FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to________ Commission File Number 1-2256 EXXON CORPORATION ______________________________________________________ (Exact name of registrant as specified in its charter) NEW JERSEY 13-5409005 _______________________________ ______________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 225 E. John W. Carpenter Freeway, Irving, Texas 75062-2298 ___________________________________________________________ (Address of principal executive offices) (Zip Code) (214) 444-1000 ___________________________________________________________ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No__. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of March 31, 1994 _______________________________ ________________________________ Common stock, without par value 1,241,771,207 EXXON CORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994 INDEX PART I. FINANCIAL INFORMATION Page Number Item 1. Financial Statements Condensed Consolidated Statement of Income 3 Three months ended March 31, 1994 and 1993 Condensed Consolidated Balance Sheet 4 As of March 31, 1994 and December 31, 1993 Condensed Consolidated Statement of Cash Flows 5 Three months ended March 31, 1994 and 1993 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-9 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 6. Exhibits and Reports on Form 8-K 10 Signature 11 -2- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EXXON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars) Three Months Ended March 31, __________________ REVENUE 1994 1993 Sales and other operating revenue, _______ ______ including excise taxes $25,624 $26,897 Earnings from equity interests and other revenue 340 365 _______ _______ Total revenue 25,964 27,262 _______ _______ COSTS AND OTHER DEDUCTIONS Crude oil and product purchases 10,255 11,836 Operating expenses 3,070 3,069 Selling, general and administrative expenses 1,616 1,608 Depreciation and depletion 1,289 1,194 Exploration expenses, including dry holes 138 129 Interest expense 301 151 Excise taxes 2,741 2,758 Other taxes and duties 4,792 4,582 Income applicable to minority and preferred interests 54 65 _______ _______ Total costs and other deductions 24,256 25,392 _______ _______ INCOME BEFORE INCOME TAXES 1,708 1,870 Income taxes 548 685 _______ _______ NET INCOME $ 1,160 $ 1,185 ======= ======= Net income per common share* $ 0.92 $ 0.94 Dividends per common share $ 0.72 $ 0.72 Average number common shares outstanding (millions) 1,241.9 1,241.7 * Computed as income less dividends on preferred stock divided by the weighted average number of common shares outstanding. -3- EXXON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (millions of dollars) March 31, Dec. 31, 1994 1993 ASSETS _______ _______ Current assets Cash and cash equivalents $ 1,648 $ 1983 Other marketable securities 468 669 Notes and accounts receivable - net 6,972 6,860 Inventories Crude oil, products and merchandise 4,392 4,616 Materials and supplies 827 856 Prepaid taxes and expenses 1,181 875 _______ _______ Total current assets 15,488 14,859 Property, plant and equipment - net 61,777 61,962 Investments and other assets 7,389 7,324 _______ _______ TOTAL ASSETS $84,654 $84,145 ======= ======= LIABILITIES Current liabilities Notes and loans payable $ 3,863 $ 4,109 Accounts payable and accrued liabilities 12,326 12,122 Income taxes payable 2,225 2,359 Total current liabilities 18,414 18,590 Long-term debt 8,712 8,506 Annuity reserves, deferred credits and other liabilities 22,275 22,257 TOTAL LIABILITIES 49,401 49,353 _______ _______ SHAREHOLDERS' EQUITY Preferred stock, without par value: Authorized:200 million shares Issued : 16 million shares (Convertible, Class A) Outstanding:10 million shares at Mar. 31, 1994 641 11 million shares at Dec. 31, 1993 668 Guaranteed LESOP obligation (716) (716) Common stock, without par value: Authorized: 2,000 million shares Issued: 1,813 million shares 2,822 2,822 Earnings reinvested 49,623 49,365 Cumulative foreign exchange translation adjustment (119) (370) Common stock held in treasury: 571 million shares at Mar. 31, 1994 (16,998) 571 million shares at Dec. 31, 1993 (16,977) _______ _______ TOTAL SHAREHOLDERS' EQUITY 35,253 34,792 _______ _______ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $84,654 $84,145 ======= ======= The number of shares of common stock issued and outstanding at March 31, 1994 and December 31, 1993 were 1,241,771,207 and 1,241,737,220, respectively. -4- EXXON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (millions of dollars) Three Months Ended _____March 31,____ 1994 1993 ______ ______ CASH FLOWS FROM OPERATING ACTIVITIES Net income $1,160 $1,185 Depreciation and depletion 1,289 1,194 Changes in operational working capital, excluding cash and debt (145) 268 All other items - net 59 (35) ______ ______ Net Cash Provided By Operating Activities 2,363 2,612 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions and additions to property, plant and equipment (1,328) (1,298) Sales of subsidiaries and property, plant and equipment 331 118 Other investing activities - net 432 276 ______ ______ Net Cash Used In Investing Activities (565) (904) ______ ______ NET CASH GENERATION BEFORE FINANCING ACTIVITIES 1,798 1,708 CASH FLOWS FROM FINANCING ACTIVITIES