EXHIBIT 13
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FINANCIAL SECTION
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Financial Review
Financial Summary........................................................ F3
Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. F4-F7
Consolidated Financial Statements
Balance Sheet............................................................ F8
Statement of Income...................................................... F9
Statement of Shareholders' Equity........................................ F9
Statement of Cash Flows................................................. F10
Report of Independent Accountants.......................................... F11
Notes to Consolidated Financial Statements............................. F11-F20
1.Summary of Accounting Policies....................................... F11
2.Miscellaneous Financial Information.................................. F12
3.Cash Flow Information................................................ F12
4.Additional Working Capital Data...................................... F12
5.Equity Company Information........................................... F12
6.Investments and Advances............................................. F13
7.Investment in Property, Plant and Equipment.......................... F13
8.Incentive Program.................................................... F14
9.Leased Facilities.................................................... F14
10.Interest Rate Swap, Currency Exchange and Commodity Contracts........ F15
11.Fair Value of Financial Instruments.................................. F15
12.Long-Term Debt....................................................... F15
13.Litigation and Other Contingencies................................... F16
14.Annuity Benefits..................................................... F16
15.Other Postretirement Benefits........................................ F18
16.Income, Excise and Other Taxes....................................... F18
17.Capital.............................................................. F19
18.Leveraged Employee Stock Ownership Plan (LESOP)...................... F19
19.Distribution of Earnings and Assets.................................. F20
Quarterly Information...................................................... F21
Supplemental Information on Oil and Gas Exploration and Production
Activities.......................................................... F22-F26
Operating Summary.......................................................... F27
F1
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FINANCIAL SUMMARY
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1997 1996 1995 1994 1993
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(millions of dollars, except per share amounts)
Sales and other operating revenue
Petroleum and natural gas $ 120,644 $ 118,012 $ 107,749 $ 100,409 $ 98,808
Chemicals 12,195 11,430 11,737 9,544 8,641
Other and eliminations 2,303 2,101 2,318 2,175 2,083
-----------------------------------------------------------------
Total sales and other operating revenue $ 135,142 $ 131,543 $ 121,804 $ 112,128 $ 109,532
Earnings from equity interests and other revenue 2,100 2,706 2,116 1,776 1,679
-----------------------------------------------------------------
Revenue $ 137,242 $ 134,249 $ 123,920 $ 113,904 $ 111,211
=================================================================
Earnings
Petroleum and natural gas
Exploration and production $ 4,693 $ 5,058 $ 3,412 $ 2,782 $ 3,313
Refining and marketing 2,063 885 1,272 1,389 2,015
-----------------------------------------------------------------
Total petroleum and natural gas $ 6,756 $ 5,943 $ 4,684 $ 4,171 $ 5,328
Chemicals 1,368 1,199 2,018 954 411
Other operations 434 433 479 409 138
Corporate and financing (98) (65) (711) (434) (597)
-----------------------------------------------------------------
Net income $ 8,460 $ 7,510 $ 6,470 $ 5,100 $ 5,280
=================================================================
Net income per common share* $ 3.41 $ 3.01 $ 2.59 $ 2.04 $ 2.10
Net income per common share - assuming dilution* $ 3.37 $ 2.99 $ 2.58 $ 2.03 $ 2.09
Cash dividends per common share* $ 1.625 $ 1.560 $ 1.500 $ 1.455 $ 1.440
Net income to average shareholders' equity (percent) 19.4 17.9 16.6 14.1 15.4
Net income to total revenue (percent) 6.2 5.6 5.2 4.5 4.7
Working capital $ 1,538 $ 405 $ (1,418) $ (3,033) $ (3,731)
Ratio of current assets to current liabilities 1.08 1.02 0.92 0.84 0.80
Total additions to property, plant and equipment $ 7,392 $ 7,132 $ 7,201 $ 6,568 $ 6,919
Property, plant and equipment, less allowances $ 66,414 $ 66,607 $ 65,446 $ 63,425 $ 61,962
Total assets $ 96,064 $ 95,527 $ 91,296 $ 87,862 $ 84,145
Exploration expenses, including dry holes $ 753 $ 763 $ 693 $ 666 $ 648
Research and development costs $ 529 $ 520 $ 525 $ 558 $ 593
Long-term debt $ 7,050 $ 7,236 $ 7,778 $ 8,831 $ 8,506
Total debt $ 9,952 $ 9,746 $ 10,025 $ 12,689 $ 12,615
Fixed charge coverage ratio 11.5 10.4 8.6 7.0 7.4
Debt to capital (percent) 17.8 17.7 19.0 24.3 25.3
Shareholders' equity at year-end $ 43,660 $ 43,542 $ 40,436 $ 37,415 $ 34,792
Shareholders' equity per common share* $ 17.77 $ 17.53 $ 16.28 $ 15.07 $ 14.01
Average number of common shares outstanding (millions)* 2,473 2,484 2,484 2,483 2,483
Number of registered shareholders at year-end (thousands) 641 610 603 608 622
Wages, salaries and employee benefits $ 5,695 $ 5,710 $ 5,799 $ 5,881 $ 5,916
Number of employees at year-end (thousands) 80 79 82 86 91
*Prior period amounts restated for two-for-one stock split effective March 14,
1997.
F3
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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REVIEW OF 1997 RESULTS
Record net income of $8,460 million in 1997 compared with the previous record of
$7,510 million in 1996. Despite lower crude oil prices, earnings growth resulted
from improved downstream margins, higher petroleum product and chemical sales,
and lower unit operating expenses. Results in 1997 included $305 million of non-
recurring credits (all in the fourth quarter) primarily related to foreign
exchange and tax-related items, while 1996 included $535 million of non-
recurring credits ($410 million in the fourth quarter) from tax-related items.
Revenue for 1997 totaled $137 billion, up 2 percent from 1996. The cost of
crude and product purchases increased 3 percent. The combined total of operating
costs (including operating, selling, general, administrative, exploration,
depreciation and depletion expenses from the consolidated statement of income
and Exxon's share of similar costs for equity companies) in 1997 was $29
billion, flat with 1996. Lower operating costs resulting from a stronger U.S.
dollar were offset by expenses from higher sales volumes, higher exploration and
production venture spending and additional reported costs from consolidation of
a Japanese affiliate following Exxon's acquisition of a controlling interest.
Exxon's operating efficiencies continued to offset the impact of inflation. Unit
operating expenses were reduced in most business segments on higher sales
volumes in 1997. Interest expense in 1997 was $415 million compared to $464
million in 1996.
Exploration and Production
Exploration and production earnings declined from last year reflecting lower
crude prices which on average were about $1.50 per barrel lower than 1996.
Liquids production of 1,599 kbd (thousand barrels per day) was similar to last
year. Increased Canadian heavy oil production and volumes from new developments,
primarily in the North Sea and Australia, were offset by scheduled maintenance,
field declines, and property sales. Natural gas production of 6,339 mcfd
(million cubic feet per day) was down somewhat from 1996, reflecting warmer
European weather. Earnings from U.S. exploration and production were $1,634
million, down from $1,781 million during 1996. Outside the U.S., exploration and
production earnings were $2,869 million, down $178 million, after excluding non-
recurring credits of $190 million in 1997 and $230 million in 1996.
Refining and Marketing
Downstream industry margins improved from the low levels seen in 1996. Refining
margins in the U.S. and Europe strengthened in 1997 and marketing margins
benefited from an improved U.K. retail environment. Petroleum product sales of
5,430 kbd were the highest in 23 years and up 4 percent from 1996, with volume
growth in all major geographic areas. Refinery throughput was 4,011 kbd, up 6
percent from last year, and the highest since 1980. In the U.S., refining and
marketing earnings were $593 million, up $424 million from the prior year.
Refining and marketing operations outside the U.S. earned $1,470 million, an
increase of $754 million from 1996.
Chemicals
Earnings from chemical operations totaled $1,368 million, up $169 million or 14
percent from 1996. Exxon achieved prime product sales of 17,301 thousand metric
tons, an increase of 10 percent over 1996 and a fourth consecutive record sales
year. Chemical commodity margins also improved in 1997 on generally higher
prices and lower feedstock costs.
Other Operations
Earnings from other operating segments of $434 million were flat with 1996.
Copper and coal production from continuing operations were at record levels.
Copper realizations were higher, while coal prices were lower.
Corporate and Financing
Full year corporate and financing expenses, excluding one-time credits of $115
million in 1997 and $305 million in 1996, declined $157 million to $213 million
reflecting lower tax and debt-related charges.
REVIEW OF 1996 RESULTS
Net income of $7,510 million in 1996 compared with $6,470 million in 1995.
Earnings growth resulted from increased natural gas, petroleum product and
chemical sales, stronger crude oil and natural gas prices and continued progress
in reducing unit operating expenses. These factors more than offset weaker
industry margins in the chemicals, downstream and minerals businesses. Results
for 1996 included $535 million in non-recurring credits ($410 million in the
fourth quarter) as a result of the resolution of outstanding tax issues with a
number of governments, while 1995 included $90 million of non-recurring credits
(all in the fourth quarter).
Revenue for 1996 totaled $134 billion, up 8 percent from 1995, and the cost of
crude oil and product purchases increased 12 percent. The combined total of
operating costs increased only 1 percent in 1996 despite higher volumes. Unit
operating expenses were reduced in all operating segments after excluding the
effects of higher fuel prices and the generally stronger U.S. dollar. Interest
expense in 1996 declined from the prior year as impacts of lower debt levels and
interest rates more than offset foreign exchange effects.
Exploration and Production
Worldwide crude oil prices were on average about $3.75 per barrel above the
prior year, and natural gas prices were stronger, particularly in North America.
Liquids production was 1,615 kbd compared with 1,726 kbd in 1995. Increased
production from new developments in the North Sea was offset by the near-term
effect of a revised production sharing agreement in Malaysia and lower volumes
in North America and Australia. Natural gas production of 6,577 mcfd was the
highest level in the last 15 years and up 9 percent from 1995, due to colder
weather in Europe and the U.S. and increased sales in Malaysia. Earnings from
U.S. exploration and production operations were $1,781 million, up from $1,061
million in 1995, as a result of stronger crude oil and natural gas prices and
reduced operating expenses. Outside the U.S., earnings from exploration and
production operations were $3,277 million versus $2,351 million in 1995. Non-
U.S. results benefited from higher gas sales as well as increased crude oil and
natural gas prices.
F4
Refining and Marketing
Petroleum product sales of 5,211 kbd were the highest in 17 years and up 3
percent from 1995, on the strength of increased clean product volumes in most
major geographic areas. Refinery throughput was 3,792 kbd, up 4 percent from
1995, and the highest level since 1982. U.S. refining and marketing earnings
were $169 million, compared with $229 million in 1995. Industry refining margins
in the U.S. improved relative to 1995's low level, but were offset by increases
in scheduled refinery maintenance activity and higher costs for fuel consumed.
