_________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission file number 1-7555
MOBIL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2850309
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3225 Gallows Road, Fairfax, VA. 22037-0001
(Address of principal executive offices) (Zip Code)
(703) 846-3000
Registrant's telephone number
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 .
The number of shares outstanding of the registrant's common
stock, all of which comprise a single class with a $2.00 par
value, as of April 28, 1995, the latest practicable date, was
395,686,981.
_________________________________________________________________
MOBIL CORPORATION
Form 10-Q
Quarterly Report
March 31, 1995
TABLE OF CONTENTS
________________________________________________________________
PART I - FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements
Consolidated Statement of Income for the
Three Months Ended March 31, 1994 and 1995 .. 1
Consolidated Balance Sheet at December 31,
1994 and March 31, 1995 ..................... 2
Consolidated Statement of Cash Flows for the
Three Months Ended March 31, 1994 and 1995 .. 3
Notes to Condensed Consolidated Financial
Statements .................................. 4
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition ......... 6
Summarized Financial Data
Mobil Oil Corporation ......................... 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ............................... 13
Item 2. Changes in Securities ........................... 14
Item 3. Defaults Upon Senior Securities ................. 14
Item 4. Submission of Matters to a Vote of Security
Holders ....................................... 14
Item 5. Other Information ............................... 14
Item 6. Exhibits and Reports on Form 8-K ................ 14
SIGNATURE ................................................. 15
EXHIBIT INDEX ............................................. 16
Exhibit 11. Computation of Earnings per Common Share .... 17
Exhibit 12. Computation of Ratio of Earnings to Fixed
Charges ................................... 18
________________________________________________________________
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
<TABLE>
<CAPTION>
MOBIL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per-share amounts)
For the Three Months
Ended March 31,
___________________
1994 1995
_______ _______
<S> <C> <C>
Revenues
Sales and services (a) .................................... $14,948 $17,402
Income from equity investments, asset sales,
interest and other ...................................... 170 225
------- -------
Total Revenues .......................................... 15,118 17,627
------- -------
Costs and Expenses
Crude oil, products and operating
supplies and expenses ................................... 8,095 10,003
Exploration expenses ...................................... 82 95
Selling and general expenses .............................. 1,249 1,256
Depreciation, depletion and amortization .................. 668 669
Interest and debt discount expense ........................ 120 115
Taxes other than income taxes (a) ......................... 3,827 4,259
Income taxes .............................................. 542 594
------- -------
Total Costs and Expenses ................................ 14,583 16,991
------- -------
Income Before Change in Accounting Principle ................ $ 535 $ 636
Cumulative Effect of Change in Accounting Principle (b) ..... (680) -
------- -------
Net Income (Loss) ........................................... $ (145) $ 636
======= =======
Income (Loss) Per Common Share
Income before change in accounting principle (c) .......... $ 1.31 $ 1.57
Cumulative effect of change in accounting
principle (b) ........................................... (1.71) -
-------- -------
Net Income (Loss) Per Common Share .......................... $ (.40) $ 1.57
======== =======
Dividends Per Common Share .................................. $ .85 $ .85
======== =======
Notes:
(a) Includes excise and state gasoline taxes of ............. $ 1,716 $ 1,897
(b) Reflects adoption, effective January 1, 1994, of a change in the accounting
method used to apply the lower of cost or market test for crude oil and product
inventories.
