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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, 1997
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, 1997, the
latest practicable date, was 393,395,035.
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<PAGE>
MOBIL CORPORATION
Form 10-Q
Quarterly Report
March 31, 1997
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, 1996 and 1997 ... 1
Consolidated Balance Sheet at December 31,
1996 and March 31, 1997 ...................... 2
Consolidated Statement of Cash Flows for the
Three Months Ended March 31, 1996 and 1997 ... 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 ................ 13
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)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------
1996 1997
------- -------
<S> <C> <C>
Revenues
Sales and services (a) .................................... $18,528 $15,935
Income from equity investments, asset sales,
interest and other ...................................... 172 251
------- -------
Total Revenues .......................................... 18,700 16,186
------- -------
Costs and Expenses
Crude oil, products and operating
supplies and expenses ................................... 10,671 10,468
Exploration expenses ...................................... 76 75
Selling and general expenses .............................. 1,126 806
Depreciation, depletion and amortization .................. 655 643
Interest and debt discount expense ........................ 116 98
Taxes other than income taxes (a) ......................... 4,534 2,406
Income taxes .............................................. 786 864
------- -------
Total Costs and Expenses ................................ 17,964 15,360
------- -------
Net Income .................................................. $ 736 $ 826
======= =======
Net Income Per Common Share (b) ............................. $ 1.83 $ 2.06
======= =======
Dividends Per Common Share .................................. $ .925 $ 1.06
======= =======
Notes:
(a) Includes excise and state gasoline
taxes of .............................................. $ 2,137 $ 1,422
(b) Based on net income less preferred stock
dividend requirements of .............................. $ 14 $ 13
divided by the weighted average number of common
shares outstanding (000's) of ......................... 394,488 394,075
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
MOBIL - 1 -
<PAGE>
<TABLE>
<CAPTION>
MOBIL CORPORATION
CONSOLIDATED BALANCE SHEET
(In millions)
Dec. 31, Mar. 31,
ASSETS 1996 1997
-------- --------
<S> <C> <C>
Current Assets
Cash and cash equivalents ................................ $ 808 $ 966
Accounts and notes receivable ............................ 8,192 6,133
Inventories .............................................. 3,017 2,453
Prepaid expenses and other current assets ................ 627 720
Deferred income taxes .................................... 251 241
------- -------
Total Current Assets ................................... 12,895 10,513
Investments and Long-Term Receivables ...................... 5,078 7,238
Properties, Plants and Equipment, at cost................... 55,127 50,814
Less: Accumulated Depreciation, Depletion and Amortization . 27,648 25,407
------- -------
Net Properties, Plants and Equipment ....................... 27,479 25,407
Deferred Charges and Other Assets .......................... 956 868
------- -------
Total Assets ........................................... $46,408 $44,026
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt .......................................... $ 3,425 $ 3,971
Accounts payable ......................................... 5,935 4,320
Accrued liabilities ...................................... 2,968 2,406
Income, excise, state gasoline and other taxes payable ... 2,615 2,006
Deferred income taxes .................................... 305 207
------- -------
Total Current Liabilities .............................. 15,248 12,910
Long-Term Debt ............................................. 4,450 4,386
Reserves for Employee Benefits ............................. 1,681 1,593
Accrued Restoration, Removal and Environmental Costs ....... 1,240 1,234
Deferred Credits and Other Noncurrent Obligations .......... 1,255 1,293
Deferred Income Taxes ...................................... 3,416 3,408
Minority Interest in Subsidiary Companies .................. 46 72
------- -------
Total Liabilities ...................................... 27,336 24,896
------- -------
Shareholders' Equity
Preferred stock (ESOP-related) -- shares issued and
outstanding: 88,168 at December 31, 1996 and
87,240 at March 31, 1997 ............................... 686 678
Unearned employee compensation (ESOP-related) ............ (365) (355)
Common stock -- $2.00 par value; shares authorized:
600,000,000; shares issued: 445,537,805 at December 31,
1996 and 446,428,336 at March 31, 1997 ................. 891 893
Capital surplus .......................................... 1,468 1,512
Earnings retained in the business ........................ 19,108 19,503
Cumulative foreign exchange translation adjustment ....... (73) (378)
Common stock held in treasury, at cost -- shares:
51,743,350 at December 31, 1996 and 52,425,850 at
March 31, 1997 ... ..................................... (2,643) (2,723)
------- -------
Total Shareholders' Equity ............................. 19,072 19,130
------- -------
Total Liabilities and Shareholders' Equity ................. $46,408 $44,026
======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
MOBIL - 2 -
<PAGE>
<TABLE>
<CAPTION>
MOBIL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
For the Three Months
Ended March 31,
-------------------
1996 1997
------- -------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income ......................................... $ 736 $ 826
Adjustments to reconcile to net cash from
operating activities:
Depreciation, depletion and amortization ....... 655 643
Deferred income taxes .......................... 13 (32)
Earnings less (greater) than dividends from
equity affiliates ............................ 65 (34)
Exploration expenses (includes noncash
charges: 1996-$8; 1997-$11) ................. 76 75
Gain on sales of properties, plants and
equipment and other assets ................... (10) (48)
Increase in working capital items............... (273) (492)
Other, net ..................................... 56 (25)
------- -------
Net Cash from Operating Activities ................... 1,318 913
------- -------
Cash Flows from Investing Activities
Capital and exploration expenditures ............... (912) (772)
Proceeds from sales of properties, plants and
equipment and other assets ....................... 130 81
Payments attributable to investments and
long-term receivables ............................ (105) (180)
------- -------
Net Cash Used in Investing Activities ................ (887) (871)
------- -------
Cash Flows from Financing Activities
Cash dividends ..................................... (379) (431)
Proceeds from borrowings having original
terms greater than three months .................. 303 354
Repayments of borrowings having original
terms greater than three months .................. (141) (612)
(Decrease) increase in other borrowings ............ (55) 854
Proceeds from issuance of common stock ............. 29 46
Purchase of common stock for treasury .............. (65) (80)
------- -------
Net Cash (Used in) Provided by Financing Activities... (308) 131
------- -------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents ................................... (1) (15)
------- -------
Net Increase in Cash and Cash Equivalents............. 122 158
Cash and Cash Equivalents - Beginning of Period ...... 498 808
------- -------
Cash and Cash Equivalents - End of Period ............ $ 620 $ 966
======= =======
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Memo:
Net cash from operating activities .................. $ 1,318 $ 913
Net cash used in investing activities ............... (887) (871)
Cash dividends ...................................... (379) (431)
------- -------
Excess (Shortfall) of cash from operating activities
Over investing activities and dividends ........... $ 52 $ (389)
======= =======
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</TABLE>
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, 1996.
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.
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(In millions) For the Three Months
Ended March 31,
--------------------
1996 1997 (a)
----- -----
Changes in Working Capital Items
(Increases)/decreases
Accounts and notes receivable ................. $(298) $ 618
Inventories ................................... 172 (138)
Prepaid expenses and other current assets ..... (91) (182)
Accounts payable .............................. 40 (463)
Accrued liabilities ........................... (95) (114)
Income, excise, state gasoline and
other taxes payable ......................... (1) (213)
----- -----
Increase in working capital items ............. $(273) $(492)
===== =====
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(a) The effects of the implementation of the Mobil-BP alliance have been
removed from these amounts.
MOBIL - 4 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
RESULTS OF OPERATIONS
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REPORTED EARNINGS First Quarter
(In millions) _________________ Incr./
1996 1997 (Decr.)
------ ------ ------
Petroleum Operations
E&P - United States ........................ $ 155 $ 224 $ 69
- International ........................ 357 470 113
----- ----- -----
Total E&P .................................. 512 694 182
----- ----- -----
M&R - United States ........................ 59 (42) (101)
- International ........................ 181 174 (7)
----- ----- -----
Total M&R .................................. 240 132 (108)
----- ----- -----
Total Petroleum .............................. 752 826 74
Chemical ..................................... 70 85 15
Corporate and Financing (a)................... (86) (85) 1
----- ----- -----
Net Income ................................... $ 736 $ 826 $ 90
===== ===== =====
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OPERATING EARNINGS First Quarter
(Adjusted for Special Items) _________________ Incr./
(In millions) 1996 1997 (Decr.)
