 $ 96,168 $ 46,776 $142,944
Future production costs 13,730 2,757 10,957 7,045 1,589 36,078 19,549 55,627
Future development costs 3,682 1,152 4,639 3,235 1,740 14,448 905 15,353
Future income tax expenses 5,923 1,831 4,586 2,088 1,059 15,487 10,123 25,610
---------------------------------------------------------------------------------
Future net cash flows $ 11,767 $ 2,488 $ 9,402 $ 5,245 $ 1,253 $ 30,155 $ 16,199 $ 46,354
Effect of discounting net cash flows at 10% 5,879 1,300 3,492 2,673 981 14,325 10,121 24,446
---------------------------------------------------------------------------------
Discounted future net cash flows $ 5,888 $ 1,188 $ 5,910 $ 2,572 $ 272 $ 15,830 $ 6,078 $ 21,908
=================================================================================
<CAPTION>
Change in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
Consolidated Subsidiaries 1998 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
Value of reserves added during the year due to extensions, discoveries,
improved recovery and net purchases less related costs $ 872 $ 1,443 $ 3,581
Changes in value of previous-year reserves due to:
Sales and transfers of oil and gas produced during the year, net of production (lifting) costs (6,517) (9,675) (10,875)
Development costs incurred during the year 3,741 3,300 3,082
Net change in prices, lifting and development costs (18,047) (31,818) 25,677
Revisions of previous reserves estimates 742 1,568 3,157
Accretion of discount 3,081 5,542 3,330
Net change in income taxes 7,771 12,742 (12,032)
--------------------------------
Total change in the standardized measure during the year $ (8,357) $(16,898) $ 15,920
================================
</TABLE>
F30
<PAGE>
OPERATING SUMMARY
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- - -----------------------------------------------------------------------------------------------------------------------------
(thousands of barrels daily)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Production of crude oil
and natural gas liquids
Net production
United States 505 559 587 600 562 553 591 619 640 693 760
Canada 251 238 211 242 251 254 268 278 302 312 249
Europe 496 483 499 498 484 423 396 363 313 351 444
Asia-Pacific 236 250 244 302 325 347 346 342 331 328 345
Other Non-U.S. 79 69 74 84 87 90 104 113 126 120 121
-----------------------------------------------------------------------------------------------
Worldwide 1,567 1,599 1,615 1,726 1,709 1,667 1,705 1,715 1,712 1,804 1,919
===============================================================================================
(millions of cubic feet daily)
Natural gas production
available for sale
Net production
United States 2,063 2,062 2,094 2,055 2,021 1,764 1,607 1,655 1,778 1,827 1,805
Canada 227 203 194 281 286 328 326 355 413 417 209
Europe 3,037 3,038 3,361 2,804 2,842 3,049 3,097 3,010 2,694 2,707 2,787
Asia-Pacific 995 1,036 928 873 827 678 577 411 369 376 332
Other Non-U.S. -- -- -- -- 2 6 54 66 64 58 59
-----------------------------------------------------------------------------------------------
Worldwide 6,322 6,339 6,577 6,013 5,978 5,825 5,661 5,497 5,318 5,385 5,192
===============================================================================================
(thousands of barrels daily)
Refinery throughput
United States 1,047 1,070 988 1,004 994 970 1,017 1,017 950 1,093 1,055
Canada 445 448 433 424 428 416 399 419 484 486 351
Europe 1,521 1,529 1,522 1,416 1,503 1,492 1,489 1,490 1,425 1,387 1,335
Asia-Pacific 799 850 733 697 633 619 602 556 586 556 522
Other Non-U.S. 116 114 116 118 122 119 112 103 101 102 105
-----------------------------------------------------------------------------------------------
Worldwide 3,928 4,011 3,792 3,659 3,680 3,616 3,619 3,585 3,546 3,624 3,368
===============================================================================================
Petroleum product sales
United States 1,338 1,342 1,261 1,198 1,196 1,152 1,203 1,210 1,109 1,147 1,113
Canada 570 561 542 526 520 517 513 527 597 625 433
Europe 1,969 1,930 1,925 1,869 1,898 1,872 1,847 1,863 1,796 1,718 1,680
Asia-Pacific and other
Eastern Hemisphere 1,095 1,145 1,046 1,042 988 962 935 878 869 847 784
Latin America 461 452 437 441 426 422 411 391 384 383 386
-----------------------------------------------------------------------------------------------
Worldwide 5,433 5,430 5,211 5,076 5,028 4,925 4,909 4,869 4,755 4,720 4,396
===============================================================================================
Gasoline, naphthas 2,053 2,014 1,939 1,903 1,849 1,818 1,822 1,821 1,742 1,708 1,572
Heating oils, kerosene,
diesel oils 1,738 1,743 1,718 1,655 1,644 1,569 1,557 1,561 1,491 1,498 1,424
Aviation fuels 456 457 442 414 403 379 376 372 382 382 344
Heavy fuels 523 539 498 488 530 558 546 535 543 507 466
Specialty petroleum
products 663 677 614 616 602 601 608 580 597 625 590
-----------------------------------------------------------------------------------------------
Worldwide 5,433 5,430 5,211 5,076 5,028 4,925 4,909 4,869 4,755 4,720 4,396
===============================================================================================
(thousands of metric tons)
Chemical prime product
sales 17,204 17,301 15,712 14,377 13,969 13,393 13,463 12,560 12,453 12,324 12,152
===============================================================================================
(millions of metric tons)
Coal production 15 15 15 16 36 36 37 39 40 36 32
===============================================================================================
(thousands of metric tons)
Copper production 216 205 203 202 191 183 133 108 112 119 134
===============================================================================================
</TABLE>
Operating statistics include 100 percent of operations of majority owned
subsidiaries; for other companies, crude production, gas, petroleum product and
chemical prime product sales include Exxon's ownership percentage, and refining
throughput includes quantities processed for Exxon. Net production excludes
royalties and quantities due others when produced, whether payment is made in
kind or cash.