(c) Based on income before change in accounting principle
less preferred stock dividend requirements of ......... $ 15 $ 14
divided by the weighted average number of common
shares outstanding (000's) of ....................... 398,336 395,842
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
MOBIL - 1 -
<TABLE>
<CAPTION>
MOBIL CORPORATION
CONSOLIDATED BALANCE SHEET
(In millions)
Dec. 31, Mar. 31,
ASSETS 1994 1995
_______ _______
<S> <C> <C>
Current Assets
Cash and cash equivalents ................................ $ 531 $ 458
Accounts and notes receivable ............................ 6,535 6,412
Inventories .............................................. 3,302 3,349
Prepaid expenses and other current assets ................ 618 736
Deferred income taxes .................................... 195 195
------- -------
Total Current Assets ................................... 11,181 11,150
Investments and Long-Term Receivables ...................... 3,802 4,209
Properties, Plants and Equipment ........................... 53,788 55,056
Less: Accumulated Depreciation, Depletion and Amortization . 28,285 29,183
------- -------
Net Properties, Plants and Equipment ....................... 25,503 25,873
Deferred Charges and Other Assets .......................... 1,056 1,058
------- -------
Total Assets ........................................... $41,542 $42,290
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt .......................................... $ 3,013 $ 3,125
Accounts payable ......................................... 4,968 4,474
Accrued liabilities ...................................... 2,659 2,797
Income, excise, state gasoline and other taxes payable ... 2,531 2,692
Deferred income taxes .................................... 247 160
------- -------
Total Current Liabilities .............................. 13,418 13,248
Long-Term Debt ............................................. 4,714 4,765
Reserves for Employee Benefits ............................. 1,520 1,593
Accrued Restoration, Removal and Environmental Costs ....... 1,191 1,230
Deferred Credits and Other Noncurrent Obligations .......... 841 877
Deferred Income Taxes ...................................... 2,639 2,749
Minority Interest in Subsidiary Companies .................. 73 66
------- -------
Total Liabilities ...................................... 24,396 24,528
------- -------
Shareholders' Equity
Preferred stock (ESOP-related) -- shares issued and
outstanding: 95,778 at December 31, 1994 and
95,069 at March 31, 1995 ............................... 745 739
Unearned employee compensation (ESOP-related) ............ (472) (457)
Common stock -- $2.00 par value; shares authorized:
600,000,000; shares issued: 442,336,317 at December 31,
1994 and 442,732,978 at March 31, 1995 ................. 885 886
Capital surplus .......................................... 1,325 1,341
Earnings retained in the business ........................ 16,859 17,144
Cumulative foreign exchange translation adjustment ....... (123) 240
Common stock held in treasury, at cost -- shares:
46,349,300 at December 31, 1994 and 47,009,300 at
March 31, 1995 ......................................... (2,073) (2,131)
------- -------
Total Shareholders' Equity ............................. 17,146 17,762
------- -------
Total Liabilities and Shareholders' Equity ................. $41,542 $42,290
======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
MOBIL - 2 -
<TABLE>
<CAPTION>
MOBIL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
For the Three Months
Ended March 31,
___________________
1994 1995
______ ______
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (loss) .................................. $ (145) $ 636
Adjustments to reconcile to net cash from
operating activities:
Cumulative effect of change in accounting
principle .................................... 680 -
Depreciation, depletion and amortization ....... 668 669
Deferred income taxes .......................... (159) ( 93)
Earnings (greater) less than dividends from
equity affiliates ............................ 54 ( 19)
Exploration expenses (includes noncash
charges: 1994-$10; 1995-$13) ................ 82 95
Gain on sales of properties, plants and
equipment and other assets ................... (52) ( 56)
(Increase) decrease in working capital items ... 87 (303)
Other, net ..................................... (63) 79
------ ------
Net Cash from Operating Activities ................... 1,152 1,008
------ ------
Cash Flows from Investing Activities
Capital and exploration expenditures ............... (718) (818)
Proceeds from sales of properties, plants and
equipment and other assets ....................... 101 142
Payments attributable to investments and
long-term receivables ............................ (34) ( 81)
------ ------
Net Cash Used in Investing Activities ................ (651) (757)
------ ------
Cash Flows from Financing Activities
Cash dividends ..................................... (353) (351)
Proceeds from borrowings having original
terms greater than three months .................. 381 350
Repayments of borrowings having original
terms greater than three months .................. (481) (316)
Increase (decrease) in other borrowings ............ (144) 59
Proceeds from issuance of common stock ............. 17 17
Purchase of common stock for treasury .............. (14) ( 58)
------ ------
Net Cash Used in Financing Activities ................ (594) (299)
------ ------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents ................................... 11 ( 25)
------ ------
Net Decrease in Cash and Cash Equivalents ............ (82) ( 73)
Cash and Cash Equivalents - Beginning of Period ...... 827 531
------ ------
Cash and Cash Equivalents - End of Period ............ $ 745 $ 458
====== ======
_______________________________________________________________________________
Memo item
Net cash from operating activities .................. $1,152 $1,008
Net cash used in investing activities ............... (651) (757)
Cash dividends ...................................... (353) (351)
------ ------
Excess (shortfall) of cash from operating activities
over investing activities and dividends ........... $ 148 $ (100)
====== ======
______________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
MOBIL - 3 -
MOBIL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Financial Statements
The condensed consolidated financial statements of Mobil Corporation (Mobil)
included herein are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Although certain
information normally included in financial statements prepared in accordance
with generally accepted accounting principles has been condensed or omitted,
Mobil believes that the disclosures are adequate to make the information
presented not misleading. The condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements,
the notes thereto and the financial statement schedules included or
incorporated by reference in Mobil's Annual Report on Form 10-K for its
fiscal year ended December 31, 1994.
The condensed consolidated financial statements included herein reflect all
normal recurring adjustments that, in the opinion of management, are
necessary for a fair presentation. The results for interim periods are not
necessarily indicative of trends or of results to be expected for a full year.
