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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, 1996
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 30, 1996, the
latest practicable date, was 394,346,646.
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<PAGE>
MOBIL CORPORATION
Form 10-Q
Quarterly Report
March 31, 1996
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements
Consolidated Statement of Income for the
Three Months Ended March 31, 1995 and 1996 ... 1
Consolidated Balance Sheet at December 31,
1995 and March 31, 1996 ...................... 2
Consolidated Statement of Cash Flows for the
Three Months Ended March 31, 1995 and 1996 ... 3
Notes to Condensed Consolidated Financial
Statements ................................... 4
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition .......... 5
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ................................ 11
Item 2. Changes in Securities ............................ 12
Item 3. Defaults Upon Senior Securities .................. 12
Item 4. Submission of Matters to a Vote of Security
Holders ........................................ 12
Item 5. Other Information ................................ 12
Item 6. Exhibits and Reports on Form 8-K ................. 12
SIGNATURE .................................................. 14
EXHIBIT INDEX .............................................. 15
Exhibit 11. Computation of Earnings per Common Share ..... 16
Exhibit 12. Computation of Ratio of Earnings to Fixed
Charges .................................... 17
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
MOBIL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per-share amounts)
For the Three Months
Ended March 31,
--------------------
1995 1996
------- -------
Revenues
Sales and services (a) .................................. $17,402 $18,528
Income from equity investments, asset sales,
interest and other .................................... 225 172
------- -------
Total Revenues ........................................ 17,627 18,700
------- -------
Costs and Expenses
Crude oil, products and operating
supplies and expenses ................................. 10,003 10,671
Exploration expenses .................................... 95 76
Selling and general expenses ............................ 1,256 1,126
Depreciation, depletion and amortization ................ 669 655
Interest and debt discount expense ...................... 115 116
Taxes other than income taxes (a) ....................... 4,259 4,534
Income taxes ............................................ 594 786
------- -------
Total Costs and Expenses .............................. 16,991 17,964
------- -------
Net Income ................................................ $ 636 $ 736
======= =======
Net Income Per Common Share (b) ........................... $ 1.57 $ 1.83
======= =======
Dividends Per Common Share ................................ $ .85 $ .925
======= =======
Notes:
(a) Includes excise and state gasoline
taxes of ............................................ $ 1,897 $ 2,137
(b) Based on net income less preferred stock
dividend requirements of ............................ $ 14 $ 14
divided by the weighted average number of common
shares outstanding (000's) of ....................... 395,842 394,488
The accompanying notes are an integral part of
these condensed consolidated financial
statements.
MOBIL - 1 -
<PAGE>
MOBIL CORPORATION
CONSOLIDATED BALANCE SHEET
(In millions)
Dec. 31, Mar. 31,
ASSETS 1995 1996
-------- --------
Current Assets
Cash and cash equivalents ................................ $ 498 $ 620
Accounts and notes receivable ............................ 7,316 7,459
Inventories .............................................. 3,287 3,089
Prepaid expenses and other current assets ................ 642 733
Deferred income taxes .................................... 313 299
------- -------
Total Current Assets ................................... 12,056 12,200
Investments and Long-Term Receivables ...................... 4,184 4,198
Properties, Plants and Equipment, at cost................... 51,719 52,444
Less: Accumulated Depreciation, Depletion and Amortization . 26,869 27,509
------- -------
Net Properties, Plants and Equipment ....................... 24,850 24,935
Deferred Charges and Other Assets .......................... 1,048 991
------- -------
Total Assets ........................................... $42,138 $42,324
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt .......................................... $ 2,127 $ 2,259
Accounts payable ......................................... 5,358 5,302
Accrued liabilities ...................................... 2,703 2,594
Income, excise, state gasoline and other taxes payable ... 2,676 2,652
Deferred income taxes .................................... 190 152
------- -------
Total Current Liabilities .............................. 13,054 12,959
Long-term Debt ............................................. 4,629 4,674
Reserves for Employee Benefits ............................. 1,624 1,594
Accrued Restoration, Removal and Environmental Costs ....... 1,254 1,257
Deferred Credits and Other Noncurrent Obligations .......... 884 874
Deferred Income Taxes ...................................... 2,647 2,666
Minority Interest in Subsidiary Companies .................. 95 97
------- -------
Total Liabilities ...................................... 24,187 24,121
------- -------
Shareholders' Equity
Preferred stock (ESOP-related) -- shares issued and
outstanding: 92,864 at December 31, 1995 and
91,536 at March 31, 1996 ............................... 722 712
Unearned employee compensation (ESOP-related) ............ (411) (399)
Common stock -- $2.00 par value; shares authorized:
600,000,000; shares issued: 443,905,531 at December 31,
1995 and 444,520,997 at March 31, 1996 ................. 888 889
Capital surplus .......................................... 1,396 1,424
Earnings retained in the business ........................ 17,745 18,102
Cumulative foreign exchange translation adjustment ....... (27) (98)
Common stock held in treasury, at cost -- shares:
49,345,650 at December 31, 1995 and 49,917,650 at
March 31, 1996 ... ..................................... (2,362) (2,427)
------- -------
Total Shareholders' Equity ............................. 17,951 18,203
------- -------
Total Liabilities and Shareholders' Equity ................. $42,138 $42,324
======= =======
The accompanying notes are an integral part of
these condensed consolidated financial
statements.
