<PAGE>
1999
- - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-2256
EXXON MOBIL CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
(State or other jurisdiction of (I.R.S. Employer 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 (3,479,892,054 shares
outstanding at February 29, 2000) 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 29, 2000, based on the closing price on that date of
$75 5/16 on the New York Stock Exchange composite tape, was in excess of $262
billion.
Documents Incorporated by Reference:
1999 Annual Report to Shareholders (Parts I, II and IV)
Proxy Statement for the 2000 Annual Meeting of Shareholders (Part III)
- - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - -------------------------------------------------------------------------------
<PAGE>
EXXON MOBIL CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
PART I
<C> <S> <C>
Item 1. Business..................................................... 1-2
Item 2. Properties................................................... 2-14
Item 3. Legal Proceedings............................................ 14
Item 4. Submission of Matters to a Vote of Security Holders.......... 14
Executive Officers of the Registrant [pursuant to Instruction 3 to Reg-
ulation S-K, Item 401(b)]............................................. 15
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder
Matters...................................................... 16
Item 6. Selected Financial Data...................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk... 16
Item 8. Financial Statements and Supplementary Data.................. 17
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 17
PART III
Item 10. Directors and Executive Officers of the Registrant........... 17
Item 11. Executive Compensation....................................... 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 17
Item 13. Certain Relationships and Related Transactions............... 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.......................................................... 17
Signatures............................................................. 18-20
Index to Financial Statements.......................................... 21
Index to Exhibits...................................................... 22
</TABLE>
<PAGE>
PART I
Item 1. Business.
Exxon Mobil Corporation ("ExxonMobil"), formerly named Exxon Corporation,
was incorporated in the State of New Jersey in 1882.
On December 1, 1998, Exxon Corporation ("Exxon") and Mobil Corporation
("Mobil") signed an agreement to merge the two companies subject to
shareholder approval, regulatory reviews and other conditions. On November 30,
1999, pursuant to the agreement, a wholly-owned subsidiary of Exxon was merged
with and into Mobil so that Mobil became a wholly-owned subsidiary of Exxon.
At the same time, Exxon changed its name to Exxon Mobil Corporation. Under the
terms of the agreement, approximately 1.0 billion shares of ExxonMobil common
stock were issued in exchange for all the outstanding shares of Mobil common
stock based on an exchange ratio of 1.32015 ExxonMobil shares for each Mobil
share. Each outstanding share of Mobil preferred stock was converted into one
share of a new class of ExxonMobil preferred stock. Following the exchange,
former shareholders of Exxon owned approximately 70 percent of the combined
company and former Mobil shareholders owned approximately 30 percent.
Coincident with the merger, ExxonMobil announced a new organization
structure built on a concept of eleven separate global businesses designed to
allow the company to compete more effectively in a changing worldwide energy
industry: five global upstream businesses--Exploration, Development,
Production, Gas Marketing and Upstream Research, four downstream businesses--
Refining and Supply, Fuels Marketing, Lubricants and Petroleum Specialties,
and Technology, plus a Chemical company and a Coal and Minerals company.
Divisions and affiliated companies of ExxonMobil operate or market products
in the United States and about 200 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. ExxonMobil is a major manufacturer
and marketer of basic petrochemicals, including olefins, aromatics,
polyethylene and polypropylene plastics and a wide variety of specialty
products. ExxonMobil is engaged in exploration for, and mining and sale of
coal, copper and other minerals. ExxonMobil also has interests in electric
power generation facilities. Affiliates of ExxonMobil conduct extensive
research programs in support of these businesses.
Exxon Mobil Corporation has several divisions and hundreds of affiliates,
many with names that include ExxonMobil, Exxon, Esso or Mobil. For convenience
and simplicity, in this report the terms ExxonMobil, Exxon, Esso and Mobil, 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.
In 1999, the corporation spent $2,052 million (of which $650 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 $2.0 billion in both 2000 and
2001 (with capital expenditures representing about 25 percent of the total).
Operating data and industry segment information for the corporation are
contained on pages F31, F32, F38 and F39; information on oil and gas reserves
is contained on pages F35 and F36 and information on company-sponsored
research and development activities is contained on page F20 of the
accompanying financial section of the 1999 Annual Report to shareholders.*
- - - - - - - - - - - - - - - - --------
*Only the data appearing on pages F2 and F6 through F39 of the accompanying
financial section of the 1999 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 21.
1
<PAGE>
Factors Affecting Future Results
- - - - - - - - - - - - - - - - --------------------------------
Competitive Factors: The energy and petrochemical industries are highly
competitive. There is competition within the industries and also with other
industries in supplying the energy, fuel and chemical needs of industry and
individual consumers. 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.
Political Factors: 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 instability and by other
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.
Industry and Economic Factors: 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, petroleum products, petrochemicals and other ExxonMobil 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.
Project Factors: The advancement, cost and results of particular ExxonMobil
projects also depend on the outcome of negotiations with partners,
governments, suppliers, customers or others; changes in operating conditions
or costs and the occurrence of unforeseen technical difficulties.
Merger-Related Factors: Realization of the benefits of the merger will depend,
among other things, upon management's ability to integrate the businesses of
Exxon and Mobil successfully and on schedule. Future results could also be
affected by the diversion of management's focus and resources from other
strategic opportunities during the merger integration process.
Market Risk Factors: See also page F9 and F10 of the accompanying financial
section of the 1999 Annual Report to shareholders for discussion of the impact
of market risks, inflation and other uncertainties.
Projections, estimates and descriptions of ExxonMobil's plans and objectives
included or incorporated in Items 1, 2, 7 and 7A of this report are forward-
looking statements. Actual project completion dates, production rates, capital
expenditures, costs and business plans could differ materially due to, among
other things, the 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 1999 Annual Report to shareholders in Note 11, which note
appears on page F22, and on pages F33 through F37 and F39.
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 1999
Estimated proved reserves are shown on pages F35 and F36 of the accompanying
financial section of the 1999 Annual Report to shareholders. No major
discovery or other favorable or adverse event
2
<PAGE>
has occurred since December 31, 1999, 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 F37 of the accompanying financial section of
the 1999 Annual Report to shareholders.
2. Estimates of Total Net Proved Oil and Gas Reserves Filed with Other Federal
Agencies
During 1999, Exxon and Mobil filed proved reserves estimates with the U.S.
Department of Energy on Forms EIA-23 and EIA-28. The information is consistent
with the Exxon and Mobil 1998 Annual Reports to shareholders with the
exception of EIA-23 which covered total oil and gas reserves from Exxon- and
Mobil-operated properties in the United States and does not include gas plant
liquids. The differences between the oil reserves and gas reserves reported on
EIA-23 and those reported in the 1998 Annual Reports exceed five percent.
3. Average Sales Prices and Production Costs per Unit of Production
Incorporated by reference to page F33 of the accompanying financial section
of the 1999 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
F35 of the accompanying financial section of the 1999 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 F39 of the
accompanying financial section of the 1999 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.
4. Gross and Net Productive Wells
<TABLE>
<CAPTION>
Year-End 1999
--------------------------
Oil Gas
------------- ------------
Gross Net Gross Net
------ ------ ------ -----
<S> <C> <C> <C> <C>
United States..................................... 37,880 13,708 10,047 4,624
Canada............................................ 7,320 5,164 4,763 2,388
Europe............................................ 1,859 621 1,362 505
Asia-Pacific...................................... 1,440 541 684 261
Other............................................. 1,216 254 117 36
------ ------ ------ -----
Total............................................ 49,715 20,288 16,973 7,814
====== ====== ====== =====
</TABLE>
5. Gross and Net Developed Acreage
<TABLE>
<CAPTION>
Year-End 1999
--------------------
Gross Net
--------- ------
(Thousands of acres)
<S> <C> <C>
United States.......................................... 9,168 5,894
Canada................................................. 4,619 2,429
Europe................................................. 13,364 5,190
Asia-Pacific........................................... 3,823 1,487
Other.................................................. 10,161 2,198
-------- ------
Total................................................. 41,135 17,198
======== ======
</TABLE>
Note: Separate acreage data for oil and gas are not maintained because, in
many instances, both are produced from the same acreage.
3
<PAGE>
6. Gross and Net Undeveloped Acreage
<TABLE>
<CAPTION>
Year-End 1999
---------------------
Gross Net
--------- ---------
(Thousands of acres)
<S> <C> <C>
United States.......................................... 11,895 7,780
Canada................................................. 22,308 11,401
Europe................................................. 23,903 8,268
Asia-Pacific........................................... 61,829 33,955
Other.................................................. 125,283 61,147
---------- ----------
Total................................................. 245,218 122,551
========== ==========
</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. In some instances, a "fee interest" is acquired where
both the surface and the underlying mineral interests are owned outright.
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. The majority of Cold Lake leases were taken for an initial 21-year term
in 1968-1969 and renewed for a second 21-year term in 1989-1990. The
exploration acreage in Eastern Canada is currently held by work commitments of
various amounts.
EUROPE
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
Exploration concessions are granted for an initial period of five years with
possible extensions of up to three years at a time for an indefinite period.
Extensions are subject to specific, minimum work commitments. Production
licenses are held as long as there is production on the license.
Netherlands
Onshore: Exploration drilling permits are issued for a period of two to five
years. Permits issued after 1996 are issued for a period of time necessary to
perform the activities for which the permit is issued. Production concessions
are granted after discoveries have been made, under conditions that 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 are for a 15-year
period, with relinquishment of about 50 percent of the original area required
at the end of ten years. Current licenses are for a period of time necessary
to perform the activities for which the permit is issued. 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
4
<PAGE>
of the ninth year. Licenses issued between 1972 and 1997 were 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. Licenses issued after July 1, 1997
are for a total period of 40 years, with a possible extension to 60 years, and
with relinquishment of at least one-half of the original area required at the
end of the initial period of six years.
United Kingdom
Acreage terms are fixed by the government but are periodically changed. For
example, the regulations governing licenses issued between 1996 and 1998
provide for an initial term of three years with possible extensions of six,
fifteen and twenty-four years for a license period of forty-five more years.
After the second extension, the license must be surrendered in part. From 1999
onward, the initial term is four years, which may be continued for another
three years. After possible surrender of acreage, the license may continue for
thirty more years.
ASIA-PACIFIC
Australia
Onshore: Acreage terms are fixed by the individual state and territory
governments. These terms and conditions vary significantly between the various
states and territories. Exploration permits are normally granted for an
initial period of between two to six years, that term being provided by
legislation in some states and territories and being fixed by the Minister in
others. Renewal periods vary but are available, as of right in some
jurisdictions and at the Minister's discretion in others, with mandatory
relinquishment applying in some states and territories. 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: Within the three nautical mile limit offshore acreage terms are
governed by state authorities. For areas beyond that limit, the duration of a
tenement is fixed by federal legislation. The conditions applying to those
tenements arise from both legislation and the additional conditions imposed by
the Joint Authority, which is a body constituted by the federal minister and
the relevant state or territory minister. Exploration permits are granted for
six years with possible renewals of five year periods. A fifty percent
relinquishment of remaining area is mandatory at the end of each period.
Retention leases are granted for periods of five years and can be subject to
review at any time during the term, if the Joint Authority considers that the
resource might have become commercial. Retention leases can be renewed for
five year periods subject to the applicant establishing that recovery is still
not commercially viable but is likely to become so within 15 years. Production
licenses granted prior to September 1, 1998 were initially for 21 years, with
a further renewal of 21 years and thereafter at the discretion of the Joint
Authority. Production licenses granted after September 1, 1998 are granted for
an indefinite period, effectively the life of the field. If no operations for
the recovery of petroleum have been carried on for five years, the production
license may be terminated.
Indonesia
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 30 years with possible extensions in some contracts.
The initial exploration period is from six to ten years.
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
5
<PAGE>
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 current contract.
Papua New Guinea
Exploration permits are granted for an initial term of six years with
renewals of five years. A 50 percent relinquishment is mandatory at the end of
the first term. Production licenses are granted for an initial 25-year period.
Renewals of up to 20 years may be granted at the Minister's discretion.
Petroleum retention licenses are granted for five-year terms, renewable twice
for a maximum retention time of 15 years.
Thailand
The company's 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.
OTHER COUNTRIES
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.
Argentina
Production licenses are typically for 30 years (20 years with one 10-year
extension), preceded by two exploration phases of two years each, with a one
year extension available for each exploration phase.
Azerbaijan
The Production Sharing Agreement (PSA) between the Azerbaijan International
Operating Company (AIOC) and the Republic of Azerbaijan for the development of
the Megastructure is established for an initial period of 30 years starting
from the PSA effective date in 1994.
Other exploration and production activities are governed by production
sharing agreements negotiated with the national oil company. The exploration
period consists of three or four years with the possibility of a two-year
extension or three-year extension. The production period, which includes
development, is for 25 years or 35 years with the possibility of one or more
five-year extensions.
Equatorial Guinea
Exploration and production activities are governed by production sharing
contracts negotiated with the state Ministry of Mines and Energy. The
exploration term is for 10 to 15 years with limited relinquishments in the
absence of commercial discoveries. The production period for crude is 30 years
while the production period for gas is 50 years.
6
<PAGE>
Kazakhstan
Onshore: Exploration and production activities are governed by a joint-
venture agreement negotiated with the Republic of Kazakhstan. Existing
production operations have a 40-year production period that commenced in 1993.
Offshore: Exploration and production activities are governed by a production
sharing agreement negotiated with the Republic of Kazakhstan. The exploration
period consists of six years with the possibility of a two-year extension. The
production period, which includes development, is for 20 years with the
possibility of two 10-year extensions.
Nigeria
Exploration licenses are no longer granted in Nigeria.
Exploration and production activities in the deepwater offshore areas are
typically governed by production sharing contracts (PSCs) with either the
national oil company or by joint ventures. The terms of the contracts are
generally 30 years, including a 10-year exploration period (six-year initial
exploration phase plus a four-year optional period) with no required
relinquishment after the initial phase and a 20-year production period that
may be extended. Some exploration activities are carried out in deepwater by
joint ventures with indigenous companies holding interests in an oil
prospecting license (OPL). OPLs in deepwater offshore areas are valid for 10
years and are non-renewable, while in all other areas the licenses are for
five years and also are non-renewable. Demonstrating a commercial discovery is
the basis for conversion of an OPL to an oil mining license (OML).
OMLs granted prior to the 1969 Petroleum Act, (i.e. under the Mineral Oils
Act 1914, repealed by the 1969 Petroleum Act) were for 30 years onshore and 40
years in offshore areas and are renewable upon 12 months written notice, for
further periods of 30 and 40 years, respectively.
OMLs granted under the 1969 Petroleum Act have a maximum term of 20 years
without distinction for on- or offshore location and are renewable, upon 12
months written notice, for another period of 20 years. However, all such OMLs
are also subject to a mandatory 50 percent relinquishment, after the first 10
years of their duration.
In all cases, renewal of OMLs is almost certain if lessee satisfies three
conditions, namely, lessee: i) gives the requisite notice within the minimum
stipulated period; ii) has paid up to date all rentals, royalties and fees and
iii) has fulfilled all lessee's obligations under the OML.
Qatar
The Government of Qatar grants to LNG projects offshore concessions within
Qatar's North field to permit the economic development and production of
sufficient gas to satisfy the LNG sales obligations of these projects.
Republic of Yemen
Production sharing agreements (PSAs) negotiated with the government entitle
the company 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).
7
<PAGE>
Venezuela
Exploration and production activities are governed by contracts negotiated
with the national oil company. Exploration activity is covered by risk/profit
sharing contracts where exploration blocks were awarded for 35 years.
Production licenses are awarded for 20 years under production service
agreements.
Strategic association agreements (such as the Cerro Negro project) are
limited to those projects that require vertical integration. Licenses are
awarded for 35 years. Negotiations by the parties require Venezuelan
congressional approval.
8. Number of Net Productive and Dry Wells Drilled
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
A. Net Productive Exploratory Wells Drilled
United States................................................ 16 23 22
Canada....................................................... 4 18 32
Europe....................................................... 7 8 11
Asia-Pacific................................................. 4 19 10
Other........................................................ 9 14 5
--- ----- -----
Total....................................................... 40 82 80
--- ----- -----
B. Net Dry Exploratory Wells Drilled
United States................................................ 11 20 8
Canada....................................................... 2 9 10
Europe....................................................... 5 11 13
Asia-Pacific................................................. 10 15 5
Other........................................................ 3 9 10
--- ----- -----
Total....................................................... 31 64 46
--- ----- -----
C. Net Productive Development Wells Drilled
United States................................................ 419 629 457
Canada....................................................... 308 149 603
Europe....................................................... 51 54 41
Asia-Pacific................................................. 47 69 72
Other........................................................ 42 32 46
--- ----- -----
Total....................................................... 867 933 1,219
--- ----- -----
D. Net Dry Development Wells Drilled
United States................................................ 16 21 22
Canada....................................................... 12 8 22
Europe....................................................... 2 4 2
Asia-Pacific................................................. -- 3 3
Other........................................................ 1 2 1
--- ----- -----
Total....................................................... 31 38 50
--- ----- -----
Total number of net wells drilled............................ 969 1,117 1,395
=== ===== =====
</TABLE>
9. Present Activities
A. Wells Drilling -- Year-End 1999
<TABLE>
<CAPTION>
Gross Net
----- ---
<S> <C> <C>
United States....................................................... 77 33
Canada.............................................................. 14 13
Europe.............................................................. 24 8
Asia-Pacific........................................................ 7 3
Other............................................................... 27 10
--- ---
Total............................................................. 149 67
=== ===
</TABLE>
8
<PAGE>
B. Review of Principal Ongoing Activities in Key Areas
During the first 11 months of 1999, in the United States and outside North
America, Exxon's activities were conducted, either directly or through
affiliated companies, for exploration by Exxon Exploration Company, for
selected development activities by Exxon Upstream Development Company and for
producing and other development activities by Exxon Company, U.S.A. and Exxon
Company, International. In Canada, Exxon's exploration and production
activities were conducted by the Resources Division of Imperial Oil Limited,
which is 69.6 percent owned by ExxonMobil.
During this same period, Mobil conducted exploration, development and
production activities in the United States, Canada and worldwide through its
various subsidiaries and affiliated companies, including Aera Energy L.L.C.
("Aera"), a joint venture with Shell Oil Company in California.
Effective December 1, 1999, after the merger of Exxon and Mobil described in
Item 1 was completed, ExxonMobil's activities were conducted, either directly
or through affiliated companies, for exploration by ExxonMobil Exploration
Company, for selected development activities by ExxonMobil Development Company
and for producing and other development activities by ExxonMobil Production
Company. Activities conducted by Imperial Oil Limited and Aera remained the
same.
Some of the more significant ongoing activities are:
UNITED STATES
Exploration and delineation of additional hydrocarbon resources continued.
At year-end 1999, ExxonMobil's inventory of undeveloped acreage totaled 7.8
million net acres. ExxonMobil was active in areas onshore and offshore in the
lower 48 states and in Alaska. A total of 27.0 net exploration and delineation
wells were completed during 1999.
During 1999, 381.9 net development wells were completed within and around
mature fields in the inland lower 48 states.
Participation in Alaska production and development continued and a total of
12.1 net development wells were drilled in 1999.
ExxonMobil's net acreage in the Gulf of Mexico at year-end 1999 was 3.8
million acres. A total of 39.4 net exploration and development wells were
completed during the year and development continued on several Gulf of Mexico
projects in 1999.
. The Genesis field, located in 2,600 feet water depth, began producing in
January 1999 from a deep draft caisson vessel (DDCV). The Ursa field,
located in 3,900 feet water depth, began producing in March 1999 from a
tension leg platform (TLP). In November 1999, production commenced from
the Chinook field.
. The ExxonMobil-operated Hoover and Diana fields will be jointly
developed using a DDCV located in 4,800 feet of water over the Hoover
field. Construction and development drilling activities continued in
1999, with a planned start-up of mid-year 2000.
. The Nile field, located in 3,500 feet water depth, is a subsea satellite
development utilizing nearby existing platform facilities. Detailed
engineering is underway, with planned production start-up in mid-2001.
. The ExxonMobil-operated Mica field, located in 4,500 feet water depth,
is a subsea satellite development utilizing existing platform
facilities. Detailed engineering and construction are underway, with
planned production start-up in mid-2001.
9
<PAGE>
. The ExxonMobil-operated Marshall and Madison fields, located in 4,800
feet water depth, are proposed subsea satellite developments using the
Hoover-Diana DDCV facility. Detailed engineering is ongoing, with
planned production start-up in 2002.
CANADA
Gross commercial heavy oil production from Cold Lake averaged 132 thousand
barrels per day during 1999. At year end, government approval was received for
the next 30 thousand barrel per day expansion. The Sable Offshore Energy
Project commenced production in December 1999. Terra Nova is on track for
start-up in the first half of 2001.
EUROPE
France
ExxonMobil's net acreage at year-end 1999 was 0.9 million net acres, with
0.5 net exploration and development wells completed during the year.
Germany
A total of 3.9 million acres were held by ExxonMobil in Germany at year-end,
with 7.5 net exploration and development wells drilled and completed during
the year. The offshore A6/B4 project commenced development, with start-up
expected in 2000.
Netherlands
ExxonMobil's interest in licenses totaled 2.8 million net acres at year-end
1999. During 1999, 8.0 net exploration and development wells were drilled.
During 1999 the D15-FA/FB offshore gas field and the onshore Norg-Zuid and
Appelscha fields started up along with the Gaag-II gas plant. The second phase
of the Rotterdam oil field development also started up. Construction is in
progress on the new onshore gas field Saaksum East.
Norway
ExxonMobil's net interest in licenses at year-end 1999 totaled 1.7 million
acres, all offshore. ExxonMobil participated in 13.6 net exploration and
development well completions in 1999.
Production was initiated on four developments: Balder, Jotun, Aasgard and
Oseberg East. Field development projects for Snorre B, Sygna, Ringhorne and
Grane fields are in progress.
United Kingdom
During the year ExxonMobil acquired interests in three new blocks. Net
acreage was approximately 3.5 million acres at year-end, all offshore. A total
of 34.0 net exploration and development wells were completed during the year.
There were successful start-ups of the Ketch, Corvette, Buckland, Bell,
Jupiter II and Gannet G fields. Several major projects were underway,
including Shearwater, Elgin/Franklin, Triton and Cook.
ASIA-PACIFIC
Australia
ExxonMobil's net year-end 1999 acreage holdings in Australia totaled 10.4
million acres. ExxonMobil drilled a total of 22.9 net exploration and
development wells in Australia in 1999. Production commenced at the Blackback
field in 1999.
10
<PAGE>
Indonesia
Deliveries of natural gas from the North Sumatra Offshore "A" field
commenced in mid-1999. This gas will supplement other local fields to supply
gas for Pertamina's P.T. Arun LNG plant. Net acreage was 9.1 million acres at
year-end. ExxonMobil participated in 16.5 net exploration and development well
completions in 1999.
Malaysia
ExxonMobil has interests in production sharing contracts covering 5.8
million net acres offshore Malaysia. During the year, a total of 17.6 net
exploration and development wells were completed. Development drilling was
successfully completed at Seligi-F and Bekok-A/B platforms, respectively.
Currently, Tapis-E development drilling is ongoing.
Papua New Guinea
At year-end 1999, ExxonMobil's acreage totaled 3.9 million net acres, with
1.8 net exploration and development wells completed during the year.
Thailand
ExxonMobil's net acreage in the Khorat concession totaled 15 thousand net
acres at year-end, with 1.6 net exploration and development wells completed
during the year.
OTHER COUNTRIES
Angola
Development has commenced on Girassol field in Block 17. Development
planning is underway for ExxonMobil-operated discoveries in Block 15 and other
Block 17 fields. ExxonMobil's net year-end 1999 acreage holdings totaled 4.3
million acres and 3.2 net exploration and development wells were completed
during the year.
Argentina
ExxonMobil's net acreage totaled 1.3 million acres at year-end, with 4.1 net
exploration and development wells completed during the year.
Azerbaijan
At year-end 1999, ExxonMobil's net acreage totaled 0.2 million acres, all of
which are located in the Caspian Sea offshore of Azerbaijan. Drilling is
continuing, with six gross wells (0.5 net) drilled and completed in 1999.
Construction was also completed on the Western Route pipeline.
Equatorial Guinea
ExxonMobil's net acreage totaled 0.7 million acres at year-end, with 3.6
exploration and development wells completed during the year. Construction is
in progress on the Jade development with start-up planned in 2000.
Kazakhstan
Construction has started on the Caspian Pipeline Consortium (CPC) pipeline
which will be dedicated to transport of Tengiz oil production to the Black
Sea. The pipeline will displace the high
11
<PAGE>
cost rail and barge transportation now being used. ExxonMobil's net acreage
totaled 0.4 million acres at year-end, with 0.8 net exploration and
development wells completed during the year.
Nigeria
ExxonMobil's net acreage totaled 1.4 million acres at year-end, with 13.5
net exploration and development wells completed during the year. Development
activities continue offshore deepwater Nigeria Block 212 at Bonga. A deepwater
production sharing contract (PSC) decree was issued by the Nigerian Government
in 1999 to legislate PSC fiscal provisions.
Qatar
Development activities continued on two major liquefied natural gas (LNG)
projects in Qatar, Ras Laffan Liquefied Natural Gas Company, Ltd. (RasGas) and
Qatar Liquefied Gas Company, Ltd. (Qatargas). RasGas commenced operations in
1999 following completion of its first LNG train. RasGas has a long-term
contract with Korea Gas Corporation for supply of 4.8 MTA (million metric tons
per year) of LNG. Train 2 is currently under construction with start-up
planned in 2000. RasGas also concluded a 7.5 MTA long-term sales and purchase
agreement with Petronet LNG Limited of India. Initial deliveries to Petronet
are scheduled to begin in 2003. Qatargas delivered its 200th LNG cargo during
1999 since start-up in 1996. Qatargas has long-term contracts to supply 6 MTA
of LNG to gas and electric utilities in Japan. Progress continued on
negotiations and marketing activities in 1999 on the Enhanced Gas Utilization
project to produce natural gas from Qatar's North Field for supply to domestic
and regional industries.
Republic of Yemen
ExxonMobil's net acreage in the Republic of Yemen production sharing areas
totaled 0.9 million acres onshore at year-end. During the year, 5.5 net
exploration and development wells were drilled and completed.
Venezuela
The Cerro Negro heavy oil project began production in November 1999.
Construction activities on the Upgrader Facility at the Jose Industrial
Complex are on schedule for a 2001 start-up. ExxonMobil's net acreage totaled
0.5 million acres at year-end with 19.0 net exploration and development wells
completed during the year.
WORLDWIDE EXPLORATION
Exploration activities were underway in several areas in which ExxonMobil
has no established production operations. A total of 60 million net acres were
held at year-end, and 3.0 net exploration wells were completed during the
year.
Information with regard to mining activities follows:
- - - - - - - - - - - - - - - - -----------------------------------------------------
Syncrude Operations
Syncrude is a joint-venture established to recover shallow deposits of tar
sands using open-pit mining methods, to extract the crude bitumen, and to
produce a high-quality, light (32 degree API), sweet, synthetic crude oil. The
Syncrude operation, located near Fort McMurray, Alberta, Canada, exploits a
portion of the Athabasca Oil Sands Deposit. The location is readily accessible
by public road. The produced synthetic crude oil is shipped from the Syncrude
site to Edmonton in the Alberta Oil Sands Pipeline owned by the Alberta Energy
Company. Since startup in 1978, Syncrude has produced
12
<PAGE>
over one billion barrels of synthetic crude oil. Imperial Oil Limited is the
owner of a 25 percent interest in the joint-venture. Exxon Mobil Corporation
has a 69.6 percent interest in Imperial Oil Limited.
Operating License and Leases
Syncrude has an operating license issued by the Province of Alberta which is
effective until 2035. This license permits Syncrude to mine tar sands and
produce synthetic crude oil from approved development areas on tar sands
leases. Syncrude holds eight tar sands leases covering 255,458 acres in the
Athabasca Oil Sands Deposit. Issued by the Province of Alberta, leases are
automatically renewable as long as tar sands operations are ongoing or the
leases are part of an approved development plan. Syncrude leases 17, 22, 10,
12, 34 (containing proven reserves) and 31 (containing no proven reserves)
have development plans approved by the Alberta Energy and Utilities Board.
Syncrude is filing development plans for the remaining two leases (containing
no proven reserves) in order to continue them. There were no known previous
commercial operations on these leases prior to the start-up of operations in
1978.
Operations, Plant and Equipment
Operations at Syncrude involve three main processes: open pit mining,
extraction of crude bitumen and upgrading of crude bitumen into synthetic
crude oil. In the Base mine (lease 17), the mining and transportation system
uses draglines, bucketwheel reclaimers and belt conveyors. In the North mine
(leases 17 and 22) and in the Aurora mine (leases 10, 12 and 34), a truck,
shovel and hydrotransport system is used. Production from the Aurora mine is
scheduled to begin in 2000. The extraction plant, which separates crude
bitumen from sand, processes approximately 480,000 tons of tar sands a day,
producing more than 90 million barrels of crude bitumen a year. This
represents recovery of 91 percent of the crude bitumen contained in the tar
sands.
Crude bitumen extracted from tar sands is refined to a marketable
hydrocarbon product through a combination of carbon removal in large, high-
temperature, fluid-coking vessels and by hydrogen addition in high-
temperature, high-pressure, hydrocracking vessels. These processes remove
carbon and sulfur and reformulate the crude into a low viscosity, high-quality
synthetic crude oil product. In 1999 this upgrading process yielded 0.839
barrels of synthetic crude oil per barrel of crude bitumen. Since startup in
1978, the capacity of each of the two fluid cokers has been increased from
72,900 to 114,000 barrels of crude bitumen per day and the hydrocracker
capacity has been increased from 40,000 to 55,000 barrels per day. About two
thirds of the synthetic crude oil is processed by Edmonton area refineries and
the remaining one third is pipelined to refineries in eastern Canada and the
mid-western United States. Electricity is provided to Syncrude by a 270
megawatt electricity generating plant located at the Syncrude site. The
generating plant is owned by a third party. Imperial Oil Limited's 25 percent
share of net investment in plant, property and equipment, including surface
mining facilities, transportation equipment and upgrading facilities is $660
million.
Synthetic Crude Oil Reserves
The crude bitumen is contained within the unconsolidated sands of the
McMurray Formation. Ore bodies are buried beneath 50 to 150 feet of
overburden, have bitumen grades ranging from 4 to 14 weight percent and ore
thickness of 120 to 160 feet. Estimates of synthetic crude oil reserves are
based on detailed geological and engineering assessments of in-place crude
bitumen volume, the mining plan, historical extraction recovery and upgrading
yield factors, installed plant operating capacity and operating approval
limits. The in-place volume, depth and grade are established through extensive
and closely spaced core drilling. Proven reserves include the operating Base
and North mines and the Aurora mine. In accordance with the approved mining
plan, there are an estimated 3,680 million tons of extractable tar sands in
the Base and North mines, with an average bitumen grade of 10.4 weight
percent. In addition, at the Aurora mine, there are an estimated 1,655 million
tons of extractable tar
13
<PAGE>
sands at an average bitumen grade of 11.3 weight percent. After deducting
royalties payable to the Province of Alberta, Imperial Oil Limited estimates
its 25 percent net share of proven reserves is equivalent to 577 million
barrels of synthetic crude oil.
ExxonMobil Share of Net Proven Syncrude Reserves(1)
<TABLE>
<CAPTION>
Synthetic Crude Oil
-------------------------------
Base Mine and
North Mine Aurora Mine Total
------------- ----------- -----
(millions of barrels)
<S> <C> <C> <C>
January 1, 1999................................. 407 190 597
Revision of previous estimate................... -- -- --
Production...................................... (20) -- (20)
--- --- ---
December 31, 1999............................... 387 190 577
=== === ===
</TABLE>
- - - - - - - - - - - - - - - - --------
(1) Net reserves are the company's share of reserves after deducting royalties
payable to the Province of Alberta.
Syncrude Operating Statistics (total operation)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Operating Statistics
Overburden removed (millions of cubic yards)(1).. 83.8 79.9 47.0 44.9 60.0
Strip Ratio (volume of overburden to volume of
tar sands)(1)................................... 1.04 1.07 0.62 0.61 0.89
Tar sands mined (million of tons)................ 178.7 165.9 166.7 163.7 164.4
Average bitumen grade (weight percent)........... 10.8 10.7 10.6 10.4 10.4
----- ----- ----- ----- -----
Crude bitumen in mined tar sands (millions of
tons)........................................... 19.3 17.8 17.7 17.0 17.1
Average extraction recovery (percent)............ 91.4 91.6 91.0 90.0 90.3
----- ----- ----- ----- -----
Crude bitumen production (millions of
barrels)(2)..................................... 99.6 92.1 90.3 86.4 87.4
Average upgrading yield (percent)................ 83.9 84.6 84.5 84.2 84.3
----- ----- ----- ----- -----
Gross synthetic crude oil produced (millions of
barrels)........................................ 83.6 77.9 76.3 72.9 73.5
ExxonMobil net share (millions of barrels)(3).... 20 19 17 15 16
</TABLE>
- - - - - - - - - - - - - - - - --------
(1) Includes pre-stripping of mine areas.
(2) Crude bitumen production = crude bitumen in mined tar sands x average
extraction recovery x 5.65 bbls/ton bitumen.
(3) Reflects ExxonMobil's 25% interest in production less applicable royalties
payable to the Province of Alberta.
Item 3. Legal Proceedings.
On October 29, 1999, a previously-reported matter, involving allegations by
the Pennsylvania Department of Environmental Protection (the "PDEP") that
Mobil Oil Corporation had violated the Pennsylvania Tank Act by knowingly
delivering products into unregistered tanks, was settled. The PDEP had sought
penalties of up to $295,000; the matter was settled with the payment of a
$90,000 penalty.
Refer to the relevant portions of Note 19 on page F29 of the accompanying
financial section of the 1999 Annual Report to shareholders for additional
information on legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
----------------
14
<PAGE>
Executive Officers of the Registrant [pursuant to Instruction 3 to Regulation
S-K, Item 401(b)].
<TABLE>
<CAPTION>
Age as of
March 30,
Name 2000 Title (Held Office Since)
---- --------- ------------------------------------------------
<S> <C> <C>
L. R. Raymond.... 61 Chairman of the Board (1993)
L. A. Noto....... 61 Vice Chairman of the Board (1999)
R. Dahan......... 58 Senior Vice President (1995)
H. J. Longwell... 58 Senior Vice President (1995)
E. A. Renna...... 55 Senior Vice President (1999)
H. R. Cramer..... 49 Vice President (1999)
M. E. Foster..... 57 President, ExxonMobil Development Company (1999)
D. D. Humphreys.. 52 Vice President and Controller (1997)
K. T. Koonce..... 61 Vice President (1999)
C. W. Matthews... 55 Vice President and General Counsel (1995)
S. R. McGill..... 57 Vice President (1998)
J. T. McMillan... 63 Vice President (1997)
S. D. Pryor...... 50 Vice President (1999)
F. A. Risch...... 57 Vice President and Treasurer (1999)
D. S. Sanders.... 60 Vice President (1999)
J. S. Simon...... 56 Vice President (1999)
P. E. Sullivan... 56 Vice President and General Tax Counsel (1995)
J. L. Thompson... 60 Vice President (1991)
T. P. Townsend... 63 Vice President -- Investor Relations (1990)
and Secretary (1995)
</TABLE>
For at least the past five years, Messrs. Longwell, Matthews, Raymond, Risch,
Sullivan, Thompson 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, 1999.
<TABLE>
<S> <C>
Esso Italiana S.p.A. ............................... Simon
Esso Malaysia Berhad................................ Foster and Humphreys
Esso Production Malaysia Inc. ...................... Foster and Humphreys
Exxon Chemical Company.............................. Sanders
Exxon Coal and Minerals Company..................... McMillan
Exxon Company, International........................ Dahan, McGill and Simon
Exxon Company, U.S.A................................ Foster and McMillan
Exxon Upstream Development Company.................. Foster
Exxon Ventures (CIS) Inc. .......................... Koonce
ExxonMobil Chemical Company......................... Sanders
ExxonMobil Coal and Minerals Company................ McMillian
ExxonMobil Fuels Marketing Company.................. Cramer
ExxonMobil Gas Marketing Company.................... McGill
ExxonMobil Lubricants & Petroleum Specialties
Company............................................ Pryor
ExxonMobil Production Company....................... Koonce
ExxonMobil Refining & Supply Company................ Simon
Mobil Asia Pacific Pty. Ltd. ....................... Pryor
Mobil Chemical Company.............................. Pryor
Mobil Corporation................................... Cramer, Noto and Renna
Mobil Europe and Central Asia Limited............... Cramer
Mobil Europe Limited................................ Cramer
Mobil Oil Corporation............................... Pryor and Renna
Mobil South, Inc. .................................. Cramer
</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.
15
<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
F38 of the accompanying financial section of the 1999 Annual Report to
shareholders.
In accordance with the registrant's 1997 Nonemployee Director Restricted
Stock Plan, each newly elected nonemployee director (4 persons) was granted
4,000 shares of restricted stock on November 30, 1999, and each incumbent
nonemployee director (13 persons) was granted 600 shares of restricted stock
on January 1, 2000. 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.
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Sales and other operating
revenue, including excise taxes. $182,529 $165,627 $197,735 $210,038 $195,200
Net income
Before cumulative effect of
accounting change............. $ 7,910 $ 8,144 $ 11,732 $ 10,474 $ 8,846
Cumulative effect of accounting
change........................ $ -- $ (70) $ -- $ -- $ --
-------- -------- -------- -------- --------
Net income..................... $ 7,910 $ 8,074 $ 11,732 $ 10,474 $ 8,846
Net income per common share......
Before cumulative effect of
accounting change............. $ 2.28 $ 2.33 $ 3.32 $ 2.95 $ 2.48
Cumulative effect of accounting
change........................ $ -- $ (0.02) $ -- $ -- $ --
-------- -------- -------- -------- --------
Net income..................... $ 2.28 $ 2.31 $ 3.32 $ 2.95 $ 2.48
Net income per common share -
assuming dilution...............
Before cumulative effect of
accounting change............. $ 2.25 $ 2.30 $ 3.28 $ 2.91 $ 2.46
Cumulative effect of accounting
change........................ $ -- $ (0.02) $ -- $ -- $ --
-------- -------- -------- -------- --------
Net income..................... $ 2.25 $ 2.28 $ 3.28 $ 2.91 $ 2.46
Cash dividends per common share . $ 1.687 $ 1.666 $ 1.619 $ 1.538 $ 1.463
Total assets..................... $144,521 $139,335 $143,751 $146,939 $139,100
Long-term debt................... $ 8,402 $ 8,532 $ 10,868 $ 11,986 $ 12,853
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Incorporated by reference to pages F6 through F12 of the accompanying
financial section of the 1999 Annual Report to shareholders.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Incorporated by reference to the section entitled "Market Risks, Inflation
and Other Uncertainties" beginning on page F9 excluding the part entitled
"Inflation and Other Uncertainties" and to the tenth paragraph of the section
entitled "Liquidity and Capital Resources" on page F11 of the accompanying
financial section of the 1999 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.
16
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Reference is made to the Index to Financial Statements on page 21 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" of the registrant's definitive proxy statement for the
2000 annual meeting of shareholders (the "2000 Proxy Statement").
Item 11. Executive Compensation.
Incorporated by reference to the section entitled "Director Compensation"
and the section entitled "Executive Compensation Tables" of the registrant's
2000 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated by reference to the section entitled "Director and Executive
Officer Stock Ownership" of the registrant's 2000 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 21 of this Annual Report on
Form 10-K.
(a) (3) Exhibits:
See Index to Exhibits on page 22 of this Annual Report on Form 10-K.
(b) Reports on Form 8-K.
On December 1, 1999, the registrant filed a Current Report on Form 8-K
reporting under Item 2 (Acquisition or Disposition of Assets) and Item
5 (Other Events) the consummation of the merger between Exxon
Corporation and Mobil Corporation.
On February 11, 2000, the registrant filed an amendment of its Current
Report on Form 8-K filed on December 1, 1999, to include financial
statements of businesses acquired and pro forma financial information
in accordance with Item 7.
17
<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 MOBIL CORPORATION
By: /s/ LEE R. RAYMOND
----------------------------------
(Lee R. Raymond,
Chairman of the Board)
Dated March 23, 2000
----------------
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Richard
E. Gutman, Paul A. Hanson 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 23, 2000
______________________________________ (Principal Executive Officer)
(Lee R. Raymond)
/s/ LUCIO A. NOTO Vice Chairman of the Board March 23, 2000
______________________________________
(Lucio A. Noto)
/s/ MICHAEL J. BOSKIN Director March 23, 2000
______________________________________
(Michael J. Boskin)
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C>
/s/ RENE DAHAN Director March 23, 2000
______________________________________
(Rene Dahan)
/s/ WILLIAM T. ESREY Director March 23, 2000
______________________________________
(William T. Esrey)
/s/ DONALD V. FITES Director March 23, 2000
______________________________________
(Donald V. Fites)
/s/ JESS HAY Director March 23, 2000
______________________________________
(Jess Hay)
/s/ CHARLES A. HEIMBOLD, JR. Director March 23, 2000
______________________________________
(Charles A. Heimbold, Jr.)
/s/ JAMES R. HOUGHTON Director March 23, 2000
______________________________________
(James R. Houghton)
/s/ WILLIAM R. HOWELL Director March 23, 2000
______________________________________
(William R. Howell)
/s/ HELENE L. KAPLAN Director March 23, 2000
______________________________________
(Helene L. Kaplan)
/s/ REATHA CLARK KING Director March 23, 2000
______________________________________
(Reatha Clark King)
/s/ PHILIP E. LIPPINCOTT Director March 23, 2000
______________________________________
(Philip E. Lippincott)
/s/ HARRY J. LONGWELL Director March 23, 2000
______________________________________
(Harry J. Longwell)
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C>
/s/ J. RICHARD MUNRO Director March 23, 2000
______________________________________
(J. Richard Munro)
/s/ MARILYN CARLSON NELSON Director March 23, 2000
______________________________________
(Marilyn Carlson Nelson)
/s/ EUGENE A. RENNA Director March 23, 2000
______________________________________
(Eugene A. Renna)
/s/ WALTER V. SHIPLEY Director March 23, 2000
______________________________________
(Walter V. Shipley)
/s/ DONALD D. HUMPHREYS Controller (Principal March 23, 2000
______________________________________ Accounting Officer)
(Donald D. Humphreys)
/s/ FRANK A. RISCH Treasurer (Principal March 23, 2000
______________________________________ Financial Officer)
(Frank A. Risch)
</TABLE>
20
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated February 23, 2000, appearing on pages F13 to
F32; the Quarterly Information appearing on page F38 and the Supplemental
Information on Oil and Gas Exploration and Production Activities appearing on
pages F33 to F37 of the accompanying financial section of the 1999 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 1999 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.
21
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S> <C>
3(i). Restated Certificate of Incorporation, as restated
November 30, 1999.
3(ii). By-Laws, as revised to November 30, 1999.
10(iii)(a). 1993 Incentive Program, as amended.*
10(iii)(b). Plan for Deferral of Nonemployee Director Compensation and
Fees, as amended (incorporated by reference to Exhibit
10(iii)(b) to the registrant's Annual Report on Form 10-K
for 1998).*
10(iii)(c). 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). ExxonMobil Executive Life Insurance and Death Benefit
Plan.*
10(iii)(e). Short Term Incentive Program, as amended.*
10(iii)(f). 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).*
10(iii)(g). 1995 Mobil Incentive Compensation and Stock Ownership Plan
(incorporated by reference to the Definitive Proxy
Statement of Mobil Corporation filed March 20, 1995).*
10(iii)(h). Mobil Oil Corporation's Executive Life Insurance Program
(incorporated by reference to Exhibit 10.4 to the Annual
Report on Form 10-K of Mobil Corporation filed March 31,
1999).*
10(iii)(i). Supplemental Employees Savings Plan of Mobil Oil
Corporation (incorporated by reference to Exhibit 10.5 to
the Annual Report on Form 10-K of Mobil Corporation filed
March 31, 1999).*
12. Computation of ratio of earnings to fixed charges.
13. Pages F2 and F6 through F39 of the Financial Section of
the registrant's 1999 Annual Report to shareholders.
