EXHIBIT 13
TABLE OF CONTENTS Management's Discussion and Analysis of Financial Condition and Results of Operations .............................. F6-F12 Report of Independent Accountants ....................................................................................... F13 Consolidated Financial Statements Statement of Income .................................................................................................. F14 Balance Sheet ........................................................................................................ F15 Statement of Shareholders' Equity .................................................................................... F16 Statement of Cash Flows .............................................................................................. F17 Notes to Consolidated Financial Statements 1.Summary of Accounting Policies .................................................................................... F18 2.Accounting Change ................................................................................................. F19 3.Merger of Exxon Corporation and Mobil Corporation ................................................................. F19 4.Adjustments of Asset Carrying Amounts ............................................................................. F19 5.Reorganization Costs .............................................................................................. F19 6.Miscellaneous Financial Information ............................................................................... F20 7.Cash Flow Information ............................................................................................. F20 8.Additional Working Capital Data ................................................................................... F20 9.Equity Company Information ........................................................................................ F21 10.Investments and Advances .......................................................................................... F21 11.Investment in Property, Plant and Equipment ....................................................................... F22 12.Leased Facilities ................................................................................................. F22 13.Capital ........................................................................................................... F23 14.Employee Stock Ownership Plans .................................................................................... F24 15.Financial Instruments ............................................................................................. F24 16.Long-Term Debt .................................................................................................... F25 17.Incentive Program ................................................................................................. F26 18.Annuity Benefits and Other Postretirement Benefits ................................................................ F27 19.Litigation and Other Contingencies ................................................................................ F29 20.Income, Excise and Other Taxes .................................................................................... F30 21.Disclosures about Segments and Related Information ................................................................ F31 Supplemental Information on Oil and Gas Exploration and Production Activities ........................................ F33-F37 Quarterly Information ................................................................................................... F38 Operating Summary ....................................................................................................... F39
F2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS REVIEW OF 1999 RESULTS Earnings excluding merger expenses and special items were $8,380 million, down $426 million or 5 percent from 1998. Net income was $7,910 million, down from $8,074 million in 1998. The decline was primarily in the downstream (Refining and Marketing) where steeply rising crude oil costs could not be recovered in the marketplace. Crude oil prices rose about $14 per barrel from January to December 1999, depressing refining and marketing margins in all geographic areas. Weaker chemicals margins and lower coal prices also adversely affected earnings. However, upstream (Exploration and Production) results benefited from the increase in crude oil prices and partly offset the weakness in downstream business conditions. Record chemicals, coal and copper volumes and reduced expenses in every operating segment also benefited earnings. Results in 1999 included $470 million of net charges for special items -- $469 million of merger expenses with other special items essentially offsetting. Results in 1998 included $732 million of net special charges. Revenue for 1999 totaled $186 billion, up 9 percent from 1998, and the cost of crude oil and product purchases increased 24 percent. Excluding merger expenses, the combined total of operating costs (including operating, selling, general, administrative, exploration, depreciation and depletion expenses from the consolidated statement of income and ExxonMobil's share of similar costs for equity companies) in 1999 was $44.3 billion, down about $400 million from 1998. Base cash operating expenses, which exclude energy costs and depreciation, were down $1.2 billion, as efficiency initiatives and high grading of exploration spending more than offset higher cash expenses from new business activity and inflation. Interest expense in 1999 was $695 million, $127 million higher than 1998, mainly due to a higher debt level and unfavorable foreign exchange effects. Exploration and Production Exploration and production earnings of $5,886 million increased significantly from last year reflecting higher average crude oil prices, up over $5 per barrel from 1998. Average U.S. natural gas prices were 9 percent higher than the prior year, while European gas prices, which are tied to petroleum product prices on a lagged basis, were about 17 percent lower. Liquids production of 2,517 kbd (thousands of barrels daily) was up 1 percent from 2,502 kbd in 1998 as production from new developments in the North Sea, the Gulf of Mexico, West Africa and the Caspian offset natural field declines in North America and lower liftings in Indonesia and Malaysia. Natural gas production of 10,308 mcfd (millions of cubic feet daily) compared with 10,617 mcfd in 1998. Exploration and producing expenses were reduced from prior year levels. Earnings from U.S. exploration and production were $1,842 million, up $807 million after excluding $185 million of special charges related mainly to property write-downs in 1998. Outside the U.S., exploration and production earnings were $3,925 million, up $1,247 million after excluding a $141 million deferred tax benefit and a $22 million property write-off in 1999 and $176 million of other net special charges in 1998. Refining and Marketing Refining and marketing earnings of $1,227 million declined from last year's strong results primarily reflecting escalating crude oil costs and weaker refining and marketing margins in all geographic areas. Unfavorable foreign exchange and inventory effects also reduced earnings. Higher volumes, mainly in the U.S., and lower operating expenses provided a partial offset. Petroleum product sales were 8,887 kbd compared with 8,873 kbd in 1998. Refinery throughput was 5,977 kbd compared with 6,093 kbd in 1998. In the U.S., refining and marketing earnings were $577 million, down $614 million from the prior year after excluding $8 million of special credits related to inventory adjustments in 1998. Refining and marketing operations outside of the U.S. earned $770 million, down $1,917 million from 1998 after excluding special charges from both years. Results in 1999 included $80 million of charges for non-merger related restructuring of Japanese refining and marketing operations and a $40 million write-off associated with the cancellation of a power project in Japan, while 1998 results included $412 million of special charges largely related to the impact of lower prices on inventories and Mobil-British Petroleum (BP) alliance implementation costs. Chemicals Earnings from chemicals operations totaled $1,354 million, down $40 million or 3 percent from 1998. Industry margins declined due to lower product prices and higher feedstock costs. Prime product sales volumes of 24,485 thousand metric tons were a record and increased 4 percent from 1998. Earnings also benefited from lower operating expenses. Chemicals' results included $9 million of special charges related to the impact of lower prices on inventories in 1998. Other Operations Earnings from other operating segments totaled $426 million, an increase of $42 million from 1998. The increase reflects record copper and coal production, lower operating expenses and favorable foreign exchange effects, partly offset by depressed coal prices. Corporate and Financing Corporate and financing expenses were $514 million, $54 million higher than 1998 which included a net special credit of $112 F6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS million related to settlement of prior years' tax disputes. Excluding special items, expenses were $58 million lower reflecting lower tax-related charges. REVIEW OF 1998 RESULTS Earnings excluding special items were $8,806 million, down $2,779 million or 24 percent from 1997. Net income was $8,074 million, down $3,658 million from $11,732 million in 1997. The decline was driven by weaker crude oil prices, that on average were over $6 per barrel or 33 percent lower than 1997. Average 1998 crude oil prices were at their lowest level in over twenty years. Earnings were also adversely affected by lower natural gas prices, weaker chemicals margins and depressed copper and coal prices. However, downstream operations achieved their second highest level of earnings ever in 1998, partly offsetting the weakness seen in the other operating segments. Additionally, results in 1998 included $732 million of net special charges for the write-down of upstream properties, the impact of lower prices on inventories, the unfavorable impact of an accounting change, non-merger related restructuring provisions and implementation costs and other net charges, partially offset by the benefit resulting from the settlement of prior years' tax disputes. In 1997, results included $147 million of net credits for special items. Of these, $190 million were the result of foreign exchange impacts on deferred income tax liabilities, $181 million were for gains on asset sales and $115 million were U.S. tax related. These items were partly offset by various other special charges, mainly restructuring provisions and Mobil-BP alliance implementation costs. Revenue for 1998 totaled $170 billion, down 16 percent from 1997, and the cost of crude and product purchases declined 26 percent. The combined total of operating costs (including operating, selling, general, administrative, exploration, depreciation and depletion expenses from the consolidated statement of income and ExxonMobil's share of similar costs for equity companies) in 1998 was $44.7 billion, down $1.5 billion from 1997. Lower operating costs resulted primarily from a stronger U.S. dollar, reduced energy costs and the de-consolidation of majority owned power companies in Hong Kong and China. Excluding these effects, ExxonMobil's operating efficiencies continued to offset the impact of inflation and new business activity growth. Interest expense in 1998 declined $295 million to $568 million, principally due to the deconsolidation of power companies mentioned above and favorable foreign exchange effects. During the fourth quarter of 1998, ExxonMobil de-consolidated the majority owned power companies in Hong Kong and China retroactive to January 1, 1998. Although ExxonMobil's 1998 net income was not affected by the de-consolidation, there were several impacts to the 1998 balance sheet (see note 9). These power companies are now accounted for as equity companies, since the minority shareholder in these companies has substantive participating management rights. These rights include the minority shareholder's approval of operating policies, expense budgets, financing and investment plans and management compensation and succession plans. Exploration and Production Exploration and production earnings of $3,352 million declined substantially from 1997 reflecting crude prices that on average were over $6 per barrel lower than 1997. Lower U.S. and international natural gas prices also adversely affected earnings. Liquids production was 2,502 kbd compared with 2,527 kbd in 1997. Lower production was mainly due to the fourth quarter Longford plant outage in Australia, limitations on production in Nigeria, along with natural field declines in mature areas. Partly offsetting these effects were increased Canadian heavy oil production, increased production from new developments in the North Sea, West Africa, Eastern Canada, Azerbaijan and Kazakhstan, and increased Malaysian output. Natural gas production of 10,617 mcfd was down 277 mcfd from 1997, mainly reflecting lower Indonesian volumes. Earnings from U.S. exploration and production were $1,035 million, down $1,259 million, after excluding special charges of $185 million from 1998 and $37 million of special credits from 1997. Outside the U.S., exploration and production earnings were $2,678 million, down $1,669 million, after excluding $176 million of special charges from 1998 and $227 million of credits from 1997. Refining and Marketing Refining and marketing earnings increased $386 million to $3,474 million. Downstream industry margins in 1998 were generally higher than 1997. European refining margins were stronger, but margins in the U.S. and Asia-Pacific were weaker. Marketing margins improved in most geographic areas, particularly in the U.K. Petroleum product sales of 8,873 kbd were up from 1997 despite the impact of weaker economic conditions in Asia-Pacific. Refinery throughput was 6,093 kbd compared with 6,234 kbd in 1997. In the U.S., refining and marketing earnings were $1,191 million, up $36 million from 1997, after excluding $8 million of special credits in 1998 and $20 million of charges in 1997. Refining and marketing operations outside the U.S. earned $2,687 million, an increase of $467 million, after excluding $412 million of special charges in 1998 and $267 million of charges in 1997. Chemicals Earnings from chemicals operations totaled $1,394 million, down $377 million or 21 percent from 1997. Chemicals margins declined during the year as the result of weaker industry commodity prices. Chemical prime product sales of 23,628 thousand metric tons were down slightly from 1997 as higher sales in North America and Europe were offset by lower demand in F7 Asia-Pacific markets. Earnings in 1998 included $9 million of special charges while 1997 results included $53 million of special credits. Other Operations Earnings from other operating segments totaled $384 million, a decrease of $50 million from 1997, reflecting significantly lower copper prices, as well as lower international coal prices. The effect of lower prices was partly offset by record copper and coal production, lower operating expenses and favorable foreign exchange effects. Corporate and Financing Corporate and financing expenses were $460 million, $6 million lower than 1997. After excluding $112 million of net special credits from 1998 and $117 million from 1997, expenses decreased $11 million. MERGER OF EXXON CORPORATION AND MOBIL CORPORATION On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation (Exxon) merged with Mobil Corporation (Mobil) so that Mobil became a wholly-owned subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its name to Exxon Mobil Corporation (ExxonMobil). Under the terms of the agreement, approximately 1.0 billion shares of ExxonMobil common stock were issued in exchange for all the outstanding shares of Mobil common stock based upon an exchange ratio of 1.32015. Following the exchange, former shareholders of Exxon owned approximately 70 percent of the corporation, while former Mobil shareholders owned approximately 30 percent of the corporation. Each outstanding share of Mobil preferred stock was converted into one share of a new class of ExxonMobil preferred stock. As a result of the Merger, the accounts of certain refining, marketing and chemicals operations jointly controlled by the combining companies have been included in the consolidated financial statements. These operations were previously accounted for by Exxon and Mobil as separate companies using the equity method of accounting. The Merger was accounted for as a pooling of interests. Accordingly, the consolidated financial statements give retroactive effect to the merger, with all periods presented as if Exxon and Mobil had always been combined. In association with the merger between Exxon and Mobil, $625 million pretax ($469 million after-tax) of costs were recorded as merger related expenses. Charges included separation expenses related to workforce reductions (approximately 1,750 employees at year-end 1999) and merger closing costs. The reserve balance at year-end 1999 of approximately $330 million is expected to be expended in 2000. Merger related expenses are expected to grow to approximately $2.5 billion on a cumulative basis by 2002. Pre-tax operating synergies associated with the Merger, including cost savings and efficiency gains, are expected to reach $3.8 billion per year by 2002. Certain property -- primarily refining, marketing, pipeline and natural gas distribution assets -- must be divested as a condition of the regulatory approval of the Merger by the U.S. Federal Trade Commission and the European Commission. These assets, with a carrying value of approximately $3 billion, are expected to be sold in the year 2000. Before tax proceeds for these assets are expected to be in the range of $4 to $5 billion and should be received in 2000. The properties have historically earned approximately $200 million per year. REORGANIZATION COSTS In the first quarter of 1999 the corporation recorded a $120 million after-tax charge for the reorganization of Japanese refining and marketing operations in its wholly-owned Esso Sekiyu K.K. and 50.1 percent owned General Sekiyu K.K. affiliates. The reorganization resulted in the reduction of approximately 700 administrative, financial, logistics and marketing service employee positions. The Japanese affiliates recorded a combined charge of $216 million (before tax) to selling, general and administrative expenses for the employee related costs. Substantially all cash expenditures anticipated in the restructuring provision have been paid as of the end of 1999. General Sekiyu also recorded a $211 million (before tax) charge to depreciation and depletion for the write-off of costs associated with the cancellation of a power plant project at the Kawasaki terminal. Manpower reduction savings associated with this reorganization are anticipated to reach $50 million per year after tax in 2000. As indicated in note 5, during 1998 Mobil implemented reorganization programs in Australia, New Zealand and Latin America to integrate regional fuels and lubes operations. In Europe Mobil completed the implementation of the downstream alliance with BP. In 1997, Mobil and BP announced that the European downstream alliance would implement