MOBIL - 2 -
<PAGE>
MOBIL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
For the Three Months
Ended March 31,
-------------------
1995 1996
------- -------
Cash Flows from Operating Activities
Net Income ......................................... $ 636 $ 736
Adjustments to reconcile to net cash from
operating activities:
Depreciation, depletion and amortization ....... 669 655
Deferred income taxes .......................... (93) 13
Earnings (greater) less than dividends from
equity affiliates ............................ (19) 65
Exploration expenses (includes noncash
charges: 1995-$13; 1996-$8) ................. 95 76
Gain on sales of properties, plants and
equipment and other assets ................... (56) (10)
Increase in working capital items............... (303) (273)
Other, net ..................................... 79 56
------- -------
Net Cash from Operating Activities ................... 1,008 1,318
------- -------
Cash Flows from Investing Activities
Capital and exploration expenditures ............... (818) (912)
Proceeds from sales of properties, plants and
equipment and other assets ....................... 142 130
Payments attributable to investments and
long-term receivables ............................ (81) (105)
------- -------
Net Cash Used in Investing Activities ................ (757) (887)
------- -------
Cash Flows from Financing Activities
Cash dividends ..................................... (351) (379)
Proceeds from borrowings having original
terms greater than three months .................. 350 303
Repayments of borrowings having original
terms greater than three months .................. (316) (141)
Increase (decrease) in other borrowings ............ 59 (55)
Proceeds from issuance of common stock ............. 17 29
Purchase of common stock for treasury .............. (58) (65)
------- -------
Net Cash Used in Financing Activities ................ (299) (308)
------- -------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents ................................... (25) (1)
------- -------
Net (Decrease) Increase in Cash and Cash Equivalents.. (73) 122
Cash and Cash Equivalents - Beginning of Period ...... 531 498
------- -------
Cash and Cash Equivalents - End of Period ............ $ 458 $ 620
======= =======
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Memo:
Net cash from operating activities .................. $ 1,008 $ 1,318
Net cash used in investing activities ............... (757) (887)
Cash dividends ...................................... (351) (379)
------- -------
(Shortfall) excess of cash from operating activities
over investing activities and dividends ........... $ (100) $ 52
======= =======
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The accompanying notes are an integral part of
these condensed consolidated financial
statements.
MOBIL - 3 -
<PAGE>
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, 1995.
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. Supplementary Cash Flow Data
The table below details the components of the line "Increase 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.
----------------------------------------------------------------------
(In millions) For the Three Months
Ended March 31,
--------------------
1995 1996
----- -----
Changes in Working Capital Items
(Increases)/decreases
Accounts and notes receivable ................. $ 228 $(298)
Inventories ................................... 13 172
Prepaid expenses and other current assets ..... (92) (91)
Accounts payable .............................. (625) 40
Accrued liabilities ........................... 109 (95)
Income, excise, state gasoline and
other taxes payable ......................... 64 (1)
----- -----
Increase in working capital items ............. $(303) $(273)
===== =====
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MOBIL - 4 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
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REVENUES BY SEGMENT First Quarter
(In millions) Incr./
(Decr.)