------ ------ ------
Petroleum Operations
E&P - United States ........................ $ 155 $ 224 $ 69
- International ........................ 357 470 113
----- ----- -----
Total E&P .................................. 512 694 182
----- ----- -----
M&R - United States ........................ 59 (42) (101)
- International ........................ 181 192 11
----- ----- -----
Total M&R .................................. 240 150 (90)
----- ----- -----
Total Petroleum .............................. 752 844 92
Chemical ..................................... 70 85 15
Corporate and Financing (a)................... (86) (85) 1
----- ----- -----
Operating Income Before Special Items......... $ 736 $ 844 $ 108
Special Items - (18) (18)
----- ----- -----
Net Income 736 $ 826 $ 90
===== ===== =====
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(a) Corporate and Financing includes the results from Real Estate operations
and Mining and Minerals (substantially all of these businesses were sold
in 1996), corporate administrative expenses, net financing expense and
other items.
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SPECIAL ITEMS First Quarter
(In millions)
1996 1997
Restructuring ....................................... $ - $ (18)
------ ------
Total Special Items ............................... $ - $ (18)
====== ======
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MOBIL - 5 -
<PAGE>
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REVENUES BY SEGMENT First Quarter
(In millions) Incr./
(Decr.)
1996 1997 %
------ ------ ----
Exploration & Producing ........................... $ 2,061 $ 2,131 3
Marketing & Refining .............................. 15,740 13,203 (16)(a)
Chemical .......................................... 819 807 (1)
Other ............................................. 80 45 (44)(b)
------- -------
Total Revenues .................................. $18,700 $16,186 (13)
======= =======
(a)Reflects the effects of the implementation of the Mobil-BP alliance in
Europe.
(b)Reflects the divestiture of real estate and mining and minerals businesses in
1996.
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CONSOLIDATED RESULTS OVERVIEW
FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996
Consolidated first quarter 1997 net income was $826 million, an increase of
$90 million from the $736 million reported in the first quarter of 1996.
Earnings per common share based on net income were $2.06, compared with $1.83 in
the first quarter of 1996. This year's first quarter net income included a
special charge of $18 million for restructuring costs associated with the
European downstream alliance with British Petroleum. There were no special items
in last year's first quarter. Excluding this year's special item, operating
earnings of $844 million increased $108 million, or 15%, from last year.
Mobil's first quarter results benefited from higher worldwide crude oil and
natural gas prices. Continued volume growth initiatives in all segments also
contributed to the improvement. International upstream volumes increased,
reflecting successful development programs in West Africa and last year's
acquisitions of Ampolex and an interest in the Tengiz field in the Republic of
Kazakstan. Natural gas production was also higher in Germany, primarily due to
new gas sales contracts in the former East Germany. Increased downstream product
trade sales volumes reflected market growth initiatives, primarily in the U.S.
and Asia-Pacific. In Chemical, volumes were higher for polyethylene and
paraxylene.
U.S. Marketing & Refining experienced a high concentration of scheduled
refinery turnarounds in the first quarter which negatively impacted net results
by about $65 million. The scheduled turnarounds are essentially complete for the
year and all refineries are operating normally.
Savings from expense initiatives were sufficient to offset the impacts of
inflation and higher purchased energy costs. In total, operating expenses were
up as the company incurred higher expenses for increased volumes and new
business development. However, Mobil's unit operating cost, on a dollar per
barrel of oil equivalent basis, was slightly less than last year's average.
Implementation of the downstream alliance with British Petroleum in Europe is
ahead of schedule. Businesses have been established, effective January 1, 1997,
in countries representing about 90% of the income of the overall venture.
Worldwide average crude oil and U.S. natural gas prices, although higher than
last year, declined sharply throughout the quarter. However, margins in many of
the downstream markets where Mobil has a large presence improved significantly
as a result of these price declines. Notwithstanding these trends, prices and
margins are likely to remain volatile, and Mobil continues to focus on internal
initiatives such as volume growth, expense reduction and better operating
performance to improve earnings.
MOBIL - 6 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
Worldwide revenues of $16,186 million were $2,514 million lower than last
year. This decrease was primarily due to the effects of the implementation of
the Mobil-BP European alliance which is accounted for on an equity basis. Apart
from the alliance implementation effects, revenues from Mobil's worldwide
downstream operations increased due to higher volumes and product prices,
primarily in the U.S. and Asia-Pacific. Upstream revenues were higher due to the
effects of higher worldwide prices and higher volumes in international areas,
partly offset by lower U.S. volumes. Chemical revenues declined as benefits from
higher polyethylene prices and volumes were more than offset by the absence of
revenues from divested businesses. Additionally, revenues decreased due to the
divestiture of Mobil's noncore real estate and mining businesses. Income from
equity investments, asset sales, interest and other increased primarily due to
higher income from equity affiliates.