a major reorganization of its lubricant base oil refining business. Also in 1997, Mobil commenced two major cost savings initiatives in Asia-Pacific: one in Japan in response to the deregulated business environment and the other in Australia. After-tax costs for programs initiated in 1998 were $41 million and for the 1997 programs were $189 million. Benefits associated with these undertakings are estimated at $140 million per year after tax and should be realized by the end of 2000. The following table summarizes the activity in the reorganization reserve. The 1997 opening balance represents accruals for provisions taken in prior years. Opening Balance at Balance Additions Deductions Year End - - - - - - - - - - - - - - - - ---------------------------------------------------------------------- (millions of dollars) 1997 $368 $272 $340 $300 1998 300 50 181 169 1999 169 224 342 51 F8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAPITAL AND EXPLORATION EXPENDITURES Capital and exploration expenditures in 1999 were $13.3 billion, down from $15.5 billion in 1998, reflecting timing of major project expenditures and reduced activity levels resulting from the low-price environment in early 1999. Exploration and production spending was down 16 percent to $8.4 billion in 1999, from $10.0 billion in 1998, primarily reflecting the completion of several major projects in the North Sea, a smaller program in the U.S. in 1999 and lower exploration expenses. Capital investments in refining and marketing totaled $2.4 billion in 1999, down $0.6 billion from 1998, primarily due to lower spending in the retail businesses. Chemicals capital expenditures were $2.2 billion in 1999, up from $2.1 billion in 1998, reflecting higher investments for plant capacity in Asia-Pacific, Saudi Arabia and the Gulf Coast. Capital and exploration expenditures in the U.S. totaled $3.4 billion in 1999, a decrease of $0.8 billion from 1998, reflecting lower spending in both exploration and production and refining and marketing. Spending outside the U.S. of $9.9 billion in 1999 compared with $11.3 billion in 1998, reflecting lower expenditures in both exploration and production and refining and marketing, slightly offset by higher spending in chemicals. Firm commitments related to capital projects totaled approximately $4.6 billion at the end of 1999, compared with $7.4 billion at year-end 1998. The largest single commitment in 1999 was $2.1 billion associated with the development of natural gas resources in Malaysia. The corporation expects to fund the majority of these commitments through internally generated funds. MARKET RISKS, INFLATION AND OTHER UNCERTAINTIES In the past, crude, product and chemical prices have fluctuated widely in response to changing market forces. The impacts of these price fluctuations on earnings from exploration and production operations, refining and marketing operations and chemical operations have been varied, tending at times to be offsetting. The markets for crude oil and natural gas have a history of significant price volatility. Although prices will occasionally drop precipitously, industry prices over the long term will continue to be driven by market supply and demand fundamentals. Accordingly, the corporation tests the viability of its oil and gas operations based on long-term price projections. The corporation's assessment is that its operations will continue to be successful in a variety of market conditions. This is the outcome of disciplined investment and asset management programs. Investment opportunities are tested against a variety of market conditions, including low price scenarios. As a result, investments that would succeed only in highly favorable price environments are screened out of the investment plan. In addition, the corporation has had an aggressive asset management program in which under-performing assets are either improved to acceptable levels or divested. The asset management program involves a disciplined, regular review to ensure that all assets are contributing to the corporation's strategic and financial objectives. The result has been the creation of a very efficient capital base. In 1999, no oil or gas assets required adjustments for impairment. Risk Management The corporation's size, geographic diversity and the complementary nature of the upstream, downstream and chemicals businesses mitigate the corporation's risk from changes in interest rates, currency rates and commodity prices. As a result, the corporation makes limited use of derivatives to hedge exposures arising from existing transactions. Pre-merger, Mobil managed these exposures using defined benchmarks for hedging to achieve a desired risk profile for the environment in which Mobil operated and financed its assets. The contract positions related to these pre-merger activities are being phased down as such contracts are settled or mature. Interest rate, foreign exchange rate and commodity price exposures from the contracts undertaken in accordance with the corporation's policies have not been significant. Derivative instruments are not held for trading purposes nor do they have leveraged features. Debt-Related Instruments The corporation is exposed to changes in interest rates, primarily as a result of its short-term and long-term debt with both fixed and floating interest rates. The corporation makes limited use of interest rate swap agreements to adjust the ratio of fixed and floating rates in the debt portfolio. The impact of a 100 basis point change in interest rates affecting the corporation's debt would not be material to earnings, cash flow or fair value. Pre-merger, Mobil's benchmark for interest rate risk was 100 percent floating rate. Mobil's benchmark was also to fully hedge exposures to foreign currency rate risk resulting from debt instruments denominated in a currency other than the functional currency of the borrower or lender. Foreign Currency Exchange Rate Instruments The corporation conducts business in many foreign currencies and is subject to foreign currency exchange rate risk on cash flows related to sales, expenses, financing and investment transactions. The impacts of fluctuations in foreign currency exchange rates on ExxonMobil's geographically diverse operations are varied and often offsetting in amount. The corporation makes limited use of currency exchange contracts to reduce the risk of adverse foreign currency movements related to certain foreign currency debt obligations. Under the former Mobil policy, the benchmark used by Mobil was to fully hedge identified net exposures to foreign currency exchange rate risk resulting from transactions in currencies that were not the functional currency of the affected affiliate. Aggregate foreign exchange transaction gains and losses included in net income are discussed in note 6 to the consolidated financial statements. F9 Commodity Instruments The corporation makes limited use of commodity forwards, swaps and futures contracts of short duration to mitigate the risk of unfavorable price movements on certain crude, natural gas and petroleum product purchases and sales. Prior to the merger, Mobil's benchmark for hydrocarbon sales and purchases was prevailing market price. Mobil used futures, forwards, swaps and options to achieve this benchmark. Inflation and Other Uncertainties The general rate of inflation in most major countries of operation has been relatively low in recent years, and the associated impact on operating costs has been countered by cost reductions from efficiency and productivity improvements. The operations and earnings of the corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the corporation vary greatly from country to country and are not predictable. RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board released Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities Information." As amended by Statement No. 137 issued in June 1999, this statement, which must be adopted beginning no later than January 1, 2001 for calendar year companies such as the corporation, establishes accounting and reporting standards for derivative instruments. The statement requires that an entity recognize all derivatives as either assets or liabilities in the financial statements and measure those instruments at fair value, and it defines the accounting for changes in the fair value of the derivatives depending on the intended use of the derivative. Adoption of this statement is not expected to have a material effect upon the corporation's operations or financial condition. SITE RESTORATION AND OTHER ENVIRONMENTAL COSTS Over the years the corporation has accrued provisions for estimated site restoration costs to be incurred at the end of the operating life of certain of its facilities and properties. In addition, the corporation accrues provisions for environmental liabilities in the many countries in which it does business when it is probable that obligations have been incurred and the amounts can be reasonably estimated. This policy applies to assets or businesses currently owned or previously disposed. The corporation has accrued provisions for probable environmental remediation obligations at various sites, including multi-party sites where ExxonMobil has been identified as one of the potentially responsible parties by the U.S. Environmental Protection Agency. The involvement of other financially responsible companies at these multi-party sites mitigates ExxonMobil's actual joint and several liability exposure. At present, no individual site is expected to have losses material to ExxonMobil's operations, financial condition or liquidity. Charges made against income for site restoration and environmental liabilities were $219 million in 1999, $240 million in 1998 and $190 million in 1997. At the end of 1999, accumulated site restoration and environmental provisions, after reduction for amounts paid, amounted to $3.7 billion. ExxonMobil believes that any cost in excess of the amounts already provided for in the financial statements would not have a materially adverse effect upon the corporation's operations, financial condition or liquidity. In 1999, the corporation spent $2,052 million (of which $650 million were capital expenditures) on environmental conservation projects and expenses worldwide, mostly dealing with air and water conservation. Total expenditures for such activities are expected to be about $2 billion in both 2000 and 2001 (with capital expenditures representing about 25 percent of the total). TAXES Income, excise and all other taxes and duties totaled $61.5 billion in 1999, an increase of $1.6 billion or 3 percent from 1998. Income tax expense, both current and deferred, was $3.2 billion compared to $3.9 billion in 1998, reflecting lower pre-tax income in 1999, the impact of lower foreign tax rates and favorable resolution of tax-related issues. The effective tax rate was 31.8 percent in 1999 versus 35.2 percent in 1998. Excise and all other taxes and duties increased $2.3 billion to $58.3 billion, reflecting higher prices. Income, excise and all other taxes and duties totaled $59.9 billion in 1998, a decrease of $4.8 billion or 7 percent from 1997. Income tax expense, both current and deferred, was $3.9 billion compared to $7.6 billion in 1997, reflecting lower pre-tax income in 1998, the impact of lower foreign tax rates and favorable resolution of tax-related issues. The effective tax rate was 35.2 percent in 1998 versus 41.1 percent in 1997. Excise and all other taxes and duties declined $1.2 billion to $56.0 billion, reflecting lower prices. F10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES In 1999, cash provided by operating activities totaled $15.0 billion, down $1.4 billion from 1998. Major sources of funds were net income of $7.9 billion and non-cash provisions of $8.3 billion for depreciation and depletion. Cash used in investing activities totaled $11.0 billion, down $1.0 billion from 1998 primarily as a result of lower additions to property, plant and equipment, partly offset by lower sales of subsidiaries and property, plant and equipment. Cash used in financing activities was $4.8 billion, down $2.4 billion, primarily due to fewer common share purchases. Dividend payments on common shares increased from $1.666 per share to $1.687 per share and totaled $5.8 billion, a payout of 74 percent. Total consolidated debt increased by $2.0 billion to $19.0 billion. Shareholders' equity increased by $1.3 billion to $63.5 billion. The ratio of debt to capital increased to 22 percent, reflecting higher debt levels. During 1999, Exxon purchased 8.3 million shares of its common stock for the treasury at a cost of $648 million. These purchases were used to offset shares issued in conjunction with the company's benefit plans and programs. Purchases were made both in the open market and through negotiated transactions. Consistent with pooling of interest accounting requirements, these repurchases were suspended effective with the close of the ExxonMobil merger on November 30, 1999. Previously, as a consequence of the then proposed merger of Exxon and Mobil announced on December 1, 1998, both companies' repurchase programs to reduce the number of shares outstanding were discontinued. In 1998, cash provided by operating activities totaled $16.4 billion, down $5.0 billion from 1997. Major sources of funds were net income of $8.1 billion and non-cash provisions of $8.4 billion for depreciation and depletion. Cash used in investing activities in 1998 totaled $12.0 billion, up $1.1 billion from 1997 primarily as a result of higher additions to property, plant and equipment and lower sales of subsidiaries and property, plant and equipment. Cash used in financing activities was $7.1 billion in 1998. Dividend payments on common shares increased from $1.619 per share to $1.666 per share and totaled $5.8 billion, a payout of 72 percent. Total consolidated debt was essentially unchanged from 1997, reflecting the de-consolidation of majority owned companies in Hong Kong and China discussed in note 9 to the consolidated financial statements, offset by increased borrowing. Shareholders' equity decreased by $1.0 billion to $62.1 billion. The ratio of debt to capital increased from 20.3 percent to 20.6 percent. During 1998, Exxon and Mobil purchased a combined 53.1 million shares of their common stock at a cost of $3.5 billion. These purchases reflect both Exxon's increased share repurchases announced in the first quarter of 1997 and Mobil's increased share repurchases announced in the third quarter of 1998, as well as purchases to offset shares issued in conjunction with the company's benefit plans and programs. Purchases were made in both the open market and through negotiated transactions. As a consequence of the then proposed merger of Exxon and Mobil announced on December 1, 1998, both companies' repurchase programs to reduce the number of shares outstanding were discontinued. 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. As discussed in note 15 to the consolidated financial statements, the corporation's financial derivative activities are limited to simple risk management strategies. The corporation does not trade in financial derivatives nor does it use financial derivatives with leveraged features. The corporation maintains a system of controls that includes a policy covering the authorization, reporting, and monitoring of derivative activity. The corporation's derivative activities pose no material credit or market risks to ExxonMobil's operations, financial condition or liquidity. Litigation and Other Contingencies As discussed in note 19 to the consolidated financial statements, a number of lawsuits, including class actions, were brought in various courts against the corporation and certain of its subsidiaries relating to the accidental release of crude oil from the tanker Exxon Valdez in 1989. Essentially all of these lawsuits have now been resolved or are subject to appeal. On September 24, 1996, the United States District Court for the District of Alaska entered a judgment in the amount of $5.058 billion in the Exxon Valdez civil trial that began in May 1994. The District Court awarded approximately $19.6 million in compensatory damages to fisher plaintiffs, $38 million in prejudgment interest on the compensatory damages and $5 billion in punitive damages to a class composed of all persons and entities who asserted claims for punitive damages from the corporation as a result of the Exxon Valdez grounding. The District Court also ordered that these awards shall bear interest from and after entry of the judgment. The District Court stayed execution on the judgment pending appeal based on a $6.75 billion letter of credit posted by the corporation. The corporation has appealed the judgment. The corporation has also appealed the District Court's denial of its renewed motion for a new trial. The United States Court of Appeals for the Ninth Circuit heard oral arguments on the appeals on May 3, 1999. ExxonMobil continues to believe that the punitive damages in this case are unwarranted and that the judgment should be set aside or substantially reduced by the appellate courts. The ultimate cost to ExxonMobil from the lawsuits arising from the Exxon Valdez grounding is not possible to predict and may not be resolved for a number of years. The U.S. Tax Court has decided the issue with respect to the pricing of crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of the corporation. This decision is subject to F11 appeal. Certain other issues for the years 1979-1988 remain pending before the Tax Court. Ultimate resolution of these issues and several other tax and legal issues, notably final resolution of the gas lifting imbalance in the Common Area (along the German/Dutch border), is not expected to have a materially adverse effect upon the corporation's operations, financial condition or liquidity. There are no events or uncertainties known to management beyond those already included in reported financial information that would indicate a material change in future operating results or financial condition. THE EURO On January 1, 1999, eleven European countries established fixed conversion rates between their existing sovereign currencies ("legacy currencies") and adopted the euro as their common legal currency. The euro and the legacy currencies are each legal tender for transactions now. Beginning January 1, 2002, the participating countries will issue euro-denominated bills and coins. By July 1, 2002 each country will withdraw its sovereign currency and transactions thereafter will be conducted solely in euros. Based on work to date, the conversion to the euro is not expected to have a material effect on the corporation's operations, financial condition or liquidity. YEAR 2000 ISSUE The Year 2000 issue resulted from computer programs being written using two digits rather than four to define a specific year, leading to the potential for problems during transition to the year 2000. ExxonMobil's preparation work for the Year 2000 rollover spanned several years. The scope of this work encompassed business information systems, infrastructure and technical and field systems, including systems utilizing embedded technology, such as micro-controllers. ExxonMobil completed preparation work in 1999, and the rollover occurred with no significant events or operational impacts. The total cost to the corporation of achieving Year 2000 compliant systems was approximately $410 million pre-tax, primarily over the 1997-1999 timeframe. Total expenditures in 1999 were approximately $120 million pre-tax. FORWARD-LOOKING STATEMENTS Statements in this discussion regarding expectations, plans and future events or conditions are forward-looking statements. Actual future results, including synergy benefits from the merger; asset divestment proceeds; financing sources; the resolution of contingencies; the effect of changes in prices, interest rates and other market conditions; and environmental and capital expenditures could differ materially depending on a number of factors. These factors include management's ability to implement merger plans successfully and on schedule; the outcome of commercial negotiations; and other factors discussed above and in Item 1 of ExxonMobil's most recent annual report on Form 10-K. F12 REPORT OF INDEPENDENT ACCOUNTANTS [LOGO] PricewaterhouseCoopers LLP Dallas, Texas February 23, 2000 To the Shareholders of Exxon Mobil Corporation In our opinion, based on our audits and the report of other auditors, the consolidated financial statements appearing on pages F14 through F32 present fairly, in all material respects, the financial position of Exxon Mobil Corporation and its subsidiary companies at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements give retroactive effect to the merger of Mobil Corporation on November 30, 1999 in a transaction accounted for as a pooling of interests, as described in note 3 to the consolidated financial statements. We did not audit the financial statements of Mobil Corporation, which statements reflect total assets of $42,754 million at December 31, 1998, and total revenues of $53,531 million and $65,906 million for the years ended December 31, 1998 and 1997, respectively. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for Mobil Corporation, is based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for the opinion expressed above. As discussed in note 2 to the consolidated financial statements, the corporation changed its method of accounting for the cost of start-up activities in 1998. /s/ PRICEWATERHOUSECOOPERS LLP F13 CONSOLIDATED STATEMENT OF INCOME