1995 1996 %
------ ------ ----
Exploration & Producing ........................... $ 1,827 $ 2,061 13
Marketing & Refining .............................. 14,330 15,740 10
Chemical .......................................... 1,351 819 (39)
Corporate & Other ................................. 119 80 (33)
------- -------
Total Revenues .................................. $17,627 $18,700 6
======= =======
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RESULTS OF OPERATIONS:
REPORTED/OPERATING EARNINGS First Quarter
(In millions) _________________ Incr./
1995 1996 (Decr.)
------ ------ ------
Petroleum Operations
E&P - United States ............................ $ 82 $ 155 $ 73
- International ............................ 295 357 62
----- ----- -----
Total E&P ...................................... 377 512 135
----- ----- -----
M&R - United States ............................ - 59 59
- International ............................ 146 181 35
----- ----- -----
Total M&R ...................................... 146 240 94
----- ----- -----
Total Petroleum .................................. 523 752 229
Chemical ......................................... 174 70 (104)
Corporate and Other (a) .......................... 4 (28) (32)
Net Financing Expense ............................ (65) (58) 7
----- ----- -----
Net Income ....................................... $ 636 $ 736 $ 100
===== ===== =====
(a) Corporate and Other includes the results from Real Estate operations,
Mining and Minerals, administrative expenses and other corporate items.
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CONSOLIDATED RESULTS OVERVIEW
FIRST QUARTER 1996 COMPARED WITH FIRST QUARTER 1995
Consolidated first quarter reported net income was $736 million, an increase
of $100 million, or 16%, from the $636 million reported in the first quarter of
1995. There were no special items in either period. Earnings per common share
for the first quarter were $1.83 versus $1.57 in the comparable period of 1995.
This quarter's improvement reflected higher income in the petroleum sector,
largely driven by improved industry fundamentals, partly offset by higher
MOBIL - 5 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
scheduled and unscheduled refinery downtime and lower Chemical income. Mobil's
worldwide average crude oil price was about $1.85 per barrel higher than last
year and the U.S. natural gas price strengthened by more than $.80 per thousand
cubic feet, both reflecting strong demand due to the colder winter weather in
the Northern Hemisphere. Production volumes were up almost 40 thousand barrels
per day of oil equivalent as a result of streaming of new fields in the United
Kingdom in 1995 and higher production rates in Nigeria. Worldwide refining
margins have been stronger this year; however, marketing margins in two of
Mobil's key markets, the United Kingdom and Japan, have been weaker, reflecting
intense competitive pressures. The decline in Chemical income is mainly due to
lower worldwide polyethylene resin margins, principally reflecting a weakening
from last year's exceptionally strong margins, and the absence of income from
the divested plastics business.
Progress continues towards implementing the various restructuring programs
announced since May of last year. Controllable cash operating expenses were down
in the quarter by about $70 million pre-tax versus last year, after absorbing
cost increases for inflation, higher volumes and certain current period charges
related to the implementation of the restructuring programs.
Plans are being developed to form major alliances in two mature operating
areas, Europe and the United States, each structured to maximize the value of
Mobil's current asset base. In Europe, Mobil and British Petroleum jointly
announced a plan to combine the two companies' fuels and lubes businesses. This
alliance, pending government approvals, should enable both companies to achieve
efficiencies and scale economics otherwise unavailable to either company on a
stand-alone basis.
Additionally, in the U.S., Mobil is actively negotiating the sale of its
natural gas processing plants to, and the formation of an energy marketing joint
venture with, PanEnergy Corporation. This joint venture will form the third
largest gas marketing operation in North America with sales of over 7 billion
cubic feet of natural gas per day.
Mobil announced several developments around the world that are consistent with
one of the Company's primary upstream goals, to profitably grow production and
reserves. Since the beginning of the year, the Company has: (1) completed a
successful exploration bid for the 445,000 acre La Ceiba block located on the
eastern shore of Lake Maracaibo in Venezuela and signed exploration and
exploitation license contracts for two lots in Peru; (2) acquired interests in
five licenses awarded in Norway's 15th licensing round; (3) made an offer to
acquire Ampolex Limited, an Australian exploration and producing company; (4)
awarded contracts for the engineering of, procurement for and construction of
the offshore pipeline and platform facilities and the onshore liquefied natural
gas (LNG) plant at Ras Laffan, Qatar; and (5) acquired a 25% interest in the
Tengiz oil field in Kazakstan, which has estimated recoverable reserves of six
billion barrels and began producing in 1991. Additionally, in Chemical, Mobil
announced plans to increase worldwide oriented polypropylene (OPP) manufacturing
capacity by about one-third.