Crude oil, products and operating supplies and expenses decreased $203 million
to $10,468 million. The decrease was due to the above mentioned effects of the
implementation of the Mobil-BP European alliance, partly offset by higher
average costs for crude oil, higher volume-related expenses and increased
spending for growth programs in new ventures. Selling and general expenses
declined $320 million to $806 million due to the effects of the implementation
of the Mobil-BP alliance, expense reductions associated with cost saving
initiatives and the effects of the above-mentioned divestitures of chemical,
real estate and mining businesses. Taxes other than income taxes decreased
$2,128 million to $2,406 million, as the effects of the implementation of the
Mobil-BP alliance were partly offset by the effects of higher worldwide volumes.
Income tax expense increased $78 million principally due to this quarter's
higher level of pre-tax income.
In February 1997, FAS 128 Earnings Per Share was issued and is effective for
financial statements ending after December 15, 1997. FAS 128 requires disclosure
of both earnings per common share and earnings per share giving effect to all
dilutive potential common shares. Had FAS 128 been effective at March 31, 1997,
the dilutive effects on Mobil's earnings per share would not have been material.
Exploration and Producing
Exploration & Producing income of $694 million was a record high for a
quarter, and was $182 million higher than 1996.
In the United States, income of $224 million increased $69 million, primarily
due to higher crude oil and natural gas prices. The benefits from higher prices
were partly offset by the effects of lower production volumes resulting from
asset sales and natural field declines.
International income of $470 million was $113 million higher, as higher prices
and volumes were partly offset by increased expenses for new venture areas.
- -------------------------------------------------------------------------------
Exploration and Producing First Three Months
Selected Operating Data Incr./
(Decr.)
1996 1997 Vol. %
----- ----- --------
Net Crude Oil and NGL
Production (TBD) - U.S. ...................... 269 235 (34)(13)
- Intl. ..................... 553 653 100 18
----- ----- ---
Total ........................................ 822 888 66 8
===== ===== ===
Net Natural Gas
Production (MMCFD) - U.S. ...................... 1,428 1,208 (220)(15)
- Intl. ..................... 3,687 3,747 60 2
----- ----- ---
Total ........................................ 5,115 4,955 (160) (3)
===== ===== ===
TOTAL NET PRODUCTION (TBDOE) ....................... 1,749 1,786 37 2
===== ===== ===
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MOBIL - 7 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
Marketing and Refining
Marketing & Refining income of $132 million was $108 million lower than 1996.
Excluding a first quarter 1997 special restructuring charge of $18 million for
costs associated with the European alliance with BP, operating earnings were
$150 million, $90 million lower than last year.
Operations in the United States experienced a loss of $42 million in the first
quarter versus earnings of $59 million in 1996. This year's operating loss was
primarily due to the timing of scheduled maintenance at four of Mobil's five
refineries, lower lubricant base stock margins and higher purchased fuel costs.
International operating earnings of $192 million were $11 million higher than
1996. In Europe, earnings improved primarily due to increased retail fuels
margins, mainly in the United Kingdom, and lower scheduled refinery downtime
costs. This improvement was largely offset by a decline in Asia-Pacific where
weaker refining margins and lower aromatics income in Singapore more than offset
improved marketing margins in several markets.
- -------------------------------------------------------------------------------
Marketing and Refining First Three Months
Selected Operating Data Incr./
(Decr.)
1996 1997 Vol. %
----- ----- --- --
Petroleum Product Sales (TBD) (a)
- U.S. ........ 1,281 1,358 77 6
- Intl. (b).... 2,019 1,988 (31) (2)(c)
----- ----- ---
Total ................... 3,300 3,346 46 1
===== ===== ===
Refinery Runs (TBD)
- U.S. ........ 877 860 (17) (2)
- Intl. (b).... 1,205 1,236 31 3
----- ----- ---
Total ................... 2,082 2,096 14 1
===== ===== ===
(a) Includes supply/other sales.
(b) Includes Mobil's share for the European alliance with BP.
(c) Unusually high seasonal supply inventory liquidations in Europe in 1996.
- -------------------------------------------------------------------------------
Chemical
Chemical income of $85 million was $15 million above last year as increased
polyethylene volumes and margins, coupled with higher paraxylene volumes, more
than offset lower paraxylene margins. Paraxylene volumes were up due to the
effects of increased capacity at the Chalmette, Louisiana, facility.
