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 September 30, 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 September 30,1994 _______________________________ ________________________________ Common stock, without par value 1,241,455,701 EXXON CORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 INDEX PART I. FINANCIAL INFORMATION Page Number Item 1. Financial Statements Condensed Consolidated Statement of Income 3 Three and nine months ended September 30, 1994 and 1993 Condensed Consolidated Balance Sheet 4 As of September 30, 1994 and December 31, 1993 Condensed Consolidated Statement of Cash Flows 5 Nine months ended September 30, 1994 and 1993 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 12 -2- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EXXON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars) Three Months Ended Nine Months Ended September 30, September 30, __________________ _________________ 1994 1993 1994 1993 REVENUE _______ _______ _______ ______ Sales and other operating revenue, including excise taxes $29,237 $27,380 $81,963 $81,881 Earnings from equity interests and other revenue 326 540 883 1,253 ______ ______ ______ ______ Total revenue 29,563 27,920 82,846 83,134 ______ ______ ______ ______ COSTS AND OTHER DEDUCTIONS Crude oil and product purchases 12,353 11,614 34,096 35,163 Operating expenses 3,101 3,035 9,315 9,300 Selling, general and administrative expenses 1,783 1,676 5,134 5,046 Depreciation and depletion 1,187 1,210 3,709 3,640 Exploration expenses, including dry holes 147 173 420 449 Interest expense 126 193 534 534 Excise taxes 3,190 2,925 8,787 8,585 Other taxes and duties 5,639 4,993 15,577 14,559 Income applicable to minority and preferred interests 97 64 189 187 ______ ______ ______ ______ Total costs and other deductions 27,623 25,883 77,761 77,463 ______ ______ ______ ______ INCOME BEFORE INCOME TAXES 1,940 2,037 5,085 5,671 Income taxes 785 677 1,885 1,891 ______ ______ ______ ______ NET INCOME $ 1,155 $ 1,360 $ 3,200 $ 3,780 ====== ====== ====== ====== Net income per common share* $ 0.92 $ 1.09 $ 2.54 $ 3.01 Dividends per common share $ 0.72 $ 0.72 $ 2.16 $ 2.16 Average number common shares outstanding (millions) 1,241.4 1,241.6 1,241.6 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) Sept. 30, Dec. 31, 1994 1993 ________ ________ ASSETS Current assets Cash and cash equivalents $ 1,700 $ 983 Other marketable securities 725 669 Notes and accounts receivable - net 7,315 6,860 Inventories Crude oil, products and merchandise 4,703 4,616 Materials and supplies 862 856 Prepaid taxes and expenses 1,145 875 _______ _______ Total current assets 16,450 14,859 Property, plant and equipment - net 63,454 61,962 Investments and other assets 7,886 7,324 _______ _______ TOTAL ASSETS $87,790 $84,145 ======= ======= LIABILITIES Current liabilities Notes and loans payable $ 4,195 $ 4,109 Accounts payable and accrued liabilities 12,832 12,122 Income taxes payable 2,226 2,359 _______ _______ Total current liabilities 19,253 18,590 Long-term debt 8,936 8,506 Annuity reserves, deferred credits and other liabilities 23,085 22,257 _______ _______ TOTAL LIABILITIES 51,274 49,353 _______ _______ SHAREHOLDERS' EQUITY Preferred stock, without par value: Authorized:200 million shares Issued: 16 million shares(Convertible,Class A) Outstanding: 9 million shares at Sept. 30, 1994 583 11 million shares at Dec. 31, 1993 668 Guaranteed LESOP obligation (614) (716) Common stock, without par value: Authorized: 2,000 million shares Issued: 1,813 million shares 2,822 2,822 Earnings reinvested 49,860 49,365 Cumulative foreign exchange translation adjustment 889 (370) Common stock held in treasury: 571 million shares at Sept. 30, 1994 (17,024) 571 million shares at Dec. 31, 1993 (16,977) _______ _______ TOTAL SHAREHOLDERS' EQUITY 36,516 34,792 _______ _______ TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $87,790 $84,145 ======= ======= The number of shares of common stock issued and outstanding at September 30, 1994 and December 31, 1993 were 1,241,455,701 and 1,241,737,220, respectively. -4- EXXON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (millions of dollars) Nine Months Ended ____Sept. 30,____ 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES ______ _____ Net income $3,200 $3,780 Depreciation and depletion 3,709 3,640 Changes in operational working capital, excluding cash and debt (312) 1,051 All other items - net 504 6 ______ _____ Net Cash Provided By Operating Activities 7,101 8,477 ______ _____ CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions and additions to property, plant and equipment (4,646) (4,841) Sales of subsidiaries and property, plant and equipment 787 934 Other investing activities - net 118 (118) ______ _____ Net Cash Used In Investing Activities (3,741) (4,025) ______ _____ NET CASH GENERATION BEFORE FINANCING ACTIVITIES 3,360 4,452 ______ _____ CASH FLOWS FROM FINANCING ACTIVITIES Additions to long-term debt 883 1,261 Reductions in long-term debt (336) (158) Additions/(reductions) in short-term debt - net (60) (1,268) Cash dividends to Exxon shareholders (2,717) (2,723) Cash dividends to minority interests (370) (202) Additions/(reductions) to minority interests and sales/(redemptions) of affiliate preferred stock 31 (533) Acquisitions of Exxon shares - net (132) (154) ______ _____ Net Cash Used In Financing Activities (2,701) (3,777) ______ ______ Effects Of Exchange Rate Changes On Cash 58 (21) ______ ______ Increase/(Decrease) In Cash And Cash Equivalents 717 654 Cash And Cash Equivalents At Beginning Of Period 983 898 ______ ______ CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,700 $1,552 ====== ====== SUPPLEMENTAL DISCLOSURES Income taxes paid $1,765 $1,409 Cash interest paid $ 517 $ 502 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: These condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto 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 Third Quarter First Nine Months _____________ _________________ 1994 1993 1994 1993 Petroleum and natural gas ____ ____ ____ ____ Exploration and production (millions of dollars) United States $ 208 $ 273 $ 659 $ 763 Non-U.S. 408 549 1,395 1,716 Refining and marketing United States 87 121 125 255 Non-U.S. 330 474 881 1,084 _____ _____ ______ _____ Total petroleum and natural gas 1,033 1,417 3,060 3,818 Chemicals United States 80 46 282 183 Non-U.S. 118 22 255 94 Other operations 89 19 211 115 Corporate and financing (165) (144) (608) (430) _____ _____ _____ _____ NET INCOME $1,155 $ 1,360 $3,200 $3,780 ===== ===== ===== ===== THIRD QUARTER 1994 COMPARED WITH THIRD QUARTER 1993 Exxon Corporation estimated third quarter 1994 net income at $1,155 million, equal to $0.92 per share, compared with $1,360 million, or $1.09 per share, in the same period last year. Earnings in the third quarter of 1993 included $306 million of credits for asset sales and tax adjustments. Excluding those special items, this quarter's earnings are up ten percent relative to the third quarter of 1993. In the third quarter of 1994, Exxon's liquids production, natural gas sales, refinery throughput, petroleum product sales, chemical sales and coal sales were all above the levels achieved in the comparable quarter of 1993. Worldwide crude oil prices were slightly higher, but industry refining margins were narrower than in the third quarter of last year. Exxon's chemical product sales in the third quarter were the highest in over two years, and margins also improved. As a result, chemical earnings more than doubled from a year ago. In addition, earnings from Exxon's other operating segments improved, as coal production increased and copper prices rose. OTHER COMMENTS ON THIRD QUARTER COMPARISON Relative to the prior year, third quarter 1994 worldwide production earnings benefited from a modest improvement in crude prices. However, natural gas earnings were negatively impacted by lower gas realizations in the U.S. Third quarter earnings from U.S. exploration and production operations were $208 million, while earnings from operations outside the U.S. were $408 million. Excluding special items, comparable 1993 earnings were $176 million for U.S. operations and $397 million for operations outside the U.S. -6- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) OTHER COMMENTS ON THIRD QUARTER COMPARISON (Continued) Crude production in the third quarter 1994 was 1,670 kbd (thousand barrels per day) up from 1,620 kbd the prior year. Production from new developments in the U.S. and the North Sea provided most of the increase. Worldwide natural gas production of 4,660 mcfd (million cubic feet per day) was up 41 mcfd from the prior year as reductions in European sales were offset by new production from Exxon's Mobile Bay development in the U.S. and growth in Pacific Rim demand. Petroleum product margins were lower in this