UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
________ ________
Commission File Number 1-2256
EXXON MOBIL CORPORATION
_____________________________________________________________
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5959 Las Colinas Boulevard, Irving, Texas 75039-2298
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(972) 444-1000
_______________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
___ ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of June 30, 2001
_______________________________ _______________________________
Common stock, without par value 6,871,078,958
<page>
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
TABLE OF CONTENTS
Page
Number
______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three and six months ended June 30, 2001 and 2000
Condensed Consolidated Balance Sheet 4
As of June 30, 2001 and December 31, 2000
Condensed Consolidated Statement of Cash Flows 5
Six months ended June 30, 2001 and 2000
Notes to Condensed Consolidated Financial Statements 6-16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17-23
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 4. Submission of Matters to a Vote of Security Holders 25-26
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K 27
Signature 28
Index to Exhibits 29
<page> -2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
__________________ _________________
2001 2000 2001 2000
________ ________ ________ ________
<s> <c> <c> <c> <c>
REVENUE
Sales and other operating revenue,
including excise taxes $ 55,101 $ 54,936 $111,177 $108,209
Earnings from equity interests and
other revenue 1,083 1,020 2,307 1,828
________ ________ ________ ________
Total revenue 56,184 55,956 113,484 110,037
________ ________ ________ ________
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 25,731 26,340 50,609 51,304
Operating expenses 4,626 4,456 9,615 8,741
Selling, general and administrative
expenses 3,215 2,830 6,275 5,707
Depreciation and depletion 1,871 1,939 3,847 4,067
Exploration expenses, including dry holes 266 166 546 376
Merger related expenses 167 202 288 732
Interest expense 70 126 147 300
Excise taxes 5,226 5,457 10,520 10,950
Other taxes and duties 8,057 7,624 16,250 15,706
Income applicable to minority and preferred
interests 83 110 295 182
________ ________ ________ ________
Total costs and other deductions 49,312 49,250 98,392 98,065
________ ________ ________ ________
INCOME BEFORE INCOME TAXES 6,872 6,706 15,092 11,972
Income taxes 2,587 2,706 5,847 4,947
________ ________ ________ ________
INCOME BEFORE EXTRAORDINARY ITEM 4,285 4,000 9,245 7,025
Extraordinary gain, net of income tax 175 530 215 985
________ ________ ________ ________
NET INCOME $ 4,460 $ 4,530 $ 9,460 $ 8,010
======== ======== ======== ========
NET INCOME PER COMMON SHARE (DOLLARS)*
Before extraordinary gain $ 0.64 $ 0.58 $ 1.35 $ 1.02
Extraordinary gain, net of income tax 0.02 0.08 0.03 0.14
________ ________ ________ ________
Net income $ 0.66 $ 0.66 $ 1.38 $ 1.16
======== ======== ======== ========
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION (DOLLARS)*
Before extraordinary gain $ 0.63 $ 0.57 $ 1.33 $ 1.00
Extraordinary gain, net of income tax 0.02 0.08 0.03 0.14
________ ________ ________ ________
Net income $ 0.65 $ 0.65 $ 1.36 $ 1.14
======== ======== ======== ========
DIVIDENDS PER COMMON SHARE* $ 0.23 $ 0.22 $ 0.45 $ 0.44
2001 amounts include additional dividend of $0.01 per common share
(post-split basis) declared on May 30, 2001.
* Prior year amounts restated to reflect two-for-one stock split effective
June 20, 2001.
<page> -3-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
June 30, Dec. 31,
2001 2000
________ ________
<s> <c> <c>
ASSETS
Current assets
Cash and cash equivalents $ 9,298 $ 7,080
Notes and accounts receivable - net 21,409 22,996
Inventories
Crude oil, products and merchandise 7,293 7,244
Materials and supplies 1,102 1,060
Prepaid taxes and expenses 2,220 2,019
________ ________
Total current assets 41,322 40,399
Property, plant and equipment - net 88,356 89,829
Investments and other assets 17,982 18,772
________ ________
TOTAL ASSETS $147,660 $149,000
======== ========
LIABILITIES
Current liabilities
Notes and loans payable $ 3,890 $ 6,161
Accounts payable and accrued liabilities 25,307 26,755
Income taxes payable 6,417 5,275
________ ________
Total current liabilities 35,614 38,191
Long-term debt 7,289 7,280
Deferred income tax liability 16,194 16,442
Other long-term liabilities 15,589 16,330
________ ________
TOTAL LIABILITIES 74,686 78,243
________ ________
SHAREHOLDERS' EQUITY
Benefit plan related balances (203) (235)
Common stock, without par value:
Authorized: 9,000 million shares
Issued: 8,019 million shares 3,745 3,661
Earnings reinvested 93,006 86,652
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (6,381) (4,862)
Minimum pension liability adjustment (310) (310)
Unrealized gains/(losses) on stock investments 56 (17)
Common stock held in treasury:
1,148 million shares at June 30, 2001 (16,939)
1,089 million shares at December 31, 2000 (14,132)
________ ________
TOTAL SHAREHOLDERS' EQUITY 72,974 70,757
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $147,660 $149,000
======== ========
The number of shares of common stock issued and outstanding at June 30, 2001
and December 31, 2000 (restated to reflect two-for-one stock split effective
June 20, 2001) were 6,871,078,958 and 6,930,006,228, respectively.
<page> -4-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
Six Months Ended
June 30,
___________________
2001 2000
________ ________
<s> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,460 $ 8,010
Depreciation and depletion 3,847 4,067
Changes in operational working capital, excluding
cash and debt 1,256 2,224
All other items - net (319) (2,847)
________ ________
Net cash provided by operating activities 14,244 11,454
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (4,370) (3,801)
Sales of subsidiaries, investments, and property,
plant and equipment 745 3,209
Other investing activities - net 311 699
________ ________
Net cash provided by/(used in) investing activities (3,314) 107
________ ________
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 10,930 11,561
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 341 143
Reductions in long-term debt (357) (280)
Additions/(reductions) in short-term debt - net (2,369) (4,178)
Cash dividends to ExxonMobil shareholders (3,037) (3,063)
Cash dividends to minority interests (94) (91)
Changes in minority interests and sales/(purchases)
of affiliate stock (274) (112)
Net ExxonMobil shares sold/(acquired) (2,776) 195
________ ________
Net cash provided by/(used in) financing activities (8,566) (7,386)
________ ________
Effects of exchange rate changes on cash (146) (50)
________ ________
Increase/(decrease) in cash and cash equivalents 2,218 4,125
Cash and cash equivalents at beginning of period 7,080 1,688
________ ________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,298 $ 5,813
======== ========
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 4,182 $ 2,582
Cash interest paid $ 244 $ 476
<page> -5-
EXXON MOBIL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis Of Financial Statement Preparation
These unaudited condensed consolidated financial statements should be read
in the context of the consolidated financial statements and notes thereto
filed with the Securities and Exchange Commission in the corporation's
2000 Annual Report on Form 10-K. In the opinion of the corporation, the
information furnished herein reflects all known accruals and adjustments
necessary for a fair statement of the results for the periods reported
herein. All such adjustments are of a normal recurring nature. The
corporation's exploration and production activities are accounted for
under the "successful efforts" method.
2. Accounting Change
As of January 1, 2001, ExxonMobil adopted Financial Accounting Standards
Board Statement No. 133 (FAS 133), "Accounting for Derivative Instruments
and Hedging Activities" as amended by Statements No. 137 and 138. This
statement requires that all derivatives be recognized as either assets or
liabilities in the financial statements and be measured at fair value.
Since the corporation makes limited use of derivatives, the effect of
adoption of FAS 133 on the corporation's operations or financial condition
was negligible.