F31
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant (1), (2) and (3)
At December 31, 1998
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Owned by State or
Immediate Country of
Parent(s) Organization
----------------- ------------
<S> <C> <C>
Ancon Insurance Company, Inc. ................... 100 Vermont
Esso Australia Resources Ltd. ................... 100 Delaware
Delhi Petroleum Pty. Ltd. ...................... 100 Australia
Esso Eastern Inc. ............................... 100 Delaware
Esso Hong Kong Limited.......................... 100 Hong Kong
Esso Malaysia Berhad............................ 65 Malaysia
Esso Production Malaysia Inc. .................. 100 Delaware
Esso Sekiyu Kabushiki Kaisha.................... 100 Japan
Esso Singapore Private Limited.................. 100 Singapore
Esso (Thailand) Public Company Limited.......... 87.5 Thailand
Exxon Energy Limited............................ 100 Hong Kong
Castle Peak Power Company Limited (5)......... 60 Hong Kong
Exxon Yemen Inc................................. 100 Delaware
General Sekiyu K.K.(6).......................... 50.103 Japan
Tonen Kabushiki Kaisha(5)....................... 25 Japan
Esso Exploration and Production Chad Inc. ....... 100 Delaware
Esso Italiana S.p.A.(7).......................... 100 Italy
Esso Standard (Inter-America) Inc. .............. 100 Delaware
Esso Standard Oil S.A. Limited................... 100 Bahamas
Exxon Asset Management Company................... 75.5 Delaware
Exxon Capital Holdings Corporation............... 100 Delaware
Exxon Capital Corporation....................... 100 New Jersey
Exxon Capital Investment, Inc................. 100 Delaware
Exxon Chemical Asset Management Partnership(8)... 100 Delaware
Exxon Mobile Bay Limited Partnership(9)......... 100 Delaware
Paxon Polymer Company, L.P. II(10)............ 100 Delaware
Exxon Chemical Eastern Inc....................... 100 Delaware
Exxon Chemical Singapore Private Limited........ 100 Singapore
Singapore Aromatics Company Private (5)....... 50 Singapore
Exxon Chemical HDPE Inc. ........................ 100 Delaware
Exxon Chemical Interamerica Inc. ................ 100 Delaware
Exxon (Barbados) Foreign Sales Corporation...... 100 Barbados
Exxon Credit Corporation......................... 100 Delaware
Exxon Holding Latin America Limited(11).......... 100 Bahamas
Esso Chile Petrolera Limitada(12)............... 100 Chile
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Owned by
Immediate State or Country of
Parent(s) Organization
----------------- --------------------
<S> <C> <C>
Exxon International Holdings, Inc. ................... 100 Delaware
Esso Aktiengesellschaft(13).......................... 100 Germany
BRIGITTA Erdgas und Erdoel GmbH, Hannover(4)(5).... 50 Germany
Elwerath Erdgas und Erdoel GmbH, Hannover(4)(5).... 50 Germany
Mineraloelraffinerie Oberrhein GmbH & Co. KG(5).... 25 Germany
Esso Austria Aktiengesellschaft(14).................. 100 Austria
Esso Exploration and Production Norway AS............ 100 Norway
Esso Holding Company Holland Inc..................... 100 Delaware
Esso Holding B.V. ................................. 100 Netherlands/Delaware
Esso N.V./S.A. (15)............................... 100 Belgium/Delaware
Exxon Chemical Antwerp Ethylene N.V. (16).......... 100 Belgium
Fina Antwerp Olefins N.V.(5)...................... 35 Belgium
Esso Nederland B.V. ............................... 100 Netherlands
Exxon Chemical Holland Inc. ....................... 100 Delaware
Exxon Chemical Holland B.V. ...................... 100 Netherlands
Exxon Funding B.V. ................................ 100 Netherlands
Esso Capital B.V. ................................ 100 Netherlands
Nederlandse Aardolie Maatschappij B.V. (4)(5)...... 50 Netherlands
Esso Holding Company U.K. Inc. ...................... 100 Delaware
Esso UK plc........................................ 100 England
Esso Exploration and Production UK Limited(17).... 100 England
Esso Petroleum Company, Limited................... 100 England