21. Subsidiaries of the registrant.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
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 1997 and
1998 annual periods to reflect accounting for the merger
of Exxon and Mobil as a pooling of interests).
27.3 Restated Financial Data Schedules (included only in the
electronic filing of this document. Restated 1999 interim
periods to reflect accounting for the merger of Exxon and
Mobil as a pooling of interests).
27.4 Restated Financial Data Schedules (included only in the
electronic filing of this document. Restated 1998 interim
periods to reflect accounting for the merger of Exxon and
Mobil as a pooling of interests).
99. Report of Ernst & Young LLP, Independent Auditors.
</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.
22
<PAGE>
EXHIBIT 3(i)
RESTATED
CERTIFICATE OF INCORPORATION
of
EXXON MOBIL CORPORATION
Exxon Mobil Corporation, a corporation organized and existing under
the laws of the State of New Jersey, restates and integrates its Certificate of
Incorporation, as heretofore restated and amended, to read in full as herein set
forth:
FIRST. The name of the corporation is:
EXXON MOBIL CORPORATION
SECOND. The address of the corporation's registered office is 830
Bear Tavern Road, West Trenton, New Jersey 08628-1020. The name of the
corporation's registered agent at such address, upon whom process against the
corporation may be served, is Corporation Service Company.
THIRD. The purposes for which the corporation is organized are to
engage in any or all activities within the purposes for which corporations now
or at any time hereafter may be organized under the New Jersey Business
Corporation Act and under all amendments and supplements thereto, or any
revision thereof or any statute enacted to take the place thereof, including but
not limited to the following:
(1) To do all kinds of mining, manufacturing and trading business;
transporting goods and merchandise by land or water in any manner; to buy, sell,
lease and improve lands; to build houses, structures, vessels, cars, wharves,
docks and piers; to lay and operate pipelines; to erect and operate telegraph
and telephone lines and lines for conducting electricity; to enter into and
carry out contracts of every kind pertaining to its business; to acquire, use,
sell and grant licenses under patent rights; to purchase or otherwise acquire,
hold, sell, assign and transfer shares of capital stock and bonds or other
evidences of indebtedness of corporations, and to exercise all the privileges of
ownership including voting upon the securities so held; to carry on its business
and have offices and agencies therefor in all parts of the world; and to hold,
purchase, mortgage and convey real estate and personal property within or
without the State of New Jersey;
(2) To engage in any activities encompassed within this Article Third
directly or through a subsidiary or subsidiaries and to take any and all acts
deemed appropriate to promote the interests of such subsidiary or subsidiaries,
including, without limiting the foregoing, the following: making contracts and
incurring liabilities for the benefit of such subsidiary or subsidiaries;
transferring or causing to be transferred to any such subsidiary or subsidiaries
assets of this corporation; guaranteeing dividends on any shares of the capital
stock of any such subsidiary; guaranteeing the principal and interest or either
of the bonds, debentures, notes or other evidences of indebtedness issued or
obligations incurred by any such subsidiary or
<PAGE>
subsidiaries; securing said bonds, debentures, notes or other evidences of
indebtedness so guaranteed by mortgage of or security interest in the property
of this corporation; and contracting that said bonds, debentures, notes or other
evidences of indebtedness so guaranteed, whether secured or not, may be
convertible into shares of this corporation upon such terms and conditions as
may be approved by the board of directors;
(3) To guarantee the bonds, debentures, notes or other evidences of
indebtedness issued, or obligations incurred, by any corporation, partnership,
limited partnership, joint venture or other association in which this
corporation at the time such guarantee is made has a substantial interest or
where such guarantee is otherwise in furtherance of the interests of this
corporation; and
(4) To exercise as a purpose or purposes each power granted to
corporations by the New Jersey Business Corporation Act or by any amendment or
supplement thereto or by any statute enacted to take the place thereof, insofar
as such powers authorize or may hereafter authorize corporations to engage in
activities.
FOURTH. The aggregate number of shares which the corporation shall
have authority to issue is four billion seven hundred million (4,700,000,000)
shares, divided into two hundred million (200,000,000) shares of preferred stock
without par value and four billion five hundred million (4,500,000,000) shares
of common stock without par value.
(1) The board of directors of the corporation is authorized at any
time or from time to time (i) to divide the shares of preferred stock into
classes and into series within any class or classes of preferred stock; (ii) to
determine for any such class or series its designation, relative rights,
preferences and limitations; (iii) to determine the number of shares in any such
class or series (including a determination that such class or series shall
consist of a single share); (iv) to increase the number of shares of any such
class or series previously determined by it and to decrease such previously
determined number of shares to a number not less than that of the shares of such
class or series then outstanding; (v) to change the designation or number of
shares, or the relative rights, preferences and limitations of the shares, of
any theretofore established class or series no shares of which have been issued;
and (vi) to cause to be executed and filed without further approval of the
shareholders such amendment or amendments to the Restated Certificate of
Incorporation as may be required in order to accomplish any of the foregoing.
In particular, but without limiting the generality of the foregoing, the board
of directors is authorized to determine with respect to the shares of any class
or series of preferred stock:
(a) whether the holders thereof shall be entitled to cumulative,
non-cumulative or partially cumulative dividends or to no dividends and, with
respect to shares entitled to dividends, the dividend rate or rates (which may
be fixed or variable and may be made dependent upon facts ascertainable outside
of the Restated Certificate of Incorporation) and any other terms and conditions
relating to such dividends;
(b) whether the holders thereof shall be entitled to receive
dividends payable on a parity with or subordinate or in preference to the
dividends payable on any other class or series of shares of the corporation;
2
<PAGE>
(c) whether, and if so to what extent and upon what terms and
conditions, the holders thereof shall be entitled to preferential rights upon
the liquidation of, or upon any distribution of the assets of, the corporation;
(d) whether, and if so upon what terms and conditions, such
shares shall be convertible into other securities;
(e) whether, and if so upon what terms and conditions, such
shares shall be redeemable;
(f) the terms and amount of any sinking fund provided for the
purchase or redemption of such shares; and
(g) the voting rights, if any, to be enjoyed by such shares and
the terms and conditions for the exercise thereof.
(2) Each holder of shares of common stock shall be entitled to one
vote for each share of common stock held of record by such holder on all matters
on which holders of shares of common stock are entitled to vote.
(3) No holder of any shares of common or preferred stock of the
corporation shall have any right as such holder (other than such right, if any,
as the board of directors in its discretion may determine) to purchase,
subscribe for or otherwise acquire any unissued or treasury shares, or any
option rights, or securities having conversion or option rights, of the
corporation now or hereafter authorized.
(4) The relative voting, dividend, liquidation and other rights,
preferences and limitations of the shares of the class of preferred stock
designated "Class A Preferred Stock" and the class of preferred stock designated
"Class B Preferred Stock" are as set forth in this Article FOURTH and in Exhibit
A to this Restated Certificate of Incorporation.
FIFTH. The following is a list of the names and residences of the
original shareholders, and of the number of shares held by each:
H.M. Flagler of New York City, One share.
Paul Babcock, Jr. of Jersey City, One share.
James McGee of Plainfield, New Jersey, One share.
Thos. C. Bushnell of Morristown, New Jersey, One share.
John D. Rockefeller of Cleveland, Ohio, }
Wm. Rockefeller of New York City, }
J.A. Bostwick of New York City, }
John D. Archbold of New York City, }
O.H. Payne of Cleveland, Ohio, }
Wm. G. Warden of Philadelphia, Pa., }
Benj. Brewster of New York City, }
Chas. Pratt of Brooklyn, N.Y., }
and H.M. Flagler of New York City. }
3
<PAGE>
Trustees of Standard Oil Trust, twenty-nine thousand nine hundred and
ninety-six shares (29,996), of which twenty-one thousand seven hundred
and twenty-four shares (21,724) were issued for property purchased and
necessary for the business of this corporation.
SIXTH. The number of directors of the corporation as of November 30,
1999 is 19 and their names and business office addresses are:
4
<PAGE>
Dr. Michael J. Boskin Mr. Phillip E. Lippincott
Hoover Institution P.O. Box 2159
Stanford University Park City, Utah 84060
Stanford, California 94305-6010
Mr. Harry J. Longwell
Mr. Rene Dahan 5959 Las Colinas Boulevard
5959 Las Colinas Boulevard Irving, Texas 75039-2298
Irving, Texas 75039-2298
Mrs. Marilyn Carlson Nelson
Mr. William T. Esrey Carlson Companies, Inc.
Sprint Corporation 1405 Xenium Lane North
2330 Shawnee Mission Pkwy. Plymouth, Minnesota 55441
Westwood, Kansas 66205
Mr. J. Richard Munro
Mr. Donald V. Fites Time Warner Cable
100 N. E. Adams Street 290 Harbor Drive
Peoria, IL 61629-9210 Stamford, CT 06902
Mr. Jess Hay Mr. Lucio A. Noto
Chase Tower 5959 Las Colinas Boulevard
2200 Ross Avenue Irving, TX 75039-2298
Dallas, Texas 75201-2764
Mr. Lee R. Raymond
Mr. Charles A. Heimbold, Jr. 5959 Las Colinas Boulevard
Bristol-Myers Squibb Company Irving, Texas 75039-2298
345 Park Avenue
New York, NY 10154-0037 Mr. Eugene A. Renna
5959 Las Colinas Boulevard
Mr. James R. Houghton Irving, Texas 75039-2298
80 East Market Street
Corning, New York 14830 Mr. Walter V. Shipley
The Chase Manhattan Corporation
Mr. William R. Howell 270 Park Avenue
6501 Legacy Drive New York, New York 10017-2070
Plano, Texas 75024-3698
Mr. Robert E. Wilhelm
Mrs. Helene L. Kaplan 5959 Las Colinas Boulevard
Skadden, Arps, Slate, Meagher & Flom Irving, Texas 75039-2298
919 Third Avenue
New York, NY 10022-3897
Dr. Reatha Clark King
General Mills Foundation
One General Mills Boulevard
Minneapolis, Minnesota 55426
5
<PAGE>
SEVENTH. The number of directors at any time may be increased or
diminished by vote of the board of directors, and in case of any such increase
the board of directors shall have power to elect each such additional director
to hold office until the next succeeding annual meeting of shareholders and
until his successor shall have been elected and qualified.
The board of directors, by the affirmative vote of a majority of the
directors in office, may remove a director or directors for cause where, in the
judgment of such majority, the continuation of the director or directors in
office would be harmful to the corporation and may suspend the director or
directors for a reasonable period pending final determination that cause exists
for such removal.
The board of directors from time to time shall determine whether and
to what extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation, or any of them, shall be
open to the inspection of the shareholders; and no shareholder shall have any
right of inspecting any account or book or document of the corporation, except
as conferred by statute or authorized by the board of directors, or by a
resolution of the shareholders.
EIGHTH. The following action may be taken by the affirmative vote of
a majority of the votes cast by the holders of shares of the corporation
entitled to vote thereon:
(1) The adoption by the shareholders of a proposed amendment of the
certificate of incorporation of the corporation;
(2) The adoption by the shareholders of a proposed plan of merger or
consolidation involving the corporation;
(3) The approval by the shareholders of a sale, lease, exchange, or
other disposition of all, or substantially all, the assets of the corporation
otherwise than in the usual and regular course of business as conducted by the
corporation; and
(4) Dissolution.
NINTH. Except as otherwise provided by statute or by this certificate
of incorporation or the by-laws of the corporation as in each case the same may
be amended from time to time, all corporate powers may be exercised by the board
of directors. Without limiting the foregoing, the board of directors shall have
power, without shareholder action:
(1) To authorize the corporation to purchase, acquire, hold, lease,
mortgage, pledge, sell and convey such property, real, personal and mixed,
without as well as within the State of New Jersey, as the board of directors may
from time to time determine, and in payment for any property to issue, or cause
to be issued, shares of the corporation, or bonds, debentures, notes or other
obligations or evidence of indebtedness thereof secured by pledge, security
interest or mortgage, or unsecured; and
(2) To authorize the borrowing of money, the issuance of bonds,
debentures, notes and other obligations or evidences of indebtedness of the
corporation, secured or unsecured, and the inclusion of provisions as to
redeemability and convertibility into shares of
6
<PAGE>
stock of the corporation or otherwise, and, as security for money borrowed or
bonds, debentures, notes and other obligations or evidences of indebtedness
issued by the corporation, the mortgaging or pledging of any property, real,
personal, or mixed, then owned or thereafter acquired by the corporation.
TENTH. To the full extent from time to time permitted by law, no
director or officer of the corporation shall be personally liable to the
corporation or its shareholders for damages for breach of any duty owed to the
corporation or its shareholders. Neither the amendment or repeal of this
Article, nor the adoption of any provision of this certificate of incorporation
inconsistent with this Article, shall eliminate or reduce the protection
afforded by this Article to a director or officer of the corporation with
respect to any matter which occurred, or any cause of action, suit or claim
which but for this Article would have accrued or arisen, prior to such
amendment, repeal or adoption.
7
<PAGE>
EXHIBIT A
PART I
Class A Preferred Stock
Section 1. Designation and Amount; Special Purpose Restricted
--------- --------------------------------------------------
Transfer Issue.
- - - - - - - - - - - - - - - - --------------
(A) The shares of this class of preferred stock shall be designated as
"Class A Preferred Stock" (referred to herein as the "Class A Preferred Stock")
and the aggregate number of shares constituting such class which the Corporation
shall have the authority to issue is 16,500,000. The shares of this class shall
have a stated value of $61.50 per share (the "Stated Value").
(B) Shares of Class A Preferred Stock shall be issued only to a
trustee acting on behalf of the Plan (as defined in Section 9(F)(vii)). In the
event of any transfer of shares of Class A Preferred Stock to any person other
than the Corporation or the trustee of the Plan, the shares of Class A Preferred
Stock so transferred, upon such transfer and without any further action by the
Corporation or the holder, shall be automatically converted into shares of the
Corporation's Common Stock without par value (the "Common Stock") pursuant to
Section 5 hereof and no such transferee shall have any of the voting powers,
preferences and relative, participating, optional or special rights ascribed to
shares of Class A Preferred Stock hereunder but, rather, only the powers and
rights pertaining to the Common Stock into which such shares of Class A
Preferred Stock shall be so converted. In the event of such a conversion, the
transferee of the shares of Class A Preferred Stock shall be treated for all
purposes as the record holder of the shares of Common Stock into which such
shares of Class A Preferred Stock have been automatically converted as of the
date of such transfer; provided, however, that the pledge of Class A Preferred
-------- -------
Stock as collateral under any credit agreement for the financing or refinancing
of the initial purchase of the Class A Preferred Stock by the Plan shall not
constitute a transfer for purposes of this Section 1. Certificates representing
shares of Class A Preferred Stock shall be legended to reflect such restrictions
on transfer. Notwithstanding the foregoing provisions of this Section 1 (B),
shares of Class A Preferred Stock (i) upon allocation to the account of a
participant in the Plan, shall be converted into shares of Common Stock pursuant
to Section 5 hereof and the shares of Common Stock issued upon such conversion
may be transferred by the holder thereof as permitted by law and (ii) shall be
redeemable by the Corporation upon the terms and conditions provided by Sections
6, 7 and 8 hereof.
Section 2. Dividends and Distributions.
--------- ---------------------------
(A) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Class A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds available under
applicable law and the Certificate of Incorporation, cumulative cash dividends
("Preferred Dividends") in an amount per share equal to $4.68 per annum and no
more, payable (x) monthly in arrears, one-twelfth on the 20th day of each month,
commencing on July 20, 1989 and ending on June 20, 1990, and thereafter (y)
quarterly in arrears, one-quarter on the 20th day of each March, June, September
and December in each year (each such monthly and quarterly date a "Dividend
Payment Date"), to holders of record at the start of business on such Dividend
Payment Date. In the event that any Dividend Payment Date shall occur on any
day other than a "Business Day" (as defined in Section 9(F)(i)),
8
<PAGE>
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately succeeding such Dividend Payment Date. Preferred
Dividends shall begin to accrue on outstanding shares of Class A Preferred Stock
from the date of issuance of such shares of Class A Preferred Stock. Preferred
Dividends shall accrue on a daily basis whether or not the Corporation shall
have earnings or surplus at the time. Preferred Dividends accrued after the
date of issuance for any period less than a full monthly or quarterly period, as
the case may be, between Dividend Payment Dates shall be computed on the basis
of a 360-day year consisting of twelve 30-day months and such a proportional
dividend shall accrue for the period from the date of issuance until the end of
the dividend payment period in which such issuance occurs. Accumulated but
unpaid Preferred Dividends shall accumulate as of the Dividend Payment Date on
which they first become payable, but no interest shall accrue on accumulated but
unpaid Preferred Dividends.
(B) So long as any Class A Preferred Stock shall be outstanding, no
dividend shall be declared or paid or set apart for payment on any other class
of stock ranking on a parity with the Class A Preferred Stock as to dividends
("Parity Stock"), unless there shall also be or have been declared and paid or
set apart for payment on the Class A Preferred Stock dividends ratably in
proportion to the respective amounts of dividends (a) accumulated and unpaid
through all dividend payment periods for the Class A Preferred Stock ending on
or before the dividend payment date of such Parity Stock and (b) accumulated and
unpaid on such Parity Stock through the dividend payment period on such Parity
Stock next preceding such dividend payment date. So long as any Class A
Preferred Stock shall be outstanding, in the event that full cumulative
dividends on the Class A Preferred Stock have not been declared and paid or set
apart for payment for all prior dividend payment periods, the Corporation shall
not declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption or
other retirement of, any other class of stock or series thereof of the
Corporation ranking as to dividends junior to the Class A Preferred Stock
("Junior Stock") until full cumulative and unpaid dividends on the Class A
Preferred Stock shall have been paid or declared and set apart for payment;
provided, however, that the foregoing shall not apply to (i) any dividend
- - - - - - - - - - - - - - - - -------- -------
payable solely in any shares of any Junior Stock, or (ii) the acquisition of
shares of any Junior Stock either (x) pursuant to any employee or director
incentive or benefit plan or arrangement (including any employment, severance or
consulting agreement) of the Corporation or any subsidiary of the Corporation
heretofore or hereafter adopted or (y) in exchange solely for shares of any
other Junior Stock.
Section 3. Voting Rights. The holders of shares of Class A Preferred
--------- -------------
Stock shall have the following voting rights:
(A) The holders of Class A Preferred Stock shall be entitled to vote
on all matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together as one class with the holders of Common Stock and
any other class or series of preferred stock so voting as one class. Each share
of the Class A Preferred Stock shall entitle the holder thereof to a number of
votes equal to the number of shares of Common Stock into which such share of
Class A Preferred Stock could be converted pursuant to the first sentence of
Section 5(A) hereof on the record date for determining the shareholders entitled
to vote, rounded to the nearest one-tenth of a vote; it being understood that
whenever the "Conversion Ratio" (as defined in Section 5 hereof) is adjusted
pursuant to Section 9 hereof, the voting rights of the Class A Preferred Stock
shall also be similarly adjusted.
9
<PAGE>
(B) Except as otherwise required by law, holders of Class A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock or any other class or series of preferred stock) for the taking of any
corporate action.
Section 4. Liquidation, Dissolution or Winding-Up.
--------- --------------------------------------
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the holders of Class A Preferred Stock shall be
entitled to receive out of assets of the Corporation which remain after
satisfaction in full of all valid claims of creditors of the Corporation and
which are available for payment to shareholders, and subject to the rights of
the holders of any class of stock of the Corporation ranking senior to or on a
parity with the Class A Preferred Stock in respect of distributions upon
liquidation, dissolution or winding-up of the Corporation, before any amount
shall be paid or distributed among the holders of Common Stock or any other
class of stock ranking junior to the Class A Preferred Stock in respect of
distributions upon liquidation, dissolution or winding-up of the Corporation,
liquidating distributions in an aggregate amount of $61.50 per share of Class A
Preferred Stock plus an amount equal to all accrued and unpaid dividends thereon
to the date fixed for distribution, and no more. If upon any liquidation,
dissolution or winding-up of the Corporation, the amounts payable with respect
to the Class A Preferred Stock and any other class of stock ranking as to any
such distribution on a parity with the Class A Preferred Stock are not paid in
full, the holders of the Class A Preferred Stock and such other class of stock
shall share ratably in any distribution of assets in proportion to the full
respective preferential amounts to which they are entitled. After payment of
the full amount to which they are entitled as provided by the foregoing
provisions of this Section 4(A), the holders of shares of Class A Preferred
Stock shall not be entitled to any further right or claim to any of the
remaining assets of the Corporation.
(B) Neither the merger, consolidation or combination of the
Corporation with or into any other corporation, nor the sale, lease, transfer or
other exchange of all or any portion of the assets of the Corporation (or any
purchase or redemption of some or all of the shares of any class or series of
stock of the Corporation), shall be deemed to be a dissolution, liquidation or
winding-up of the affairs of the Corporation for purposes of this Section 4, but
the holders of Class A Preferred Stock shall nevertheless be entitled in the
event of any such transaction to the rights provided by Section 8 hereof.
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to holders of
Class A Preferred Stock and any other class or series of preferred stock in such
circumstances shall be payable, and stating that, except in the case of Class A
Preferred Stock represented by uncertificated shares, such payment will be made
only after the surrender (or submission for notation of any partial payment) of
such holder's certificates representing shares of Class A Preferred Stock, shall
be given by first class mail, postage prepaid, mailed not less than twenty (20)
days prior to any payment date stated therein, to the holders of Class A
Preferred Stock, at the address shown on the books of the Corporation or any
transfer agent for the Class A Preferred Stock.
10
<PAGE>
Section 5. Conversion into Common Stock.
--------- ----------------------------
(A) A holder of shares of Class A Preferred Stock shall be entitled at
any time, but not later than the close of business on the Redemption Date (as
hereinafter defined) of such shares pursuant to Section 6, 7 or 8 hereof, to
cause any or all of such shares to be converted into a number of shares of
Common Stock for each share of Class A Preferred Stock which initially shall be
one and which shall be adjusted as hereinafter provided (and, as so adjusted, is
hereinafter sometimes referred to as the "Conversion Ratio"). In addition to
the foregoing and subject to Section 5(B) hereof, a holder of shares of Class A
Preferred Stock upon allocation of such shares to the account of a participant
in the Plan shall be required to convert each such share of Class A Preferred
Stock into the greater of (i) that number of shares of Common Stock which shall
be the quotient obtained by dividing the Stated Value of each share of Class A
Preferred Stock by the greater of (x) $15 divided by the Conversion Ratio or (y)
the average of the high and low sales prices for a share of Common Stock on the
trading day next preceding the Conversion Date (as hereinafter defined) on which
one or more sales of shares of Common Stock occur, all as reported on the
Composite Tape (as hereinafter defined), or (ii) that number of shares of Common
Stock equal to the Conversion Ratio. The Corporation's determination in good
faith in respect of the number of shares to be issued upon any and all
conversions pursuant to the preceding sentence shall be conclusive.
(B) Any holder of shares of Class A Preferred Stock desiring or
required to convert such shares into shares of Common Stock shall surrender the
certificate or certificates representing the shares of Class A Preferred Stock
being converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto) in case of a request
for registration in a name other than that of such holder, at the offices of the
Corporation or the transfer agent for the Common Stock accompanied by written
notice of conversion. Such notice of conversion shall specify (i) the number of
shares of Class A Preferred Stock to be converted, and the name or names in
which such holder wishes the certificate or certificates for Common Stock and
for any shares of Class A Preferred Stock not to be so converted to be issued
(or the name or names in which ownership of such shares is to be registered in
the event that they are to be uncertificated), (ii) the address or addresses to
which such holder wishes delivery to be made of such new certificates to be
issued upon such conversion, and (iii) whether the conversion is being effected
pursuant to the second sentence of Section 5(A) hereof.
(C) A conversion of shares of Class A Preferred Stock into shares of
Common Stock pursuant to Section 5(A) shall be effective immediately before the
close of business on the day of the later of (i) the surrender to the
Corporation of the certificate or certificates for the shares of Class A
Preferred Stock to be converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto) in
case of a request for registration in a name other than that of such holder and
(ii) the giving of the notice of conversion as provided herein (the "Conversion
Date"). On and after such Conversion Date, the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock.
(D) Promptly after the Conversion Date for shares of Class A Preferred
Stock to be converted, the Corporation or the transfer agent for the Common
Stock shall issue and send by hand delivery (with receipt to be acknowledged) or
by first class mail, postage prepaid, to the holder of such shares or to such
holder's designee, at the address designated by such holder, a
11
<PAGE>
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled upon conversion. In the event that there shall
have been surrendered a certificate or certificates representing shares of Class
A Preferred Stock only part of which are to be converted, the Corporation or the
transfer agent for the Common Stock shall issue and deliver to such holder or
such holder's designee a new certificate or certificates representing the number
of shares of Class A Preferred Stock which shall not have been converted.
(E) The Corporation shall not be obligated to deliver to holders of
Class A Preferred Stock any fractional share or shares of Common Stock issuable
upon any conversion of such shares of Class A Preferred Stock, but in lieu
thereof may make a cash payment in respect thereof in any manner permitted by
law. The determination in good faith by the Corporation of the amount of any
such cash payments shall be conclusive.
(F) The Corporation shall at all times reserve and keep available out
of its authorized and unissued and/or treasury Common Stock solely for issuance
upon the conversion of shares of Class A Preferred Stock as herein provided,
free from any preemptive rights, the maximum number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all shares of Class A
Preferred Stock then outstanding.
Section 6. Redemption at the Option of the Corporation.
--------- -------------------------------------------
(A) The Class A Preferred Stock shall be redeemable, in whole or in
part, at the option of the Corporation at any time at the Stated Value, plus an
amount equal to all accrued and unpaid dividends thereon to the date fixed for
redemption (the close of business on such date being referred to as the
"Redemption Date"); provided that such redemption may be made on or after
--------
December 20, 1990 and prior to July 20, 1995 only if (i) the Corporation shall
have requested that the trustee of the Plan repay the indebtedness incurred by
such trustee to purchase the shares of Class A Preferred Stock and (ii) either
(x) Section 404(k) of the Code (as hereinafter defined) is repealed or amended
or the Internal Revenue Service or the Treasury Department promulgates a Revenue
Ruling or Regulation or a federal Court of Appeals issues a decision involving
the Corporation, at any time on or after December 20, 1990 and prior to July 20,
1995 with the effect that less than 100% of the dividends payable on the shares
of any capital stock of the Corporation including, without limitation, Class A
Preferred Stock or Common Stock held in the Plan is deductible by the
Corporation, when paid to participants in the Plan or their beneficiaries or
used to repay indebtedness as described in Section 404(k) of the Code, from its
gross income for purposes of determining its liability for the federal income
tax imposed by Section 11 of the Code or (y) the Code is amended at any time on
or after December 20, 1990 and prior to July 20, 1995 (other than to change the
rate of any existing tax imposed by the Code) or the Internal Revenue Service or
the Treasury Department promulgates a Revenue Ruling or Regulation or a federal
Court of Appeals issues a decision involving the Corporation, with the effect
that the Corporation's liability for the alternative minimum tax imposed by
Section 55 of the Code, the general federal income tax imposed by Section 11 of
the Code or any other tax hereafter imposed by the Code is increased solely by
reason of its claiming a deduction in respect of dividends paid on the shares of
any capital stock of the Corporation including, without limitation, Class A
Preferred Stock or Common Stock held in the Plan in a manner consistent with
Section 404(k) of the Code. Payment of the redemption price shall be made by
the Corporation in cash or shares of Common Stock or a combination thereof, as
permitted by paragraph (C) of this Section 6. From and after the Redemption
Date, dividends on shares of Class A Preferred Stock called for redemption will
cease to accrue, such shares will no longer be
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deemed to be outstanding and all rights in respect of such shares of the
Corporation shall cease, except the right to receive the redemption price. No
interest shall accrue at the redemption price after the Redemption Date. If
less than all of the outstanding shares of Class A Preferred Stock are to be
redeemed, the Corporation shall either redeem a portion of the shares of each
holder determined pro rata based on the number of shares held by each holder or
shall select the shares to be redeemed by lot or as may be otherwise determined
by the Board of Directors of the Corporation.
(B) Unless otherwise required by law, notice of redemption pursuant to
paragraph (A) of this Section 6 will be sent to the holders of Class A Preferred
Stock at the address shown on the books of the Corporation or any transfer agent
for the Class A Preferred Stock by first class mail, postage prepaid, mailed not
less than thirty (30) days nor more than sixty (60) days prior to the Redemption
Date. Such Class A Preferred Stock shall continue to be entitled to the
conversion rights provided in Section 5 hereof through such Redemption Date.
Each such notice shall state: (i) the Redemption Date; (ii) the total number of
shares of the Class A Preferred Stock to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the redemption price and the intended form of
payment; (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such Redemption Date; and (vi) a
summary of the conversion rights of the shares to be redeemed, the period within
which conversion rights may be exercised, and the Conversion Ratio in effect at
the time. Upon surrender of the certificate for any shares so called for
redemption and not previously converted (or upon giving the notice of redemption
in the case of uncertificated shares), but not earlier than the Redemption Date,
the Corporation shall pay to the holder of such shares or its designee the
redemption price set forth pursuant to this Section 6.
(C) The Corporation, at its option, may make payment of the redemption
price required upon redemption of shares of Class A Preferred Stock pursuant to
Section 6 or 7 hereof in cash or in shares of Common Stock or in a combination
of such shares and cash, any such shares of Common Stock to be valued for such
purpose at their Fair Market Value (as defined in Section 9(F)(iii)) on the
Redemption Date. Any shares of Common Stock so issued or delivered (or issued
or delivered pursuant to Section 7) shall be deemed to have been issued or
delivered to the holder of the Class A Preferred Stock as of the Redemption Date
and such holder shall be deemed to have become the record holder thereof as of
the Redemption Date.
Section 7. Other Redemption Rights.
--------- -----------------------
Shares of Class A Preferred Stock shall be redeemed by the Corporation
for cash or, if the Corporation so elects, in shares of Common Stock, or a
combination of such shares and cash (any such shares of Common Stock to be
valued for such purpose in accordance with Section 6(C)), at a redemption price
equal to the Stated Value plus accrued and unpaid dividends thereon to the date
fixed for redemption, at the option of the holder, at any time and from time to
time upon notice to the Corporation given not less than five (5) Business Days
prior to the Redemption Date fixed by the holder in such notice (i) in the event
that the Plan is determined by the Internal Revenue Service not to be qualified
within the meaning of Sections 401(a) and 4975(e)(7) of the Internal Revenue
Code of 1986, as amended from time to time (the "Code") or (ii) in the event
that the Plan is terminated in accordance with its terms.
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Section 8. Consolidation, Combination, Merger, Etc.
--------- ---------------------------------------
(A) In the event that the Corporation shall consummate any
consolidation, combination, merger or substantially similar transaction,
pursuant to which the outstanding shares of Common Stock are by operation of law
exchanged solely for or changed, reclassified or converted solely into stock of
any successor or resulting corporation (including the Corporation) that
constitutes "qualifying employer securities" with respect to a holder of Class A
Preferred Stock within the meaning of Section 409(1) of the Code and Section
407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or
any successor provisions of law, and, if applicable, for a cash payment in lieu
of fractional shares, if any, the shares of Class A Preferred Stock of such
holder shall in connection therewith be exchanged for or converted into
preferred stock of such successor or resulting corporation, having in respect of
such corporation insofar as possible the same powers, preferences and relative,
participating, optional or other special rights (including the redemption rights
provided by Sections 6, 7 and 8 hereof), and the qualifications, limitations or
restrictions thereon, that the Class A Preferred Stock had immediately prior to
such transaction, except that after such transaction each share of the Class A
Preferred Stock shall be convertible, otherwise on the terms and conditions
provided by Section 5 hereof, into the number and kind of qualifying employer
securities so receivable by a holder of the number of shares of Common Stock
into which such shares of Class A Preferred Stock could have been converted
pursuant to the first sentence of Section 5(A) hereof immediately prior to such
transaction; provided, however, that if by virtue of the structure of such
-------- -------
transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, such holder of shares of Class A Preferred Stock shall be entitled
to make an equivalent election as to the nature and kind of consideration it
shall receive, and if such election cannot practicably be made by the holders of
the Class A Preferred Stock, then the shares of Class A Preferred Stock shall,
by virtue of such transaction and on the same terms as apply to the holders of
Common Stock, be convertible into or exchangeable for the aggregate amount of
qualifying employer securities (payable in like kind and proportion) receivable
by a holder of the number of shares of Common Stock into which such shares of
Class A Preferred Stock could have been converted immediately prior to such
transaction if such holder of Common Stock failed to exercise any rights of
election to receive any kind or amount of qualifying employer securities
receivable upon such transaction (provided that, if the kind or amount of
--------
qualifying employer securities receivable upon such transaction is not the same
for each non-electing share, then the kind and amount of qualifying employer
securities receivable upon such transaction for each such non-electing share
shall be the kind and amount so receivable per share by a plurality of the non-
electing shares). The conversion rights of the class of preferred stock of such
successor or resulting corporation for which the Class A Preferred Stock is
exchanged or into which it is converted, shall successively be subject to
adjustments pursuant to Section 9 hereof after any such transactions as nearly
equivalent as practicable to the adjustments provided for by such Section prior
to such transaction. The Corporation shall not consummate any such merger,
consolidation or similar transaction unless the successor or resulting
corporation shall have agreed to recognize and honor the rights of the holders
of Class A Preferred Stock set forth in this Section 8(A).
(B) In the event that the Corporation shall consummate any
consolidation, combination, merger or substantially similar transaction,
pursuant to which the outstanding shares of Common Stock are by operation of law
exchanged for or changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination thereof,
14
<PAGE>
other than solely qualifying employer securities (as referred to in Section
8(A)) and cash payments, if applicable, in lieu of fractional shares,
outstanding shares of Class A Preferred Stock shall, without any action on the
part of the Corporation or any holder thereof (but subject to Section 8(C)), be
deemed to have been converted pursuant to the first sentence of Section 5(A)
hereof immediately prior to the consummation of such merger, consolidation,
combination or similar business combination transaction into the number of
shares of Common Stock into which such shares of Class A Preferred Stock could
have been converted pursuant to the first sentence of Section 5(A) hereof at
such time so that each share of Class A Preferred Stock shall, by virtue of such
transaction and on the same terms as apply to the holders of Common Stock, be
converted into or exchanged for the aggregate amount of stock, securities, cash
or other property (payable in like kind and proportion) receivable by a holder
of the number of shares of Common Stock into which such share of Class A
Preferred Stock could have been converted pursuant to the first sentence of
Section 5(A) hereof immediately prior to such transaction; provided, however,
-------- -------
that if by virtue of the structure of such transaction, a holder of Common Stock
is required to make an election with respect to the nature and kind of
consideration to be received in such transaction, the holder of Class A
Preferred Stock shall be entitled to make an equivalent election as to the kind
of consideration it shall receive, and if such election cannot practicably be
made by the holders of the Class A Preferred Stock, then the shares of Class A
Preferred Stock shall, by virtue of such transaction and on the same terms as
apply to the holders of Common Stock, be converted into or exchanged for the
aggregate amount of stock, securities, cash or other property (payable in like
kind and proportion) receivable by a holder of the number of shares of Common
Stock into which such shares of Class A Preferred Stock could have been
converted immediately prior to such transaction if such holder of Common Stock
failed to exercise any rights of election as to the kind or amount of stock,
securities, cash or other property receivable upon such transaction (provided
--------
that, if the kind or amount of stock, securities, cash or other property
- - - - - - - - - - - - - - - - ----
receivable upon such transaction is not the same for each non-electing share,
then the kind and amount of stock, securities, cash or other property receivable
upon such transaction for each such non-electing share shall be the kind and
amount so receivable per share by a plurality of the non-electing shares).
(C) In the event the Corporation shall enter into any agreement
providing for any consolidation, combination, merger or substantially similar
transaction described in Section 8(B), then the Corporation shall as soon as
practicable thereafter (and in any event at least twenty (20) Business Days
before consummation of such transaction) give notice of such agreement and the
material terms thereof to each holder of Class A Preferred Stock and each holder
shall have the right to elect, by written notice to the Corporation, to receive,
upon consummation of such transaction (if and when such transaction is
consummated), from the Corporation or the successor of the Corporation, in
redemption and retirement of such Class A Preferred Stock, a cash payment equal
to the amount payable in respect of shares of Class A Preferred Stock upon
redemption pursuant to Section 6(A) hereof as if the date of the consummation of
such transaction was the Redemption Date. No such notice of redemption shall be
effective unless given to the Corporation prior to the close of business on the
second Business Day prior to consummation of such transaction, unless the
Corporation or the successor of the Corporation shall waive such prior notice,
but any notice of redemption so given prior to such time may be withdrawn by
notice of withdrawal given to the Corporation prior to the close of business on
the second Business Day prior to consummation of such transaction.
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<PAGE>
Section 9. Anti-dilution Adjustments.
--------- -------------------------
(A) In the event the Corporation shall, at any time or from time to
time while any of the shares of the Class A Preferred Stock are outstanding, (i)
pay a dividend or make a distribution in respect of the Common Stock in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Corporation (including a recapitalization effected by a merger or consolidation
to which Section 8 hereof does not apply) or otherwise, the Conversion Ratio in
effect immediately prior to such action shall be adjusted by multiplying such
Conversion Ratio by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock outstanding immediately before
such event. An adjustment made pursuant to this Section 9(A) shall be given
effect, upon payment of such a dividend or distribution, as of the record date
for the determination of shareholders entitled to receive such dividend or
distribution (on a retroactive basis) and in the case of a subdivision or
combination shall become effective immediately as of the effective date thereof.
(B) In the event the Corporation shall, at any time or from time to
time while any shares of Class A Preferred Stock are outstanding, issue rights,
options or warrants to all holders of its outstanding Common Stock, without any
charge to such holders, entitling them (for a period expiring within forty-five
(45) days after the record date mentioned below) to subscribe for or purchase
shares of Common Stock at a price per share which is more than 2% lower at the
record date mentioned below than the then Current Market Price per share of
Common Stock, the Conversion Ratio in effect immediately prior to such action
shall, subject to paragraphs (D) and (E) of this Section 9, be adjusted by
multiplying such Conversion Ratio by a fraction (i) the numerator of which shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of additional shares of Common
Stock issued upon exercise thereof, and (ii) the denominator of which shall be
the number of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of shares which the aggregate
offering price of the total number of shares of Common Stock so issued would
purchase at the then Current Market Price per share of Common Stock. Such
adjustment shall be made whenever such rights, options or warrants have expired,
and shall become effective retroactively immediately after the record date for
the determination of shareholders entitled to receive such rights, options or
warrants on the basis of the number of rights, options or warrants actually
exercised.
(C) In the event the Corporation shall, at any time or from time to
time while any of the shares of Class A Preferred Stock are outstanding, make an
Extraordinary Distribution (as defined in Section 9(F)(ii)) in respect of the
Common Stock, whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation (other than a recapitalization or
reclassification effected by a merger, combination or consolidation to which
Section 8 hereof applies), the Conversion Ratio in effect immediately prior to
such Extraordinary Distribution shall, subject to paragraphs (D) and (E) of this
Section 9, be adjusted by multiplying such Conversion Ratio by a fraction, the
numerator of which shall be the product of (i) the number of shares of Common
Stock outstanding immediately before such Extraordinary Distribution and (ii)
the Fair Market Value of a share of Common Stock on the Valuation Date (as
defined in Section 9(F)(vi)) with respect to an Extraordinary Distribution, and
the
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<PAGE>
denominator of which shall be (i) the product of (x) the number of shares of
Common Stock outstanding immediately before such Extraordinary Distribution and
(y) the Fair Market Value of a share of Common Stock on the Valuation Date with
respect to an Extraordinary Distribution, minus (ii) the Fair Market Value of
-----
the Extraordinary Distribution on the Valuation Date. The Corporation shall
send each holder of Class A Preferred Stock notice of its intent to make any
Extraordinary Distribution at the same time as, or as soon as practicable after,
such intent is first communicated (including by announcement of a record date in
accordance with the rules of the principal stock exchange on which the Common
Stock is listed or admitted to trading) to holders of Common Stock. Such notice
shall indicate the intended record date and the amount and nature of such
dividend or distribution, and the Conversion Ratio in effect at such time.
(D) Notwithstanding any other provisions of this Section 9, the
Corporation shall not be required to make any adjustment of the Conversion Ratio
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Conversion Ratio. Any lesser adjustment shall be carried
forward and shall be made no later than the time of, and together with, the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least one percent
(1%) in the Conversion Ratio.
(E) The Corporation shall be entitled to make such additional
adjustments in the Conversion Ratio, in addition to those required by the
foregoing provisions of this Section 9, as shall be necessary in order that any
dividend or distribution in shares of capital stock of the Corporation,
subdivision, reclassification or combination of shares of stock of the
Corporation or any recapitalization of the Corporation shall not be taxable to
holders of the Common Stock.
(F) For purposes of this Exhibit A, the following definitions shall
apply:
(i) "Business Day" shall mean each day that is not a Saturday,
Sunday or a day which state or federally chartered banking institutions in
New York are required or authorized to be closed.
(ii) "Extraordinary Distribution" shall mean any dividend or
other distribution (effected while any of the shares of Class A Preferred
Stock are outstanding) of (x) cash to the extent that such dividend or
distribution when added to the amount of all cash dividends and
distributions paid during the preceding period of twelve (12) calendar
months exceeds fifteen percent (15%) of the aggregate Fair Market Value of
all shares of Common Stock outstanding on the declaration date for such
Extraordinary Distribution and/or (y) any shares of capital stock of the
Corporation (other than shares of Common Stock), other securities of the
Corporation, evidences of indebtedness of the Corporation or any other
person or any other property (including shares of any subsidiary of the
Corporation), or any combination thereof, but excluding rights, options or
warrants to which Section 9(B) refers (without regard to the subscription
or purchase price provided for therein).
(iii) "Fair Market Value" shall mean, as to shares of Common
Stock or any other class of publicly traded capital stock or securities of
the Corporation or any other issuer which are publicly traded, the average
of the Current Market Prices of such shares or securities for each day of
the Adjustment Period. The "Fair Market Value" of any security which is
not publicly traded or of any other property shall mean the fair
17
<PAGE>
value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property,
which firm shall be selected in good faith by the Board of Directors of the
Corporation or a committee thereof, or, if no such investment banking or
appraisal firm is in the good faith judgment of the Board of Directors or
such committee available to make such determination, as determined in good
faith by the Board of Directors of the Corporation or such committee.
(iv) "Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security of the
Corporation or any other issuer shall mean (I) the last reported sales
price, regular way, or, if no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way, in either case as
reported on the Composite Tape for New York Stock Exchange transactions
(the "Composite Tape") or, (II) if such security is not listed or admitted
to trading on the New York Stock Exchange (the "NYSE"), on the principal
national securities exchange on which such security is listed or admitted
to trading or, (III) if not listed or admitted to trading on any national
securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ
National Market System") or, (IV) if such security is not quoted on the
NASDAQ National Market System, the average of the closing bid and asked
prices on each such day in the over-the-counter market as reported by
NASDAQ or, (V) if bid and asked prices for such security on each such day
shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any NYSE member firm regularly
making a market in such security selected for such purposes by the Board of
Directors of the Corporation or a committee thereof, in each case, on each
trading day during the Adjustment Period; provided, however, in determining
-------- -------
the Current Market Price, the value (as reasonably determined by the Board
of Directors of the Corporation or a committee thereof) of any "due-bill"
or similar instrument which is then associated with a share of Common Stock
or any other class of capital stock or other security, shall be deducted.