3. Recently Issued Statements of Financial Accounting Standards
In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141 (FAS 141), "Business
Combinations", and No. 142 (FAS 142), "Goodwill and Other Intangible
Assets". Under FAS 141, the pooling of interests method of accounting is
no longer permitted and the purchase method must be used for business
combinations initiated after June 30, 2001. Under FAS 142, which will be
effective for the corporation beginning January 1, 2002, goodwill and
certain intangibles will no longer be amortized but will be subject to
annual impairment tests. The effect of adoption of the new standards on
the corporation's financial statements will be negligible.
4. Capital
On May 30, 2001, the company's Board of Directors approved a two-for-one
stock split to common stock shareholders of record on June 20, 2001. The
authorized common stock was increased from four billion five hundred
million (4,500,000,000) shares without par value to nine billion
(9,000,000,000) shares without par value and the issued shares were split
on a two-for-one basis on June 20, 2001.
<page> -6-
The number of shares of common stock issued and outstanding as of
March 31, 2001 and as of December 31, 2000 and 1999, restated to reflect
the two-for-one stock split, were 6,899,752,948, 6,930,006,228 and
6,954,846,646, respectively. Net income per common share -- assuming
dilution, restated to reflect the two-for-one stock split, for the
quarters ended March 31, 2001 and 2000 were $0.71 and $0.49, respectively,
and for the years ended December 31, 2000, 1999 and 1998, were $2.52,
$1.12, and $1.14, respectively.
5. Merger of Exxon Corporation and Mobil Corporation
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation
merged with Mobil Corporation so that Mobil became a wholly-owned
subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its
name to Exxon Mobil Corporation. The Merger was accounted for as a pooling
of interests.
In the second quarter of 2001, in association with the Merger,
$167 million of before tax costs ($95 million after tax) were recorded as
merger related expenses. In the second quarter of 2000, merger related
expenses were $202 million before tax ($150 million after tax). For the
six months ended June 30, 2001 merger related expenses totaled
$288 million before tax ($185 million after tax). For the six months ended
June 30, 2000, merger related expenses totaled $732 million ($475 million
after tax).
The severance reserve balance at the end of the second quarter of 2001 is
expected to be expended in 2001 and 2002. The following table summarizes
the activity in the severance reserve for the six months ended June 30,
2001:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
317 67 170 214
6. Extraordinary Gain
Second quarter 2001 results included a net after tax gain of $175 million
(including an income tax credit of $6 million), or $0.02 per common share,
from asset management activities in the chemicals segment. Second quarter
2000 included a net after tax gain of $530 million (net of $75 million of
income taxes), or $0.08 per common share, from asset divestments that were
required as a condition of the regulatory approval of the Merger.
For the six months ended June 30, 2001, the net after tax gain from asset
management activities and required asset divestitures totaled $215 million
(including an income tax credit of $21 million), or $0.03 per common
share. For the six months ended June 30, 2000, the net after tax gain from
required asset divestitures totaled $985 million (net of $624 million of
income taxes), or $0.14 per common share. These net gains from asset
management activities in the chemicals segment and required asset
divestitures have been reported as extraordinary items in accordance with
accounting requirements for business combinations accounted for as a
pooling of interests.
<page> -7-
7. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various
courts against Exxon Mobil Corporation and certain of its subsidiaries
relating to the accidental release of crude oil from the tanker Exxon
Valdez in 1989. Essentially all of these lawsuits have now been resolved
or are subject to appeal.
On September 24, 1996, the United States District Court for the District
of Alaska entered a judgment in the amount of $5.058 billion in the Exxon
Valdez civil trial that began in May 1994. The District Court awarded
approximately $19.6 million in compensatory damages to fisher plaintiffs,
$38 million in prejudgment interest on the compensatory damages and
$5 billion in punitive damages to a class composed of all persons and
entities who asserted claims for punitive damages from the corporation as
a result of the Exxon Valdez grounding. The District Court also ordered
that these awards shall bear interest from and after entry of the
judgment. The District Court stayed execution on the judgment pending
appeal based on a $6.75 billion letter of credit posted by the
corporation. ExxonMobil has appealed the judgment. The United States Court
of Appeals for the Ninth Circuit heard oral arguments on the appeal on
May 3, 1999. The corporation continues to believe that the punitive
damages in this case are unwarranted and that the judgment should be set
aside or substantially reduced by the appellate courts.
On January 29, 1997, a settlement agreement was concluded resolving all
remaining matters between the corporation and various insurers arising
from the Valdez accident. Under terms of this settlement, ExxonMobil
received $480 million. Final income statement recognition of this
settlement continues to be deferred in view of uncertainty regarding the
ultimate cost to the corporation of the Valdez accident.
The ultimate cost to ExxonMobil from the lawsuits arising from the Exxon
Valdez grounding is not possible to predict and may not be resolved for a
number of years.
Under the October 8, 1991, civil agreement and consent decrees with the
U.S. and Alaska governments, the corporation will make a final payment of
$70 million in 2001. This payment, along with prior payments, will be
charged against the provision that was previously established to cover the
costs of the settlement.
German and Dutch affiliated companies are the concessionaires of a natural
gas field subject to a treaty between the governments of Germany and the
Netherlands under which the gas reserves in an undefined border or common
area are to be shared equally. Entitlement to the reserves is determined
by calculating the amount of gas which can be recovered from this area.
Based on the final reserve determination, the German affiliate has
received more gas than its entitlement. Arbitration proceedings, as
provided in the agreements, were conducted to resolve issues concerning
the compensation for the overlifted gas.
By final award dated July 2, 1999, preceded by an interim award in 1996,
an arbitral tribunal established the full amount of the compensation for
the excess gas. This amount has now been paid and a petition to set the
award aside has now been dismissed, rendering the award final in all
respects. 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. However, the ultimate outcome is not
expected to have a materially adverse effect upon the corporation's
operations or financial condition.
<page> -8-
On December 19, 2000, a jury in Montgomery County, Alabama, returned a
verdict against the corporation in a contract dispute over royalties in
the amount of $87.69 million in compensatory damages and $3.42 billion in
punitive damages in the case of Exxon Corporation v. State of Alabama,
et al. The verdict was upheld by the trial court on May 4, 2001.
ExxonMobil has appealed the verdict and believes that the verdict is
unwarranted and that the judgement should be set aside or substantially
reduced. The ultimate outcome is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
On May 22, 2001, a state court jury in New Orleans, Louisiana, returned a
verdict against the corporation and three other entities in a case
brought by a landowner claiming damage to his property. The property had
been leased by the landowner to a company that performed pipe cleaning
and storage services for customers, including the corporation. The jury
awarded the plaintiff $56 million in compensatory damages (90 percent to
be paid by the corporation) and $1 billion in punitive damages (all to be
paid by the corporation). The damage related to the presence of naturally
occurring radioactive material (NORM) on the site resulting from pipe
cleaning operations. The award has been affirmed by the trial court, and
the corporation is in the process of taking an appeal to the Louisiana
Fourth Circuit Court of Appeals. The ultimate outcome is not expected to
have a materially adverse effect upon the corporation's operations or
financial condition.
The U.S. Tax Court has decided the issue with respect to the pricing of
crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of
the corporation. This decision is subject to appeal. Certain other issues
for the years 1979-1993 remain pending before the Tax Court. The ultimate
resolution of these issues is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
Claims for substantial amounts have been made against ExxonMobil and
certain of its consolidated subsidiaries in other pending lawsuits, the
outcome of which is not expected to have a materially adverse effect upon
the corporation's operations or financial condition.