2. Change in Accounting Principle
Effective January 1, 1994, Mobil changed the method of accounting it uses
to apply the lower of cost or market (LCM) test for its crude oil and product
inventories. The LCM test is now measured, and the results are recognized
separately, on a country-by-country basis, and any resulting writedowns to
market are recorded as permanent adjustments to the last-in, first-out (LIFO)
cost of inventory in accordance with Accounting Research Bulletin No. 43,
Chapter 4, "Inventory Pricing." Previously, Mobil aggregated its worldwide
inventories into one pool for the determination of the LCM measurement.
The $680 million after-tax charge to 1994 first quarter net income represents
the cumulative effect of this accounting change as of January 1, 1994. The
new method of applying the LCM test to the book value of inventories is
preferable because Mobil's financial statements will better reflect local
market conditions and exchange rates in the countries in which Mobil operates.
MOBIL - 4 -
3. Supplementary Cash Flow Data
The table below details the components of the line "(Increase)/decrease in
working capital items" which is shown in the Consolidated Statement of Cash
Flows on page 3. The impact of changes in foreign currency translation rates
has been removed from these amounts. Therefore, these amounts do not agree
with the differences that could be derived from the Consolidated Balance
Sheet amounts shown on page 2.
<TABLE>
<CAPTION>
______________________________________________________________________
(In millions) For the Three Months
Ended March 31,
____________________
1994 1995
_____ _____
Changes in Working Capital Items
(Increases)/decreases
<S> <C> <C>
Accounts and notes receivable ................. $ 99 $ 228
Inventories ................................... (100) 13
Prepaid expenses and other current assets ..... (110) ( 92)
Accounts payable .............................. (91) (625)
Accrued liabilities ........................... 154 109
Income, excise, state gasoline and
other taxes payable ......................... 135 64
----- -----
(Increase)/decrease in working capital items .. $ 87 $(303)
===== =====
______________________________________________________________________
</TABLE>
MOBIL - 5 -
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
<TABLE>
<CAPTION>
__________________________________________________________________________________
REVENUES BY SEGMENT First Quarter Incr./
(In millions) _________________ (Decr.)
1994 1995 %
_______ _______ _______
<S> <C> <C> <C>
Exploration & Producing .......................... $ 1,670 $ 1,827 9
Marketing & Refining ............................. 12,488 14,330 15
Chemical ......................................... 833 1,351 62
Corporate & Other ................................ 127 119 ( 6)
_______ _______
Total Revenues ................................ $15,118 $17,627 17
======= =======
</TABLE>
_______________________________________________________________________________
_______________________________________________________________________________
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS: First Quarter
REPORTED/OPERATING EARNINGS _____________ Incr./
(In millions) 1994 1995 (Decr.)
____ ____ _______
<S> <C> <C> <C>
Petroleum Operations
E&P - United States ................................. $ 77 $ 82 $ 5
- International ................................. 258 295 37
____ ____ ____
Total E&P ........................................... 335 377 42
____ ____ ____
M&R - United States ................................. 61 - (61)
- International ................................. 175 146 (29)
____ ____ ____
Total M&R ........................................... 236 146 (90)
____ ____ ____
Total Petroleum ....................................... 571 523 (48)
Chemical .............................................. 15 174 159
Corporate and Other (a) ............................... (13) 4 17
Net Financing Expense ................................. (38) (65) (27)
____ ____ ____
Income Before Change in Accounting Principle .......... 535 636 101
Cumulative Effect of Change in Accounting
Principle (b) ....................................... (680) - 680
_____ ____ ____
Net Income (Loss) ..................................... $(145) $636 $781
===== ==== ====
(a) Corporate and Other includes the results from Real Estate operations,
Mining and Minerals, administrative expenses and other corporate items.
(b) Reflects the impact of the change in the method of applying the lower of
cost or market test for crude oil and product inventories, effective
January 1, 1994.
</TABLE>
______________________________________________________________________________
FIRST QUARTER 1995 COMPARED WITH FIRST QUARTER 1994
Consolidated Results Overview
Consolidated first quarter net income was $636 million, up $101 million from
the first quarter of 1994, after excluding last year's charge of $680 million
for the change in accounting principle related to crude oil and product
inventories. There were no special items in either period. Net income per
common share was $1.57 for the first quarter of 1995 and $1.31 for the
comparable period of 1994 (before the change in accounting principle). The
tables above summarize first quarter results for 1994 and 1995.
MOBIL - 6 -
Consolidated Results Overview - continued
Mobil's 19% income improvement (before change in accounting principle) was
achieved despite extremely low worldwide refining margins and the lowest North
American natural gas prices in more than three years. Mobil's performance
reflected strength in the Chemical segment, particularly in petrochemicals,
which benefited from higher industry demand and a tight ethylene market.
Income also benefited from higher worldwide crude oil prices, up more than
$3.00 per barrel from last year's depressed levels.