(v) "Adjustment Period" shall mean the period of five (5)
consecutive trading days preceding, and including, the date as of which the
Fair Market Value of a security is to be determined.
(vi) "Valuation Date" with respect to an Extraordinary
Distribution shall mean the date that is five (5) Business Days prior to
the record date for such Extraordinary Distribution.
(vii) "Plan" shall mean collectively the Corporation's Thrift
and ESOP plans and its Thrift and ESOP Trust.
(G) Whenever an adjustment to the Conversion Ratio and the related
voting rights of the Class A Preferred Stock is required pursuant hereto, the
Corporation shall forthwith deliver to the transfer agent(s) for the Common
Stock and the Class A Preferred Stock and file with the Secretary of the
Corporation, a statement signed by an officer of the Corporation stating the
adjusted Conversion Ratio determined as provided herein, and the voting rights
(as appropriately adjusted), of the Class A Preferred Stock. Such statement
shall set forth in reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment including any
determination of Fair Market Value involved in such
18
<PAGE>
computation. Promptly after each adjustment to the Conversion Ratio and the
related voting rights of the Class A Preferred Stock, the Corporation shall mail
a notice thereof and of the then prevailing Conversion Ratio to each holder of
Class A Preferred Stock.
Section 10. Ranking; Cancellation of Shares.
---------- -------------------------------
(A) The Class A Preferred Stock shall rank senior to the Common Stock
as to the payment of dividends and senior to the Common Stock as to the
distribution of assets on liquidation, dissolution and winding-up of the
Corporation, and, unless otherwise provided in the Certificate of Incorporation,
as the same may be amended, the Class A Preferred Stock shall rank on a parity
with all other classes or series of the Corporation's preferred stock, as to
payment of dividends and the distribution of assets on liquidation, dissolution
or winding-up.
(B) Any shares of Class A Preferred Stock acquired by the Corporation
by reason of the conversion or redemption of such shares as provided hereby, or
otherwise so acquired, shall be cancelled as shares of Class A Preferred Stock
and restored to the status of authorized but unissued shares of preferred stock
of the Corporation, undesignated as to classes or series, and may thereafter be
reissued as part of a new class or series of such preferred stock as permitted
by law.
Section 11. Miscellaneous.
---------- -------------
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three (3) Business Days after the mailing thereof if sent by
registered mail (unless first class mail shall be specifically permitted for
such notice under the terms of this Exhibit A) with postage prepaid, addressed:
(i) if to the Corporation, to its office at 5959 Las Colinas Boulevard, Irving,
TX 75039 (Attention: Treasurer) or to the transfer agent (if any) for the Class
A Preferred Stock or (ii) if to any holder of the Class A Preferred Stock or the
Common Stock, as the case may be, to such holder at the address of such holder
as listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the Class A Preferred Stock or the Common
Stock, as the case may be) or (iii) to such other address as the Corporation
shall have designated by notice similarly given.
(B) In the event that, at any time as a result of an adjustment made
pursuant to Section 8 or 9, the holder of any share of the Class A Preferred
Stock upon thereafter surrendering such shares for conversion shall become
entitled to receive any shares or other securities of the Corporation other than
shares of Common Stock, the Conversion Ratio in respect of such other shares or
securities so receivable upon conversion of shares of Class A Preferred Stock
shall thereafter be adjusted, and shall be subject to further adjustment from
time to time, in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in Sections 8 or 9, and
the provisions of each of the other Sections hereof with respect to the Common
Stock shall apply on like or similar terms to any such other shares or
securities. Any determination in good faith by the Corporation as to any
adjustment of the Conversion Ratio pursuant to this Section 11 (B) shall be
conclusive.
(C) The Corporation shall pay any and all issuance, stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Class A Preferred Stock or Common Stock or other
securities issued upon conversion of Class A
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<PAGE>
Preferred Stock pursuant hereto or certificates representing such shares or
securities. The Corporation shall not, however, be required to pay any such tax
which may be payable in respect of any transfer involved in the issuance or
delivery of shares of Common Stock or other securities in a name other then that
in which the shares of Class A Preferred Stock with respect to which such shares
or other securities are issued or delivered were registered, or in respect of
any payment to any person with respect to any such shares or securities other
than a payment to the registered holder thereof, and shall not be required to
make any such issuance, delivery or payment unless and until the person
otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax for issuance, transfer or documentary
stamp taxes or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
(D) In the event that a holder of shares of Class A Preferred Stock
shall not by written notice designate the name in which (i) shares of Common
Stock or (ii) any other securities in accordance with this Exhibit A, to be
issued upon conversion of such shares should be registered or to whom payment
upon redemption of shares of Class A Preferred Stock should be made or the
address to which the certificate or certificates representing such shares, or
such payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such Class A
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Corporation.
(E) Unless otherwise provided in the Certificate of Incorporation, as
the same may be amended, all payments of (x) dividends upon the shares of any
class of stock and upon any other class of stock ranking on a parity with such
first class of stock with respect to such dividends shall be made pro rata, so
that amounts paid per share on such first class of stock and such other class of
stock shall in all cases bear to each other the same ratio that the required
dividends then payable per share on the shares of such first class of stock and
such other class of stock bear to each other and (y) distributions on voluntary
or involuntary dissolution, liquidation or winding-up or otherwise made upon the
shares of any class of stock and upon any other class of stock ranking on a
parity with such first class of stock with respect to such distributions shall
be made pro rata, so that amounts paid per share on such first class of stock
and such other class of stock shall in all cases bear to each other the same
ratio that the required distributions then payable per share on the shares of
such first class of stock and such other class of stock bear to each other.
(F) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the Class A Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first class mail, postage prepaid, to each holder of record of Class
A Preferred Stock. So long as there is a transfer agent for a class of stock, a
holder thereof shall give any notices to the Corporation required hereunder to
the transfer agent at the address of the transfer agent last given by the
Corporation.
(G) If the Corporation and the holder so agree, any shares of Class A
Preferred Stock or any shares of Common Stock into which the shares of Class A
Preferred Stock shall be converted, may be uncertificated shares, provided that
--------
the names of the holders of all uncertificated shares and the number of such
shares held by each holder shall be registered at the offices of the Corporation
or the transfer agent for such shares. In the event that any shares shall
20
<PAGE>
be uncertificated, all references herein to the surrender or issuance of stock
certificates shall have no application to such uncertificated shares.
21
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PART II
Class B Preferred Stock
1. Designation and Issuance
(A) The shares of such class shall be designated CLASS B PREFERRED
STOCK (hereinafter referred to as "Class B Preferred Stock") and the number of
shares constituting such class shall be 165,800. Such number of shares may be
increased or decreased by resolution of the Board of Directors, but no such
decrease shall reduce the number of shares of Class B Preferred Stock to a
number less than that of the shares then outstanding plus the number of shares
issuable upon exercise of any rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation. All shares of Class B
Preferred Stock redeemed or purchased by the Corporation shall be retired and
shall be restored to the status of authorized but unissued shares of preferred
stock without designation.
(B) Shares of Class B Preferred Stock shall be issued only to a
trustee or trustees acting on behalf of an employee stock ownership trust or
plan or other employee benefit plan ("Plan") of Mobil Corporation or Mobil Oil
Corporation (collectively, "Mobil Oil"). In the event of any sale, transfer or
other disposition (hereinafter a "transfer") of shares of Class B Preferred
Stock to any person other than (x) any trustee or trustees of the Plan and (y)
any pledgee of such shares acquiring such shares as security for any loan or
loans made to the Plan or to any trustee or trustees acting on behalf of the
Plan, the shares of Class B Preferred Stock so transferred, upon such transfer
and without any further action by the Corporation or the holder shall be
automatically converted into shares of the Common Stock (as defined in Section
10) at the Conversion Price (as hereinafter defined) and on the terms otherwise
provided for the conversion of shares of Class B Preferred Stock into shares of
Common Stock pursuant to Section 5 hereof and no such transferee shall have any
of the voting powers, preferences and relative, participating, optional or
special rights ascribed to shares of Class B Preferred Stock hereunder but,
rather, only the powers and rights pertaining to the Common Stock into which
such shares of Class B Preferred Stock shall be so converted, provided, however,
that in the event of a foreclosure or other realization upon shares of Class B
Preferred Stock pledged as security for any loan or loans made to the Plan or to
the trustee or the trustees acting on behalf of the Plan, the pledged shares so
foreclosed or otherwise realized upon shall (subject to the holder's right of
redemption set forth in Section 7(B) hereof) be automatically converted into
shares of Common Stock at the Conversion Price and on the terms otherwise
provided for conversions of shares of Class B Preferred Stock into shares of
Common Stock pursuant to Section 5 hereof. In the event of such a conversion,
such transferee shall be treated for all purposes as the record holder of the
shares of Common Stock into which the Class B Preferred Stock shall have been
converted as of the date of such conversion. Certificates representing shares
of Class B Preferred Stock shall be legended to reflect such restrictions on
transfer. Notwithstanding the foregoing provisions of this Section 1, shares of
Class B Preferred Stock (i) may be converted into shares of Common Stock as
provided by Section 5 hereof and the shares of Common Stock issued upon such
conversion may be transferred by the holder thereof as permitted by law and (ii)
shall be redeemable by the Corporation upon the terms and conditions provided by
Sections 6, 7 and 8 hereof.
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2. Dividends and Distributions.
(A)(1) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Class B Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors out of funds legally available
therefor, cash dividends ("Regular Preferred Dividends") in an amount per share
initially equal to $300 per share per annum, subject to adjustment from time to
time as hereinafter provided, and no more, except as provided in Section 2(A)(2)
(such amount, as adjusted from time to time, being hereinafter referred to as
the "Regular Preferred Dividend Rate"), payable semiannually in arrears, one-
half on the last day of February, and one-half on the last day of August of each
year (each a "Dividend Payment Date") to holders of record at the start of
business on such Dividend Payment Date. The first dividend payable on each
share of Class B Preferred Stock shall accrue from the date of original issuance
thereof, except that the first dividend payable on shares of Class B Preferred
Stock issued on conversion of Mobil Corporation Series B ESOP Convertible
Preferred Stock ("Mobil Series B Stock") shall accrue and be cumulative from the
last dividend payment date of the Mobil Series B Stock and shall include any
arrearage on the Mobil Series B Stock. Regular Preferred Dividends shall accrue
on a daily basis, based on the Regular Preferred Dividend Rate in effect on such
date, whether or not the Corporation shall have earnings or surplus at the time,
computed on the basis of a 360-day year of 30-day months in case of any period
less than a full semiannual period. Accrued but unpaid Regular Preferred
Dividends, shall cumulate as of the Dividend Payment Date on which they first
become payable, but no interest shall accrue on accumulated but unpaid Regular
Preferred Dividends.
(2) In the event that for any period of six (6) months preceding
any Dividend Payment Date (each such period, a "Dividend Period") the aggregate
fair value (as determined by the Board of Directors) of all dividends and other
distributions declared per share of Common Stock during such Dividend Period
multiplied by the number of shares of Common Stock into which a share of Class B
Preferred Stock was convertible on the appropriate dividend payment date for the
Common Stock shall exceed the amount of the Regular Preferred Dividends accrued
on a share of Class B Preferred Stock during such Dividend Period, the holders
of shares of the Class B Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors out of funds legally available therefor,
cash dividends (the "Supplemental Preferred Dividends") in an amount per share
(with appropriate adjustments to reflect any stock split or combination of
shares or other adjustment provided for in Section 9) equal to the amount of
such excess up to but not exceeding (x) the product of twelve and one-half per
cent (12.5%) times the average of the Fair Market Values of the number of shares
of Common Stock into which a share of Class B Preferred Stock was convertible on
the day next preceding the ex-dividend date for each such dividend and the
distribution date for each such distribution on the Common Stock of the
Corporation minus (y) such amount of accrued Regular Preferred Dividends. The
calculation of each Supplemental Preferred Dividend shall be subject to
adjustment corresponding to the adjustments provided in Section 9 hereof.
Supplemental Preferred Dividends shall accrue and cumulate as of the close of
each relevant Dividend Period and shall be payable on the Dividend Payment Date
next following the close of any such Dividend Period, but no interest shall
accrue on accumulated but unpaid Supplemental Preferred Dividends and no
Supplemental Preferred Dividends shall accrue in respect of any period of less
than six months.
(B)(1) No full dividends shall be declared or paid or set apart for
payment on any shares ranking, as to dividends, on a parity with or junior to
the Class B Preferred Stock, for any
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period unless full cumulative dividends (which for all purposes of this
resolution shall include Regular Preferred Dividends and Supplemental Preferred
Dividends) have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for such payment on the Class
B Preferred Stock for all Dividend Payment Dates occurring on or prior to the
date of payment of such full dividends. When dividends are not paid in full, as
aforesaid, upon the shares of Class B Preferred Stock and any other shares
ranking, as to dividends, on a parity with Class B Preferred Stock, all
dividends declared upon shares of Class B Preferred Stock shall be declared pro
rata so that the amount of dividends declared per share on Class B Preferred
Stock and such other parity shares shall in all cases bear to each other the
same ratio that accumulated dividends per share on the shares of Class B
Preferred Stock and such other parity shares bear to each other. Except as
otherwise provided herein, holders of shares of Class B Preferred Stock shall
not be entitled to any dividends, whether payable in cash, property or shares,
in excess of full cumulative dividends, as herein provided, on Class B Preferred
Stock.
(2) So long as any shares of Class B Preferred Stock are outstanding,
no dividend (other than dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Common Stock
or other shares ranking junior to Class B Preferred Stock as to dividends and
upon liquidation and other than as provided in Section 2(B)(1)) shall be
declared or paid or set aside for payment or other distribution declared or made
upon the Common Stock or upon any other shares ranking junior to or on a parity
with Class B Preferred Stock as to dividends or upon liquidation, nor shall any
Common Stock or any other shares of the Company ranking junior to or on a parity
with Class B Preferred Stock as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such shares) by
the Corporation (except by conversion into or exchange for shares of the
Corporation ranking junior to Class B Preferred Stock as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of Class B Preferred Stock shall have been paid.
(3) Any dividend payment made on shares of Class B Preferred Stock
shall first be credited against the earliest accumulated but unpaid dividend due
with respect to shares of Class B Preferred Stock.
3. Liquidation Preference
(A) In the event of any liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of any series or classes of stock of the
Corporation ranking junior to Class B Preferred Stock upon liquidation,
dissolution or winding-up, the holders of Class B Preferred Stock shall be
entitled to receive the Liquidation Price (as hereinafter defined) per share in
effect at the time of liquidation, dissolution or winding-up plus an amount
equal to all dividends accrued (whether or not accumulated) and unpaid thereon
to the date of final distribution to such holders, but such holders shall not be
entitled to any further payments. The Liquidation Price per share which holders
of Class B Preferred Stock shall receive upon liquidation, dissolution or
winding-up shall be $3,887.50, subject to adjustment as hereinafter provided.
If, upon any liquidation, dissolution or winding-up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the holders
of Class B Preferred Stock shall be insufficient to pay in full the preferential
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amount aforesaid and liquidating payments on any other shares ranking as to
liquidation, dissolution or winding-up, on a parity with Class B Preferred
Stock, then such assets, or the proceeds thereof, shall be distributed among the
holders of Class B Preferred Stock and any such other shares ratably in
accordance with the respective amounts which would be payable on such shares of
Class B Preferred Stock and any such other shares if all amounts payable thereon
were paid in full. For the purposes of this Section 3, a consolidation or
merger of the Corporation with one or more corporations shall not be deemed to
be a liquidation, dissolution or winding-up, voluntary and involuntary.
(B) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with or prior to Class B Preferred
Stock upon liquidation, dissolution or winding-up, upon any liquidation,
dissolution or winding-up of the Corporation, after payment shall have been made
in full to the holders of Class B Preferred Stock as provided in this Section 3,
but not prior thereto, any other series or class or classes of stock ranking
junior to Class B Preferred Stock upon liquidation, dissolution or winding-up
shall, subject to the respective terms and provisions (if any) applying thereto,
be entitled to receive any and all assets remaining to be paid or distributed,
and the holders of Class B Preferred Stock shall not be entitled to share
therein.
4. Ranking and Voting of Shares.
(A) Any shares of the Corporation shall be deemed to rank:
(1) prior to Class B Preferred Stock as to dividends or as to
distribution of assets upon liquidation, dissolution or winding-up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding-up, as the case
may be, in preference or priority to the holders of Class B Preferred Stock,
(2) on a parity with Class B Preferred Stock as to dividends or as to
distribution of assets upon liquidation, dissolution or winding-up, whether or
not the dividend rates, dividend payment dates, or redemption or liquidation
prices per share thereof be different from those of Class B Preferred Stock, if
the holders of such class of stock and Class B Preferred Stock shall be entitled
to the receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding-up, as the case may be, in proportion to their respective
dividend or liquidation amounts, as the case may be, without preference or
priority one over the other, and
(3) junior to Class B Preferred Stock as to dividends or as to the
distribution of assets upon liquidation, dissolution or winding-up, if such
shares shall be Common Stock or if the holders of Class B Preferred Stock shall
be entitled to receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding-up, as the case may be, in preference or
priority to the holders of such shares. Unless otherwise provided in the
Restated Certificate of Incorporation of the Corporation, as the same may be
amended, including an amendment relating to any subsequent class or series of
preferred stock, the Class B Preferred Stock shall rank junior to all classes or
series of the Corporation's preferred stock as to dividends and the distribution
of assets upon liquidation, dissolution or winding-up.
(B) The holders of shares of Class B Preferred Stock shall have the
following voting rights:
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(1) The holders of Class B Preferred Stock shall be entitled to vote
on all matters submitted to a vote of the shareholders of the Corporation,
voting together with the holders of Common Stock as one class. The holder of
each share of Class B Preferred Stock shall be entitled to a number of votes
equal to the number of shares of Common Stock into which such Class B Preferred
Stock could be converted on the record date for determining the shareholders
entitled to vote; it being understood that whenever the "Conversion Price" (as
defined in Section 5 hereof) is adjusted as provided in Section 9 hereof, the
number of votes of the Class B Preferred Stock shall also be correspondingly
adjusted.
(2) Except as otherwise required by law or set forth herein, holders
of Class B Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for the taking of any corporate
action, including the issuance of any preferred stock now or hereafter
authorized, provided, however, that the vote of at least 66-2/3% of the
outstanding shares of Class B Preferred Stock, voting separately as a class,
shall be necessary to approve any alteration, amendment or repeal of any
provision of the Restated Certificate of Incorporation or any alteration,
amendment or repeal of any provision of the resolutions relating to the
designation, preferences and rights of Class B Preferred Stock (including any
such alteration, amendment or repeal effected by any merger or consolidation in
which the Corporation is the surviving or resulting corporation), if such
amendment, alteration or repeal would alter or change the powers, preferences,
or special rights of the Class B Preferred Stock so as to affect them adversely.
5. Conversion into Common Stock.
(A) A holder of shares of Class B Preferred Stock shall be entitled,
at any time prior to the close of business on the date fixed for redemption of
such shares pursuant to Sections 6, 7 or 8 hereof, to cause any or all of such
shares to be converted into shares of Common Stock. The number of shares of
Common Stock into which each share of the Class B Preferred Stock may be
converted shall be determined by dividing the Liquidation Price in effect at the
time of conversion by the Conversion Price (as hereinafter defined) in effect at
the time of conversion. The Conversion Price per share at which shares of
Common Stock shall be initially issuable upon conversion of any shares of Class
B Preferred Stock shall be $29.447411 subject to adjustment as hereinafter
provided; that is, a conversion rate initially equivalent to 132.015 shares of
Common Stock for each share of Class B Preferred Stock, which is subject to
adjustment as hereinafter provided.
(B) Any holder of shares of Class B Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender, if
certificated, the certificate or certificates representing the shares of Class B
Preferred Stock being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto), or
if uncertificated, a duly executed stock power relating thereto, at the
principal executive office of the Corporation or the offices of the transfer
agent for the Class B Preferred Stock or such office or offices in the
continental United States of an agent for conversion as may from time to time be
designated by notice to the holders of the Class B Preferred Stock by the
Corporation or the transfer agent for the Class B Preferred Stock, accompanied
by written notice of conversion. Such notice of conversion shall specify (i)
the number of shares of Class B Preferred Stock to be converted and the name or
names in which such holder wishes the Common Stock and any shares of Class B
Preferred Stock not to be so converted to be issued, and (ii) the address to
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which such holder wishes delivery to be made of a confirmation of such
conversion, if uncertificated, or any new certificate which may be issued upon
such conversion if certificated.
(C) Upon surrender, if certificated, of a certificate representing a
share or shares of Class B Preferred Stock for conversion, or if uncertificated,
of a duly executed stock power relating thereto, the Corporation shall issue and
send by hand delivery (with receipt to be acknowledged) or by first class mail,
postage prepaid, to the holder thereof or to such holder's designee, at the
address designated by such holder, if certificated, a certificate or
certificates for, or if uncertificated, confirmation of, the number of shares of
Common Stock to which such holder shall be entitled upon conversion. In the
event that there shall have been surrendered shares of Class B Preferred Stock,
only part of which are to be converted, the Corporation shall issue and deliver
to such holder or such holder's designee, if certificated, a new certificate or
certificates representing the number of shares of Class B Preferred Stock which
shall not have been converted, or if uncertificated, confirmation of the number
of shares of Class B Preferred Stock which shall not have been converted.
(D) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of Class B Preferred Stock into shares of Common Stock made
at the option of the holder thereof shall be effective as of the earlier of (i)
the delivery to such holder or such holder's designee of the certificates
representing the shares of Common Stock issued upon conversion thereof if
certificated or confirmation if uncertificated or (ii) the commencement of
business on the second business day after the surrender of the certificate or
certificates, if certificated, or a duly executed stock power, if
uncertificated, for the shares of Class B Preferred Stock to be converted. On
and after the effective date of conversion, the person or persons entitled to
receive Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock, but no
allowance or adjustment shall be made in respect of dividends payable to holders
of Common Stock of record on any date prior to such effective date. The
Corporation shall not be obligated to pay any dividends which shall have been
declared and shall be payable to holders of shares of Class B Preferred Stock on
a Dividend Payment Date if such Dividend Payment Date for such dividend shall be
on or subsequent to the effective date of conversion of such shares.
(E) The Corporation shall not be obligated to deliver to holders of
Class B Preferred Stock any fractional share or shares of Common Stock issuable
upon any conversion of such shares of Class B Preferred Stock, but in lieu
thereof may make a cash payment in respect thereof in any manner permitted by
law.
(F) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Stock or treasury Common Stock, solely for
issuance upon the conversion of shares of Class B Preferred Stock as herein
provided, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all the shares of Class B Preferred Stock then
outstanding.
6. Redemption at the Option of the Corporation.
(A) The Class B Preferred Stock shall be redeemable, in whole or in
part, at the option of the Corporation, out of funds legally available therefor,
at any time after November 22, 1999 at 100% of the Liquidation Price per share
in effect on the date fixed for redemption, plus an amount equal to all accrued
(whether or not accumulated) and unpaid dividends thereon
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to the date fixed for redemption. The Class B Preferred Stock shall be
redeemable, in whole or in part, out of funds legally available therefor, on or
before November 22, 1999 only if permitted by Section 6 (C) or (D) at a price
per share equal to, (i) if pursuant to Section 6(C), the redemption price set
forth therein, or (ii) if pursuant to Section 6(D), 100.775% of the Liquidation
Price in effect on the date fixed for redemption, plus, in each case, an amount
equal to all accrued (whether or not accumulated) and unpaid dividends thereon
to the date fixed for redemption. Payment of the redemption price shall be made
by the Corporation in cash or shares of Common Stock, or a combination thereof,
as permitted by Section 6(E). From and after the date fixed for redemption,
dividends on shares of Class B Preferred Stock called for redemption will cease
to accrue, such shares will no longer be deemed to be outstanding and all rights
in respect of such shares of the Corporation shall cease, except for the right
to receive the redemption price. If less than all of the outstanding shares of
Class B Preferred Stock are to be redeemed, the Corporation shall either redeem
a portion of the shares of each holder determined pro rata based on the number
of shares held by each holder or shall select the shares to be redeemed by lot,
as may be determined by the Board of Directors of the Corporation.
(B) Unless otherwise required by law, notice of redemption will be
sent to the holders of Class B Preferred Stock at the address shown on the books
of the Corporation or any transfer agent for Class B Preferred Stock by first
class mail, postage prepaid, mailed not less than twenty (20) days nor more than
sixty (60) days prior to the redemption date. Each notice shall state: (i) the
redemption date; (ii) the total number of shares of the Class B Preferred Stock
to be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates, if certificated,
for such shares are to be surrendered for payment of the redemption price; (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date; (vi) the conversion rights of the shares to be redeemed, the
period within which such conversion rights may be exercised, and the Conversion
Price and number of shares of Common Stock issuable upon conversion of a share
of Class B Preferred Stock at the time. Upon surrender of the certificates, if
certificated, for any shares so called for redemption, or upon the date fixed
for redemption if uncertificated such shares if not previously converted shall
be redeemed by the Corporation on the date fixed for redemption and at the
redemption price set forth in this Section 6.
(C) In the event (i) of a change in the federal tax law or
regulations of the United States of America or of an interpretation or
application of such law or regulations or of a determination by a court of
competent jurisdiction, which in any case has the effect of precluding the
Corporation from claiming (other than for purposes of calculating any
alternative minimum tax) any of the tax deductions for dividends paid on the
Class B Preferred Stock when such dividends are used as provided under Section
404(k)(2) of the Internal Revenue Code of 1986, as amended (the "Code") as in
effect on the date shares of Class B Preferred Stock are initially issued, or
(ii) that the Corporation certifies to the holders of the Class B Preferred
Stock that the Corporation has determined in good faith that the Plan either is
not qualified within the meaning of Section 401(a) of the Code or is not an
"employee stock ownership plan" within the meaning of 4975(e)(7) of the Code,
the Corporation may, in its sole discretion and notwithstanding anything to the
contrary in Section 6(A), at any time within one year of the occurrence of such
event, elect either to (a) redeem any or all of such Class B Preferred Stock for
cash or, if the Corporation so elects, in shares of Common Stock, or a
combination of such shares of Common Stock and cash, as permitted by Section
6(B), at a redemption price equal to the higher of (x) the
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Liquidation Price per share on the date fixed for redemption or (y) the Fair
Market Value (as defined in Section 9(G)(2)) of the number of shares of Common
Stock into which each share of Class B Preferred Stock is convertible at the
time the notice of such redemption is given, plus in either case an amount equal
to accrued (whether or not accumulated) and unpaid dividends thereon to the date
fixed for redemption, or (b) exchange any or all of such shares of Class B
Preferred Stock for securities of comparable value (as determined by an
independent appraiser) that constitute "qualifying employer securities" with
respect to a holder of Class B Preferred Stock within the meaning of Section
409(1) of the Code and Section 407(d)(5) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") or any successor provisions of law.
(D) Notwithstanding anything to the contrary in Section 6(A), in the
event that the Employees Savings Plan of Mobil Oil is terminated or the Employee
Stock Ownership Plan incorporated therein is terminated or eliminated from such
Plan, the Corporation may, in its sole discretion, call for redemption of any or
all of the then outstanding Class B Preferred Stock at a redemption price
calculated on the basis of the redemption prices provided in Section 6(A),
increased by 50% of the amount thereof in excess of 100% of the Liquidation
Price in effect on the date fixed for redemption.
(E) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of Class B Preferred Stock
in cash or in shares of Common Stock, or in a combination of such shares and
cash, any such shares of Common Stock to be valued for such purpose at their
Fair Market Value (as defined in Section 9(G)(2)); provided, however, that in
calculating their Fair Market Value the Adjustment Period shall be deemed to be
the five (5) consecutive trading days preceding the date of redemption.
7. Redemption at the Option of the Holder.
(A) Unless otherwise provided by law, shares of Class B Preferred
Stock shall be redeemed by the Corporation out of funds legally available
therefor for cash or, if the Corporation so elects, in shares of Common Stock,
or a combination of such shares and cash, any such shares of Common Stock to be
valued for such purpose as provided by Section 6(E), at a redemption price equal
to the higher of (x) the Liquidation Price per share in effect on the date fixed
for redemption or (y) the Fair Market Value of the number of shares of Common
Stock into which each share of Class B Preferred Stock is convertible at the
time the notice of such redemption is given plus in either case an amount equal
to accrued (whether or not accumulated) and unpaid dividends thereon to the date
fixed for redemption, at the option of the holder, at any time and from time to
time upon notice to the Corporation given not less than five (5) business days
prior to the date fixed by the holder in such notice of redemption, when and to
the extent necessary for such holder to provide for distributions required to be
made under, or to satisfy an investment election provided to participants in
accordance with, the Employee Stock Ownership Plan incorporated in the Employees
Savings Plan of Mobil Oil, or any successor plan or when the holder elects to
redeem shares of Class B Preferred Stock in respect of any Regular or
Supplemental Preferred Dividend (a "Dividend Redemption"). In the case of any
Dividend Redemption, such holder shall give the notice specified above within
five (5) business days after the related Dividend Payment Date and such
redemption shall be effective as to such number of shares of Class B Preferred
Stock as shall equal (x) the aggregate amount of such Regular or Supplemental
Preferred Dividend with respect to shares of Class B Preferred Stock allocated
or credited to the accounts of participants in the Employee Stock Ownership Plan
incorporated in
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the Employees Savings Plan of Mobil Oil, or any successor plan divided by (y)
the redemption price specified above.
(B) Shares of Class B Preferred Stock shall be redeemed by the
Corporation out of funds legally available therefor for cash or, if the
Corporation so elects, in shares of Common Stock, or a combination of such
shares of Common Stock and cash, any such shares of Common Stock to be valued
for such purpose as provided by Section 6(E), at a redemption price equal to the
Liquidation Price plus an amount equal to accrued and unpaid dividends thereon
to the date fixed for redemption, at the option of the holder, at any time and
from time to time upon notice to the Corporation given not less than five (5)
business days prior to the date fixed by the holder in such notice for such
redemption, upon certification by such holder to the Corporation of the
following events: (i) when and to the extent necessary for such holder to make
any payments of principal, interest or premium due and payable (whether as
scheduled, upon acceleration or otherwise) upon any obligations of the trust
established under the Employee Stock Ownership Plan incorporated in the
Employees Savings Plan of Mobil Oil in connection with the acquisition of Class
B Preferred Stock or any indebtedness, expenses or costs incurred by the holder
for the benefit of the Plan; or (ii) when and if it shall be established to the
satisfaction of the holder that the Plan has not initially been determined by
the Internal Revenue Service to be qualified as a stock bonus plan and an
employee stock ownership plan within the meaning of Sections 401(a) or
4975(e)(7) of the Code, respectively.
8. Consolidation, Merger, etc.
(A) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant to which
the outstanding shares of Common Stock are by operation of law exchanged solely
for or changed, reclassified or converted solely into shares of any successor or
resulting company (including the Corporation) that constitute "qualifying
employer securities" that are common stock with respect to a holder of Class B
Preferred Stock within the meanings of Section 409(1) of the Code and Section
407(d)(5) of ERISA, or any successor provision of law, and, if applicable, for a
cash payment in lieu of fractional shares, if any, then, in such event, the
terms of such consolidation or merger or similar transaction shall provide that
the shares of Class B Preferred Stock of such holder shall be converted into or
exchanged for and shall become preferred shares of such successor or resulting
company, having in respect of such company insofar as possible the same powers,
preferences and relative, participating, optional or other special rights
(including the redemption rights provided by Sections 6, 7, and 8 hereof), and
the qualifications, limitations or restrictions thereon, that the Class B
Preferred Stock had immediately prior to such transaction; provided, however,
that after such transaction each share of stock into which the Class B Preferred
Stock is so converted or for which it is exchanged shall be convertible,
pursuant to the terms and conditions provided by Section 5 hereof, into the
number and kind of qualifying employer securities receivable by a holder of the
number of shares of Common Stock into which such shares of Class B Preferred
Stock could have been converted pursuant to Section 5 hereof immediately prior
to such transaction and provided, further, that if by virtue of the structure of
such transaction, a holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by the holders of the
Class B Preferred Stock, then such election shall be deemed to be solely for
"qualifying employer securities" (together, if applicable, with a cash payment
in lieu of fractional shares) with the effect provided above on the basis of the
number
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and kind of qualifying employer securities receivable by a holder of the number
of shares of Common Stock into which the shares of Class B Preferred Stock could
have been converted pursuant to Section 5 hereof immediately prior to such
transaction (it being understood that if the kind or amount of qualifying
employer securities receivable in respect of each share of Common Stock upon
such transaction is not the same for each such share, then the kind and amount
of qualifying employer securities deemed to be receivable in respect of each
share of Common Stock for purposes of this proviso shall be the kind and amount
so receivable per share of Common Stock by a plurality of such shares). The
rights of the Class B Preferred Stock as preferred shares of such successor
resulting company shall successively be subject to adjustments pursuant to
Section 9 hereof after any such transaction as nearly equivalent to the
adjustments provided for by such Section prior to such transaction. The
Corporation shall not consummate any such merger, consolidation or similar
transaction unless all the terms of this Section 8(A) are complied with.
(B) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant to which
the outstanding shares of Common Stock are by operation of law exchanged for or
changed, reclassified or converted into other shares or securities or cash or
any other property, or any combination thereof, other than any such
consideration which is constituted solely of qualifying employer securities that
are common stock (as referred to in Section 8(A)) and cash payments, if
applicable, in lieu of fractional shares, outstanding shares of Class B
Preferred Stock shall, without any action on the part of the Corporation or any
holder thereof (but subject to Section 8(C)), be automatically converted
immediately prior to the consummation of such merger, consolidation or similar
transaction into shares of Common Stock at the conversion rate then in effect so
that each share of Class B Preferred Stock shall, by virtue of such transaction
and on the same terms as apply to the holders of Common Stock, be converted into
or exchanged for the aggregate amount of shares, securities, cash or other
property (payable in like kind) receivable by a holder of the number of shares
of Common Stock into which such shares of Class B Preferred Stock could have
been converted immediately prior to such transaction if such holder of Common
Stock failed to exercise any rights of election as to the kind or amount of
shares, securities, cash or other property receivable upon such transaction
(provided that, if the kind or amount of shares, securities, cash or other
property receivable upon such transaction is not the same for each non-electing
share, then the kind and amount of shares, securities, cash or other property
receivable upon such transaction for each non-electing share shall be the kind
and amount so receivable per share by a plurality of non-electing shares).
(C) In the event the Corporation shall enter into any agreement
providing for any consolidation or merger or similar transaction described in
Section 8(B), then the Corporation shall as soon as practicable thereafter (and
in any event at least ten (10) business days before consummation of such
transaction) give notice of such agreement and the material terms thereof to
each holder of Class B Preferred Stock and each such holder shall have the right
to elect, by written notice to the Corporation, to receive, upon consummation of
such transaction (if and when such transaction is consummated), out of funds
legally available therefor, from the Corporation or the successor of the
Corporation, in redemption and retirement of such Class B Preferred Stock, in
lieu of any cash or other securities which such holder would otherwise be
entitled to receive under Section 8(B) hereof, a cash payment equal to the
redemption price specified in Section 6(A) in effect on the date of the
consummation of such transaction plus an amount equal to all accrued (whether or
not accumulated) and unpaid dividends. No such notice
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of redemption shall be effective unless given to the Corporation prior to the
close of business of the fifth business day prior to consummation of such
transaction, unless the Corporation or the successor of the Corporation shall
waive such prior notice, but any notice of redemption so given prior to such
time may be withdrawn by notice of withdrawal given to the Corporation prior to
the close of business on the fifth business day prior to consummation of such
transaction.
9. Anti-dilution Adjustments.
(A)(1) Subject to the provisions of Section 9(E), in the event the
Corporation shall, at any time or from time to time while any of the shares of
the Class B Preferred Stock are outstanding, (i) pay a dividend or make a
distribution in respect of the Common Stock in shares of Common Stock or (ii)
subdivide the outstanding shares of Common Stock into a greater number of
shares, in each case whether by reclassification of shares, recapitalization of
the Corporation (excluding a recapitalization or reclassification effected by a
merger or consolidation to which Section 8 hereof applies) or otherwise, then,
in such event, the Board of Directors shall, to the extent legally permissible,
declare a dividend in respect of the Class B Preferred Stock in shares of Class
B Preferred Stock (a "Special Dividend") in such a manner that a holder of Class
B Preferred Stock will become a holder of that number of shares of Class B
Preferred Stock equal to the product of the number of such shares held prior to
such event times a fraction (the "Sec. 9(A) Non-Dilutive Share Fraction"), the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock outstanding immediately before such event. A Special
Dividend declared pursuant to this Section 9(A)(1) shall be effective, upon
payment of such dividend or distribution in respect of the Common Stock, as of
the record date for the determination of shareholders entitled to receive such
dividend or distribution (on a retroactive basis), and in the case of a
subdivision shall become effective immediately as of the effective date thereof.
Concurrently with the declaration of the Special Dividend pursuant to this
Section 9(A)(1), the Conversion Price, the Liquidation Price and the Regular
Preferred Dividend Rate of all shares of Class B Preferred Stock shall be
adjusted by dividing the Conversion Price, the Liquidation Price and the Regular
Preferred Dividend Rate, respectively, in effect immediately before such event
by the Sec. 9(A) Non-Dilutive Share Fraction.
(2) The Corporation and the Board of Directors shall each use its best
efforts to take all necessary steps or to take all actions as are reasonably
necessary or appropriate for declaration of the Special Dividend provided in
Section 9(A)(1) but shall not be required to call a special meeting of
shareholders in order to implement the provisions thereof. If for any reason
the Board of Directors is precluded from giving full effect to the Special
Dividend provided in Section 9(A)(1), then no such Special Dividend shall be
declared, but instead the Conversion Price shall automatically be adjusted by
dividing the Conversion Price in effect immediately before the event by the Sec.
9(A) Non-Dilutive Share Fraction and the Liquidation Price and the Regular
Preferred Dividend Rate will not be adjusted. An adjustment to the Conversion
Price made pursuant to this Section 9(A)(2) shall be given effect, upon payment
of such a dividend or distribution, as of the record date for the determination
of holders entitled to receive such dividend or distribution (on a retroactive
basis), and in the case of a subdivision shall become effective immediately as
of the effective date thereof. If subsequently the Board of Directors is able
to give full effect to the Special Dividend as provided in Section 9(A)(1), then
such Special Dividend will be declared and other adjustments will be made in
accordance with the provisions
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of Section 9(A)(1) and the adjustment in the Conversion Price as provided in
this Section 9(A)(2) will automatically be reversed and nullified prospectively.
(3) Subject to the provisions of Section 9(E) hereof, in the event the
Corporation shall, at any time or from time to time while any of the shares of
the Class B Preferred Stock are outstanding, combine the outstanding shares of
Common Stock into a lesser number of shares, whether by reclassification of
shares, recapitalization of the Corporation (excluding a recapitalization or
reclassification effected by a merger, consolidation or other transaction to
which Section 8 hereof applies) or otherwise, then, in such event, the
Conversion Price shall automatically be adjusted by dividing the Conversion
Price in effect immediately before such event by the Sec. 9(A) Non-Dilutive
Share Fraction and the Liquidation Price and the Regular Preferred Dividend Rate
will not be adjusted. An adjustment to the Conversion Price made pursuant to
this Section 9(A)(3) shall be given effect immediately as of the effective date
of such combination.
(B)(1) Subject to the provisions of Section 9(E), in the event the
Corporation shall, at any time or from time to time while any of the shares of
Class B Preferred Stock are outstanding issue to holders of shares of Common
Stock as a dividend or distribution, including by way of reclassification of
shares or a recapitalization of the Corporation, any right or warrant to
purchase shares of Common Stock (but not including as a right or warrant for
this purpose any security convertible into or exchangeable for shares of Common
Stock) for a consideration having a Fair Market Value (as defined in Section 9
(G)(2) hereof) per share less than the Fair Market Value of a share of Common
Stock on the date of issuance of such right or warrant, then, in such event, the
Board of Directors shall, to the extent legally permissible, declare a Special
Dividend in such a manner that a holder of Class B Preferred Stock will become a
holder of that number of shares of Class B Preferred Stock equal to the product
of the number of such shares held prior to such event times a fraction (the
"Sec. 9(B) Non-Dilutive Share Fraction"), the numerator of which is the number
of shares of Common Stock outstanding immediately before such issuance of rights
or warrants plus the maximum number of shares of Common Stock that could be
acquired upon exercise in full of all such rights and warrants and the
denominator of which is the number of shares of Common Stock outstanding
immediately before such issuance of warrants or rights plus the number of shares
of Common Stock which could be purchased at the Fair Market Value of a share of
Common Stock at the time of such issuance for the maximum aggregate
consideration payable upon exercise in full of all such rights and warrants. A
Special Dividend declared pursuant to this Section 9(B)(1) shall be effective
upon such issuance of rights or warrants. Concurrently with the declaration of
the Special Dividend pursuant to this Section 9(B)(1), the Conversion Price, the
Liquidation Price and the Regular Preferred Dividend Rate of all shares of Class
B Preferred Stock shall be adjusted by dividing the Conversion Price, the
Liquidation Price and the Regular Preferred Dividend Rate, respectively, in
effect immediately before such event by the Sec. 9(B) Non-Dilutive Share
Fraction.
(2) The Corporation and the Board of Directors shall each use its best
efforts to take all necessary steps or to take all actions as are reasonably
necessary or appropriate for declaration of the Special Dividend provided in
Section 9(B)(1) but shall not be required to call a special meeting of
shareholders in order to implement the provisions thereof. If for any reason
the Board of Directors is precluded from giving full effect to the Special
Dividend provided in Section 9(B)(1), then no such Special Dividend shall be
declared, but instead the Conversion Price shall automatically be adjusted by
dividing the Conversion Price in effect immediately
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before the event by the Sec. 9(B) Non-Dilutive Share Fraction and the
Liquidation Price and the Preferred Dividend Rate will not be adjusted. An
adjustment to the Conversion Price made pursuant to this Section 9(B)(2) shall
be given effect upon issuance of rights or warrants. If subsequently the Board
of Directors is able to give full effect to the Special Dividend as provided in
Section 9(B)(1), then such Special Dividend will be declared and other
adjustments will be made in accordance with the provisions of Section 9(B)(1)
and the adjustment in the Conversion Price as provided in this Section 9(B)(2)
will automatically be reversed and nullified prospectively.
(C)(1)(i) Subject to the provisions of Section 9(E), in the event the
Corporation shall, at any time or from time to time while any of the shares of
Class B Preferred Stock are outstanding, issue, sell or exchange shares of
Common Stock (other than pursuant to (x) any right or warrant to purchase or
acquire shares of Common Stock (including as such a right or warrant any
security convertible into or exchangeable for shares of Common Stock), or (y)
any employee or director incentive, compensation or benefit plan or arrangement
of the Corporation or any subsidiary of the Corporation heretofore or hereafter
adopted) at a purchase price per share less than the Fair Market Value of a
share of Common Stock on the date of such issuance, sale or exchange, then, in
such event, the Board of Directors shall, to the extent legally permissible,
declare a Special Dividend in such a manner that a holder of Class B Preferred
Stock will become the holder of that number of shares of Class B Preferred Stock
equal to the product of the number of such shares held prior to such event times
a fraction (the "Sec. 9(C)(1)(i) Non-Dilutive Share Fraction"), the numerator of
which is the number of shares of Common Stock outstanding immediately before
such issuance, sale or exchange plus the number of shares of Common Stock so
issued, sold or exchanged and the denominator of which is the number of shares
of Common Stock outstanding immediately before such issuance, sale or exchange
plus the number of shares of Common Stock which could be purchased at the Fair
Market Value of a share of Common Stock at the time of such issuance, sale or
exchange for the maximum aggregate consideration paid therefor.