1999 1998 1997 - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------- (millions of dollars) Revenue Sales and other operating revenue, including excise taxes $ 182,529 $ 165,627 $ 197,735 Earnings from equity interests and other revenue 2,998 4,015 4,011 ---------------------------------------- Total revenue $ 185,527 $ 169,642 $ 201,746 ---------------------------------------- Costs and other deductions Crude oil and product purchases $ 77,011 $ 62,145 $ 83,441 Operating expenses 16,806 17,666 19,475 Selling, general and administrative expenses 13,134 12,925 13,574 Depreciation and depletion 8,304 8,355 8,228 Exploration expenses, including dry holes 1,246 1,506 1,252 Merger related expenses 625 - - Interest expense 695 568 863 Excise taxes 21,646 20,926 21,183 Other taxes and duties 34,765 33,203 33,867 Income applicable to minority and preferred interests 145 265 526 ---------------------------------------- Total costs and other deductions $ 174,377 $ 157,559 $ 182,409 ---------------------------------------- Income before income taxes $ 11,150 $ 12,083 $ 19,337 Income taxes 3,240 3,939 7,605 ---------------------------------------- Income before cumulative effect of accounting change $ 7,910 $ 8,144 $ 11,732 Cumulative effect of accounting change - (70) - ---------------------------------------- Net income $ 7,910 $ 8,074 $ 11,732 ======================================== Net income per common share (dollars) Before cumulative effect of accounting change $ 2.28 $ 2.33 $ 3.32 Cumulative effect of accounting change - (0.02) - ---------------------------------------- Net income $ 2.28 $ 2.31 $ 3.32 ---------------------------------------- Net income per common share - assuming dilution (dollars) Before cumulative effect of accounting change $ 2.25 $ 2.30 $ 3.28 Cumulative effect of accounting change - (0.02) - ---------------------------------------- Net income $ 2.25 $ 2.28 $ 3.28 ----------------------------------------
The information on pages F18 through F32 is an integral part of these statements. F14 CONSOLIDATED BALANCE SHEET
Dec. 31 Dec. 31 1999 1998 - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------------------------------------- (millions of dollars) Assets Current assets Cash and cash equivalents $ 1,688 $ 2,386 Other marketable securities 73 50 Notes and accounts receivable, less estimated doubtful amounts 19,155 15,829 Inventories Crude oil, products and merchandise 7,370 7,537 Materials and supplies 1,122 1,155 Prepaid taxes and expenses 1,733 1,637 ------------------------- Total current assets $ 31,141 $ 28,594 Investments and advances 14,544 13,915 Property, plant and equipment, at cost, less accumulated depreciation and depletion 94,043 92,583 Other assets, including intangibles, net 4,793 4,243 ------------------------- Total assets $ 144,521 $ 139,335 ========================= Liabilities Current liabilities Notes and loans payable $ 10,570 $ 8,484 Accounts payable and accrued liabilities 25,492 23,154 Income taxes payable 2,671 2,143 ------------------------- Total current liabilities $ 38,733 $ 33,781 Long-term debt 8,402 8,532 Annuity reserves and accrued liabilities 12,902 13,002 Deferred income tax liabilities 16,251 16,749 Deferred credits 1,079 1,524 Equity of minority and preferred shareholders in affiliated companies 3,688 3,627 ------------------------- Total liabilities $ 81,055 $ 77,215 ------------------------- Shareholders' equity Class A preferred stock without par value (16.5 million shares authorized) $ - $ 105 Class B preferred stock without par value (0.2 million shares authorized) - 641 Benefit plan related balances (298) (793) Common stock without par value (4,500 million shares authorized) 3,403 4,870 Earnings reinvested 75,055 75,109 Accumulated other nonowner changes in equity Cumulative foreign exchange translation adjustment (2,300) (1,573) Minimum pension liability adjustment (299) (408) Unrealized gains on stock investments 31 - Common stock held in treasury (533 million shares in 1999 and 711 million shares in 1998) (12,126) (15,831) ------------------------- Total shareholders' equity $ 63,466 $ 62,120 ------------------------- Total liabilities and shareholders' equity $ 144,521 $ 139,335 =========================
The information on pages F18 through F32 is an integral part of these statements. F15
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY 1999 1998 1997 ------------------------------------------------------------------------------------ Nonowner Nonowner Nonowner Shareholders' Changes in Shareholders' Changes in Shareholders' Changes in Equity Equity Equity Equity Equity Equity ------------------------------------------------------------------------------------ (millions of dollars) Class A preferred stock outstanding at end of year $ - $ 105 $ 190 Class B preferred stock outstanding at end of year - 641 665 Benefit plan related balances (298) (793) (554) Common stock (see note 13) At beginning of year 4,870 4,766 5,181 Issued 92 104 84 Other 303 - - Cancellation of common stock held in treasury (1,862) - (499) -------- -------- -------- At end of year $ 3,403 $ 4,870 $ 4,766 -------- -------- -------- Earnings reinvested At beginning of year 75,109 72,875 76,264 Net income for year 7,910 $ 7,910 8,074 $ 8,074 11,732 $ 11,732 Dividends - common and preferred shares (5,872) (5,840) (5,751) Cancellation of common stock held in treasury (2,092) - (9,370) -------- -------- -------- At end of year $ 75,055 $ 75,109 $ 72,875 -------- -------- -------- Accumulated other nonowner changes in equity At beginning of year (1,981) (1,940) 1,053 Foreign exchange translation adjustment (727) (727) 367 367 (2,993) (2,993) Minimum pension liability adjustment 109 109 (408) (408) - - Unrealized gains on stock investments 31 31 - - - - -------- -------- -------- At end of year $ (2,568) $ (1,981) $ (1,940) -------- -------- -------- -------- -------- -------- Total $ 7,323 $ 8,033 $ 8,739 ======== ======== ======== Common stock held in treasury At beginning of year (15,831) (12,881) (20,163) Acquisitions, at cost (976) (3,523) (3,101) Dispositions 727 573 514 Cancellation, returned to unissued 3,954 - 9,869 -------- -------- -------- At end of year $(12,126) $(15,831) $(12,881) -------- -------- -------- Shareholders' equity at end of year $ 63,466 $ 62,120 $ 63,121 ======== ======== ======== Share Activity ---------------------------------------------------------------------- 1999 1998 1997 ---------------------------------------------------------------------- (millions of shares) Class A preferred stock - 2 3 Class B preferred stock - 0.2 0.2 Common stock Issued (see note 13) At beginning of year 4,169 4,164 4,802 Issued 4 5 4 Cancelled (163) - (642) ------- ------- ------- At end of year 4,010 4,169 4,164 ------- ------- ------- Held in treasury (see note 13) At beginning of year (711) (674) (1,279) Acquisitions (17) (53) (53) Dispositions 32 16 16 Cancellation, returned to unissued 163 - 642 ------- ------- ------- At end of year (533) (711) (674) ------- ------- ------- Common shares outstanding at end of year 3,477 3,458 3,490 ======= ======= =======
The information on pages F18 through F32 is an integral part of these statements. F16 CONSOLIDATED STATEMENT OF CASH FLOWS
1999 1998 1997 - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of dollars) Cash flows from operating activities Net income Accruing to ExxonMobil shareholders $ 7,910 $ 8,074 $ 11,732 Accruing to minority and preferred interests 145 265 526 Adjustments for non-cash transactions Depreciation and depletion 8,304 8,355 8,228 Deferred income tax charges/(credits) (1,439) 318 834 Annuity and accrued liability provisions 412 (251) 420 Dividends received greater than/(less than) equity in current earnings of equity companies 146 328 73 Changes in operational working capital, excluding cash and debt Reduction/(increase) - Notes and accounts receivable (3,478) 2,170 2,078 - Inventories 50 438 292 - Prepaid taxes and expenses 177 8 (30) Increase/(reduction) - Accounts and other payables 3,046 (3,010) (2,884) All other items - net (260) (259) 173 ----------------------------------- Net cash provided by operating activities $ 15,013 $ 16,436 $ 21,442 ----------------------------------- Cash flows from investing activities Additions to property, plant and equipment $(10,849) $(12,730) $(11,652) Sales of subsidiaries and property, plant and equipment 854 1,522 2,193 Additional investments and advances (1,476) (1,469) (1,741) Sales of investments and collection of advances 505 698 363 Additions to other marketable securities (61) (61) (37) Sales of other marketable securities 42 58 39 ----------------------------------- Net cash used in investing activities $(10,985) $(11,982) $(10,835) ----------------------------------- Net cash generation before financing activities $ 4,028 $ 4,454 $ 10,607 ----------------------------------- Cash flows from financing activities Additions to long-term debt $ 454 $ 1,384 $ 1,089 Reductions in long-term debt (341) (305) (806) Additions to short-term debt 1,870 930 1,118 Reductions in short-term debt (2,359) (2,175) (2,591) Additions/(reductions) in debt with less than 90 day maturity 2,210 2,384 282 Cash dividends to ExxonMobil shareholders (5,872) (5,843) (5,757) Cash dividends to minority interests (219) (387) (420) Changes in minority interests and sales/(purchases) of affiliate stock (200) (84) 204 Common stock acquired (670) (3,547) (3,122) Common stock sold 348 507 424 ----------------------------------- Net cash used in financing activities $ (4,779) $ (7,136) $ (9,579) ----------------------------------- Effects of exchange rate changes on cash $ 53 $ 23 $ (127) ----------------------------------- Increase/(decrease) in cash and cash equivalents $ (698) $ (2,659) $ 901 Cash and cash equivalents at beginning of year 2,386 5,045 4,144 ----------------------------------- Cash and cash equivalents at end of year $ 1,688 $ 2,386 $ 5,045 ===================================
The information on pages F18 through F32 is an integral part of these statements. F17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The corporation's principal business is energy, involving the worldwide exploration, production, transportation and sale of crude oil and natural gas and the manufacture, transportation and sale of petroleum products. The corporation is also a major worldwide manufacturer and marketer of petrochemicals and participates in coal and minerals mining and electric power generation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The accompanying consolidated financial statements and the supporting and supplemental material are the responsibility of the management of Exxon Mobil Corporation. 1. Summary of Accounting Policies Principles of Consolidation. The consolidated financial statements include the accounts of those significant subsidiaries owned directly or indirectly with more than 50 percent of the voting rights held by the corporation, and for which other shareholders do not possess the right to participate in significant management decisions. Amounts representing the corporation's percentage interest in the underlying net assets of other significant subsidiaries and less than majority owned companies in which a significant equity ownership interest is held, are included in "Investments and advances"; the corporation's share of the net income of these companies is included in the consolidated statement of income caption "Earnings from equity interests and other revenue." Investments in other companies, none of which is significant, are generally included in "Investments and advances" at cost or less. Dividends from these companies are included in income as received. Revenue Recognition. Revenues associated with sales of crude oil, natural gas, petroleum and chemical products and all other items are recorded when title passes to the customer. Revenues from the production of natural gas properties in which the corporation has an interest with the other producers are recognized on the basis of the company's net working interest. Differences between actual production and net working interest volumes are not significant. Derivative Instruments. As discussed in footnote 15, the corporation makes limited use of derivative instruments to hedge its exposures associated with interest rates, foreign currency exchange rates and hydrocarbon prices. Gains and losses on hedging contracts are recognized concurrent with the recognition of the economic impact of the underlying exposures using either the accrual or deferral method of accounting. In order to qualify for hedge accounting, the derivative instrument must be designated and effective as a hedge. The accrual method is used for interest rate swaps, cross-currency interest rate swaps and commodity swaps. Under the accrual method, differentials in the swapped amounts are recorded as adjustments of the underlying periodic cash flows that are being hedged. If these swaps are terminated, the gains and losses are amortized over the original lives of such contracts. The deferral method is used for futures exchange contracts, forward contracts and commodity swaps. Gains and losses resulting from changes in value of derivative instruments are deferred and recognized in the same period as the gains and losses of the items being hedged. Cash flow from derivative instruments that qualify for hedge accounting is included in the same category for cash flow purposes as the item being hedged. Inventories. Crude oil, products and merchandise inventories are carried at the lower of current market value or cost (generally determined under the last-in, first-out method-LIFO). Costs include applicable purchase costs and operating expenses but not general and administrative expenses or research and development costs. Inventories of materials and supplies are valued at cost or less. Property, Plant and Equipment. Depreciation, depletion and amortization, based on cost less estimated salvage value of the asset, are primarily determined under either the unit-of-production method or the straight-line method. Unit-of-production rates are based on oil, gas and other mineral reserves estimated to be recoverable from existing facilities. The straight-line method of depreciation is based on estimated asset service life taking obsolescence into consideration. Maintenance and repairs are expensed as incurred. Major renewals and improvements are capitalized and the assets replaced are retired. The corporation's exploration and production activities are accounted for under the "successful efforts" method. Under this method, costs of productive wells and development dry holes, both tangible and intangible, as well as productive acreage are capitalized and amortized on the unit-of-production method. Costs of that portion of undeveloped acreage likely to be unproductive, based largely on historical experience, are amortized over the period of exploration. Other exploratory expenditures, including geophysical costs, other dry hole costs and annual lease rentals, are expensed as incurred. Exploratory wells that find oil and gas in an area requiring a major capital expenditure before production could begin are evaluated annually to assure that commercial quantities of reserves have been found or that additional exploration work is underway or planned. Exploratory well costs not meeting either of these tests are charged to expense. Oil, gas and other properties held and used by the corporation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The corporation estimates the future undiscounted cash flows of the affected properties to judge the recoverability of carrying amounts. In general, analyses are based on proved reserves, except in circumstances where it is probable that additional resources will be developed and contribute to cash flows in the future. Environmental Conservation and Site Restoration Costs. Liabilities for environmental conservation are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. These liabilities are not reduced by possible recoveries from third parties, and projected cash expenditures are not discounted. Site restoration costs that may be incurred by the corporation at the end of the operating life of certain of its facilities and properties are reserved ratably over the asset's productive life. F18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Foreign Currency Translation. The "functional currency" for translating the accounts of the majority of refining, marketing and chemical operations outside the U.S. is the local currency. Local currency is also used for exploration and production operations that are relatively self-contained and integrated within a particular country, such as in Canada, the United Kingdom, Norway and Continental Europe. The U.S. dollar is used for operations in highly inflationary economies, in Singapore which is predominantly export oriented and for some exploration and production operations, primarily in Malaysia, Indonesia, Nigeria, Equatorial Guinea and the Middle East. For all operations, gains or losses on remeasuring foreign currency transactions into functional currency are included in income. 2. Accounting Change Effective as of January 1, 1998, the corporation adopted the American Institute of Certified Public Accountants' Statement of Position 98-5, "Reporting on the Costs of Start-up Activities." This statement requires that costs of start-up activities and organizational costs be expensed as incurred. The cumulative effect of this accounting change on years prior to 1998 was a charge of $70 million (net of $70 million income tax effect), or $0.02 per common share. 