Continuing benefits from business initiatives to increase volume, enhance
revenues, and reduce costs benefited income this quarter. Worldwide petroleum
product sales volumes were up 7%, chemical sales volumes were up 29% and, at
the same time, controllable operating expenses continued their downward trend.
Mobil is also pursuing opportunities for growth which are expected to benefit
future earnings. Since the beginning of the year, the company announced: (1)
commencement of work on a natural gas liquids project in Nigeria; (2)
participation in a study to develop large gas resources in the Sable Island
area offshore eastern Canada; (3) establishment of a new business unit to
develop independent power plant projects; (4) formation of a consortium to
evaluate and bid on new acreage in Venezuela, and reentry into lubricant
manufacturing and marketing in that country; (5) an agreement to explore for
oil and gas in Kazakhstan; (6) a commitment to sell LNG from the Qatar Ras
Laffan project to South Korea; and (7) a fuels market entry into Ecuador. In
addition, Mobil's exploration program realized several successes in both
emerging and core areas during the quarter. Significant discoveries were made
in Equatorial Guinea (offshore western Africa), Norway and the Netherlands.
Petroleum sector market fundamentals continue to be volatile and are likely
to remain so in the near term. While worldwide crude oil prices have increased
since the beginning of the year, refining margins have been very weak, and
North American natural gas prices remain low. However, throughout the company,
we continue to implement business initiatives that are designed, independent of
industry conditions, to improve the productivity of our assets, reduce costs,
increase shareholder value and lay the groundwork for future growth of the
company (see also Current Developments, page 11).
Worldwide revenues of $17,627 million increased $2,509 million from $15,118
million in the first quarter of 1994. The effects of higher worldwide crude oil
prices and petroleum product sales, together with higher petrochemical prices,
chemical volumes and currency translation effects, were only partly offset by
lower North American natural gas prices. Crude oil, products and operating
supplies and expenses increased $1,908 million to $10,003 million primarily due
to higher volume related expenses, higher crude oil prices and currency
translation effects. Exploration expenses of $95 million were $13 million
higher than the same quarter last year. Taxes other than income taxes increased
$432 million to $4,259 million due to higher sales volumes and currency
translation effects. Income tax expense increased by $52 million to $594
million (before change in accounting principle) mainly due to this quarter's
higher level of earnings.
MOBIL - 7 -
Exploration and Producing
Exploration and Producing income of $377 million was $42 million higher than
the first quarter of last year.
In the United States, income of $82 million was up $5 million, as higher
crude oil prices and lower operating expenses more than offset lower production
volumes and significantly lower natural gas prices.
International income of $295 million was $37 million higher than the
comparable quarter last year. Higher crude oil and Indonesian LNG prices were
partly offset by lower Canadian natural gas prices and higher exploration and
frontier area expenses. In addition, a fire caused a shutdown of the Ubit
platform in Nigeria and resulted in decreased production. The platform was re-
streamed late in March and most of the lost production is expected to be
recovered over the balance of the year.
_______________________________________________________________________________
<TABLE>
<CAPTION>
Exploration and Producing First Three Months
Selected Operating Data Incr./
(Decr.)
1994 1995 Vol. %
_____ _____ _____ ___
<S> <C> <C> <C> <C>
Net Crude Oil and NGL Production (TBD) - U.S. ...... 294 290 ( 4) ( 1)
- Intl. ..... 568 512 (56) (10)
_____ _____ _____ ___
Total .......................................... 862 802 (60) ( 7)
===== ===== ===== ===
Net Natural Gas Production (MMCFD) - U.S. ...... 1,579 1,494 (85) ( 5)
- Intl. ..... 3,510 3,544 34 1
_____ _____ _____ ___
Total .......................................... 5,089 5,038 (51) ( 1)
===== ===== ===== ===
Natural Gas Sales (MMCFD) - U.S. ...... 2,727 3,699 972 36
- Intl. ..... 3,540 3,632 92 3
_____ _____ _____ ___
Total .......................................... 6,267 7,331 1,064 17
===== ===== ===== ===
__________________________________________________________________________________
</TABLE>
Marketing and Refining
Marketing and Refining income of $146 million was $90 million lower than the
first quarter of last year.
United States results were breakeven, compared with income of $61 million
last year. Industry margins were exceptionally weak during the quarter, masking
the benefits of lower refinery turnaround activity, lower operating expenses,
and increased sales and production. In particular, margins suffered due to
decreased distillate demand resulting from warm winter weather and lower-than-
anticipated requirements for reformulated gasoline following its introduction
on January 1, 1995.