The corporation and certain of its consolidated subsidiaries are directly
and indirectly contingently liable for amounts similar to those at the
prior year-end relating to guarantees for notes, loans and performance
under contracts, including guarantees of non-U.S. excise taxes and customs
duties of other companies, entered into as a normal business practice,
under reciprocal arrangements.
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.
<page> -9-
8. Nonowner Changes in Shareholders' Equity
The total nonowner changes in shareholders' equity for the three months
ended June 30, 2001 and 2000 were $4,026 million and $3,746 million,
respectively. The total nonowner changes in shareholders' equity for the
six months ended June 30, 2001 and 2000 were $8,014 million and
$6,265 million, respectively. Total nonowner changes in shareholders'
equity include net income and the change in the cumulative foreign
exchange translation adjustment, the minimum pension liability adjustment
and the unrealized gains and losses on stock investments components of
shareholders' equity.
9. Earnings Per Share*
Three Months Ended Six Months Ended
June 30, June 30,
__________________ ________________
2001 2000 2001 2000
_______ _______ _______ _______
<s> <c> <c> <c> <c>
NET INCOME PER COMMON SHARE
Income before extraordinary item
(millions of dollars) $ 4,285 $ 4,000 $ 9,245 $ 7,025
Weighted average number of common shares
outstanding (million of shares) 6,883 6,962 6,898 6,962
Net income per common share (dollars)
Before extraordinary gain $ 0.64 $ 0.58 $ 1.35 $ 1.02
Extraordinary gain, net of income tax 0.02 0.08 0.03 0.14
_______ _______ _______ _______
Net income $ 0.66 $ 0.66 $ 1.38 $ 1.16
======= ======= ======= =======
NET INCOME PER COMMON SHARE
- ASSUMING DILUTION
Income before extraordinary item
(millions of dollars) $ 4,285 $ 4,000 $ 9,245 $ 7,025
Adjustment for assumed dilution 1 (3) (2) (10)
_______ _______ _______ _______
Income available to common shares $ 4,286 $ 3,997 $ 9,243 $ 7,015
======= ======= ======= =======
Weighted average number of common shares
outstanding (millions of shares) 6,883 6,962 6,898 6,962
Plus: Issued on assumed exercise of
stock options 80 87 76 85
_______ _______ _______ _______
Weighted average number of common shares
outstanding 6,963 7,049 6,974 7,047
======= ======= ======= =======
Net income per common share
- assuming dilution (dollars)
Before extraordinary gain $ 0.63 $ 0.57 $ 1.33 $ 1.00
Extraordinary gain, net of income tax 0.02 0.08 0.03 0.14
_______ _______ _______ ________
Net income $ 0.65 $ 0.65 $ 1.36 $ 1.14
======= ======= ======= =======
* Prior year amounts restated to reflect two-for-one stock split effective
June 20, 2001.
<page> -10-
10. Disclosures about Segments and Related Information
Three Months Ended Six Months Ended
June 30, June 30,
__________________ __________________
2001 2000 2001 2000
________ ________ ________ ________
<s> <c> <c> <c> <c>
(millions of dollars)
EARNINGS AFTER INCOME TAX
Upstream
United States $ 1,111 $ 1,086 $ 2,739 $ 1,966
Non-U.S. 1,739 1,679 3,889 3,553
Downstream
United States 844 594 1,253 776
Non-U.S. 423 404 1,013 591
Chemicals
United States 149 238 194 419
Non-U.S. 168 124 323 263
All Other 26 405 49 442
________ ________ ________ ________
Corporate Total $ 4,460 $ 4,530 $ 9,460 $ 8,010
======== ======== ======== ========
Extraordinary gains included above:
Chemicals
United States $ 100 $ 0 $ 100 $ 0
Non-U.S. 75 0 75 0
All Other 0 530 40 985
________ ________ ________ ________
Corporate Total $ 175 $ 530 $ 215 $ 985
======== ======== ======== ========
SALES AND OTHER OPERATING REVENUE
Upstream
United States $ 1,415 $ 1,195 $ 3,701 $ 2,191
Non-U.S. 3,404 3,312 7,901 7,115
Downstream
United States 14,375 14,100 27,104 27,117
Non-U.S. 31,514 31,696 63,442 62,788
Chemicals
United States 1,841 2,113 3,806 4,082
Non-U.S. 2,354 2,302 4,799 4,472
All Other 198 218 424 444
________ ________ ________ ________
Corporate Total $ 55,101 $ 54,936 $111,177 $108,209
======== ======== ======== ========
INTERSEGMENT REVENUE
Upstream
United States $ 1,827 $ 1,467 $ 3,797 $ 2,948
Non-U.S. 3,350 3,700 6,777 6,918
Downstream
United States 1,092 1,099 2,384 1,972
Non-U.S. 4,813 2,459 8,845 4,877
Chemicals
United States 646 697 1,344 1,368
Non-U.S. 439 458 1,025 904
All Other 43 37 94 67
<page> -11-
11. Condensed Consolidating Financial Information Related to Guaranteed
Securities Issued by Subsidiaries
Exxon Mobil Corporation has fully and unconditionally guaranteed the 6.0%
notes due 2005 and the 6.125% notes due 2008 of Exxon Capital Corporation
and the deferred interest debentures due 2012 and the debt securities due
2001-2011 of SeaRiver Maritime Financial Holdings, Inc. Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc. are 100 percent
owned subsidiaries of Exxon Mobil Corporation.
The following condensed consolidating financial information is provided
for Exxon Mobil Corporation, as guarantor, and for Exxon Capital
Corporation and SeaRiver Maritime Financial Holdings, Inc., as issuers, as
an alternative to providing separate financial statements for the issuers.
The accounts of Exxon Mobil Corporation, Exxon Capital Corporation and
SeaRiver Maritime Financial Holdings, Inc., are presented utilizing the
equity method of accounting for investments in subsidiaries.