Exxon Chemical Limited............................. 100 England
Exxon Chemical Olefins Inc. ....................... 100 Delaware
Esso Norge AS ....................................... 100 Norway
Esso Sociedad Anonima Petrolera Argentina............ 100 Argentina
Esso Societe Anonyme Francaise....................... 81.548 France
Esso (Switzerland)................................... 100 Switzerland
Exxon Minerals International Inc...................... 100 Delaware
Compania Minera Disputada de Las Condes Limitada(18). 100 Chile
Exxon Overseas Corporation............................ 100 Delaware
Exxon Chemical Arabia Inc............................ 100 Delaware
Al-Jubail Petrochemical Company(4)(5).............. 50 Saudi Arabia
Exxon Equity Holding Company......................... 100 Delaware
Exxon Overseas Investment Corporation................ 100 Delaware
Exxon Financial Services Company Limited........... 100 Bahamas
Exxon Ventures Inc. ............................... 100 Delaware
Exxon Azerbaijan Limited.......................... 100 Bahamas
Mediterranean Standard Oil Co........................ 100 Delaware
Esso Trading Company of Abu Dhabi.................. 100 Delaware
Exxon Pipeline Holdings, Inc. ........................ 100 Delaware
Exxon Pipeline Company............................... 100 Delaware
Exxon Rio Holding Inc................................. 100 Delaware
Esso Brasileira de Petroleo Limitada(19)............. 100 Brazil
Exxon Sao Paulo Holding Inc. ......................... 100 Delaware
Exxon Worldwide Trading Company....................... 100 Delaware
Imperial Oil Limited.................................. 69.6 Canada
International Colombia Resources Corporation(20)...... 100 Delaware
SeaRiver Maritime Financial Holdings, Inc. ........... 100 Delaware
SeaRiver Maritime, Inc. ............................. 100 Delaware
Societe Francaise EXXON CHEMICAL...................... 99.359 France
Exxon Chemical France................................ 100 France
Exxon Chemical Polymeres SNC(21)..................... 100 France
</TABLE>
2
<PAGE>
- - ---------------------
NOTES:
(1) For purposes of this list, if the registrant owns directly or indirectly
approximately 50 percent of the voting securities of any person and
approximately 50 percent of the voting securities of such person is owned
directly or indirectly by another interest, or if the registrant includes
its share of net income of any other unconsolidated person in
consolidated net income, such person is deemed to be a subsidiary.
(2) With respect to certain companies, shares in names of nominees and
qualifying shares in names of directors are included in the above
percentages.
(3) The names of other subsidiaries have been omitted from the above list
since considered in the aggregate, they would not constitute a
significant subsidiary.
(4) The registrant owns directly or indirectly approximately 50 percent of
the securities of this person and approximately 50 percent of the voting
securities of this person is owned directly or indirectly by another
single interest.
(5) The investment in this unconsolidated person is represented by the
registrant's percentage interest in the underlying net assets of such
person.
(6) Dual ownership; of the 50.103%, 48.571% is owned by Esso Eastern Inc. and
1.532% is owned by Esso Sekiyu Kabushiki Kaisha.
(7) Dual ownership; of the 100%, 90% is owned by Exxon Corporation and 10% by
Exxon Overseas Corporation.
(8) Dual ownership; of the 100%, 68.4% is owned by Exxon Corporation and
31.6% is owned by Exxon Asset Management Company.
(9) Dual ownership; of the 100%, 81.4% is owned by Exxon Chemical Asset
Management Partnership and 18.6% is owned by Exxon Corporation.
(10) Dual ownership; of the 100%, 98% is owned by Exxon Mobile Bay Limited
Partnership and 2% is owned by Exxon Chemical HDPE Inc.
(11) Dual ownership; of the 100%, 79.822% is owned by Exxon Corporation and
20.178% is owned by Esso Standard (Inter-America) Inc.
(12) Dual ownership; of the 100%, 99% is owned by Exxon Holding Latin America
Limited and 1% is owned by Exxon Corporation.