Corporate and Financing
Corporate and Financing expenses of $85 million were essentially unchanged
from last year. The unfavorable effect of a higher average debt balance on
interest expense was offset by the absence of charges related to our staff
redesign project which were included in last year's operating results.
MOBIL - 8 -
<PAGE>
CONSOLIDATED RESULTS OVERVIEW - continued
DISCUSSION OF FINANCIAL CONDITION
At March 31, 1997, total current assets of $10,513 million were $2,382 million
lower than at year-end 1996. Accounts and notes receivable decreased $2,059
million to $6,133 million, due to the effects of the implementation of the
Mobil- BP European alliance which is accounted for on an equity basis, and
decreases in prices and volumes from year end. Inventories decreased $564
million due to the effects of the implementation of the Mobil-BP alliance,
partly offset by higher volumes in the United States. Partly offsetting these
net decreases were higher prepaid expenses resulting from an annual pattern of
prepayments made in the first quarter, offset somewhat by the effects of the
Mobil-BP alliance. Cash and cash equivalents also increased $158 million from
year end.
Investments and Long-Term Receivables increased $2,160 million, primarily
reflecting Mobil's investment in the European alliance with BP, partly offset by
the effects of the strengthening dollar.
Net properties, plants and equipment decreased $2,072 million to $25,407
million as capital expenditures were more than offset by the effects of
deconsolidating those assets utilized by the Mobil-BP alliance, and
depreciation.
Deferred charges and other assets decreased, primarily as a result of the
effects of the Mobil-BP alliance.
Total debt of Mobil and its subsidiaries was $8,357 million at March 31, 1997,
up $482 million from year-end 1996. The debt-to-capitalization ratio was 30% at
March 31, 1997, up from 29% at year-end 1996.
Accounts payable decreased $1,615 million due to the effects of the
implementation of the Mobil-BP alliance and decreases in prices and volumes from
year end.
Accrued liabilities decreased $562 million due to the effects of the Mobil-BP
alliance implementation.
Income, excise, state gasoline and other taxes payable decreased $609 million
due to the effects of the Mobil-BP alliance implementation, lower purchases and
timing of certain tax payments.
Shareholders' equity rose $58 million during the first three months of 1997.
Earnings retained in the business increased $395 million as income exceeded
common and preferred stock dividends. The cost of common stock held in the
treasury increased as 682,500 shares were purchased on the open market to offset
the dilutive effects of the issuance of shares upon exercise 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 1997, net cash generated from operating
activities was $913 million, $389 million less than the cash requirements for
investing activities and dividends. (Refer to table on page 3.)
MOBIL - 9 -
<PAGE>
DISCUSSION OF FINANCIAL CONDITION - continued
Total investment spending for the first quarter of 1997 was $834 million, a
decrease of $205 million from the comparable period last year.
- -------------------------------------------------------------------------------
INVESTMENT SPENDING
(In millions) First Three Months
Capital and Exploration Expenditures 1996 1997
------ ------
Petroleum Operations
Exploration & Producing - United States .......... $ 118 $ 72
- International .......... 411 466
Marketing & Refining - United States .......... 82 75
- International .......... 227 94
Chemical ............................................... 52 54
Other .................................................. 22 11
------ ------
Total Capital and Exploration Expenditures ............. 912 772
------ ------
Cash Investments in Equity Companies ................... 127 62
------ ------
Total Investment Spending .............................. $1,039 $ 834
====== ======
------------------------------
Memo:
Exploration expenses charged
to income, included above - United States .......... $ 9 $ 5
- International .......... 67 70
------ ------
$ 76 $ 75
====== ======
------------------------------------------------------------------------------
Return on average shareholders' equity was 16.4% for the twelve month period
ended March 31, 1997, compared with 16.0% for the calendar year 1996. Return on
average capital employed for the twelve month period ended March 31, 1997 was
12.8%, compared with 12.7% for the calendar year 1996.
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, 1997, 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. $2 billion of Euro-Medium-Term
Notes and bonds having a principal amount of 30 billion Japanese yen are also in
place.
CURRENT DEVELOPMENTS
On April 24, 1997, Mobil agreed to combine its California exploration and
producing operations with those of Shell Oil Company. The combined California
operation is to be owned 41.4 percent by Mobil and 58.6 by Shell Oil and is
expected to offer opportunities to reduce costs and leverage complementary
skills and competencies.