SeaRiver
Exxon Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ _________ ____________ ____________ ____________
<s> <c> <c> <c> <c> <c> <c>
(millions of dollars)
Condensed consolidated statement of income for three months ended June 30, 2001
_______________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 9,477 $ - $ - $ 45,624 $ - $ 55,101
Earnings from equity
interests and other
revenue 3,687 - 11 960 (3,575) 1,083
Intercompany revenue 1,234 254 17 27,537 (29,042) -
________ ________ ________ ________ ________ ________
Total revenue 14,398 254 28 74,121 (32,617) 56,184
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 6,062 - - 45,691 (26,022) 25,731
Operating expenses 1,499 - 1 4,361 (1,235) 4,626
Selling, general and
administrative expenses 547 1 - 2,667 - 3,215
Depreciation and
depletion 388 1 - 1,482 - 1,871
Exploration expenses,
including dry holes 39 - - 227 - 266
Merger related expenses 36 - - 131 - 167
Interest expense 323 238 28 1,266 (1,785) 70
Excise taxes 650 - - 4,576 - 5,226
Other taxes and duties 3 - - 8,054 - 8,057
Income applicable to
minority and preferred
interests - - - 83 - 83
________ ________ ________ ________ ________ ________
Total costs and
other deductions 9,547 240 29 68,538 (29,042) 49,312
________ ________ ________ ________ ________ ________
Income before income taxes 4,851 14 (1) 5,583 (3,575) 6,872
Income taxes 566 6 (4) 2,019 - 2,587
________ ________ ________ ________ ________ ________
Income before
extraordinary item 4,285 8 3 3,564 (3,575) 4,285
Extraordinary gain, net
of income tax 175 - - (25) 25 175
________ ________ ________ ________ ________ ________
Net income $ 4,460 $ 8 $ 3 $ 3,539 $ (3,550) $ 4,460
======== ======== ======== ======== ======== ========
<page> -12-
SeaRiver
Exxon Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ _________ ____________ ____________ ____________
<s> <c> <c> <c> <c> <c> <c>
(millions of dollars)
Condensed consolidated statement of income for three months ended June 30, 2000
_______________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 8,984 $ - $ - $ 45,952 $ - $ 54,936
Earnings from equity
interests and other
revenue 3,335 - 7 914 (3,236) 1,020
Intercompany revenue 681 228 21 20,460 (21,390) -
________ ________ ________ ________ ________ ________
Total revenue 13,000 228 28 67,326 (24,626) 55,956
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 5,314 - - 39,031 (18,005) 26,340
Operating expenses 1,469 - - 5,053 (2,066) 4,456
Selling, general and
administrative expenses 362 1 (1) 2,537 (69) 2,830
Depreciation and
depletion 353 1 - 1,585 - 1,939
Exploration expenses,
including dry holes 7 - - 159 - 166
Merger related expenses 117 - - 85 - 202
Interest expense 377 208 29 762 (1,250) 126
Excise taxes 677 - - 4,780 - 5,457
Other taxes and duties 2 - - 7,622 - 7,624
Income applicable to
minority and preferred
interests - - - 110 - 110
________ ________ ________ ________ ________ ________
Total costs and
other deductions 8,678 210 28 61,724 (21,390) 49,250
________ ________ ________ ________ ________ ________
Income before income taxes 4,322 18 - 5,602 (3,236) 6,706
Income taxes 322 5 (2) 2,381 - 2,706
________ ________ ________ ________ ________ ________
Income before
extraordinary item 4,000 13 2 3,221 (3,236) 4,000
Extraordinary gain, net
of income tax 530 - - 291 (291) 530
________ ________ ________ ________ ________ ________
Net income $ 4,530 $ 13 $ 2 $ 3,512 $ (3,527) $ 4,530
======== ======== ======== ======== ======== ========
Condensed consolidated statement of income for six months ended June 30, 2001
_____________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 18,733 $ - $ - $ 92,444 $ - $111,177
Earnings from equity
interests and other
revenue 8,039 - 27 2,023 (7,782) 2,307
Intercompany revenue 2,362 548 38 54,883 (57,831) -
________ ________ ________ ________ ________ ________
Total revenue 29,134 548 65 149,350 (65,613) 113,484
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 11,550 - - 91,093 (52,034) 50,609
Operating expenses 3,178 1 1 8,601 (2,166) 9,615
Selling, general and
administrative expenses 1,056 1 - 5,218 - 6,275
Depreciation and depletion 764 2 1 3,080 - 3,847
Exploration expenses,
including dry holes 83 - - 463 - 546
Merger related expenses 71 - - 217 - 288
Interest expense 703 513 59 2,503 (3,631) 147
Excise taxes 1,258 - - 9,262 - 10,520
Other taxes and duties 7 - - 16,243 - 16,250
Income applicable to
minority and preferred
interests - - - 295 - 295
________ ________ ________ ________ ________ ________
Total costs and
other deductions 18,670 517 61 136,975 (57,831) 98,392
________ ________ ________ ________ ________ ________
Income before income taxes 10,464 31 4 12,375 (7,782) 15,092
Income taxes 1,219 12 (8) 4,624 - 5,847
________ ________ ________ ________ ________ ________
Income before
extraordinary item 9,245 19 12 7,751 (7,782) 9,245
Extraordinary gain, net
of income tax 215 - - - - 215
________ ________ ________ ________ ________ ________
Net income $ 9,460 $ 19 $ 12 $ 7,751 $ (7,782) $ 9,460
======== ======== ======== ======== ======== ========
<page> -13-
SeaRiver
Exxon Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ _________ ____________ ____________ ____________
<s> <c> <c> <c> <c> <c> <c>
(millions of dollars)
Condensed consolidated statement of income for six months ended June 30, 2000
_____________________________________________________________________________
Revenue
Sales and other
operating revenue,
including excise taxes $ 17,092 $ - $ - $ 91,117 $ - $108,209
Earnings from equity
interests and other
revenue 6,091 - 13 1,619 (5,895) 1,828
Intercompany revenue 1,139 407 38 39,886 (41,470) -
________ ________ ________ ________ ________ ________
Total revenue 24,322 407 51 132,622 (47,365) 110,037
________ ________ ________ ________ ________ ________
Costs and other deductions
Crude oil and product
purchases 9,903 - - 78,218 (36,817) 51,304
Operating expenses 2,765 - - 8,330 (2,354) 8,741
Selling, general and
administrative expenses 800 1 (3) 4,978 (69) 5,707
Depreciation and
depletion 689 2 1 3,375 - 4,067
Exploration expenses,
including dry holes 41 - - 335 - 376
Merger related expenses 314 - - 418 - 732
Interest expense 688 370 57 1,415 (2,230) 300
Excise taxes 1,405 - - 9,545 - 10,950
Other taxes and duties 5 - - 15,701 - 15,706
Income applicable to
minority and preferred
interests - - - 182 - 182
________ ________ ________ ________ ________ ________
Total costs and
other deductions 16,610 373 55 122,497 (41,470) 98,065
________ ________ ________ ________ ________ ________
Income before income taxes 7,712 34 (4) 10,125 (5,895) 11,972
Income taxes 687 9 (6) 4,257 - 4,947
________ ________ ________ ________ ________ ________
Income before
extraordinary item 7,025 25 2 5,868 (5,895) 7,025
Extraordinary gain, net
of income tax 985 - - 721 (721) 985
________ ________ ________ ________ ________ ________
Net income $ 8,010 $ 25 $ 2 $ 6,589 $ (6,616) $ 8,010
======== ======== ======== ======== ======== ========
<page> -14-
SeaRiver
Exxon Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ _________ ____________ ____________ ____________
<s> <c> <c> <c> <c> <c> <c>
(millions of dollars)
Condensed consolidated balance sheet as of June 30, 2001
________________________________________________________
Cash and cash equivalents $ 3,294 $ - $ - $ 6,004 $ - $ 9,298
Notes and accounts
receivable - net 3,904 - - 17,505 - 21,409
Inventories 1,259 - - 7,136 - 8,395
Other current assets 168 - 9 2,043 - 2,220
________ ________ ________ ________ _________ ________
Total current
assets 8,625 - 9 32,688 - 41,322
Property, plant and
equipment - net 18,695 111 8 69,542 - 88,356
Investments and other
assets 85,976 - 584 317,348 (385,926) 17,982
Intercompany receivables 5,995 20,683 1,363 194,879 (222,920) -
________ ________ ________ ________ _________ ________
Total assets $119,291 $ 20,794 $ 1,964 $614,457 $(608,846) $147,660
======== ======== ======== ======== ========= ========
Notes and loans payables $ - $ 23 $ 7 $ 3,860 $ - $ 3,890
Accounts payable and
accrued liabilities 3,396 11 1 21,899 - 25,307
Income taxes payable 1,502 21 - 4,894 - 6,417