(ii) In the event that the Corporation shall, at any time or from time
to time while any Class B Preferred Stock is outstanding, issue, sell or
exchange any right or warrant to purchase or acquire shares of Common Stock
(including as such a right or warrant any security convertible into or
exchangeable for shares of Common Stock other than pursuant to (x) any employee
or director incentive, compensation or benefit plan or arrangement of the
Corporation or any subsidiary of the Corporation heretofore or hereafter adopted
and (y) any dividend or distribution on shares of Common Stock contemplated in
Section 9(A)(1)) for a consideration having a Fair Market Value, on the date of
such issuance, sale or exchange, less than the Non-Dilutive Amount (as defined
in Section 9(G)(3) hereof), then, in such event, the Board of Directors shall,
to the extent legally permissible, declare a Special Dividend in such a manner
that a holder of Class B Preferred Stock will become the holder of that number
of shares of Class B Preferred Stock equal to the product of the number of such
shares held prior to such event times a fraction (the "Sec. 9(C)(1)(ii) Non-
Dilutive Share Fraction"), the numerator of which is the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock that could be acquired upon
exercise in full of all such rights and warrants and the denominator of which is
the number of shares of Common Stock outstanding immediately before such
issuance of rights or warrants plus the number of shares of Common Stock which
could be purchased at the Fair Market Value of a share of Common Stock at the
time of such issuance for the total of (x) the maximum
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aggregate consideration payable at the time of the issuance, sale or exchange of
such right or warrant and (y) the maximum aggregate consideration payable upon
exercise in full of all such rights or warrants.
(iii) A Special Dividend declared pursuant to this Section 9(C)(1)
shall be effective upon the effective date of such issuance, sale or exchange.
Concurrently with the declaration of the Special Dividend pursuant to this
Section 9(C)(1), the Conversion Price, the Liquidation Price and the Regular
Preferred Dividend Rate of all shares of Class B Preferred Stock shall be
adjusted by dividing the Conversion Price, the Liquidation Price and the Regular
Preferred Dividend Rate, respectively, in effect immediately before such event
by the Sec. 9(C)(1)(i) or Sec. 9(C)(1)(ii) Non-Dilutive Share Fraction, as the
case may be.
(2) The Corporation and the Board of Directors shall each use its best
efforts to take all necessary steps or to take all actions as are reasonably
necessary or appropriate for declaration of the Special Dividend provided in
Section 9(C)(1)(i) or (ii) but shall not be required to call a special meeting
of shareholders in order to implement the provisions thereof. If for any reason
the Board of Directors is precluded from giving full effect to any Special
Dividend provided in Section 9(C)(1), then no such Special Dividend shall be
declared, but instead the Conversion Price shall automatically be adjusted by
dividing the Conversion Price in effect immediately before the event by the Sec.
9(C)(1)(i) or Sec. 9(C)(1)(ii) Non-Dilutive Share Fraction, as the case may be,
and the Liquidation Price and the Regular Preferred Dividend Rate will not be
adjusted. An adjustment to the Conversion Price made pursuant to this Section
9(C)(2) shall be given effect upon the effective date of such issuance, sale or
exchange. If subsequently the Board of Directors is able to give full effect to
the Special Dividend as provided in Section 9(C)(1), then such Special Dividend
will be declared and other adjustments will be made in accordance with the
provisions of Section 9(C)(1) and the adjustment in the Conversion Price as
provided in this Section 9(C)(2) will automatically be reversed and nullified
prospectively.
(D)(1) Subject to the provisions of Section 9(E), in the event the
Corporation shall, at any time or from time to time while any of the shares of
Class B Preferred Stock are outstanding, make an Extraordinary Distribution (as
defined in Section 9(G)(1) hereof) in respect of the Common Stock, whether by
dividend, distribution, reclassification of shares or recapitalization of the
Corporation (including capitalization or reclassification effected by a merger
or consolidation to which Section 8 hereof does not apply) or effect a Pro Rata
Repurchase (as defined in Section 9(G)(4) hereof) of Common Stock, then, in such
event, the Board of Directors shall, to the extent legally permissible, declare
a Special Dividend in such a manner that a holder of Class B Preferred Stock
will become a holder of that number of shares of Class B Preferred Stock equal
to the product of the number of such shares held prior to such event times a
fraction (the "Sec. 9(D) Non-Dilutive Share Fraction"), the numerator of which
is the product of (a) the number of shares of Common Stock outstanding
immediately before such Extraordinary Distribution or Pro Rata Repurchase minus,
in the case of a Pro Rata Repurchase, the number of shares of Common Stock
repurchased by the Corporation multiplied by (b) the Fair Market Value of a
share of Common Stock on the day before the ex-dividend date with respect to an
Extraordinary Distribution which is paid in cash and on the distribution date
with respect to an Extraordinary Distribution which is paid other than in cash,
or on the applicable expiration date (including all extensions thereof) of any
tender offer which is a Pro Rata Repurchase or on the date of purchase with
respect to any Pro Rata Repurchase which is not a
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tender offer, as the case may be, and the denominator of which is (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase multiplied by (y)
the Fair Market Value of a share of Common Stock on the day before the ex-
dividend date with respect to an Extraordinary Distribution which is paid in
cash and on the distribution date with respect to an Extraordinary Distribution
which is paid other than in cash, or on the applicable expiration date
(including all extensions thereof) of any tender offer which is a Pro Rata
Repurchase, or on the date of purchase with respect to any Pro Rata Repurchase
which is not a tender offer, as the case may be, minus (ii) the Fair Market
Value of the Extraordinary Distribution or the aggregate purchase price of the
Pro Rata Repurchase, as the case may be. The Corporation shall send each holder
of Class B Preferred Stock (i) notice of its intent to make an Extraordinary
Distribution and (ii) notice of any offer by the Corporation to make a Pro Rata
Repurchase, in each case at the same time as, or as soon as practicable after,
such offer is first communicated to holders of Common Stock or, in the case of
an Extraordinary Distribution, the announcement of a record date in accordance
with the rules of any stock exchange on which the Common Stock is listed or
admitted to trading. Such notice shall indicate the intended record date and
the amount and nature of such dividend or distribution, or the number of shares
subject to such offer for a Pro Rata Repurchase and the purchase price payable
by the Corporation pursuant to such offer, as well as the Conversion Price and
the number of shares of Common Stock into which a share of Class B Preferred
Stock may be converted at such time. Concurrently with the Special Dividend
paid pursuant to this Section 9(D)(1), the Conversion Price, the Liquidation
Price and the Regular Preferred Dividend Rate of all shares of Class B Preferred
Stock shall be adjusted by dividing the Conversion Price, the Liquidation Price
and the Regular Preferred Dividend Rate, respectively, in effect immediately
before such Extraordinary Distribution or Pro Rata Repurchase by the Sec. 9(D)
Non-Dilutive Share Fraction determined pursuant to this Section 9(D)(1).
(2) The Corporation and the Board of Directors shall each use its best
efforts to take all necessary steps or to take all actions as are reasonably
necessary or appropriate for declaration of the Special Dividend provided in
Section 9(D)(1) but shall not be required to call a special meeting of
shareholders in order to implement the provisions thereof. If for any reason
the Board of Directors is precluded from giving full effect to the Special
Dividend provided in Section 9(D)(1), then no such Special Dividend shall be
declared, but instead the Conversion Price shall automatically be adjusted by
dividing the Conversion Price in effect immediately before the event by the Sec.
9(D) Non-Dilutive Share Fraction, and the Liquidation Price and the Regular
Preferred Dividend Rate will not be adjusted. If subsequently the Board of
Directors is able to give full effect to the Special Dividend as provided in
Section 9(D)(1), then such Special Dividend will be declared and other
adjustments will be made in accordance with the provisions of Section 9(D)(1)
and the adjustment in the Conversion Price as provided in this Section 9(D)(2)
will automatically be reversed and nullified prospectively.
(E) Notwithstanding any other provision of this Section 9, the
Corporation shall not be required to make (i) any Special Dividend or any
adjustment of the Conversion Price, the Liquidation Price or the Regular
Preferred Dividend Rate unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of shares of Class B
Preferred Stock outstanding, or, (ii) if no additional shares of Class B
Preferred Stock are issued, any adjustment of the Conversion Price unless such
adjustment would require an increase or decrease of at least one percent (1%) in
the Conversion Price. Any lesser adjustment
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shall be carried forward and shall be made no later than the time of, and
together with, the next subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least one percent (1%) of the number of shares of Class B
Preferred Stock outstanding or, if no additional shares of Class B Preferred
Stock are being issued, an increase or decrease of at least one percent (1%) of
the Conversion Price, whichever the case may be.
(F) If the Corporation shall make any dividend or distribution on the
Common Stock or issue any Common Stock, other capital stock or other security of
the Corporation or any rights or warrants to purchase or acquire any such
security, which transaction does not result in an adjustment to the number of
shares of Class B Preferred Stock outstanding or the Conversion Price pursuant
to the foregoing provisions of this Section 9, the Board of Directors of the
Corporation may, in its sole discretion, consider whether such action is of such
a nature that some type of equitable adjustment should be made in respect of
such transaction. If in such case the Board of Directors of the Corporation
determines that some type of adjustment should be made, an adjustment shall be
made effective as of such date as determined by the Board of Directors of the
Corporation. The determination of the Board of Directors of the Corporation as
to whether some type of adjustment should be made pursuant to the foregoing
provisions of this Section 9(F), and, if so, as to what adjustment should be
made and when, shall be final and binding on the Corporation and all
shareholders of the Corporation. The Corporation shall be entitled to make such
additional adjustments, in addition to those required by the foregoing
provisions of this Section 9, as shall be necessary in order that any dividend
or distribution in shares of capital stock of the Corporation, subdivision,
reclassification or combination of shares of the Corporation or any
recapitalization of the Corporation shall not be taxable to holders of the
Common Stock.
(G) For purposes hereof, the following definitions shall apply:
(1) "Extraordinary Distribution" shall mean any dividend or other
distribution to holders of Common Stock effected while any of the shares of
Class B Preferred Stock are outstanding of (i) cash or (ii) any shares of
capital stock of the Corporation (other than shares of Common Stock), other
securities of the Corporation (other than securities of the type referred to in
Section 9(B)), evidences of indebtedness of the Corporation or any other person
or any other property (including shares of any subsidiary of the Corporation),
or any combination thereof, where the aggregate amount of such cash dividend or
other distribution together with the amount of all cash dividends and other
distributions made during the preceding period of twelve (12) months, when
combined with the aggregate amount of all Pro Rata Repurchases (for this
purpose, including only that portion of the aggregate purchase price of such Pro
Rata Repurchase which is in excess of the Fair Market Value of the Common Stock
repurchased as determined on the applicable expiration date (including all
extensions thereof) of any tender offer or exchange offer which is a Pro Rata
Repurchase, or the date of purchase with respect to any other Pro Rata
Repurchase which is not a tender offer or exchange offer) made during such
period, exceeds twelve and one-half percent (12.5%) of the aggregate Fair Market
Value of all shares of Common Stock outstanding on the day before the ex-
dividend date with respect to such Extraordinary Distribution which is paid in
cash and on the distribution date with respect to an Extraordinary Distribution
which is paid other than in cash. The Fair Market Value of an Extraordinary
Distribution for purposes of Section 9(D) shall be the sum of the Fair Market
Value of such Extraordinary Distribution plus the aggregate amount of any cash
dividends or
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other distributions which are not Extraordinary Distributions made during such
twelve month period and not previously included in the calculation of an
adjustment pursuant to Section 9(D), but shall exclude the aggregate amount of
regular quarterly dividends declared by the Board of Directors and paid by the
Corporation in such twelve month period.
(2) "Fair Market Value" shall mean, as to shares of Common Stock or
any other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the Adjustment
Period (as hereinafter defined). "Current Market Price" of publicly traded
shares of Common Stock or any other class of capital stock or other security of
the Corporation or any other issuer for a day shall mean the last reported sales
price, regular way, or, in case no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way, in either case as
reported on the New York Stock Exchange Composite Tape or, if such security is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market System or, if such security
is not quoted on such National Market System, the average of the closing bid and
asked prices on each such day in the over-the-counter market as reported by
NASDAQ or, if bid and asked prices for such security on each such day shall not
have been reported through NASDAQ, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member firm regularly
making a market in such security selected for such purpose by the Board of
Directors of the Corporation on each trading day during the Adjustment Period.
"Adjustment Period" shall mean the period of five consecutive trading days,
selected by the Board of Directors of the Corporation, during the twenty (20)
trading days preceding, and including, the date as of which the Fair Market
Value of a security is to be determined. The "Fair Market Value" of any
security which is not publicly traded or of any other property shall mean the
fair value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the Corporation, or, if no
such investment banking or appraisal firm is in the good faith judgment of the
Board of Directors available to make such determination, as determined in good
faith by the Board of Directors of the Corporation.
(3) "Non-Dilutive Amount" in respect of an issuance, sale or exchange
by the Corporation of any right or warrant to purchase or acquire shares of
Common Stock (including any security convertible into or exchangeable for shares
of Common Stock) shall mean the difference between (i) the product of the Fair
Market Value of a share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the maximum number
of shares of Common Stock which could be acquired on such date upon the exercise
in full of such rights or warrants (including upon the conversion or exchange of
all such convertible or exchangeable securities), whether or not exercisable (or
convertible or exchangeable) at such date, and (ii) the aggregate amount payable
pursuant to such right or warrant to purchase or acquire such maximum number of
shares of Common Stock; provided, however, that in no event shall the Non-
Dilutive Amount be less than zero. For purposes of the foregoing sentence, in
the case of a security convertible into or exchangeable for shares of Common
Stock, the amount payable pursuant to a right or warrant to purchase or acquire
shares of Common Stock shall be the Fair Market Value of such security on the
date of the issuance, sale or exchange of such security by the Corporation.
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(4) "Pro Rata Repurchase" shall mean any purchase of shares of Common
Stock by the Corporation or any subsidiary thereof, whether for cash, shares of
capital stock of the Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or any other property
(including shares of a subsidiary of the Corporation ), or any combination
thereof, effected while any of the shares of Class B Preferred Stock are
outstanding, pursuant to any tender offer or exchange offer subject to Section
13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock, provided, however, that no purchase
of shares by the Corporation or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For purposes of this
Section 9(G), shares shall be deemed to have been purchased by the Corporation
or any subsidiary thereof "in open market transactions" if they have been
purchased substantially in accordance with the requirements of Rule 10b-18 as in
effect under the Exchange Act on the date shares of Class B Preferred Stock are
initially issued by the Corporation or on such other terms and conditions as the
Board of Directors of the Corporation shall have determined are reasonably
designed to prevent such purchases from having a material effect on the trading
market for the Common Stock.
(H) Whenever an adjustment increasing the number of shares of Class B
Preferred Stock outstanding is required pursuant hereto, the Board of Directors
shall take action as is necessary so that a sufficient number of shares of Class
B Preferred Stock are designated with respect to such increase resulting from
such adjustment. Whenever an adjustment to the Conversion Price, the
Liquidation Price or the Regular Preferred Dividend Rate of the Class B
Preferred Stock is required pursuant hereto, the Corporation shall forthwith
place on file with the transfer agent for the Common Stock and the Class B
Preferred Stock, if there be one, and with the Treasurer of the Corporation, a
statement signed by the Treasurer or any Assistant Treasurer of the Corporation
stating the adjusted Conversion Price, Liquidation Price and Regular Preferred
Dividend Rate determined as provided herein. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and the
manner of computing such adjustment, including any determination of Fair Market
Value involved in such computation. Promptly after each adjustment to the
number of shares of Class B Preferred Stock outstanding, the Conversion Price,
the Liquidation Price or the Regular Preferred Dividend Rate, the Corporation
shall mail a notice thereof and of the then prevailing number of shares of Class
B Preferred Stock outstanding, the Conversion Price, the Liquidation Price and
the Regular Preferred Dividend Rate to each holder of shares of Class B
Preferred Stock.
10. Miscellaneous.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three (3) business days after the mailing thereof if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms hereof) with postage prepaid, addressed: (i) if to
the Corporation, to its office at 5959 Las Colinas Boulevard, Irving, Texas
75039 (Attention: Treasurer) or to the transfer agent for the Class B Preferred
Stock, or other agent of the Corporation designated as permitted hereby or (ii)
if to any holder of the Class B Preferred Stock or Common Stock, as the case may
be, to such holder at the address of such holder as listed in the stock record
books of the Corporation (which may include the records of any transfer agent
for the Class B Preferred Stock or Common Stock, as the case may be) or (iii) to
such other
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address as the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(B) The term "Common Stock" as used herein means the Corporation's no
par value common stock, as the same exists at the Effective Date, or any other
class of stock resulting from successive changes or reclassifications of such
Common Stock consisting solely of changes in par value, or from par value to
without par value, or from without par value to par value. In the event that,
at any time as a result of an adjustment made pursuant to Section 9 hereof, the
holder of any shares of the Class B Preferred Stock upon thereafter surrendering
such shares for conversion shall become entitled to receive any shares or other
securities of the Corporation other than shares of Common Stock, the anti-
dilution provisions contained in Section 9 hereof shall apply in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
Common Stock, and the provisions of Sections 1 through 8 and 10 hereof with
respect to the Common Stock shall apply on like or similar terms to any such
other shares of securities.
(C) The term "Effective Date" shall mean the date of effectiveness of
the Certificate of Merger of Lion Acquisition Subsidiary Corporation with and
into Mobil Corporation filed in the office of the Secretary of State of the
State of Delaware.
(D) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Class B Preferred Stock or shares of Common Stock or other
securities issued on account of Class B Preferred Stock pursuant thereto or
certificate representing such shares or securities. The Corporation shall not,
however, be required to pay any such tax which may be payable in respect of any
transfer involved in the issuance or delivery of shares of Class B Preferred
Stock or Common Stock or other securities in a name other than that in which the
shares of Class B Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than a payment
to the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid or is not payable.
(E) In the event that a holder of shares of Class B Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of Class B Preferred Stock should be made or
the address to which the certificate or certificates representing such shares,
or such payment, should be sent, the Corporation shall be entitled to register
such shares, and make such payment, in the name of the holder of such Class B
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates or other documentation representing such shares, or
such payment, to the address of such holder shown on the records of the
Corporation.
(F) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the Class B Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of Class
B Preferred Stock.
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(G) Any shares of Common Stock into which the shares of Class B
Preferred Stock shall be converted, may be uncertificated shares, provided that
--------
the names of the holders of all uncertificated shares and the number of such
shares held by each holder shall be registered at the offices of the Corporation
or the transfer agent for such shares. In the event that any shares shall be
uncertificated, all references herein to surrender or issuance of stock
certificates shall have no application to such uncertificated shares.
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EXHIBIT 3(ii)
EXXON MOBIL CORPORATION
INCORPORATED IN NEW JERSEY
BY-LAWS
ARTICLE I
Meetings of Shareholders
1. Meetings of shareholders may be held on such date and at such time and
place, within or without the State of New Jersey, as may be fixed by the board
of directors and stated in the notice of meeting.
2. The date for each annual meeting of shareholders, fixed as provided in
Section 1 of this Article I, shall be a date not more than thirteen months after
the date on which the last annual meeting of shareholders was held. The
directors shall be elected at the annual meeting of shareholders.
3. Special meetings of the shareholders may be called by the board of
directors, the chairman of the board or the president.
4. Except as otherwise provided by statute, written notice of the date, time,
place and purpose or purposes of every meeting of shareholders shall be given
not less than ten nor more than sixty days before the date of the meeting,
either personally or by mail, to each shareholder of record entitled to vote at
the meeting. The business transacted at meetings shall be confined to the
purposes specified in the notice.
5. Unless otherwise provided by statute the holders of shares entitled to cast
a majority of votes at a meeting, present either in person or by proxy, shall
constitute a quorum at such meeting. Less than a quorum may adjourn.
6. For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or for the
purpose of determining shareholders entitled to receive payment of any dividend
or allotment of any right, or for the purpose of any other action, the board of
directors may fix in advance a date as the record date for any such
determination of shareholders. Such date shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action.
7. The board of directors may, in advance of any shareholders' meeting, appoint
one or more inspectors to act at the meeting or any adjournment thereof. If
inspectors are not so appointed by the board or shall fail to qualify, the
person presiding at a shareholders' meeting may, and at the request of any
shareholder entitled to vote thereat, shall, make such appointment. In case any
person appointed as inspector fails to appear or act, the vacancy may be filled
by appointment made by the board in advance of the meeting or at the meeting by
the person presiding at the meeting. Each inspector, before entering upon the
discharge of the duties of inspector, shall take and sign an oath faithfully to
execute such duties at such meeting with strict impartiality and according to
the best of the inspector's ability.
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The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders. If there are three or more inspectors, the act of a majority
shall govern. On request of the person presiding at the meeting or any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them. Any report
made by them shall be prima facie evidence of the facts therein stated, and such
report shall be filed with the minutes of the meeting.
ARTICLE II
Board of Directors
1. The business and affairs of the corporation shall be managed by its board of
directors consisting of not less than ten nor more than nineteen members, who
shall hold office until the next annual meeting and until their successors shall
have been elected and qualified. The actual number of directors shall be
determined from time to time by resolution of the board. If at any time, except
at the annual meeting, the number of directors shall be increased, the
additional director or directors may be elected by the board, to hold office
until the next annual meeting and until their successors shall have been elected
and qualified.
2. The organization meeting of the board of directors, for the purpose of
organization or otherwise, shall be held without further notice on the day of
the annual meeting of shareholders, at such time and place as shall be fixed
from time to time pursuant to resolution of the board. Other regular meetings
of the board may be held without further notice at such times and places as
shall be fixed from time to time pursuant to resolution of the board. The
chairman of the board, the president, any vice president who is a member of the
board, or the secretary may change the day or hour or place of any single
regular meeting from that determined by the board upon causing that prior notice
of such change be transmitted to all directors.
Special meetings of the board may be called at the direction of the chairman
of the board, of the president or of any vice president who is a member of the
board, or, in the absence of such officers, at the direction of any one of the
directors. Any such meeting shall be held on such date and at such time and
place as may be designated in the notice of the meeting.
Notices required under this section may be transmitted in person, in
writing, or by telephone, telegram, cable or radio, and shall be effective
whether or not actually received, provided they are duly transmitted not less
than forty-eight hours in advance of the meeting. Notice may be waived in
writing before or after a meeting. No notice or waiver need specify the
business scheduled for any board meeting and any business may be transacted at
either a regular or special meeting.
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3. Five directors shall constitute a quorum for the transaction of business,
except that any directorship not filled at the annual meeting and any vacancy,
however caused, occurring in the board may be filled by the affirmative vote of
a majority of the remaining directors even though less than a quorum of the
board, or by a sole remaining director. At any meeting of the board, whether or
not a quorum is present, a majority of those present may adjourn the meeting.
Notice of an adjourned meeting need not be given if the time and place are fixed
at the meeting adjourning and if the period of adjournment does not exceed ten
days in any one adjournment.
4. (a) The provisions of this Section 4 of Article II shall be operative during
any emergency in the conduct of the business of the corporation resulting from
an attack on the United States or any nuclear or atomic disaster or from the
imminent threat of such an attack or disaster. For the purpose of this Section
4 of Article II, such an emergency is defined as any period following (i) an
enemy attack on the continental United States or any nuclear or atomic disaster
as a result and during the period of which the means of communication or travel
within the continental United States are disrupted or made uncertain or unsafe,
or (ii) a determination as herein provided that such an attack or disaster is
imminent or has occurred. The commencement and termination of the period of any
such emergency may be determined by the chairman of the board or, in the event
of the death, absence or disability of the chairman of the board, by the
president, or in the event of the death, absence or disability of both the
chairman of the board and the president, by such person or persons as the board
of directors may from time to time designate, but in the absence of such
specific designation, by the senior vice president who has been designated
pursuant to the authority of Section 6 of Article IV of these by-laws to
exercise the powers and perform the duties of the chairman of the board and the
president. To the extent not inconsistent with the provisions of this Section 4
of Article II, the by-laws in their entirety shall remain in effect during any
such emergency.
(b) Before or during any such emergency, the board may change the head
office or designate several alternative head offices or regional offices, or
authorize the officers to do so, said change to be effective during the
emergency.
(c) The officers or other persons designated by title in a list approved by
the board before or during the emergency, all who are known to be alive and
available to act in such order of priority and subject to such conditions and
for such period of time, not longer than reasonably necessary after the
termination of the emergency, as may be provided in the resolution of the board
approving the list, shall, to the extent required to provide a quorum at any
meeting of the board, be deemed and shall have all the powers of directors for
such meeting. Unless so designated, an officer who is not a director shall not
be deemed a director for the foregoing purpose.
(d) Meetings of the board may be called by any officer or director or in the
absence of all officers and directors by any person designated in a list
approved by the board pursuant to subsection (c) of this Section 4. Any such
meeting shall be held on such date and at such time and place as may be
designated in the notice of the meeting. Notice of any such meeting need be
given only to such of the directors as it may be feasible to reach
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at the time and such of the persons designated in such list as is considered
advisable in the judgment of the person calling the meeting. Any such notice
may be transmitted in person, in writing, or by telephone, telegram, cable or
radio, or by such other means as may be feasible at the time, shall be effective
whether or not actually received and shall be given at such time in advance of
the meeting as, in the judgment of the person calling the meeting, circumstances
permit.
(e) Three directors shall constitute a quorum for the transaction of
business.
(f) Before or during any such emergency, the board by resolution may (i)
appoint one or more committees in addition to or in substitution for one or more
of those appointed pursuant to the provisions of Article III of these by-laws to
act during such emergency and (ii) take any of the actions listed in Section 2
of Article III of these by-laws in regard to any committee established pursuant
to (i) of this subsection (f). Each such committee shall have at least three
members, none of whom need be a director. To the extent provided in such
resolution, each such committee shall have and may exercise all the authority of
the board, except that no such committee shall take the action which Section 1
of Article III of these by-laws prohibits committees of the board to take.
(g) Before or during any such emergency, the board may provide and from time
to time modify, lines of succession in the event that during such an emergency
any or all officers or agents of the corporation or any or all members of any
committee of the board shall for any reason be rendered incapable of discharging
their duties.
(h) No officer, director or employee acting in accordance with this Section
4 of Article II shall be liable except for willful misconduct. No officer,
director or employee shall be liable for any action taken in good faith in such
an emergency in furtherance of the ordinary business affairs of the corporation
even though not authorized by the by-laws then in effect.
(i) Persons may conclusively rely upon a determination made pursuant to
subsection (a) of this Section 4 that an emergency as therein defined exists
regardless of the correctness of such determination.
5. No contract or other transaction between the corporation and one or more of
its directors or between the corporation and any other corporation, firm or
association of any type or kind in which one or more of its directors are
directors or are otherwise interested, shall be void or voidable solely by
reason of such common directorship or interest, or solely because such director
or directors are present at the meeting of the board or a committee thereof
which authorizes or approves the contract or transaction, or solely because such
director's or directors' votes are counted for such purpose, if (a) the contract
or other transaction is fair and reasonable as to this corporation at the time
it is authorized, approved or ratified, or (b) the fact of the common
directorship or interest is disclosed or known to the board or committee and the
board or committee authorizes, approves or ratifies the contract or transaction
by unanimous written consent, provided at least one director so consenting is
disinterested, or by affirmative vote of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum,
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or (c) the fact of the common directorship or interest is disclosed or known to
the shareholders and they authorize, approve or ratify the contract or
transaction.
ARTICLE III
Committees of the Board
1. The board, by resolution adopted by a majority of the entire board, may
appoint from among its members an executive committee and one or more other
committees, each of which shall have at least three members. To the extent
provided in such resolution, each such committee shall have and may exercise all
the authority of the board, except that no such committee shall (a) make, alter
or repeal any by-law of the corporation; (b) elect any director, or remove any
officer or director; (c) submit to shareholders any action that requires
shareholders' approval; or (d) amend or repeal any resolution theretofore
adopted by the board which by its terms is amendable or repealable only by the
board.
2. The board, by resolution adopted by a majority of the entire board, may (a)
fill any vacancy in any such committee; (b) appoint one or more directors to
serve as alternate members of any such committee, to act in the absence or
disability of members of any such committee with all the powers of such absent
or disabled members; (c) abolish any such committee at its pleasure; (d) remove
any director from membership on such committee at any time, with or without
cause; and (e) establish as a quorum for any such committee less than a majority
of the entire committee, but in no case less than the greater of two persons or
one-third of the entire committee.
3. Actions taken at a meeting of any such committee shall be reported to the
board at its next meeting following such committee meeting; except that, when
the meeting of the board is held within two days after the committee meeting,
such report shall, if not made at the first meeting, be made to the board at its
second meeting following such committee meeting.
ARTICLE IV
Officers
1. The board of directors at the organization meeting on the day of the annual
election of directors shall elect a chairman of the board, a president, one or
more vice presidents as the board may determine, any one or more of whom may be
designated as executive vice president or as senior vice president or in such
special or limiting style as the board may determine, a secretary, a treasurer,
a controller, a general counsel, and a general tax counsel. The chairman of the
board and the president shall each be a director, but the other officers need
not be members of the board.
2. The board of directors may from time to time elect, or authorize an officer
of the corporation to appoint in writing, assistant secretaries, assistant
treasurers, assistant controllers, and such other officers as the board may
designate.
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3. All officers of the corporation, as between themselves and the corporation,
shall have such authority and perform such duties in the management of the
corporation as may be provided in these by-laws, or as may be determined by
resolution of the board not inconsistent with these by-laws.
4. The chairman of the board shall be chief executive officer of the
corporation and shall preside at all meetings of shareholders and directors.
Subject to the board of directors, the chairman of the board shall have general
care and supervision of the business and affairs of the corporation. In the
absence of the president, the chairman of the board shall exercise the powers
and perform the duties of the president.
5. The president shall, subject to the board of directors, direct the current
administration of the business and affairs of the corporation. In the absence
of the chairman of the board, the president shall preside at meetings of the
shareholders and directors and exercise the other powers and duties of the
chairman.
6. In the event of the death, absence, or disability of the chairman of the
board and the president, a senior vice president may be designated by the board
to exercise the powers and perform the duties of those offices.
7. The secretary shall give notice of all meetings of the shareholders and of
the board of directors. The secretary shall keep records of the votes at
elections and of all other proceedings of the shareholders and of the board.
The secretary shall have all the authority and perform all the duties normally
incident to the office of secretary and shall perform such additional duties as
may be assigned to the secretary by the board, the chairman of the board or the
president.
The assistant secretaries shall perform such of the duties of the secretary
as may be delegated to them by the secretary.
8. The treasurer shall be the principal financial officer of the corporation.
The treasurer shall have charge and custody of all funds and securities of the
corporation; receive and give receipts for monies paid to the corporation, and
deposit such monies in the corporation's name in such banks or other
depositories as shall be selected for the purpose; and shall cause money to be
paid out as the corporation may require. The treasurer shall have all the
authority and perform all the duties normally incident to the office of
treasurer and shall perform such additional duties as may be assigned to the
treasurer by the board of directors, the chairman of the board or the president.
The assistant treasurers shall perform such of the duties of the treasurer
as may be delegated to them by the treasurer.
9. The controller shall be the principal accounting and financial control
officer of the corporation. The controller shall be responsible for the system
of financial control of the corporation, including internal audits, the
maintenance of its accounting records, and the preparation of the corporation's
financial statements. The controller shall periodically inform the board of
directors of the corporation's financial results and position. The controller
shall have all the authority and perform all the duties normally incident to the
office of controller and shall perform such
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additional duties as may be assigned to the controller by the board of
directors, the chairman of the board or the president.
The assistant controllers shall perform such of the duties of the controller
as may be delegated to them by the controller.
10. The general counsel shall advise the board of directors and officers on
legal matters, except those relating to taxes. The general tax counsel shall
advise the board of directors and officers on legal matters relating to taxes.
Each shall perform such additional duties as may be assigned to either of them
by the board of directors, the chairman of the board or the president.
11. Any vacancy occurring among the officers, however caused, may be filled by
the board of directors except that any vacancy in the office of an assistant
secretary, assistant treasurer or assistant controller appointed by an officer
of the corporation may be filled by the officer, if any, then authorized by the
board to make appointments to such office.
12. Any officer may be removed by the board with or without cause, and any
assistant secretary, assistant treasurer or assistant controller appointed by an
officer of the corporation may be removed with or without cause by the officer,
if any, then authorized by the board to make appointments to such office.
ARTICLE V
Divisions and Division Officers
1. The board of directors may from time to time establish one or more divisions
of the corporation and assign to such divisions responsibilities for such of the
corporation's business, operations and affairs as the board may designate.
2. The board of directors may appoint or authorize an officer of the
corporation to appoint in writing officers of a division. Unless elected or
appointed an officer of the corporation by the board of directors or pursuant to
authority granted by the board, an officer of a division shall not as such be an
officer of the corporation, except that such person shall be an officer of the
corporation for the purposes of executing and delivering documents on behalf of
the corporation or for other specific purposes, if and to the extent that such
person may be authorized to do so by the board of directors. Unless otherwise
provided in the writing appointing an officer of a division, such person's term
of office shall be for one year and until that person's successor is appointed
and qualified. Any officer of a division may be removed with or without cause by
the board of directors or by the officer, if any, of the corporation then
authorized by the board of directors to appoint such officer of a division.
3. The board of directors may prescribe or authorize an officer of the
corporation or an officer of a division to prescribe in writing the duties and
powers and authority of officers of divisions.
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ARTICLE VI
Transfer of Shares
1. Shares of the corporation shall be transferable on the records of the
corporation in accordance with the provisions of Chapter 8 of the Uniform
Commercial Code (New Jersey Statutes 12A:8-101 et seq.), as amended from time to
time, except as otherwise provided in the New Jersey Business Corporation Act
(New Jersey Statutes 14A:l-l et seq.).
2. In the case of lost, destroyed or wrongfully taken certificates, transfer
shall be made only after the receipt of a sufficient indemnity bond, if required
by the board of directors, and satisfaction of other reasonable requirements
imposed by the board.
3. The board of directors may from time to time appoint one or more transfer
agents and one or more registrars of transfers. All share certificates shall
bear the signature, which may be a facsimile, of a transfer agent and of a
registrar. The functions of transfer agents and registrars shall conform to
such regulations as the board may from time to time prescribe. The board may at
any time terminate the appointment of any transfer agent or registrar.
ARTICLE VII
Fiscal Year
The fiscal year of the corporation shall be the calendar year.
ARTICLE VIII
Corporate Seal
1. The corporate seal is, and until otherwise ordered by the board of directors
shall be, a circle containing the words "EXXON MOBIL CORPORATION, CORPORATE
SEAL, 1882, NEW JERSEY" and may be an impression thereof or printed or other
facsimile reproduction.
2. The impression of the seal may be made and attested by either the secretary
or an assistant secretary for the authentication of contracts and other papers
requiring the seal.
ARTICLE IX
Amendments
The board of directors shall have the power to make, alter and repeal the
by-laws of the corporation, but by-laws made by the board may be altered or
repealed, and new by-laws made, by the shareholders.
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ARTICLE X
Indemnification
1. The corporation shall indemnify to the full extent from time to time
permitted by law any director or former director or officer or former officer
made, or threatened to be made, a party to, or a witness or other participant
in, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, legislative, investigative, or of
any other kind, by reason of the fact that such person is or was a director,
officer, employee or other corporate agent of the corporation or any subsidiary
of the corporation or serves or served any other enterprise at the request of
the corporation (including service as a fiduciary with respect to any employee
benefit plan of the corporation or any subsidiary of the corporation) against
expenses (including attorneys' fees), judgments, fines, penalties, excise taxes
and amounts paid in settlement, actually and reasonably incurred by such person
in connection with such action, suit or proceeding, or any appeal therein. No
indemnification pursuant to this Article X shall be required with respect to any
settlement or other nonadjudicated disposition of any threatened or pending
action or proceeding unless the corporation has given its prior consent to such
settlement or other disposition.
2. As any of the foregoing expenses are incurred, they shall be paid by the
corporation for the director or former director or officer or former officer in
advance of the final disposition of the action, suit or proceeding promptly upon
receipt of an undertaking by or on behalf of such person to repay such payments
if it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation.
3. The foregoing indemnification and advancement of expenses shall not be
deemed exclusive of any other rights to which any person indemnified may be
entitled.
4. The rights provided to any person by this Article X shall be enforceable
against the corporation by such person, who shall be presumed to have relied
upon it in serving or continuing to serve as a director or in any of the other
capacities set forth in this Article X. No elimination of or amendment to this
Article X shall deprive any person of rights hereunder arising out of alleged or
actual occurrences, acts or failures to act occurring prior to notice to such
person of such elimination or amendment. The rights provided to any person by
this Article X shall inure to the benefit of such person's legal representative.
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EXHIBIT 10(iii)(a)
EXXON CORPORATION
1993 INCENTIVE PROGRAM
Adopted by shareholders April 28, 1993
(as last amended January 26, 2000)
General Provisions
I. Purpose.
The 1993 Incentive Program is intended to help maintain and develop strong
management through ownership of shares of the Corporation by key employees of
the Corporation and certain of its affiliates and through incentive awards for
recognition of efforts and accomplishments which contribute materially to the
success of the Corporation's business interests.
II. Definitions.
In this Program, except where the context otherwise indicates, the
following definitions apply:
(1) `Administrative authority' means one of the following, as
appropriate in accordance with Section III: the Board; any committee to
which the Board delegates authority to administer this Program; or, in
individual cases, the Chairman of the Board or persons acting under his
direction.
(2) 'Affiliate' means (a) any subsidiary and (b) any other
corporation, partnership, joint venture, or other entity in which the
Corporation, directly or indirectly, owns an equity interest and which the
administrative authority deems to be an affiliate for purposes of this
Program (including, without limitation, for purposes of determining whether
a change of employment constitutes a termination).
(3) 'Award' means a stock option, stock appreciation right ('SAR'),
restricted stock, performance award, incentive share, dividend equivalent
right ('DER'), or other award under this Program.
(4) 'Board' means the Board of Directors of the Corporation.
(5) 'Board Compensation Committee,' hereinafter sometimes called the
'BCC,' means the committee of the Board so designated in accordance with
Section IV.
(6) 'By the grant' means by the action of the granting authority at
the time of the grant of an award hereunder, or at the time of an amendment
of the grant, as the case may be.
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(7) 'Code' means the Internal Revenue Code, as in effect from time to
time.
(8) 'Corporation' means Exxon Corporation, a New Jersey corporation.
(9) 'Designated beneficiary' means the person designated by the
grantee of an award hereunder to be entitled, on the death of the grantee,
to any remaining rights arising out of such award. Such designation must be
made in writing and in accordance with such regulations as the
administrative authority may establish.
(10) 'Detrimental activity' means activity that is determined in
individual cases by the administrative authority to be detrimental to the
interests of the Corporation or any affiliate.
(11) 'Dividend equivalent right,' herein sometimes called a 'DER,'
means the right of the holder thereof to receive, pursuant to the terms of
the DER, credits based on the cash dividends that would be paid on the
shares specified in the DER if such shares were held by the grantee, as
more particularly set forth in Section XIV(1).
(12) 'Effectively granted' means, for purposes of determining the
number of shares subject to an outstanding award under this Program, the
number of shares subject to such award or the number of shares with respect
to which the value of such award is measured, as applicable. An option that
includes an SAR shall be considered a single award for this purpose.
(13) 'Effectively issued' means the gross number of shares purchased,
issued, delivered, or paid free of restrictions upon the exercise,
settlement, or payment of an award, or lapse of restrictions thereon, as
the case may be.
(14) 'Eligible employee' means an employee of the Corporation or a
subsidiary who is a director or officer, or in a managerial, professional,
or other key position as determined by the granting authority.
(15) `Employee' means an employee of the Corporation or an affiliate.
(16) 'Exchange Act' means the Securities Exchange Act of 1934, as
amended from time to time.
(17) 'Fair market value' in relation to a share as of any specific
time shall mean such value as reported for stock exchange transactions
determined in accordance with any applicable regulations of the
administrative authority in effect at the relevant time.
(18) 'Grantee' means a recipient of an award under this Program.
(19) `Granting authority" means the Board or any appropriate committee
authorized to grant and amend awards under this Program in accordance with
Section V and to exercise other powers of the granting authority hereunder.
2
<PAGE>
(20) 'Incentive shares' means an award of shares granted pursuant to
Section XIII.
(21) 'Incentive Stock Option,' herein sometimes called an 'ISO,' means
a stock option meeting the requirements of Section 422 of the Code or any
successor provision.
(22) 'Performance award' means an award of shares, or of units or
rights based on, payable in, or otherwise related to shares, granted
pursuant to Section XII.
(23) 'Performance period' means any period specified by the grant of a
performance award during which specified performance criteria are to be
measured.
(24) 'Reporting person' means a person subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to equity
securities of the Corporation.
(25) 'Restricted stock' means any share issued with the restriction
that the holder may not sell, transfer, pledge, or assign such share and
such other restrictions (which may include, but are not limited to,
restrictions on the right to vote or receive dividends) which may expire
separately or in combination, at one time or in installments, all as
specified by the grant.
(26) 'Rule 16b-3' means Rule 16b-3 (or any successor thereto) under
the Exchange Act that exempts transactions under employee benefit plans, as
in effect from time to time.
(27) 'Share' means a share of Common Stock of the Corporation issued
and reacquired by the Corporation or previously authorized but unissued.
(28) 'Shareholder-approved plan' means any of the plans constituting
parts of any of the Incentive Programs previously approved by shareholders
of the Corporation.
(29) 'Stock appreciation right,' herein sometimes called an 'SAR,'
means the right of the holder thereof to receive, pursuant to the terms of
the SAR, a number of shares or cash or a combination of shares and cash,
based on the increase in the value of the number of shares specified in the
SAR, as more particularly set forth in Section X.
(30) 'Subsidiary' means a corporation, partnership, joint venture, or
other entity in which the Corporation, directly or indirectly, owns a 50%
or greater equity interest.
(31) 'Terminate' means cease to be an employee for any reason, except
by death, but a change of employment from the Corporation or one affiliate
to another affiliate or to the Corporation shall not be considered a
termination. For purposes of this Program, the administrative authority may
determine that the time or date of termination is the day an
3
<PAGE>
employee resigns, accepts employment with another employer or otherwise
indicates an intent to resign, which time or date need not necessarily be
the last day on the payroll.
(32) 'Terminate normally' for purposes of this Program means terminate
(a) at normal retirement time for that employee, or
(b) with written approval of the administrative authority given
in the context of recognition that all or a specified portion of the
outstanding awards to that employee will not expire or be forfeited or
annulled because of such termination.
(33) 'Year' means calendar year.
III. Administration.
(1) The Board is the ultimate administrative authority for this Program,
with the power to conclusively interpret its provisions and decide all questions
of fact arising in its application. The Board may delegate its authority
pursuant to any provision of this Program to a committee which, except in the
case of the BCC, need not be a committee of the Board. Subject to the authority
of the Board or an authorized committee and excluding cases involving the
Chairman as grantee, the Chairman of the Board and persons acting under his
direction may serve as the administrative authority under this Program for
purposes of making determinations and interpretations in individual cases.
(2) The Board and any committee acting as the administrative authority
under this Program can act by regulation, by making individual determinations,
or by both. The Chairman of the Board and persons designated by him can act as
the administrative authority under this Program only by making individual
determinations.