(13) Dual ownership; of the 100%, 99.998% is owned by Exxon International
Holdings, Inc. and 0.002% is owned by Exxon Corporation.
(14) Dual ownership; of the 100%, 99.9996% is owned by Exxon International
Holdings, Inc. and 0.0004% is owned by Exxon Corporation.
(15) Dual ownership; of the 100%, 99.99997% is owned by Esso Holding B.V. and
0.00003% is owned by Exxon Chemical Holland Inc.
(16) Dual ownership; of the 100%, 99.9994% is owned by Esso Holding B.V. and
0.0006% is owned by Exxon Chemical Holland Inc.
(17) Dual ownership; of the 100%, 98% is owned by Esso UK plc and 2% is owned
by Exxon Holding Company U.K. Inc.
(18) Dual ownership; of the 100%, 99.9999852% is owned by Exxon Minerals
International Inc. and 0.0000148% is owned by Exxon Holding Latin America
Limited.
(19) Dual ownership; of the 100%, 90% is owned by Exxon Rio Holding Inc. and
10% is owned by Exxon Sao Paulo Holding Inc.
(20) Dual ownership; of the 100%, 55% is owned by Exxon Corporation and 45% is
owned by Esso Holding Company Holland Inc.
(21) Dual ownership; of the 100%, 98% is owned by Societe Francaise EXXON
CHEMICAL and 2% is owned by Exxon Chemical France.
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXON'S
CONSOLIDATED BALANCE SHEET AT 12/31/98 AND EXXON'S CONSOLIDATED STATEMENT OF
INCOME FOR THE YEAR ENDED 12/31/98 AND THE RELATED NOTES TO THESE CONSOLIDATED
FINANCIAL STATEMENTS, THAT ARE CONTAINED IN EXXON'S FORM 10-K FOR THE ANNUAL
PERIOD ENDED 12/31/98. THE SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,441
<SECURITIES> 20
<RECEIVABLES> 6,711
<ALLOWANCES> 108
<INVENTORY> 5,605
<CURRENT-ASSETS> 17,593
<PP&E> 128,248
<DEPRECIATION> 63,049
<TOTAL-ASSETS> 92,630
<CURRENT-LIABILITIES> 19,412
<BONDS> 4,530
0
105
<COMMON> 2,323
<OTHER-SE> 41,322
<TOTAL-LIABILITY-AND-EQUITY> 92,630
<SALES> 115,417
<TOTAL-REVENUES> 117,772
<CGS> 45,020
<TOTAL-COSTS> 45,020
<OTHER-EXPENSES> 17,743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100
<INCOME-PRETAX> 9,056
<INCOME-TAX> 2,616
<INCOME-CONTINUING> 6,440
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (70)
<NET-INCOME> 6,370
<EPS-PRIMARY> 2.61
<EPS-DILUTED> 2.58
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXON'S
CONDENSED CONSOLIDATED BALANCE SHEETS AT 3/31/98 AND 6/30/98 AND 9/30/98 AND
EXXON'S CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
3/31/98, SIX MONTHS ENDED 6/30/98, AND NINE MONTHS ENDED 9/30/98, AS RESTATED.
THE SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 JAN-01-1998 JAN-01-1998
<PERIOD-END> MAR-31-1998 JUN-30-1998 SEP-30-1998
<CASH> 3,840 2,688 2,100
<SECURITIES> 20 21 108
<RECEIVABLES> 7,268 6,621 6,597
<ALLOWANCES> 102 99 103
<INVENTORY> 5,151 5,069 5,409
<CURRENT-ASSETS> 19,864 18,109 17,899
<PP&E> 123,626 124,414 127,545
<DEPRECIATION> 61,042 61,787 63,403
<TOTAL-ASSETS> 91,237 89,511 91,502
<CURRENT-LIABILITIES> 18,095 17,054 18,284
<BONDS> 4,928 4,772 4,760
0 0 0
174 134 119
<COMMON> 2,323 2,323 2,323
<OTHER-SE> 41,178 40,830 41,247
<TOTAL-LIABILITY-AND-EQUITY> 91,237 89,511 91,502
<SALES> 29,332 58,140 86,047
<TOTAL-REVENUES> 29,964 59,329 87,825
<CGS> 12,100 23,490 34,463
<TOTAL-COSTS> 12,100 23,490 34,463
<OTHER-EXPENSES> 4,439 8,786 13,022
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 32 60 66
<INCOME-PRETAX> 2,709 4,967 7,007
<INCOME-TAX> 819 1,457 2,097
<INCOME-CONTINUING> 1,890 3,510 4,910
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> (70) (70) (70)
<NET-INCOME> 1,820 3,440 4,840
<EPS-PRIMARY> 0.74 1.40 1.98
<EPS-DILUTED> 0.73 1.38 1.96
</TABLE>