MOBIL - 8 -
International income of $146 million was $29 million lower than the
comparable quarter last year. Refining margins in all enclaves were very weak
due to low distillate demand. These were, however, partially offset by benefits
derived from ongoing business initiatives, which contributed to higher trade
sales volumes, particularly in the Pacific Rim, and expense savings in Europe.
Income also reflected full quarter benefits from the major refinery upgrade in
Singapore, and improved lubricants profitability in Europe.
<TABLE>
<CAPTION>
________________________________________________________________________________
Marketing and Refining First Three Months
Selected Operating Data Incr./
(Decr.)
1994 1995 Vol. %
_____ _____ ___ __
<S> <C> <C> <C> <C>
Petroleum Product Sales (TBD) - U.S. .............. 1,110 1,259 149 13
- Intl. ............. 1,823 1,889 66 4
_____ _____ ___ __
Total .......................................... 2,933 3,148 215 7
===== ===== === ==
Refinery Runs for Mobil (TBD) - U.S. .............. 827 904 77 9
- Intl. ............. 1,159 1,244 85 7
_____ _____ ___ __
Total .......................................... 1,986 2,148 162 8
===== ===== === ==
________________________________________________________________________________
</TABLE>
Chemical
Chemical income of $174 million was $159 million higher than the prior year's
first quarter, reflecting better industry fundamentals in most businesses,
particularly polyethylene resin. Income also benefited from the Singapore
aromatics complex, as well as increased sales volumes of OPP films and chemical
specialties. Business initiatives, notably in plastics fabricating and
petrochemicals, also contributed to the income improvement.
Corporate and Other
Corporate and Other income was $4 million, an improvement of $17 million over
the same quarter last year, mainly in real estate operations, due to the sale
of an office complex in Arlington, Virginia.
Net Financing Expense
Net Financing Expense of $65 million was $27 million higher than last year,
principally reflecting higher average interest rates and certain favorable non-
recurring items reported in last year's results.
Accounting Standards
In March, 1995, Financial Accounting Standard (FAS) 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
was issued but adoption is not required until 1996. This new standard requires
that assets be reported at fair value, if the related book values are deemed to
be impaired. The financial reporting impact that will result from the adoption
of FAS 121 is not known at this time.
MOBIL - 9 -
DISCUSSION OF FINANCIAL CONDITION
At March 31, 1995, total current assets of $11,150 million were essentially
unchanged from year-end 1994. Accounts and notes receivable were down $123
million, primarily due to reduced third party crude oil trade sales volumes and
timing of collections of receivables. Prepaid expenses increased $118 million,
which reflected normal annual prepayments made during the first quarter and
currency translation effects.
Investments and long-term receivables were up $407 million primarily due to
currency translation effects and increased spending on Qatar LNG projects.
Net properties, plants and equipment increased $370 million to $25,873
million. Capital expenditures and foreign currency translation effects were
largely offset by depreciation and asset sales.
Total current liabilities of $13,248 million at March 31, 1995 decreased $170
million from year-end 1994. Lower accounts payable, primarily due to a seasonal
decrease in product purchases and timing of certain payments at year-end 1994,
were largely offset by currency translation effects.
Total debt of Mobil and its subsidiaries was $7,890 million at March 31,
1995, up $163 million from the year-end 1994 level. The ratio of debt to
capitalization was 31% at March 31, 1995, unchanged from year-end 1994.
Shareholders' equity increased $616 million during the first three months of
1995. Earnings retained in the business at March 31, 1995 increased by $285
million reflecting net income of $636 million less dividends of $351 million.
Additionally, changes in the cumulative foreign exchange translation adjustment
account increased equity by $363 million. This change was due to the general
strengthening, relative to the U.S. dollar, of currencies in most of the
nations that host our main international operations.
For the first three months of 1995, net cash from operating activities of
$1,008 million was $100 million less than the cash requirements for investing
activities and dividends, primarily due to increases in working capital items
(see table page 5).
Worldwide capital and exploration expenditures for the first quarter of 1995
were $818 million, an increase of $100 million from the comparable period last
year. Full year 1995 capital and exploration expenditures are expected to be
$4.1 billion, including about $500 million for exploration expenses. As of
March 31, 1995, Mobil's unspent balance of total appropriations for capital
expenditures was $4.4 billion, compared with $4.1 billion at year-end 1994.
Mobil is not contractually committed to spend all of this amount but generally
expects to do so over the next several years.
Return on average shareholders' equity was 10.8% for the twelve month period
ended March 31, 1995, compared with 10.4% for the calendar year 1994 (excluding
the cumulative effect of the change in accounting principle). Return on average
capital employed for the twelve month period ended March 31, 1995 was 8.7%,
compared with 8.4% for the calendar year 1994 (excluding the cumulative effect
of the change in accounting principle).