Refining and marketing operations outside the U.S. earned $716 million, down
from $1,043 million in 1995, and were affected by weak industry conditions in
the U.K. and Japan.
Chemicals
Earnings from chemical operations totaled $1,199 million, down from 1995's
record of $2,018 million. Exxon achieved record prime product sales of 15,712
thousand metric tons in 1996, up 9 percent from the prior year, but industry
product prices were lower and feedstock costs higher than 1995 levels.
Other Operations
Earnings from other operating segments were $433 million, down from $479 million
in 1995. Copper and coal production from continuing operations were at record
levels. International coal prices were higher, but copper prices were down
significantly from the prior year.
Corporate and Financing
Corporate and financing expenses of $65 million declined from $711 million in
1995 due to $305 million in non-recurring credits and lower tax-related charges
and interest costs.
MARKET RISKS, INFLATION, AND OTHER UNCERTAINTIES
In the past, crude and product 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
corporation makes very limited use of commodity forwards, swaps and futures
contracts of short duration to mitigate the risk of unfavorable price movements
on certain crude and petroleum product purchases and sales. Commodity price
exposure related to these contracts is not material.
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 Exxon's geographically diverse operations are often
varied, at times offsetting in amount. As discussed in note 10 to the
consolidated financial statements, the corporation makes very limited use of
currency exchange contracts to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Exposure from
market rate fluctuations related to these contracts is not material. Aggregate
foreign exchange transaction gains and losses included in net income are
discussed in note 2 to the consolidated financial statements.
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 very limited use of interest rate swap agreements
to adjust the ratio of fixed and floating rates in the debt portfolio, as
discussed in note 10 to the consolidated financial statements. 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.
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.
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 Exxon 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
Exxon's actual joint and several liability exposure. At present, no individual
site is expected to have losses material to Exxon's operations, financial
condition or liquidity.
Charges made against income for site restoration and environmental liabilities
were $140 million in 1997, $146 million in 1996 and $215 million in 1995. At the
end of 1997, accumulated site restoration and environmental provisions, after
reduction for amounts paid, amounted to $2.5 billion. Exxon 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 1997, the corporation spent $1,566 million (of which $524 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 $1.5 billion in both 1998 and 1999
(with capital expenditures representing about 30 percent of the total).
TAXES
Income, excise and all other taxes and duties totaled $43.9 billion in
1997, essentially unchanged from 1996. Income tax expense, both cur-
F5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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rent and deferred, was $4.3 billion compared to $4.4 billion in 1996, reflecting
higher pre-tax income and a lower effective tax rate -- 36.4 percent in 1997
versus 39.9 percent in 1996. Excise and all other taxes and duties at $39.6
billion compared to $39.4 billion in 1996.
Income, excise and all other taxes and duties totaled $43.8 billion in 1996,
an increase of $2.6 billion or 6 percent. Income tax expense, both current and
deferred, was $4.4 billion compared to $4.0 billion in 1995, reflecting higher
pre-tax income in 1996 and a lower effective tax rate -- 39.9 percent in 1996
versus 41.4 percent in 1995. Excise and all other taxes and duties were $2.1
billion higher reflecting increased sales.
LIQUIDITY AND CAPITAL RESOURCES
In 1997, cash provided by operating activities totaled $14.7 billion, up $1.5
billion from 1996. Major sources of funds were net income of $8.5 billion and
non-cash provisions of $5.4 billion for depreciation and depletion.
Cash used in investing activities totaled $6.8 billion, up $0.3 billion from
1996 primarily as a result of higher additions to property, plant and equipment.
Cash used in financing activities was $6.7 billion. Dividend payments on
common shares were increased from $1.560 per share to $1.625 per share and
totaled $4.0 billion, a payout of 48 percent. Total consolidated debt increased
by $0.2 billion to $10.0 billion.
Shareholders' equity increased by $0.2 billion to $43.7 billion. The ratio of
debt to capital remained at 18 percent in 1997, the same as 1996. During 1997,
Exxon purchased 43.2 million shares of its common stock for the treasury at a
cost of $2.6 billion. These purchases reflect both the increased share
repurchases announced in the first quarter of 1997, 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. Purchases may be discontinued at any time.
In 1996, cash provided by operating activities totaled $13.2 billion, down
$0.6 billion from 1995. Major sources of funds were net income of $7.5 billion
and non-cash provisions of $5.3 billion for depreciation and depletion.
Cash used in investing activities totaled $6.5 billion in 1996, up from $6.4
billion in 1995, primarily as a result of higher additions to property, plant
and equipment.
Cash used in financing activities was $5.2 billion in 1996. Dividend payments
on common shares were increased from $1.500 per share to $1.560 per share and
totaled $3.9 billion, a payout of 52 percent. Total consolidated debt decreased
$0.3 billion to $9.7 billion.
Shareholders' equity increased by $3.1 billion to $43.5 billion. The ratio of
debt to capital decreased to 18 percent in 1996 compared to 19 percent in 1995.
In 1997 and 1996, the corporation strengthened its financial position and
flexibility to meet future financial needs. 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 10 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
Exxon's operations, financial condition or liquidity.
As discussed in note 13 to the consolidated financial statements, a number of
lawsuits, including class actions, were brought in various courts against Exxon
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. Exxon has appealed the judgment. 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.
Since it is impossible to estimate what the ultimate earnings impact will be, no
charge was taken in 1996 or 1997 related to these verdicts.
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between Exxon and various insurers arising from the Valdez
accident. Under terms of this settlement, Exxon received $480 million. Final
income statement recognition of this settlement will be deferred in view of
uncertainty regarding the ultimate cost to the corporation of the Valdez
accident.
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. Ultimate resolution of this
issue and several other tax and legal issues, notably a settlement of gas
lifting imbalances in the common border area between the Netherlands and
Germany, is not expected to have a material 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 future financial condition.
CAPITAL AND EXPLORATION EXPENDITURES
Capital and exploration expenditures in 1997 were $8.8 billion, down from $9.2
billion in 1996 reflecting the impact of a generally stronger U.S. dollar.
Despite the effects of the stronger dollar, exploration and production
spending was up 8 percent to $5.3 billion in 1997, from $4.9 billion in 1996,
reflecting higher spending for exploration and development drilling. Capital
investments in refining and marketing totaled $2.0 billion in 1997, the same
level as in 1996.
F6
Chemicals capital expenditures were $1.0 billion in 1997, down from $1.6
billion in 1996 which included higher plant capacity investments in the U.S. and
acquisitions in Europe.
Investments in the power and other operating segments were $0.5 billion in
1997, down $0.2 billion from 1996 following start-up in 1996 of four units of
the Black Point Power Station in Hong Kong.
Capital and exploration expenditures in the U.S. totaled $2.6 billion in 1997,
an increase of 7 percent from 1996, primarily in exploration and production.
Spending outside the U.S. of $6.2 billion in 1997 compared to $6.8 billion in
1996, reflecting the stronger U.S. dollar and the absence of chemicals
acquisitions. Capital and exploration expenditures in 1998, excluding foreign
exchange rate fluctuations, are anticipated to increase about 10 percent as
attractive investment opportunities continue to be developed in each of the
major business segments.
Firm commitments related to capital projects totaled approximately $5.6
billion at the end of 1997, with the largest single commitment being $2.0
billion associated with the development of natural gas resources in Malaysia.
Similar commitments totaled $2.4 billion at the end of 1996. The corporation
expects to fund the majority of these commitments through internally generated
funds.
YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define a specific year. Absent corrective actions, a
computer program that has date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions to various activities and
operations.
The corporation initiated assessments in prior years to identify the work
efforts required to assure that systems supporting the business successfully
operate beyond the turn of the century. Comprehensive plans for achieving Year
2000 compliance were finalized during 1997, and implementation work was underway
at year-end. While plans are in place, significant work remains to be done. Most
required systems modifications are expected to be completed in 1998. Also during
1998, attention will continue to be focused on compliance attainment efforts of
vendors and others, including key system interfaces with customers and
suppliers. Notwithstanding the substantive work efforts described above, the
corporation could potentially experience disruptions to some aspects of its
various activities and operations as a result of non-compliant systems utilized
by unrelated third party governmental and business entities. Contingency plans
are therefore under development in order to attempt to mitigate the extent of
such potential disruption to business operations. The total cost to the
corporation of achieving Year 2000 compliant systems is not expected to be
material to Exxon's operations, financial condition or liquidity.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
++++++ +++++++ ++++++ +++++++ ++++++ +++++++
+ + + + + +
+ + + + + +
+ GRAPH #1 + + GRAPH #2 + + GRAPH #3 +
+ + + + + +
+ + + + + +
++++++ +++++++ ++++++ +++++++ ++++++ +++++++
GRAPH #1 - FUNCTIONAL EARNINGS. Five-year history of earnings by function
(Exploration & Production, Refining & Marketing, Chemicals and Other)
and net income
GRAPH #2 - SOURCES AND USES OF CASH. Five-year history of cash sources (Cash
from Operations and Asset Sales) compared to cash uses (Plant
Additions and Dividends/Changes in Debt/Other.
GRAPH #3 - CAPITAL AND EXPLORATION EXPENDITURES. Five-year history of capital
and exploration expenditures by function (Exploration & Production,
Refining & Marketing, Chemicals and Other).
F7
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CONSOLIDATED BALANCE SHEET
- - --------------------------------------------------------------------------------
Dec. 31 Dec. 31
1997 1996
- - --------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Assets
Current assets
Cash and cash equivalents $ 4,047 $ 2,951
Other marketable securities 15 18
Notes and accounts receivable, less estimated doubtful amounts 10,702 10,499
Inventories
Crude oil, products and merchandise 4,725 4,501
Materials and supplies 762 784
Prepaid taxes and expenses 941 1,157
---------------------
Total current assets $21,192 $19,910
Investments and advances 5,205 6,010
Property, plant and equipment, at cost, less accumulated depreciation and depletion 66,414 66,607
Other assets, including intangibles, net 3,253 3,000
---------------------
Total assets $96,064 $95,527
=====================
Liabilities
Current liabilities
Notes and loans payable $ 2,902 $ 2,510
Accounts payable and accrued liabilities 14,683 14,510
Income taxes payable 2,069 2,485
---------------------
Total current liabilities $19,654 $19,505
Long-term debt 7,050 7,236
Annuity reserves and accrued liabilities 9,302 9,195
Deferred income tax liabilities 13,452 13,475
Deferred credits 575 660
Equity of minority and preferred shareholders in affiliated companies 2,371 1,914
---------------------
Total liabilities $52,404 $51,985
---------------------
Shareholders' Equity
Preferred stock without par value (authorized 200 million shares) $ 190 $ 303
Guaranteed LESOP obligation (225) (345)
Common stock without par value (2,984 million issued 1997 and 3,626 million issued 1996) 2,323 2,822
Earnings reinvested 52,214 57,156
Cumulative foreign exchange translation adjustment (1,119) 1,126
Common stock held in treasury (527 million shares in 1997 and 1,142 million shares in 1996) (9,723) (17,520)
---------------------
Total shareholders' equity $43,660 $43,542
---------------------
Total liabilities and shareholders' equity $96,064 $95,527
=====================
The information on pages F11 through F20 is an integral part of these
statements.