Additions to long-term debt 584 292 Reductions in long-term debt (256) (54) Additions/(reductions) in short-term debt-net (410) (458) Cash dividends to Exxon shareholders (906) (908) Cash dividends to minority interests (102) (68) Additions/(reductions) to minority interests and sales/(redemptions) of affiliate preferred stock 27 (255) Acquisitions of Exxon shares - net (48) (47) ______ ______ Net Cash Used In Financing Activities (1,111) (1,498) ______ ______ Effects Of Exchange Rate Changes On Cash (22) 1 ______ ______ Increase/(Decrease) In Cash And Cash Equivalents 665 211 Cash And Cash Equivalents At Beginning Of Period 983 898 ______ ______ CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,648 $1,109 ====== ====== SUPPLEMENTAL DISCLOSURES Income taxes paid $ 799 $ 535 Cash interest paid $ 139 $ 176 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: These condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes there to filed with the S.E.C. in the corporation's 1993 Annual Report on Form 10-K. In the opinion of the corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. The corporation's exploration and production activities are accounted for under the "successful efforts" method. -5- EXXON CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FUNCTIONAL EARNINGS SUMMARY First Quarter _____________ 1994 1993 ____ ____ (millions of dollars) Petroleum and natural gas Exploration and production United States $ 245 $ 228 Non-U.S. 590 668 Refining and marketing United States 39 21 Non-U.S. 349 277 _____ _____ Total petroleum and natural gas 1,223 1,194 Chemicals United States 92 87 Non-U.S. 57 36 Other operations 58 48 Corporate and financing (270) (180) _____ _____ NET INCOME $1,160 $1,185 ====== ====== FIRST QUARTER 1994 COMPARED WITH FIRST QUARTER 1993 Exxon Corporation estimated first quarter 1994 net income at $1,160 million, or $0.92 per share, compared with $1,185 million, or $0.94 per share, in the same period last year. Despite the continued weakness in worldwide crude prices, Exxon earned nearly $1.2 billion in the first quarter, down only 2 percent from the first quarter of 1993. Sales volumes increased in each of Exxon's major business segments and petroleum product and chemical margins improved. During the quarter, crude prices were on average lower than they have been in over five years. While this negatively impacted worldwide exploration and producing earnings, stronger natural gas earnings provided a partial offset, particularly in the United States where Exxon benefited from improved gas market conditions and increased volumes from several new field developments. Earnings in the refining and marketing segment improved due to increased sales volumes and stronger margins. This improvement was achieveddespite unusually high refinery maintenance activity in the quarter. Chemical earnings also rose as a modest improvement in economic conditions in major markets led to increased demand and better margins. -6- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) OTHER COMMENTS ON FIRST QUARTER COMPARISON During the first quarter 1994, worldwide production earnings were negatively impacted by crude prices which on average were over $4.00 per barrel below the prior year. Earnings from exploration and production operations outside the U.S. totaled $590 million, compared with $668 million in the year ago period. Earnings from U.S. exploration and production operations were $245 million in the first quarter of 1994, up from $228 million in the first quarter 1993 reflecting the improved natural gas market and lower operating expenses. Crude production in the first quarter 1994 was 1,749 kbd (thousand barrels per day) up from 1,676 kbd the prior year. The increase resulted from higher production from operations in the North Sea and Alaska. Worldwide natural gas production of 7,294 mcfd (million cubic feet per day) rose 3 percent in the first quarter 1994 compared to the same period last year reflecting stronger demand and new production from operations in the U.S. and Malaysia. Earnings from U.S. refining and marketing operations were $39 million in the first quarter 1994, up from $21 million in the first quarter 1993 despite sharply higher scheduled refinery maintenance activities this year. Earnings from refining and marketing operations outside the U.S. were $349 million in the most recent quarter, compared with $277 million in the first quarter 1993. In comparison to the prior year period, petroleum product margins strengthened as lower crude supply costs more than offset the effect of lower product prices. Worldwide petroleum product sales volumes of 4,994 kbd rose from 4,870 kbd in the first quarter of last year, due principally to increases in Europe, Canada, and Latin America. First quarter 1994 earnings from worldwide chemical operations totaled $149 million, up from $123 million in the first quarter last year. Earnings benefited from increased demand and improved margins. Product sales volumes of 3,268 kt (thousands tons) were up from 3,211 kt last year. Earnings from other operating segments were $58 million, up from $48 million in the first quarter 1993. Corporate and financing expenses of $270 million compared with $180 million in the first quarter of last year, with the increase due primarily