________ ________ ________ ________ _________ ________
Total current
liabilities 4,898 55 8 30,653 - 35,614
Long-term debt 1,234 266 972 4,817 - 7,289
Deferred income tax
liabilities 3,344 33 292 12,525 - 16,194
Other long-term liabilities 4,398 - - 11,191 - 15,589
Intercompany payables 32,443 19,559 383 170,535 (222,920) -
________ ________ ________ ________ _________ ________
Total liabilities 46,317 19,913 1,655 229,721 (222,920) 74,686
Earnings reinvested 93,006 75 (85) 44,160 (44,150) 93,006
Other shareholders'
equity (20,032) 806 394 340,576 (341,776) (20,032)
________ ________ ________ ________ _________ ________
Total shareholders'
equity 72,974 881 309 384,736 (385,926) 72,974
________ ________ ________ ________ _________ ________
Total liabilities
and shareholders'
equity $119,291 $ 20,794 $ 1,964 $614,457 $(608,846) $147,660
======== ======== ======== ======== ========= ========
Condensed consolidated balance sheet as of December 31, 2000
____________________________________________________________
Cash and cash equivalents $ 4,235 $ - $ - $ 2,845 $ - $ 7,080
Notes and accounts
receivable - net 4,427 - - 18,569 - 22,996
Inventories 1,102 - - 7,202 - 8,304
Other current assets 262 - 14 1,743 - 2,019
________ ________ ________ ________ _________ ________
Total current
assets 10,026 - 14 30,359 - 40,399
Property, plant and
equipment - net 18,559 113 9 71,148 - 89,829
Investments and other
assets 80,097 2 558 308,584 (370,469) 18,772
Intercompany receivables 9,339 19,124 1,355 212,790 (242,608) -
________ ________ ________ ________ _________ ________
Total assets $118,021 $ 19,239 $ 1,936 $622,881 $(613,077) $149,000
======== ======== ======== ======== ========= ========
Notes and loans payables $ 60 $ 74 $ 7 $ 6,020 $ - $ 6,161
Accounts payable and
accrued liabilities 3,918 8 2 22,827 - 26,755
Income taxes payable 902 9 - 4,364 - 5,275
________ ________ ________ ________ _________ ________
Total current
liabilities 4,880 91 9 33,211 - 38,191
Long-term debt 1,209 281 925 4,865 - 7,280
Deferred income tax
liabilities 3,334 31 292 12,785 - 16,442
Other long-term liabilities 4,428 9 - 11,893 - 16,330
Intercompany payables 33,413 17,965 412 190,818 (242,608) -
________ ________ ________ ________ _________ ________
Total liabilities 47,264 18,377 1,638 253,572 (242,608) 78,243
Earnings reinvested 86,652 56 (96) 36,946 (36,906) 86,652
Other shareholders'
equity (15,895) 806 394 332,363 (333,563) (15,895)
________ ________ ________ ________ _________ ________
Total shareholders'
equity 70,757 862 298 369,309 (370,469) 70,757
________ ________ ________ ________ _________ ________
Total liabilities
and shareholders'
equity $118,021 $ 19,239 $ 1,936 $622,881 $(613,077) $149,000
======== ======== ======== ======== ========= ========
<page> -15-
SeaRiver
Exxon Mobil Maritime Consolidating
Corporation Exxon Financial and
Parent Capital Holdings, All Other Eliminating
Guarantor Corporation Inc. Subsidiaries Adjustments Consolidated
___________ ___________ _________ ____________ ____________ ____________
<s> <c> <c> <c> <c> <c> <c>
(millions of dollars)
Condensed consolidated statement of cash flows for six months ended June 30, 2001
_________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 3,214 $ 31 $ 37 $ 11,446 $ (484) $ 14,244
________ ________ ________ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (1,040) - - (3,330) - (4,370)
Sales of long-term assets 514 - - 231 - 745
Net intercompany
investing 2,268 (1,559) (8) (680) (21) -
All other investing, net (23) - - 334 - 311
________ ________ ________ ________ ________ ________
Net cash provided by/
(used in) investing
activities 1,719 (1,559) (8) (3,445) (21) (3,314)
________ ________ ________ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 341 - 341
Reductions in long-term
debt (1) (15) - (341) - (357)
Additions/(reductions)
in short-term debt
- net (60) (51) - (2,258) - (2,369)
Cash dividends (3,037) - - (484) 484 (3,037)
Net ExxonMobil shares
sold/(acquired) (2,776) - - - - (2,776)
Net intercompany
financing activity - 1,594 (29) (1,586) 21 -
All other financing, net - - - (368) - (368)
________ ________ ________ ________ ________ ________
Net cash provided
by/(used in) financing
activities (5,874) 1,528 (29) (4,696) 505 (8,566)
________ ________ ________ ________ ________ ________
Effects of exchange rate
changes on cash - - - (146) - (146)
________ ________ ________ ________ ________ ________
Increase/(decrease) in
cash and cash equivalents $ (941) $ - $ - $ 3,159 $ - $ 2,218
======== ======== ======== ======== ======== ========
Condensed consolidated statement of cash flows for six months ended June 30, 2000
_________________________________________________________________________________
Cash provided by/(used in)
operating activities $ 4,692 $ 33 $ 48 $ 6,902 $ (221) $ 11,454
________ ________ ________ ________ ________ ________
Cash flows from investing
activities
Additions to property,
plant and equipment (756) - - (3,045) - (3,801)
Sales of long-term assets 1,161 - - 2,048 - 3,209
Net intercompany
investing 179 (4,116) (46) 3,951 32 -
All other investing, net 93 - - 606 - 699
________ ________ ________ ________ ________ ________
Net cash provided
by/(used in) investing
activities 677 (4,116) (46) 3,560 32 107
________ ________ ________ ________ ________ ________
Cash flows from financing
activities
Additions to long-term
debt - - - 143 - 143
Reductions in long-term
debt - - - (280) - (280)
Additions/(reductions)
in short-term debt
- net (978) (6) - (3,194) - (4,178)
Cash dividends (3,063) - - (221) 221 (3,063)
Net ExxonMobil shares
sold/(acquired) 195 - - - - 195
Net intercompany
financing activity - 4,089 (2) (4,055) (32) -
All other financing, net - - - (203) - (203)
________ ________ ________ ________ ________ ________
Net cash provided
by/(used in) financing
activities (3,846) 4,083 (2) (7,810) 189 (7,386)
________ ________ ________ ________ ________ ________
Effects of exchange rate
changes on cash - - - (50) - (50)
________ ________ ________ ________ ________ ________
Increase/(decrease) in
cash and cash equivalents $ 1,523 $ - $ - $ 2,602 $ - $ 4,125
======== ======== ======== ======== ======== ========
<page> -16-
EXXON MOBIL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
Second Quarter First Six Months
______________ ________________
2001 2000 2001 2000
_____ ____ ____ ____
<s> <c> <c> <c> <c>
(millions of dollars)
Earnings including merger effects and special items
___________________________________________________
Upstream
United States $ 1,111 $ 1,086 $ 2,739 $ 1,966
Non-U.S. 1,739 1,679 3,889 3,553
Downstream
United States 844 594 1,253 776
Non-U.S. 423 404 1,013 591
Chemicals
United States 149 238 194 419
Non-U.S. 168 124 323 263
Other operations 128 127 269 246
Corporate and financing (7) (102) (75) (314)
Merger expenses (95) (150) (185) (475)
Gain from required asset divestitures 0 530 40 985
_______ _______ _______ _______
NET INCOME $ 4,460 $ 4,530 $ 9,460 $ 8,010
======= ======= ======= =======
Net income per common share* $ 0.66 $ 0.66 $ 1.38 $ 1.16
Net income per common share
- assuming dilution* $ 0.65 $ 0.65 $ 1.36 $ 1.14
Merger effects and special items
________________________________
Chemicals
United States $ 100 $ 0 $ 100 $ 0
Non-U.S. 75 0 75 0
Merger expenses (95) (150) (185) (475)
Gain from required asset divestitures 0 530 40 985
_______ _______ _______ _______
TOTAL $ 80 $ 380 $ 30 $ 510
======= ======= ======= =======
Earnings excluding merger effects and special items
___________________________________________________
Upstream
United States $ 1,111 $ 1,086 $ 2,739 $ 1,966
Non-U.S. 1,739 1,679 3,889 3,553
Downstream
United States 844 594 1,253 776
Non-U.S. 423 404 1,013 591
Chemicals
United States 49 238 94 419
Non-U.S. 93 124 248 263
Other operations 128 127 269 246
Corporate and financing (7) (102) (75) (314)
_______ _______ _______ _______
TOTAL $ 4,380 $ 4,150 $ 9,430 $ 7,500
======= ======= ======= =======
Earnings per common share* $ 0.65 $ 0.61 $ 1.38 $ 1.09
Earnings per common share
- assuming dilution* $ 0.64 $ 0.60 $ 1.36 $ 1.07
* Prior year amounts restated to reflect two-for-one stock split effective
June 20, 2001.