The Board of Directors authorized a two-for-one split of Mobil's common stock
and set the record date therefor as May 20, 1997.
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 February 25, 1997, a previously-reported proceeding, brought by the EPA
against Mobil Oil Corporation on October 20, 1995, was settled. The EPA had
alleged that the operations of Mobil Oil Corporation's Joliet, Illinois refinery
(a) violated the Illinois State Implementation Plan under the Clean Air Act, (b)
violated the state air regulatory standards for opacity, particulates and carbon
monoxide, and (c) failed to comply with an Agency request under the Clean Air
Act. The EPA had sought a penalty of $146,000; the proceeding was settled by a
payment of $125,000.
On March 27, 1997, Mobil Oil Corporation d/b/a Mobil Mining and Minerals
Company entered into a consent decree with the State of Florida Department of
Environmental Protection (the "DEP") to resolve allegations by the DEP that
Mobil Mining and Minerals Company violated Florida Statutes ss.403.088 by
discharging storm water without a permit. Under the terms of the consent decree,
Mobil is required (1) to pay $100,000 to Hillsborough County, Florida and $1,445
to the DEP and (2) to convey 80 acres of undeveloped property to the Southwest
Florida Water Management District.
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.
MOBIL - 11 -
<PAGE>
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 8, 1997,
the following matters were voted upon:
Shareholders elected four directors for three-year terms expiring at the
Annual Meeting in 2000 and one director for the balance of a three-year term
expiring at the Annual Meeting in 1998. The vote tabulation for individual
directors was:
Directors Shares For Shares Withheld
--------- ---------- ---------------
Donald V. Fites 338,335,013 5,447,470
Charles S. Sanford, Jr. 338,277,846 5,504,637
Robert G. Schwartz 336,701,665 7,080,818
Iain D. T. Vallance 335,673,942 8,108,541
Robert O. Swanson 337,893,567 5,888,916
Shareholders approved and ratified the appointment of Ernst & Young LLP as the
company's independent auditors by a vote of 340,156,527 for, 2,002,052 against,
and 1,623,904 abstentions.
Shareholders approved a proposal to increase the number of authorized shares
of common stock from 600,000,000 to 1,200,000,000 and to change the par value
thereof from $2.00 per share to $1.00 per share by a vote of 335,339,343 votes
for, 6,327,908 votes against and 2,115,232 votes abstained.
A shareholder resolution to limit the authority of Mobil's Board of Directors
to issue preferred stock was defeated with 175,035,808 votes against,
131,537,029 in favor and 6,288,714 votes abstained.
A shareholder resolution calling for cumulative voting in the election of
Mobil's Directors was defeated with 222,403,818 votes against, 77,819,425 votes
in favor and 12,637,025 votes abstained.
A shareholder resolution calling for the discontinuance of grants of stock
options to directors and officers was defeated with 283,540,331 votes against,
21,625,477 votes in favor and 7,568,121 votes abstained.
A shareholder resolution prohibiting executives from exercising stock options
for six months after announcements of workforce reductions was defeated with
276,599,591 votes against, 27,929,602 votes in favor and 8,206,607 votes
abstained.
The text of the above proposals is incorporated by reference to Items 3, 4, 5,
6 and 7 of Mobil's definitive Proxy Statement dated March 18, 1997, filed with
the SEC pursuant to Regulation 14A on March 18, 1997.
Item 5. Other Information.
None.
MOBIL - 12 -
<PAGE>
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.
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 3, 1997 Submitted documents relating to
$231,900,000 of "Pass Through Certificates"
guaranteed by Mobil Corporation.
January 27, 1997 Submitted a copy of the Mobil News Release dated January 27,
1997, reporting Mobil's estimated earnings for the fourth
quarter and full year of 1996.
January 31, 1997 Submitted a copy of the Mobil News Release dated January 31,
1997, announcing that Mobil Corporation's Board of Directors
had voted to split Mobil's outstanding shares of common
stock two-for-one, subject to stockholder approval of an
increase in the number of authorized shares of common stock.
March 27, 1997 Submitted a "Form of Note" in
connection with the offering and sale of
Mobil Oil Corporation Employee Stock
Ownership
Plan Medium-Term Notes.