MOBIL - 10 -
DISCUSSION OF FINANCIAL CONDITION - continued
Whenever external financing is needed, Mobil and its subsidiary companies
have ready access to multiple capital markets, including significant bank
credit lines.
At March 31, 1995, Mobil had effective shelf registration statements on file
with the SEC permitting the offer and sale of $1,815 million of debt
securities. Shelf registrations allowing the issuance of U.S. $1,000 million of
Euro-Medium-Term Notes and bonds having a principal amount of 30 billion
Japanese yen are also in place.
Additionally, at March 31, 1995, the Mobil Oil Corporation Employee Stock
Ownership Plan Trust (ESOP Trust) had an effective shelf registration on file
with the SEC permitting the offer and sale of $230 million of debt securities,
guaranteed by Mobil. The proceeds of any debt securities issued by the ESOP
Trust thereunder would be used to refund its existing indebtedness.
CURRENT DEVELOPMENTS
Restructurings
On May 1, 1995, Mobil announced a major restructuring of the company's
worldwide staff support services. Work processes will be streamlined to create
efficiencies, which will lead to a reduction of about 4,000 people from Mobil's
current worldwide 14,500 staff support employees. These changes and other
associated improvements, when fully implemented by year-end 1996, are estimated
to realize annual pre-tax savings of approximately $750 million as compared
with the 1994 expense levels for these services.
In addition to reductions among the staff groups, Mobil will also eliminate
700 other positions in the U.S downstream businesses. Expense reductions from
this program together with associated initiatives are expected to save an
additional $300 million pre-tax annually by year-end 1996 as compared with 1994
expense levels.
Mobil will take a charge in the second quarter of 1995 of approximately $300
million after-tax to cover costs of employee severance and facility closings,
for both restructurings mentioned above.
Both restructurings are expected to be substantially complete by the end of
the first quarter of 1996. Savings are expected to begin in the first quarter
of 1996, building to the indicated annualized levels by year-end 1996.
MOBIL - 11 -
SUMMARIZED FINANCIAL DATA
MOBIL OIL CORPORATION
Summarized financial data for Mobil Oil Corporation, a wholly-owned
subsidiary of Mobil Corporation, follow. Net obligations to Mobil Corporation
amounted to $1,737 million at December 31, 1994, and $1,488 million at
March 31, 1995.
<TABLE>
<CAPTION>
________________________________________________________________________
(In millions) Dec. 31, Mar. 31,
1994 1995
_______ _______
<S> <C> <C>
Current assets .......................... $12,942 $13,426
Noncurrent assets ....................... 25,006 25,638
Current liabilities ..................... (12,398) (12,385)
Long-term debt .......................... (6,639) ( 6,722)
Deferred credits and other liabilities .. (4,899) ( 5,215)
Minority interests, primarily
Mobil Corporation ..................... (1,165) ( 1,166)
------- -------
Net assets .............................. $12,847 $13,576
======= =======
For the Three Months Ended
March 31,
_________________________
1994 1995
_______ _______
Gross revenues .......................... $14,263 $16,680
Income before taxes and change in
accounting principle .................. $ 716 $ 787
Income after taxes but before change in
accounting principle .................. $ 328 $ 395
Cumulative effect of change in accounting
principle (a).......................... (680) -
Net income .............................. $ (352) 395
(a) Reflects the adoption, effective January 1, 1994, of a change in the
accounting method used to apply the lower of cost or market test for
crude oil and product inventories.
________________________________________________________________________
</TABLE>
MOBIL - 12 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Environmental Litigation.
Mobil periodically receives notices from the Environmental Protection Agency
(EPA) or equivalent agencies at the state level that Mobil is a "potentially
responsible party" under Superfund or equivalent state legislation with respect
to various waste disposal sites. The majority of these sites are either still
under investigation by the EPA or the state agencies concerned, or under
remediation, or both. In certain instances, Mobil and other potentially
responsible parties have been named in court or administrative proceedings by
federal or state agencies seeking the cleanup of these sites. Mobil has also
been named as a defendant in various suits brought by private parties alleging
injury from disposal of wastes at these sites. The ultimate impact of these
proceedings on the business or accounts of Mobil cannot be predicted at this
time due to the large number of other potentially responsible parties and the
speculative nature of cleanup cost estimates, but based on our long experience
in managing environmental matters, we do not anticipate that the aggregate
level of future remediation costs will increase above recent levels so as to
materially and adversely affect our consolidated financial position or
liquidity.
On January 26, 1995, a proceeding was brought by the Department of Health
Services of Orange County, California, alleging that Mobil Oil Corporation
violated Article 4 of the California Underground Storage Tank Regulations for
failing to report an unauthorized release from underground storage tanks and
for failing to submit required monitoring reports. Combined penalties and fines
were sought with a statutory range totaling $240,000 to $2,400,000. The matter
was settled on April 13, 1995 by the payment of $115,000 which covered costs
and penalties.