3. Merger of Exxon Corporation and Mobil Corporation On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation (Exxon) merged with Mobil Corporation (Mobil) so that Mobil became a wholly-owned subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its name to Exxon Mobil Corporation (ExxonMobil). Under the terms of the agreement, approximately 1.0 billion shares of ExxonMobil common stock were issued in exchange for all the outstanding shares of Mobil common stock based upon an exchange ratio of 1.32015. Following the exchange, former shareholders of Exxon owned approximately 70 percent of the corporation, while former Mobil shareholders owned approximately 30 percent of the corporation. Each outstanding share of Mobil preferred stock was converted into one share of a new class of ExxonMobil preferred stock. As a result of the Merger, the accounts of certain refining, marketing and chemicals operations jointly controlled by the combining companies have been included in the consolidated financial statements. These operations were previously accounted for by Exxon and Mobil as separate companies using the equity method of accounting. The Merger was accounted for as a pooling of interests. Accordingly, the consolidated financial statements give retroactive effect to the Merger, with all periods presented as if Exxon and Mobil had always been combined. Certain reclassifications have been made to conform the presentation of Exxon and Mobil. The following table sets forth summary data for the separate companies and the combined amounts for periods prior to the Merger. Nine Months Year Ended Ended September 30 December 31 ------------ ---------------------- 1999 1998 1997 - - - - - - - - - - - - - - - - ------------------------------------------------------------------------- (millions of dollars) Revenues Exxon $ 89,378 $ 117,772 $ 137,242 Mobil 42,782 53,531 65,906 Adjustments (1) 6,033 7,987 9,925 Eliminations (7,248) (9,648) (11,327) ----------------------------------------------- ExxonMobil $ 130,945 $ 169,642 $ 201,746 =============================================== Net Income Exxon $ 3,725 $ 6,370 $ 8,460 Mobil 1,901 1,704 3,272 ----------------------------------------------- ExxonMobil $ 5,626 $ 8,074 $ 11,732 =============================================== (1) Consolidation of activities previously accounted for using the equity method of accounting. In association with the Merger, $625 million pre-tax ($469 million after-tax) of costs were recorded as merger related expenses. Charges included separation expenses of approximately $350 million related to workforce reductions (approximately 1,750 employees at year-end 1999), plus implementation and merger closing costs. The reserve balance, primarily related to severance, at year end 1999 of approximately $330 million, is expected to be expended in 2000. Certain property -- primarily refining, marketing, pipeline and natural gas distribution assets -- must be divested as a condition of the regulatory approval of the Merger by the U.S. Federal Trade Commission and the European Commission. These assets, with a carrying value of approximately $3 billion, are expected to be sold in the year 2000. The properties have historically earned approximately $200 million per year. 4. Adjustments of Asset Carrying Amounts In 1998, as a result of lower worldwide crude oil and petroleum product prices, Mobil recorded a charge of $325 million before tax ($270 million after tax) in crude oil and product purchases to adjust certain inventories to their market value. Also in 1998, a charge of $491 million before tax ($387 million after tax) was recorded by Mobil to write down certain oil and gas properties to fair value, mainly in the U.S., Latin America and Asia-Pacific. These write-downs were the result of the reduction of hydrocarbon reserves and governmental actions. Of this amount, $352 million was recorded in depreciation and depletion with the remainder recorded primarily in operating expenses and exploration expenses. 5. Reorganization Costs In the first quarter of 1999, the corporation recorded a $120 million after-tax charge for the non-merger related reorganization of Japanese refining and marketing operations in its wholly-owned Esso Sekiyu K.K. and 50.1 percent owned General Sekiyu K.K. affiliates. The reorganization resulted in the reduction of approximately 700 administrative, financial, logistics and marketing service employee positions. The Japanese affiliates recorded a combined charge of $216 million (before tax) to selling, general and administrative expenses for the employee related costs. Substantially all cash expenditures anticipated in the restructuring provi- F19 sion have been paid as of the end of 1999. General Sekiyu also recorded a $211 million (before tax) charge to depreciation and depletion for the write-off of costs associated with the cancellation of a power plant project at the Kawasaki terminal. In 1998, Mobil implemented new reorganization programs in Australia and New Zealand and in Latin America to integrate regional fuels and lubes operations. These programs resulted in the elimination of approximately 500 positions as well as asset write-downs in Australia and New Zealand. A provision of $50 million ($41 million after tax) was recorded in selling, general and administrative expenses and depreciation and depletion for these programs. In 1998 and 1999, a combination of cash for employee separation benefits and exit costs and noncash costs for the closure of facilities essentially depleted the reserve. Also during 1998, Mobil and BP completed the implementation of their alliance, which combined the companies' European operations in the refining and marketing of fuels and lubricants. This alliance resulted in the elimination of approximately 1,000 positions, the impairment of certain fuels marketing assets and the closure of surplus facilities. During 1996, a provision of $184 million ($145 million after tax), was established primarily for separation costs related to workforce reductions, facilities closure costs and asset write-downs. There was no amount remaining in the reserve at December 31, 1999, for this program. In 1997, Mobil and BP announced that the alliance would implement a major restructuring of its lubricant base oil refining business. This program resulted in the elimination of approximately 460 positions and in write-downs and closure of certain facilities and was completed by the end of 1999. Reserves were recorded in 1997 of about $86 million ($82 million after tax) mainly for employee severance costs associated with workforce reductions and for write-downs and closure of certain facilities. These costs were recorded in earnings from equity interests and selling, general and administrative expenses. Cash outlays have been approximately $40 million and non-cash costs about $20 million. The amounts remaining in the reserve at December 31, 1999, 1998 and 1997 were $28 million, $35 million and $66 million, respectively. Also in 1997, Mobil commenced two major cost savings initiatives in Asia-Pacific--one in Japan in response to the deregulated business environment and the other in Australia. These programs resulted in the elimination of approximately 400 positions and the impairment of certain assets. In 1997, reserves were recorded in the amount of $172 million ($107 million after tax) primarily for separation costs related to workforce reductions and for closure of certain facilities. The provisions were recorded in selling, general and administrative expenses; operating expenses; earnings from equity interests and other revenue and depreciation and depletion. At the end of 1999 the reserve was essentially depleted. The following table summarizes the activity in the reorganization reserve. The 1997 opening balance represents accruals for provisions taken in prior years. Opening Balance at Balance Additions Deductions Year End - - - - - - - - - - - - - - - - -------------------------------------------------------------------- (millions of dollars) 1997 $368 $272 $340 $300 1998 300 50 181 169 1999 169 224 342 51 6. Miscellaneous Financial Information Research and development costs totaled $630 million in 1999, $753 million in 1998 and $763 million in 1997. Net income included aggregate foreign exchange transaction losses of $5 million in 1999, and gains of $20 million in 1998 and $113 million in 1997. In 1999, 1998 and 1997, net income included losses of $7 million, $8 million and gains of $69 million, respectively, attributable to the combined effects of LIFO inventory accumulations and draw-downs. The aggregate replacement cost of inventories was estimated to exceed their LIFO carrying values by $5,898 million and $957 million at December 31, 1999 and 1998, respectively. 7. Cash Flow Information The consolidated statement of cash flows provides information about changes in cash and cash equivalents. Highly liquid investments with maturities of three months or less when acquired are classified as cash equivalents. Cash payments for interest were: 1999 - $882 million, 1998 - $1,066 million and 1997 - $1,149 million. Cash payments for income taxes were: 1999 - $3,805 million, 1998 - $4,629 million and 1997 - $6,762 million. 8. Additional Working Capital Data Dec. 31 Dec. 31 1999 1998 - - - - - - - - - - - - - - - - -------------------------------------------------------------------------- Notes and accounts receivable (millions of dollars) Trade, less reserves of $231 million and $234 million $14,605 $10,862 Other, less reserves of $10 million and $13 million 4,550 4,967 ------------------------ $19,155 $15,829 ======================== Notes and loans payable Bank loans $ 2,223 $ 2,051 Commercial paper 7,231 4,595 Long-term debt due within one year 407 1,524 Other 709 314 ------------------------ $10,570 $ 8,484 ======================== Accounts payable and accrued liabilities Trade payables $13,524 $10,915 Obligations to equity companies 608 498 Accrued taxes other than income taxes 6,005 5,539 Other 5,355 6,202 ------------------------ $25,492 $23,154 ======================== On December 31, 1999, unused credit lines for short-term financing totaled approximately $7.1 billion. Of this total, $4.7 billion support commercial paper programs under terms negotiated when drawn. The weighted average interest rate on short-term borrowings outstanding at December 31, 1999 and 1998 was 5.6 percent and 5.1 percent, respectively. F20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Equity Company Information The summarized financial information below includes amounts related to certain less than majority owned companies and majority owned subsidiaries where minority shareholders possess the right to participate in significant management decisions (see note 1). These companies are primarily engaged in crude production, natural gas marketing and refining operations in North America; natural gas production and distribution, refining and marketing operations in Europe and crude production in Kazakhstan and the Middle East. Also included are several power generation, petrochemical/lubes manufacturing and chemical ventures. Exxon and Mobil each owned 25 percent of certain refining, marketing and chemical operations in Japan and accounted for their interests using the equity method. As a result of the merger, ExxonMobil now owns 50 percent of these operations. These financial statements reflect the consolidation of these operations because the interests not owned by ExxonMobil have less than 50 percent of the voting rights. During the fourth quarter of 1998, ExxonMobil de-consolidated the majority owned power companies in Hong Kong and China in response to new accounting requirements. These financial statements reflect the de-consolidation of these companies retroactive to January 1, 1998. ExxonMobil's 1998 net income was not affected by the de-consolidation. As of January 1, 1998, these affiliates had assets of $4.3 billion and total liabilities of $3.6 billion, including $2.5 billion of short-term and long-term debt.
1999 1998 1997 ------------------------------------------------------------------ ExxonMobil ExxonMobil ExxonMobil Equity Company Financial Summary Total Share Total Share Total Share - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of dollars) Total revenues Percent of revenues from companies included in the ExxonMobil consolidation was 8% in 1997, 7% in 1998, and 8% in 1999 $ 94,534 $ 32,124 $ 76,552 $ 24,740 $ 81,861 $ 26,403 ------------------------------------------------------------------ Income before income taxes $ 4,100 $ 2,095 $ 4,104 $ 2,002 $ 4,826 $ 2,165 Less: Related income taxes (734) (449) (1,071) (492) (1,352) (566) ------------------------------------------------------------------ Net income $ 3,366 $ 1,646 $ 3,033 $ 1,510 $ 3,474 $ 1,599 ================================================================== Current assets $ 21,518 $ 7,739 $ 19,037 $ 6,645 $ 16,628 $ 6,115 Property, plant and equipment, less accumulated depreciation 44,213 15,509 40,268 15,221 32,799 11,477 Other long-term assets 4,806 2,106 3,529 1,449 3,685 1,613 ------------------------------------------------------------------ Total assets $ 70,537 $ 25,354 $ 62,834 $ 23,315 $ 53,112 $ 19,205 ------------------------------------------------------------------ Short-term debt $ 2,856 $ 1,129 $ 2,628 $ 1,048 $ 1,804 $ 678 Other current liabilities 18,129 6,324 16,367 5,574 15,237 5,488 Long-term debt 13,486 3,978 11,316 3,488 8,033 2,063 Other long-term liabilities 5,372 2,598 4,974 2,362 4,546 1,848 Advances from shareholders 3,636 1,919 3,734 2,017 2,139 1,151 ------------------------------------------------------------------ Net assets $ 27,058 $ 9,406 $ 23,815 $ 8,826 $ 21,353 $ 7,977 ==================================================================
10. Investments and Advances Dec. 31 Dec. 31 1999 1998 - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------- (millions of dollars) Companies carried at equity in underlying assets Investments $ 9,406 $ 8,826 Advances 1,919 2,017 -------------------- $11,325 $10,843 Companies carried at cost or less and stock investments carried at fair value 964 769 -------------------- $12,289 $11,612 Long-term receivables and miscellaneous investments at cost or less 2,255 2,303 -------------------- Total $14,544 $13,915 ====================
F21
11. Investment in Property, Plant and Equipment Dec. 31, 1999 Dec. 31, 1998 -------------------------------------------------- Cost Net Cost Net - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------- (millions of dollars) Petroleum and natural gas Exploration and production $106,067 $ 48,100 $100,969 $ 46,900 Refining and marketing 54,772 28,974 54,341 29,412 -------------------------------------------------- Total petroleum and natural gas $160,839 $ 77,074 $155,310 $ 76,312 Chemicals 17,564 9,969 16,921 9,501 Other 10,809 7,000 10,236 6,770 -------------------------------------------------- Total $189,212 $ 94,043 $182,467 $ 92,583 ==================================================
Accumulated depreciation and depletion totaled $95,169 million at the end of 1999 and $89,884 million at the end of 1998. Interest capitalized in 1999, 1998 and 1997 was $595 million, $545 million and $595 million, respectively. - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------- 12. Leased Facilities At December 31, 1999, the corporation and its consolidated subsidiaries held non-cancelable operating charters and leases covering drilling equipment, tankers, service stations and other properties with minimum lease commitments as indicated in the table. Net rental expenditures for 1999, 1998 and 1997 totaled $2,172 million, $2,760 million and $2,841 million, respectively, after being reduced by related rental income of $317 million, $331 million and $319 million, respectively. Minimum rental expenditures totaled $2,311 million in 1999, $2,910 million in 1998 and $2,994 million in 1997. Minimum Related commitment rental income - - - - - - - - - - - - - - - - -------------------------------------------------------------- (millions of dollars) 2000 $ 1,070 $ 81 2001 875 69 2002 696 35 2003 538 24 2004 418 17 2005 and beyond 2,778 105 F22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Capital At the effective time of the merger of Exxon and Mobil, the authorized common stock of ExxonMobil was increased from three billion shares to 4.5 billion shares. Under the terms of the merger agreement, approximately 1.0 billion shares of ExxonMobil common stock were issued in exchange for all of the outstanding shares of Mobil's common stock based upon an exchange ratio of 1.32015 ExxonMobil shares for each Mobil share. In 1997, 642 million shares of Exxon common stock held by Exxon as treasury shares were cancelled and returned to the status of authorized but unissued shares. Mobil's common stock accounted for as treasury stock was cancelled at the effective time of the merger. In 1989, Mobil sold 206 thousand shares of a new issue of Series B Convertible Preferred Stock to its employee stock ownership plan (Mobil ESOP) trust for $3,887.50 per share. Each preferred share was convertible into 100 shares of Mobil common stock. The proceeds of the issuance were used by Mobil for general corporate purposes. In connection with the merger, each outstanding share of Mobil's Series B Convertible Preferred Stock was converted into one share of ExxonMobil Class B Preferred Stock with similar terms. Each share of ExxonMobil Class B Preferred Stock was convertible into 132.015 shares of ExxonMobil common stock. Dividends were cumulative and payable in an amount per share equal to $300 per annum. In 1999, 1998, and 1997, Mobil Series B Convertible Preferred Stock totaling 6 thousand, 6 thousand, and 5 thousand shares, respectively, were redeemed. After the merger, 159 thousand shares of ExxonMobil Class B Preferred Stock totaling $618 million were converted to ExxonMobil common stock. At year-end 1999, no shares of Class B Preferred Stock remained outstanding. In 1989, Exxon sold 16.3 million shares of a new issue of convertible Class A Preferred Stock to its leveraged employee stock ownership plan (Exxon LESOP) trust for $61.50 per share. The proceeds of the issuance were used by Exxon for general corporate purposes. If the common share price exceeded $30.75, one share of Exxon Class A Preferred Stock was convertible into two shares of common stock. If the price was $30.75 or less, one share of preferred stock was convertible into common shares having a value of $61.50. Dividends were cumulative and payable in an amount per share equal to $4.680 per annum. In 1999, 1998 and 1997, 1.7 million, 1.4 million and 1.8 million shares of Exxon Class A Preferred Stock totaling $105 million, $85 million and $113 million, respectively, were converted to common stock. At year-end 1999, no shares of Class A Preferred Stock remained outstanding. In 1989, $1,800 million of benefit plan related balances were recorded as debt and as a reduction to shareholders' equity, representing Exxon and Mobil guaranteed borrowings by the Mobil ESOP and Exxon LESOP trusts to purchase preferred stock. As the debt is repaid and shares are earned by employees, the benefit plan related balances are being extinguished. Preferred dividends of $36 million, $60 million and $69 million were paid during 1999, 1998 and 1997, respectively. The table below summarizes the earnings per share calculations.