F8
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CONSOLIDATED STATEMENT OF INCOME
- - --------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------
(millions of dollars)
Revenue
Sales and other operating revenue, including excise taxes $135,142 $131,543 $121,804
Earnings from equity interests and other revenue 2,100 2,706 2,116
---------------------------------
Total revenue $137,242 $134,249 $123,920
---------------------------------
Costs and other deductions
Crude oil and product purchases $ 57,971 $ 56,406 $ 50,320
Operating expenses 13,045 13,255 12,772
Selling, general and administrative expenses 8,406 7,961 7,802
Depreciation and depletion 5,474 5,329 5,386
Exploration expenses, including dry holes 753 763 693
Interest expense 415 464 485
Excise taxes 14,863 14,815 13,911
Other taxes and duties 23,111 22,956 21,808
Income applicable to minority and preferred interests 406 384 301
---------------------------------
Total costs and other deductions $124,444 $122,333 $113,478
---------------------------------
Income before income taxes $ 12,798 $ 11,916 $ 10,442
Income taxes 4,338 4,406 3,972
---------------------------------
Net income $ 8,460 $ 7,510 $ 6,470
=================================
Net income per common share (dollars) $ 3.41 $ 3.01 $ 2.59
Net income per common share - assuming dilution (dollars) $ 3.37 $ 2.99 $ 2.58
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- - --------------------------------------------------------------------------------
1997 1996 1995
-------------------------------------------------------------
Shares Dollars Shares Dollars Shares Dollars
- - -------------------------------------------------------------------------------------------------------------------
(millions)
Preferred stock outstanding at end of year 3 $ 190 5 $ 303 7 $ 454
Guaranteed LESOP obligation (225) (345) (501)
Common stock issued at end of year (See note 17) 2,984 2,323 3,626 2,822 3,626 2,822
Earnings reinvested
At beginning of year $ 57,156 $ 53,539 $ 50,821
Net income for year 8,460 7,510 6,470
Dividends - common and preferred shares (4,032) (3,893) (3,752)
Cancellation of common stock held in treasury (9,370) 0 0
--------------------------------------------------------------
At end of year $ 52,214 $ 57,156 $ 53,539
--------------------------------------------------------------
Cumulative foreign exchange translation adjustment
At beginning of year $ 1,126 $ 1,339 $ 848
Change during the year (2,245) (213) 491
--------------------------------------------------------------
At end of year $ (1,119) $ 1,126 $ 1,339
--------------------------------------------------------------
Common stock held in treasury
At beginning of year (1,142) $(17,520) (1,142) $(17,217) (1,142) $(17,017)
Acquisitions, at cost (43) (2,586) (18) (801) (17) (628)
Dispositions 16 514 18 498 17 428
Cancellation, returned to unissued 642 9,869 0 0 0 0
--------------------------------------------------------------
At end of year (527) $ (9,723) (1,142) $(17,520) (1,142) $(17,217)
--------------------------------------------------------------
Shareholders' equity at end of year $ 43,660 $ 43,542 $ 40,436
--------------------------------------------------------------
Common shares outstanding at end of year 2,457 2,484 2,484
==============================================================
The information on pages F11 through F20 is an integral part of these
statements.
F9
- - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
- - --------------------------------------------------------------------------------
1997 1996 1995
- - ----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Cash flows from operating activities
Net income
Accruing to Exxon shareholders $ 8,460 $ 7,510 $ 6,470
Accruing to minority and preferred interests 406 384 301
Adjustments for non-cash transactions
Depreciation and depletion 5,474 5,329 5,386
Deferred income tax charges 346 835 1,043
Annuity and accrued liability provisions 385 514 843
Dividends received greater than/(less than) equity in current earnings of equity companies 141 11 (22)
Changes in operational working capital, excluding cash and debt
Reduction/(increase) - Notes and accounts receivable 120 (1,702) (702)
- Inventories (253) 246 37
- Prepaid taxes and expenses (5) (81) 109
Increase/(reduction) - Accounts and other payables (833) 495 546
All other items - net 435 (379) (164)
---------------------------------
Net cash provided by operating activities $14,676 $13,162 $13,847
---------------------------------
Cash flows from investing activities
Additions to property, plant and equipment $(7,393) $(7,209) $(7,128)
Sales of subsidiaries and property, plant and equipment 1,110 719 666
Additional investments and advances (820) (810) (530)
Sales of investments and collection of advances 310 522 285
Additions to other marketable securities (37) (159) (380)
Sales of other marketable securities 39 422 732
---------------------------------
Net cash used in investing activities $(6,791) $(6,515) $(6,355)
---------------------------------
Net cash generation before financing activities $ 7,885 $ 6,647 $ 7,492
---------------------------------
Cash flows from financing activities
Additions to long-term debt $ 589 $ 659 $ 1,092
Reductions in long-term debt (249) (806) (1,492)
Additions to short-term debt 531 261 423
Reductions in short-term debt (991) (607) (901)
Additions/(reductions) in debt with less than 90 day maturity 128 239 (1,827)
Cash dividends to Exxon shareholders (4,038) (3,902) (3,765)
Cash dividends to minority interests (313) (291) (282)
Changes in minority interests and sales/(purchases) of affiliate stock (123) (338) (84)
Common stock acquired (2,586) (801) (628)
Common stock sold 340 347 328
---------------------------------
Net cash used in financing activities $(6,712) $(5,239) $(7,136)
---------------------------------
Effects of exchange rate changes on cash $ (77) $ 35 $ (5)
---------------------------------
Increase in cash and cash equivalents $ 1,096 $ 1,443 $ 351
Cash and cash equivalents at beginning of year 2,951 1,508 1,157
---------------------------------
Cash and cash equivalents at end of year $ 4,047 $ 2,951 $ 1,508
=================================
The information on pages F11 through F20 is an integral part of these
statements.
F10
- - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- - --------------------------------------------------------------------------------
Price Waterhouse LLP
Dallas, Texas
February 25, 1998
To the Shareholders of Exxon Corporation
In our opinion, the consolidated financial statements appearing on pages F8
through F20 present fairly, in all material respects, the financial position of
Exxon Corporation and its subsidiary companies at December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. 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. We conducted our
audits of these statements in accordance with generally accepted auditing
standards 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 provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- - --------------------------------------------------------------------------------
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
Corporation.
1. Summary of Accounting Policies
Principles of Consolidation. The consolidated financial statements include
the accounts of those significant subsidiaries owned directly or indirectly more
than 50 percent.
Amounts representing the corporation's percentage interest in the underlying
net assets of 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 all other companies, none of which is significant, are
included in "Investments and advances" at cost or less. Dividends from these
companies are included in income as received.
Financial Instruments. Interest rate swap agreements are used to modify the
interest rates on certain debt obligations. The interest differentials to be
paid or received under such swaps are recognized over the life of the agreements
as adjustments to interest expense. Currency exchange contracts are used to
reduce the risk of adverse foreign currency movements related to certain foreign
currency debt obligations. The gains or losses arising from currency exchange
contracts offset foreign exchange gains or losses on the underlying assets or
liabilities and are recognized as offsetting adjustments to the carrying
amounts. Commodity swap and futures contracts are used to mitigate the risk of
unfavorable price movements on certain crude and petroleum product purchases and
sales. Gains or losses on these contracts are recognized as adjustments to
purchase costs or to sales revenue. Related amounts payable to or receivable
from counterparties are included in current assets and liabilities.
Investments in marketable debt securities are expected to be held to maturity
and are stated at amortized cost.
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate.
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.
F11
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
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.
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.
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 Australia, Canada, the United Kingdom, Norway and
Continental Europe. The U.S. dollar is used for operations in highly
inflationary economies and for some exploration and production operations,
primarily in Malaysia and the Middle East.
Recently Issued Statements Of Financial Accounting Standards. In June 1997, the
Financial Accounting Standards Board released Statement No. 130, "Reporting
Comprehensive Income," and Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information." These statements require disclosure of
certain components of changes in equity and certain information about operating
segments and geographic areas of operation. These statements, which will be
adopted in 1998, will not have any effect upon the corporation's consolidated
financial condition or operations.
2. Miscellaneous Financial Information
Research and development costs totaled $529 million in 1997, $520 million in
1996 and $525 million in 1995.
Net income included aggregate foreign exchange transaction gains of $153
million in 1997, losses of $37 million in 1996 and gains of $26 million in 1995.
In 1997, 1996 and 1995, net income included gains of $35 million, $14 million
and $12 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 $2,673 million
and $4,151 million at December 31, 1997 and 1996, respectively.
3. Cash Flow Information
The consolidated statement of cash flows provides information about changes in
cash and cash equivalents. All short-term marketable securities, with original
maturities of three months or less, that are readily convertible to known
amounts of cash and are so near maturity that they present insignificant risk of
changes in value because of changes in interest rates, are classified as cash
equivalents.
Cash payments for interest were: 1997 - $613 million, 1996 - $669 million and
1995 - $776 million. Cash payments for income taxes were: 1997 - $3,943 million,
1996 - $3,420 million and 1995 - $2,797 million.
4. Additional Working Capital Data
Dec. 31 Dec. 31
1997 1996
- - --------------------------------------------------------------------------------
(millions of dollars)
Notes and accounts receivable
Trade, less reserves of $80 million
and $81 million $ 7,989 $ 7,993
Other, less reserves of $21 million
and $17 million 2,713 2,506
--------------------
$10,702 $10,499
====================
Notes and loans payable
Bank loans $ 1,309 $ 1,359
Commercial paper 707 645
Long-term debt due within one year 770 463
Other 116 43
--------------------
$ 2,902 $ 2,510
====================
Accounts payable and accrued liabilities
Trade payables $ 8,246 $ 8,343
Obligations to equity companies 730 926
Accrued taxes other than income taxes 3,283 2,880
Other 2,424 2,361
--------------------
$14,683 $14,510
====================
On December 31, 1997, unused credit lines for short-term financing totaled
approximately $6.3 billion. Of this total, $4.3 billion support commercial paper
programs under terms negotiated when drawn. The weighted average interest rate
on short-term borrowings outstanding at December 31, 1997 and 1996 was 5.8
percent and 5.9 percent, respectively.