(3) All determinations and interpretations pursuant to the provisions of
this Program shall be binding and conclusive upon the individuals involved and
all persons claiming under them.
(4) With respect to reporting persons, transactions under this Program are
intended to comply with all applicable conditions of Rule 16b-3. To the extent
any provision of this Program or any action by an authority under this Program
fails to so comply, such provision or action shall, without further action by
any person, be deemed to be automatically amended to the extent necessary to
effect compliance with Rule 16b-3, provided that if such provision or action
cannot be amended to effect such compliance, such provision or action shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
appropriate authority. Each award to a reporting person under this Program shall
be deemed issued subject to the foregoing qualification.
(5) An award under this Program is not transferable except, as provided in
the award, by will or the laws of descent and distribution, and is not subject
to attachment, execution, or levy of any kind. The designation by a grantee of a
designated beneficiary shall not constitute a transfer.
4
<PAGE>
(6) Any rights with respect to an award granted under this Program existing
after the grantee dies are exercisable by the grantee's designated beneficiary
or, if there is no designated beneficiary, by the grantee's personal
representative.
(7) Except as otherwise provided herein, a particular form of award may be
granted to an eligible employee either alone or in addition to other awards
hereunder. The provisions of particular forms of award need not be the same with
respect to each recipient.
(8) If the administrative authority believes that a grantee (a) may have
engaged in detrimental activity or (b) may have accepted employment with another
employer or otherwise indicated an intent to resign, the authority may suspend
the exercise, vesting or settlement of all or any specified portion of such
grantee's outstanding awards pending an investigation of the matter.
(9) This Program and all action taken under it shall be governed by the
laws of the State of New York.
(10) Any award which was granted under a shareholder-approved plan and is
still outstanding shall be interpreted and administered in accordance with the
definitions and administrative provisions of this Program, including, without
limitation, Sections II through V hereof.
IV. Board Compensation Committee (BCC).
The Board shall appoint a BCC. The BCC shall consist of two or more members
of the Board, each of whom is a 'nonemployee director' within the meaning of
Rule 16b-3. No award may be granted to a member of the BCC.
V. Right to Grant Awards; Reserved Powers.
The Board is the ultimate granting authority for this Program, with the
power to select eligible employees for participation in this Program and to make
all decisions concerning the grant or amendment of awards. The Board may
delegate such authority in whole or in part (1) in the case of reporting
persons, to the BCC and (2) in the case of eligible employees who are not
reporting persons, to any committee.
VI. Term.
The term of this Program begins on the date shareholder approval of this
Program is obtained and ends on the tenth anniversary of that date.
VII. Awards Grantable.
(1) Subject to the provisions of this Program, an award is grantable if,
should it be granted, the total number of shares effectively granted during the
year of the grant would 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.
5
<PAGE>
(2) If the total number of shares effectively issued with respect to an
award is less than, or exceeds, the number of shares deemed effectively granted
with respect to such award, the balance of such shares shall be, respectively,
added to, or subtracted from, the maximum number of shares that may be
effectively granted as awards thereafter.
(3) If the total number of shares effectively granted as awards in any year
is less than the maximum number of shares that could have been so granted
pursuant to the provisions of this Program, the balance of such unused shares
shall be added to the maximum number of shares that may be effectively granted
as awards in the following year.
(4) In addition to the foregoing, shares surrendered to the Corporation in
payment of the exercise price or applicable taxes upon exercise or settlement of
an award may also be used thereafter for additional awards.
(5) Notwithstanding the foregoing provisions of this Section VII, the total
number of shares that may be effectively granted under stock options or stock
appreciation rights to any one grantee in any one calendar year may not exceed
two tenths of one percent (0.2%) of the total number of shares of Common Stock
of the Corporation outstanding (excluding shares held by the Corporation) on
December 31, 1996; provided, that such number of shares is doubled in accordance
with Section VIII to reflect a two-for-one split of the shares on March 14,
1997.
VIII. Adjustments.
Whenever a stock split, stock dividend, or other relevant change in
capitalization which the administrative authority determines to be dilutive to
outstanding awards occurs,
(1) the number of shares that can thereafter be obtained under
outstanding awards and the purchase price per share, if any, under such
awards, and
(2) every number of shares used in determining whether a particular
award is grantable thereafter,
shall be appropriately adjusted.
6
<PAGE>
IX. Stock Options.
One or more grantable stock options can be granted to any eligible
employee. Each stock option so granted shall be subject to such terms and
conditions as the granting authority shall impose, which shall include the
following:
(1) The exercise price per share shall be specified by the grant, but
shall in no instance be less than 100 percent of fair market value at the
time of grant. Payment of the exercise price shall be made in cash, shares,
or other consideration in accordance with the terms of this Program and any
applicable regulations of the administrative authority in effect at the
time and valued at fair market value on the date of exercise of the stock
option.
(2) A stock option shall become exercisable, if at all, at the time or
times specified by the grant. If the grantee terminates other than normally
before a stock option or portion thereof becomes exercisable, that stock
option or portion thereof shall be forfeited and shall never become
exercisable. Except as otherwise specified by the grant, a stock option
shall become immediately exercisable in full upon the death of the grantee.
(3) Any stock option or portion thereof that is exercisable is
exercisable for the full amount or for any part thereof, except as
otherwise provided by the grant.
(4) Each stock option ceases to be exercisable, as to any share, when
the stock option is exercised to purchase that share, or when a related SAR
is exercised either by the holder or automatically in accordance with its
terms, or when the stock option expires. To the extent an SAR included in a
stock option is exercised, such stock option shall be deemed to have been
exercised and shall not be deemed to have expired.
(5) A stock option or portion thereof that is exercisable shall expire
in the following situations:
(a) unless clauses (b), (c) or (d) below apply, it shall expire
at the earlier of:
(i) ten years after it is granted, or
(ii) any earlier time specified by the grant;
(b) if the grantee terminates, but does not terminate normally,
it shall expire at the time of termination;
(c) if the grantee is determined to have engaged in detrimental
activity, it shall expire as of the date of such determination; or
(d) if the grantee dies, it shall expire at the earlier of:
(i) five years after the grantee's death, or
7
<PAGE>
(ii) any earlier time specified by the grant;
but, in any case, no later than ten years after it is granted.
(6) If a grantee terminates other than normally, (a) the
administrative authority may refuse to deliver shares in settlement of any
pending stock option exercise and (b) the granting authority may require
the grantee to repay to the Corporation an amount equal to the spread on
any stock option exercised by the grantee during the six-month period
immediately preceding such termination. For purposes of the foregoing
subsection (6)(b), 'spread' means the difference between the aggregate
stock option exercise price and the fair market value of the underlying
shares on the date such option is exercised.
(7) All stock options granted hereunder are hereby designated as ISOs
except to the extent otherwise specified by the grant and except to the
extent otherwise specified in this Section IX(7). To the extent that the
aggregate fair market value of shares with respect to which stock options
designated as ISOs are exercisable for the first time by any grantee during
any year (under all plans of the Corporation and any affiliate thereof)
exceeds $100,000, such stock options shall be treated as not being ISOs.
The foregoing shall be applied by taking stock options into account in the
order in which they were granted. For the purposes of the foregoing, the
fair market value of any share shall be determined as of the time the stock
option with respect to such share is granted. In the event the foregoing
results in a portion of a stock option designated as an ISO exceeding the
above $100,000 limitation, only such excess shall be treated as not being
an ISO.
For each year in which this Program is in effect, the number of shares
that may be effectively granted as ISOs 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 the
December 31 preceding the date on which shareholder approval of this
Program is obtained; provided, that beginning with the year 1998, the
annual number of shares determined as aforesaid shall be doubled in
accordance with Section VIII to reflect a two-for one split of the shares
on March 14, 1997. If the number of shares effectively granted as ISOs in
any year is less than the number of shares that could have been so granted
pursuant to this paragraph, the balance of such unused shares may be added
to the maximum number of shares that may be effectively granted as ISOs the
following year.
A stock option designated as an ISO, or portion thereof, that fails or
ceases to qualify as such under the Code shall otherwise remain valid
according to its terms as a non-ISO under this Program.
X. Stock Appreciation Rights.
(1) An SAR may be granted to an eligible employee as a separate award
hereunder. Any such SAR shall be subject to such terms and conditions as the
granting authority shall impose, which shall include provisions that (a) such
SAR shall entitle the holder thereof, upon exercise thereof in accordance with
such SAR and the regulations of the administrative authority, to receive
8
<PAGE>
from the Corporation that number of shares having an aggregate value equal to
the excess of the fair market value, at the time of exercise of such SAR, of one
share over the exercise price per share specified by the grant of such SAR
(which shall in no instance be less than 100 percent of fair market value at the
time of grant) times the number of shares specified in such SAR, or portion
thereof, which is so exercised; and (b) such SAR shall be exercisable, or be
forfeited or expire, upon the same conditions set forth for freestanding options
in Section IX, paragraphs (2), (3), (4), (5), and (6).
(2) Any stock option granted under this Program may include an SAR, either
at the time of grant or by amendment. An SAR included in a stock option shall be
subject to such terms and conditions as the granting authority shall impose,
which shall include provisions that (a) such SAR shall be exercisable to the
extent, and only to the extent, the stock option is exercisable; and (b) such
SAR shall entitle the optionee to surrender to the Corporation unexercised the
stock option in which the SAR is included, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares having
an aggregate value equal to the excess of the fair market value, at the time of
exercise of such SAR, of one share over the exercise price specified in such
stock option times the number of shares specified in such stock option, or
portion thereof, which is so surrendered.
(3) In lieu of the right to receive all or any specified portion of such
shares, an SAR may entitle the holder thereof to receive the cash equivalent
thereof as specified by the grant.
(4) An SAR may provide that such SAR shall be deemed to have been exercised
at the close of business on the business day preceding the expiration of such
SAR or the related stock option, if any, if at such time such SAR has positive
value and would have expired in accordance with the conditions set forth in
Section IX(5)(a).
XI. Restricted Stock.
(1) An award of restricted stock may be granted hereunder to an eligible
employee, for no cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as may be specified
by the grant. The terms and conditions of restricted stock shall be specified by
the grant.
(2) Any restricted stock issued hereunder may be evidenced in such manner
as the administrative authority in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of restricted stock awarded hereunder, such certificate shall
bear an appropriate legend with respect to the restrictions applicable to such
award.
(3) Except as otherwise specified by the grant, if a holder of record of
restricted stock terminates, but does not terminate normally, all shares of
restricted stock (whether or not stock certificates have been issued) then held
by such holder and then subject to restriction shall be forfeited by such holder
and reacquired by the Corporation. Except as otherwise specified by the grant,
if a holder of record of restricted stock terminates normally or dies, any and
all remaining restrictions with respect to such restricted stock shall expire.
Notwithstanding the foregoing, if a
9
<PAGE>
holder of record of restricted stock is determined to have engaged in
detrimental activity, all shares of restricted stock (whether or not stock
certificates have been issued) then held by such holder and then subject to
restriction shall be forfeited by such holder as of the date of such
determination and shall be reacquired by the Corporation.
XII. Performance Awards.
(1) Performance awards may be granted hereunder to an eligible employee,
for no cash consideration, for such minimum consideration as may be required by
applicable law, or for such other consideration as may be specified by the
grant. The terms and conditions of performance awards, which may include
provisions establishing performance periods, performance criteria to be achieved
during a performance period, and maximum or minimum settlement values, shall be
specified by the grant.
(2) Performance awards may be valued by reference to the value of Common
Stock of the Corporation or according to any other formula or method.
Performance awards may be paid in cash, shares, or other consideration, or any
combination thereof. The extent to which any applicable performance criteria
have been achieved shall be conclusively determined by the administrative
authority. Performance awards may be payable in a single payment or in
installments and may be payable at a specified date or dates or upon attaining
performance criteria.
(3) Except as otherwise specified by the grant, if the grantee terminates,
but does not terminate normally, any performance award or installment thereof
not payable prior to the grantee's termination shall be annulled as of the date
of termination. If the grantee is determined to have engaged in detrimental
activity, any performance award or installment thereof not payable prior to the
date of such determination shall be annulled as of such date.
XIII. Incentive Shares.
(1) An incentive award may be granted hereunder in the form of shares.
Incentive shares may be granted to an eligible employee for no cash
consideration, for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the grant. The terms
and conditions of incentive shares shall be specified by the grant.
(2) Incentive shares may be paid to the grantee in a single installment or
in installments and may be paid at the time of grant or deferred to a later date
or dates. Each grant shall specify the time and method of payment as determined
by the granting authority, provided that no such determination shall authorize
delivery of shares to be made later than the tenth anniversary of the grantee's
date of termination. The granting authority, by amendment of the grant prior to
delivery, can modify the method of payment for any incentive shares, provided
that the delivery of any incentive shares shall be completed not later than the
tenth anniversary of the grantee's date of termination.
(3) If any incentive shares are payable after the grantee dies, such shares
shall be payable (a) to the grantee's designated beneficiary or, if there is no
designated beneficiary, to the grantee's
10
<PAGE>
personal representative, and (b) either in the form specified by the grant or
otherwise, as may be determined by the administrative authority.
(4) Any grant of incentive shares is provisional, as to any share, until
delivery of the certificate representing such share. If, while the grant is
provisional,
(a) the grantee terminates, but does not terminate normally, or
(b) the grantee is determined to have engaged in detrimental activity,
the grant shall be annulled as of the date of termination, or the date of such
determination, as the case may be.
XIV. Dividend Equivalent Rights; Interest Equivalents.
(1) A DER may be granted hereunder to an eligible employee, as a component
of another award or as a separate award. The terms and conditions of DERs shall
be specified by the grant. Dividend equivalents credited to the holder of a DER
may be paid currently or may be deemed to be reinvested in additional shares
(which may thereafter accrue additional dividend equivalents). Any such
reinvestment shall be at fair market value at the time thereof. DERs may be
settled in cash or shares or a combination thereof, in a single installment or
installments. A DER granted as a component of another award may provide that
such DER shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such DER shall expire or be
forfeited or annulled under the same conditions as such other award. A DER
granted as a component of another award may also contain terms and conditions
different from such other award.
(2) Any award under this Program that is settled in whole or in part in
cash on a deferred basis may provide by the grant for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
by the grant.
XV. Other Awards.
Other forms of award based on, payable in or otherwise related in whole or
in part to shares may be granted to an eligible employee under this Program if
the granting authority determines that such awards are consistent with the
purposes and restrictions of this Program. The terms and conditions of such
awards shall be specified by the grant. Such awards shall be granted for no cash
consideration, for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the grant.
11
<PAGE>
XVI. Amendments to This Program.
The Board can from time to time amend or terminate this Program, or any
provision hereof, except that approval of the shareholders of the Corporation
shall be required for any amendment (1) to increase the maximum number of shares
that may be effectively granted as awards hereunder; (2) to decrease the minimum
exercise price per share of a stock option or SAR; or (3) for which such
approval is otherwise necessary to comply with any applicable law, regulation,
or listing requirement, or to qualify for an exemption or characterization that
is deemed desirable by the Board. An amendment of this Program shall, unless
the amendment provides otherwise, be effective for all outstanding awards.
XVII. Amendments to Individual Awards.
Without amending this Program, but subject to any requirements of
applicable law or regulation, the granting authority may amend any one or more
outstanding awards under this Program or any other shareholder-approved plan to
incorporate in those awards any terms that could then be incorporated in a new
award under this Program.
XVIII. Withholding Taxes.
The Corporation shall have the right to deduct from any cash payment made
under this Program any federal, state or local income or other taxes required by
law to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares or securities of the Corporation
upon exercise of a stock option or SAR, upon settlement of a performance award
or DER, upon delivery of restricted stock or incentive shares, or upon exercise,
settlement, or payment of any other award under this Program, that the grantee
of such award pay to the Corporation such amount as may be requested by the
Corporation for the purpose of satisfying any liability for such withholding
taxes. Any award under this Program may provide by the grant that the grantee of
such award may elect, in accordance with any applicable regulations of the
administrative authority, to pay a portion or all of the amount of such minimum
required or additional permitted withholding taxes in shares. The grantee shall
authorize the Corporation to withhold, or shall agree to surrender back to the
Corporation, on or about the date such withholding tax liability is
determinable, shares previously owned by such grantee or a portion of the shares
that were or otherwise would be distributed to such grantee pursuant to such
award having a fair market value equal to the amount of such required or
permitted withholding taxes to be paid in shares.
XIX. Grant of Awards to Employees Who are Foreign Nationals.
Without amending this Program, but subject to the limitations specified in
Sections III(4) and XVI, the granting authority can grant or amend, and the
administrative authority can administer, annul, or terminate, awards to eligible
employees who are foreign nationals on such terms and conditions different from
those specified in this Program as may in its judgment be necessary or desirable
to foster and promote achievement of the purposes of this Program.
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EXHIBIT 10(iii)(d)
EDITION OF JANUARY 1, 2000
EXXONMOBIL EXECUTIVE LIFE INSURANCE AND
---------------------------------------
DEATH BENEFIT PLAN
------------------
Articles
--------
1. Participation and Coverage
2. Levels of Insurance Coverage
3. Payment of Benefit
4. Designation of Beneficiary
5. Miscellaneous
<PAGE>
EXXONMOBIL EXECUTIVE LIFE INSURANCE AND
---------------------------------------
DEATH BENEFIT PLAN
------------------
1. Participation
-------------
1.1 Covered Executive
-----------------
Each covered executive is a participant in this Plan.
----------------- -----------
1.2 Retiree
-------
(A) In General
----------
Except as provided in paragraph (B) below, each person who becomes a
retiree on or after the effective date, and who is a covered executive
------- -------------- -----------------
immediately prior to becoming a retiree is a participant in this Plan.
------- -----------
In addition, each grandfathered retiree is a participant in the Plan.
--------------------- -----------
(B) Exception
---------
A retiree will cease to be a participant during the time the retiree
------- ----------- -------
is a suspended retiree.
-----------------
1.3 Cessation of Participant Status
-------------------------------
(A) Termination of Employment
-------------------------
(1) In General
----------
Except as provided in paragraphs (2) through (4) below, a covered
-------
executive will cease to be a participant 31 days after the
--------- -----------
covered executive terminates employment without becoming a
-----------------
retiree.
-------
(2) Exception for Long Term Disability
----------------------------------
A covered executive who terminates employment with eligibility
-----------------
for long-term disability benefits under the ExxonMobil Disability
Plan, will cease to be a participant at the earlier of
-----------
(a) one year after terminating employment, or
(b) the date the person is no longer eligible for long-term
disability benefits on account of ceasing to be disabled.
<PAGE>
(3) Exception for Coverage Provided Through Death Benefit
-----------------------------------------------------
If, at the time a covered executive terminates employment he or
-----------------
she has elected to receive executive life coverage in the form of
a death benefit, the covered executive will cease to be a
-----------------
participant on the date of such termination of employment.
-----------
(4) Exception for Transition Severance Terminees
--------------------------------------------
(a) In General
----------
A covered executive who terminates employment without
-----------------
becoming a retiree shall continue to be a participant for a
------- -----------
period of one year from the date of such termination of
employment, but only if the person is eligible for a benefit
under the Exxon Transition Severance Plan, or if the
Corporation, acting through its management, determines that
the covered executive is otherwise eligible for such
-----------------
continued participation.
(b) Termination of Provision
------------------------
This paragraph (4) shall not apply to any covered executive
-----------------
who terminates employment after August 31, 2000.
(B) Suspended Retirees
------------------
A retiree or grandfathered retiree will cease to be a participant
------- --------------------- -----------
during the time the person is a suspended retiree.
-----------------
2. Coverage
--------
2.1 When and How Coverage is Provided
---------------------------------
(A) In General
----------
(1) Executive Life Coverage
-----------------------
Executive life coverage is automatically provided to all
participants other than grandfathered retirees.
------------ ----------------------
2
<PAGE>
(2) Supplemental Group Life Coverage
--------------------------------
Supplemental group life coverage is automatically provided to all
participants who are grandfathered retirees.
------------ ----------------------
(B) Life Insurance or Death Benefit Option
--------------------------------------
(1) In General
----------
Both executive life coverage and supplemental group life coverage
is automatically provided under the Plan as life insurance unless
a participant elects to receive coverage in the form of a death
-----------
benefit.
(2) Election
--------
Participants may, at any time, elect to receive executive life or
------------
supplemental group life coverage, whichever is applicable, as a
death benefit, and may revoke any such election. An election or
revocation under this paragraph (2) shall be made in accordance
with procedures established by the administrator.
-------------
(3) When Election is Effective
--------------------------
(a) Death Benefit
-------------
An election under paragraph (2) above to receive executive
life or supplemental group life coverage as a death benefit
shall become effective on the first of the month following
the receipt of such election by the administrator.
-------------
(b) Revocation of Election
----------------------
A participant's revocation of a death benefit election in
-------------
favor of receiving executive life or supplemental group life
coverage as life insurance becomes effective on the first of
the month following the date the administrator receives
-------------
notification from the insurer that the insurer has, in its
------- -------
discretion, approved evidence of insurability submitted by
the participant.
-----------
3
<PAGE>
(4) Reinstatement of Coverage
-------------------------
If a participant's executive life or supplemental group life
-------------
coverage is reinstated after a period in which the participant
-----------
was ineligible for coverage under section 1.3(B) above on account
of becoming a suspended retiree, such coverage shall be
-----------------
reinstated under the option (i.e., life insurance or a death
benefit) in force at the time coverage was lost.
(C) Termination of Coverage
-----------------------
Executive life or supplemental group life coverage terminates for an
individual on the date the individual ceases to be a participant.
-----------
2.2 Amount of Benefit
-----------------
(A) Executive Life Coverage
-----------------------
(1) In General
----------
Except as provided in paragraph (2) below, the amount of
executive life coverage in effect for a participant is equal to
-----------
the applicable percentage determined under the following chart
multiplied by the participant's annual base pay:
-------------
If the participant's age is The percentage is
--------------------------- -----------------
Under 65 400%
65-69 350%
70-74 300%
75 and over 250%
For this purpose, a participant attains a particular age as of
-----------
the first day of the month in which the person will turn such
age. In addition, a covered executive's annual base pay is the
-------------------
base pay in effect at the time coverage is determined, and a
retiree's base pay is the base pay in effect for the person
---------
immediately before the person became a retiree.
-------
4
<PAGE>
(2) Transition Severance Terminees
------------------------------
The amount of executive life coverage in effect for a person who
is a participant solely on account of section 1.3(A)(4) above
-----------
relating to transition severance terminees is 200% of the
person's annual base pay in effect immediately before the
person's termination of employment.
(B) Supplemental Group Life Coverage
--------------------------------
Supplemental Group Life Coverage is provided
(1) during retirement to all grandfathered retirees, and
----------------------
(2) during employment to those persons who become grandfathered
-------------
retirees after the effective date.
-------- --------------
The amount of supplemental group life coverage in effect for a
grandfathered retiree is equal to the amount of coverage in effect for
---------------------
the person under the provisions of the Supplemental Group Life
Insurance Plan or Supplemental Group Death Benefit Plan (as such plans
existed on December 31, 1999) as of the later of December 31, 1999 or
the date the person retires. The amount of supplemental group life
coverage in effect during employment for a person who becomes a
grandfathered retiree after the effective date is the amount of
--------------------- --------------
coverage to which they are entitled under the terms of the
Supplemental Group Life Insurance Plan or Supplemental Group Death
Benefit Plan (as such plans existed on December 31, 1999).
3. Payment of Benefit
------------------
3.1 Conditions for Payment of Benefit
---------------------------------
If a participant dies while executive life or supplemental group life
-----------
coverage for that participant is in effect, then the amount of coverage
-----------
then in effect for the
5
<PAGE>
participant becomes payable; provided, that proof of death satisfactory to
-----------
the insurer must be provided before any benefit becomes payable as life
-------
insurance.
3.2 Form of Payment
---------------
A benefit payable under Section 3.1 above upon a participant's death shall
-------------
be paid in a lump sum.
3.3 Source of Payment
-----------------
(A) Life Insurance
--------------
Executive life and supplemental group life coverage in the form of
life insurance shall be provided through one or more policies of
insurance issued by an insurer selected by the Corporation, and any
------- -----------
executive life or supplemental group life benefit payable as insurance
shall be paid pursuant to such policy or policies.
(B) Death Benefit
-------------
Any executive life or supplemental group life benefit payable as a
death benefit shall be paid from the general assets of the
Corporation.
-----------
3.4 To Whom Paid
------------
A benefit payable under Section 3.1 above upon a participant's death shall
-------------
be paid as follows:
(A) If a beneficiary designation is in effect at the time of the
participant's death, the benefit shall be paid in accordance with such
-------------
designation.
(B) If no beneficiary designation is in effect, the benefit shall be paid
to the first of the following groups that has at least one member that
survives the participant:
-----------
(1) The participant's spouse.
-------------
(2) The participant's children. In this event, the benefit will be
-------------
divided equally among the children who survive the participant as
-----------
well as the children who die before the participant leaving
-----------
children of their own who survive the participant. In the case
-----------
of a participant's child who dies before the participant leaving
------------- -----------
children of his or her own
6
<PAGE>
who survive the participant, such child's share shall be divided
-----------
equally among his or her surviving children.
(3) The participant's parents. In this event, the benefit will be
-------------
divided equally among the parents if they both survive the
participant.
-----------
(4) The participant's brothers and sisters. In this event, the
-------------
benefit will be divided equally among the brothers and sisters
who survive the participant as well as the brothers and sisters
-----------
who die before the participant leaving children of their own who
-----------
survive the participant. In the case of a brother or sister who
-----------
dies before the participant leaving children of his or her own
-----------
who survive the participant, such brother or sister's share shall
-----------
be divided equally among his or her surviving children.
(5) The participant's executors or administrators.
-------------
For purposes of this Paragraph (B), a spouse of a participant shall
-----------
include only someone who is the legal spouse of the participant, and a
-----------
child, parent, brother, or sister of a participant shall include only
-----------
someone who is a legitimate blood relative of the participant or whose
-----------
relationship with the participant is established by virtue of a legal
-----------
adoption.
4. Designation of Beneficiary
--------------------------
4.1 Designation
-----------
A participant may designate one or more beneficiaries to receive the
-----------
payment of benefits upon the death of the participant, or may at any time
-----------
change or cancel a previously made beneficiary designation.
4.2 Forms and Submission
--------------------
Any beneficiary designation or change or cancellation thereof shall be made
on such forms and in such manner as is satisfactory to the insurer. No
-------
beneficiary
7
<PAGE>
designation or change or cancellation thereof shall become effective until
received by the insurer or its designated agent.
-------
4.3 Designation Made Under Prior Plans
----------------------------------
Any beneficiary designation made by a participant under the Supplemental
-----------
Group Life Insurance Plan or Supplemental Death Benefit Plan that remains
in effect on December 31, 1999, shall continue to be valid under this Plan
on and after the effective date until and unless properly superceded.
--------------
5. Miscellaneous
-------------
5.1 Plan Funding
------------
The funding for executive life and supplemental group life coverage,
including the funding of premiums under any life insurance policy issued in
connection with such coverage, shall be paid for by the Corporation; no
-----------
participant contributions will be required or permitted.
-----------
5.2 Assignment of Insurance
-----------------------
(A) Assignment
----------
A participant may assign to another owner the participant's interest
----------- --------------
in his or her executive life or supplemental group life coverage
provided in the form of life insurance. Such assignment shall be made
on such forms and in such manner as is acceptable to the administrator
-------------
and the insurer.
-------
(B) Effect of Assignment
--------------------
(1) In General
----------
When an assignment of a participant's coverage is in effect as
-------------
described in paragraph (A) above, then, except as provided in
paragraph (2) below, the participant's assignee shall have the
-------------
right to take all actions under the terms of this Plan with
respect to such coverage that the participant would otherwise
-----------
have the right to
8
<PAGE>
take, including, without limitation, the right to designate a
beneficiary.
(2) Exception
---------
An assignee shall not have the right under this Plan to elect to
receive executive life or supplemental group life coverage as a
death benefit under section 2.1(B)(2) above or to revoke an
already existing election.
(C) Assignment Under Prior Plan
---------------------------
Any assignment of coverage made by a participant under the
-----------
Supplemental Group Life Insurance Plan shall continue to be valid
under this Plan with respect to executive life and supplemental group
life coverage.
5.3 Amendment and Termination
-------------------------
The Corporation at any time, by action of any duly authorized officer, may
-----------
amend or terminate this Plan in whole or in part.
5.4 Responsibilities and Authority of Administrator
-----------------------------------------------
The administrator shall fulfill all duties and responsibilities of a "plan
-------------
administrator" required by the Employee Retirement Income Security Act of
1974, as amended. The administrator shall have the authority to control
-------------
and manage the operation and administration of this Plan, including,
without limitation:
(A) discretionary and final authority to determine eligibility and to
administer this Plan in its application to each participant and
beneficiary; and
(B) discretionary and final authority to interpret this Plan, in whole or
in part, including but not limited to, exercising such authority in
conducting a full and fair review, with such interpretation being
conclusive for all participants and beneficiaries under this Plan.
9
<PAGE>
5.5 Claim Appeal Process
--------------------
(A) Submission of Appeal
--------------------
In the event a claim for benefits is denied, the claimant has the
right to appeal to the administrator. A written request to review a
-------------
denied claim must be received by the administrator within 90 days
-------------
after the claim denial. The request may state the reasons the
claimant believes he or she is entitled to Plan benefits, and may be
accompanied by supporting information and documentation for the
administrator's consideration.
---------------
(B) Decision
--------
The administrator shall decide appeals in accordance with the
-------------
administrator's fiduciary authority set out in section 5.4 above.
---------------
Appeal decisions will be made within 60 days of the receipt of the
claim by the administrator unless special circumstances warrant an
-------------
extension of time. If an extension of time is required, the
administrator will notify the claimant of the extension. In all
-------------
cases, the decision will be made no later than 120 days after the
receipt of the claim by the administrator. The appeal decision shall
-------------
be in writing, specify the reasons for the decision, and refer to the
relevant Plan provision(s) on which the decision is based.
5.6 Definitions
-----------
The following terms shall have the following meanings ascribed to them:
(A) "Administrator" means the Manager, Compensation and Executive Plans,
Human Resources Department, Exxon Mobil Corporation.
(B) "Corporation" means Exxon Mobil Corporation.
(C) "Covered Employee" has the meaning set out in the ExxonMobil Benefit
Plans Common Provisions.
(D) "Covered Executive" means a covered employee who has a classification
----------------
level of 35 or higher.
(E) "Effective Date" means January 1, 2000.
(F) "Grandfathered retiree" means a person who
10
<PAGE>
(1) became a retiree prior to the effective date, and was covered
------- --------------
under the Supplemental Group Life Insurance Plan or Supplemental
Death Benefit Plan immediately prior to the effective date, or
--------------
who
(2) becomes a retiree after the effective date after having been
------- --------------
given the opportunity to elect and having elected continued
coverage under the Supplemental Group Life Insurance Plan or
Supplemental Death Benefit Plan.
(G) "Insurer" means the insurance company that is the issuer of the policy
of insurance described in section 3.3(A) above.
(H) "Participant" means a covered executive, retiree, or grandfathered
----------------- ------- -------------
retiree, as the context requires.
-------
(I) "Retiree"
(1) In General
----------
"Retiree" has the meaning set out in the ExxonMobil Benefit Plans
Common Provisions.
(2) Transition Severance Cases
--------------------------
(a) Treatment as Covered Annuitant
------------------------------
Solely for purposes of this Plan, a person who is described
in paragraph (b) below shall be treated as if he or she were
a retiree.
-------
(b) Eligibility
-----------
A person is described in this paragraph (b) if the person
(i) terminates employment as a covered executive;
-----------------
(ii) is at least 50 years old by the end of the month in
which the termination of employment occurs;
(iii) has at least 10 years of benefit plan service (as
defined in the ExxonMobil Benefit Plans Common
Provisions) at the time of the termination of
employment; and
11
<PAGE>
(iv) upon termination of employment receives a benefit under
the Exxon Transition Severance Plan.
(c) Termination of Provision
------------------------
This paragraph (2) shall not apply to any person who fails
to meet the eligibility requirements set out in paragraph
(b) above on or before August 31, 2000.
(J) "Suspended retiree"
(1) In General
----------
"Suspended Retiree" means a person who becomes a retiree by
-------
virtue of being incapacitated within the meaning of the
ExxonMobil Disability Plan and commences long-term disability
benefits under such Plan, but whose benefits under such Plan
thereafter cease by virtue of
(a) the person no longer being incapacitated, or
(b) the person's failure to report non-rehabilitative employment.
(2) Period
------
A person remains a suspended retiree until the earlier of (1) the
-----------------
date the person attains age 55, or (2) the date the person
commences his or her benefit or receives a lump-sum settlement
under the ExxonMobil Pension Plan, at which time the person is
again considered a retiree.
-------
12
<PAGE>
EXHIBIT 10(iii)(e)
EXXON CORPORATION
SHORT TERM INCENTIVE PROGRAM
(as last amended January 26, 2000)
I. Purpose. The Short Term Incentive Program is intended to help
maintain and develop strong management through incentive awards to key employees
of the Corporation and certain of its affiliates for recognition of efforts and
accomplishments which contribute materially to the success of the Corporation's
business interests.
II. Definitions. In this Program, except where the context otherwise
indicates, the following definitions apply:
(1) 'Administrative authority' means one of the following, as
appropriate in accordance with Section III: the Board; any committee to
which the Board delegates authority to administer this Program; or, in
individual cases, the Chairman of the Board or persons acting under his
direction.
(2) 'Affiliate' means (a) any subsidiary and (b) any other
corporation, partnership, joint venture, or other entity in which the
Corporation, directly or indirectly, owns an equity interest and which the
administrative authority deems to be an affiliate for purposes of this
Program (including, without limitation, for purposes of determining whether
a change of employment constitutes a termination).
(3) "Award" means a bonus, bonus unit, or other incentive award under
this Program.
(4) "Board" means the Board of Directors of the Corporation.
(5) "Board Compensation Committee," hereinafter sometimes called the
"BCC," means the committee of the Board so designated.
(6) "Bonus" means an award granted under this Program which may be
payable in cash or other consideration as specified by the grant.
(7) "Bonus unit" means an award granted under this Program to receive
from the Corporation an amount of cash or other consideration not to exceed
the maximum settlement value and based upon a measurement for valuation as
specified by the grant. The term bonus unit includes, but is not limited
to, earnings bonus units.
(8) "By the grant" means by the action of the granting authority at
the time of the grant of an award hereunder, or at the time of an amendment
of the grant, as the case may be.
<PAGE>
(9) "Corporation" means Exxon Corporation, a New Jersey corporation.
(10) "Designated beneficiary" means the person designated by the
grantee of an award hereunder to be entitled, on the death of the grantee,
to any remaining rights arising out of such award. Such designation must be
made in writing and in accordance with such regulations as the
administrative authority may establish.
(11) "Detrimental activity" means activity that is determined in
individual cases by the administrative authority to be detrimental to the
interests of the Corporation or any affiliate.
(12) "Earnings bonus unit," hereinafter sometimes called an "EBU,"
means a bonus unit granting the right to receive from the Corporation at
the settlement date specified by the grant, or at a later payment date so
specified, an amount of cash equal to the Corporation's cumulative
consolidated earnings per common share as reflected in its quarterly
earnings statements as initially published commencing with earnings for the
first full quarter following the date of grant to and including the last
full quarter preceding the date of settlement, but the amount of such
settlement shall not exceed the maximum settlement value specified by the
grant.
(13) "Eligible employee" means an employee of the Corporation or a
subsidiary who is a director or officer, or in a managerial, professional,
or other key position as determined by the granting authority.
(14) "Employee" means an employee of the Corporation or an affiliate.
(15) "Grantee" means a recipient of an award under this Program.
(16) "Granting authority" means the Board or any appropriate committee
authorized to grant and amend awards under this Program in accordance with
Section V and to exercise other powers of the granting authority hereunder.
(17) "Reporting person" means a person subject to the reporting
requirements of Section 16 with respect to equity securities of the
Corporation.
(18) "Section 16" means Section 16 of the Securities Exchange Act of
1934, together with the rules and interpretations thereunder, as in effect
from time to time.
(19) 'Subsidiary' means a corporation, partnership, joint venture, or
other entity in which the Corporation, directly or indirectly, owns a 50%
or greater equity interest.
(20) "Terminate" means cease to be an employee for any reason, except
by death, but a change of employment from the Corporation or one affiliate
to another affiliate or to the Corporation shall not be considered a
termination. For purposes of this Program, the administrative authority may
determine that the time or date of termination is the day an
2
<PAGE>
employee resigns, accepts employment with another employer or otherwise
indicates an intent to resign, which time or date need not necessarily be
the last day on the payroll.
(21) "Terminate normally" for purposes of this Program means terminate
(a) at normal retirement time for that employee, or
(b) with written approval of the administrative authority given in
the context of recognition that all or a specified portion of the
outstanding awards to that employee will not expire or be
forfeited or annulled because of such termination.
(22) "Year" means calendar year.
III. Administration.
(1) The Board is the ultimate administrative authority for this
Program, with the power to conclusively interpret its provisions and decide
all questions of fact arising in its application. The Board may delegate
its authority pursuant to any provision of this Program to a committee
which, except in the case of the BCC, need not be a committee of the Board.
Subject to the authority of the Board or an authorized committee and
excluding cases involving the Chairman as grantee, the Chairman of the
Board and persons acting under his direction may serve as the
administrative authority under this Program for purposes of making
determinations and interpretations in individual cases.
(2) The Board and any committee acting as the administrative authority
under this Program can act by regulation, by making individual
determinations, or by both. The Chairman of the Board and persons
designated by him can act as the administrative authority under this
Program only by making individual determinations.
(3) All determinations and interpretations pursuant to the provisions
of this Program shall be binding and conclusive upon the individual
employees involved and all persons claiming under them.
(4) It is intended that this Program shall not be subject to the
provisions of Section 16 and that awards granted hereunder shall not be
considered equity securities of the Corporation within the meaning of
Section 16. Accordingly, no award under this Program shall be payable in
any equity security of the Corporation. In the event an award to a
reporting person under this Program should be deemed to be an equity
security of the Corporation within the meaning of Section 16, such award
may, to the extent permitted by law and deemed advisable by the granting
authority, be amended so as not to constitute such an equity security or be
annulled. Each award to a reporting person under this Program shall be
deemed issued subject to the foregoing qualification.
3
<PAGE>
(5) An award under this Program is not transferable prior to payment
or settlement except, as provided in the award, by will or the laws of
descent and distribution, and is not subject, in whole or in part, to
attachment, execution, or levy of any kind. The designation by a grantee of
a designated beneficiary shall not constitute a transfer.
(6) The grantee's designated beneficiary or, if there is no designated
beneficiary, the grantee's personal representative shall be entitled to any
remaining rights with respect to an award granted under this Program
existing after the grantee dies.
(7) Except as otherwise provided herein, a particular form of award
may be granted to an eligible employee either alone or in addition to other
awards hereunder. The provisions of particular forms of award need not be
the same with respect to each recipient.
(8) If the administrative authority believes that a grantee (a) may
have engaged in detrimental activity or (b) may have accepted employment
with another employer or otherwise indicated an intent to resign, the
authority may suspend the delivery, vesting or settlement of all or any
specified portion of such grantee's outstanding awards pending an
investigation of the matter.
(9) This Program and all action taken under it shall be governed by
the laws of the State of New York.
IV. Annual Ceiling. In respect to each year under the Program, the
BCC shall, pursuant to authority delegated by the Board, establish a
ceiling on the aggregate dollar amount that can be awarded hereunder. With
respect to bonuses granted in a particular year under the Program, the sum
of:
(1) the aggregate amount of bonuses in cash, and
(2) the aggregate maximum settlement value of bonuses in any form
of bonus unit shall not exceed such ceiling.
The BCC may revise the ceiling as it deems appropriate.
V. Right to Grant Awards; Reserved Powers. The Board is the ultimate
granting authority for this Program, with the power to select eligible
employees for participation in this Program and to make all decisions
concerning the grant or amendment of awards. The Board may delegate such
authority in whole or in part to a committee which, except in the case of
the BCC, need not be a committee of the Board.
VI. Term. The term of this Program begins on November 1, 1993 and
shall continue until terminated by the Board.
4
<PAGE>
VII. Bonuses Grantable. A bonus is grantable in respect of any year
to any eligible employee during such year if, should it be granted, the
aggregate amount of the bonuses granted in respect of that year will not
exceed the ceiling established from time to time by the BCC. In this
connection, each bonus granted ceases to be effectively granted to the
extent that the grant is annulled. No award may be granted to a member of
the BCC.
VIII. Form of Bonus. Subject to Section III(4), a grantable bonus can
be granted to any eligible employee in respect of any year either wholly in
cash, bonus units, or other consideration, or partly in two or more such
forms.
IX. Settlement of Bonuses. Each grant shall specify the time and
method of settlement as determined by the granting authority, provided that
no such determination shall authorize settlement to be made later than the
tenth anniversary of the grantee's date of termination. Each grant, any
portion of which is granted in bonus units, shall specify as the regular
method of settlement for that portion a settlement date, which may be
accelerated to an earlier time as specified by the grant, provided,
however, whether or not the settlement date has been accelerated, payment
of cash to the grantee to complete such settlement may be postponed, by the
grant, so long as such payment is not postponed beyond the tenth
anniversary of the grantee's date of termination. The granting authority,
by amendment of the grant prior to payment or delivery, can modify any
method of settlement for any bonus or portion thereof, provided that the
settlement of any bonus shall be completed by the payment of any cash not
later than the tenth anniversary of the grantee's date of termination.
X. Installments Payable After Death. If any bonus or installment
thereof is payable after the grantee dies, it shall be payable
(1) to the grantee's designated beneficiary or, if there is no
designated beneficiary, to the grantee's personal representative, and
(2) either in the form specified by the grant or otherwise, as
may be determined in the individual case by the administrative
authority.
XI. Interest Equivalents. With respect to the relevant portion of a
bonus granted in cash for delivery more than six months after the date of
grant, there shall be credited to the grantee an amount equivalent to
interest (which may be compounded) as specified by the grant with respect
to the period beginning at the date of grant and ending on the date as
specified by the grant. The rate of interest, if any, credited to the
grantee shall be determined from time to time by the BCC.
With respect to the relevant portion of a bonus granted in bonus units
the payment of cash in settlement of which is postponed more than six
months after the settlement date, there shall be credited to the grantee an
amount equivalent to interest (which may be
5
<PAGE>
compounded) as specified by the grant. The rate of interest, if any,
credited to the grantee shall be determined from time to time by the BCC.
Such credits for interest equivalents shall not be included in any
computation made for purposes of any ceiling established by the BCC
pursuant to Section IV.
When a bonus in cash is paid, any interest equivalents so credited on
the cash shall be paid. When a bonus in units is paid, any interest
equivalents so credited on the units shall be paid.
XII. Annulment of Grant. The grant of any bonus or portion thereof is
provisional until cash or other consideration is paid in settlement
thereof, except to the extent the granting authority shall have declared
the bonus to be vested and nonforfeitable. If, while the grant is
provisional,
(1) the grantee terminates but does not terminate normally, or
(2) the grantee is determined to have engaged in detrimental
activity, the grant shall be annulled as of the time of termination,
or the date such activity is determined to be detrimental, as the case
may be.
XIII. Amendments to this Program. The Board can from time to time
amend or terminate this Program, or any provision hereof. An amendment of
this Program shall, unless the amendment provides otherwise, be effective
for all outstanding awards.
XIV. Amendments to Awards. The granting authority may amend any
outstanding award under this Program to incorporate any terms that could
then be incorporated in a new award under this Program.