On March 7, 1995, a proceeding brought by the EPA against Mobil Chemical
Company on March 30, 1992, was settled. The EPA had alleged that Mobil
Chemical Company violated the Resource Conservation and Recovery Act in that
its Edison, New Jersey plant improperly characterized the plant's K-65 solvent
waste and did not include a "land ban" restriction, and had sought penalties of
$243,350. The proceeding was settled by a payment of $112,000.
Other Than Environmental Litigation.
Mobil and its subsidiaries are engaged in various litigations and have a
number of unresolved claims pending. While the amounts claimed are substantial
and the ultimate liability in respect of such litigations and claims cannot be
determined at this time, Mobil is of the opinion that such liability, to the
extent not provided for through insurance or otherwise, is not likely to be of
material importance in relation to its accounts.
Mobil has provided in its accounts for items and issues not yet resolved
based on management's best judgement.
The Internal Revenue Service (IRS) has investigated the pricing of Saudi
Arabian crude oil by Mobil and the other Arabian American Oil Co. (Aramco)
shareholder companies during the period 1979-1984. In January 1992, the IRS
assessed a tax deficiency against Mobil of about $300 million on this so-called
"Aramco Advantage" issue for tax years 1980 and 1981. In April 1992, Mobil
filed a petition in the U.S. Tax Court challenging the IRS deficiency notice.
MOBIL - 13 -
Legal Proceedings -- continued
If the IRS were ultimately to prevail, tax deductible interest in excess of
$1 billion would also be due. Mobil is presently negotiating with the IRS to
resolve the "Aramco Advantage" and certain other tax issues. It is not possible
to predict whether these negotiations will be successful. If a court trial is
required, final resolution could be several years away. In December 1993, the
U.S. Tax Court held that the IRS had exceeded its authority in making large
adjustments to increase the taxable income of Exxon Corporation and Texaco Inc.
(former Aramco shareholders) on the "Aramco Advantage" issue. It is anticipated
that the IRS will appeal this decision.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits.
The following exhibits are filed with this report:
11. Computation of Earnings Per Common Share
12. Computation of Ratio of Earnings to Fixed Charges
27. Financial Data Schedule
Reports on Form 8-K.
The company filed the following Form 8-K, Current Reports during and
subsequent to the end of the first quarter:
Date of 8-K Description of 8-K
January 5, 1995 Submitted a copy of the Mobil Corporation By-laws, as
amended to December 16, 1994.
January 20, 1995 Submitted a copy of the Mobil News Release dated
January 20, 1995, reporting estimated earnings for
the fourth quarter and full year of 1994.
March 20, 1995 Submitted a copy of the Form of Note relating to the
issuance of $25 million Medium-Term Notes, Series A,
due March 27, 2003.
April 24, 1995 Submitted a copy of the Mobil News Release dated
April 24, 1995, reporting estimated earnings for the
first quarter of 1995.
May 1, 1995 Submitted a copy of the Mobil News Release dated
May 1, 1995, announcing a major restructuring of the
company's worldwide staff support services.
MOBIL - 14 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGISTRANT MOBIL CORPORATION
BY /S/ROBERT C. MUSSER
_____________________________
NAME AND TITLE Robert C. Musser, Controller;
Principal Accounting Officer
DATE May 8, 1995
MOBIL - 15 -
<PAGE>
EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
- - ------- ----------------
11. Computation of Earnings Per Electronic
Common Share
12. Computation of Ratio of Earnings Electronic
to Fixed Charges
27. Financial Data Schedule Electronic
MOBIL - 16 -
<TABLE>
<CAPTION>
Exhibit 11.