5. Equity Company Information
The following summarized financial information includes those less than
majority-owned companies for which Exxon's share of net income is included in
consolidated net income (see note 1). These companies are primarily engaged in
natural gas production and distribution in the Netherlands and Germany, refining
and marketing operations in Japan and several chemical operations.
During the third quarter of 1997, Exxon increased ownership in General Sekiyu
K.K. (GSK) from 49.0 percent to 50.1 percent. These financial statements reflect
the consolidation of GSK retroactive to January 1, 1997. GSK was previously
accounted for as an equity company. GSK's balance sheet as of January 1, 1997
had total assets of $3.9 billion and total liabilities of $3.2 billion.
F12
Equity Company Financial Summary 1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------------------
Exxon Exxon Exxon
Total share Total share Total share
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Total revenues
Percent of revenues from companies included in the Exxon
consolidation was 20% in 1997, 16% in 1996 and 16% in 1995 $29,639 $ 8,740 $33,719 $10,901 $32,187 $10,506
-----------------------------------------------------------
Income before income taxes $ 3,096 $ 1,475 $ 3,852 $ 1,831 $ 4,227 $ 1,974
Less: Related income taxes (1,103) (499) (1,229) (576) (1,306) (596)
-----------------------------------------------------------
Net income $ 1,993 $ 976 $ 2,623 $ 1,255 $ 2,921 $ 1,378
===========================================================
Current assets $ 6,618 $ 2,030 $ 9,231 $ 3,097 $ 9,789 $ 3,261
Property, plant and equipment, less accumulated depreciation 12,619 4,704 15,586 5,987 14,272 5,671
Other long-term assets 2,818 1,028 3,695 1,400 3,633 1,312
-----------------------------------------------------------
Total assets $22,055 $ 7,762 $28,512 $10,484 $27,694 $10,244
-----------------------------------------------------------
Short-term debt $ 1,256 $ 363 $ 1,661 $ 541 $ 1,233 $ 371
Other current liabilities 5,481 1,760 8,736 3,111 8,128 2,864
Long-term debt 2,163 580 2,857 918 2,660 839
Other long-term liabilities 3,556 1,497 4,319 1,820 4,424 1,818
Advances from shareholders 2,139 1,105 1,006 469 1,000 577
-----------------------------------------------------------
Net assets $ 7,460 $ 2,457 $ 9,933 $ 3,625 $10,249 $ 3,775
===========================================================
6. Investments and Advances Dec. 31 Dec. 31
1997 1996
- - --------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
In less than majority-owned companies
Carried at equity in underlying assets
Investments $2,457 $3,625
Advances 1,105 751
-----------------
$3,562 $4,376
Carried at cost or less 193 154
-----------------
$3,755 $4,530
Long-term receivables and miscellaneous investments at cost or less 1,450 1,480
-----------------
Total $5,205 $6,010
=================
7. Investment in Property, Plant and Equipment Dec. 31, 1997 Dec. 31, 1996
-----------------------------------------------
Cost Net Cost Net
- - --------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Petroleum and natural gas
Exploration and production $ 69,106 $31,715 $ 69,748 $ 32,685
Refining and marketing 32,663 18,269 31,524 17,858
-----------------------------------------------
Total petroleum and natural gas $101,769 $49,984 $101,272 $ 50,543
Chemicals 11,336 6,144 10,785 5,880
Other 14,673 10,286 14,309 10,184
-----------------------------------------------
Total $127,778 $66,414 $126,366 $ 66,607
===============================================
Accumulated depreciation and depletion totaled $61,364 million at the end of
1997 and $59,759 million at the end of 1996. Interest capitalized in 1997, 1996
and 1995 was $494 million, $520 million and $533 million, respectively.
F13
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
8. 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 the 10-year period ending April 28, 2003 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.
As under earlier programs, 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. Of the
options outstanding at December 31, 1997 and 1996, 2,365 thousand and 4,994
thousand, respectively, included SARs. Exercise of either a related option or a
related SAR cancels the other to the extent exercised. No SARs have been granted
since 1992.
Shares available for granting were 38,947 thousand at the beginning of 1997
and 27,337 thousand at the end of 1997. At December 31, 1997 and 1996,
respectively, 613 thousand and 416 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, Exxon 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 bases) would have been reduced by $76
million, or $0.03 per share in 1997 and $53 million, or $0.02 per share in 1996.
The average fair value of each option granted during 1997 and 1996 was $11.36
and $7.43, respectively. The fair value was estimated at the grant date using an
option-pricing model with the following weighted average assumptions for 1997
and 1996, respectively: risk-free interest rates of 5.8 percent and 6.1 percent;
expected life of 6 years for both years; volatility of 12 percent for both years
and a dividend growth rate of 3.3 percent and 4.0 percent.
Changes that occurred in options outstanding in 1997, 1996 and 1995 are
summarized below (shares in thousands):
1997 1996 1995
---------------------------------------------------------------------------
Avg. Exercise Avg. Exercise Avg. Exercise
Shares Price Shares Price Shares Price
- - -------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year 73,897 $33.20 75,510 $29.70 78,070 $27.04
Granted 11,019 61.41 11,968 47.06 11,786 39.47
Exercised (12,153) 26.95 (13,295) 25.69 (13,983) 23.12
Expired/Canceled (323) 46.61 (286) 37.63 (363) 28.69
------- ------- -------
Outstanding at end of year 72,440 38.48 73,897 33.20 75,510 29.70
Exercisable at end of year 61,179 34.32 61,939 30.53 63,724 27.90
The following table summarizes information about stock options outstanding at
December 31, 1997 (shares in thousands):
Options Outstanding Options Exercisable
- - ---------------------------------------------------------------- ---------------------
Exercise Price Avg. Remaining Avg. Exercise Avg. Exercise
Range Shares Contractual Life Price Shares Price
- - ---------------------------------------------------------------- ---------------------
$21.50-30.25 29,898 4.7 years $28.40 29,898 $28.40
31.78-61.41 42,542 8.3 45.57 31,281 39.98
------ ------
Total 72,440 6.8 38.48 61,179 34.32
- - ------------------------------------------------------------------------------------------
9. Leased Facilities
At December 31, 1997, 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 1997, 1996 and 1995 totaled $1,595 million, $1,284
million and $1,212 million, respectively, after being reduced by related rental
income of $182 million, $133 million and $157 million, respectively. Minimum
rental expenditures totaled $1,692 million in 1997, $1,330 million in 1996 and
$1,280 million in 1995.
Minimum Related
commitment rental income
- - ---------------------------------------------------
(millions of dollars)
1998 $ 919 $ 82
1999 684 67
2000 495 41
2001 406 33
2002 332 28
2003 and beyond 1,191 127
F14
10. Interest Rate Swap, Currency Exchange and Commodity Contracts
The corporation limits its use of financial derivative instruments to simple
risk management activities. The corporation does not hold or issue financial
derivative instruments for trading purposes nor does it use financial
derivatives with leveraged features. Derivative instruments are matched to
existing assets, liabilities or transactions with the objective of mitigating
the impact of adverse movements in interest rates, currency exchange rates or
commodity prices. These instruments normally equal the amount of the underlying
assets, liabilities or transactions and are held to maturity. Instruments are
either traded over authorized exchanges or with counterparties of high credit
standing. As a result of the above factors, the corporation's exposure to market
and credit risks from financial derivative instruments is considered to be
negligible.
Interest rate swap agreements are used to adjust the ratio of fixed and
floating rates in the corporation's debt portfolio. Interest rate swap
agreements, maturing in 1999, had an aggregate notional principal amount of $100
million and $500 million at year-end 1997 and 1996, respectively. Currency
exchange contracts are used to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Currency
exchange contracts, maturing 1998-2005, totaled $1,140 million at year-end 1997
and $1,585 million at year-end 1996. These amounts included contracts in which
affiliates held positions which were effectively offsetting totaling $544
million in 1997 and $794 million in 1996. Excluding these, the remaining
currency exchange contracts totaled $596 million and $791 million at year-end
1997 and 1996, respectively.
The corporation makes very limited use of commodity swap and futures contracts
of short duration to mitigate the risk of unfavorable price movements on certain
crude and petroleum product purchases and sales. The aggregate notional amount
for these contracts at year-end 1997 and 1996 was not material.
11. Fair Value of 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, 1997 and 1996 was $7.9
billion and $7.8 billion, respectively, as compared to recorded book values of
$7.1 billion and $7.2 billion.
12. Long-Term Debt
At December 31, 1997, long-term debt consisted of $6,235 million due in U.S.
dollars and $815 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 $770 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, 1998, in millions of dollars, are: 1999 - $619, 2000 -
$469, 2001 - $730 and 2002 - $331. Certain of the borrowings described may from
time to time be assigned to other Exxon affiliates. At December 31, 1997, the
corporation had $823 million in unused long-term credit lines.
The total outstanding balance of defeased debt at year-end 1997 was $713
million.
Summarized long-term borrowings at year-end 1997 and 1996 were as follows:
Dec. 31 Dec. 31
1997 1996
- - -------------------------------------------------------------------
(millions of dollars)
Exxon Capital Corporation
7.45% Guaranteed notes due 2001 $ 246 $ 246
Guaranteed zero coupon notes due 2004
-Face value ($1,146) net of
unamortized discount 538 482
6.0% Guaranteed notes due 2005 246 246
6.125% Guaranteed notes due 2008 250 250
Exxon Funding B.V.
8.0% Guaranteed notes due 1998 0 250
SeaRiver Maritime Financial Holdings, Inc.
Guaranteed debt securities due 1999-2011 143 150
Guaranteed deferred interest
debentures due 2012
- Face value ($771) net of
unamortized discount 586 526
Exxon Energy Limited
8.3% Hong Kong dollar loan due 1999-2008 144 159
7.16% Export credit loans due 1999-2012 856 763
Floating rate term loan due 2000-2006 591 565
6.87% notes due 2003 173 173
Imperial Oil Limited
9.875% Canadian dollar notes due 1999 171 173
8.3% notes due 2001 200 200
Variable rate notes due 2004 600 650
8.75% notes due 2019 219 219
Industrial revenue bonds due 2012-2033 951 926
Guaranteed LESOP notes due 1999 125 235
Other U.S. dollar obligations 511 506
Other foreign currency obligations 428 472
Capitalized lease obligations* 72 45
-------------------
Total long-term debt $7,050 $7,236
===================
*At an average imputed interest rate of 7.4% in 1997 and 9.3% in 1996.
F15
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
13. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various courts
against Exxon 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. Exxon has appealed the judgment. 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.