<page> -17-
SECOND QUARTER 2001 COMPARED WITH SECOND QUARTER 2000
Exxon Mobil Corporation reported record second quarter results. Excluding
merger effects and special items, estimated second quarter 2001 earnings of
$4,380 million ($0.64 per share) increased $230 million (6 percent) from the
second quarter of 2000. Including merger effects and special items, estimated
second quarter net income of $4,460 million ($0.65 per share) was $70 million
lower, primarily reflecting the absence of last year's gains on asset
divestments required as a condition of the merger. These per share amounts
reflect the two-for-one stock split effective June 20, 2001. Included in this
year's second quarter net income were merger expenses and special items netting
to a favorable $80 million, while last year's second quarter included net
favorable merger effects of $380 million.
Revenue for the second quarter of 2001 totaled $56,184 million compared with
$55,956 million in 2000. Capital and exploration expenditures of $2,834 million
in the second quarter of 2001 were up $410 million, or 17 percent, compared
with $2,424 million last year and were 13 percent higher than in the first
quarter.
The improvement in earnings reflected higher U.S. natural gas realizations and
refining margins, both of which were very strong early in the second quarter
but declined significantly as the quarter progressed. The decline in these key
earnings drivers along with crude oil prices has continued into the third
quarter. Upstream volumes were higher excluding the effect of suspending
natural gas production operations in the Aceh province in Indonesia due to
security concerns. Capital expenditures were higher in line with full-year
spending plans and company-wide operating cost efficiencies continued to
increase.
Upstream earnings were $2,850 million, an increase of $85 million from last
year, and represent a second quarter record. The higher earnings were driven by
higher average natural gas realizations, particularly in the U.S. This was
partly offset by lower average crude oil realizations, especially among heavier
crude grades, and higher exploration expenses in future growth areas. Liquids
production increased 1 percent with growth in West Africa, Kazakhstan and
Canada. Natural gas volumes increased by about 4 percent absent the impact of
the Aceh shutdown.
Downstream earnings of $1,267 million were also a second quarter record. These
results were $269 million, or 27 percent higher than the same period a year
ago, reflecting stronger refining and marketing margins, particularly in the
U.S. Although average U.S. refining margins were well above last year's levels,
there was significant margin erosion towards the end of the quarter. Refining
margins remained weak in Asia-Pacific. Sales volumes were flat when adjusted
for the impact of U.S. businesses divested as a regulatory requirement of the
merger.
Chemicals earnings of $317 million included $175 million of net gains on asset
management activities. Absent this special item, chemicals earnings of
$142 million declined $220 million due to a significant deterioration in
margins, particularly in the U.S., as higher natural gas prices drove up
feedstock costs while product realizations declined. U.S. volumes decreased
6 percent reflecting weak economic conditions in the manufacturing sector.
Outside the U.S., higher volumes were offset by lower margins and higher
expenses associated with new capacity additions. Earnings from other operations
were essentially unchanged from last year as higher volumes and coal
realizations were offset by lower copper prices.
<page> -18-
Second quarter net income included merger expenses of $95 million ($167 million
before tax) and $175 million of special gains related to asset management
activities in the chemicals segment.
In the second quarter, ExxonMobil continued its active investment program,
spending $2,834 million on capital and exploration projects, compared with
$2,424 million last year, reflecting higher spending in both the upstream and
downstream.
During the quarter, the Corporation announced a two-for-one stock split and an
additional two cents per share dividend (one cent per share on a post-split
basis), both with a record date of June 20, 2001.
OTHER COMMENTS ON SECOND QUARTER COMPARISON
Upstream earnings benefited from higher natural gas realizations, up 25 percent
from last year. The higher realizations were driven by higher U.S. gas prices,
although these steadily declined during the quarter. Lower crude oil
realizations and higher exploration expenses in growth areas were a partial
offset.
Liquids production of 2,533 kbd (thousands of barrels per day) increased from
2,514 kbd in the second quarter of 2000. This increase reflected higher
production in Equatorial Guinea, Nigeria, Kazakhstan and Canadian heavy oil
operations, partly offset by natural field declines in mature areas. Worldwide
gas production was up about 4 percent, primarily reflecting higher production
in Europe, Australia, Canada and Qatar, before including the effect of
suspending operations at the Arun facility in the Aceh province in Indonesia
due to security concerns. On a year to year basis, including the effects of
Arun, second quarter natural gas production was 9,131 mcfd (millions of cubic
feet per day) in 2001, compared with 9,247 mcfd last year.
Earnings from U.S. upstream operations were $1,111 million, an increase of
$25 million from the prior year. Upstream earnings outside the U.S. were
$1,739 million, an increase of $60 million.
Downstream results improved by 27 percent from the second quarter of 2000
primarily reflecting stronger refining margins in the U.S. Asia-Pacific margins
remained depressed. Refining margins in all regions declined throughout the
quarter, particularly in the U.S., while improving marketing margins provided a
partial offset. Petroleum product sales of 7,933 kbd decreased from 8,035 kbd
in the second quarter of 2000. Absent the volumes from operations divested as a
regulatory requirement of the merger, sales were flat.
U.S. downstream earnings were $844 million, up $250 million. Non-U.S.
downstream earnings of $423 million were $19 million higher than last year.
Chemicals earnings, excluding a $175 million net gain on asset management
activities, were $142 million, down $220 million from the same quarter a year
ago as higher feedstock costs and energy costs, particularly in the U.S., put
significant pressure on commodity margins. Prime product sales volumes of
6,418 kt (thousands of metric tons) were 3 percent below last year's level,
reflecting a difficult U.S. market, partly offset by higher sales outside of
the U.S. which were helped by recent capacity additions.
<page> -19-
Earnings from other operations, including coal, minerals and power, totaled
$128 million, compared with $127 million in the second quarter of 2000. Higher
volumes from continuing operations and higher coal realizations were offset by
lower copper prices.
Corporate and financing expenses of $7 million compared with $102 million last
year, reflecting lower net interest costs due to lower debt levels and higher
cash balances, and favorable foreign exchange effects.
During the period, the company's operating segments continued to benefit from
reductions in the tax rates of several countries and favorable resolution of
tax-related issues.
Second quarter net income included $95 million of after tax merger expenses and
special gains of $175 million from asset management activities in chemicals.
During the second quarter of 2001, Exxon Mobil Corporation purchased
34.8 million shares of its common stock for the treasury at a gross cost of
$1,516 million. These purchases were to offset shares issued in conjunction
with company benefit plans and programs and to reduce the number of shares
outstanding. Shares outstanding were reduced from 6,900 million at the end of
the first quarter of 2001 to 6,871 million at the end of the second quarter.
Purchases may be made in both the open market and through negotiated
transactions, and may be discontinued at any time. The number of common shares
reflect the two-for-one stock split which had a record date of June 20, 2001.
FIRST SIX MONTHS 2001 COMPARED WITH FIRST SIX MONTHS 2000
Excluding merger effects and special items, record first half 2001 earnings of
$9,430 million ($1.36 per share) increased $1,930 million, or 26 percent from
the first half of last year. Including merger effects and special items, first
half net income of $9,460 million ($1.36 per share) increased $1,450 million.