1999 1998 1997 --------------------------------------- Net income per common share - - - - - - - - - - - - - - - - --------------------------- Income before cumulative effect of accounting change (millions of dollars) $ 7,910 $ 8,144 $ 11,732 Less: Preferred stock dividends (36) (60) (69) --------------------------------------- Income available to common shares $ 7,874 $ 8,084 $ 11,663 ======================================= Weighted average number of common shares outstanding (millions of shares) 3,453 3,468 3,511 Net income per common share Before cumulative effect of accounting change $ 2.28 $ 2.33 $ 3.32 Cumulative effect of accounting change - (0.02) - --------------------------------------- Net income $ 2.28 $ 2.31 $ 3.32 ======================================= Net income per common share - assuming dilution - - - - - - - - - - - - - - - - ----------------------------------------------- Income before cumulative effect of accounting change (millions of dollars) $ 7,910 $ 8,144 $ 11,732 Adjustment for assumed dilution 1 (7) (4) --------------------------------------- Income available to common shares $ 7,911 $ 8,137 $ 11,728 ======================================= Weighted average number of common shares outstanding (millions of shares) 3,453 3,468 3,511 Plus: Issued on assumed exercise of stock options 44 39 41 Plus: Assumed conversion of preferred stock 21 26 29 --------------------------------------- Weighted average number of common shares outstanding 3,518 3,533 3,581 ======================================= Net income per common share Before cumulative effect of accounting change $ 2.25 $ 2.30 $ 3.28 Cumulative effect of accounting change - (0.02) - --------------------------------------- Net income $ 2.25 $ 2.28 $ 3.28 ======================================= Dividends paid per common share $ 1.687 $ 1.666 $ 1.619
F23 14. Employee Stock Ownership Plans In 1989, the Exxon leveraged employee stock ownership plan (Exxon LESOP) trust borrowed $1,000 million under the terms of notes guaranteed by Exxon maturing between 1990 and 1999. As further described in note 13, the Exxon LESOP trust used the proceeds of the borrowing to purchase shares of Exxon's convertible Class A Preferred Stock. The final Exxon LESOP note matured in 1999 with the final principal payment of the outstanding debt. All remaining shares of Exxon Class A Preferred Stock were converted to ExxonMobil common shares. In 1989, the Mobil Oil Corporation employee stock ownership plan (Mobil ESOP) trust borrowed $800 million under the terms of notes and debentures guaranteed by Mobil. As further described in note 13, the trust used the proceeds of the borrowing to purchase shares of Mobil's Series B Convertible Preferred Stock which upon the Merger were converted into shares of ExxonMobil Class B Preferred Stock with similar terms. By year-end 1999, all outstanding shares of Class B Preferred Stock were converted to ExxonMobil common shares. Employees eligible to participate in ExxonMobil's Savings Plan may elect to participate in the Mobil ESOP. Corporate contributions to the plan and dividends are used to make principal and interest payments on the notes and debentures. As contributions and dividends are credited, common shares are allocated to participants' accounts. As debt service exceeded dividends, ExxonMobil was required to fund the excess. The excess for the Mobil ESOP was $19 million, $15 million and $21 million in 1999, 1998, and 1997 respectively. Accounting for the plans follows the principles which were in effect for the respective plans when they were established. The amount of compensation expense related to the plans and recorded by the corporation during the periods was not significant. The Mobil ESOP trust held 165 thousand shares of Mobil Series B Convertible Preferred Stock at the end of 1998 and 21.6 million shares of ExxonMobil common stock at the end of 1999. The Exxon LESOP trust held 1.7 million shares of Exxon Class A Preferred Stock and 39.2 million shares of Exxon common stock at the end of 1998, and 38.4 million shares of ExxonMobil common stock at the end of 1999. 15. Financial Instruments The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. Long-term debt is the only category of financial instruments whose fair value differs materially from the recorded book value. The estimated fair value of total long-term debt, including capitalized lease obligations, at December 31, 1999 and 1998, was $8.9 billion and $9.7 billion, respectively, as compared to recorded book values of $8.4 billion and $8.5 billion. The corporation's size, geographic diversity and the complementary nature of the upstream, downstream and chemicals businesses mitigate the corporation's risk from changes in interest rate, foreign currency rate and commodity prices. As a result, the corporation makes limited use of derivatives to hedge exposures arising from existing transactions. Prior to the merger, Mobil managed these exposures using defined benchmarks for hedging to achieve a desired risk profile for the environment in which Mobil operated and financed its assets. The contract positions related to these pre-merger activities are being phased down as such contracts are settled or mature. Derivative instruments are not held for trading purposes nor do they have leveraged features. In addition, they are either purchased or sold over authorized exchanges or with counterparties of high credit standing. As a result of the above factors, the corporation's exposure to credit risks and market risks from derivative activities is negligible. The notional principal amounts of derivative financial instruments at December 31, are as follows: At December 31: 1999 1998 - - - - - - - - - - - - - - - - --------------- ---- ---- (millions of dollars) Debt-related instruments $ 2,111 $ 4,942 Nondebt-related foreign currency exchange rate instruments 4,245 7,791 Commodity financial instruments requiring cash settlement 1,988 2,623 F24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. Long-Term Debt At December 31, 1999, long-term debt consisted of $7,545 million due in U.S. dollars and $857 million representing the U.S. dollar equivalent at year-end exchange rates of amounts payable in foreign currencies. These amounts exclude that portion of long-term debt, totaling $407 million, which matures within one year and is included in current liabilities. The amounts of long-term debt maturing, together with sinking fund payments required, in each of the four years after December 31, 2000, in millions of dollars, are: 2001 - $931, 2002 - $263, 2003 - $816 and 2004 - $2,260. Certain of the borrowings described may from time to time be assigned to other ExxonMobil affiliates. At December 31, 1999, the corporation's unused long-term credit lines were not material. The total outstanding balance of defeased debt at year-end 1999 was $475 million. Summarized long-term borrowings at year-end 1999 and 1998 were as follows: 1999 1998 - - - - - - - - - - - - - - - - --------------------------------------------------------------------- (millions of dollars) Exxon Mobil Corporation 7.45% Guaranteed notes due 2001 $ 246 $ 246 Guaranteed zero coupon notes due 2004 - Face value ($1,146) net of unamortized discount 671 601 Exxon Capital Corporation 6.0% Guaranteed notes due 2005 246 246 6.125% Guaranteed notes due 2008 250 250 SeaRiver Maritime Financial Holdings, Inc. Guaranteed debt securities due 2001-2011(1) 122 129 Guaranteed deferred interest debentures due 2012 - Face value ($771) net of unamortized discount 728 653 Imperial Oil Limited 8.3% notes due 2001 200 200 Variable rate notes due 2004(2) 600 600 8.75% notes due 2019 134 220 Mobil Oil Canada, Ltd. 3.0% Swiss franc debentures due 2003(3) 331 330 5.0% U.S. dollar Eurobonds due 2004(4) 300 300 Mobil Producing Nigeria Unlimited 8.625% notes due 2001-2006 229 250 Mobil Corporation 8.625% debentures due 2021 247 250 7.625% debentures due 2033 213 216 Industrial revenue bonds due 2003-2033(5) 1,429 1,421 ESOPTrust debentures/notes due 2001-2003 351 321 Other U.S. dollar obligations(6) 1,045 1,040 Other foreign currency obligations 790 934 Capitalized lease obligations(7) 270 325 ------------------ Total long-term debt $8,402 $8,532 ================== 1. Average effective interest rate of 4.7% in 1999 and 5.5% in 1998. 2. Average effective interest rate of 5.3% in 1999 and 5.5% in 1998. 3. Swapped into floating rate U.S.$ debt. 4. Swapped principally into floating rate debt. 5. Average effective interest rate of 4.0% in 1999 and 4.1% in 1998. 6. Average effective interest rate of 7.6% in 1999 and 7.6% in 1998. 7. Average imputed interest rate of 7.2% in 1999 and 6.7% in 1998. F25 17. Incentive Program The 1993 Incentive Program provides for grants of stock options, stock appreciation rights (SARs), restricted stock and other forms of award. Awards may be granted over a 10-year period to eligible employees of the corporation and those affiliates at least 50 percent owned. The number of shares of stock which may be awarded each year under the 1993 Incentive Program may not exceed seven tenths of one percent (0.7%), of the total number of shares of common stock of the corporation outstanding (excluding shares held by the corporation) on December 31 of the preceding year. If the total number of shares effectively granted in any year is less than the maximum number of shares allowable, the balance may be carried over thereafter. Outstanding awards are subject to certain forfeiture provisions contained in the program or award instrument. Options and SARs may be granted at prices not less than 100 percent of market value on the date of grant and have a maximum life of 10 years. Most of the options and SARs thus far granted first become exercisable after one year of continuous employment following the date of grant. On the closing of the merger on November 30, 1999, outstanding options and SARs granted by Mobil under its 1995 Incentive Compensation and Stock Ownership Plan and prior plans were assumed by ExxonMobil and converted into rights to acquire ExxonMobil common stock with adjustments to reflect the exchange ratio. No further awards may be granted under the former Mobil plans. Shares available for granting under the 1993 Incentive Program were 51,894 thousand at the beginning of 1999 and 35,194 thousand at the end of 1999. At December 31, 1998 and 1999, respectively, 946 thousand and 1,077 thousand shares of restricted common stock were outstanding. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," was implemented in January 1996. As permitted by the Standard, ExxonMobil retained its prior method of accounting for stock compensation. If the provisions of Statement No. 123 had been adopted, net income and earnings per share (on both a basic and diluted basis) would have been reduced by $149 million, or $0.04 per share in 1999; $134 million, or $0.04 per share in 1998 and $105 million, or $0.03 per share in 1997. For the Exxon plan, the average fair value of each option granted during 1999, 1998 and 1997 was $19.70, $12.80 and $11.36, respectively. The fair value was estimated at the grant date using an option-pricing model with the following weighted average assumptions for 1999, 1998 and 1997, respectively: risk-free interest rates of 6.2 percent, 4.8 percent and 5.8 percent; expected life of 6 years for all years; volatility of 15 percent, 13 percent and 12 percent and a dividend yield of 2.1 percent, 2.3 percent and 2.7 percent. For the Mobil plans, the average fair value of each Mobil option granted during 1999, 1998, and 1997 was $17.02, $13.05 and $11.03, respectively. The fair value was estimated at the grant date using an option-pricing model with the following weighted average assumption for 1999, 1998, and 1997 respectively: risk-free interest rates of 5.2 percent, 5.7 percent and 6.4 percent; expected life of 5 years for all years; volatility of 20 percent, 18 percent and 16 percent and a dividend yield of 2.7 percent, 3.2 percent and 3.4 percent. Changes that occurred in options outstanding in 1999, 1998 and 1997 (including the former Mobil plans) are summarized below (shares in thousands):
1999 1998 1997 ---------------------------------------------------------------------------- Avg. Exercise Avg. Exercise Avg. Exercise Shares Price Shares Price Shares Price ---------------------------------------------------------------------------- Outstanding at beginning of year 110,609 $42.03 112,341 $36.42 112,544 $31.92 Granted 22,099 78.00 16,646 65.89 17,197 56.17 Exercised (11,250) 30.31 (17,907) 28.65 (16,675) 26.06 Expired/Canceled (342) 66.18 (471) 55.41 (725) 44.54 ------- ------- ------- Outstanding at end of year 121,116 49.62 110,609 42.03 112,341 36.42 Exercisable at end of year 87,472 42.16 83,258 36.76 85,510 32.22
The following table summarizes information about stock options outstanding, including those from former Mobil plans, at December 31, 1999 (shares in thousands):
Options Outstanding Options Exercisable - - - - - - - - - - - - - - - - ---------------------------------------------------------------------- -------------------------- Exercise Price Avg. Remaining Avg. Exercise Avg. Exercise Range Shares Contractual Life Price Shares Price - - - - - - - - - - - - - - - - ---------------------------------------------------------------------- -------------------------- $25.13-33.07 41,692 3.5 years $29.26 41,692 $29.26 39.47-55.42 36,304 6.8 45.72 25,627 43.74 58.36-83.56 43,120 9.1 72.59 20,153 66.86 ------- ------ Total 121,116 6.5 49.62 87,472 42.16
F26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Annuity Benefits and Other Postretirement Benefits
Annuity Benefits - - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------- Other Postretirement U.S. Non-U.S. Benefits ---------------------------------------------------------------------------------------- 1999 1998 1997 1999 1998 1997 1999 1998 1997 ---------------------------------------------------------------------------------------- Components of net benefit cost (millions of dollars) Service cost $ 249 $ 229 $ 209 $ 312 $ 297 $ 294 $ 36 $ 34 $ 37 Interest cost 555 549 545 608 625 654 190 191 191 Expected return on plan assets (601) (622) (589) (599) (564) (537) (48) (41) (35) Amortization of actuarial loss/(gain) and prior service cost (36) (24) (37) 167 111 124 14 12 9 Net pension enhancement and curtailment/settlement expense 1 1 (6) 50 (1) 28 - - - ---------------------------------------------------------------------------------------- Net benefit cost $ 168 $ 133 $ 122 $ 538 $ 468 $ 563 $ 192 $ 196 $ 202 ========================================================================================
Costs for defined contribution plans were $69 million, $121 million and $111 million in 1999, 1998 and 1997, respectively.