The ultimate cost to the corporation from the lawsuits arising from the Exxon
Valdez grounding is not possible to predict and may not be resolved for a number
of years.
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between Exxon and various insurers arising from the Valdez
accident. Under terms of this settlement, Exxon received $480 million. Final
income statement recognition of this settlement will be deferred in view of
uncertainty regarding the ultimate cost to the corporation of the Valdez
accident.
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, have been underway to
determine the manner of resolving the issues between the German and Dutch
affiliated companies.
On July 8, 1996, an interim ruling was issued establishing a provisional
compensation payment for the excess gas received. Additional compensation, if
any, remains subject to further arbitration proceedings or negotiation. Other
substantive matters remain outstanding, including recovery of royalties paid on
such excess gas and the taxes payable on the final compensation amount. The net
financial impact on the corporation is not possible to predict at this time
given these outstanding issues. However, the ultimate outcome is not expected to
have a materially adverse effect upon the corporation's consolidated financial
condition or operations.
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 Exxon 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 consolidated
financial condition or operations.
The corporation and certain of its consolidated subsidiaries were contingently
liable at December 31, 1997 for $1,286 million, primarily relating to guarantees
for notes, loans and performance under contracts. This includes $888 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 $908 million, representing Exxon'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.
14. Annuity Benefits
Exxon and most of its affiliates have defined benefit retirement plans which
cover substantially all of their employees. Plan benefits are generally based on
years of service and employees' compensation during their last years of
employment.
Assets are contributed to trustees and insurance companies to provide benefits
for many of Exxon's retirement plans and are primarily invested in equity and
fixed income securities. 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 at the end of this note. 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.
F16
U.S. Plans Non-U.S. Plans
------------------------- ----------------------
Annuity plans net pension cost/(credit) 1997 1996 1995 1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Cost of benefits earned by employees during the year $137 $147 $111 $176 $162 $148
Interest accrual on benefits earned in prior years 364 361 362 515 523 540
Actual (gain)/loss on plan assets (646) (544) (796) (769) (641) (625)
Deferral of actual versus assumed return on assets 295 193 486 324 229 254
Amortization of actuarial (gain)/loss and prior service cost (23) 13 (23) 82 40 20
Net pension enhancement and curtailment/settlement expense (6) 6 (9) (11) 17 11
-----------------------------------------------------------
Net pension cost for the year $121 $176 $131 $317 $330 $348
===========================================================
U.S. Plans Non-U.S. Plans
------------------- ------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
Annuity plans status 1997 1996 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Actuarial present value of benefit obligations
Benefits based on service to date and present pay levels
Vested $4,153 $3,887 $6,649 $6,219
Non-vested 540 497 177 211
------------------- ------------------
Total accumulated benefit obligation $4,693 $4,384 $6,826 $6,430
Additional benefits related to projected pay increases 703 693 1,027 1,040
------------------- ------------------
Total projected benefit obligation $5,396 $5,077 $7,853 $7,470
------------------- ------------------
Funded assets (market values) $4,016 $3,815 $5,367 $5,025
Book reserves 1,366 1,299 1,954 2,127
------------------- ------------------
Total funded assets and book reserves $5,382 $5,114 $7,321 $7,152
------------------- ------------------
Assets and reserves in excess of/(less than) projected benefit obligation $ (14) $ 37 $ (532) $ (318)
Unrecognized net gain/(loss) at transition $ 136 $ 192 $ (26) $ (10)
Unrecognized net actuarial loss since transition (66) (62) (361) (196)
Unrecognized prior service costs incurred since transition (84) (93) (145) (112)
Assets and reserves in excess of accumulated benefit obligation $ 689 $ 730 $ 495 $ 722
Assumptions in projected benefit obligation and expense (percent)
Discount rate 7.00 7.50 4.0- 8.5 4.5- 8.5
Long-term rate of compensation increase 3.50 4.00 2.5- 8.5 3.0- 6.5
Long-term annual rate of return on funded assets 9.75 9.75 5.0-10.0 6.0-10.0
- - --------------------------------------------------------------------------------
Pension data, as shown above, is reported as required by current accounting
standards which specify use of a discount rate at which pension liabilities
could be effectively settled. The discount rate stipulated for use in
calculating year-end pension liabilities is based on the year-end rate of
interest on high quality bonds. For determining the funding requirements of U.S.
pension plans in accordance with applicable federal government regulations,
Exxon uses the expected long-term rate of return of the pension 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. On this basis,
all of Exxon's U.S. funded plans meet the full funding criteria of the
government as shown below. In fact, the actual rate earned over the past decade
has been 13 percent.
Dec. 31 Dec. 31
Status of U.S. plans subject to federal government funding requirements 1997 1996
- - ----------------------------------------------------------------------------------------------------------
(millions of dollars)
Funded assets at market value less total projected benefit obligation $(1,380) $(1,262)
Differences between accounting and funding basis:
Certain smaller plans unfunded due to lack of tax and
regulatory incentives 512 519
Use of long-term rate of return on fund assets as the
discount rate 1,062 900
Use of government required assumptions and other
actuarial adjustments 127 54
-------------------
Funded assets in excess of obligations under government regulations $ 321 $ 211
F17
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
15. Other Postretirement Benefits
The corporation and several of its affiliates make contributions toward the cost
of providing certain health care and life insurance benefits to retirees, their
beneficiaries and covered dependents. The corporation determines the level of
its contributions to these plans annually; no commitments have been made
regarding the level of such contributions in the future.
The accumulated postretirement benefit obligation is based on the existing
level of the corporation's contribution toward these plans. Plan assets include
investments in equity and fixed income securities.
1997 1996 1995
------------------------- ------------------------- -------------------------
Other postretirement benefits expense Total Health Life/Other Total Health Life/Other Total Health Life/Other
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Service cost $ 28 $12 $16 $ 28 $12 $16 $ 22 $11 $11
Interest cost 136 46 90 130 45 85 133 46 87
Actual (gain) on plan assets (88) - (88) (57) - (57) (99) - (99)
Deferral of actual versus assumed return on assets 53 - 53 21 - 21 71 - 71
Amortization of actuarial loss 10 8 2 15 7 8 1 - 1
-----------------------------------------------------------------------------
Net expense $139 $66 $73 $137 $64 $73 $128 $57 $71
=============================================================================
Dec. 31, 1997 Dec. 31, 1996
------------------------- -------------------------
Other postretirement benefit plans status Total Health Life/Other Total Health Life/Other
- - ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Accumulated postretirement benefit obligation
Retirees $1,451 $467 $ 984 $1,372 $460 $ 912
Fully eligible participants 162 56 106 121 42 79
Other active participants 439 191 248 386 147 239
----------------------------------------------------------
$2,052 $714 $1,338 $1,879 $649 $1,230
Funded assets (market values) (447) - (447) (422) - (422)
Unrecognized prior service costs (20) (20) - (22) (22) -
Unrecognized net loss (219) (170) (49) (133) (95) (38)
----------------------------------------------------------
Book reserves $1,366 $524 $ 842 $1,302 $532 $ 770
==========================================================
Assumptions in accumulated postretirement benefit
obligation and expense (percent)
Discount rate 7.00 7.50
Long-term rate of compensation increase 3.50 4.00
Long-term annual rate of return on funded assets 9.75 9.75
- - ------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
16. Income, Excise and Other Taxes
- - --------------------------------------------------------------------------------
1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------------
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 $1,199 $ 2,365 $ 3,564 $ 988 $ 2,751 $ 3,739 $ 854 $ 1,966 $ 2,820
Deferred - net 163 429 592 314 164 478 199 789 988
U.S. tax on non-U.S. operations 20 - 20 47 - 47 45 - 45
-------------------------------------------------------------------------------------
$1,382 $ 2,794 $ 4,176 $1,349 $ 2,915 $ 4,264 $1,098 $ 2,755 $ 3,853
State 162 - 162 142 - 142 119 - 119
-------------------------------------------------------------------------------------
Total income tax expense $1,544 $ 2,794 $ 4,338 $1,491 $ 2,915 $ 4,406 $1,217 $ 2,755 $ 3,972
Excise taxes 2,605 12,258 14,863 2,494 12,321 14,815 2,356 11,555 13,911
All other taxes and duties 816 23,855 24,671 853 23,689 24,542 870 22,458 23,328
-------------------------------------------------------------------------------------
Total $4,965 $ 38,907 $43,872 $4,838 $38,925 $43,763 $4,443 $36,768 $41,211
=====================================================================================
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 (charges)/credits for the effect of changes in tax laws and
rates of $147 million in 1997, $26 million in 1996 and $(83) million in 1995.
Income taxes of $301 million in 1997, $(78) million in 1996 and $(14) million in
1995 were (charged)/credited directly to shareholders' equity.
F18
The reconciliation between income tax expense and a theoretical U.S. tax
computed by applying a rate of 35 percent for 1997, 1996 and 1995, is as
follows:
1997 1996 1995
- - --------------------------------------------------------------------------------
(millions of dollars)
Earnings before Federal and
non-U.S. income taxes
United States $ 4,413 $ 3,706 $ 2,619
Non-U.S. 8,223 8,068 7,704
--------------------------------
Total $12,636 $11,774 $10,323
--------------------------------
Theoretical tax $ 4,423 $ 4,121 $ 3,613
Effect of equity method accounting (342) (439) (482)
Adjustment for non-U.S. taxes in
excess of theoretical U.S. tax 258 530 541
U.S. tax on non-U.S. operations 20 47 45
Other U.S. (183) 5 136
--------------------------------
Federal and non-U.S. income
tax expense $ 4,176 $ 4,264 $ 3,853
================================
Total effective tax rate 36.4% 39.9% 41.4%
The effective income tax rate includes state income taxes and the
corporation's share of income taxes of equity companies. Equity company taxes
totaled $499 million in 1997, $576 million in 1996 and $596 million in 1995,
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: 1997 1996
- - --------------------------------------------------------------------------------
(millions of dollars)
Depreciation $10,324 $10,574
Intangible development costs 3,036 3,177
Capitalized interest 1,309 1,187
Other liabilities 2,215 1,824
----------------------
Total deferred tax liabilities $16,884 $16,762
----------------------
Pension and other postretirement benefits $(1,187) $(1,102)
Site restoration reserves (809) (850)
Tax loss carryforwards (850) (718)
Other assets (1,092) (1,259)
----------------------
Total deferred tax assets $(3,938) $(3,929)
----------------------
Asset valuation allowances 296 327
----------------------
Net deferred tax liabilities $13,242 $13,160
======================
The corporation had $6.6 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.
