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, 1995 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, 1995 _______________________________ ________________________________ Common stock, without par value 1,242,233,354 EXXON CORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page Number Item 1. Financial Statements Condensed Consolidated Statement of Income 3 Three months ended March 31, 1995 and 1994 Condensed Consolidated Balance Sheet 4 As of March 31, 1995 and December 31, 1994 Condensed Consolidated Statement of Cash Flows 5 Three months ended March 31, 1995 and 1994 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 1995 1994 Sales and other operating revenue, _______ ______ including excise taxes $29,197 $25,624 Earnings from equity interests and other revenue 582 340 _______ _______ Total revenue 29,779 25,964 _______ _______ COSTS AND OTHER DEDUCTIONS Crude oil and product purchases 12,240 10,255 Operating expenses 3,042 3,070 Selling, general and administrative expenses 1,731 1,616 Depreciation and depletion 1,336 1,289 Exploration expenses, including dry holes 168 138 Interest expense 143 301 Excise taxes 3,070 2,741 Other taxes and duties 5,464 4,792 Income applicable to minority and preferred interests 74 54 _______ _______ Total costs and other deductions 27,268 24,256 _______ _______ INCOME BEFORE INCOME TAXES 2,511 1,708 Income taxes 851 548 _______ _______ NET INCOME $ 1,660 $ 1,160 ======= ======= Net income per common share* $ 1.33 $ 0.92 Dividends per common share $ 0.75 $ 0.72 Average number common shares outstanding (millions) 1,241.9 1,241.9 * 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, 1995 1994 ASSETS _______ _______ Current assets Cash and cash equivalents $ 2,770 $ 1,157 Other marketable securities 404 618 Notes and accounts receivable - net 8,431 8,073 Inventories Crude oil, products and merchandise 4,704 4,717 Materials and supplies 818 824 Prepaid taxes and expenses 1,325 1,071 _______ _______ Total current assets 18,452 16,460 Property, plant and equipment - net 64,535 63,425 Investments and other assets 8,284 7,977 _______ _______ TOTAL ASSETS $91,271 $87,862 ======= ======= LIABILITIES Current liabilities Notes and loans payable $ 3,581 $ 3,858 Accounts payable and accrued liabilities 13,925 13,391 Income taxes payable 2,459 2,244 Total current liabilities 19,965 19,493 Long-term debt 9,178 8,831 Annuity reserves, deferred credits and other liabilities 22,946 22,123 TOTAL LIABILITIES 52,089 50,447 _______ _______ SHAREHOLDERS' EQUITY Preferred stock, without par value: Authorized:200 million shares Outstanding: 9 million shares at Mar. 31, 1995 526 9 million shares at Dec. 31, 1994 554 Guaranteed LESOP obligation (613) (613) Common stock, without par value: Authorized: 2,000 million shares Issued: 1,813 million shares 2,822 2,822 Earnings reinvested 51,542 50,821 Cumulative foreign exchange translation adjustment 1,915 848 Common stock held in treasury: 571 million shares at Mar. 31, 1995 (17,010) 571 million shares at Dec. 31, 1994 (17,017) _______ _______ TOTAL SHAREHOLDERS' EQUITY 39,182 37,415 _______ _______ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $91,271 $87,862 ======= ======= The number of shares of common stock issued and outstanding at March 31, 1995 and December 31, 1994 were 1,242,233,354 and 1,241,744,053, respectively. -4- EXXON CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (millions of dollars) Three Months Ended _____March 31,____ 1995 1994 ______ ______ CASH FLOWS FROM OPERATING ACTIVITIES Net income $1,660 $1,160 Depreciation and depletion 1,336 1,289 Changes in operational working capital, excluding cash and debt 212 (145) All other items - net 74 59 ______ ______ Net Cash Provided By Operating Activities 3,282 2,363 _____ ______ CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions and additions to property, plant and equipment (1,399) (1,328) Sales of subsidiaries and property, plant and equipment 115 331 Other investing activities - net 490 432 ______ ______ Net Cash Used In Investing Activities (794) (565) ______ ______ NET CASH GENERATION BEFORE FINANCING ACTIVITIES 2,488 1,798 CASH FLOWS FROM FINANCING ACTIVITIES Additions to long-term debt 527 584 Reductions in long-term debt (82) (256) Additions/(reductions) in short-term debt-net (399) (410) Cash dividends to Exxon shareholders (942) (906) Cash dividends to minority interests (76) (102) Additions/(reductions) to minority interests and sales/(redemptions) of affiliate preferred stock 14 27 Acquisitions of Exxon shares - net (21) (48) ______ ______ Net Cash Used In Financing Activities (979) (1,111) ______ ______ Effects Of Exchange Rate Changes On Cash 104 (22) ______ ______ Increase/(Decrease) In Cash And Cash Equivalents 1,613 665 Cash And Cash Equivalents At Beginning Of Period 1,157 983 ______ ______ CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,770 $1,648 ====== ====== SUPPLEMENTAL DISCLOSURES Income taxes paid $ 441 $ 799 Cash interest paid $ 224 $ 139 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 1994 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 _____________ 1995 1994 ____ ____ (millions of dollars) Petroleum and natural gas Exploration and production United States $ 209 $ 245 Non-U.S. 757 590 Refining and marketing United States 16 39 Non-U.S. 184 349 _____ _____ Total petroleum and natural gas 1,166 1,223 Chemicals United States 230 92 Non-U.S. 317 57 Other operations 113 58 Corporate and financing (166) (270) _____ _____ NET INCOME $1,660 $1,160 ====== ====== FIRST QUARTER 1995 COMPARED WITH FIRST QUARTER 1994 Exxon Corporation estimated first quarter 1995 net income at $1,660 million, or $1.33 per share, compared with $1,160 million, or $0.92 per share, in the same period last year. Exxon's earnings of over $1.6 billion in the first quarter were significantly above the first quarter of last year as a result of improvements in the operating performance of most business segments. Relative to the first quarter of last year, crude, chemicals and copper prices were considerably stronger, and Exxon increased liquids and copper production, as well as sales of petroleum and chemicals products. Chemical earnings rose to record levels in the first quarter, more than tripling the results of a year ago. Improvements in crude prices and liquids production more than offset the effect of unseasonably warm weather which reduced natural gas sales, particularly in Europe, and further depressed natural gas prices in the U.S. Downstream results, however, were disappointing as petroleum product prices did not keep pace with rising crude supply costs. This, coupled with an industry wide over supply situation, exerted strong downward pressure on refining margins in all major markets. During the quarter, Exxon maintained its active investment program spending over $1.7 billion on capital and exploration projects and advancing several large initiatives, including projects in Azerbaijan, China and Russia. -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, worldwide production earnings benefited from crude prices that were on average more than $3.00 per barrel above the prior year. Natural gas prices in Europe also moved higher, benefiting from improved contract terms. However, unseasonably warm weather resulted in lower natural gas sales, particularly in Europe, and lower natural gas prices in the U.S. Worldwide crude production was 1,776 kbd (thousand barrels per day) up from 1,742 kbd in 1994. The increase in production came from developments in Malaysia and the North Sea, and the highest U.S. quarterly production in three years. Worldwide natural gas production of 7,159 mcfd (million cubic feet per day) was down 118 mcfd from the first quarter of last year as increased production in the Asia-Pacific region was offset by lower demand in Europe and the U.S. Exploration and production earnings in the U.S. were $209 million, down from $245 million in the first quarter of last year, as the benefit of higher crude prices was offset by lower natural gas prices. Earnings from exploration and production operations outside the U.S. were $757 million, up from $590 million in last year's first quarter, as improved crude and natural gas realizations offset the negative impact of lower European natural gas sales. Worldwide petroleum product sales of 5,031 kbd rose 70 kbd from last year's first quarter on the strength of a 3 percent increase in clean product volumes. Refining and marketing earnings benefited from lower scheduled maintenance activities this year, but were negatively affected by depressed refining margins, particularly in the U.S. and Europe. First quarter refining and marketing earnings in the U.S. were $16 million, down from $39 million the prior year. Earnings from refining and marketing operations outside the U.S. were $184 million, compared with $349 million in the same period a year ago. Worldwide chemical earnings rose sharply to a quarterly record $547 million, compared to $149 million in the first quarter of 1994. Higher product margins and sales volumes, along with lower operating expenses, produced the upturn in chemical earnings. Chemical prime product sales were a quarterly record 3,369 kt (thousand metric tons), an increase of 3 percent from the first quarter 1994. Earnings from other operating segments, including coal, minerals and power were $113 million, nearly double the $58 