Annuity Benefits ---------------------------------------- Other Postretirement U.S. Non-U.S. Benefits --------------------- ------------------ ----------------------- 1999 1998 1999 1998 1999 1998 ---------------------------------------------------------------- Change in benefit obligation (millions of dollars) Benefit obligation at January 1 $ 8,708 $ 8,147 $ 12,572 $ 10,713 $ 2,932 $ 2,886 Service cost 249 229 312 297 36 34 Interest cost 555 549 608 625 190 191 Actuarial loss/(gain) (746) 523 (948) 1,224 (333) 44 Benefits paid (859) (832) (814) (682) (259) (211) Foreign exchange rate changes -- -- (171) 260 14 (18) Other 125 92 69 135 40 6 ---------------------------------------------------------------- Benefit obligation at December 31 $ 8,032 $ 8,708 $ 11,628 $ 12,572 $ 2,620 $ 2,932 ================================================================ Change in plan assets Fair value at January 1 $ 6,604 $ 7,023 $ 7,577 $ 6,907 $ 512 $ 447 Actual return on plan assets 2,083 884 1,467 785 104 117 Foreign exchange rate changes -- -- 14 31 -- -- Payments directly to participants 138 109 305 221 172 169 Company contribution -- -- 167 300 42 34 Benefits paid (859) (832) (814) (682) (259) (211) Other (1) -- (27) 15 (3) (44) Reclassification of supplemental benefit trust -- (580) -- -- -- -- ---------------------------------------------------------------- Fair value at December 31 $ 7,965 $ 6,604 $ 8,689 $ 7,577 $ 568 $ 512 ================================================================ Assets in excess of/(less than) benefit obligation Balance at December 31 $ (67) $ (2,104) $ (2,939) $ (4,995) $ (2,052) $ (2,420) Unrecognized net transition liability/(asset) (102) (177) 42 36 -- -- Unrecognized net actuarial loss/(gain) (1,960) 247 (368) 1,547 (217) 189 Unrecognized prior service cost 338 306 310 430 5 11 Intangible asset (33) (103) (81) (191) -- -- Equity of minority shareholders -- -- (23) (55) -- -- Minimum pension liability adjustment (103) (109) (444) (674) -- -- ---------------------------------------------------------------- Prepaid/(accrued) benefit cost $ (1,927) $ (1,940) $ (3,503) $ (3,902) $ (2,264) $ (2,220) ================================================================ Annuity assets and reserves in excess of accumulated benefit obligation $ 2,833 $ 1,084 $ 1,760 $ 472 -- -- Assumptions as of December 31 (percent) ---------------------------------------------------------------- Discount rate 7.75 6.5-6.75 3.0-7.3 2.7-8.3 7.75 6.5-6.75 Long-term rate of compensation increase 3.5 3.5-4.0 3.0-4.0 2.3-6.5 3.5 3.5-4.0 Long-term rate of return on funded assets 9.5 9.5 5.5-10.0 5.0-10.0 9.5 9.5
F27 The data shown on the previous page are reported as required by current accounting standards which specify use of a discount rate at which postretirement liabilities could be effectively settled. The discount rate stipulated for use in calculating year-end postretirement liabilities is based on the year-end rate of interest on high quality bonds. For determining the funding requirements of U.S. annuity plans in accordance with applicable federal government regulations, ExxonMobil uses the expected long-term rate of return of the annuity fund's actual portfolio as the discount rate. This rate has historically been higher than bonds as the majority of pension assets are invested in equities. In fact, the actual rate earned over the past decade has been 15 percent. On this basis, all funded U.S. plans meet the full funding requirements of the Department of Labor and the Internal Revenue Service as detailed in the table below. Certain smaller U.S. plans and a number of non-U.S. plans are not funded because of local tax conventions and regulatory practices which do not encourage funding of these plans. Book reserves have been established for these plans to provide for future benefit payments.
Status of U.S. annuity plans subject to federal government funding requirements 1999 1998 - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------ (millions of dollars) Funded assets at market value less total projected benefit obligation $ (67) $(2,104) Differences between accounting and funding basis: Certain smaller plans unfunded due to lack of tax and regulatory incentives 874 929 Use of long-term rate of return on fund assets as the discount rate 1,061 1,786 Use of government required assumptions and other actuarial adjustments (1,086) 271 ------------------- Funded assets in excess of obligations under government regulations $ 782 $ 882
F28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Litigation and Other Contingencies A number of lawsuits, including class actions, were brought in various courts against Exxon Mobil Corporation and certain of its subsidiaries relating to the accidental release of crude oil from the tanker Exxon Valdez in 1989. Essentially all of these lawsuits have now been resolved or are subject to appeal. On September 24, 1996, the United States District Court for the District of Alaska entered a judgment in the amount of $5.058 billion in the Exxon Valdez civil trial that began in May 1994. The District Court awarded approximately $19.6 million in compensatory damages to fisher plaintiffs, $38 million in prejudgment interest on the compensatory damages and $5 billion in punitive damages to a class composed of all persons and entities who asserted claims for punitive damages from the corporation as a result of the Exxon Valdez grounding. The District Court also ordered that these awards shall bear interest from and after entry of the judgment. The District Court stayed execution on the judgment pending appeal based on a $6.75 billion letter of credit posted by the corporation. The corporation has appealed the judgment. The corporation has also appealed the District Court's denial of its renewed motion for a new trial. The United States Court of Appeals for the Ninth Circuit heard oral arguments on the appeals on May 3, 1999. The corporation continues to believe that the punitive damages in this case are unwarranted and that the judgment should be set aside or substantially reduced by the appellate courts. On January 29, 1997, a settlement agreement was concluded resolving all remaining matters between the corporation and various insurers arising from the Valdez accident. Under terms of this settlement, ExxonMobil received $480 million. Final income statement recognition of this settlement continues to be deferred in view of uncertainty regarding the ultimate cost to the corporation of the Valdez accident. The ultimate cost to ExxonMobil from the lawsuits arising from the Exxon Valdez grounding is not possible to predict and may not be resolved for a number of years. Under the October 8, 1991, civil agreement and consent decrees with the U.S. and Alaska governments, the corporation has made annual payments since 1991, which in each of the years 1999, 1998 and 1997, were $70 million. These payments were charged against the provision that was previously established to cover the costs of the settlement. German and Dutch affiliated companies are the concessionaires of a natural gas field subject to a treaty between the governments of Germany and the Netherlands under which the gas reserves in an undefined border or common area are to be shared equally. Entitlement to the reserves is determined by calculating the amount of gas which can be recovered from this area. Based on the final reserve determination, the German affiliate has received more gas than its entitlement. Arbitration proceedings, as provided in the agreements, were conducted to resolve issues concerning the compensation for overlifted gas. By final award dated July 2, 1999, preceded by an interim award in 1996, an arbitral tribunal established the full amount of the compensation for the excess gas. This amount has now been paid, but the Dutch affiliate is seeking to have the award set aside. Other substantive matters remain outstanding, including recovery of royalties paid on such excess gas and the taxes payable on the final compensation amount. The ultimate outcome is not expected to have a materially adverse effect upon the corporation's operations or financial condition. The U.S. Tax Court has decided the issue with respect to the pricing of crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of the corporation. This decision is subject to appeal. Certain other issues for the years 1979-1988 remain pending before the Tax Court. The ultimate resolution of these issues is not expected to have a materially adverse effect upon the corporation's operations or financial condition. Claims for substantial amounts have been made against ExxonMobil and certain of its consolidated subsidiaries in other pending lawsuits, the outcome of which is not expected to have a materially adverse effect upon the corporation's operations or financial condition. The corporation and certain of its consolidated subsidiaries were contingently liable at December 31, 1999, for $1,860 million, primarily relating to guarantees for notes, loans and performance under contracts. This includes $1,046 million representing guarantees of non-U.S. excise taxes and customs duties of other companies, entered into as a normal business practice, under reciprocal arrangements. Not included in this figure are guarantees by consolidated affiliates of $1,461 million, representing ExxonMobil's share of obligations of certain equity companies. Additionally, the corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the corporation's operations or financial condition. The operations and earnings of the corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the corporation vary greatly from country to country and are not predictable. F29 20. Income, Excise and Other Taxes
1999 1998 1997 - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ United Non- United Non- United Non- States U.S. Total States U.S. Total States U.S. Total -------------------------------------------------------------------------------------------------- (millions of dollars) Income taxes Federal or non-U.S. Current $ 369 $ 3,973 $ 4,342 $ 801 $ 2,753 $ 3,554 $ 1,366 $ 4,889 $ 6,255 Deferred - net 214 (1,489) (1,275) 196 5 201 415 669 1,084 U.S. tax on non-U.S. operations 25 -- 25 43 -- 43 59 -- 59 ------------------------------------------------------------------------------------------------- $ 608 $ 2,484 $ 3,092 $ 1,040 $ 2,758 $ 3,798 $ 1,840 $ 5,558 $ 7,398 State 148 -- 148 141 -- 141 207 -- 207 -------------------------------------------------------------------------------------------------- Total income taxes $ 756 $ 2,484 $ 3,240 $ 1,181 $ 2,758 $ 3,939 $ 2,047 $ 5,558 $ 7,605 Excise taxes 7,795 13,851 21,646 7,459 13,467 20,926 7,063 14,120 21,183 All other taxes and duties 1,021 35,616 36,637 967 34,084 35,051 1,163 34,803 35,966 -------------------------------------------------------------------------------------------------- Total $ 9,572 $ 51,951 $ 61,523 $ 9,607 $ 50,309 $ 59,916 $ 10,273 $ 54,481 $ 64,754 ==================================================================================================
All other taxes and duties include taxes reported in operating and selling, general and administrative expenses. The above provisions for deferred income taxes include net credits for the effect of changes in tax laws and rates of $205 million in 1999, $153 million in 1998 and $147 million in 1997. Income taxes (charged)/credited directly to shareholders' equity were: 1999 1998 1997 - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------- (millions of dollars) Cumulative foreign exchange translation adjustment $ (84) $ (21) $ 246 Minimum pension liability adjustment (127) 375 - Unrealized gains on stock investments (45) - - Other components of shareholders' equity 50 88 67 The reconciliation between income tax expense and a theoretical U.S. tax computed by applying a rate of 35 percent for 1999, 1998 and 1997, is as follows: 1999 1998 1997 - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------- (millions of dollars) Earnings before Federal and non-U.S. income taxes United States $ 3,187 $ 3,451 $ 6,094 Non-U.S. 7,815 8,491 13,036 ------------------------------------------ Total $ 11,002 $ 11,942 $ 19,130 ------------------------------------------ Theoretical tax $ 3,851 $ 4,180 $ 6,696 Effect of equity method accounting (576) (529) (560) Non-U.S. taxes in excess of theoretical U.S. tax 201 256 1,476 U.S. tax on non-U.S. operations 25 43 59 Other U.S. (409) (152) (273) ------------------------------------------ Federal and non-U.S. income tax expense $ 3,092 $ 3,798 $ 7,398 ========================================== Total effective tax rate 31.8% 35.2% 41.1% The effective income tax rate includes state income taxes and the corporation's share of income taxes of equity companies. Equity company taxes totaled $449 million in 1999, $492 million in 1998 and $566 million in 1997, essentially all outside the U.S. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. Deferred tax liabilities/(assets) are comprised of the following at December 31: Tax effects of temporary differences for: 1999 1998 - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------- (millions of dollars) Depreciation $ 14,118 $ 14,252 Intangible development costs 3,371 3,296 Capitalized interest 1,500 1,432 Other liabilities 2,028 3,039 ------------------------ Total deferred tax liabilities $ 21,017 $ 22,019 ------------------------ Pension and other postretirement benefits $ (2,070) $ (2,138) Tax loss carryforwards (1,701) (1,756) Other assets (2,195) (1,642) ------------------------ Total deferred tax assets $ (5,966) $ (5,536) ------------------------ Asset valuation allowances 651 724 ------------------------ Net deferred tax liabilities $ 15,702 $ 17,207 ======================== The corporation had $11.1 billion of indefinitely reinvested, undistributed earnings from subsidiary companies outside the U.S. Unrecognized deferred taxes on remittance of these funds are not expected to be material. F30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 21. Disclosures about Segments and Related Information The functional segmentation of operations reflected below is consistent with ExxonMobil's internal reporting. Earnings are before the cumulative effect of accounting changes and include special items. Transfers are at estimated market prices. The interest revenue amount relates to interest earned on cash deposits and marketable securities. Interest expense includes non-debt related interest expense of $123 million, $81 million and $121 million in 1999, 1998 and 1997, respectively. All Other includes smaller operating segments, corporate and financing activities and merger expenses.