Market fundamentals are likely to remain volatile in the near term. Mobil's
strategies are designed to enhance shareholder value by improving returns from
the existing asset base while pursuing profitable growth opportunities around
the world.
Worldwide revenues of $18,700 million were $1,073 million higher than
revenues in the first quarter of 1995. This increase was due to the effects of
higher worldwide selling prices for crude oil and petroleum products, higher
U.S. natural gas prices and higher petroleum product sales volumes. The effects
of higher product prices and volumes were partly offset by lower Chemical
MOBIL - 6 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
product prices and the absence of revenues from the divested plastics business.
Crude oil, products and operating supplies and expenses increased $668 million
to $10,671 million, primarily due to the higher cost of crude oil and higher
volume-related expenses, partly offset by the absence of expenses from the
divested plastics business. Exploration expenses of $76 million were $19 million
lower than last year, primarily due to timing of program execution. Taxes other
than income taxes increased $275 million to $4,534 million, due to the effects
of higher prices and sales volumes and an increase in the duty tax rate in the
United Kingdom. Income tax expense increased $192 million principally due to
this quarter's higher level of pre-tax income.
Exploration and Producing
Exploration and Producing income of $512 million was $135 million higher than
in the first quarter of 1995.
In the United States, income was $155 million, up $73 million, primarily
resulting from higher crude oil and natural gas prices, which were somewhat
moderated by the impact of certain opportunity losses on forward sales made as
part of the Company's risk management strategy. This improvement was partially
offset by lower production volumes, primarily resulting from prior asset
disposals and from natural field declines.
International income of $357 million was $62 million higher, principally due
to higher prices, higher volumes and lower exploration expenses resulting from
timing of program execution. Notably, Nigerian crude oil volumes were up 60 TBD
(44%) reflecting additional production from the Ubit field, in part due to the
absence of last year's operational problems, and from other fields streamed in
1995. Natural gas production also increased, particularly in Europe, primarily
due to the streaming of three North Sea fields in the United Kingdom and an
increase in demand resulting from colder weather this year. This helped offset
a decline in U.K. natural gas prices.
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Exploration and Producing First Three Months
Selected Operating Data Incr./
(Decr.)
1995 1996 Vol. %
----- ----- ----- ---
Net Crude Oil and NGL
Production (TBD) - U.S. ..................... 290 269 (21) (7)
- Intl. .................... 510 553 43 8
----- ----- ---
Total ....................................... 800 822 22 3
===== ===== ===
Net Natural Gas
Production (MMCFD) - U.S. ..................... 1,494 1,428 (66) (4)
- Intl. .................... 3,544 3,687 143 4
----- ----- ---
Total ....................................... 5,038 5,115 77 2
===== ===== ===
Natural Gas Sales
(MMCFD) - U.S. ..................... 3,699 2,847 (852)(23)
- Intl. .................... 3,633 3,994 361 10
----- ----- ---
Total ....................................... 7,332 6,841 (491) (7)
===== ===== ===
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MOBIL - 7 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
Marketing and Refining
Marketing and Refining income of $240 million was $94 million higher than in
the first quarter of 1995.
United States income was $59 million this year versus breakeven last year. The
improvement reflects favorable expense performance, 6% growth in auto gasoline
and distillate sales to trade and higher gross margins. These factors were
partially offset by higher scheduled and unscheduled refinery downtime. The
scheduled refinery downtime principally reflected preparation at the Torrance
refinery for the introduction of new, mandated gasoline formulations in the
California market.
International income of $181 million was $35 million higher. The improvement
was mainly due to stronger refining margins, lower expenses, ongoing business
initiatives and higher trade sales in the Asia-Pacific region. These favorable
items were partly offset by weaker marketing margins, notably in the United
Kingdom as a result of intense competitive pressures, and in Japan stemming from
the impending market deregulation of oil product imports. In addition, earnings
were unfavorably impacted by a higher level of planned and unscheduled downtime
at several refineries.
- --------------------------------------------------------------------------------
Marketing and Refining First Three Months
Selected Operating Data Incr./
(Decr.)