XV. Withholding Taxes. The Corporation shall have the right to
deduct from any cash payment made under this Program any federal, state or
local income or other taxes required by law to be withheld with respect to
such payment. In the case of a payment under this Program other than cash,
the grantee will pay to the Corporation such amount of cash as may be
requested by the Corporation for purpose of satisfying any liability for
such withholding taxes.
XVI. Grant of Awards to Employees Who Are Foreign Nationals. Without
amending this Program, but subject to the limitations specified in Section
III(4), the granting authority can grant or amend, and the administrative
authority can administer, annul, or terminate, awards to eligible employees
who are foreign nationals on such terms and conditions different from those
specified in this Program as may in its judgment be necessary or desirable
to foster and promote achievement of the purposes of this Program.
6
<PAGE>
EXHIBIT 12
EXXON MOBIL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(millions of dollars)
<S> <C> <C> <C> <C> <C>
Income before cumulative effect of
accounting changes............... $ 7,910 $ 8,144 $11,732 $10,474 $ 8,846
Excess/(shortfall) of dividends
over earnings of affiliates owned
less than 50 percent accounted
for by the equity method......... 300 164 (64) 186 (26)
Provision for income taxes(1)..... 3,632 4,390 8,140 8,201 6,572
Capitalized interest.............. (423) (400) (448) (467) (465)
Minority interests in earnings of
consolidated subsidiaries........ 139 261 523 500 392
------- ------- ------- ------- -------
11,558 12,559 19,883 18,894 15,319
------- ------- ------- ------- -------
Fixed Charges:(1)
Interest expense--borrowings..... 826 769 811 944 1,096
Capitalized interest............. 606 564 595 598 580
Rental expense representative of
interest factor................. 617 795 818 819 780
Dividends on preferred stock..... 8 6 5 4 4
------- ------- ------- ------- -------
2,057 2,134 2,229 2,365 2,460
------- ------- ------- ------- -------
Total adjusted earnings available
for payment of fixed charges..... $13,615 $14,693 $22,112 $21,259 $17,779
======= ======= ======= ======= =======
Number of times fixed charges are
earned........................... 6.6 6.9 9.9 9.0 7.2
</TABLE>
- - - - - - - - - - - - - - - - ---------------------
Note:
(1) The provision for income taxes and the fixed charges include Exxon Mobil
Corporation's share of 50 percent owned companies and majority owned
subsidiaries that are not consolidated.
1
<PAGE>
EXHIBIT 13
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Management's Discussion and Analysis of Financial Condition and Results of Operations .............................. F6-F12
Report of Independent Accountants ....................................................................................... F13
Consolidated Financial Statements
Statement of Income .................................................................................................. F14
Balance Sheet ........................................................................................................ F15
Statement of Shareholders' Equity .................................................................................... F16
Statement of Cash Flows .............................................................................................. F17
Notes to Consolidated Financial Statements
1.Summary of Accounting Policies .................................................................................... F18
2.Accounting Change ................................................................................................. F19
3.Merger of Exxon Corporation and Mobil Corporation ................................................................. F19
4.Adjustments of Asset Carrying Amounts ............................................................................. F19
5.Reorganization Costs .............................................................................................. F19
6.Miscellaneous Financial Information ............................................................................... F20
7.Cash Flow Information ............................................................................................. F20
8.Additional Working Capital Data ................................................................................... F20
9.Equity Company Information ........................................................................................ F21
10.Investments and Advances .......................................................................................... F21
11.Investment in Property, Plant and Equipment ....................................................................... F22
12.Leased Facilities ................................................................................................. F22
13.Capital ........................................................................................................... F23
14.Employee Stock Ownership Plans .................................................................................... F24
15.Financial Instruments ............................................................................................. F24
16.Long-Term Debt .................................................................................................... F25
17.Incentive Program ................................................................................................. F26
18.Annuity Benefits and Other Postretirement Benefits ................................................................ F27
19.Litigation and Other Contingencies ................................................................................ F29
20.Income, Excise and Other Taxes .................................................................................... F30
21.Disclosures about Segments and Related Information ................................................................ F31
Supplemental Information on Oil and Gas Exploration and Production Activities ........................................ F33-F37
Quarterly Information ................................................................................................... F38
Operating Summary ....................................................................................................... F39
</TABLE>
F2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
REVIEW OF 1999 RESULTS
Earnings excluding merger expenses and special items were $8,380 million, down
$426 million or 5 percent from 1998. Net income was $7,910 million, down from
$8,074 million in 1998. The decline was primarily in the downstream (Refining
and Marketing) where steeply rising crude oil costs could not be recovered in
the marketplace. Crude oil prices rose about $14 per barrel from January to
December 1999, depressing refining and marketing margins in all geographic
areas. Weaker chemicals margins and lower coal prices also adversely affected
earnings. However, upstream (Exploration and Production) results benefited from
the increase in crude oil prices and partly offset the weakness in downstream
business conditions. Record chemicals, coal and copper volumes and reduced
expenses in every operating segment also benefited earnings. Results in 1999
included $470 million of net charges for special items -- $469 million of merger
expenses with other special items essentially offsetting. Results in 1998
included $732 million of net special charges. Revenue for 1999 totaled $186
billion, up 9 percent from 1998, and the cost of crude oil and product purchases
increased 24 percent.
Excluding merger expenses, the combined total of operating costs (including
operating, selling, general, administrative, exploration, depreciation and
depletion expenses from the consolidated statement of income and ExxonMobil's
share of similar costs for equity companies) in 1999 was $44.3 billion, down
about $400 million from 1998. Base cash operating expenses, which exclude energy
costs and depreciation, were down $1.2 billion, as efficiency initiatives and
high grading of exploration spending more than offset higher cash expenses from
new business activity and inflation. Interest expense in 1999 was $695 million,
$127 million higher than 1998, mainly due to a higher debt level and unfavorable
foreign exchange effects.
Exploration and Production
Exploration and production earnings of $5,886 million increased significantly
from last year reflecting higher average crude oil prices, up over $5 per barrel
from 1998. Average U.S. natural gas prices were 9 percent higher than the prior
year, while European gas prices, which are tied to petroleum product prices on a
lagged basis, were about 17 percent lower. Liquids production of 2,517 kbd
(thousands of barrels daily) was up 1 percent from 2,502 kbd in 1998 as
production from new developments in the North Sea, the Gulf of Mexico, West
Africa and the Caspian offset natural field declines in North America and lower
liftings in Indonesia and Malaysia. Natural gas production of 10,308 mcfd
(millions of cubic feet daily) compared with 10,617 mcfd in 1998. Exploration
and producing expenses were reduced from prior year levels. Earnings from U.S.
exploration and production were $1,842 million, up $807 million after excluding
$185 million of special charges related mainly to property write-downs in 1998.
Outside the U.S., exploration and production earnings were $3,925 million, up
$1,247 million after excluding a $141 million deferred tax benefit and a $22
million property write-off in 1999 and $176 million of other net special charges
in 1998.
Refining and Marketing
Refining and marketing earnings of $1,227 million declined from last year's
strong results primarily reflecting escalating crude oil costs and weaker
refining and marketing margins in all geographic areas. Unfavorable foreign
exchange and inventory effects also reduced earnings. Higher volumes, mainly in
the U.S., and lower operating expenses provided a partial offset. Petroleum
product sales were 8,887 kbd compared with 8,873 kbd in 1998. Refinery
throughput was 5,977 kbd compared with 6,093 kbd in 1998. In the U.S., refining
and marketing earnings were $577 million, down $614 million from the prior year
after excluding $8 million of special credits related to inventory adjustments
in 1998. Refining and marketing operations outside of the U.S. earned $770
million, down $1,917 million from 1998 after excluding special charges from both
years. Results in 1999 included $80 million of charges for non-merger related
restructuring of Japanese refining and marketing operations and a $40 million
write-off associated with the cancellation of a power project in Japan, while
1998 results included $412 million of special charges largely related to the
impact of lower prices on inventories and Mobil-British Petroleum (BP) alliance
implementation costs.
Chemicals
Earnings from chemicals operations totaled $1,354 million, down $40 million or 3
percent from 1998. Industry margins declined due to lower product prices and
higher feedstock costs. Prime product sales volumes of 24,485 thousand metric
tons were a record and increased 4 percent from 1998. Earnings also benefited
from lower operating expenses. Chemicals' results included $9 million of special
charges related to the impact of lower prices on inventories in 1998.
Other Operations
Earnings from other operating segments totaled $426 million, an increase of $42
million from 1998. The increase reflects record copper and coal production,
lower operating expenses and favorable foreign exchange effects, partly offset
by depressed coal prices.
Corporate and Financing
Corporate and financing expenses were $514 million, $54 million higher than 1998
which included a net special credit of $112
F6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
million related to settlement of prior years' tax disputes. Excluding special
items, expenses were $58 million lower reflecting lower tax-related charges.
REVIEW OF 1998 RESULTS
Earnings excluding special items were $8,806 million, down $2,779 million or 24
percent from 1997. Net income was $8,074 million, down $3,658 million from
$11,732 million in 1997. The decline was driven by weaker crude oil prices, that
on average were over $6 per barrel or 33 percent lower than 1997. Average 1998
crude oil prices 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. Additionally, results in 1998
included $732 million of net special charges for the write-down of upstream
properties, the impact of lower prices on inventories, the unfavorable impact of
an accounting change, non-merger related restructuring provisions and
implementation costs and other net charges, partially offset by the benefit
resulting from the settlement of prior years' tax disputes. In 1997, results
included $147 million of net credits for special items. Of these, $190 million
were the result of foreign exchange impacts on deferred income tax liabilities,
$181 million were for gains on asset sales and $115 million were U.S. tax
related. These items were partly offset by various other special charges, mainly
restructuring provisions and Mobil-BP alliance implementation costs. Revenue for
1998 totaled $170 billion, down 16 percent from 1997, and the cost of crude and
product purchases declined 26 percent.
The combined total of operating costs (including operating, selling, general,
administrative, exploration, depreciation and depletion expenses from the
consolidated statement of income and ExxonMobil's share of similar costs for
equity companies) in 1998 was $44.7 billion, down $1.5 billion 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. Excluding these effects, ExxonMobil's operating efficiencies
continued to offset the impact of inflation and new business activity growth.
Interest expense in 1998 declined $295 million to $568 million, principally due
to the deconsolidation of power companies mentioned above and favorable foreign
exchange effects.
During the fourth quarter of 1998, ExxonMobil de-consolidated the majority
owned power companies in Hong Kong and China retroactive to January 1, 1998.
Although ExxonMobil's 1998 net income was not affected by the de-consolidation,
there were several impacts to the 1998 balance sheet (see note 9). 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 $3,352 million declined substantially
from 1997 reflecting crude prices that on average were over $6 per barrel lower
than 1997. Lower U.S. and international natural gas prices also adversely
affected earnings. Liquids production was 2,502 kbd compared with 2,527 kbd in
1997. Lower production was mainly due to the fourth quarter Longford plant
outage in Australia, limitations on production in Nigeria, along with natural
field declines in mature areas. Partly offsetting these effects were increased
Canadian heavy oil production, increased production from new developments in the
North Sea, West Africa, Eastern Canada, Azerbaijan and Kazakhstan, and increased
Malaysian output. Natural gas production of 10,617 mcfd was down 277 mcfd from
1997, mainly reflecting lower Indonesian volumes. Earnings from U.S. exploration
and production were $1,035 million, down $1,259 million, after excluding special
charges of $185 million from 1998 and $37 million of special credits from 1997.
Outside the U.S., exploration and production earnings were $2,678 million, down
$1,669 million, after excluding $176 million of special charges from 1998 and
$227 million of credits from 1997.
Refining and Marketing
Refining and marketing earnings increased $386 million to $3,474 million.
Downstream industry margins in 1998 were generally higher than 1997. European
refining margins were stronger, but margins in the U.S. and Asia-Pacific were
weaker. Marketing margins improved in most geographic areas, particularly in the
U.K. Petroleum product sales of 8,873 kbd were up from 1997 despite the impact
of weaker economic conditions in Asia-Pacific. Refinery throughput was 6,093 kbd
compared with 6,234 kbd in 1997. In the U.S., refining and marketing earnings
were $1,191 million, up $36 million from 1997, after excluding $8 million of
special credits in 1998 and $20 million of charges in 1997. Refining and
marketing operations outside the U.S. earned $2,687 million, an increase of $467
million, after excluding $412 million of special charges in 1998 and $267
million of charges in 1997.
Chemicals
Earnings from chemicals operations totaled $1,394 million, down $377 million or
21 percent from 1997. Chemicals margins declined during the year as the result
of weaker industry commodity prices. Chemical prime product sales of 23,628
thousand metric tons were down slightly from 1997 as higher sales in North
America and Europe were offset by lower demand in
F7
<PAGE>
Asia-Pacific markets. Earnings in 1998 included $9 million of special charges
while 1997 results included $53 million of special credits.
Other Operations
Earnings from other operating segments totaled $384 million, a decrease of $50
million from 1997, 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 were $460 million, $6 million lower than 1997.
After excluding $112 million of net special credits from 1998 and $117 million
from 1997, expenses decreased $11 million.
MERGER OF EXXON CORPORATION AND MOBIL CORPORATION
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation (Exxon)
merged with Mobil Corporation (Mobil) so that Mobil became a wholly-owned
subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its name to
Exxon Mobil Corporation (ExxonMobil). Under the terms of the agreement,
approximately 1.0 billion shares of ExxonMobil common stock were issued in
exchange for all the outstanding shares of Mobil common stock based upon an
exchange ratio of 1.32015. Following the exchange, former shareholders of Exxon
owned approximately 70 percent of the corporation, while former Mobil
shareholders owned approximately 30 percent of the corporation. Each outstanding
share of Mobil preferred stock was converted into one share of a new class of
ExxonMobil preferred stock.
As a result of the Merger, the accounts of certain refining, marketing and
chemicals operations jointly controlled by the combining companies have been
included in the consolidated financial statements. These operations were
previously accounted for by Exxon and Mobil as separate companies using the
equity method of accounting.
The Merger was accounted for as a pooling of interests. Accordingly, the
consolidated financial statements give retroactive effect to the merger, with
all periods presented as if Exxon and Mobil had always been combined.
In association with the merger between Exxon and Mobil, $625 million pretax
($469 million after-tax) of costs were recorded as merger related expenses.
Charges included separation expenses related to workforce reductions
(approximately 1,750 employees at year-end 1999) and merger closing costs. The
reserve balance at year-end 1999 of approximately $330 million is expected to be
expended in 2000. Merger related expenses are expected to grow to approximately
$2.5 billion on a cumulative basis by 2002. Pre-tax operating synergies
associated with the Merger, including cost savings and efficiency gains, are
expected to reach $3.8 billion per year by 2002.
Certain property -- primarily refining, marketing, pipeline and natural gas
distribution assets -- must be divested as a condition of the regulatory
approval of the Merger by the U.S. Federal Trade Commission and the European
Commission. These assets, with a carrying value of approximately $3 billion, are
expected to be sold in the year 2000. Before tax proceeds for these assets are
expected to be in the range of $4 to $5 billion and should be received in 2000.
The properties have historically earned approximately $200 million per year.
REORGANIZATION COSTS
In the first quarter of 1999 the corporation recorded a $120 million after-tax
charge for the reorganization of Japanese refining and marketing operations in
its wholly-owned Esso Sekiyu K.K. and 50.1 percent owned General Sekiyu K.K.
affiliates. The reorganization resulted in the reduction of approximately 700
administrative, financial, logistics and marketing service employee positions.
The Japanese affiliates recorded a combined charge of $216 million (before tax)
to selling, general and administrative expenses for the employee related costs.
Substantially all cash expenditures anticipated in the restructuring provision
have been paid as of the end of 1999. General Sekiyu also recorded a $211
million (before tax) charge to depreciation and depletion for the write-off of
costs associated with the cancellation of a power plant project at the Kawasaki
terminal. Manpower reduction savings associated with this reorganization are
anticipated to reach $50 million per year after tax in 2000.
As indicated in note 5, during 1998 Mobil implemented reorganization programs
in Australia, New Zealand and Latin America to integrate regional fuels and
lubes operations. In Europe Mobil completed the implementation of the downstream
alliance with BP. In 1997, Mobil and BP announced that the European downstream
alliance would implement a major reorganization of its lubricant base oil
refining business. Also in 1997, Mobil commenced two major cost savings
initiatives in Asia-Pacific: one in Japan in response to the deregulated
business environment and the other in Australia. After-tax costs for programs
initiated in 1998 were $41 million and for the 1997 programs were $189 million.
Benefits associated with these undertakings are estimated at $140 million per
year after tax and should be realized by the end of 2000.
The following table summarizes the activity in the reorganization reserve.
The 1997 opening balance represents accruals for provisions taken in prior
years.
Opening Balance at
Balance Additions Deductions Year End
- - - - - - - - - - - - - - - - ----------------------------------------------------------------------
(millions of dollars)
1997 $368 $272 $340 $300
1998 300 50 181 169
1999 169 224 342 51
F8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CAPITAL AND EXPLORATION EXPENDITURES
Capital and exploration expenditures in 1999 were $13.3 billion, down from $15.5
billion in 1998, reflecting timing of major project expenditures and reduced
activity levels resulting from the low-price environment in early 1999.
Exploration and production spending was down 16 percent to $8.4 billion in
1999, from $10.0 billion in 1998, primarily reflecting the completion of several
major projects in the North Sea, a smaller program in the U.S. in 1999 and lower
exploration expenses. Capital investments in refining and marketing totaled $2.4
billion in 1999, down $0.6 billion from 1998, primarily due to lower spending in
the retail businesses. Chemicals capital expenditures were $2.2 billion in 1999,
up from $2.1 billion in 1998, reflecting higher investments for plant capacity
in Asia-Pacific, Saudi Arabia and the Gulf Coast.
Capital and exploration expenditures in the U.S. totaled $3.4 billion in
1999, a decrease of $0.8 billion from 1998, reflecting lower spending in both
exploration and production and refining and marketing. Spending outside the U.S.
of $9.9 billion in 1999 compared with $11.3 billion in 1998, reflecting lower
expenditures in both exploration and production and refining and marketing,
slightly offset by higher spending in chemicals.
Firm commitments related to capital projects totaled approximately $4.6
billion at the end of 1999, compared with $7.4 billion at year-end 1998. The
largest single commitment in 1999 was $2.1 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.
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.
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.
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 1999, no oil or gas assets required adjustments for impairment.
Risk Management
The corporation's size, geographic diversity and the complementary nature of the
upstream, downstream and chemicals businesses mitigate the corporation's risk
from changes in interest rates, currency rates and commodity prices. As a
result, the corporation makes limited use of derivatives to hedge exposures
arising from existing transactions. Pre-merger, Mobil managed these exposures
using defined benchmarks for hedging to achieve a desired risk profile for the
environment in which Mobil operated and financed its assets. The contract
positions related to these pre-merger activities are being phased down as such
contracts are settled or mature.
Interest rate, foreign exchange rate and commodity price exposures from the
contracts undertaken in accordance with the corporation's policies have not been
significant. Derivative instruments are not held for trading purposes nor do
they have leveraged features.
Debt-Related Instruments
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 limited use of interest rate swap agreements to
adjust the ratio of fixed and floating rates in the debt portfolio. 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. Pre-merger, Mobil's
benchmark for interest rate risk was 100 percent floating rate. Mobil's
benchmark was also to fully hedge exposures to foreign currency rate risk
resulting from debt instruments denominated in a currency other than the
functional currency of the borrower or lender.
Foreign Currency Exchange Rate Instruments
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 ExxonMobil's geographically diverse operations are
varied and often offsetting in amount. The corporation makes limited use of
currency exchange contracts to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Under the former
Mobil policy, the benchmark used by Mobil was to fully hedge identified net
exposures to foreign currency exchange rate risk resulting from transactions in
currencies that were not the functional currency of the affected affiliate.
Aggregate foreign exchange transaction gains and losses included in net income
are discussed in note 6 to the consolidated financial statements.
F9
<PAGE>
Commodity Instruments
The corporation makes 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. Prior
to the merger, Mobil's benchmark for hydrocarbon sales and purchases was
prevailing market price. Mobil used futures, forwards, swaps and options to
achieve this benchmark.
Inflation and Other Uncertainties
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.
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."
As amended by Statement No. 137 issued in June 1999, this statement, which must
be adopted beginning no later than January 1, 2001 for calendar year companies
such as the corporation, 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. Adoption of this statement is not expected to have a material
effect upon the corporation's operations or financial condition.
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 ExxonMobil 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
ExxonMobil's actual joint and several liability exposure. At present, no
individual site is expected to have losses material to ExxonMobil's operations,
financial condition or liquidity.
Charges made against income for site restoration and environmental
liabilities were $219 million in 1999, $240 million in 1998 and $190 million in
1997. At the end of 1999, accumulated site restoration and environmental
provisions, after reduction for amounts paid, amounted to $3.7 billion.
ExxonMobil 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 1999, the corporation spent $2,052 million (of which $650 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 $2 billion in both 2000 and 2001
(with capital expenditures representing about 25 percent of the total).
TAXES
Income, excise and all other taxes and duties totaled $61.5 billion in 1999, an
increase of $1.6 billion or 3 percent from 1998. Income tax expense, both
current and deferred, was $3.2 billion compared to $3.9 billion in 1998,
reflecting lower pre-tax income in 1999, the impact of lower foreign tax rates
and favorable resolution of tax-related issues. The effective tax rate was 31.8
percent in 1999 versus 35.2 percent in 1998. Excise and all other taxes and
duties increased $2.3 billion to $58.3 billion, reflecting higher prices.
Income, excise and all other taxes and duties totaled $59.9 billion in 1998,
a decrease of $4.8 billion or 7 percent from 1997. Income tax expense, both
current and deferred, was $3.9 billion compared to $7.6 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 35.2
percent in 1998 versus 41.1 percent in 1997. Excise and all other taxes and
duties declined $1.2 billion to $56.0 billion, reflecting lower prices.
F10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
In 1999, cash provided by operating activities totaled $15.0 billion, down $1.4
billion from 1998. Major sources of funds were net income of $7.9 billion and
non-cash provisions of $8.3 billion for depreciation and depletion.
Cash used in investing activities totaled $11.0 billion, down $1.0 billion
from 1998 primarily as a result of lower additions to property, plant and
equipment, partly offset by lower sales of subsidiaries and property, plant and
equipment.
Cash used in financing activities was $4.8 billion, down $2.4 billion,
primarily due to fewer common share purchases. Dividend payments on common
shares increased from $1.666 per share to $1.687 per share and totaled $5.8
billion, a payout of 74 percent. Total consolidated debt increased by $2.0
billion to $19.0 billion.
Shareholders' equity increased by $1.3 billion to $63.5 billion. The ratio of
debt to capital increased to 22 percent, reflecting higher debt levels. During
1999, Exxon purchased 8.3 million shares of its common stock for the treasury at
a cost of $648 million. These purchases were used to offset shares issued in
conjunction with the company's benefit plans and programs. Purchases were made
both in the open market and through negotiated transactions. Consistent with
pooling of interest accounting requirements, these repurchases were suspended
effective with the close of the ExxonMobil merger on November 30, 1999.
Previously, as a consequence of the then proposed merger of Exxon and Mobil
announced on December 1, 1998, both companies' repurchase programs to reduce the
number of shares outstanding were discontinued.
In 1998, cash provided by operating activities totaled $16.4 billion, down
$5.0 billion from 1997. Major sources of funds were net income of $8.1 billion
and non-cash provisions of $8.4 billion for depreciation and depletion.
Cash used in investing activities in 1998 totaled $12.0 billion, up $1.1
billion from 1997 primarily as a result of higher additions to property, plant
and equipment and lower sales of subsidiaries and property, plant and equipment.
Cash used in financing activities was $7.1 billion in 1998. Dividend payments
on common shares increased from $1.619 per share to $1.666 per share and totaled
$5.8 billion, a payout of 72 percent. Total consolidated debt was essentially
unchanged from 1997, reflecting the de-consolidation of majority owned companies
in Hong Kong and China discussed in note 9 to the consolidated financial
statements, offset by increased borrowing.
Shareholders' equity decreased by $1.0 billion to $62.1 billion. The ratio of
debt to capital increased from 20.3 percent to 20.6 percent. During 1998, Exxon
and Mobil purchased a combined 53.1 million shares of their common stock at a
cost of $3.5 billion. These purchases reflect both Exxon's increased share
repurchases announced in the first quarter of 1997 and Mobil's increased share
repurchases announced in the third quarter of 1998, 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 then proposed merger of Exxon and Mobil
announced on December 1, 1998, both companies' repurchase programs to reduce the
number of shares outstanding were discontinued.
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 15 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
ExxonMobil's operations, financial condition or liquidity.
Litigation and Other Contingencies
As discussed in note 19 to the consolidated financial statements, a number of
lawsuits, including class actions, were brought in various courts against the
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. The corporation has appealed the judgment. The corporation has also
appealed the District Court's denial of its renewed motion for a new trial. The
United States Court of Appeals for the Ninth Circuit heard oral arguments on the
appeals on May 3, 1999. ExxonMobil 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
ExxonMobil from the lawsuits arising from the Exxon Valdez grounding is not
possible to predict and may not be resolved for a number of years.
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
F11
<PAGE>
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 have a materially 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 financial condition.
THE EURO
On January 1, 1999, eleven European countries established fixed conversion rates
between their existing sovereign currencies ("legacy currencies") and adopted
the euro as their common legal currency. The euro and the legacy currencies are
each legal tender for transactions now. Beginning January 1, 2002, the
participating countries will issue euro-denominated bills and coins. By July 1,
2002 each country will withdraw its sovereign currency and transactions
thereafter will be conducted solely in euros. Based on work to date, the
conversion to the euro is not expected to have a material effect on the
corporation's operations, financial condition or liquidity.
YEAR 2000 ISSUE
The Year 2000 issue resulted from computer programs being written using two
digits rather than four to define a specific year, leading to the potential for
problems during transition to the year 2000. ExxonMobil's preparation work for
the Year 2000 rollover spanned several years. The scope of this work encompassed
business information systems, infrastructure and technical and field systems,
including systems utilizing embedded technology, such as micro-controllers.
ExxonMobil completed preparation work in 1999, and the rollover occurred with no
significant events or operational impacts. The total cost to the corporation of
achieving Year 2000 compliant systems was approximately $410 million pre-tax,
primarily over the 1997-1999 timeframe. Total expenditures in 1999 were
approximately $120 million pre-tax.
FORWARD-LOOKING STATEMENTS
Statements in this discussion regarding expectations, plans and future events or
conditions are forward-looking statements. Actual future results, including
synergy benefits from the merger; asset divestment proceeds; financing sources;
the resolution of contingencies; the effect of changes in prices, interest rates
and other market conditions; and environmental and capital expenditures could
differ materially depending on a number of factors. These factors include
management's ability to implement merger plans successfully and on schedule; the
outcome of commercial negotiations; and other factors discussed above and in
Item 1 of ExxonMobil's most recent annual report on Form 10-K.
F12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO] PricewaterhouseCoopers LLP
Dallas, Texas
February 23, 2000
To the Shareholders of Exxon Mobil Corporation
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements appearing on pages F14 through F32 present
fairly, in all material respects, the financial position of Exxon Mobil
Corporation and its subsidiary companies at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. 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. The consolidated
financial statements give retroactive effect to the merger of Mobil Corporation
on November 30, 1999 in a transaction accounted for as a pooling of interests,
as described in note 3 to the consolidated financial statements. We did not
audit the financial statements of Mobil Corporation, which statements reflect
total assets of $42,754 million at December 31, 1998, and total revenues of
$53,531 million and $65,906 million for the years ended December 31, 1998 and
1997, respectively. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Mobil Corporation, is based solely on the
report of the other auditors. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
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 and the report of
the other auditors 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
F13
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
1999 1998 1997
- - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
Revenue
Sales and other operating revenue, including excise taxes $ 182,529 $ 165,627 $ 197,735
Earnings from equity interests and other revenue 2,998 4,015 4,011
----------------------------------------
Total revenue $ 185,527 $ 169,642 $ 201,746
----------------------------------------
Costs and other deductions
Crude oil and product purchases $ 77,011 $ 62,145 $ 83,441
Operating expenses 16,806 17,666 19,475
Selling, general and administrative expenses 13,134 12,925 13,574
Depreciation and depletion 8,304 8,355 8,228
Exploration expenses, including dry holes 1,246 1,506 1,252
Merger related expenses 625 - -
Interest expense 695 568 863
Excise taxes 21,646 20,926 21,183
Other taxes and duties 34,765 33,203 33,867
Income applicable to minority and preferred interests 145 265 526
----------------------------------------
Total costs and other deductions $ 174,377 $ 157,559 $ 182,409
----------------------------------------
Income before income taxes $ 11,150 $ 12,083 $ 19,337
Income taxes 3,240 3,939 7,605
----------------------------------------
Income before cumulative effect of accounting change $ 7,910 $ 8,144 $ 11,732
Cumulative effect of accounting change - (70) -
----------------------------------------
Net income $ 7,910 $ 8,074 $ 11,732
========================================
Net income per common share (dollars)
Before cumulative effect of accounting change $ 2.28 $ 2.33 $ 3.32
Cumulative effect of accounting change - (0.02) -
----------------------------------------
Net income $ 2.28 $ 2.31 $ 3.32
----------------------------------------
Net income per common share - assuming dilution (dollars)
Before cumulative effect of accounting change $ 2.25 $ 2.30 $ 3.28
Cumulative effect of accounting change - (0.02) -
----------------------------------------
Net income $ 2.25 $ 2.28 $ 3.28
----------------------------------------
</TABLE>
The information on pages F18 through F32 is an integral part of these
statements.
F14
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Dec. 31 Dec. 31
1999 1998
- - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 1,688 $ 2,386
Other marketable securities 73 50
Notes and accounts receivable, less estimated doubtful amounts 19,155 15,829
Inventories
Crude oil, products and merchandise 7,370 7,537
Materials and supplies 1,122 1,155
Prepaid taxes and expenses 1,733 1,637
-------------------------
Total current assets $ 31,141 $ 28,594
Investments and advances 14,544 13,915
Property, plant and equipment, at cost, less accumulated depreciation and depletion 94,043 92,583
Other assets, including intangibles, net 4,793 4,243
-------------------------
Total assets $ 144,521 $ 139,335
=========================
Liabilities
Current liabilities
Notes and loans payable $ 10,570 $ 8,484
Accounts payable and accrued liabilities 25,492 23,154
Income taxes payable 2,671 2,143
-------------------------
Total current liabilities $ 38,733 $ 33,781
Long-term debt 8,402 8,532
Annuity reserves and accrued liabilities 12,902 13,002
Deferred income tax liabilities 16,251 16,749
Deferred credits 1,079 1,524
Equity of minority and preferred shareholders in affiliated companies 3,688 3,627
-------------------------
Total liabilities $ 81,055 $ 77,215
-------------------------
Shareholders' equity
Class A preferred stock without par value (16.5 million shares authorized) $ - $ 105
Class B preferred stock without par value (0.2 million shares authorized) - 641
Benefit plan related balances (298) (793)
Common stock without par value (4,500 million shares authorized) 3,403 4,870
Earnings reinvested 75,055 75,109
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (2,300) (1,573)
Minimum pension liability adjustment (299) (408)
Unrealized gains on stock investments 31 -
Common stock held in treasury (533 million shares in 1999 and 711 million shares in 1998) (12,126) (15,831)
-------------------------
Total shareholders' equity $ 63,466 $ 62,120
-------------------------
Total liabilities and shareholders' equity $ 144,521 $ 139,335
=========================
</TABLE>
The information on pages F18 through F32 is an integral part of these
statements.
F15
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
1999 1998 1997
------------------------------------------------------------------------------------
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>
Class A preferred stock outstanding
at end of year $ - $ 105 $ 190
Class B preferred stock outstanding
at end of year - 641 665
Benefit plan related balances (298) (793) (554)
Common stock (see note 13)
At beginning of year 4,870 4,766 5,181
Issued 92 104 84
Other 303 - -
Cancellation of common stock held
in treasury (1,862) - (499)
-------- -------- --------
At end of year $ 3,403 $ 4,870 $ 4,766
-------- -------- --------
Earnings reinvested
At beginning of year 75,109 72,875 76,264
Net income for year 7,910 $ 7,910 8,074 $ 8,074 11,732 $ 11,732
Dividends - common and preferred shares (5,872) (5,840) (5,751)
Cancellation of common stock held
in treasury (2,092) - (9,370)
-------- -------- --------
At end of year $ 75,055 $ 75,109 $ 72,875
-------- -------- --------
Accumulated other nonowner changes in equity
At beginning of year (1,981) (1,940) 1,053
Foreign exchange translation adjustment (727) (727) 367 367 (2,993) (2,993)
Minimum pension liability adjustment 109 109 (408) (408) - -
Unrealized gains on stock investments 31 31 - - - -
-------- -------- --------
At end of year $ (2,568) $ (1,981) $ (1,940)
-------- -------- -------- -------- -------- --------
Total $ 7,323 $ 8,033 $ 8,739
======== ======== ========
Common stock held in treasury
At beginning of year (15,831) (12,881) (20,163)
Acquisitions, at cost (976) (3,523) (3,101)
Dispositions 727 573 514
Cancellation, returned to unissued 3,954 - 9,869
-------- -------- --------
At end of year $(12,126) $(15,831) $(12,881)
-------- -------- --------
Shareholders' equity at end of year $ 63,466 $ 62,120 $ 63,121
======== ======== ========
Share Activity
----------------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------------
(millions of shares)
Class A preferred stock - 2 3
Class B preferred stock - 0.2 0.2
Common stock
Issued (see note 13)
At beginning of year 4,169 4,164 4,802
Issued 4 5 4
Cancelled (163) - (642)
------- ------- -------
At end of year 4,010 4,169 4,164
------- ------- -------
Held in treasury (see note 13)
At beginning of year (711) (674) (1,279)
Acquisitions (17) (53) (53)
Dispositions 32 16 16
Cancellation, returned to unissued 163 - 642
------- ------- -------
At end of year (533) (711) (674)
------- ------- -------
Common shares outstanding at end of year 3,477 3,458 3,490
======= ======= =======
</TABLE>
The information on pages F18 through F32 is an integral part of these
statements.
F16
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1999 1998 1997
- - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
Cash flows from operating activities
Net income
Accruing to ExxonMobil shareholders $ 7,910 $ 8,074 $ 11,732
Accruing to minority and preferred interests 145 265 526
Adjustments for non-cash transactions
Depreciation and depletion 8,304 8,355 8,228
Deferred income tax charges/(credits) (1,439) 318 834
Annuity and accrued liability provisions 412 (251) 420
Dividends received greater than/(less than) equity in current earnings of equity companies 146 328 73
Changes in operational working capital, excluding cash and debt
Reduction/(increase) - Notes and accounts receivable (3,478) 2,170 2,078
- Inventories 50 438 292
- Prepaid taxes and expenses 177 8 (30)
Increase/(reduction) - Accounts and other payables 3,046 (3,010) (2,884)
All other items - net (260) (259) 173
-----------------------------------
Net cash provided by operating activities $ 15,013 $ 16,436 $ 21,442
-----------------------------------
Cash flows from investing activities
Additions to property, plant and equipment $(10,849) $(12,730) $(11,652)
Sales of subsidiaries and property, plant and equipment 854 1,522 2,193
Additional investments and advances (1,476) (1,469) (1,741)
Sales of investments and collection of advances 505 698 363
Additions to other marketable securities (61) (61) (37)
Sales of other marketable securities 42 58 39
-----------------------------------
Net cash used in investing activities $(10,985) $(11,982) $(10,835)
-----------------------------------
Net cash generation before financing activities $ 4,028 $ 4,454 $ 10,607
-----------------------------------
Cash flows from financing activities
Additions to long-term debt $ 454 $ 1,384 $ 1,089
Reductions in long-term debt (341) (305) (806)
Additions to short-term debt 1,870 930 1,118
Reductions in short-term debt (2,359) (2,175) (2,591)
Additions/(reductions) in debt with less than 90 day maturity 2,210 2,384 282
Cash dividends to ExxonMobil shareholders (5,872) (5,843) (5,757)
Cash dividends to minority interests (219) (387) (420)
Changes in minority interests and sales/(purchases) of affiliate stock (200) (84) 204
Common stock acquired (670) (3,547) (3,122)
Common stock sold 348 507 424
-----------------------------------
Net cash used in financing activities $ (4,779) $ (7,136) $ (9,579)
-----------------------------------
Effects of exchange rate changes on cash $ 53 $ 23 $ (127)
-----------------------------------
Increase/(decrease) in cash and cash equivalents $ (698) $ (2,659) $ 901
Cash and cash equivalents at beginning of year 2,386 5,045 4,144
-----------------------------------
Cash and cash equivalents at end of year $ 1,688 $ 2,386 $ 5,045
===================================
</TABLE>
The information on pages F18 through F32 is an integral part of these
statements.
F17
<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 Mobil
Corporation.
1. Summary of Accounting Policies
Principles of Consolidation. The consolidated financial statements include the
accounts of those significant subsidiaries owned directly or indirectly with
more than 50 percent of the voting rights held by the corporation, and for which
other 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 other companies, none of which is significant, are generally
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 the
corporation has an interest with the 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.
Derivative Instruments. As discussed in footnote 15, the corporation makes
limited use of derivative instruments to hedge its exposures associated with
interest rates, foreign currency exchange rates and hydrocarbon prices. Gains
and losses on hedging contracts are recognized concurrent with the recognition
of the economic impact of the underlying exposures using either the accrual or
deferral method of accounting. In order to qualify for hedge accounting, the
derivative instrument must be designated and effective as a hedge.
The accrual method is used for interest rate swaps, cross-currency interest
rate swaps and commodity swaps. Under the accrual method, differentials in the
swapped amounts are recorded as adjustments of the underlying periodic cash
flows that are being hedged. If these swaps are terminated, the gains and losses
are amortized over the original lives of such contracts. The deferral method is
used for futures exchange contracts, forward contracts and commodity swaps.
Gains and losses resulting from changes in value of derivative instruments are
deferred and recognized in the same period as the gains and losses of the items
being hedged.
Cash flow from derivative instruments that qualify for hedge accounting is
included in the same category for cash flow purposes as the item being hedged.
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, analyses 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.
F18
<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 Canada, the United Kingdom, Norway and
Continental Europe. The U.S. dollar is used for operations in highly
inflationary economies, in Singapore which is predominantly export oriented and
for some exploration and production operations, primarily in Malaysia,
Indonesia, Nigeria, Equatorial Guinea and the Middle East. For all operations,
gains or losses on remeasuring foreign currency transactions into functional
currency are included in income.
2. Accounting Change
Effective as of January 1, 1998, the corporation adopted the American Institute
of Certified Public Accountants' Statement of Position 98-5, "Reporting on the
Costs of Start-up Activities." 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 $0.02 per common share.
3. Merger of Exxon Corporation and Mobil Corporation
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation (Exxon)
merged with Mobil Corporation (Mobil) so that Mobil became a wholly-owned
subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its name to
Exxon Mobil Corporation (ExxonMobil). Under the terms of the agreement,
approximately 1.0 billion shares of ExxonMobil common stock were issued in
exchange for all the outstanding shares of Mobil common stock based upon an
exchange ratio of 1.32015. Following the exchange, former shareholders of Exxon
owned approximately 70 percent of the corporation, while former Mobil
shareholders owned approximately 30 percent of the corporation. Each outstanding
share of Mobil preferred stock was converted into one share of a new class of
ExxonMobil preferred stock.
As a result of the Merger, the accounts of certain refining, marketing and
chemicals operations jointly controlled by the combining companies have been
included in the consolidated financial statements. These operations were
previously accounted for by Exxon and Mobil as separate companies using the
equity method of accounting.
The Merger was accounted for as a pooling of interests. Accordingly, the
consolidated financial statements give retroactive effect to the Merger, with
all periods presented as if Exxon and Mobil had always been combined. Certain
reclassifications have been made to conform the presentation of Exxon and Mobil.
The following table sets forth summary data for the separate companies and
the combined amounts for periods prior to the Merger.
Nine Months Year
Ended Ended
September 30 December 31
------------ ----------------------
1999 1998 1997
- - - - - - - - - - - - - - - - -------------------------------------------------------------------------
(millions of dollars)
Revenues
Exxon $ 89,378 $ 117,772 $ 137,242
Mobil 42,782 53,531 65,906
Adjustments (1) 6,033 7,987 9,925
Eliminations (7,248) (9,648) (11,327)
-----------------------------------------------
ExxonMobil $ 130,945 $ 169,642 $ 201,746
===============================================
Net Income
Exxon $ 3,725 $ 6,370 $ 8,460
Mobil 1,901 1,704 3,272
-----------------------------------------------
ExxonMobil $ 5,626 $ 8,074 $ 11,732
===============================================
(1) Consolidation of activities previously accounted for using the equity method
of accounting.
In association with the Merger, $625 million pre-tax ($469 million after-tax) of
costs were recorded as merger related expenses. Charges included separation
expenses of approximately $350 million related to workforce reductions
(approximately 1,750 employees at year-end 1999), plus implementation and merger
closing costs. The reserve balance, primarily related to severance, at year end
1999 of approximately $330 million, is expected to be expended in 2000.
Certain property -- primarily refining, marketing, pipeline and natural gas
distribution assets -- must be divested as a condition of the regulatory
approval of the Merger by the U.S. Federal Trade Commission and the European
Commission. These assets, with a carrying value of approximately $3 billion, are
expected to be sold in the year 2000. The properties have historically earned
approximately $200 million per year.
4. Adjustments of Asset Carrying Amounts
In 1998, as a result of lower worldwide crude oil and petroleum product prices,
Mobil recorded a charge of $325 million before tax ($270 million after tax) in
crude oil and product purchases to adjust certain inventories to their market
value.
Also in 1998, a charge of $491 million before tax ($387 million after tax)
was recorded by Mobil to write down certain oil and gas properties to fair
value, mainly in the U.S., Latin America and Asia-Pacific. These write-downs
were the result of the reduction of hydrocarbon reserves and governmental
actions. Of this amount, $352 million was recorded in depreciation and depletion
with the remainder recorded primarily in operating expenses and exploration
expenses.
5. Reorganization Costs
In the first quarter of 1999, the corporation recorded a $120 million after-tax
charge for the non-merger related reorganization of Japanese refining and
marketing operations in its wholly-owned Esso Sekiyu K.K. and 50.1 percent owned
General Sekiyu K.K. affiliates. The reorganization resulted in the reduction of
approximately 700 administrative, financial, logistics and marketing service
employee positions. The Japanese affiliates recorded a combined charge of $216
million (before tax) to selling, general and administrative expenses for the
employee related costs. Substantially all cash expenditures anticipated in the
restructuring provi-
F19
<PAGE>
sion have been paid as of the end of 1999. General Sekiyu also recorded a $211
million (before tax) charge to depreciation and depletion for the write-off of
costs associated with the cancellation of a power plant project at the Kawasaki
terminal.
In 1998, Mobil implemented new reorganization programs in Australia and New
Zealand and in Latin America to integrate regional fuels and lubes operations.
These programs resulted in the elimination of approximately 500 positions as
well as asset write-downs in Australia and New Zealand. A provision of $50
million ($41 million after tax) was recorded in selling, general and
administrative expenses and depreciation and depletion for these programs. In
1998 and 1999, a combination of cash for employee separation benefits and exit
costs and noncash costs for the closure of facilities essentially depleted the
reserve.
Also during 1998, Mobil and BP completed the implementation of their
alliance, which combined the companies' European operations in the refining and
marketing of fuels and lubricants. This alliance resulted in the elimination of
approximately 1,000 positions, the impairment of certain fuels marketing assets
and the closure of surplus facilities. During 1996, a provision of $184 million
($145 million after tax), was established primarily for separation costs related
to workforce reductions, facilities closure costs and asset write-downs. There
was no amount remaining in the reserve at December 31, 1999, for this program.