April 23, 1997 Submitted a copy of the Mobil News Release dated April
23, 1997, reporting Mobil's estimated earnings for the
first quarter of 1997.
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/ M. Frances Keeth
NAME AND TITLE M. Frances Keeth, Controller;
Principal Accounting Officer
DATE May 13, 1997
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, except for per-share amounts;
number of shares in thousands)
For the Three Months
Ended March 31,
____________________
Primary 1996 1997
_______ ________ ________
Net income ............................................. $ 736 $ 826
Less dividends on preferred stock ...................... 14 13
-------- --------
Net income applicable to common shares ................. $ 722 $ 813
======== ========
Weighted average number of primary common shares
Outstanding .......................................... 394,488 394,075
Issuable on assumed exercise of stock options ........ 5,087 5,322
-------- --------
Total ............................................. 399,575 399,397
======== ========
Primary earnings per common share ...................... $ 1.81 $ 2.04
======== ========
Fully Diluted
_____________
Net income ............................................. $ 736 $ 826
Less additional contribution to ESOP ................... 5 4
-------- --------
Adjusted net income applicable to common shares ........ $ 731 $ 822
======== ========
Weighted average number of primary common shares ....... 399,575 399,397
Increment to assumed exercise of stock options to
reflect maximum dilutive effect ...................... 227 208
Assumed conversion of preferred stock .................. 9,154 8,724
-------- --------
Total ............................................. 408,956 408,329
======== ========
Fully diluted earnings per common share ................ $ 1.79 $ 2.01
======== ========
___________
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,
__________________________________________ ________
1992 1993 1994 1995 1996 1997
______ ______ ______ ______ ______ ______
Income Before Change in
Accounting Principle(s) $1,308 $2,084 $1,759 $2,376 $2,964 $ 826
Add:
Income taxes ............ 1,567 1,931 1,919 2,015 3,147 864
Portion of rents
representative of
interest factor ....... 319 339 340 368 376 94
Interest and debt
discount expense ...... 612 529(a) 461 467 455 98
Earnings (greater) less
than dividends from
equity affiliates...... 36 265 (40) (51) 153 (34)
------ ------ ------ ------ ------ ------
Income as Adjusted ...... $3,842 $5,148 $4,439 $5,175 $7,095 $1,848
====== ====== ====== ====== ====== ======
Fixed Charges:
Interest and debt
discount expense ...... $ 612 $ 529(a) $ 461 $ 467 $ 455 $ 98
Capitalized interest .... 42 42 37 47 78 22
Portion of rents
representative of
interest factor ....... 319 339 340 368 376 94
------ ------ ------ ------ ------ ------
Total Fixed Charges ..... $ 973 $ 910 $ 838 $ 882 $ 909 $ 214
====== ====== ====== ====== ====== ======
Ratio of Earnings to
Fixed Charges ......... 3.9 5.7(a) 5.3 5.9 7.8 8.6
====== ====== ====== ====== ====== ======
Note:
For the years ended December 31, 1992, 1993, 1994, 1995 and 1996 and the three
months ended March 31, 1997, Fixed Charges exclude $37 million, $31 million, $37
million, $28 million, $24 million, and $8 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 ENDING MARCH 31, 1997 10-Q
This schedule contains summary financial information extracted
from the March 31, 1997 Form 10-Q, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 966
<SECURITIES> 0
<RECEIVABLES> 6,133
<ALLOWANCES> 0
<INVENTORY> 2,453
<CURRENT-ASSETS> 10,513
<PP&E> 50,814
<DEPRECIATION> 25,407
<TOTAL-ASSETS> 44,026
<CURRENT-LIABILITIES> 12,910
<BONDS> 4,386
0
678
<COMMON> 893
<OTHER-SE> 17,559
<TOTAL-LIABILITY-AND-EQUITY> 44,026
<SALES> 15,935 <F1>
<TOTAL-REVENUES> 16,186 <F1>
<CGS> 10,468
<TOTAL-COSTS> 11,111
<OTHER-EXPENSES> 2,481
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 1,690
<INCOME-TAX> 864
<INCOME-CONTINUING> 826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 826
<EPS-PRIMARY> 2.04
<EPS-DILUTED> 2.01
<FN>
<F1> SALES AND TOTAL REVENUES INCLUDE $1,422 MILLION OF EXCISE AND
STATE GASOLINE TAXES
</FN>
</TABLE>