- - --------------------------------------------------------------------------------
17. Capital
On March 14, 1997 authorized common stock was increased from two billion shares
without par value to three billion shares without par value and the issued
shares were split on a two-for-one basis. Prior to the common share split,
321,000,000 shares (pre-split basis) of common stock held by the corporation as
treasury shares were cancelled and returned to the status of authorized but
unissued shares. Accordingly, the restated number of common stock shares issued
(on a post-split basis) at December 31, 1996 and 1995 is not meaningful. All
common stock data and per share amounts presented in this report have been
adjusted for the stock split.
In 1989, the corporation sold 16.3 million shares of a new issue of
convertible Class A Preferred Stock to its leveraged employee stock ownership
plan (LESOP) trust for $61.50 per share. The proceeds of the issuance were used
by the corporation for general corporate purposes. The corporation recorded a
"Guaranteed LESOP Obligation" of $1,000 million as debt and as a reduction in
shareholders' equity, representing company-guaranteed borrowings by the LESOP
trust to purchase the preferred stock. As the debt is repaid, the Guaranteed
LESOP Obligation will be extinguished. After adjusting for the 1997 common stock
split, if the common share price exceeds $30.75, one share of preferred stock is
convertible into two shares of common stock. If the price is $30.75 or less, one
share of preferred is convertible into common shares having a value of $61.50.
Dividends are cumulative and payable in an amount per share equal to $4.680 per
annum. Dividends paid per preferred share were $4.680 in 1997, 1996 and 1995.
Preferred dividends of $17 million, $27 million and $38 million were paid during
1997, 1996 and 1995, respectively.
After adjusting for the 1997 common stock split, dividends paid per common
share were $1.625 in 1997, $1.560 in 1996 and $1.500 in 1995.
Statement of Financial Accounting Standards No. 128, "Earnings Per Share," was
implemented in December, 1997. Net income per common share is based on net
income less preferred stock dividends and the weighted average number of
outstanding common shares, adjusted for stock splits. Net income per common
share - assuming dilution is based on net income and the weighted average number
of outstanding common shares, including the additional common shares that would
have been outstanding if dilutive potential common shares had been issued.
Dilutive potential common shares include outstanding incentive program stock
options and convertible preferred stock. The weighted average number of
outstanding common shares - assuming dilution included 32 million shares in
1997, 28 million shares in 1996 and 28 million shares in 1995 for assumed
conversion of dilutive potential common shares.
18. Leveraged Employee Stock Ownership Plan (LESOP)
In 1989, the corporation's employee stock ownership plan trust borrowed $1,000
million under the terms of notes guaranteed by the corporation maturing between
1990 and 1999. The principal due on the notes increases from $75 million in 1990
to $125 million in 1999. As further described in note 17, the LESOP trust used
the proceeds of the borrowing to purchase shares of convertible Class A
Preferred Stock.
Employees eligible to participate in the corporation's thrift plan may elect
to participate in the LESOP. Corporation contributions to the plan, plus
dividends, are used to make principal and interest payments on the notes. As
contributions and dividends are credited, shares of preferred stock are
proportionately converted into common stock, with no cash flow impact to the
corporation, and allocated to participants' accounts. In 1997, 1996 and 1995,
1.8 million, 2.5 million and 1.6 million shares of preferred stock totaling $112
million, $151 million and $100 million, respectively, were converted to common
stock. Preferred dividends of
F19
- - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
$17 million, $27 million and $38 million were paid during 1997, 1996 and 1995,
respectively, and covered interest payments on the notes. The 1997, 1996 and
1995 principal payments were made from employer contributions, dividends
reinvested within the LESOP trust and proceeds from the sale of common stock
received upon conversion of preferred shares.
Accounting for the plan follows the principles which were in effect in 1989
when the plan was established. The amount of plan related compensation expense
recorded by the corporation during the periods was immaterial. The LESOP trust
held 3.1 million and 4.9 million shares of preferred stock and 40.0 million and
39.4 million shares of common stock at the end of 1997 and 1996, respectively,
when adjusted for the 1997 two-for-one common stock split.
- - --------------------------------------------------------------------------------
19. Distribution of Earnings and Assets
- - --------------------------------------------------------------------------------
Segment 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------------------
Corporate Corporate Corporate
Petroleum Chemicals total Petroleum Chemicals total Petroleum Chemicals total
---------------------------------------------------------------------------------------------------
(millions of dollars)
Sales and operating revenue
Non-affiliated $120,644 $12,195 $135,142 $118,012 $11,430 $131,543 $107,749 $11,737 $121,804
Intersegment 3,183 1,829 - 3,049 1,683 - 2,539 1,609 -
---------------------------------------------------------------------------------------------------
Total $123,827 $14,024 $135,142 $121,061 $13,113 $131,543 $110,288 $13,346 $121,804
===================================================================================================
Operating profit $ 9,675 $ 2,078 $ 12,517 $ 8,717 $ 1,662 $ 11,134 $ 6,654 $ 2,734 $ 10,185
Add/(deduct):
Income taxes (3,711) (739) (4,534) (3,735) (592) (4,420) (3,060) (896) (4,065)
Minority interests (227) (35) (500) (215) (14) (458) (129) (27) (365)
Earnings of
equity companies 1,019 64 1,075 1,176 143 1,319 1,219 207 1,426
Corporate and financing - - (98) - - (65) - - (711)
---------------------------------------------------------------------------------------------------
Earnings $ 6,756 $ 1,368 $ 8,460 $ 5,943 $ 1,199 $ 7,510 $ 4,684 $ 2,018 $ 6,470
===================================================================================================
Identifiable assets $ 69,254 $10,829 $ 96,064 $ 70,035 $10,715 $ 95,527 $ 68,852 $ 9,595 $ 91,296
Depreciation and depletion $ 4,439 $ 456 $ 5,474 $ 4,394 $ 430 $ 5,329 $ 4,474 $ 399 $ 5,386
Additions to plant $ 5,726 $ 828 $ 7,392 $ 5,161 $ 987 $ 7,132 $ 5,055 $ 782 $ 7,201
Geographic Sales and other operating revenue Earnings Identifiable assets
- - ------------------------------------------------------------------------------------------------------------------------------------
Non-affiliated Interarea Total
---------------------------------------------------------------------
(millions of dollars)
1997 Petroleum and chemicals
United States $ 28,041 $ 1,003 $ 29,044 $3,052 $25,504
Other Western Hemisphere 21,139 125 21,264 651 9,947
Eastern Hemisphere 83,659 768 84,427 4,421 44,632
Other/eliminations 2,303 (1,896) 407 336 15,981
-------------------------------------------------------------
Corporate total $ 135,142 - $135,142 $8,460 $96,064
=============================================================
1996 Petroleum and chemicals
United States $ 27,513 $ 857 $ 28,370 $2,651 $25,161
Other Western Hemisphere 20,197 158 20,355 559 10,768
Eastern Hemisphere 81,732 771 82,503 3,932 44,821
Other/eliminations 2,101 (1,786) 315 368 14,777
-------------------------------------------------------------
Corporate total $ 131,543 - $131,543 $7,510 $95,527
=============================================================
1995 Petroleum and chemicals
United States $ 24,024 $ 854 $ 24,878 $2,307 $24,606
Other Western Hemisphere 18,354 328 18,682 444 10,664
Eastern Hemisphere 77,108 1,842 78,950 3,951 43,177
Other/eliminations 2,318 (3,024) (706) (232) 12,849
-------------------------------------------------------------
Corporate total $ 121,804 - $121,804 $6,470 $91,296
=============================================================
Transfers between business activities or areas are at estimated market prices.
F20
- - --------------------------------------------------------------------------------
QUARTERLY INFORMATION
- - --------------------------------------------------------------------------------
1997 1996
------------------------------------------------------------------------------------------------------
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 1,625 1,584 1,558 1,631 1,599 1,683 1,595 1,570 1,615 1,615
Refinery throughput 4,006 3,962 4,041 4,036 4,011 3,753 3,754 3,828 3,833 3,792
Petroleum product sales 5,350 5,404 5,415 5,548 5,430 5,149 5,067 5,223 5,404 5,211
Natural gas production (millions of cubic feet daily)
available for sale 7,500 5,649 5,189 7,037 6,339 8,330 5,674 5,084 7,227 6,577
(thousands of metric tons)
Chemical prime product sales 4,161 4,329 4,433 4,378 17,301 3,911 3,978 3,909 3,914 15,712
Summarized financial data
Sales and other operating (millions of dollars)
revenue $34,720 33,679 32,381 34,362 135,142 $30,474 31,625 32,938 36,506 131,543
Gross profit* $14,596 14,619 14,277 15,160 58,652 $13,217 13,724 14,403 15,209 56,553
Net income $ 2,175 1,965 1,820 2,500 8,460 $ 1,885 1,570 1,560 2,495 7,510
Per share data** (dollars per share)
Net income per common share $ 0.87 0.79 0.74 1.01 3.41 $ 0.76 0.63 0.62 1.00 3.01
Net income per common share
- assuming dilution $ 0.86 0.78 0.73 1.00 3.37 $ 0.75 0.62 0.62 1.00 2.99
Dividends per common share $ 0.395 0.410 0.410 0.410 1.625 $ 0.375 0.395 0.395 0.395 1.560
Dividends per preferred share $ 1.170 1.170 1.170 1.170 4.680 $ 1.170 1.170 1.170 1.170 4.680
Common Stock prices**
High $55.625 65.125 67.250 66.875 67.250 $43.000 44.375 45.063 50.625 50.625
Low $48.250 49.875 58.625 54.750 48.250 $38.813 39.938 40.000 41.438 38.813
* Gross profit equals sales and other operating revenue less estimated costs
associated with products sold.
** Certain prior period amounts restated for two-for-one stock split effective
March 14, 1997.
The price range of Exxon Common Stock is based on the composite tape of the
several U.S. exchanges where Exxon Common Stock is traded. The principal market
where Exxon Common Stock (XON) is traded is the New York Stock Exchange,
although the stock is traded on other exchanges in and outside the United
States.
At January 31, 1998, there were 642,466 holders of record of Exxon Common
Stock.
On January 28, 1998, the corporation declared a $0.410 dividend per common
share, payable March 10, 1998.