Upstream Downstream Chemicals -------------------- ------------------ ----------------- All Corporate U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Other Total --------------------------------------------------------------------------------------- (millions of dollars) As of December 31, 1999 Earnings after income tax $ 1,842 $ 4,044 $ 577 $ 650 $ 738 $ 616 $ (557) $ 7,910 Earnings of equity companies included above 299 881 8 148 49 83 178 1,646 Sales and other operating revenue 3,104 11,353 43,376 109,969 6,554 7,223 950 182,529 Intersegment revenue 3,925 9,093 2,867 5,387 1,624 1,317 796 - Depreciation and depletion expense 1,330 3,497 697 1,670 402 274 434 8,304 Interest revenue -- -- -- -- -- -- 153 153 Interest expense -- -- -- -- -- -- 695 695 Income taxes 1,008 2,703 343 (22) 338 63 (1,193) 3,240 Additions to property, plant and equipment 1,440 5,025 830 1,201 600 1,093 660 10,849 Investments in equity companies 1,171 2,647 280 3,304 429 1,537 38 9,406 Total assets 18,211 40,906 13,699 43,718 7,605 9,831 10,551 144,521 ======================================================================================= As of December 31, 1998 Earnings after income tax $ 850 $ 2,502 $ 1,199 $ 2,275 $ 792 $ 602 $ (76) $ 8,144 Earnings of equity companies included above 92 955 69 126 7 67 194 1,510 Sales and other operating revenue 3,017 10,493 36,642 100,957 5,940 7,649 929 165,627 Intersegment revenue 2,957 6,313 2,124 4,828 2,101 1,250 798 -- Depreciation and depletion expense 1,682 3,330 706 1,516 402 338 381 8,355 Interest revenue -- -- -- -- -- -- 185 185 Interest expense -- -- -- -- -- -- 568 568 Income taxes 476 1,490 666 1,204 329 132 (358) 3,939 Additions to property, plant and equipment 1,836 5,646 1,035 1,718 622 1,121 752 12,730 Investments in equity companies 1,161 2,523 313 3,345 365 1,058 61 8,826 Total assets 18,130 39,094 12,585 42,790 7,224 8,898 10,614 139,335 =======================================================================================
F31
Upstream Downstream Chemicals ------------------- ------------------ ---------------- All Corporate U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Other Total --------------------------------------------------------------------------------------- (millions of dollars) As of December 31, 1997 Earnings after income tax $ 2,331 $ 4,574 $ 1,135 $ 1,953 $ 1,056 $ 715 $ (32) $ 11,732 Earnings of equity companies included above 175 1,044 45 295 12 134 (106) 1,599 Sales and other operating revenue 3,672 12,976 44,737 117,752 7,044 9,146 2,408 197,735 Intersegment revenue 5,053 9,694 2,760 7,041 2,509 1,457 910 - Depreciation and depletion expense 1,554 3,101 773 1,542 364 295 599 8,228 Interest revenue - - - - - - 374 374 Interest expense - - - - - - 863 863 Income taxes 1,313 4,065 635 1,167 473 393 (441) 7,605 Additions to property, plant and equipment 1,776 5,013 935 1,957 534 547 890 11,652 Investments in equity companies 748 2,229 608 3,251 217 883 41 7,977 Total assets 18,261 36,893 13,280 42,663 7,077 7,789 17,788 143,751 ======================================================================================
Geographic Sales and other operating revenue 1999 1998 1997 - - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------- (millions of dollars) United States $ 53,214 $ 45,783 $ 55,665 Non-U.S. 129,315 119,844 142,070 ------------------------------------ Total $182,529 $165,627 $197,735 Significant non-U.S. revenue sources include: Japan $ 19,727 $ 22,982 $ 27,488 United Kingdom 16,305 16,012 16,933 Germany 12,670 12,935 14,765 Long-lived assets 1999 1998 1997 - - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------- (millions of dollars) United States $ 33,913 $ 33,597 $ 33,690 Non-U.S. 60,130 58,986 59,837 ------------------------------------ Total $ 94,043 $ 92,583 $ 93,527 Significant non-U.S. long-lived assets include: United Kingdom $ 10,293 $ 11,112 $ 10,838 Canada 8,404 7,526 7,778 Japan 6,545 6,055 5,688
F32 SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
Consolidated Subsidiaries --------------------------------------------------------------- Non- United Consolidated Total Results of Operations States Canada Europe Asia-Pacific Other Total Interests Worldwide - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of dollars) 1999 - Revenue Sales to third parties $ 2,419 $ 925 $ 3,287 $ 2,160 $ 191 $ 8,982 $ 2,123 $ 11,105 Transfers 3,237 848 2,965 1,250 1,903 10,203 867 11,070 ----------------------------------------------------------------------------------------- $ 5,656 $ 1,773 $ 6,252 $ 3,410 $ 2,094 $ 19,185 $ 2,990 $ 22,175 Production costs excluding taxes 1,347 504 1,499 566 551 4,467 617 5,084 Exploration expenses 232 93 280 144 497 1,246 29 1,275 Depreciation and depletion 1,260 486 1,932 678 491 4,847 443 5,290 Taxes other than income 425 31 246 288 24 1,014 591 1,605 Related income tax 893 252 929 521 529 3,124 546 3,670 ----------------------------------------------------------------------------------------- Results of producing activities $ 1,499 $ 407 $ 1,366 $ 1,213 $ 2 $ 4,487 $ 764 $ 5,251 Other earnings* 42 32 391 6 (19) 452 183 635 ----------------------------------------------------------------------------------------- Total earnings $ 1,541 $ 439 $ 1,757 $ 1,219 $ (17) $ 4,939 $ 947 $ 5,886 ========================================================================================= 1998 - Revenue Sales to third parties $ 2,297 $ 603 $ 3,427 $ 1,893 $ 32 $ 8,252 $ 2,385 $ 10,637 Transfers 2,343 526 1,956 928 1,544 7,297 537 7,834 ----------------------------------------------------------------------------------------- $ 4,640 $ 1,129 $ 5,383 $ 2,821 $ 1,576 $ 15,549 $ 2,922 $ 18,471 Production costs excluding taxes 1,505 501 1,731 514 730 4,981 542 5,523 Exploration expenses 317 74 299 210 600 1,500 69 1,569 Depreciation and depletion 1,649 423 1,726 813 451 5,062 388 5,450 Taxes other than income 343 40 195 164 26 768 595 1,363 Related income tax 313 (49) 499 509 226 1,498 513 2,011 ----------------------------------------------------------------------------------------- Results of producing activities $ 513 $ 140 $ 933 $ 611 $ (457) $ 1,740 $ 815 $ 2,555 Other earnings* 269 51 556 5 (2) 879 (82) 797 ----------------------------------------------------------------------------------------- Total earnings $ 782 $ 191 $ 1,489 $ 616 $ (459) $ 2,619 $ 733 $ 3,352 ========================================================================================= 1997 - Revenue Sales to third parties $ 2,784 $ 780 $ 4,130 $ 2,978 $ 30 $ 10,702 $ 2,870 $ 13,572 Transfers 4,357 688 2,900 1,584 2,203 11,732 580 12,312 ----------------------------------------------------------------------------------------- $ 7,141 $ 1,468 $ 7,030 $ 4,562 $ 2,233 $ 22,434 $ 3,450 $ 25,884 Production costs excluding taxes 1,653 557 1,590 628 687 5,115 448 5,563 Exploration expenses 206 53 332 235 420 1,246 89 1,335 Depreciation and depletion 1,525 430 1,648 757 324 4,684 308 4,992 Taxes other than income 565 38 199 374 34 1,210 866 2,076 Related income tax 1,110 151 1,609 1,033 834 4,737 724 5,461 ----------------------------------------------------------------------------------------- Results of producing activities $ 2,082 $ 239 $ 1,652 $ 1,535 $ (66) $ 5,442 $ 1,015 $ 6,457 Other earnings* 128 77 216 36 38 495 (47) 448 ----------------------------------------------------------------------------------------- Total earnings $ 2,210 $ 316 $ 1,868 $ 1,571 $ (28) $ 5,937 $ 968 $ 6,905 =========================================================================================
Average sales prices and production costs per unit of production - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ During 1999 Average sales prices Crude oil and NGL, per barrel $ 14.96 $ 14.47 $ 16.59 $ 17.96 $ 14.94 $ 15.79 $ 14.52 $ 15.65 Natural gas, per thousand cubic feet 2.21 1.61 2.25 1.88 1.21 2.08 2.47 2.15 Average production costs, per barrel** 3.42 3.69 3.64 2.40 3.82 3.38 3.02 3.33 During 1998 Average sales prices Crude oil and NGL, per barrel $ 9.87 $ 8.29 $ 12.59 $ 13.10 $ 12.23 $ 11.29 $ 10.72 $ 11.23 Natural gas, per thousand cubic feet 2.01 1.27 2.62 1.50 1.24 1.99 3.03 2.16 Average production costs, per barrel** 3.55 3.60 4.48 1.97 5.55 3.71 2.73 3.59 During 1997 Average sales prices Crude oil and NGL, per barrel $ 15.88 $ 13.13 $ 18.85 $ 20.20 $ 18.47 $ 17.42 $ 16.09 $ 17.32 Natural gas, per thousand cubic feet 2.37 1.44 2.99 2.08 1.18 2.39 3.40 2.56 Average production costs, per barrel** 3.54 4.48 4.16 2.18 5.55 3.70 2.43 3.55
* Includes earnings from transportation operations, tar sands operations, LNG operations, technical services agreements, other non-operating activities and adjustments for minority interests. ** Production costs exclude depreciation and depletion and all taxes. Natural gas included by conversion to crude oil equivalent. F33 Oil and Gas Exploration and Production Costs The amounts shown for net capitalized costs of consolidated subsidiaries are $4,593 million less at year-end 1999 and $3,402 million less at year-end 1998 than the amounts reported as investments in property, plant and equipment for exploration and production in note 11. This is due to the exclusion from capitalized costs of certain transportation and research assets and assets relating to the tar sands and LNG operations, and to the inclusion of accumulated provisions for site restoration costs, all as required in Statement of Financial Accounting Standards No. 19. The amounts reported as costs incurred include both capitalized costs and costs charged to expense during the year. Total worldwide costs incurred in 1999 were $7,759 million, down $1,616 million from 1998, due primarily to lower development costs. 1998 costs were $9,375 million, up $711 million from 1997, due primarily to higher development costs.
Consolidated Subsidiaries -------------------------------------------------------------- Non- United Consolidated Total Capitalized costs States Canada Europe Asia-Pacific Other Total Interests Worldwide - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of dollars) As of December 31, 1999 Property (acreage) costs - Proved $ 4,606 $ 2,952 $ 207 $ 931 $ 1,351 $ 10,047 $ 14 $ 10,061 - Unproved 664 214 59 926 916 2,779 3 2,782 ------------------------------------------------------------------------------------- Total property costs $ 5,270 $ 3,166 $ 266 $ 1,857 $ 2,267 $ 12,826 $ 17 $ 12,843 Producing assets 30,708 4,499 28,669 11,526 4,442 79,844 5,294 85,138 Support facilities 795 115 580 1,007 1,166 3,663 145 3,808 Incomplete construction 1,093 2,226 1,828 651 764 6,562 695 7,257 ------------------------------------------------------------------------------------- Total capitalized costs $ 37,866 $ 10,006 $ 31,343 $ 15,041 $ 8,639 $102,895 $ 6,151 $109,046 Accumulated depreciation and depletion 23,953 4,401 18,680 9,248 3,106 59,388 2,872 62,260 ------------------------------------------------------------------------------------- Net capitalized costs $ 13,913 $ 5,605 $ 12,663 $ 5,793 $ 5,533 $ 43,507 $ 3,279 $ 46,786 ===================================================================================== As of December 31, 1998 Property (acreage) costs - Proved $ 4,718 $ 2,778 $ 208 $ 824 $ 1,349 $ 9,877 $ 14 $ 9,891 - Unproved 683 212 56 995 391 2,337 15 2,352 ------------------------------------------------------------------------------------- Total property costs $ 5,401 $ 2,990 $ 264 $ 1,819 $ 1,740 $ 12,214 $ 29 $ 12,243 Producing assets 29,451 3,910 27,171 10,322 4,003 74,857 5,029 79,886 Support facilities 890 107 655 987 753 3,392 279 3,671 Incomplete construction 1,274 1,636 3,169 1,122 706 7,907 748 8,655 ------------------------------------------------------------------------------------- Total capitalized costs $ 37,016 $ 8,643 $ 31,259 $ 14,250 $ 7,202 $ 98,370 $ 6,085 $104,455 Accumulated depreciation and depletion 22,923 3,651 17,457 8,360 2,481 54,872 2,628 57,500 ------------------------------------------------------------------------------------- Net capitalized costs $ 14,093 $ 4,992 $ 13,802 $ 5,890 $ 4,721 $ 43,498 $ 3,457 $ 46,955 ===================================================================================== Costs incurred in property acquisitions, exploration and development activities - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------------------------------------------- During 1999 Property acquisition costs - Proved $ - $ - $ 1 $ 18 $ - $ 19 $ - $ 19 - Unproved 8 5 8 - 529 550 - 550 Exploration costs 263 106 248 152 571 1,340 38 1,378 Development costs 1,263 787 1,822 576 955 5,403 409 5,812 ------------------------------------------------------------------------------------- Total $ 1,534 $ 898 $ 2,079 $ 746 $ 2,055 $ 7,312 $ 447 $ 7,759 ===================================================================================== During 1998 Property acquisition costs - Proved $ 21 $ 2 $ - $ 1 $ - $ 24 $ - $ 24 - Unproved 100 9 13 4 165 291 - 291 Exploration costs 409 79 392 258 709 1,847 127 1,974 Development costs 1,469 731 2,596 757 870 6,423 663 7,086 ------------------------------------------------------------------------------------- Total $ 1,999 $ 821 $ 3,001 $ 1,020 $ 1,744 $ 8,585 $ 790 $ 9,375 ===================================================================================== During 1997 Property acquisition costs - Proved $ 7 $ - $ 55 $ 8 $ 53 $ 123 $ 2 $ 125 - Unproved 130 20 - 6 61 217 5 222 Exploration costs 342 57 460 254 544 1,657 123 1,780 Development costs 1,442 622 2,069 892 912 5,937 600 6,537 ------------------------------------------------------------------------------------- Total $ 1,921 $ 699 $ 2,584 $ 1,160 $ 1,570 $ 7,934 $ 730 $ 8,664 =====================================================================================
F34 SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES Oil and Gas Reserves The following information describes changes during the years and balances of proved oil and gas reserves at year-end 1997, 1998 and 1999. The definitions used are in accordance with applicable Securities and Exchange Commission regulations. Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions. In some cases, substantial new investments in additional wells and related facilities will be required to recover these proved reserves. Proved reserves include 100 percent of each majority owned affiliate's participation in proved reserves and ExxonMobil's ownership percentage of the proved reserves of equity companies, but exclude royalties and quantities due others. Gas reserves exclude the gaseous equivalent of liquids expected to be removed from the gas on leases, at field facilities and at gas processing plants. These liquids are included in net proved reserves of crude oil and natural gas liquids.