to foreign exchange fluctuations. Net income in the first quarter 1994 of $1,160 million included a net credit of $66 million from tax rate changes and asset dispositions, while the first quarter of the prior year included $47 million of similar credits. -7- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net cash generation before financing activities was $1,798 million in the first three months of 1994 versus $1,708 million in the same period last year. Operating activities provided net cash of $2,363 million, a decrease of $249 million from 1993's first three months, influenced mainly by a change in operational working capital. Investing activities used net cash of $565 million, or $339 million less than a year ago primarily due to higher proceeds from asset dispositions. Net cash used in financing activities was $1,111 million in the first quarter of 1994 versus $1,498 million in the same quarter last year. The decrease mainly reflects the absence of the redemption of preferred securities by an affiliate in the year ago period. Net outlays for treasury share acquisitions were $48 million, essentially unchanged from the prior year quarter. During the first quarter of 1994, a total of 1.3 million shares were acquired at a cost of $86 million. Purchases are made in both the open market and through negotiated transactions. Purchases may be discontinued at any time. Capital and exploration expenditures of $1,577 million in the first quarter 1994 were essentially unchanged from the amount invested in the first quarter of 1993. Current plans indicate capital and exploration expenditures in 1994 will be about equal to the prior year as Exxon continues to maintain its active investment program. Total debt of $12.6 billion at March 31, 1994 was level with the total debt at year-end 1993. The corporation's debt to total capital ratio was 25.1 percent at the end of the first quarter of 1994, down from 25.3 percent at year-end 1993. Over the twelve months ended March 31, 1994, return on average shareholder's equity was 15.2 percent. Return on average capital employed, which includes debt, was 12.1 percent over the same time period. Although the corporation accesses financial markets from time to time, internally generated funds cover a significant portion of its financial requirements. The corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade. Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses. -8- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded) SPECIAL ITEMS First Quarter ___________________ 1994 1993 _____ _____ (millions of dollars) Petroleum and natural gas, Non-U.S. Primarily tax related $66 - Other items - $20 Corporate and financing Other items - $27 ____ ____ Total $66 $47 ==== ==== -9- PART II - OTHER INFORMATION EXXON CORPORATION FOR THE QUARTER ENDED MARCH 31, 1994 Item 1. Legal Proceedings _________________________ As previously reported, a number of lawsuits, including class actions,have been brought in various courts against Exxon Corporation and certain of its subsidiaries relating to the release of crude oil from the tanker Exxon Valdez in 1989. Most of these lawsuits seek unspecified compensatory and punitive damages; several lawsuits seek damages in varying specified amounts. The claims of many individuals have been dismissed or settled. For most of the remaining actions, trial in federal court commenced on May 2, 1994. Other actions are scheduled for trial in state court commencing June 6, 1994. The cost to the corporation from these lawsuits is not possible to predict; however, it is believed that the final outcome will not have a materially adverse effect upon the corporation's operations or financial condition. On August 23, 1993, the U.S. Environmental Protection Agency ("EPA") issued a notice to Exxon Chemical Company alleging violation of certain new source performance standards under the Clean Air Act applicable to a volatile organic compound storage tank. The EPA has not yet proposed a specific penalty. In March 1994, a settlement was reached with respect to a lawsuit brought on October 16, 1992 in the Superior Court of the State of California for the County of Solano by the Western States Petroleum Association, Exxon Company, U.S.A., and five other Bay Area refiners against the San Francisco Regional Water Quality Control Board ("RWQCB") and the State Water Resources Control Board. The suit challenged the addition by the RWQCB of certain final selenium discharge limitations to Bay Area refinery permits. The terms of the settlement, which were embodied in anadministrative order of the RWQCB, included a postponement of the effectiveness of the final limitations, as well as Exxon's agreement to pay an aggregate of $180,000 over two years into the State selenium mitigation and water pollution cleanup and abatement funds. Item 6. Exhibits and Reports on Form 8-K ________________________________________ a) Exhibits None b) Reports on Form 8-K The registrant has not filed any reports on Form 8-K during the quarter. -10- EXXON CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1994 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. EXXON CORPORATION Date: May 11, 1994 ______________.W. B. Cook_____________ W. B. Cook, Vice President, Controller and Principal Accounting Officer -11-