F21
- - --------------------------------------------------------------------------------
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)
1997 - Revenue
Sales to third parties $1,815 $ 459 $2,742 $1,694 $ 71 $ 6,781 $ 2,540 $ 9,321
Transfers 3,300 537 1,979 751 112 6,679 51 6,730
-------------------------------------------------------------------------------------
$5,115 $ 996 $4,721 $2,445 $ 183 $13,460 $ 2,591 $16,051
Production costs excluding taxes 1,044 344 995 341 111 2,835 225 3,060
Exploration expenses 130 23 197 150 247 747 87 834
Depreciation and depletion 1,084 325 1,204 423 90 3,126 211 3,337
Taxes other than income 438 24 91 371 - 924 866 1,790
Related income tax 888 109 1,011 219 (48) 2,179 512 2,691
-------------------------------------------------------------------------------------
Results of producing activities $1,531 $ 171 $1,223 $ 941 $ (217) $ 3,649 $ 690 $ 4,339
Other earnings* 101 65 104 21 (6) 285 69 354
-------------------------------------------------------------------------------------
Total earnings $1,632 $ 236 $1,327 $ 962 $ (223) $ 3,934 $ 759 $ 4,693
=====================================================================================
1996 - Revenue
Sales to third parties $1,706 $ 443 $2,581 $1,998 $ 119 $ 6,847 $ 2,974 $ 9,821
Transfers 3,846 682 2,360 736 125 7,749 47 7,796
-------------------------------------------------------------------------------------
$5,552 $1,125 $4,941 $2,734 $ 244 $14,596 $ 3,021 $17,617
Production costs excluding taxes 1,116 376 1,050 391 70 3,003 250 3,253
Exploration expenses 116 32 224 140 255 767 73 840
Depreciation and depletion 1,139 342 1,130 426 102 3,139 195 3,334
Taxes other than income 476 24 96 477 - 1,073 1,038 2,111
Related income tax 990 83 1,182 492 (13) 2,734 603 3,337
-------------------------------------------------------------------------------------
Results of producing activities $1,715 $ 268 $1,259 $ 808 $ (170) $ 3,880 $ 862 $ 4,742
Other earnings* 63 51 103 36 5 258 58 316
-------------------------------------------------------------------------------------
Total earnings $1,778 $ 319 $1,362 $ 844 $ (165) $ 4,138 $ 920 $ 5,058
=====================================================================================
1995 - Revenue
Sales to third parties $1,021 $ 320 $2,253 $1,724 $ 138 $ 5,456 $ 2,657 $ 8,113
Transfers 3,140 715 1,782 734 113 6,484 159 6,643
-------------------------------------------------------------------------------------
$4,161 $1,035 $4,035 $2,458 $ 251 $11,940 $ 2,816 $14,756
Production costs excluding taxes 1,138 366 1,093 390 88 3,075 254 3,329
Exploration expenses 108 55 166 168 194 691 83 774
Depreciation and depletion 1,245 380 1,060 464 126 3,275 250 3,525
Taxes other than income 434 26 101 349 1 911 899 1,810
Related income tax 457 89 841 477 36 1,900 540 2,440
-------------------------------------------------------------------------------------
Results of producing activities $ 779 $ 119 $ 774 $ 610 $ (194) $ 2,088 $ 790 $ 2,878
Other earnings* 277 - 169 40 (3) 483 51 534
-------------------------------------------------------------------------------------
Total earnings $1,056 $ 119 $ 943 $ 650 $ (197) $ 2,571 $ 841 $ 3,412
=====================================================================================
Average sales prices and production costs per unit of production
- - ----------------------------------------------------------------------------------------------------------------------------------
During 1997
Average sales prices
Crude oil and NGL, per barrel $15.82 $12.29 $19.14 $21.08 $ 18.06 $ 17.32 $ 19.20 $ 17.39
Natural gas, per thousand cubic feet 2.43 1.88 3.13 1.39 - 2.37 3.46 2.67
Average production costs, per barrel** 3.17 4.19 3.98 2.21 10.87 3.43 1.78 3.21
During 1996
Average sales prices
Crude oil and NGL, per barrel $17.24 $16.38 $19.93 $21.04 $ 20.50 $ 18.69 $ 20.36 $ 18.75
Natural gas, per thousand cubic feet 2.35 1.48 2.83 2.52 - 2.49 3.48 2.80
Average production costs, per barrel** 3.26 5.08 4.07 2.68 5.83 3.61 1.72 3.33
During 1995
Average sales prices
Crude oil and NGL, per barrel $13.09 $12.92 $16.43 $18.19 $ 17.16 $ 15.11 $ 16.73 $ 15.16
Natural gas, per thousand cubic feet 1.64 0.95 2.98 1.44 - 1.89 3.81 2.45
Average production costs, per barrel** 3.31 4.09 4.55 2.41 5.87 3.62 1.97 3.40
* Earnings related to transportation of oil and gas, sale of third party
purchases, oil sands operations and technical services agreements (reduced
by minority interests).
** Natural gas included by conversion to crude oil equivalent; production
costs exclude all taxes.
F22
Oil and Gas Exploration and Production Costs
The amounts shown for net capitalized costs of consolidated subsidiaries are
$3,208 million less at year-end 1997 and $3,242 million less at year-end 1996
than the amounts reported as investments in property, plant and equipment for
exploration and production in note 7, page F13. This is due to the exclusion
from capitalized costs of certain transportation and research assets and assets
relating to the oil sands 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 1997
were $4,872 million, up $429 million from 1996, due primarily to higher
development costs. 1996 costs were $4,443 million, up $126 million from 1995,
due primarily to higher exploration 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, 1997
Property (acreage) costs-Proved $ 3,109 $2,441 $ 85 $ 557 $ 828 $ 7,020 $ 16 $ 7,036
-Unproved 390 96 26 163 114 789 13 802
--------------------------------------------------------------------------------------------
Total property costs $ 3,499 $2,537 $ 111 $ 720 $ 942 $ 7,809 $ 29 $ 7,838
Producing assets 23,218 2,915 19,345 7,229 753 53,460 2,240 55,700
Support facilities 328 78 469 865 46 1,786 113 1,899
Incomplete construction 589 86 1,968 609 359 3,611 308 3,919
--------------------------------------------------------------------------------------------
Total capitalized costs $ 27,634 $5,616 $21,893 $9,423 $2,100 $66,666 $2,690 $69,356
Accumulated depreciation and depletion 16,391 2,803 12,181 5,568 1,216 38,159 2,060 40,219
--------------------------------------------------------------------------------------------
Net capitalized costs $ 11,243 $2,813 $ 9,712 $3,855 $ 884 $28,507 $ 630 $29,137
============================================================================================
As of December 31, 1996
Property (acreage) costs-Proved $ 3,195 $2,914 $ 90 $ 631 $ 827 $ 7,657 $ 12 $ 7,669
-Unproved 323 100 27 236 105 791 20 811
--------------------------------------------------------------------------------------------
Total property costs $ 3,518 $3,014 $ 117 $ 867 $ 932 $ 8,448 $ 32 $ 8,480
Producing assets 22,405 3,690 20,009 7,022 726 53,852 2,451 56,303
Support facilities 369 78 520 699 41 1,707 130 1,837
Incomplete construction 537 98 1,726 971 207 3,539 346 3,885
--------------------------------------------------------------------------------------------
Total capitalized costs $ 26,829 $6,880 $22,372 $9,559 $1,906 $67,546 $2,959 $70,505
Accumulated depreciation and depletion 15,761 3,418 12,302 5,498 1,124 38,103 2,240 40,343
--------------------------------------------------------------------------------------------
Net capitalized costs $ 11,068 $3,462 $10,070 $4,061 $ 782 $29,443 $ 719 $30,162
============================================================================================
Costs incurred in property acquisitions, exploration and development activities
- - ------------------------------------------------------------------------------------------------------------------------------------
During 1997
Property acquisition costs-Proved $ 2 $ - $ - $ 1 $ 1 $ 4 $ - $ 4
-Unproved 80 1 - - 9 90 - 90
Exploration costs 231 29 280 160 321 1,021 122 1,143
Development costs 1,112 213 1,504 512 112 3,453 182 3,635
--------------------------------------------------------------------------------------------
Total $ 1,425 $ 243 $ 1,784 $ 673 $ 443 $ 4,568 $ 304 $ 4,872
============================================================================================
During 1996
Property acquisition costs-Proved $ 2 $ 1 $ - $ 2 $ 81 $ 86 $ - $ 86
-Unproved 16 3 - 7 46 72 - 72
Exploration costs 156 50 258 153 283 900 117 1,017
Development costs 817 165 1,498 563 83 3,126 142 3,268
--------------------------------------------------------------------------------------------
Total $ 991 $ 219 $ 1,756 $ 725 $ 493 $ 4,184 $ 259 $ 4,443
============================================================================================
During 1995
Property acquisition costs-Proved $ 1 $ 6 $ 2 $ - $ 87 $ 96 $ 1 $ 97
-Unproved 19 3 1 3 2 28 - 28
Exploration costs 131 60 251 200 207 849 89 938
Development costs 624 139 1,653 551 60 3,027 227 3,254
--------------------------------------------------------------------------------------------
Total $ 775 $ 208 $ 1,907 $ 754 $ 356 $ 4,000 $ 317 $ 4,317
============================================================================================
F23
- - --------------------------------------------------------------------------------
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 1995, 1996 and 1997.
The definitions used are in accordance with applicable Securities and
Exchange Commission regulations.
Proved reserves are the estimated quantities of oil and gas which geological
and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
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 Exxon'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, 1995 2,324 1,168 1,341 759 80 5,672 476 6,148
Revisions 124 (29) 16 67 1 179 (11) 168
Purchases - - - - 47 47 - 47
Sales (8) (5) (1) - (5) (19) (7) (26)
Improved recovery 3 71 9 - - 83 - 83
Extensions and discoveries 93 9 297 31 2 432 - 432
Production (219) (73) (176) (109) (15) (592) (22) (614)
----------------------------------------------------------------------------------
December 31, 1995 2,317 1,141 1,486 748 110 5,802 436 6,238
Revisions 139 10 59 83 38 329 3 332
Purchases 2 - - - 50 52 - 52
Sales (31) (7) - - (5) (43) - (43)
Improved recovery 26 1 9 - - 36 - 36
Extensions and discoveries 53 1 231 13 2 300 - 300
Production (214) (63) (178) (89) (12) (556) (20) (576)
-----------------------------------------------------------------------------------
December 31, 1996 2,292 1,083 1,607 755 183 5,920 419 6,339
Revisions 190 2 33 45 13 283 2 285
Purchases 1 - - - - 1 - 1
Sales (6) (63) (6) - - (75) - (75)
Improved recovery 25 4 2 - - 31 - 31
Extensions and discoveries 79 16 42 21 - 158 2 160
Production (204) (70) (171) (91) (10) (546) (21) (567)
-----------------------------------------------------------------------------------
December 31, 1997 (excluding oil sands) 2,377 972 1,507 730 186 5,772 402 6,174
Oil sands reserves
At December 31, 1995 - 432 - - - 432 - 432
At December 31, 1996 - 443 - - - 443 - 443
At December 31, 1997 - 616 - - - 616 - 616
====================================================================================================================================
Worldwide net proved developed and
undeveloped reserves (including oil sands)
At December 31, 1995 2,317 1,573 1,486 748 110 6,234 436 6,670
At December 31, 1996 2,292 1,526 1,607 755 183 6,363 419 6,782
At December 31, 1997 2,377 1,588 1,507 730 186 6,388 402 6,790
====================================================================================================================================
Developed reserves, included above
(excluding oil sands)
At December 31, 1995 1,942 526 805 610 60 3,943 410 4,353
At December 31, 1996 1,925 512 815 582 44 3,878 396 4,274
At December 31, 1997 2,064 494 802 609 41 4,010 384 4,394
F24
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 1997 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 Exxon'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 F27 due to volumes consumed or flared and inventory
changes. Such quantities amounted to approximately 189 billion cubic feet in
1995, 236 billion cubic feet in 1996, and 268 billion cubic feet in 1997.