year's third quarter, as product prices did not keep pace with higher crude supply costs, while in the 1993 third quarter product margins benefited from declining crude supply costs. Worldwide petroleum product sales of 5,043 kbd rose 120 kbd compared to the third quarter of last year, with increases in U.S., Europe, Far East and Latin American volumes. Third quarter 1994 earnings from refining and marketing operations in the U.S. were $87 million, compared with $121 million in the third quarter 1993. Earnings from refining and marketing operations outside the U.S. totaled $330 million, versus $474 million in the third quarter last year. Earnings from chemical operations in the third quarter of this year benefited from improved margins and increased sales. Product sales volumes of 3,307 kt (thousand tons) were up 219 kt over last year's quarter. Third quarter 1994 worldwide chemical earnings were $198 million compared with $68 million last year. Earnings from other operating segments totaled $89 million, compared with $19 million in third quarter 1993. Coal production increased and copper realizations rose substantially. Corporate and financing expenses in the third quarter 1994 were $165 million, compared with $144 million last year. Net income in the third quarter of 1993 included $306 million of tax credits and gains on asset sales; there were no similar credits in the third quarter 1994. During the third quarter 1994, a Federal District Court jury in Anchorage, Alaska, returned compensatory and punitive damage verdicts in the civil litigation resulting from the accidental grounding of the Exxon Valdez in 1989. See Exxon's Current Report on Form 8-K dated September 21, 1994. During the quarter, Exxon filed motions to overturn or reduce these verdicts, which are being reviewed by the trial court and may be the subject of appeals to higher courts. Since it is impossible to estimate what the ultimate earnings impact will be, no charge was taken in the third quarter related to these events. -7- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) OTHER COMMENTS ON THIRD QUARTER COMPARISON (Continued) Revenue for the third quarter totaled $29,563 million. This was an increase from $27,920 million in the third quarter 1993. Capital and exploration expenditures of $1,925 million compared to $2,010 million in the third quarter 1993. During the third quarter of this year, Exxon purchased 0.6 million shares of its stock for the treasury at a cost of $34 million. FIRST NINE MONTHS 1994 COMPARED WITH FIRST NINE MONTHS 1993 Net income of $3,200 million for the first nine months of 1994 compared with $3,780 million in 1993. Net income in 1993 included $563 million of net special credits, while the first nine months of 1994 included $66 million of tax related credits. Although worldwide crude prices improved in the third quarter, through nine months of 1994 prices were weaker, down over $2.00 per barrel on average from 1993. Worldwide crude production of 1,704 kbd was up from 1,648 kbd in 1993, principally as a result of increased production from new developments in the North Sea and Alaska. Natural gas production of 5,757 mcfd rose by six percent versus 1993, largely due to increased U.S. and Pacific Rim production. Excluding special items, earnings from U.S. exploration and production operations were $659 million, compared with $666 million in the first nine months of last year. Outside the U.S., earnings from exploration and production operations were $1,329 million versus $1,462 million in 1993. Petroleum product margins for the first nine months of 1994 were on average weaker than the prior year, negatively impacting refining and marketing earnings. In addition, an increase in refining maintenance activities this year reduced earnings. Worldwide petroleum product sales of 4,985 kbd were up from 4,875 kbd in the first nine months of 1993, with increases in clean product sales in most major markets. Through the first nine months of this year, U.S. refining and marketing earnings were $125 million, compared with $255 million the prior year. Earnings from refining and marketing operations outside the U.S. were $881 million, versus $1,084 million in 1993. Earnings from worldwide chemical operations totaled $537 million for the first nine months of 1994, nearly double the earnings level of the prior year. Product margins were higher than in 1993 and sales volume this year totaled 9,879 