1995 1996 Vol. %
----- ----- --- --
Petroleum Product Sales (TBD) (a)
- U.S. .......... 1,259 1,281 22 2
- Intl. ......... 1,899 2,019 120 6
----- ----- ---
Total ..................... 3,158 3,300 142 4
===== ===== ===
Refinery Runs (TBD)
- U.S. .......... 904 877 (27) (3)
- Intl. ......... 1,244 1,205 (39) (3)
----- ----- ---
Total ..................... 2,148 2,082 (66) (3)
===== ===== ===
(a) includes supply/other sales
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MOBIL - 8 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
Chemical
Chemical income of $70 million was $104 million lower than last year's first
quarter. This reflected a decline from last year's exceptionally strong
worldwide polyethylene resin margins, the expiration of the tax holiday for our
Yanpet petrochemicals joint venture in Saudi Arabia, and the absence of income
from divested businesses.
Corporate and Other
Corporate and Other expense was $28 million compared with $4 million of income
last year when an office complex in Arlington, Virginia was sold. Corporate and
Other also included certain nonrecurring, current period charges related to the
implementation of the restructuring programs.
Net Financing Expense
Net Financing Expense of $58 million was $7 million lower, principally due to
the favorable impact of lower average net debt balances.
DISCUSSION OF FINANCIAL CONDITION
At March 31, 1996, total current assets of $12,200 million were $144 million
higher than at year-end 1995. Accounts and notes receivable increased primarily
due to higher prices, and prepaid expenses increased due to the normal annual
pattern of prepayments made in the first quarter. These increases, together with
higher cash balances, were partly offset by lower crude oil and petroleum
product inventories, and a decrease in Chemical inventories and receivables
resulting from the sale of the resin marketing business.
Net properties, plants and equipment increased $85 million to $24,935 million
as capital expenditures were largely offset by depreciation and asset sales.
Total debt of Mobil and its subsidiaries was $6,933 million at March 31, 1996,
up $177 million from year-end 1995. The debt-to-capitalization ratio was 27% at
March 31, 1996, unchanged from year-end 1995.
Shareholders' equity rose $252 million during the first three months of 1996.
Earnings retained in the business increased $357 million as income exceeded
common and preferred stock dividends. The cost of common stock held in the
treasury increased as 572,000 shares were purchased on the open market to offset
the dilutive effects of stock options, and the cumulative foreign exchange
translation account decreased due to the strengthening of the U.S.
dollar.
During the first three months of 1996, net cash generated from operating
activities was $1,318 million, $52 million more than the cash requirements for
investing activities and dividends. (Refer to table on page 3.)
MOBIL - 9 -
<PAGE>
DISCUSSION OF FINANCIAL CONDITION - continued
Capital and Exploration Expenditures for the first quarter of 1996 were $912
million, an increase of $94 million from the comparable period last year. Full
year 1996 capital and exploration expenditures are expected to be approximately
$4.6 billion (U.S.- 25%; International- 75%), plus an estimated additional $0.6
billion for cash investments in equity companies. At March 31, 1996, the
unspent balance of total appropriations for capital expenditures was $4.4
billion, unchanged from year-end.
- ----------------------------------------------------------------------------
CAPITAL AND EXPLORATION
EXPENDITURES First Three Months
(In millions)
1995 1996
------ ------
Petroleum Operations
Exploration & Producing - U.S. ................ $ 113 $ 118
- Intl. ............... 375 411
Marketing & Refining - U.S. ................ 124 82
- Intl. ............... 143 227
Chemical ................................................ 40 52
Corporate & Other ....................................... 23 22
------ ------
Total Capital and Exploration Expenditures........... 818 912
====== ======
Memo:
Exploration expenses charged
to income, included above - U.S. ................ 18 9
- Intl. ............... 77 67
------ ------
Total Exploration Expenses .......................... 95 76
------ ------
----------------------------------------------------------------------------
Return on average shareholders' equity was 13.8% for the twelve month period
ended March 31, 1996, compared with 13.5% for the calendar year 1995. Return on
average capital employed for the twelve month period ended March 31, 1996 was
11.0%, compared with 10.9% for the calendar year 1995.
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, 1996, 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. $811 million of
Euro-Medium-Term Notes and bonds having a principal amount of 30 billion
Japanese yen are also in place.
At March 31, 1996, 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 refinance its existing indebtedness.