In 1997, Mobil and BP announced that the alliance would implement a major
restructuring of its lubricant base oil refining business. This program resulted
in the elimination of approximately 460 positions and in write-downs and closure
of certain facilities and was completed by the end of 1999. Reserves were
recorded in 1997 of about $86 million ($82 million after tax) mainly for
employee severance costs associated with workforce reductions and for
write-downs and closure of certain facilities. These costs were recorded in
earnings from equity interests and selling, general and administrative expenses.
Cash outlays have been approximately $40 million and non-cash costs about $20
million. The amounts remaining in the reserve at December 31, 1999, 1998 and
1997 were $28 million, $35 million and $66 million, respectively.
Also in 1997, Mobil commenced two major cost savings initiatives in
Asia-Pacific--one in Japan in response to the deregulated business environment
and the other in Australia. These programs resulted in the elimination of
approximately 400 positions and the impairment of certain assets. In 1997,
reserves were recorded in the amount of $172 million ($107 million after tax)
primarily for separation costs related to workforce reductions and for closure
of certain facilities. The provisions were recorded in selling, general and
administrative expenses; operating expenses; earnings from equity interests and
other revenue and depreciation and depletion. At the end of 1999 the reserve was
essentially depleted.
The following table summarizes the activity in the reorganization reserve.
The 1997 opening balance represents accruals for provisions taken in prior
years.
Opening Balance at
Balance Additions Deductions Year End
- - - - - - - - - - - - - - - - --------------------------------------------------------------------
(millions of dollars)
1997 $368 $272 $340 $300
1998 300 50 181 169
1999 169 224 342 51
6. Miscellaneous Financial Information
Research and development costs totaled $630 million in 1999, $753 million in
1998 and $763 million in 1997.
Net income included aggregate foreign exchange transaction losses of $5
million in 1999, and gains of $20 million in 1998 and $113 million in 1997.
In 1999, 1998 and 1997, net income included losses of $7 million, $8 million
and gains of $69 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 $5,898 million
and $957 million at December 31, 1999 and 1998, respectively.
7. Cash Flow Information
The consolidated statement of cash flows provides information about changes in
cash and cash equivalents. Highly liquid investments with maturities of three
months or less when acquired are classified as cash equivalents.
Cash payments for interest were: 1999 - $882 million, 1998 - $1,066 million
and 1997 - $1,149 million. Cash payments for income taxes were: 1999 - $3,805
million, 1998 - $4,629 million and 1997 - $6,762 million.
8. Additional Working Capital Data Dec. 31 Dec. 31
1999 1998
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------
Notes and accounts receivable (millions of dollars)
Trade, less reserves of $231 million
and $234 million $14,605 $10,862
Other, less reserves of $10 million
and $13 million 4,550 4,967
------------------------
$19,155 $15,829
========================
Notes and loans payable
Bank loans $ 2,223 $ 2,051
Commercial paper 7,231 4,595
Long-term debt due within one year 407 1,524
Other 709 314
------------------------
$10,570 $ 8,484
========================
Accounts payable and accrued liabilities
Trade payables $13,524 $10,915
Obligations to equity companies 608 498
Accrued taxes other than income taxes 6,005 5,539
Other 5,355 6,202
------------------------
$25,492 $23,154
========================
On December 31, 1999, unused credit lines for short-term financing totaled
approximately $7.1 billion. Of this total, $4.7 billion support commercial paper
programs under terms negotiated when drawn. The weighted average interest rate
on short-term borrowings outstanding at December 31, 1999 and 1998 was 5.6
percent and 5.1 percent, respectively.
F20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Equity Company Information
The summarized financial information below 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 crude
production, natural gas marketing and refining operations in North America;
natural gas production and distribution, refining and marketing operations in
Europe and crude production in Kazakhstan and the Middle East. Also included are
several power generation, petrochemical/lubes manufacturing and chemical
ventures.
Exxon and Mobil each owned 25 percent of certain refining, marketing and
chemical operations in Japan and accounted for their interests using the equity
method. As a result of the merger, ExxonMobil now owns 50 percent of these
operations. These financial statements reflect the consolidation of these
operations because the interests not owned by ExxonMobil have less than 50
percent of the voting rights.
During the fourth quarter of 1998, ExxonMobil de-consolidated the majority
owned power companies in Hong Kong and China in response to new accounting
requirements. These financial statements reflect the de-consolidation of these
companies retroactive to January 1, 1998. ExxonMobil's 1998 net income was not
affected by the de-consolidation. As of January 1, 1998, these affiliates had
assets of $4.3 billion and total liabilities of $3.6 billion, including $2.5
billion of short-term and long-term debt.
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------------------
ExxonMobil ExxonMobil ExxonMobil
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 ExxonMobil
consolidation was 8% in 1997, 7% in 1998, and 8% in 1999 $ 94,534 $ 32,124 $ 76,552 $ 24,740 $ 81,861 $ 26,403
------------------------------------------------------------------
Income before income taxes $ 4,100 $ 2,095 $ 4,104 $ 2,002 $ 4,826 $ 2,165
Less: Related income taxes (734) (449) (1,071) (492) (1,352) (566)
------------------------------------------------------------------
Net income $ 3,366 $ 1,646 $ 3,033 $ 1,510 $ 3,474 $ 1,599
==================================================================
Current assets $ 21,518 $ 7,739 $ 19,037 $ 6,645 $ 16,628 $ 6,115
Property, plant and equipment, less accumulated depreciation 44,213 15,509 40,268 15,221 32,799 11,477
Other long-term assets 4,806 2,106 3,529 1,449 3,685 1,613
------------------------------------------------------------------
Total assets $ 70,537 $ 25,354 $ 62,834 $ 23,315 $ 53,112 $ 19,205
------------------------------------------------------------------
Short-term debt $ 2,856 $ 1,129 $ 2,628 $ 1,048 $ 1,804 $ 678
Other current liabilities 18,129 6,324 16,367 5,574 15,237 5,488
Long-term debt 13,486 3,978 11,316 3,488 8,033 2,063
Other long-term liabilities 5,372 2,598 4,974 2,362 4,546 1,848
Advances from shareholders 3,636 1,919 3,734 2,017 2,139 1,151
------------------------------------------------------------------
Net assets $ 27,058 $ 9,406 $ 23,815 $ 8,826 $ 21,353 $ 7,977
==================================================================
</TABLE>
<TABLE>
<CAPTION>
10. Investments and Advances Dec. 31 Dec. 31
1999 1998
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C>
Companies carried at equity in underlying assets
Investments $ 9,406 $ 8,826
Advances 1,919 2,017
--------------------
$11,325 $10,843
Companies carried at cost or less and stock investments carried at fair value 964 769
--------------------
$12,289 $11,612
Long-term receivables and miscellaneous investments at cost or less 2,255 2,303
--------------------
Total $14,544 $13,915
====================
</TABLE>
F21
<PAGE>
<TABLE>
<CAPTION>
11. Investment in Property, Plant and Equipment Dec. 31, 1999 Dec. 31, 1998
--------------------------------------------------
Cost Net Cost Net
- - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C>
Petroleum and natural gas
Exploration and production $106,067 $ 48,100 $100,969 $ 46,900
Refining and marketing 54,772 28,974 54,341 29,412
--------------------------------------------------
Total petroleum and natural gas $160,839 $ 77,074 $155,310 $ 76,312
Chemicals 17,564 9,969 16,921 9,501
Other 10,809 7,000 10,236 6,770
--------------------------------------------------
Total $189,212 $ 94,043 $182,467 $ 92,583
==================================================
</TABLE>
Accumulated depreciation and depletion totaled $95,169 million at the end of
1999 and $89,884 million at the end of 1998. Interest capitalized in 1999, 1998
and 1997 was $595 million, $545 million and $595 million, respectively.
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
12. Leased Facilities
At December 31, 1999, 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 1999, 1998 and 1997 totaled $2,172 million,
$2,760 million and $2,841 million, respectively, after being reduced by related
rental income of $317 million, $331 million and $319 million, respectively.
Minimum rental expenditures totaled $2,311 million in 1999, $2,910 million in
1998 and $2,994 million in 1997.
Minimum Related
commitment rental income
- - - - - - - - - - - - - - - - --------------------------------------------------------------
(millions of dollars)
2000 $ 1,070 $ 81
2001 875 69
2002 696 35
2003 538 24
2004 418 17
2005 and beyond 2,778 105
F22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Capital
At the effective time of the merger of Exxon and Mobil, the authorized common
stock of ExxonMobil was increased from three billion shares to 4.5 billion
shares. Under the terms of the merger agreement, approximately 1.0 billion
shares of ExxonMobil common stock were issued in exchange for all of the
outstanding shares of Mobil's common stock based upon an exchange ratio of
1.32015 ExxonMobil shares for each Mobil share.
In 1997, 642 million shares of Exxon common stock held by Exxon as treasury
shares were cancelled and returned to the status of authorized but unissued
shares. Mobil's common stock accounted for as treasury stock was cancelled at
the effective time of the merger.
In 1989, Mobil sold 206 thousand shares of a new issue of Series B
Convertible Preferred Stock to its employee stock ownership plan (Mobil ESOP)
trust for $3,887.50 per share. Each preferred share was convertible into 100
shares of Mobil common stock. The proceeds of the issuance were used by Mobil
for general corporate purposes. In connection with the merger, each outstanding
share of Mobil's Series B Convertible Preferred Stock was converted into one
share of ExxonMobil Class B Preferred Stock with similar terms. Each share of
ExxonMobil Class B Preferred Stock was convertible into 132.015 shares of
ExxonMobil common stock. Dividends were cumulative and payable in an amount per
share equal to $300 per annum. In 1999, 1998, and 1997, Mobil Series B
Convertible Preferred Stock totaling 6 thousand, 6 thousand, and 5 thousand
shares, respectively, were redeemed. After the merger, 159 thousand shares of
ExxonMobil Class B Preferred Stock totaling $618 million were converted to
ExxonMobil common stock. At year-end 1999, no shares of Class B Preferred Stock
remained outstanding.
In 1989, Exxon sold 16.3 million shares of a new issue of convertible Class A
Preferred Stock to its leveraged employee stock ownership plan (Exxon LESOP)
trust for $61.50 per share. The proceeds of the issuance were used by Exxon for
general corporate purposes. If the common share price exceeded $30.75, one share
of Exxon Class A Preferred Stock was convertible into two shares of common
stock. If the price was $30.75 or less, one share of preferred stock was
convertible into common shares having a value of $61.50. Dividends were
cumulative and payable in an amount per share equal to $4.680 per annum. In
1999, 1998 and 1997, 1.7 million, 1.4 million and 1.8 million shares of Exxon
Class A Preferred Stock totaling $105 million, $85 million and $113 million,
respectively, were converted to common stock. At year-end 1999, no shares of
Class A Preferred Stock remained outstanding.
In 1989, $1,800 million of benefit plan related balances were recorded as
debt and as a reduction to shareholders' equity, representing Exxon and Mobil
guaranteed borrowings by the Mobil ESOP and Exxon LESOP trusts to purchase
preferred stock. As the debt is repaid and shares are earned by employees, the
benefit plan related balances are being extinguished. Preferred dividends of $36
million, $60 million and $69 million were paid during 1999, 1998 and 1997,
respectively.
The table below summarizes the earnings per share calculations.
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------
<S> <C> <C> <C>
Net income per common share
- - - - - - - - - - - - - - - - ---------------------------
Income before cumulative effect of accounting change (millions of dollars) $ 7,910 $ 8,144 $ 11,732
Less: Preferred stock dividends (36) (60) (69)
---------------------------------------
Income available to common shares $ 7,874 $ 8,084 $ 11,663
=======================================
Weighted average number of common shares outstanding (millions of shares) 3,453 3,468 3,511
Net income per common share
Before cumulative effect of accounting change $ 2.28 $ 2.33 $ 3.32
Cumulative effect of accounting change - (0.02) -
---------------------------------------
Net income $ 2.28 $ 2.31 $ 3.32
=======================================
Net income per common share - assuming dilution
- - - - - - - - - - - - - - - - -----------------------------------------------
Income before cumulative effect of accounting change (millions of dollars) $ 7,910 $ 8,144 $ 11,732
Adjustment for assumed dilution 1 (7) (4)
---------------------------------------
Income available to common shares $ 7,911 $ 8,137 $ 11,728
=======================================
Weighted average number of common shares outstanding (millions of shares) 3,453 3,468 3,511
Plus: Issued on assumed exercise of stock options 44 39 41
Plus: Assumed conversion of preferred stock 21 26 29
---------------------------------------
Weighted average number of common shares outstanding 3,518 3,533 3,581
=======================================
Net income per common share
Before cumulative effect of accounting change $ 2.25 $ 2.30 $ 3.28
Cumulative effect of accounting change - (0.02) -
---------------------------------------
Net income $ 2.25 $ 2.28 $ 3.28
=======================================
Dividends paid per common share $ 1.687 $ 1.666 $ 1.619
</TABLE>
F23
<PAGE>
14. Employee Stock Ownership Plans
In 1989, the Exxon leveraged employee stock ownership plan (Exxon LESOP) trust
borrowed $1,000 million under the terms of notes guaranteed by Exxon maturing
between 1990 and 1999. As further described in note 13, the Exxon LESOP trust
used the proceeds of the borrowing to purchase shares of Exxon's convertible
Class A Preferred Stock. The final Exxon LESOP note matured in 1999 with the
final principal payment of the outstanding debt. All remaining shares of Exxon
Class A Preferred Stock were converted to ExxonMobil common shares.
In 1989, the Mobil Oil Corporation employee stock ownership plan (Mobil ESOP)
trust borrowed $800 million under the terms of notes and debentures guaranteed
by Mobil. As further described in note 13, the trust used the proceeds of the
borrowing to purchase shares of Mobil's Series B Convertible Preferred Stock
which upon the Merger were converted into shares of ExxonMobil Class B Preferred
Stock with similar terms. By year-end 1999, all outstanding shares of Class B
Preferred Stock were converted to ExxonMobil common shares.
Employees eligible to participate in ExxonMobil's Savings Plan may elect to
participate in the Mobil ESOP. Corporate contributions to the plan and dividends
are used to make principal and interest payments on the notes and debentures. As
contributions and dividends are credited, common shares are allocated to
participants' accounts. As debt service exceeded dividends, ExxonMobil was
required to fund the excess. The excess for the Mobil ESOP was $19 million, $15
million and $21 million in 1999, 1998, and 1997 respectively.
Accounting for the plans follows the principles which were in effect for the
respective plans when they were established. The amount of compensation expense
related to the plans and recorded by the corporation during the periods was not
significant. The Mobil ESOP trust held 165 thousand shares of Mobil Series B
Convertible Preferred Stock at the end of 1998 and 21.6 million shares of
ExxonMobil common stock at the end of 1999. The Exxon LESOP trust held 1.7
million shares of Exxon Class A Preferred Stock and 39.2 million shares of Exxon
common stock at the end of 1998, and 38.4 million shares of ExxonMobil common
stock at the end of 1999.
15. 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, 1999 and 1998, was $8.9
billion and $9.7 billion, respectively, as compared to recorded book values of
$8.4 billion and $8.5 billion.
The corporation's size, geographic diversity and the complementary nature of
the upstream, downstream and chemicals businesses mitigate the corporation's
risk from changes in interest rate, foreign currency rate and commodity prices.
As a result, the corporation makes limited use of derivatives to hedge exposures
arising from existing transactions. Prior to the merger, Mobil managed these
exposures using defined benchmarks for hedging to achieve a desired risk profile
for the environment in which Mobil operated and financed its assets. The
contract positions related to these pre-merger activities are being phased down
as such contracts are settled or mature. Derivative instruments are not held for
trading purposes nor do they have leveraged features. In addition, they are
either purchased or sold over authorized exchanges or with counterparties of
high credit standing. As a result of the above factors, the corporation's
exposure to credit risks and market risks from derivative activities is
negligible.
The notional principal amounts of derivative financial instruments at December
31, are as follows:
At December 31: 1999 1998
- - - - - - - - - - - - - - - - --------------- ---- ----
(millions of dollars)
Debt-related instruments $ 2,111 $ 4,942
Nondebt-related foreign currency
exchange rate instruments 4,245 7,791
Commodity financial instruments
requiring cash settlement 1,988 2,623
F24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Long-Term Debt
At December 31, 1999, long-term debt consisted of $7,545 million due in U.S.
dollars and $857 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 $407 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, 2000, in millions of dollars, are: 2001 - $931, 2002 -
$263, 2003 - $816 and 2004 - $2,260. Certain of the borrowings described may
from time to time be assigned to other ExxonMobil affiliates. At December 31,
1999, the corporation's unused long-term credit lines were not material.
The total outstanding balance of defeased debt at year-end 1999 was $475
million.
Summarized long-term borrowings at year-end 1999 and 1998 were as follows:
1999 1998
- - - - - - - - - - - - - - - - ---------------------------------------------------------------------
(millions of dollars)
Exxon Mobil Corporation
7.45% Guaranteed notes due 2001 $ 246 $ 246
Guaranteed zero coupon notes due 2004
- Face value ($1,146) net of
unamortized discount 671 601
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 2001-2011(1) 122 129
Guaranteed deferred interest
debentures due 2012
- Face value ($771) net of
unamortized discount 728 653
Imperial Oil Limited
8.3% notes due 2001 200 200
Variable rate notes due 2004(2) 600 600
8.75% notes due 2019 134 220
Mobil Oil Canada, Ltd.
3.0% Swiss franc debentures due 2003(3) 331 330
5.0% U.S. dollar Eurobonds due 2004(4) 300 300
Mobil Producing Nigeria Unlimited
8.625% notes due 2001-2006 229 250
Mobil Corporation
8.625% debentures due 2021 247 250
7.625% debentures due 2033 213 216
Industrial revenue bonds due 2003-2033(5) 1,429 1,421
ESOPTrust debentures/notes due 2001-2003 351 321
Other U.S. dollar obligations(6) 1,045 1,040
Other foreign currency obligations 790 934
Capitalized lease obligations(7) 270 325
------------------
Total long-term debt $8,402 $8,532
==================
1. Average effective interest rate of 4.7% in 1999 and 5.5% in 1998.
2. Average effective interest rate of 5.3% in 1999 and 5.5% in 1998.
3. Swapped into floating rate U.S.$ debt.
4. Swapped principally into floating rate debt.
5. Average effective interest rate of 4.0% in 1999 and 4.1% in 1998.
6. Average effective interest rate of 7.6% in 1999 and 7.6% in 1998.
7. Average imputed interest rate of 7.2% in 1999 and 6.7% in 1998.
F25
<PAGE>
17. 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 a 10-year period 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.
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.
On the closing of the merger on November 30, 1999, outstanding options and
SARs granted by Mobil under its 1995 Incentive Compensation and Stock Ownership
Plan and prior plans were assumed by ExxonMobil and converted into rights to
acquire ExxonMobil common stock with adjustments to reflect the exchange ratio.
No further awards may be granted under the former Mobil plans.
Shares available for granting under the 1993 Incentive Program were 51,894
thousand at the beginning of 1999 and 35,194 thousand at the end of 1999. At
December 31, 1998 and 1999, respectively, 946 thousand and 1,077 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, ExxonMobil 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 $149 million, or $0.04 per share in 1999; $134 million, or $0.04
per share in 1998 and $105 million, or $0.03 per share in 1997. For the Exxon
plan, the average fair value of each option granted during 1999, 1998 and 1997
was $19.70, $12.80 and $11.36, respectively. The fair value was estimated at the
grant date using an option-pricing model with the following weighted average
assumptions for 1999, 1998 and 1997, respectively: risk-free interest rates of
6.2 percent, 4.8 percent and 5.8 percent; expected life of 6 years for all
years; volatility of 15 percent, 13 percent and 12 percent and a dividend yield
of 2.1 percent, 2.3 percent and 2.7 percent. For the Mobil plans, the average
fair value of each Mobil option granted during 1999, 1998, and 1997 was $17.02,
$13.05 and $11.03, respectively. The fair value was estimated at the grant date
using an option-pricing model with the following weighted average assumption for
1999, 1998, and 1997 respectively: risk-free interest rates of 5.2 percent, 5.7
percent and 6.4 percent; expected life of 5 years for all years; volatility of
20 percent, 18 percent and 16 percent and a dividend yield of 2.7 percent, 3.2
percent and 3.4 percent.
Changes that occurred in options outstanding in 1999, 1998 and 1997
(including the former Mobil plans) are summarized below (shares in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------------------------------------------------
Avg. Exercise Avg. Exercise Avg. Exercise
Shares Price Shares Price Shares Price
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 110,609 $42.03 112,341 $36.42 112,544 $31.92
Granted 22,099 78.00 16,646 65.89 17,197 56.17
Exercised (11,250) 30.31 (17,907) 28.65 (16,675) 26.06
Expired/Canceled (342) 66.18 (471) 55.41 (725) 44.54
------- ------- -------
Outstanding at end of year 121,116 49.62 110,609 42.03 112,341 36.42
Exercisable at end of year 87,472 42.16 83,258 36.76 85,510 32.22
</TABLE>
The following table summarizes information about stock options outstanding,
including those from former Mobil plans, at December 31, 1999 (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>
$25.13-33.07 41,692 3.5 years $29.26 41,692 $29.26
39.47-55.42 36,304 6.8 45.72 25,627 43.74
58.36-83.56 43,120 9.1 72.59 20,153 66.86
------- ------
Total 121,116 6.5 49.62 87,472 42.16
</TABLE>
F26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Annuity Benefits and Other Postretirement Benefits
<TABLE>
<CAPTION>
Annuity Benefits
- - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------- Other Postretirement
U.S. Non-U.S. Benefits
----------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
----------------------------------------------------------------------------------------
Components of net benefit cost (millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost $ 249 $ 229 $ 209 $ 312 $ 297 $ 294 $ 36 $ 34 $ 37
Interest cost 555 549 545 608 625 654 190 191 191
Expected return on plan assets (601) (622) (589) (599) (564) (537) (48) (41) (35)
Amortization of actuarial loss/(gain)
and prior service cost (36) (24) (37) 167 111 124 14 12 9
Net pension enhancement and
curtailment/settlement expense 1 1 (6) 50 (1) 28 - - -
----------------------------------------------------------------------------------------
Net benefit cost $ 168 $ 133 $ 122 $ 538 $ 468 $ 563 $ 192 $ 196 $ 202
========================================================================================
</TABLE>
Costs for defined contribution plans were $69 million, $121 million and $111
million in 1999, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
Annuity Benefits
---------------------------------------- Other Postretirement
U.S. Non-U.S. Benefits
--------------------- ------------------ -----------------------
1999 1998 1999 1998 1999 1998
----------------------------------------------------------------
Change in benefit obligation (millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Benefit obligation at January 1 $ 8,708 $ 8,147 $ 12,572 $ 10,713 $ 2,932 $ 2,886
Service cost 249 229 312 297 36 34
Interest cost 555 549 608 625 190 191
Actuarial loss/(gain) (746) 523 (948) 1,224 (333) 44
Benefits paid (859) (832) (814) (682) (259) (211)
Foreign exchange rate changes -- -- (171) 260 14 (18)
Other 125 92 69 135 40 6
----------------------------------------------------------------
Benefit obligation at December 31 $ 8,032 $ 8,708 $ 11,628 $ 12,572 $ 2,620 $ 2,932
================================================================
Change in plan assets
Fair value at January 1 $ 6,604 $ 7,023 $ 7,577 $ 6,907 $ 512 $ 447
Actual return on plan assets 2,083 884 1,467 785 104 117
Foreign exchange rate changes -- -- 14 31 -- --
Payments directly to participants 138 109 305 221 172 169
Company contribution -- -- 167 300 42 34
Benefits paid (859) (832) (814) (682) (259) (211)
Other (1) -- (27) 15 (3) (44)
Reclassification of supplemental benefit trust -- (580) -- -- -- --
----------------------------------------------------------------
Fair value at December 31 $ 7,965 $ 6,604 $ 8,689 $ 7,577 $ 568 $ 512
================================================================
Assets in excess of/(less than) benefit obligation
Balance at December 31 $ (67) $ (2,104) $ (2,939) $ (4,995) $ (2,052) $ (2,420)
Unrecognized net transition liability/(asset) (102) (177) 42 36 -- --
Unrecognized net actuarial loss/(gain) (1,960) 247 (368) 1,547 (217) 189
Unrecognized prior service cost 338 306 310 430 5 11
Intangible asset (33) (103) (81) (191) -- --
Equity of minority shareholders -- -- (23) (55) -- --
Minimum pension liability adjustment (103) (109) (444) (674) -- --
----------------------------------------------------------------
Prepaid/(accrued) benefit cost $ (1,927) $ (1,940) $ (3,503) $ (3,902) $ (2,264) $ (2,220)
================================================================
Annuity assets and reserves in excess of accumulated
benefit obligation $ 2,833 $ 1,084 $ 1,760 $ 472 -- --
Assumptions as of December 31 (percent) ----------------------------------------------------------------
Discount rate 7.75 6.5-6.75 3.0-7.3 2.7-8.3 7.75 6.5-6.75
Long-term rate of compensation increase 3.5 3.5-4.0 3.0-4.0 2.3-6.5 3.5 3.5-4.0
Long-term rate of return on funded assets 9.5 9.5 5.5-10.0 5.0-10.0 9.5 9.5
</TABLE>
F27
<PAGE>
The data shown on the previous page are 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, ExxonMobil 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 15 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 1999 1998
- - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C>
Funded assets at market value less total projected benefit obligation $ (67) $(2,104)
Differences between accounting and funding basis:
Certain smaller plans unfunded due to lack of tax and regulatory incentives 874 929
Use of long-term rate of return on fund assets as the discount rate 1,061 1,786
Use of government required assumptions and other actuarial adjustments (1,086) 271
-------------------
Funded assets in excess of obligations under government regulations $ 782 $ 882
</TABLE>
F28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various courts
against Exxon Mobil Corporation and certain of its subsidiaries relating to the
accidental release of crude oil from the tanker Exxon Valdez in 1989.
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. The corporation has appealed the judgment. The corporation has also
appealed the District Court's denial of its renewed motion for a new trial. The
United States Court of Appeals for the Ninth Circuit heard oral arguments on the
appeals on May 3, 1999. 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 the corporation and various insurers arising from the
Valdez accident. Under terms of this settlement, ExxonMobil received $480
million. Final income statement recognition of this settlement continues to be
deferred in view of uncertainty regarding the ultimate cost to the corporation
of the Valdez accident.
The ultimate cost to ExxonMobil from the lawsuits arising from the Exxon
Valdez grounding is not possible to predict and may not be resolved for a number
of years.
Under the October 8, 1991, civil agreement and consent decrees with the U.S.
and Alaska governments, the corporation has made annual payments since 1991,
which in each of the years 1999, 1998 and 1997, were $70 million. 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, were
conducted to resolve issues concerning the compensation for overlifted gas.
By final award dated July 2, 1999, preceded by an interim award in 1996, an
arbitral tribunal established the full amount of the compensation for the excess
gas. This amount has now been paid, but the Dutch affiliate is seeking to have
the award set aside. Other substantive matters remain outstanding, including
recovery of royalties paid on such excess gas and the taxes payable on the final
compensation amount. 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 ExxonMobil and certain
of its consolidated subsidiaries in other pending lawsuits, the outcome of which
is not expected to have a materially adverse effect upon the corporation's
operations or financial condition.
The corporation and certain of its consolidated subsidiaries were
contingently liable at December 31, 1999, for $1,860 million, primarily relating
to guarantees for notes, loans and performance under contracts. This includes
$1,046 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 $1,461 million, representing ExxonMobil's share of
obligations of certain equity companies.
Additionally, the corporation and its affiliates have numerous long-term
sales and purchase commitments in their various business activities, all of
which are expected to be fulfilled with no adverse consequences material to the
corporation's operations or financial condition.
The 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.
F29
<PAGE>
20. Income, Excise and Other Taxes
<TABLE>
<CAPTION>
1999 1998 1997
- - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
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 $ 369 $ 3,973 $ 4,342 $ 801 $ 2,753 $ 3,554 $ 1,366 $ 4,889 $ 6,255
Deferred - net 214 (1,489) (1,275) 196 5 201 415 669 1,084
U.S. tax on non-U.S. operations 25 -- 25 43 -- 43 59 -- 59
-------------------------------------------------------------------------------------------------
$ 608 $ 2,484 $ 3,092 $ 1,040 $ 2,758 $ 3,798 $ 1,840 $ 5,558 $ 7,398
State 148 -- 148 141 -- 141 207 -- 207
--------------------------------------------------------------------------------------------------
Total income taxes $ 756 $ 2,484 $ 3,240 $ 1,181 $ 2,758 $ 3,939 $ 2,047 $ 5,558 $ 7,605
Excise taxes 7,795 13,851 21,646 7,459 13,467 20,926 7,063 14,120 21,183
All other taxes and duties 1,021 35,616 36,637 967 34,084 35,051 1,163 34,803 35,966
--------------------------------------------------------------------------------------------------
Total $ 9,572 $ 51,951 $ 61,523 $ 9,607 $ 50,309 $ 59,916 $ 10,273 $ 54,481 $ 64,754
==================================================================================================
</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
$205 million in 1999, $153 million in 1998 and $147 million in 1997. Income
taxes (charged)/credited directly to shareholders' equity were:
1999 1998 1997
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
(millions of dollars)
Cumulative foreign exchange
translation adjustment $ (84) $ (21) $ 246
Minimum pension liability
adjustment (127) 375 -
Unrealized gains on stock
investments (45) - -
Other components of
shareholders' equity 50 88 67
The reconciliation between income tax expense and a theoretical U.S. tax
computed by applying a rate of 35 percent for 1999, 1998 and 1997, is as
follows:
1999 1998 1997
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
(millions of dollars)
Earnings before Federal and
non-U.S. income taxes
United States $ 3,187 $ 3,451 $ 6,094
Non-U.S. 7,815 8,491 13,036
------------------------------------------
Total $ 11,002 $ 11,942 $ 19,130
------------------------------------------
Theoretical tax $ 3,851 $ 4,180 $ 6,696
Effect of equity method accounting (576) (529) (560)
Non-U.S. taxes in excess of
theoretical U.S. tax 201 256 1,476
U.S. tax on non-U.S. operations 25 43 59
Other U.S. (409) (152) (273)
------------------------------------------
Federal and non-U.S. income
tax expense $ 3,092 $ 3,798 $ 7,398
==========================================
Total effective tax rate 31.8% 35.2% 41.1%
The effective income tax rate includes state income taxes and the
corporation's share of income taxes of equity companies. Equity company taxes
totaled $449 million in 1999, $492 million in 1998 and $566 million in 1997,
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: 1999 1998
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
(millions of dollars)
Depreciation $ 14,118 $ 14,252
Intangible development costs 3,371 3,296
Capitalized interest 1,500 1,432
Other liabilities 2,028 3,039
------------------------
Total deferred tax liabilities $ 21,017 $ 22,019
------------------------
Pension and other postretirement benefits $ (2,070) $ (2,138)
Tax loss carryforwards (1,701) (1,756)
Other assets (2,195) (1,642)
------------------------
Total deferred tax assets $ (5,966) $ (5,536)
------------------------
Asset valuation allowances 651 724
------------------------
Net deferred tax liabilities $ 15,702 $ 17,207
========================
The corporation had $11.1 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.
F30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Disclosures about Segments and Related Information
The functional segmentation of operations reflected below is consistent with
ExxonMobil's internal reporting. Earnings are before the cumulative effect of
accounting changes and include special items. 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 $123 million, $81 million and $121 million in 1999, 1998 and 1997,
respectively. All Other includes smaller operating segments, corporate and
financing activities and merger expenses.
<TABLE>
<CAPTION>
Upstream Downstream Chemicals
-------------------- ------------------ ----------------- All Corporate
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Other Total
---------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1999
Earnings after income tax $ 1,842 $ 4,044 $ 577 $ 650 $ 738 $ 616 $ (557) $ 7,910
Earnings of equity companies included above 299 881 8 148 49 83 178 1,646
Sales and other operating revenue 3,104 11,353 43,376 109,969 6,554 7,223 950 182,529
Intersegment revenue 3,925 9,093 2,867 5,387 1,624 1,317 796 -
Depreciation and depletion expense 1,330 3,497 697 1,670 402 274 434 8,304
Interest revenue -- -- -- -- -- -- 153 153
Interest expense -- -- -- -- -- -- 695 695
Income taxes 1,008 2,703 343 (22) 338 63 (1,193) 3,240
Additions to property, plant and equipment 1,440 5,025 830 1,201 600 1,093 660 10,849
Investments in equity companies 1,171 2,647 280 3,304 429 1,537 38 9,406
Total assets 18,211 40,906 13,699 43,718 7,605 9,831 10,551 144,521
=======================================================================================
As of December 31, 1998
Earnings after income tax $ 850 $ 2,502 $ 1,199 $ 2,275 $ 792 $ 602 $ (76) $ 8,144
Earnings of equity companies included above 92 955 69 126 7 67 194 1,510
Sales and other operating revenue 3,017 10,493 36,642 100,957 5,940 7,649 929 165,627
Intersegment revenue 2,957 6,313 2,124 4,828 2,101 1,250 798 --
Depreciation and depletion expense 1,682 3,330 706 1,516 402 338 381 8,355
Interest revenue -- -- -- -- -- -- 185 185
Interest expense -- -- -- -- -- -- 568 568
Income taxes 476 1,490 666 1,204 329 132 (358) 3,939
Additions to property, plant and equipment 1,836 5,646 1,035 1,718 622 1,121 752 12,730
Investments in equity companies 1,161 2,523 313 3,345 365 1,058 61 8,826
Total assets 18,130 39,094 12,585 42,790 7,224 8,898 10,614 139,335
=======================================================================================
</TABLE>
F31
<PAGE>
<TABLE>
<CAPTION>
Upstream Downstream Chemicals
------------------- ------------------ ---------------- All Corporate
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Other Total
---------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1997
Earnings after income tax $ 2,331 $ 4,574 $ 1,135 $ 1,953 $ 1,056 $ 715 $ (32) $ 11,732
Earnings of equity companies included above 175 1,044 45 295 12 134 (106) 1,599
Sales and other operating revenue 3,672 12,976 44,737 117,752 7,044 9,146 2,408 197,735
Intersegment revenue 5,053 9,694 2,760 7,041 2,509 1,457 910 -
Depreciation and depletion expense 1,554 3,101 773 1,542 364 295 599 8,228
Interest revenue - - - - - - 374 374
Interest expense - - - - - - 863 863
Income taxes 1,313 4,065 635 1,167 473 393 (441) 7,605
Additions to property, plant and
equipment 1,776 5,013 935 1,957 534 547 890 11,652
Investments in equity companies 748 2,229 608 3,251 217 883 41 7,977
Total assets 18,261 36,893 13,280 42,663 7,077 7,789 17,788 143,751
======================================================================================
</TABLE>
<TABLE>
<CAPTION>
Geographic
Sales and other operating revenue 1999 1998 1997
- - - - - - - - - - - - - - - - -----------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
United States $ 53,214 $ 45,783 $ 55,665
Non-U.S. 129,315 119,844 142,070
------------------------------------
Total $182,529 $165,627 $197,735
<CAPTION>
<S> <C> <C> <C>
Significant non-U.S. revenue sources include:
Japan $ 19,727 $ 22,982 $ 27,488
United Kingdom 16,305 16,012 16,933
Germany 12,670 12,935 14,765
<CAPTION>
Long-lived assets 1999 1998 1997
- - - - - - - - - - - - - - - - -----------------------------------------------------------------------------------------
(millions of dollars)
<S> <C> <C> <C>
United States $ 33,913 $ 33,597 $ 33,690
Non-U.S. 60,130 58,986 59,837
------------------------------------
Total $ 94,043 $ 92,583 $ 93,527
<CAPTION>
<S> <C> <C> <C>
Significant non-U.S. long-lived assets include:
United Kingdom $ 10,293 $ 11,112 $ 10,838
Canada 8,404 7,526 7,778
Japan 6,545 6,055 5,688
</TABLE>
F32
<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>
1999 - Revenue
Sales to third parties $ 2,419 $ 925 $ 3,287 $ 2,160 $ 191 $ 8,982 $ 2,123 $ 11,105
Transfers 3,237 848 2,965 1,250 1,903 10,203 867 11,070
-----------------------------------------------------------------------------------------
$ 5,656 $ 1,773 $ 6,252 $ 3,410 $ 2,094 $ 19,185 $ 2,990 $ 22,175
Production costs excluding taxes 1,347 504 1,499 566 551 4,467 617 5,084
Exploration expenses 232 93 280 144 497 1,246 29 1,275
Depreciation and depletion 1,260 486 1,932 678 491 4,847 443 5,290
Taxes other than income 425 31 246 288 24 1,014 591 1,605
Related income tax 893 252 929 521 529 3,124 546 3,670
-----------------------------------------------------------------------------------------
Results of producing activities $ 1,499 $ 407 $ 1,366 $ 1,213 $ 2 $ 4,487 $ 764 $ 5,251
Other earnings* 42 32 391 6 (19) 452 183 635
-----------------------------------------------------------------------------------------
Total earnings $ 1,541 $ 439 $ 1,757 $ 1,219 $ (17) $ 4,939 $ 947 $ 5,886
=========================================================================================
1998 - Revenue
Sales to third parties $ 2,297 $ 603 $ 3,427 $ 1,893 $ 32 $ 8,252 $ 2,385 $ 10,637
Transfers 2,343 526 1,956 928 1,544 7,297 537 7,834
-----------------------------------------------------------------------------------------
$ 4,640 $ 1,129 $ 5,383 $ 2,821 $ 1,576 $ 15,549 $ 2,922 $ 18,471
Production costs excluding taxes 1,505 501 1,731 514 730 4,981 542 5,523
Exploration expenses 317 74 299 210 600 1,500 69 1,569
Depreciation and depletion 1,649 423 1,726 813 451 5,062 388 5,450
Taxes other than income 343 40 195 164 26 768 595 1,363
Related income tax 313 (49) 499 509 226 1,498 513 2,011
-----------------------------------------------------------------------------------------
Results of producing activities $ 513 $ 140 $ 933 $ 611 $ (457) $ 1,740 $ 815 $ 2,555
Other earnings* 269 51 556 5 (2) 879 (82) 797
-----------------------------------------------------------------------------------------
Total earnings $ 782 $ 191 $ 1,489 $ 616 $ (459) $ 2,619 $ 733 $ 3,352
=========================================================================================
1997 - Revenue
Sales to third parties $ 2,784 $ 780 $ 4,130 $ 2,978 $ 30 $ 10,702 $ 2,870 $ 13,572
Transfers 4,357 688 2,900 1,584 2,203 11,732 580 12,312
-----------------------------------------------------------------------------------------
$ 7,141 $ 1,468 $ 7,030 $ 4,562 $ 2,233 $ 22,434 $ 3,450 $ 25,884
Production costs excluding taxes 1,653 557 1,590 628 687 5,115 448 5,563
Exploration expenses 206 53 332 235 420 1,246 89 1,335
Depreciation and depletion 1,525 430 1,648 757 324 4,684 308 4,992
Taxes other than income 565 38 199 374 34 1,210 866 2,076
Related income tax 1,110 151 1,609 1,033 834 4,737 724 5,461
-----------------------------------------------------------------------------------------
Results of producing activities $ 2,082 $ 239 $ 1,652 $ 1,535 $ (66) $ 5,442 $ 1,015 $ 6,457
Other earnings* 128 77 216 36 38 495 (47) 448
-----------------------------------------------------------------------------------------
Total earnings $ 2,210 $ 316 $ 1,868 $ 1,571 $ (28) $ 5,937 $ 968 $ 6,905
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Average sales prices and production costs per unit of production
- - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
During 1999
Average sales prices
Crude oil and NGL, per barrel $ 14.96 $ 14.47 $ 16.59 $ 17.96 $ 14.94 $ 15.79 $ 14.52 $ 15.65
Natural gas, per thousand cubic feet 2.21 1.61 2.25 1.88 1.21 2.08 2.47 2.15
Average production costs, per barrel** 3.42 3.69 3.64 2.40 3.82 3.38 3.02 3.33
During 1998
Average sales prices
Crude oil and NGL, per barrel $ 9.87 $ 8.29 $ 12.59 $ 13.10 $ 12.23 $ 11.29 $ 10.72 $ 11.23
Natural gas, per thousand cubic feet 2.01 1.27 2.62 1.50 1.24 1.99 3.03 2.16
Average production costs, per barrel** 3.55 3.60 4.48 1.97 5.55 3.71 2.73 3.59
During 1997
Average sales prices
Crude oil and NGL, per barrel $ 15.88 $ 13.13 $ 18.85 $ 20.20 $ 18.47 $ 17.42 $ 16.09 $ 17.32
Natural gas, per thousand cubic feet 2.37 1.44 2.99 2.08 1.18 2.39 3.40 2.56
Average production costs, per barrel** 3.54 4.48 4.16 2.18 5.55 3.70 2.43 3.55
</TABLE>
* Includes earnings from transportation operations, tar sands operations, LNG
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.
F33
<PAGE>
Oil and Gas Exploration and Production Costs
The amounts shown for net capitalized costs of consolidated subsidiaries are
$4,593 million less at year-end 1999 and $3,402 million less at year-end 1998
than the amounts reported as investments in property, plant and equipment for
exploration and production in note 11. This is due to the exclusion from
capitalized costs of certain transportation and research assets and assets
relating to the tar sands and LNG 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 1999
were $7,759 million, down $1,616 million from 1998, due primarily to lower
development costs. 1998 costs were $9,375 million, up $711 million from 1997,
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, 1999
Property (acreage) costs - Proved $ 4,606 $ 2,952 $ 207 $ 931 $ 1,351 $ 10,047 $ 14 $ 10,061
- Unproved 664 214 59 926 916 2,779 3 2,782
-------------------------------------------------------------------------------------
Total property costs $ 5,270 $ 3,166 $ 266 $ 1,857 $ 2,267 $ 12,826 $ 17 $ 12,843
Producing assets 30,708 4,499 28,669 11,526 4,442 79,844 5,294 85,138
Support facilities 795 115 580 1,007 1,166 3,663 145 3,808
Incomplete construction 1,093 2,226 1,828 651 764 6,562 695 7,257
-------------------------------------------------------------------------------------
Total capitalized costs $ 37,866 $ 10,006 $ 31,343 $ 15,041 $ 8,639 $102,895 $ 6,151 $109,046
Accumulated depreciation and depletion 23,953 4,401 18,680 9,248 3,106 59,388 2,872 62,260
-------------------------------------------------------------------------------------
Net capitalized costs $ 13,913 $ 5,605 $ 12,663 $ 5,793 $ 5,533 $ 43,507 $ 3,279 $ 46,786
=====================================================================================
As of December 31, 1998
Property (acreage) costs - Proved $ 4,718 $ 2,778 $ 208 $ 824 $ 1,349 $ 9,877 $ 14 $ 9,891
- Unproved 683 212 56 995 391 2,337 15 2,352
-------------------------------------------------------------------------------------
Total property costs $ 5,401 $ 2,990 $ 264 $ 1,819 $ 1,740 $ 12,214 $ 29 $ 12,243
Producing assets 29,451 3,910 27,171 10,322 4,003 74,857 5,029 79,886
Support facilities 890 107 655 987 753 3,392 279 3,671
Incomplete construction 1,274 1,636 3,169 1,122 706 7,907 748 8,655
-------------------------------------------------------------------------------------
Total capitalized costs $ 37,016 $ 8,643 $ 31,259 $ 14,250 $ 7,202 $ 98,370 $ 6,085 $104,455
Accumulated depreciation and depletion 22,923 3,651 17,457 8,360 2,481 54,872 2,628 57,500
-------------------------------------------------------------------------------------
Net capitalized costs $ 14,093 $ 4,992 $ 13,802 $ 5,890 $ 4,721 $ 43,498 $ 3,457 $ 46,955
=====================================================================================
Costs incurred in property acquisitions, exploration and development activities
- - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------------
During 1999
Property acquisition costs - Proved $ - $ - $ 1 $ 18 $ - $ 19 $ - $ 19
- Unproved 8 5 8 - 529 550 - 550
Exploration costs 263 106 248 152 571 1,340 38 1,378
Development costs 1,263 787 1,822 576 955 5,403 409 5,812
-------------------------------------------------------------------------------------
Total $ 1,534 $ 898 $ 2,079 $ 746 $ 2,055 $ 7,312 $ 447 $ 7,759
=====================================================================================
During 1998
Property acquisition costs - Proved $ 21 $ 2 $ - $ 1 $ - $ 24 $ - $ 24
- Unproved 100 9 13 4 165 291 - 291
Exploration costs 409 79 392 258 709 1,847 127 1,974
Development costs 1,469 731 2,596 757 870 6,423 663 7,086
-------------------------------------------------------------------------------------
Total $ 1,999 $ 821 $ 3,001 $ 1,020 $ 1,744 $ 8,585 $ 790 $ 9,375
=====================================================================================
During 1997
Property acquisition costs - Proved $ 7 $ - $ 55 $ 8 $ 53 $ 123 $ 2 $ 125
- Unproved 130 20 - 6 61 217 5 222
Exploration costs 342 57 460 254 544 1,657 123 1,780
Development costs 1,442 622 2,069 892 912 5,937 600 6,537
-------------------------------------------------------------------------------------
Total $ 1,921 $ 699 $ 2,584 $ 1,160 $ 1,570 $ 7,934 $ 730 $ 8,664
=====================================================================================
</TABLE>
F34
<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 1997, 1998 and 1999.