kt, up from 9,480 kt in the first nine months of 1993. -8- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) FIRST NINE MONTHS 1994 COMPARED WITH FIRST NINE MONTHS 1993 (Continued) Earnings from other operating segments totaled $211 million in the first nine months of 1994, up from $115 million in 1993. Coal and copper production increased, and copper prices were significantly higher. Corporate and financing charges of $608 million compared with $430 million in the first nine months of 1993, which benefited from $220 million of tax credits. Net cash generation before financing activities was $3,360 million in the first nine months of 1994 versus $4,452 million in the same period last year. Operating activities provided net cash of $7,101 million, a decrease of $1,376 million from 1993's first nine months, due mainly to lower net income and changes in operational working capital. Investing activities used net cash of $3,741 million, or $284 million less than a year ago. Net cash used in financing activities was $2,701 million in the first nine months of 1994 versus $3,777 million for the year-ago period. The decrease of $1,076 million mainly reflects the absence of the redemption of preferred securities by an affiliate in 1993 and increased borrowings. Net outlays for treasury share acquisitions were $132 million versus $154 million in the same period last year. During the first nine months of 1994, a total of 2.9 million shares were acquired at a cost of $181 million. Purchases are made in the open market and through negotiated transactions. Purchases may be discontinued at any time. Capital and exploration expenditures of $5,461 million in the first nine months of 1994 compared to $5,724 million in the same period last year. Total debt of $13.1 billion at September 30, 1994 was $0.5 billion higher than the level at year-end 1993. The corporation's debt to capital ratio was 25.3 percent at the end of the first nine months of 1994, unchanged from year-end 1993. Over the twelve months ended September 30, 1994, return on average shareholders' equity was 13.2 percent. Return on average capital employed, which includes debt, was 10.6 percent over the same time period. Although the corporation accesses financial markets from time to time, internally generated funds cover the majority 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. -9- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded) SPECIAL ITEMS _____________ Third Quarter First Nine Months ______________ ________________ 1994 1993 1994 1993 ____ ____ ____ ____ (millions of dollars) EXPLORATION & PRODUCTION United States Primarily asset dispositions - $182 - $182 Primarily tax related - (85) - (85) Non-U.S. Primarily asset dispositions - (26) - (6) Primarily tax related - 178 $66 260 REFINING AND MARKETING United States Primarily asset dispositions - - - 43 Primarily tax related - (17) - (17) Non-U.S. Primarily asset dispositions - - - (32) Primarily tax related - 23 - 23 CHEMICALS Primarily tax related - (26) - (26) OTHER OPERATIONS Primarily asset dispositions - (12) - (12) Primarily tax related - - - 13 CORPORATE & FINANCING Primarily tax related - 89 - 220 ___ ____ ____ ____ TOTAL - $306 $ 66 $563 === ==== ==== ==== -10- PART II - OTHER INFORMATION EXXON CORPORATION FOR THE QUARTER ENDED SEPTEMBER 30, 1994 Item 1. Legal Proceedings ______ _________________ On September 30, 1994, the U.S. Environmental Protection Agency issued a Complaint to the registrant proposing civil penalties totaling $258,000 for a number of alleged violations of the Clean Air Act and the Clean Water Act at the registrant's Baton Rouge Chemical Plant. The registrant plans to request a hearing concerning the Complaint. See also the registrant's Current Report on Form 8-K dated September 21, 1994 for developments in the legal proceedings arising out of the release of crude oil from the tanker Exxon Valdez in 1989. Item 6. Exhibits and Reports on Form 8-K ________________________________________ a) Exhibits Exhibit 27, Financial Data Schedule, is included only in the electronic filing of this document. b) Reports on Form 8-K The registrant filed a Form 8-K on September 21, 1994. -11- EXXON CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 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: November 11, 1994 W. B. Cook ______________________________________ W. B. Cook, Vice President, Controller and Principal Accounting Officer -12-