MOBIL - 10 -
<PAGE>
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 March 13, 1996, Mobil Oil Corporation received a proposed Consent Agreement
and Enforcement Order from the Maine Department of Environmental Protection (the
"MEDEP") which (1) alleges that the operation of a service station in Saco,
Maine violated MEDEP's regulations by reason of (a) failure to report evidence
of a leak, (b) discharge of oil to the environment, (c) failure to maintain leak
detection equipment and (d) failure to annually test electronic leak detection
equipment, and (2) proposes a penalty of $127,500.
On March 28, 1996, the Department of Justice filed a civil action in the U.S.
District Court for the Middle District of Florida, Tampa Division, alleging that
the operation of Mobil Mining and Minerals Company's facilities located in South
Fort Meade, Fort Meade and Nichols, Florida, violated the Clean Water Act by
reason of (a) discharges of pollutants into navigable waters of the United
States in violation of permits issued under that Act and (b) unpermitted point
source discharges. The maximum potential amount of the penalties sought in the
action, based upon the maximum statutory penalty amount of $25,000 per day per
violation, would be approximately $6.5 million.
On March 28, 1996, the Department of Justice filed a civil action in the U.S.
District Court for the Eastern Division of New York alleging that the operation
of Mobil Oil Corporation's Port Mobil facility in Staten Island, New York
violated the Resources Conservation and Recovery Act by reason of (a) failure to
obtain a hazardous waste permit or interim status, (b) failure to install a
groundwater recovery system in a timely manner, (c) failure to obtain
groundwater samples in a timely manner, and (d) failure to test waste properly
and develop a waste analysis plan. The maximum potential amount of the penalties
sought in the action, based upon the maximum statutory penalty amount of $25,000
per day per violation, would be approximately $20 million.
On May 2, 1996, Mobil Oil Corporation received an Administrative Order and
Notice of Civil Penalty Assessment from the New Jersey Department of
Environmental Protection alleging that the operations of Mobil Oil
MOBIL - 11 -
<PAGE>
Legal Proceedings - continued
Corporation's Paulsboro, New Jersey refinery had violated various Clean Air Act
requirements. The penalty sought is $153,000.
The foregoing proceedings are not of material importance in relation to
Mobil's accounts and are described in compliance with SEC rules requiring
disclosure of such proceedings although not material.
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.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of the Shareholders of Mobil Corporation on May 9, 1996,
the following matters were voted upon:
A shareholder resolution to limit the authority of Mobil's Board of Directors
to issue preferred stock was defeated with 183,632,875 votes against,
126,990,685 votes in favor and 5,309,590 votes abstained.
A shareholder resolution calling for cumulative voting in the election of
Mobil's Directors was defeated with 234,628,894 votes against, 74,080,097 votes
in favor and 7,066,619 votes abstained.
A shareholder resolution calling for the discontinuance of the use of employee
stock options was defeated with 290,926,806 votes against, 19,050,807 votes in
favor and 5,939,069 votes abstained.
The text of the above proposals is incorporated by reference to Items 3, 4 and
5 of Mobil's definitive Proxy Statement dated March 18, 1996, filed with the SEC
pursuant to Regulation 14A on March 18, 1996.
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
MOBIL - 12 -
<PAGE>
Exhibits and Reports on Form 8-K - continued
Reports on Form 8-K.
Mobil filed the following Current Reports on Form 8-K during and subsequent
to the end of the first quarter:
Date of 8-K Description of 8-K
January 22, 1996 Submitted a copy of the Mobil News Release dated
January 22, 1996, reporting estimated earnings for the
fourth quarter and full year of 1995.
February 14, 1996 Submitted a copy of the Mobil News Release dated
February 14, 1996, announcing that Mobil Exploration and
Producing Australia Pty. Ltd. (MEPA) has acquired a
substantial position in Ampolex Limited through the purchase
of its listed securities and has made a proposal to acquire
the Australian oil and gas exploration and producing
company.
February 29, 1996 Submitted a copy of the Mobil News Release dated
February 29, 1996, announcing that BP and Mobil will combine
their European operations in the refining and marketing of
fuels and lubricants.
April 23, 1996 Submitted a copy of the Mobil News Release issued
April 22, 1996, reporting Mobil's estimated earnings for the
first quarter of 1996, and the Mobil News Release issued
April 22, 1996, correcting certain Petroleum Product Sales
numbers in Table 6 of the above referenced News Release.
MOBIL - 13 -
<PAGE>
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/ George Broadhead
NAME AND TITLE George Broadhead,
Acting Controller;
Principal Accounting Officer
DATE May 10, 1996
MOBIL - 14 -
<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 - 15 -
Exhibit 11.