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, 1995 9,538 2,302 7,469 5,874 104 25,287 16,941 42,228
Revisions 838 (72) 65 175 (1) 1,005 228 1,233
Purchases - - - - 10 10 - 10
Sales (27) (79) - - (3) (109) (88) (197)
Improved recovery - 19 56 - - 75 - 75
Extensions and discoveries 407 104 375 67 - 953 117 1,070
Production (809) (156) (412) (352) (8) (1,737) (646) (2,383)
-----------------------------------------------------------------------------------
December 31, 1995 9,947 2,118 7,553 5,764 102 25,484 16,552 42,036
Revisions 422 (118) 101 107 13 525 196 721
Purchases 4 11 - - 13 28 11 39
Sales (36) (76) - - (1) (113) (3) (116)
Improved recovery 39 18 5 - - 62 - 62
Extensions and discoveries 615 61 506 53 - 1,235 166 1,401
Production (841) (142) (525) (380) (8) (1,896) (747) (2,643)
-----------------------------------------------------------------------------------
December 31, 1996 10,150 1,872 7,640 5,544 119 25,325 16,175 41,500
Revisions (53) (43) (1) 433 - 336 107 443
Purchases 2 - - - - 2 - 2
Sales (27) (122) (6) - - (155) - (155)
Improved recovery (2) 19 17 - - 34 - 34
Extensions and discoveries 450 24 363 1,687 - 2,524 363 2,887
Production (831) (138) (531) (441) (8) (1,949) (633) (2,582)
-----------------------------------------------------------------------------------
December 31, 1997 9,689 1,612 7,482 7,223 111 26,117 16,012 42,129
===============================================================================================================================
Worldwide net proved developed
and undeveloped reserves
At December 31, 1995 9,947 2,118 7,553 5,764 102 25,484 16,552 42,036
At December 31, 1996 10,150 1,872 7,640 5,544 119 25,325 16,175 41,500
At December 31, 1997 9,689 1,612 7,482 7,223 111 26,117 16,012 42,129
===============================================================================================================================
Developed reserves, included above
At December 31, 1995 8,394 1,586 4,555 4,349 92 18,976 7,210 26,186
At December 31, 1996 8,216 1,392 4,872 3,995 83 18,558 6,754 25,312
At December 31, 1997 7,625 1,236 5,334 5,191 76 19,462 6,463 25,925
F25
- - -------------------------------------------------------------------------------
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, legislated tax rates and a discount factor of 10 percent to net
proved reserves. The corporation believes that 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, 1995
Future cash inflows from sales of oil and gas $49,920 $15,418 $43,602 $21,214 $2,015 $132,169 $63,444 $195,613
Future production and development costs 19,871 6,353 19,647 10,084 836 56,791 28,521 85,312
Future income tax expenses 10,204 3,840 11,298 4,117 456 29,915 13,928 43,843
-----------------------------------------------------------------------------------
Future net cash flows $19,845 $ 5,225 $12,657 $ 7,013 $ 723 $ 45,463 $20,995 $ 66,458
Effect of discounting net cash flows at 10% 9,616 2,592 4,445 3,292 353 20,298 13,089 33,387
-----------------------------------------------------------------------------------
Discounted future net cash flows $10,229 $ 2,633 $ 8,212 $ 3,721 $ 370 $ 25,165 $ 7,906 $ 33,071
===================================================================================
As of December 31, 1996
Future cash inflows from sales of oil and gas $78,728 $21,969 $56,745 $26,336 $4,094 $187,872 $66,078 $253,950
Future production and development costs 20,918 6,654 19,024 11,941 1,435 59,972 30,015 89,987
Future income tax expenses 20,772 6,444 18,845 5,436 627 52,124 14,961 67,085
-----------------------------------------------------------------------------------
Future net cash flows $37,038 $ 8,871 $18,876 $ 8,959 $2,032 $ 75,776 $21,102 $ 96,878
Effect of discounting net cash flows at 10% 18,022 4,808 6,703 3,955 1,203 34,691 13,066 47,757
-----------------------------------------------------------------------------------
Discounted future net cash flows $19,016 $ 4,063 $12,173 $ 5,004 $ 829 $ 41,085 $ 8,036 $ 49,121
===================================================================================
As of December 31, 1997
Future cash inflows from sales of oil and gas $50,295 $ 8,449 $41,523 $25,800 $3,114 $129,181 $55,650 $184,831
Future production and development costs 18,683 5,319 16,200 13,587 1,171 54,960 27,472 82,432
Future income tax expenses 11,159 1,444 11,483 4,890 490 29,466 10,856 40,322
-----------------------------------------------------------------------------------
Future net cash flows $20,453 $ 1,686 $13,840 $ 7,323 $1,453 $ 44,755 $17,322 $ 62,077
Effect of discounting net cash flows at 10% 10,135 834 5,159 3,679 761 20,568 11,067 31,635
-----------------------------------------------------------------------------------
Discounted future net cash flows $10,318 $ 852 $ 8,681 $ 3,644 $ 692 $ 24,187 $ 6,255 $ 30,442
===================================================================================
Change in Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves
Consolidated Subsidiaries 1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Value of reserves added during the year due to extensions, discoveries, improved recovery
and net purchases less related costs $ 1,443 $ 3,581 $ 3,057
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 (9,675) (10,875) (8,101)
Development costs incurred during the year 3,300 3,082 2,850
Net change in prices, lifting and development costs (31,818) 25,677 9,257
Revisions of previous reserves estimates 1,568 3,157 1,581
Accretion of discount 5,542 3,330 2,495
Net change in income taxes 12,742 (12,032) (5,613)
-----------------------------------
Total change in the standardized measure during the year $(16,898) $15,920 $ 5,526
===================================
F26
- - --------------------------------------------------------------------------------
OPERATING SUMMARY
- - --------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- - ------------------------------------------------------------------------------------------------------------------------------------
(thousands of barrels daily)
Production of crude oil and natural gas liquids
Net production
United States 559 587 600 562 553 591 619 640 693 760 756
Canada 238 211 242 251 254 268 278 302 312 249 222
Europe 483 499 498 484 423 396 363 313 351 444 456
Asia-Pacific 250 244 302 325 347 346 342 331 328 345 338
Other Non-U.S. 69 74 84 87 90 104 113 126 120 121 63
------------------------------------------------------------------------------------
Worldwide 1,599 1,615 1,726 1,709 1,667 1,705 1,715 1,712 1,804 1,919 1,835
====================================================================================
(millions of cubic feet daily)
Natural gas production available for sale
Net production
United States 2,062 2,094 2,055 2,021 1,764 1,607 1,655 1,778 1,827 1,805 1,698
Canada 203 194 281 286 328 326 355 413 417 209 147
Europe 3,038 3,361 2,804 2,842 3,049 3,097 3,010 2,694 2,707 2,787 3,012
Asia-Pacific 1,036 928 873 827 678 577 411 369 376 332 308
Other Non-U.S. - - - 2 6 54 66 64 58 59 62
------------------------------------------------------------------------------------
Worldwide 6,339 6,577 6,013 5,978 5,825 5,661 5,497 5,318 5,385 5,192 5,227
====================================================================================
(thousands of barrels daily)
Refinery throughput
United States 1,070 988 1,004 994 970 1,017 1,017 950 1,093 1,055 1,066
Canada 448 433 424 428 416 399 419 484 486 351 354
Europe 1,529 1,522 1,416 1,503 1,492 1,489 1,490 1,425 1,387 1,335 1,264
Asia-Pacific 850 733 697 633 619 602 556 586 556 522 426
Other Non-U.S. 114 116 118 122 119 112 103 101 102 105 101
------------------------------------------------------------------------------------
Worldwide 4,011 3,792 3,659 3,680 3,616 3,619 3,585 3,546 3,624 3,368 3,211
====================================================================================
Petroleum product sales
United States 1,342 1,261 1,198 1,196 1,152 1,203 1,210 1,109 1,147 1,113 1,057
Canada 561 542 526 520 517 513 527 597 625 433 430
Europe 1,930 1,925 1,869 1,898 1,872 1,847 1,863 1,796 1,718 1,680 1,634
Asia-Pacific and other Eastern Hemisphere 1,145 1,046 1,042 988 962 935 878 869 847 784 619
Latin America 452 437 441 426 422 411 391 384 383 386 388
------------------------------------------------------------------------------------
Worldwide 5,430 5,211 5,076 5,028 4,925 4,909 4,869 4,755 4,720 4,396 4,128
====================================================================================
Gasoline, naphthas 2,014 1,939 1,903 1,849 1,818 1,822 1,821 1,742 1,708 1,572 1,488
Heating oils, kerosene, diesel oils 1,743 1,718 1,655 1,644 1,569 1,557 1,561 1,491 1,498 1,424 1,344
Aviation fuels 457 442 414 403 379 376 372 382 382 344 338
Heavy fuels 539 498 488 530 558 546 535 543 507 466 419
Specialty petroleum products 677 614 616 602 601 608 580 597 625 590 539
------------------------------------------------------------------------------------
Worldwide 5,430 5,211 5,076 5,028 4,925 4,909 4,869 4,755 4,720 4,396 4,128
====================================================================================
(thousands of metric tons)
Chemical prime product sales 17,301 15,712 14,377 13,969 13,393 13,463 12,560 12,453 12,324 12,152 11,613
====================================================================================
(millions of metric tons)
Coal production 15 15 16 36 36 37 39 40 36 32 30
====================================================================================
(thousands of metric tons)
Copper production 205 203 202 191 183 133 108 112 119 134 101
====================================================================================
Operating statistics include 100 percent of operations of majority-owned
subsidiaries; for other companies, gas, crude production, petroleum product and
chemical prime product sales include Exxon's ownership percentage, and refining
throughput includes quantities processed for Exxon. Net production excludes
royalties and quantities due others when produced, whether payment is made in
kind or cash.
F27