Included in this year's first half net income was a net favorable $30 million
in merger effects and special items, while last year's first half included net
favorable merger effects of $510 million.
Upstream earnings increased primarily due to higher natural gas realizations,
particularly in the U.S., which reached historical highs at the beginning of
2001 but have eased over the first six months, ending the period below prior
year levels. The impact of higher average gas realizations was slightly offset
by lower crude oil realizations and higher exploration expenses in future
growth areas. Liquids production of 2,574 kbd increased 16 kbd over the first
half of 2000, reflecting higher production in West Africa, Kazakhstan and
Canada, partly offset by natural field declines in mature areas and the
decision early in the year to reduce gas plant processing to maximize natural
gas sales. Absent the effect of suspending operations in the Aceh province of
Indonesia due to security concerns, worldwide gas production was up about
3 percent, with increases in Europe, Australia, Canada and Qatar. Including the
impact of lower Indonesia volumes, first half 2001 worldwide natural gas
production of 10,612 mcfd compared with 10,696 mcfd in 2000.
Earnings from U.S. upstream operations for the first half of 2001 were
$2,739 million, an increase of $773 million. Earnings outside the U.S. were
$3,889 million, $336 million higher than last year.
<page> -20-
Downstream earnings improved by 66 percent versus the first half of 2000,
reflecting higher refining margins in the U.S., higher marketing margins,
particularly outside the U.S., and improved refinery operations. Petroleum
product sales of 7,959 kbd compared with 7,916 kbd in the first half of 2000.
Excluding the effect of the required divestments, volumes were up 2 percent.
U.S. downstream earnings were $1,253 million, up $477 million. Earnings outside
the U.S. of $1,013 million were $422 million higher than last year.
First half chemicals earnings were $517 million, including $175 million of net
gains on asset management activities. Absent this special item, chemicals
earnings were $342 million, $340 million lower than last year. Most of the
reduction occurred in the U.S. as higher feedstock and energy costs put
significant pressure on commodity margins. Prime product sales volumes of
12,951 kt were slightly below last year's level. Lower sales in the U.S.,
reflecting reduced industry demand, were largely offset by higher sales outside
the U.S.
Earnings from other operations totaled $269 million, an increase of $23 million
reflecting higher volumes from continuing operations and higher coal
realizations, partly offset by lower copper prices. Corporate and financing
expenses decreased $239 million to $75 million, reflecting lower net interest
costs due to lower debt levels and higher cash balances, along with favorable
foreign exchange and tax effects.
MERGER OF EXXON CORPORATION AND MOBIL CORPORATION
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation merged
with Mobil Corporation so that Mobil became a wholly-owned subsidiary of Exxon
(the "Merger"). At the same time, Exxon changed its name to Exxon Mobil
Corporation. The Merger was accounted for as a pooling of interests.
In the second quarter of 2001, in association with the Merger, $167 million of
before tax costs ($95 million after tax) were recorded as merger related
expenses. In the second quarter of 2000, merger related expenses were
$202 million before tax ($150 million after tax). For the six months ended
June 30, 2001 merger related expenses totaled $288 million before tax
($185 million after tax). For the six months ended June 30, 2000, merger
related expenses totaled $732 million ($475 million after tax).
The severance reserve balance at the end of the second quarter of 2001 is
expected to be expended in 2001 and 2002. The following table summarizes the
activity in the severance reserve for the six months ended June 30, 2001:
Opening Balance at
Balance Additions Deductions Period End
_______ _________ __________ __________
(millions of dollars)
317 67 170 214
Merger related expenses are expected to grow to approximately $2.5 billion
before tax on a cumulative basis by 2002. Merger synergy initiatives, including
cost savings, efficiency gains, and revenue enhancements, are on track.
<page> -21-
Certain property -- primarily refining, marketing, pipeline and natural gas
distribution assets -- were divested as a condition of the regulatory approval
of the Merger by the U.S. Federal Trade Commission and the European Commission.
For the six months ended June 30, 2001, the net after tax gain from required
asset divestitures, all in the first quarter, totaled $40 million (including an
income tax credit of $15 million), or $0.01 per common share. Second quarter
2000 included a net after tax gain of $530 million (net of $75 million of
income taxes), or $0.08 per common share, from required asset divestments. For
the six months ended June 30, 2000, the net after tax gain from required asset
divestitures totaled $985 million (net of $624 million of income taxes), or
$0.14 per common share. These merger related net gains from required asset
divestitures have been reported as extraordinary items in accordance with
accounting requirements for business combinations accounted for as a pooling of
interests.
LIQUIDITY AND CAPITAL RESOURCES
Net cash generation before financing activities was $10,930 million in the
first six months of 2001 versus $11,561 million in the same period last year.
Operating activities provided net cash of $14,244 million, an increase of
$2,790 million from the prior year, influenced by higher net income. Investing
activities used net cash of $3,314 million, compared to cash provided of
$107 million in the prior year, reflecting higher additions to property, plant,
and equipment and the absence of proceeds from the asset divestments that were
required as a condition of regulatory approval of the merger.
Net cash used in financing activities was $8,566 million in the first half of
2001 versus $7,386 million in the same period last year. The increase was
driven by purchases of shares of ExxonMobil common stock, partially offset by
lower debt reductions in the current year period versus last year.
During the first half of 2001, Exxon Mobil Corporation purchased 69.7 million
shares of its common stock for the treasury at a gross cost of $2,958 million.
These purchases were to offset shares issued in conjunction with company
benefit plans and programs and to reduce the number of shares outstanding.
Purchases may be made in both the open market and through negotiated
transactions, and may be discontinued at any time.
Revenue for the first half of 2001 totaled $113,484 million compared to
$110,037 million in the first half of 2000.
Capital and exploration expenditures were $5,350 million in the first half 2001
compared to $4,648 million in last year's first half. Given the breadth of
ExxonMobil's portfolio of attractive growth opportunities, capital and
exploration investments are expected to increase by 15 to 20 percent in 2001
versus 2000 and another 10 percent in 2002.
Total debt of $11.2 billion at June 30, 2001 decreased $2.3 billion from
year-end 2000. The corporation's debt to total capital ratio was 12.8 percent
at the end of the first half of 2001, compared to 15.4 percent at year-end
2000.
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.
<page> -22-
Litigation and other contingencies are discussed in note 7 to the unaudited
condensed consolidated financial statements. 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.
The corporation, as part of its ongoing asset management program, continues to
evaluate its mix of assets for potential upgrade. Because of the ongoing nature
of this program, dispositions will continue to be made from time to time,
within the constraints of pooling of interests accounting, which will result in
either gains or losses.
FORWARD-LOOKING STATEMENTS
Statements in this discussion regarding expectations, plans and future events
or conditions are forward-looking statements. Actual future results, including
merger related expenses; synergy benefits from the merger (including cost
savings, efficiency gains, and revenue enhancements); financing sources; the
resolution of contingencies; the effect of changes in prices, interest rates
and other market conditions; and environmental and capital expenditures could
differ materially depending on a number of factors. These factors include
management's ability to implement merger plans successfully and on schedule;
the outcome of commercial negotiations; changes in the supply of and demand for
crude oil, natural gas and petroleum and petrochemical products; and other
factors discussed above and discussed under the caption "Factors Affecting
Future Results" in Item 1 of ExxonMobil's 2000 Form 10-K.