MOBIL CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(In millions of dollars except per-share amounts;
number of shares in thousands)
For the Three Months
Ended March 31,
--------------------
Primary 1995 1996
- ------- -------- --------
Net income ............................................ $ 636 $ 736
Less dividends on preferred stock ..................... 14 14
-------- --------
Net income applicable to common shares ................ $ 622 $ 722
======== ========
Weighted average number of primary common shares
Outstanding ......................................... 395,842 394,488
Issuable on assumed exercise of stock options ....... 3,409 5,087
-------- --------
Total ............................................ 399,251 399,575
======== ========
Primary earnings per common share ..................... $ 1.56 $ 1.81
======== ========
Fully Diluted
- -------------
Net income ............................................ $ 636 $ 736
Less additional contribution to ESOP .................. 6 5
-------- --------
Adjusted net income applicable to common shares ....... $ 630 $ 731
======== ========
Weighted average number of primary common shares ...... 399,251 399,575
Increment to assumed exercise of stock options to
reflect maximum dilutive effect ..................... 665 227
Assumed conversion of preferred stock ................. 9,507 9,154
-------- --------
Total ............................................ 409,423 408,956
======== ========
Fully diluted earnings per common share ............... $ 1.54 $ 1.79
======== ========
- -----------
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.
MOBIL - 16 -
Exhibit 12.
MOBIL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions)
Three
Months
Ended
Year Ended December 31, March 31,
------------------------------------------ --------
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
Income Before Change in
Accounting Principle(s) $1,920 $1,308 $2,084 $1,759 $2,376 $ 736
Add:
Income taxes ............ 2,105 1,567 1,931 1,919 2,015 786
Portion of rents
representative of
interest factor ....... 344 319 339 340 368 92
Interest and debt
discount expense ...... 713 612 529(a) 461 467 116
Earnings (greater) less
than dividends from
equity affiliates...... (151) 36 265 (40) (51) 65
------ ------ ------ ------ ------ ------
Income as Adjusted ...... $4,931 $3,842 $5,148 $4,439 $5,175 $1,795
====== ====== ====== ====== ====== ======
Fixed Charges:
Interest and debt
discount expense ...... $ 713 $ 612 $ 529(a)$ 461 $ 467 $ 116
Capitalized interest .... 20 42 42 37 47 12
Portion of rents
representative of
interest factor ....... 344 319 339 340 368 92
------ ------ ------ ------ ------ ------
Total Fixed Charges ..... $1,077 $ 973 $ 910 $ 838 $ 882 $ 220
====== ====== ====== ====== ====== ======
Ratio of Earnings to
Fixed Charges ......... 4.6 3.9 5.7(a) 5.3 5.9 8.2
====== ====== ====== ====== ====== ======
Note:
For the years ended December 31, 1991, 1992, 1993, 1994, 1995 and the three
months ended March 31, 1996, Fixed Charges exclude $42 million, $37 million, $31
million, $37 million, $28 million and $7 million, respectively, of interest
expense attributable to debt issued by the Mobil Oil Corporation Employee Stock
Ownership 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.
MOBIL - 17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS FOR PERIOD ENDED MARCH 31, 1996 10-Q
This schedule contains summary financial information extracted
from the March 31, 1996 Form 10-Q, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000067182
<NAME> MOBILCORP/JNICHOLS
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 620
<SECURITIES> 0
<RECEIVABLES> 7,459
<ALLOWANCES> 0
<INVENTORY> 3,089
<CURRENT-ASSETS> 12,200
<PP&E> 52,444
<DEPRECIATION> 27,509
<TOTAL-ASSETS> 42,324
<CURRENT-LIABILITIES> 12,959
<BONDS> 4,674
0
712
<COMMON> 889
<OTHER-SE> 16,602
<TOTAL-LIABILITY-AND-EQUITY> 42,324
<SALES> 18,528<F1>
<TOTAL-REVENUES> 18,700<F1>
<CGS> 10,671
<TOTAL-COSTS> 11,326
<OTHER-EXPENSES> 4,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116
<INCOME-PRETAX> 1,522
<INCOME-TAX> 786
<INCOME-CONTINUING> 736
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 736
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.79
<FN>
<F1>Sales and total revenues include $2,137 million of excise and state gasoline
taxes
</FN>
</TABLE>