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 ExxonMobil'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, 1997 3,194 1,333 1,973 878 1,471 8,849 1,272 10,121
Revisions (180) - 52 75 19 (34) 609 575
Purchases 2 1 16 - - 19 - 19
Sales (26) (66) (11) (9) - (112) (5) (117)
Improved recovery 117 8 12 - - 137 - 137
Extensions and discoveries 81 40 61 21 211 414 36 450
Production (272) (88) (228) (127) (119) (834) (72) (906)
--------------------------------------------------------------------------------------------
December 31, 1997 2,916 1,228 1,875 838 1,582 8,439 1,840 10,279
Revisions 73 (23) 13 41 241 345 117 462
Purchases - - - - - - - -
Sales (5) (5) - - - (10) (3) (13)
Improved recovery 17 9 21 - 1 48 85 133
Extensions and discoveries 37 43 27 24 832 963 23 986
Production (234) (98) (228) (117) (125) (802) (92) (894)
--------------------------------------------------------------------------------------------
December 31, 1998 2,804 1,154 1,708 786 2,531 8,983 1,970 10,953
Revisions 96 19 96 23 134 368 25 393
Purchases - - - - - - - -
Sales (3) - - - - (3) (9) (12)
Improved recovery 7 1 15 - 3 26 72 98
Extensions and discoveries 58 277 174 18 193 720 - 720
Production (213) (96) (232) (112) (137) (790) (102) (892)
--------------------------------------------------------------------------------------------
December 31, 1999 2,749 1,355 1,761 715 2,724 9,304 1,956 11,260
Developed reserves, included above
At December 31, 1997 2,573 659 982 689 911 5,814 1,286 7,100
At December 31, 1998 2,470 594 884 673 1,089 5,710 1,383 7,093
At December 31, 1999 2,383 608 1,086 615 1,234 5,926 1,333 7,259
</TABLE>
F35
<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 1999 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 ExxonMobil'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 F39 due to volumes consumed or flared
and inventory changes. Such quantities amounted to approximately 268 billion
cubic feet in 1997, 242 billion cubic feet in 1998 and 391 billion cubic feet in
1999.
<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, 1997 14,549 3,613 11,841 9,615 352 39,970 18,635 58,605
Revisions (201) (120) 275 152 135 241 534 775
Purchases 3 - 67 - - 70 - 70
Sales (122) (147) (7) (119) - (395) (126) (521)
Improved recovery 23 70 30 - - 123 - 123
Extensions and discoveries 476 219 522 1,687 55 2,959 1,319 4,278
Production (1,247) (283) (981) (1,024) (36) (3,571) (674) (4,245)
-------------------------------------------------------------------------------------------------
December 31, 1997 13,481 3,352 11,747 10,311 506 39,397 19,688 59,085
Revisions 643 (87) 456 245 99 1,356 184 1,540
Purchases - 10 - - - 10 - 10
Sales (52) (47) (10) (4) - (113) (34) (147)
Improved recovery 3 57 20 - - 80 34 114
Extensions and discoveries 195 503 191 362 171 1,422 99 1,521
Production (1,213) (299) (1,003) (916) (48) (3,479) (638) (4,117)
-------------------------------------------------------------------------------------------------
December 31, 1998 13,057 3,489 11,401 9,998 728 38,673 19,333 58,006
Revisions 781 31 680 131 42 1,665 142 1,807
Purchases - - - - - - - -
Sales (18) (1) - - - (19) - (19)
Improved recovery 2 14 105 - - 121 161 282
Extensions and discoveries 305 207 192 44 64 812 61 873
Production (1,126) (353) (1,150) (815) (55) (3,499) (654) (4,153)
-------------------------------------------------------------------------------------------------
December 31, 1999 13,001 3,387 11,228 9,358 779 37,753 19,043 56,796
Developed reserves, included above
At December 31, 1997 10,993 2,297 8,033 7,029 288 28,640 7,407 36,047
At December 31, 1998 10,690 2,254 7,939 6,871 391 28,145 7,967 36,112
At December 31, 1999 10,820 2,475 7,764 6,471 428 27,958 8,643 36,601
=================================================================================================================================
</TABLE>
INFORMATION ON CANADIAN TAR SANDS PROVEN RESERVES NOT INCLUDED ABOVE
In addition to conventional liquids and natural gas proved reserves, ExxonMobil
has significant interests in proven tar sands reserves in Canada associated with
the Syncrude project. For internal management purposes, ExxonMobil views these
reserves and their development as an integral part of total Upstream operations.
However, U.S. Securities and Exchange Commission regulations define these
reserves as mining related and not a part of conventional oil and gas reserves.
The tar sands reserves are not considered in the standardized measure of
discounted future cash flows for conventional oil and gas reserves, which is
found on page F37.
Tar Sands Reserves Canada
- - - - - - - - - - - - - - - - -----------------------------------------------------------------
(millions of barrels)
At December 31, 1997 616
At December 31, 1998 597
At December 31, 1999 577
F36
<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, 1997
Future cash inflows from sales
of oil and gas $ 66,893 $ 14,736 $ 59,486 $ 35,528 $ 26,603 $203,246 $ 76,610 $279,856
Future production costs 21,239 5,873 16,025 11,172 7,462 61,771 33,941 95,712
Future development costs 4,232 2,372 6,319 5,010 3,137 21,070 3,260 24,330
Future income tax expenses 14,280 2,413 17,508 7,656 9,222 51,079 14,609 65,688
--------------------------------------------------------------------------------------------
Future net cash flows $ 27,142 $ 4,078 $ 19,634 $ 11,690 $ 6,782 $ 69,326 $ 24,800 $ 94,126
Effect of discounting net cash
flows at 10% 13,032 1,707 7,237 5,177 2,832 29,985 15,877 45,862
--------------------------------------------------------------------------------------------
Discounted future net cash flows $ 14,110 $ 2,371 $ 12,397 $ 6,513 $ 3,950 $ 39,341 $ 8,923 $ 48,264
============================================================================================
As of December 31, 1998
Future cash inflows from sales
of oil and gas $ 45,618 $ 13,255 $ 42,408 $ 21,640 $ 23,428 $146,349 $ 62,642 $208,991
Future production costs 18,946 4,567 14,926 8,679 8,828 55,946 28,343 84,289
Future development costs 4,066 2,012 5,668 3,490 5,116 20,352 3,393 23,745
Future income tax expenses 7,359 2,411 8,290 2,725 3,252 24,037 11,734 35,771
--------------------------------------------------------------------------------------------
Future net cash flows $ 15,247 $ 4,265 $ 13,524 $ 6,746 $ 6,232 $ 46,014 $ 19,172 $ 65,186
Effect of discounting net cash
flows at 10% 7,395 2,011 4,951 3,060 3,599 21,016 12,207 33,223
--------------------------------------------------------------------------------------------
Discounted future net cash flows $ 7,852 $ 2,254 $ 8,573 $ 3,686 $ 2,633 $ 24,998 $ 6,965 $ 31,963
============================================================================================
As of December 31, 1999
Future cash inflows from sales
of oil and gas $ 82,674 $ 29,360 $ 64,192 $ 34,771 $ 63,027 $274,024 $ 94,767 $368,791
Future production costs 21,219 6,618 13,660 9,754 14,332 65,583 33,006 98,589
Future development costs 4,131 2,116 4,904 3,516 5,384 20,051 3,104 23,155
Future income tax expenses 20,103 8,096 23,396 7,680 22,898 82,173 26,573 108,746
--------------------------------------------------------------------------------------------
Future net cash flows $ 37,221 $ 12,530 $ 22,232 $ 13,821 $ 20,413 $106,217 $ 32,084 $138,301
Effect of discounting net cash
flows at 10% 20,139 5,884 7,351 5,918 10,969 50,261 19,473 69,734
--------------------------------------------------------------------------------------------
Discounted future net cash flows $ 17,082 $ 6,646 $ 14,881 $ 7,903 $ 9,444 $ 55,956 $ 12,611 $ 68,567
============================================================================================
</TABLE>
Change in Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves
<TABLE>
<CAPTION>
Consolidated Subsidiaries 1999 1998 1997
- - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
(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 $ 4,245 $ 1,329 $ 2,976
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 (13,395) (10,300) (16,079)
Development costs incurred during the year 5,313 6,104 5,651
Net change in prices, lifting and development costs 59,466 (34,611) (49,176)
Revisions of previous reserves estimates 3,106 1,281 2,240
Accretion of discount 3,056 5,865 9,819
Net change in income taxes (30,833) 15,989 20,837
feet) ---------------------------------
Total change in the standardized measure during the year $ 30,958 $(14,343) $(23,732)
=================================
</TABLE>
F37
<PAGE>
QUARTERLY INFORMATION
<TABLE>
<CAPTION>
1999 1998
--------------------------------------------------------------------------------------------------
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 2,540 2,473 2,477 2,579 2,517 2,545 2,527 2,474 2,462 2,502
Refinery throughput 6,068 5,950 5,899 5,991 5,977 6,147 6,133 6,083 6,010 6,093
Petroleum product sales 8,974 8,842 8,879 8,857 8,887 8,728 8,775 8,918 9,066 8,873
Natural gas production (millions of cubic feet daily)
available for sale 11,516 9,178 8,700 11,851 10,308 11,908 9,757 9,333 11,489 10,617
(thousands of metric tons)
Chemical prime product sales 5,876 6,063 6,088 6,458 24,485 5,905 5,952 5,840 5,931 23,628
Summarized financial data
Sales and other operating (millions of dollars)
revenue $ 37,982 42,458 48,415 53,674 182,529 $ 42,250 41,304 40,072 42,001 165,627
Gross profit* $ 17,850 19,229 20,379 22,950 80,408 $ 19,221 19,460 18,704 20,076 77,461
Net income as reported $ 1,484 1,954 2,188 2,284 7,910 $ 2,595 2,262 1,909 1,378 8,144
Cumulative effect of
accounting change $ -- -- -- -- -- $ (70) -- -- -- (70)
Net income as restated $ 1,484 1,954 2,188 2,284 7,910 $ 2,525 2,262 1,909 1,378 8,074
Per share data
Net income per common share (dollars per share)
as reported $ 0.42 0.57 0.63 0.66 2.28 $ 0.74 0.65 0.55 0.39 2.33
Cumulative effect of
accounting change $ -- -- -- -- -- $ (0.02) -- -- -- (0.02)
Net income per common share
as restated $ 0.42 0.57 0.63 0.66 2.28 $ 0.72 0.65 0.55 0.39 2.31
Net income per common share
- assuming dilution $ 0.42 0.56 0.62 0.65 2.25 $ 0.71 0.64 0.54 0.39 2.28
Dividends per common share $ 0.4165 0.4165 0.4165 0.4375 1.6870 $ 0.4165 0.4165 0.4165 0.4165 1.6660
Common stock prices
High $ 76.375 87.250 83.000 86.563 87.250 $ 70.000 76.000 73.813 77.313 77.313
Low $ 64.313 69.438 72.125 70.063 64.313 $ 56.625 65.375 62.000 69.438 56.625
</TABLE>
* Gross profit equals sales and other operating revenue less estimated costs
associated with products sold.
The price range of ExxonMobil Common Stock is as reported on the composite tape
of the several U.S. exchanges where ExxonMobil Common Stock is traded. The
principal market where ExxonMobil Common Stock (XOM) is traded is the New York
Stock Exchange, although the stock is traded on other exchanges in and outside
the United States. Through December 1, 1999, the Common Stock traded under the
name of Exxon Corporation (XON).
There were 778,644 registered shareholders of ExxonMobil common stock at
December 31, 1999. At January 31, 2000, the registered shareholders of
ExxonMobil common stock numbered 772,614.
On January 26, 2000, the corporation declared a $0.44 dividend per common
share, payable March 10, 2000.
F38
<PAGE>
OPERATING SUMMARY
1999 1998 1997
- - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
(thousands of barrels daily)
Production of crude oil and natural gas liquids
Net production
United States 729 745 803
Canada 315 322 287
Europe 650 635 641
Asia-Pacific 307 322 347
Other Non-U.S. 516 478 449
-----------------------------
Worldwide 2,517 2,502 2,527
=============================
(millions of cubic feet daily)
Natural gas production available for sale
Net production
United States 2,871 3,140 3,223
Canada 683 667 600
Europe 4,438 4,245 4,283
Asia-Pacific 2,027 2,352 2,632
Other Non-U.S. 289 213 156
-----------------------------
Worldwide 10,308 10,617 10,894
=============================
(thousands of barrels daily)
Refinery throughput
United States 1,930 1,919 2,026
Canada 441 445 448
Europe 1,782 1,888 1,899
Asia-Pacific 1,537 1,554 1,559
Other Non-U.S. 287 287 302
-----------------------------
Worldwide 5,977 6,093 6,234
=============================
Petroleum product sales
United States 2,918 2,804 2,777
Canada 587 579 574
Europe 2,597 2,646 2,609
Asia-Pacific and other Eastern Hemisphere 2,223 2,266 2,249
Latin America 562 578 564
-----------------------------
Worldwide 8,887 8,873 8,773
=============================
Gasoline, naphthas 3,428 3,417 3,317
Heating oils, kerosene, diesel oils 2,658 2,689 2,725
Aviation fuels 813 774 753
Heavy fuels 706 765 744
Specialty petroleum products 1,282 1,228 1,234
-----------------------------
Worldwide 8,887 8,873 8,773
=============================
(thousands of metric tons)
Chemical prime product sales 24,485 23,628 23,838
=============================
(millions of metric tons)
Coal production 17 15 15
=============================
(thousands of metric tons)
Copper production 248 216 205
=============================
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 ExxonMobil's ownership percentage, and
refining throughput includes quantities processed for ExxonMobil. Net production
excludes royalties and quantities due others when produced, whether payment is
made in kind or cash.
F39
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant (1), (2) and (3)
AT DECEMBER 31, 1999
<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 Andina Inc................................................ 100 Delaware
Esso Colombiana Limited...................................... 100 Delaware
Esso Australia Resources Ltd. ................................. 100 Delaware
Delhi Petroleum Pty. Ltd. ................................... 100 Australia
Esso Eastern Inc. ............................................. 100 Delaware
Esso Exploration and Production Norway AS.................... 100 Norway
Standard Marine Tonsberg AS............................... 100 Norway
Esso Global Investments Ltd. (6)............................. 100 Bahamas
Esso Holding Company Singapore Limited.................... 100 Bahamas
Esso Singapore Private Limited.......................... 100 Singapore
Exxon Chemical Singapore Private Limited................ 100 Singapore
Singapore Aromatics Company Private (5).............. 50 Singapore
Esso Holding Company U.K. Inc. .............................. 100 Delaware
Esso Ireland Limited...................................... 100 Ireland
Esso UK plc............................................... 100 England
Esso Exploration and Production UK Limited (7).......... 100 England
Esso Petroleum Company, Limited......................... 100 England
EssoAir International Limited............................. 100 England
Exxon Chemical Limited.................................... 100 England
Exxon Chemical Olefins Inc. .............................. 100 Delaware
Esso Hong Kong Limited....................................... 100 Hong Kong
Esso Malaysia Berhad......................................... 65 Malaysia
Esso Natuna Ltd.............................................. 100 Bahamas
Esso Norge AS................................................ 100 Norway
Esso Production Malaysia Inc. ............................... 100 Delaware
Esso Sekiyu Kabushiki Kaisha................................. 100 Japan
Esso Sociedad Anonima Petrolera Argentina (8)................ 100 Argentina
Esso Societe Anonyme Francaise............................... 81.548 France
Esso (Switzerland)........................................... 100 Switzerland
Esso (Thailand) Public Company Limited....................... 87.5 Thailand
Exxon Benelux Holdings B.V. ................................. 100 Netherlands
Esso Holding Company Holland Inc. ........................ 100 Delaware
Esso Holding B.V. ...................................... 100 Netherlands/
Delaware
Esso N.V./S.A. (9)................................... 100 Belgium/
Delaware
Esso Coordination Center N.V.(10)................ 100 Belgium
Exxon Chemical Antwerp Ethylene N.V. (11)............ 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
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Owned by State or
Immediate Country of
Parent(s) Organization
----------------- ------------
<S> <C> <C>
Esso Eastern Inc. (continued)
Exxon Benelux Holdings B.V. (continued)
Esso Holding Company Holland Inc. (continued)
Exxon Funding B.V. ...................................... 100 Netherlands
Esso Capital B.V. .................................... 100 Netherlands
Nederlandse Aardolie Maastschappij B.V. (4) (5).......... 50 Netherlands
Exxon Energy Limited.......................................... 100 Hong Kong
Castle Peak Power Company Limited (5)...................... 60 Hong Kong
Exxon Spain, S.L. ............................................ 100 Spain
Exxon Denmark Holdings International ApS................... 100 Denmark
Esso International BVBA(12).............................. 100 Belgium
ESSO Central Europe Holding GmbH...................... 100 Germany
Esso Austria GmbH (13)............................ 100 Austria
Esso Deutchland GmbH (14)......................... 100 Germany
BRIGITTA Erdgas und Erdoel GmbH,
Hannover (4)(5)................................ 50 Germany
Deutsche Exxon Chemical GmbH.................... 100 Germany
Mineraloelraffinerie Oberrhein GmbH & Co.
KG(5).......................................... 25 Germany
Exxon Luxembourg LLC ......................................... 100 Luxembourg
Exxon Luxembourg International, SARL....................... 100 Luxembourg
Exxon Chemical Netherlands 6 B.V. ....................... 100 Netherlands
Esso Brasileira de Petroleo Limitada.................. 100 Brazil
Exxon Sao Paulo Holding LLC........................... 100 Delaware
Exxon Yemen Inc. ............................................. 100 Delaware
General Sekiyu K.K. (15)...................................... 50.103 Japan
Tonen Kabushiki Kaisha (16)................................... 50 Japan
Esso Exploration and Production Chad Inc. ...................... 100 Delaware
Esso Italiana S.p.A. (17)....................................... 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 Corporation....................................... 100 New Jersey
Exxon Chemical Asset Management Partnership (18)................ 100 Delaware
Exxon Mobile Bay Limited Partnership (19)..................... 100 Delaware
Paxon Polymer Company, L.P. II (20)........................ 100 Delaware
Exxon Chemical Eastern Inc. .................................... 100 Delaware
Exxon Chemical HDPE Inc. ....................................... 100 Delaware
Exxon Chemical Interamerica Inc. ............................... 100 Delaware
Exxon (Barbados) Foreign Sales Corporation.................... 100 Barbados
Exxon Coal U.S.A., Inc.......................................... 100 Delaware
Exxon France Holding SAS........................................ 100 France
Societe Francaise EXXON CHEMICAL S.A. ........................ 99.359 France
Exxon Chemical France...................................... 100 France
Exxon Chemical Polymeres SNC (21).......................... 100 France
Exxon Holding Latin America Limited (22)........................ 100 Bahamas
Esso Chile Petrolera Limitada (23)............................ 100 Chile
Exxon Land Development, Inc..................................... 100 Delaware
Exxon Minerals International Inc. .............................. 100 Delaware
Compania Minera Disputada de Las Condes Limitada (24)......... 100 Chile
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Owned by State or
Immediate Country of
Parent(s) Organization
----------------- -------------
<S> <C> <C>
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
Esso Exploration Angola (Block 15) Limited............... 100 Bahamas
Esso Exploration Angola (Block 17) Limited............... 100 Bahamas
Exxon Financial Services Company Limited................. 100 Bahamas
Exxon Ventures Inc. ..................................... 100 Delaware
Exxon Azerbaijan Limited............................... 100 Bahamas
Exxon Ventures Holdings Inc. ............................ 100 Delaware
Esso Exploration and Production Angola
(Block 33) 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 Worldwide Trading Company............................... 100 Delaware
ExxonMobil Research and Engineering Company................... 100 Delaware
Imperial Oil Limited.......................................... 69.6 Canada
International Colombia Resources Corporation (25)............. 100 Delaware
Mobil Corporation............................................. 100 Delaware
Mobil Business Resources Corporation........................ 100 Delaware
Mobil Cerro Negro Holding, Ltd. ............................ 100 Cayman Island
Mobil Cerro Negro, Ltd. ................................. 100 Bahamas
Mobil Equatorial Guinea Inc................................. 100 Delaware
Mobil Exploration and Development Venezuela Inc. ........... 100 Delaware
Mobil Exploration & Producing U.S. Inc. .................... 100 Delaware
Mobil Exploration and Producing North America Inc. ......... 100 Nevada
Mobil Oil Exploration & Producing Southeast Inc. ........ 100 Delaware
Mobil Oil Indonesia Inc. ................................ 100 Delaware
Mobil International Finance Corporation..................... 100 Delaware
Mobil Investments Inc. .................................. 100 Delaware
Mobil International Petroleum Corporation................... 100 Delaware
Mobil de Colombia S.A. (26).............................. 98.1 Colombia
General Petroleum Company, Inc. ......................... 100 New York
Mobil Chemical International Ltd. ....................... 100 Delaware
Mobil Exploration Norway Inc. ........................... 100 Delaware
Mobil Oil Abu Dhabi Inc. ................................ 100 Delaware
Mobil Oil Company de Colombia............................ 100 Delaware
Mobil Oil Cote d'Ivoire.................................. 100 Ivory Coast
Mobil Oil do Brasil (Industria e Comercio) Ltda. (27).... 100 Brazil
Mobil Oil East Africa Limited............................ 100 Delaware
Mobil Oil Egypt (S.A.E.) (28)............................ 100 Egypt
Mobil Oil Francaise...................................... 99.98 France
Mobil Oil Malaysia Sendirian Berhad...................... 100 Malaysia
Mobil Oil Singapore Pte. Ltd. ........................... 100 Singapore
Mobil Petroleum Company Inc. ............................ 100 Delaware
Mobil Australia Finance Company Pty Ltd................ 100 Australia
Mobil Europe Inc. ..................................... 100 Delaware
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Owned by State or
Immediate Country of
Parent(s) Organization
----------------- ----------------
<S> <C> <C>
Mobil Corporation (continued)
Mobil International Petroleum Corporation (continued)
Mobil Petroleum Company Inc. (continued)
Mobil Exploration Indonesia Inc. .................... 100 Delaware
Mobil Exploration & Producing Australia Pty Ltd...... 100 Australia
Mobil Australia Resources Company Pty Limited..... 100 Australia
Mobil Holdings (U.K.) Limited........................ 100 Delaware
Mobil Holdings (Europe and Africa) Limited........ 100 Delaware
Mobil Oil Portuguesa, LDA (29)................. 100 Portugal
Mobil Holdings Limited............................ 100 England
Mobil Oil Company Limited...................... 100 England
Mobil Gas Marketing (U.K.) Limited.......... 100 England
Mobil Services Company Limited.............. 100 England
Mobil Trading and Supply Limited............ 100 England
Vacuum Oil Company Limited.................. 100 England
Superior Oil (UK) Limited...................... 100 England
Mobil North Sea Limited........................... 100 Delaware
Mobil Holdings Benelux Inc. ......................... 100 Delaware
Mobil Oil B.V. ................................... 100 Netherlands
Mobil Oil S.A. ................................ 100 Spain
Mobil Oil Hellas A.E. (30)........................ 100 Greece
Mobil Marine Transportation Limited.................. 100 Canada
Mobil Shipping and Transportation Company......... 100 Marshall Islands
Mobil Oil Australia Limited.......................... 100 Australia
Vacuum Oil Company Proprietary Limited............ 100 Australia
Mobil Refining Australia Pty LTD............... 100 Australia
Mobil Oil Austria Aktiengesellschaft................. 100 Austria
Mobil Oil GmbH (31).................................. 100 Germany
Mobil Erdgas-Erdoel GmbH.......................... 100 Germany
Mobil Mineraloel GmbH............................. 100 Germany
Mobil Oil Hong Kong Limited.......................... 99.9 Hong Kong
Mobil Oil Kazakhstan Inc. ........................... 100 Delaware
Mobil Oil Maroc (32)................................. 100 Morocco
Mobil Oil New Zealand Limited........................ 100 New Zealand
Mobil Oil Qatar Inc. ................................ 100 Delaware
Mobil Oil (Switzerland).............................. 100 Switzerland
Mobil Oil Turk A.S. ................................. 100 Turkey
Mobil Petrochemical Sales and Supply Corporation..... 100 Delaware
Mobil Producing Netherlands Inc. .................... 100 Delaware
Mobil Saudi Arabia Inc. ............................. 100 Delaware
Mobil Sekiyu Kabushiki Kaisha........................ 100 Japan
Mobil Vietnam Inc. .................................. 100 Delaware
Mobil Yanbu Petrochemical Company Inc. .............. 100 Delaware
Saudi Yanbu Petrochemical Co. (4)(5).............. 50 Saudi Arabia
Mobil Yanbu Refining Company Inc. ................... 100 Delaware
Saudi Aramco Mobil Refinery Company Ltd. (4)(5)... 50 Saudi Arabia
Mobil Petrochemicals International Limited............. 100 Delaware
Mobil Pipe Line Company................................ 100 Delaware
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Owned by State or
Immediate Country of
Parent(s) Organization
----------------- ------------
<S> <C> <C>
Mobil Corporation (continued)
Mobil International Petroleum Corporation (continued)
Mobil Plastics Europe, Inc. ............................... 100 Delaware
Mobil Petrochemical Holdings Co. Inc. ................... 100 Delaware
Mobil Sales and Supply Corporation......................... 100 Delaware
Mobil Gas Liquids Trading, Inc. ......................... 100 Delaware
Mobil Kazakhstan Ventures Inc. ............................... 100 Delaware
Tengizchevroil (5)......................................... 25 Kazakhstan
Mobil Natural Gas Inc. ....................................... 100 Delaware
Duke Energy and Marketing LLC (5).......................... 40 Delaware
Mobil Oil Cameroun............................................ 99.98 Cameroon
Mobil Oil Corporation......................................... 100 New York
Mobil Alaska Pipeline Company.............................. 100 Delaware
Mobil California Exploration & Producing Asset
Company (33).............................................. 100 Delaware
Aera Energy L.L.C. (5)................................... 48.2 California
Mobil Chemical Company Inc. ............................... 100 Delaware
Mobil Development Nigeria Inc. ............................ 100 Delaware
Mobil Producing Nigeria Unlimited (34)................... 100 Nigeria
Mobil Exploration and Producing Services Inc. ............. 100 Delaware
Mobil Exploration Nigeria Inc. ............................ 100 Delaware
Mobil Oil Credit Corporation............................... 100 Delaware
Mobil Oil Nigeria Public Limited Company................... 60 Nigeria
Mobil Oil Refining Corporation............................. 100 Delaware
Mobil Rocky Mountain Inc. ................................. 100 Delaware
Mobil Investments Canada Inc. (35)....................... 100 Delaware
Mobil Oil Canada, Ltd. ............................... 100 Canada
Mobil Technology Company................................... 100 Delaware
Mobil Produccion E Industrializacion de Venezuela............. 100 Delaware
Mobil Producing Texas & New Mexico Inc. ...................... 100 Delaware
Mobil Qatargas Inc. .......................................... 100 Delaware
Qatar Liquefied Gas Company Limited (5).................... 10 Qatar
Mobil QM Gas Inc. ............................................ 100 Delaware
Ras Laffan Liquefied Natural Gas Company Ltd. (5).......... 26.5 Qatar
The Superior Oil Company...................................... 100 Delaware
oy Esso ab...................................................... 100 Finland
SeaRiver Maritime Financial Holdings, Inc. ..................... 100 Delaware
SeaRiver Maritime, Inc. ...................................... 100 Delaware
</TABLE>
- - - - - - - - - - - - - - - - ---------------------
NOTES:
(1) For the 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.
5
<PAGE>
(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 100%, 83.3333% is owned by Esso Eastern Inc. and
16.6667% is owned by Exxon Chemical Eastern Inc.
(7) Dual ownership; of the 100%, 98% is owned by Esso UK plc and 2% is owned
by Esso Holding Company U.K. Inc.
(8) Multiple ownership; of the 100%, 97% is owned by Esso Eastern Inc.,
2.75% is owned by Exxon Chemical Interamerica Inc. and .25% is owned by
Exxon Mobil Corporation.
(9) Dual ownership; of the 100%, 99.99997% is owned by Esso Holding B.V. and
0.00003% is owned by Exxon Chemical Holland Inc.
(10) Multiple ownership; of the 100%, 32.22% is owned by Esso N.V./S.A.,
26.39% is owned by Esso Standard NV, 28.06% is owned by Esso Exploration
and Production Norway AS and 13.33% is owned by Exxon Chemical Antwerp
Ethylene NV.
(11) Dual ownership; of the 100%, 99.9994% is owned by Esso Holding B.V. and
0.0006% is owned by Exxon Chemical Holland Inc.
(12) Dual ownership; of the 100%, 99.9% is owned by Exxon Denmark Holdings
International ApS and 0.1% is owned by Exxon Luxembourg International,
SARL.
(13) Dual ownership; of the 100%, 99.9996% is owned by ESSO Central Europe
Holding GmbH and 0.0004% is owned by Exxon Mobil Corporation.
(14) Dual ownership; of the 100%, 99.998% is owned by ESSO Central Europe
Holding GmbH and 0.002% is owned by Exxon Mobil Corporation.
(15) Dual ownership; of the 50.103%, 48.571% is owned by Esso Eastern Inc.
and 1.532% is owned by Esso Sekiyu Kabushiki Kaisha.
(16) Dual ownership; of the 50%, 25% is owned by Esso Eastern Inc. and 25% is
owned by Mobil Petroleum Company Inc.
(17) Dual ownership; of the 100%, 90% is owned by Exxon Mobil Corporation and
10% is owned by Exxon Overseas Corporation.
(18) Dual ownership; of the 100%, 68.4% is owned by Exxon Mobil Corporation
and 31.6% is owned by Exxon Asset Management Company.
(19) Dual ownership; of the 100%, 81.4% is owned by Exxon Chemical Asset
Management Partnership and 18.6% is owned by Exxon Mobil Corporation.
(20) Dual ownership; of the 100%, 98% is owned by Exxon Mobile Bay Limited
Partnership and 2% is owned by Exxon Chemical HDPE Inc.
(21) Dual ownership; of the 100%, 98% is owned by Societe Francaise EXXON
CHEMICAL S.A. and 2% is owned by Exxon Chemical France.
(22) Dual ownership; of the 100%, 79.822% is owned by Exxon Mobil Corporation
and 20.178% is owned by Esso Standard (Inter-America) Inc.
(23) Dual ownership; of the 100%, 99% is owned by Exxon Holding Latin America
Limited and 1% is owned by Exxon Mobil Corporation.
(24) Multiple ownership; of the 100%, 47.56% is owned by Exxon Minerals
International Inc., 34.18% is owned by Exxon Financial Services Company
Limited and 18.26% is owned by Exxon Holding Latin America Limited.
(25) Dual ownership; of the 100%, 55% is owned by Exxon Mobil Corporation and
45% is owned by Esso Holding Company Holland Inc.
6
<PAGE>
(26) Multiple ownership; of the 98.1%, 81.27% is owned by Mobil International
Petroleum Corporation, .31% is owned by Mobil Oil Company de Colombia
and 16.52% is owned by Mobil Petroleum Company Inc.
(27) Dual ownership; of the 100%, 90% is owned by Mobil International
Petroleum Corporation and 10% is owned by General Petroleum Company Inc.
(28) Multiple ownership; of the 100%, 99.28% is owned by Mobil International
Petroleum Corporation, .36% is owned by General Petroleum Company, Inc.
and .36% is owned by Mobil Petroleum Company, Inc.
(29) Dual ownership; of the 100%, 99.98% is owned by Mobil Holdings (Europe
and Africa) Limited and .02% is owned by Mobil Services Company Limited.
(30) Dual ownership; of the 100%, 99.98% is owned by Mobil Holdings Benelux
Inc. and .02% is owned by Mobil Holdings (UK) Limited.
(31) Dual ownership; of the 100%, 90% is owned by Mobil Petroleum Company
Inc. and 10% is owned by Mobil International Petroleum Corporation.
(32) Dual ownership; of the 100%, 87.55% is owned by Mobil Petroleum Company
Inc. and 12.45% is owned by Mobil Oil Francaise.
(33) Dual ownership; of the 100%, 98.5% is owned by Mobil Oil Corporation and
1.5% is owned by Mobil Exploration and Producing North America Inc.
(34) Dual ownership; of the 100%, 50% is owned by Mobil Development Nigeria
Inc. and 50% is owned by Mobil Exploration Nigeria Inc.
(35) Dual ownership; of the 100%, 65.31% is owned by Mobil Rocky Mountain
Inc. and 34.69% is owned by Mobil Exploration and Producing North
America Inc.
7
<PAGE>
EXHIBIT 23.1
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 Mobil 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 Mobil Corporation
and 33-51107) (together with 1988 Long Term Incentive Plan of Exxon
Mobil Corporation);
Form S-8 (No. 333-72955) --ExxonMobil Savings Plan
Form S-8 (No. 333-75659) --Post-Effective Amendment No. 1 on Form S-8 to Form S-4
</TABLE>
of our report dated February 23, 2000 appearing on page F13 of the
accompanying financial section of the 1999 Annual Report to shareholders of
Exxon Mobil Corporation which is incorporated as Exhibit 13 in this Annual
Report on Form 10-K.
/s/ PRICEWATERHOUSECOOPERS LLP
Dallas, Texas
March 23, 2000
1
<PAGE>
EXHIBIT 23.2
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statements on
Form S-3 (Nos. 333-27489 and 33-60677) pertaining to the Exxon Mobil
Corporation Shareholder Investment Program; Form S-3 (No. 33-48919) pertaining
to Guaranteed Debt Securities and Warrants to Purchase Guaranteed Debt
Securities of Exxon Capital Corporation; Form S-3 (No. 33-8922) pertaining to
Guaranteed Debt Securities of SeaRiver Maritime Financial Holdings, Inc.
(formerly Exxon Shipping Company); Form S-8 (Nos. 333-38917 and 33-51107)
pertaining to the 1993 Incentive Program of Exxon Mobil Corporation and the
1998 Long Term Incentive Plan of Exxon Mobil Corporation; Form S-8 (No. 333-
72955) pertaining to the ExxonMobil Savings Plan; Form S-8 (No. 333-75659)
pertaining to the Post-Effective Amendment No. 1 on Form S-8 to Form S-4; and
in the related Prospectuses of our report dated February 26, 1999, with
respect to the consolidated financial statements and schedule of Mobil
Corporation included in this Annual Report on Form 10-K of Exxon Mobil
Corporation.
/s/ ERNST & YOUNG LLP
McLean, Virginia
March 23, 2000
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXONMOBIL'S
CONSOLIDATED BALANCE SHEET AT 12/31/99 AND EXXONMOBIL'S CONSOLIDATED STATEMENT
OF INCOME FOR THE YEAR ENDED 12/31/99, THAT ARE CONTAINED IN EXXONMOBIL'S FORM
10-K FOR THE ANNUAL PERIOD ENDED 12/31/99. THE SCHEDULE IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,688
<SECURITIES> 73
<RECEIVABLES> 14,836
<ALLOWANCES> 241
<INVENTORY> 8,492
<CURRENT-ASSETS> 31,141
<PP&E> 189,212
<DEPRECIATION> 95,169
<TOTAL-ASSETS> 144,521
<CURRENT-LIABILITIES> 38,733
<BONDS> 8,402
0
0
<COMMON> 3,403
<OTHER-SE> 60,063
<TOTAL-LIABILITY-AND-EQUITY> 144,521
<SALES> 182,529
<TOTAL-REVENUES> 185,527
<CGS> 77,011
<TOTAL-COSTS> 77,011
<OTHER-EXPENSES> 26,356
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 695
<INCOME-PRETAX> 11,150
<INCOME-TAX> 3,240
<INCOME-CONTINUING> 7,910
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,910
<EPS-BASIC> 2.28
<EPS-DILUTED> 2.25
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXONMOBIL'S
CONSOLIDATED BALANCE SHEET AT 12/31/97 AND 12/31/98 AND EXXONMOBIL'S
CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED 12/31/97 AND 12/31/98, AS
RESTATED TO REFLECT ACCOUNTING FOR THE MERGER OF EXXON AND MOBIL AS A POOLING OF
INTERESTS, THE SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-END> DEC-31-1997 DEC-31-1998
<CASH> 5,045 2,386
<SECURITIES> 40 50
<RECEIVABLES> 13,018 11,096
<ALLOWANCES> 248 247
<INVENTORY> 8,921 8,692
<CURRENT-ASSETS> 33,236 28,594
<PP&E> 182,568 182,467
<DEPRECIATION> 89,041 89,884
<TOTAL-ASSETS> 143,751 139,335
<CURRENT-LIABILITIES> 33,613 33,781
<BONDS> 10,868 8,532
0 0
855 746
<COMMON> 4,766 4,870
<OTHER-SE> 57,500 56,504
<TOTAL-LIABILITY-AND-EQUITY> 143,751 139,335
<SALES> 197,735 165,627
<TOTAL-REVENUES> 201,746 169,642
<CGS> 83,441 62,145
<TOTAL-COSTS> 83,441 62,145
<OTHER-EXPENSES> 28,955 27,527
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 863 568
<INCOME-PRETAX> 19,337 12,083
<INCOME-TAX> 7,605 3,939
<INCOME-CONTINUING> 11,732 8,144
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 (70)
<NET-INCOME> 11,732 8,074
<EPS-BASIC> 3.32 2.31
<EPS-DILUTED> 3.28 2.28
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXONMOBIL'S
CONDENSED CONSOLIDATED BALANCE SHEET AT 3/31/99 AND 6/30/99 AND 9/30/99 AND
EXXONMOBIL'S CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED 3/31/99, SIX MONTHS ENDED 6/30/99 AND NINE MONTHS ENDED 9/30/99, AS
RESTATED TO REFLECT ACCOUNTING FOR THE MERGER OF EXXON AND MOBIL AS A POOLING
OF INTERESTS. 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-31-1999 DEC-31-1999 DEC-31-1999
<PERIOD-END> MAR-31-1999 JUN-30-1999 SEP-30-1999
<CASH> 2,331 2,175 2,315
<SECURITIES> 48 48 68
<RECEIVABLES> 10,057 9,939 11,609
<ALLOWANCES> 237 234 235
<INVENTORY> 7,983 7,898 8,051
<CURRENT-ASSETS> 27,657 27,417 30,082
<PP&E> 181,992 183,732 188,298
<DEPRECIATION> 90,203 91,185 94,142
<TOTAL-ASSETS> 137,260 137,992 142,889
<CURRENT-LIABILITIES> 33,275 34,558 37,213
<BONDS> 8,750 8,669 8,728
0 0 0
724 670 653
<COMMON> 4,945 5,036 5,065
<OTHER-SE> 55,608 55,713 57,131
<TOTAL-LIABILITY-AND-EQUITY> 137,260 137,992 142,889
<SALES> 37,982 80,440 128,855
<TOTAL-REVENUES> 38,682 81,959 130,945
<CGS> 13,909 31,452 53,061
<TOTAL-COSTS> 13,909 31,452 53,061
<OTHER-EXPENSES> 6,556 12,669 19,502
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 182 310 467
<INCOME-PRETAX> 1,677 4,361 7,853
<INCOME-TAX> 193 923 2,227
<INCOME-CONTINUING> 1,484 3,438 5,626
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1,484 3,438 5,626
<EPS-BASIC> 0.42 0.99 1.62
<EPS-DILUTED> 0.42 0.98 1.60
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXONMOBIL'S
CONSENSED CONSOLIDATED BALANCE SHEET AT 3/31/98 AND 6/30/98 AND 9/30/98 AND
EXXONMOBIL'S CONDENSED CONSOLIDATED STATEMENT 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 TO REFLECT ACCOUNTING FOR THE MERGER OF EXXON AND MOBIL AS A POOLING OF
INTERESTS. 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-END> MAR-31-1998 JUN-30-1998 SEP-30-1998
<CASH> 4,754 4,919 3,528
<SECURITIES> 45 46 133
<RECEIVABLES> 11,689 10,725 10,718
<ALLOWANCES> 249 246 250
<INVENTORY> 8,626 8,534 8,812
<CURRENT-ASSETS> 31,506 29,585 29,793
<PP&E> 178,680 180,193 183,446
<DEPRECIATION> 89,047 90,241 91,883
<TOTAL-ASSETS> 139,042 137,047 138,845
<CURRENT-LIABILITIES> 31,889 30,781 32,532
<BONDS> 8,630 8,801 9,098
0 0 0
833 788 767
<COMMON> 4,804 4,824 4,837
<OTHER-SE> 57,673 57,253 57,235
<TOTAL-LIABILITY-AND-EQUITY> 139,042 137,047 138,845
<SALES> 42,250 83,554 123,626
<TOTAL-REVENUES> 43,119 85,208 126,502
<CGS> 16,699 32,340 47,540
<TOTAL-COSTS> 16,699 32,340 47,540
<OTHER-EXPENSES> 6,588 13,125 19,680
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 132 195 432
<INCOME-PRETAX> 3,940 7,249 10,127
<INCOME-TAX> 1,345 2,392 3,361
<INCOME-CONTINUING> 2,595 4,857 6,766
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> (70) (70) (70)
<NET-INCOME> 2,525 4,787 6,696
<EPS-BASIC> 0.72 1.37 1.92
<EPS-DILUTED> 0.71 1.35 1.89
</TABLE>
<PAGE>
Exhibit 99
Report of Ernst & Young LLP
Independent Auditors
Board of Directors and Shareholders
Mobil Corporation
We have audited the consolidated balance sheets of Mobil Corporation as of
December 31, 1998, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for each of the two years in the period
ended December 31, 1998 (not presented separately herein). Our audits also
included the financial statement schedule listed in the Index at Item 14 (not
presented separately herein). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards 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. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Mobil Corporation
at December 31, 1998, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1998, in
conformity with accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basis financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
McLean, Virginia
February 26, 1999
1