Consolidated Subsidiaries ------------------------------------------------------------------- Non- United Consolidated Total Crude Oil and Natural Gas Liquids States Canada Europe Asia-Pacific Other Total Interests Worldwide - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of barrels) Net proved developed and undeveloped reserves January 1, 1997 3,194 1,333 1,973 878 1,471 8,849 1,272 10,121 Revisions (180) - 52 75 19 (34) 609 575 Purchases 2 1 16 - - 19 - 19 Sales (26) (66) (11) (9) - (112) (5) (117) Improved recovery 117 8 12 - - 137 - 137 Extensions and discoveries 81 40 61 21 211 414 36 450 Production (272) (88) (228) (127) (119) (834) (72) (906) -------------------------------------------------------------------------------------------- December 31, 1997 2,916 1,228 1,875 838 1,582 8,439 1,840 10,279 Revisions 73 (23) 13 41 241 345 117 462 Purchases - - - - - - - - Sales (5) (5) - - - (10) (3) (13) Improved recovery 17 9 21 - 1 48 85 133 Extensions and discoveries 37 43 27 24 832 963 23 986 Production (234) (98) (228) (117) (125) (802) (92) (894) -------------------------------------------------------------------------------------------- December 31, 1998 2,804 1,154 1,708 786 2,531 8,983 1,970 10,953 Revisions 96 19 96 23 134 368 25 393 Purchases - - - - - - - - Sales (3) - - - - (3) (9) (12) Improved recovery 7 1 15 - 3 26 72 98 Extensions and discoveries 58 277 174 18 193 720 - 720 Production (213) (96) (232) (112) (137) (790) (102) (892) -------------------------------------------------------------------------------------------- December 31, 1999 2,749 1,355 1,761 715 2,724 9,304 1,956 11,260 Developed reserves, included above At December 31, 1997 2,573 659 982 689 911 5,814 1,286 7,100 At December 31, 1998 2,470 594 884 673 1,089 5,710 1,383 7,093 At December 31, 1999 2,383 608 1,086 615 1,234 5,926 1,333 7,259
F35 Net proved developed reserves are those volumes which are expected to be recovered through existing wells with existing equipment and operating methods. Undeveloped reserves are those volumes which are expected to be recovered as a result of future investments to drill new wells, to recomplete existing wells and/or to install facilities to collect and deliver the production from existing and future wells. Reserves attributable to certain oil and gas discoveries were not considered proved as of year-end 1999 due to geological, technological or economic uncertainties and therefore are not included in the tabulation. Crude oil and natural gas liquids and natural gas production quantities shown are the net volumes withdrawn from ExxonMobil's oil and gas reserves. The natural gas quantities differ from the quantities of gas delivered for sale by the producing function as reported on page F39 due to volumes consumed or flared and inventory changes. Such quantities amounted to approximately 268 billion cubic feet in 1997, 242 billion cubic feet in 1998 and 391 billion cubic feet in 1999.
Consolidated Subsidiaries ------------------------------------------------------------------- Non- United Consolidated Total Natural Gas States Canada Europe Asia-Pacific Other Total Interests Worldwide - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (billions of cubic feet) Net proved developed and undeveloped reserves January 1, 1997 14,549 3,613 11,841 9,615 352 39,970 18,635 58,605 Revisions (201) (120) 275 152 135 241 534 775 Purchases 3 - 67 - - 70 - 70 Sales (122) (147) (7) (119) - (395) (126) (521) Improved recovery 23 70 30 - - 123 - 123 Extensions and discoveries 476 219 522 1,687 55 2,959 1,319 4,278 Production (1,247) (283) (981) (1,024) (36) (3,571) (674) (4,245) ------------------------------------------------------------------------------------------------- December 31, 1997 13,481 3,352 11,747 10,311 506 39,397 19,688 59,085 Revisions 643 (87) 456 245 99 1,356 184 1,540 Purchases - 10 - - - 10 - 10 Sales (52) (47) (10) (4) - (113) (34) (147) Improved recovery 3 57 20 - - 80 34 114 Extensions and discoveries 195 503 191 362 171 1,422 99 1,521 Production (1,213) (299) (1,003) (916) (48) (3,479) (638) (4,117) ------------------------------------------------------------------------------------------------- December 31, 1998 13,057 3,489 11,401 9,998 728 38,673 19,333 58,006 Revisions 781 31 680 131 42 1,665 142 1,807 Purchases - - - - - - - - Sales (18) (1) - - - (19) - (19) Improved recovery 2 14 105 - - 121 161 282 Extensions and discoveries 305 207 192 44 64 812 61 873 Production (1,126) (353) (1,150) (815) (55) (3,499) (654) (4,153) ------------------------------------------------------------------------------------------------- December 31, 1999 13,001 3,387 11,228 9,358 779 37,753 19,043 56,796 Developed reserves, included above At December 31, 1997 10,993 2,297 8,033 7,029 288 28,640 7,407 36,047 At December 31, 1998 10,690 2,254 7,939 6,871 391 28,145 7,967 36,112 At December 31, 1999 10,820 2,475 7,764 6,471 428 27,958 8,643 36,601 =================================================================================================================================
INFORMATION ON CANADIAN TAR SANDS PROVEN RESERVES NOT INCLUDED ABOVE In addition to conventional liquids and natural gas proved reserves, ExxonMobil has significant interests in proven tar sands reserves in Canada associated with the Syncrude project. For internal management purposes, ExxonMobil views these reserves and their development as an integral part of total Upstream operations. However, U.S. Securities and Exchange Commission regulations define these reserves as mining related and not a part of conventional oil and gas reserves. The tar sands reserves are not considered in the standardized measure of discounted future cash flows for conventional oil and gas reserves, which is found on page F37. Tar Sands Reserves Canada - - - - - - - - - - - - - - - - ----------------------------------------------------------------- (millions of barrels) At December 31, 1997 616 At December 31, 1998 597 At December 31, 1999 577 F36 SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES Standardized Measure of Discounted Future Cash Flows As required by the Financial Accounting Standards Board, the standardized measure of discounted future net cash flows is computed by applying year-end prices, costs and legislated tax rates and a discount factor of 10 percent to net proved reserves. The corporation believes the standardized measure is not meaningful and may be misleading.
Consolidated Subsidiaries ------------------------------------------------------------------- Non- United Consolidated Total States Canada Europe Asia-Pacific Other Total Interests Worldwide - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of dollars) As of December 31, 1997 Future cash inflows from sales of oil and gas $ 66,893 $ 14,736 $ 59,486 $ 35,528 $ 26,603 $203,246 $ 76,610 $279,856 Future production costs 21,239 5,873 16,025 11,172 7,462 61,771 33,941 95,712 Future development costs 4,232 2,372 6,319 5,010 3,137 21,070 3,260 24,330 Future income tax expenses 14,280 2,413 17,508 7,656 9,222 51,079 14,609 65,688 -------------------------------------------------------------------------------------------- Future net cash flows $ 27,142 $ 4,078 $ 19,634 $ 11,690 $ 6,782 $ 69,326 $ 24,800 $ 94,126 Effect of discounting net cash flows at 10% 13,032 1,707 7,237 5,177 2,832 29,985 15,877 45,862 -------------------------------------------------------------------------------------------- Discounted future net cash flows $ 14,110 $ 2,371 $ 12,397 $ 6,513 $ 3,950 $ 39,341 $ 8,923 $ 48,264 ============================================================================================ As of December 31, 1998 Future cash inflows from sales of oil and gas $ 45,618 $ 13,255 $ 42,408 $ 21,640 $ 23,428 $146,349 $ 62,642 $208,991 Future production costs 18,946 4,567 14,926 8,679 8,828 55,946 28,343 84,289 Future development costs 4,066 2,012 5,668 3,490 5,116 20,352 3,393 23,745 Future income tax expenses 7,359 2,411 8,290 2,725 3,252 24,037 11,734 35,771 -------------------------------------------------------------------------------------------- Future net cash flows $ 15,247 $ 4,265 $ 13,524 $ 6,746 $ 6,232 $ 46,014 $ 19,172 $ 65,186 Effect of discounting net cash flows at 10% 7,395 2,011 4,951 3,060 3,599 21,016 12,207 33,223 -------------------------------------------------------------------------------------------- Discounted future net cash flows $ 7,852 $ 2,254 $ 8,573 $ 3,686 $ 2,633 $ 24,998 $ 6,965 $ 31,963 ============================================================================================ As of December 31, 1999 Future cash inflows from sales of oil and gas $ 82,674 $ 29,360 $ 64,192 $ 34,771 $ 63,027 $274,024 $ 94,767 $368,791 Future production costs 21,219 6,618 13,660 9,754 14,332 65,583 33,006 98,589 Future development costs 4,131 2,116 4,904 3,516 5,384 20,051 3,104 23,155 Future income tax expenses 20,103 8,096 23,396 7,680 22,898 82,173 26,573 108,746 -------------------------------------------------------------------------------------------- Future net cash flows $ 37,221 $ 12,530 $ 22,232 $ 13,821 $ 20,413 $106,217 $ 32,084 $138,301 Effect of discounting net cash flows at 10% 20,139 5,884 7,351 5,918 10,969 50,261 19,473 69,734 -------------------------------------------------------------------------------------------- Discounted future net cash flows $ 17,082 $ 6,646 $ 14,881 $ 7,903 $ 9,444 $ 55,956 $ 12,611 $ 68,567 ============================================================================================
Change in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
Consolidated Subsidiaries 1999 1998 1997 - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ (millions of dollars) Value of reserves added during the year due to extensions, discoveries, improved recovery and net purchases less related costs $ 4,245 $ 1,329 $ 2,976 Changes in value of previous-year reserves due to: Sales and transfers of oil and gas produced during the year, net of production (lifting) costs (13,395) (10,300) (16,079) Development costs incurred during the year 5,313 6,104 5,651 Net change in prices, lifting and development costs 59,466 (34,611) (49,176) Revisions of previous reserves estimates 3,106 1,281 2,240 Accretion of discount 3,056 5,865 9,819 Net change in income taxes (30,833) 15,989 20,837 feet) --------------------------------- Total change in the standardized measure during the year $ 30,958 $(14,343) $(23,732) =================================
F37 QUARTERLY INFORMATION
1999 1998 -------------------------------------------------------------------------------------------------- First Second Third Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Year Quarter Quarter Quarter Quarter Year - - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------- Volumes Production of crude oil (thousands of barrels daily) and natural gas liquids 2,540 2,473 2,477 2,579 2,517 2,545 2,527 2,474 2,462 2,502 Refinery throughput 6,068 5,950 5,899 5,991 5,977 6,147 6,133 6,083 6,010 6,093 Petroleum product sales 8,974 8,842 8,879 8,857 8,887 8,728 8,775 8,918 9,066 8,873 Natural gas production (millions of cubic feet daily) available for sale 11,516 9,178 8,700 11,851 10,308 11,908 9,757 9,333 11,489 10,617 (thousands of metric tons) Chemical prime product sales 5,876 6,063 6,088 6,458 24,485 5,905 5,952 5,840 5,931 23,628 Summarized financial data Sales and other operating (millions of dollars) revenue $ 37,982 42,458 48,415 53,674 182,529 $ 42,250 41,304 40,072 42,001 165,627 Gross profit* $ 17,850 19,229 20,379 22,950 80,408 $ 19,221 19,460 18,704 20,076 77,461 Net income as reported $ 1,484 1,954 2,188 2,284 7,910 $ 2,595 2,262 1,909 1,378 8,144 Cumulative effect of accounting change $ -- -- -- -- -- $ (70) -- -- -- (70) Net income as restated $ 1,484 1,954 2,188 2,284 7,910 $ 2,525 2,262 1,909 1,378 8,074 Per share data Net income per common share (dollars per share) as reported $ 0.42 0.57 0.63 0.66 2.28 $ 0.74 0.65 0.55 0.39 2.33 Cumulative effect of accounting change $ -- -- -- -- -- $ (0.02) -- -- -- (0.02) Net income per common share as restated $ 0.42 0.57 0.63 0.66 2.28 $ 0.72 0.65 0.55 0.39 2.31 Net income per common share - assuming dilution $ 0.42 0.56 0.62 0.65 2.25 $ 0.71 0.64 0.54 0.39 2.28 Dividends per common share $ 0.4165 0.4165 0.4165 0.4375 1.6870 $ 0.4165 0.4165 0.4165 0.4165 1.6660 Common stock prices High $ 76.375 87.250 83.000 86.563 87.250 $ 70.000 76.000 73.813 77.313 77.313 Low $ 64.313 69.438 72.125 70.063 64.313 $ 56.625 65.375 62.000 69.438 56.625
* Gross profit equals sales and other operating revenue less estimated costs associated with products sold. The price range of ExxonMobil Common Stock is as reported on the composite tape of the several U.S. exchanges where ExxonMobil Common Stock is traded. The principal market where ExxonMobil Common Stock (XOM) is traded is the New York Stock Exchange, although the stock is traded on other exchanges in and outside the United States. Through December 1, 1999, the Common Stock traded under the name of Exxon Corporation (XON). There were 778,644 registered shareholders of ExxonMobil common stock at December 31, 1999. At January 31, 2000, the registered shareholders of ExxonMobil common stock numbered 772,614. On January 26, 2000, the corporation declared a $0.44 dividend per common share, payable March 10, 2000. F38 OPERATING SUMMARY 1999 1998 1997 - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------- (thousands of barrels daily) Production of crude oil and natural gas liquids Net production United States 729 745 803 Canada 315 322 287 Europe 650 635 641 Asia-Pacific 307 322 347 Other Non-U.S. 516 478 449 ----------------------------- Worldwide 2,517 2,502 2,527 ============================= (millions of cubic feet daily) Natural gas production available for sale Net production United States 2,871 3,140 3,223 Canada 683 667 600 Europe 4,438 4,245 4,283 Asia-Pacific 2,027 2,352 2,632 Other Non-U.S. 289 213 156 ----------------------------- Worldwide 10,308 10,617 10,894 ============================= (thousands of barrels daily) Refinery throughput United States 1,930 1,919 2,026 Canada 441 445 448 Europe 1,782 1,888 1,899 Asia-Pacific 1,537 1,554 1,559 Other Non-U.S. 287 287 302 ----------------------------- Worldwide 5,977 6,093 6,234 ============================= Petroleum product sales United States 2,918 2,804 2,777 Canada 587 579 574 Europe 2,597 2,646 2,609 Asia-Pacific and other Eastern Hemisphere 2,223 2,266 2,249 Latin America 562 578 564 ----------------------------- Worldwide 8,887 8,873 8,773 ============================= Gasoline, naphthas 3,428 3,417 3,317 Heating oils, kerosene, diesel oils 2,658 2,689 2,725 Aviation fuels 813 774 753 Heavy fuels 706 765 744 Specialty petroleum products 1,282 1,228 1,234 ----------------------------- Worldwide 8,887 8,873 8,773 ============================= (thousands of metric tons) Chemical prime product sales 24,485 23,628 23,838 ============================= (millions of metric tons) Coal production 17 15 15 ============================= (thousands of metric tons) Copper production 248 216 205 ============================= Operating statistics include 100 percent of operations of majority owned subsidiaries; for other companies, crude production, gas, petroleum product and chemical prime product sales include ExxonMobil's ownership percentage, and refining throughput includes quantities processed for ExxonMobil. Net production excludes royalties and quantities due others when produced, whether payment is made in kind or cash. F39