million earned in the first quarter of 1994. Earnings this year benefited from higher copper prices and production. Corporate and financing expenses of $166 million were down from the first quarter of last year due to a reduction in foreign exchange effects and lower interest costs. Revenue totaled $29,779 million compared with $25,964 million in the first quarter of 1994. -7- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) OTHER COMMENTS ON FIRST QUARTER COMPARISON (Continued) Net cash generation before financing activities was $2,488 million in the first three months of 1995 versus $1,798 million in the same period last year. Operating activities provided net cash of $3,282 million, an increase of $919 million from 1994's first three months, influenced mainly by higher net income and changes in operational working capital. Investing activities used net cash of $794 million, or $229 million more than a year ago primarily due to lower proceeds from asset dispositions. Net cash used in financing activities was $979 million in the first quarter of 1995 versus $1,111 million in the same quarter last year. During the first quarter of 1995, a total of 1.0 million shares were acquired at a cost of $64 million. Purchases are made in both the open market and through negotiated transactions. Purchases may be discontinued at any time. Capital and exploration expenditures totaled $1,762 million in the first quarter 1995 versus $1,577 million in the first quarter of 1994. Capital and exploration expenditures in 1995 should exceed the 1994 level as Exxon maintains its focus on profitable growth opportunities. Total debt of $12.8 billion at March 31, 1995 was essentially unchanged from year-end 1994. The corporation's debt to total capital ratio was 23.6 percent at the end of the first quarter of 1995, down from 24.3 percent at year-end 1994, primarily due to increases in shareholders' equity. Over the twelve months ended March 31, 1995, return on average shareholder's equity was 15.0 percent. Return on average capital employed, which includes debt, was 11.7 percent over the same time period. Although the corporation issues long-term debt from time to time and maintains a revolving commercial paper program, 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. -8- EXXON CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded) SPECIAL ITEMS _____________ First Quarter ____________________ 1995 1994 ____ ____ (millions of dollars) EXPLORATION & PRODUCTION ________________________ Non-U.S. Primarily tax related - $66 ___ ___ TOTAL - $66 === === -9- PART II - OTHER INFORMATION EXXON CORPORATION FOR THE QUARTER ENDED MARCH 31, 1995 Item 1. Legal Proceedings _________________________ The U.S. Environmental Protection Agency (the "EPA") has indicated that it may issue an Administrative Order or otherwise seek unspecified civil penalties against Esso Virgin Islands, Inc., a subsidiary of the registrant, in connection with alleged violations under the Clean Air Act involving failure to conduct performance testing on a timely basis and underestimations of daily throughput of gasoline in an emissions permit application. As reported in the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, the Texas Natural Resource Conservation Commission (the "TNRCC") proposed penalties totaling $847,460 with respect to a number of alleged water and waste violations at the registrant's Baytown Refinery. On March 20, 1995, the registrant and the TNRCC settled the alleged violations by entering into an Agreed Order that included penalties totaling $600,000, $460,000 of which has been paid and $140,000 of which was deferred pending the registrant's completion of a number of environmental projects. If the registrant completes these projects, the deferred portion of the penalties will not have to be paid. As reported in the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 and its Annual Report on Form 10-K for the year ended December 31, 1994, in December 1994, the EPA proposed a penalty of $144,000 with respect to an alleged violation by the registrant of certain new source performance standards under the Clean Air Act applicable to a volatile organic compound storage tank. The EPA has subsequently increased the proposed penalty to $152,600 due to a calculation error. Item 6. Exhibits and Reports on Form 8-K a) Exhibits Exhibit 27, Financial Data Schedule (included only in the electronic filing of this document). 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, 1995 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, 1995 /s/ W. BRUCE COOK _________________________________________ W. Bruce Cook, Vice President, Controller and Principal Accounting Officer -11-