MOBIL CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(Millions of dollars except per-share amounts; number of shares in thousands)
- - ---------------------------------------------------------------------------------------
For the Three Months
Ended March 31,
--------------------
Primary 1994 1995
- - ------- ------ ------
<S> <C> <C>
Income before change in accounting principle .................. $ 535 $ 636
Less dividends on preferred stock ............................. 15 14
------ ------
Adjusted income applicable to common shares before
change in accounting principle .............................. $ 520 $ 622
Cumulative effect of change in accounting principle ........... (680) -
------ ------
Adjusted net income (loss) applicable to common shares ........ $ (160) $ 622
====== ======
Weighted average number of primary common shares
Outstanding ................................................. 398,336 395,842
Issuable on assumed exercise of stock options ............... 3,043 3,409
------- -------
Total ................................................... 401,379 399,251
======= =======
Primary earnings per common share
Income applicable to common shares before change
in accounting principle ................................... $ 1.30 $ 1.56
Cumulative effect of change in accounting principle ......... (1.70) -
------ ------
Net income (loss) per common share ............................ $( .40) $ 1.56
====== ======
Fully Diluted
- - -------------
Income before change in accounting principle .................. $ 535 $ 636
Less additional contribution to ESOP .......................... -(a) 6
Less dividends on preferred stock ............................. 15(a) -
------ ------
Adjusted income applicable to common shares before
change in accounting principle .............................. $ 520 $ 630
Cumulative effect of change in accounting principle ........... (680) -
------ ------
Adjusted net income (loss) applicable to common shares ........ $ (160) $ 630
====== ======
Weighted average number of primary common shares .............. 401,379 399,251
Increment to assumed exercise of stock options to
reflect maximum dilutive effect ............................. - 665
Assumed conversion of preferred stock ......................... -(a) 9,507
------- -------
Total ................................................... 401,379 409,423
======= =======
Fully diluted earnings per common share
Adjusted income before change in accounting
principle ................................................. $ 1.30 $ 1.54
Cumulative effect of change in accounting principle ......... (1.70) -
------ ------
Net income (loss) per common share ............................ $( .40) $ 1.54
====== ======
This Exhibit is included to show that dilution of earnings per common share is
immaterial and therefore not necessary for presentation on the Consolidated
Statement of Income.
(a) For the quarter ended March 31, 1994, the incremental shares attributable
to the assumed conversion of preferred stock were not considered for the
fully diluted earnings per share calculation due to their antidilutive
effect.
- - -----------------------------------------------------------------------------
MOBIL - 17 -
</TABLE>
<TABLE>
<CAPTION>
Exhibit 12.
MOBIL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions)
Three
Months
Ended
Year Ended December 31, March 31,
----------------------------------------- --------
1990 1991 1992 1993 1994 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Income Before Change in
Accounting Principle(s).. $1,929 $1,920 $1,308 $2,084 $1,759 $ 636
Add:
Income taxes .............. 2,515 2,105 1,567 1,931 1,919 594
Portion of rents
representative of
interest factor ......... 342 344 319 339 340 85
Interest and debt
discount expense ........ 700 713 612 529(a) 461 115
Earnings (greater) less
than dividends from
equity affiliates........ (100) (151) 36 265 (40) (19)
------ ------ ------ ------ ------ ------
Income as Adjusted ........ $5,386 $4,931 $3,842 $5,148 $4,439 $1,411
====== ====== ====== ====== ====== ======
Fixed Charges:
Interest and debt
discount expense ........ $ 700 $ 713 $ 612 $ 529(a)$ 461 $ 115
Capitalized interest ...... 7 20 42 42 37 7
Portion of rents
representative of
interest factor ......... 342 344 319 339 340 85
------ ------ ------ ------ ------ ------
Total Fixed Charges ....... $1,049 $1,077 $ 973 $ 910 $ 838 $ 207
====== ====== ====== ====== ====== ======
Ratio of Earnings to
Fixed Charges ........... 5.1 4.6 3.9 5.7(a) 5.3 6.8
====== ====== ====== ====== ====== ======
Note:
For the years ended December 31, 1991, 1992, 1993, 1994 and the three months
ended March 31, 1995, Fixed Charges exclude $42 million, $37 million,
$31 million, $37 million and $7 million, respectively, of interest expense
attributable to debt issued by the Mobil Oil Corporation Employee Stock Owner-
ship Plan Trust and guaranteed by Mobil.
(a) Excludes the favorable effect of $205 million of interest benefits from the
resolution of prior-period tax issues.
</TABLE>
MOBIL - 18 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> ART. 5 FDS FOR 1ST QUARTER 1995 10-Q
This schedule contains summary financial information extracted from the
March 31, 1995 Form 10-Q, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000067182
<NAME> MOBILCORP/ B. Johnson
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 458
<SECURITIES> 0
<RECEIVABLES> 6,412
<ALLOWANCES> 0
<INVENTORY> 3,349
<CURRENT-ASSETS> 11,150
<PP&E> 55,056
<DEPRECIATION> 29,183
<TOTAL-ASSETS> 42,290
<CURRENT-LIABILITIES> 13,248
<BONDS> 4,765
<COMMON> 886
0
739
<OTHER-SE> 16,137
<TOTAL-LIABILITY-AND-EQUITY> 42,290
<SALES> 17,402 <F1>
<TOTAL-REVENUES> 17,627 <F1>
<CGS> 10,003
<TOTAL-COSTS> 10,672
<OTHER-EXPENSES> 4,354
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115
<INCOME-PRETAX> 1,230
<INCOME-TAX> 594
<INCOME-CONTINUING> 636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 636
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.54
<FN>
<F1> SALES AND TOTAL REVENUES INCLUDE $1,897 MILLION OF EXCISE TAXES
</FN>
</TABLE>