<page> -23-
EXXON MOBIL CORPORATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the six months ended June 30, 2001
does not differ materially from that discussed under Item 7A of the
registrant's Annual Report on Form 10-K for 2000.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On May 21, 2001, the Puerto Rican Environmental Quality Board
("EQB")in Case No. OA-99-TE-102 issued an order alleging that Esso
Standard Oil Company has failed to perform its obligations for
investigation and remediation of alleged hydrocarbon contamination
associated with underground storage tanks at the La Vega Esso Station,
Barranquitas, Puerto Rico, in violation of the Puerto Rico
Environmental Public Policy Act, Act No. 9 of June 18, 1970, as
amended, 12 L.P.R.A. Sections 1121 et seq., and Underground Storage
Tank Control Regulation and Water Quality Standards Regulation
promulgated pursuant thereto. The EQB seeks a penalty of $75,960,000.
On July 10, 2001, Mobil Oil Corporation was served by the State of New
York in a case captioned State of New York v. Mobil Oil Corporation,
__________________________________________
et al. The case is pending in the New York State Supreme Court, 3rd
_____
District, Albany County, New York, Cause No. L-00054-01. The State
alleges violations of Article 12 of the New York Navigation Law in
connection with an underground storage tank clean-up in the City of
Liberty, New York. In addition to seeking approximately $1.1 million
in compensatory damages, the State is seeking statutory penalties of
up to $25,000 for each offense for each day of violation.
Refer to the relevant portions of Note 7 on pages 8 and 9 of this
Quarterly Report on Form 10-Q for further information on legal
proceedings.
<page> -24-
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders on May 30, 2001, the following
proposals were voted upon. Votes are presented on a pre-split basis
since the voting was before the June 20, 2001 effective date of the
two-for-one stock split. Percentages are based on the total of the
shares voted for and against.
Concerning Election of Directors
Votes Votes
Nominees for Directors Cast For Withheld
______________________ ________ ________
Michael J. Boskin 2,809,088,501 28,452,094
Rene Dahan 2,810,220,563 27,320,032
William T. Esrey 2,809,687,874 27,852,721
Donald V. Fites 2,807,295,334 30,245,261
Charles A. Heimbold, Jr. 2,808,130,956 29,409,639
James R. Houghton 2,809,407,888 28,132,707
William R. Howell 2,808,140,103 29,400,492
Helene L. Kaplan 2,751,863,231 85,677,364
Reatha Clark King 2,809,122,376 28,418,219
Philip E. Lippincott 2,809,170,486 28,370,109
Harry J. Longwell 2,809,550,007 27,990,588
Marilyn Carlson Nelson 2,809,489,818 28,050,777
Lee R. Raymond 2,808,419,961 29,120,634
Eugene A. Renna 2,809,526,746 28,013,849
Walter V. Shipley 2,808,975,981 28,564,614
Concerning Ratification of Independent Auditors
Votes Cast For: 2,761,310,680 98.0%
Votes Cast Against: 57,087,321 2.0%
Abstentions: 19,142,592
Broker Non-Votes: 2
Concerning Government Service
Votes Cast For: 101,107,058 4.4%
Votes Cast Against: 2,182,609,772 95.6%
Abstentions: 63,359,197
Broker Non-Votes: 490,464,568
Concerning Two Director Nominees
Votes Cast For: 96,562,700 4.2%
Votes Cast Against: 2,195,209,686 95.8%
Abstentions: 55,303,641
Broker Non-Votes: 490,464,568
<page> -25-
Concerning Policy on Board Diversity
Votes Cast For: 214,825,773 9.6%
Votes Cast Against: 2,019,283,526 90.4%
Abstentions: 112,966,728
Broker Non-Votes: 490,464,568
Concerning Amendment of EEO Policy
Votes Cast For: 290,271,760 13.0%
Votes Cast Against: 1,950,194,247 87.0%
Abstentions: 106,610,020
Broker Non-Votes: 490,464,568
Concerning Executive Pay and Downsizing
Votes Cast For: 213,366,313 9.3%
Votes Cast Against: 2,069,583,496 90.7%
Abstentions: 64,126,218
Broker Non-Votes: 490,464,568
Concerning Executive Compensation Factors
Votes Cast For: 215,915,010 9.5%
Votes Cast Against: 2,050,034,422 90.5%
Abstentions: 81,126,595
Broker Non-Votes: 490,464,568
Concerning Additional Report on ANWR Drilling
Votes Cast For: 215,394,152 9.6%
Votes Cast Against: 2,035,008,315 90.4%
Abstentions: 96,673,560
Broker Non-Votes: 490,464,568
Concerning Renewable Energy Sources
Votes Cast For: 199,035,075 8.9%
Votes Cast Against: 2,037,646,752 91.1%
Abstentions: 110,394,200
Broker Non-Votes: 490,464,568
See also pages 3 through 9 and pages 26 through 42 of the registrant's
definitive proxy statement dated April 18, 2001.
<page> -26-
Item 5. Other Information
This selected financial data from Item 6 of the registrant's Annual Report on
Form 10-K for 2000 has been restated to reflect the two-for-one stock split
effective June 20, 2001. Restated data elements are marked with an asterisk (*).
Years Ended December 31,
________________________________________________
2000 1999 1998 1997 1996
____ ____ ____ ____ ____
<s> <c> <c> <c> <c> <c>
(millions of dollars, except per share amounts)
Sales and other operating
revenue, including excise
taxes $228,439 $182,529 $165,627 $197,732 $210,038
Net income
Before extraordinary item
and cumulative effect of
accounting change $ 15,990 $ 7,910 $ 8,144 $ 11,732 $ 10,474
Extraordinary gain from
required asset
divestitures, net of
income tax $ 1,730 $ - $ - $ - $ -
Cumulative effect of
accounting change $ - $ - $ (70) $ - $ -
________ ________ ________ ________ ________
Net income $ 17,720 $ 7,910 $ 8,074 $ 11,732 $ 10,474
Net income - per common share*
Before extraordinary item
and cumulative effect of
accounting change $ 2.30 $ 1.14 $ 1.16 $ 1.66 $ 1.48
Extraordinary gain, net
of income tax $ 0.25 $ - $ - $ - $ -
Cumulative effect of
accounting change $ - $ - $ (0.01) $ - $ -
________ ________ ________ ________ ________
Net income $ 2.55 $ 1.14 $ 1.15 $ 1.66 $ 1.48
Net income per common share
- assuming dilution*
Before extraordinary item
and cumulative effect of
accounting change $ 2.27 $ 1.12 $ 1.15 $ 1.64 $ 1.46
Extraordinary gain, net
of income tax $ 0.25 $ - $ - $ - $ -
Cumulative effect of
accounting change $ - $ - $ (0.01) $ - $ -
________ ________ ________ ________ ________
Net income $ 2.52 $ 1.12 $ 1.14 $ 1.64 $ 1.46
Cash dividends per common
share* $ 0.88 $ 0.84 $ 0.83 $ 0.81 $ 0.77
Total assets $149,000 $144,521 $139,335 $143,751 $146,939
Long-term debt $ 7,280 $ 8,402 $ 8,532 $ 10,868 $ 11,986
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 3(i) - Restated Certificate of Incorporation, as restated
November 30, 1999, and as further amended effective
June 20, 2001.
b) Reports on Form 8-K
On April 2, 2001 the registrant filed a regulation FD disclosure in a
Current Report on Form 8-K listing informational reports provided by
the company and announcing a presentation to the investment community
and media and the ExxonMobil annual meeting of shareholders.
<page> -27-
EXXON MOBIL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXXON MOBIL CORPORATION
Date: August 13, 2001 /s/ DONALD D. HUMPHREYS
_______________________________________________
Donald D. Humphreys, Vice President, Controller
and Principal Accounting Officer
<page> -28-
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
INDEX TO EXHIBITS
3(i). Restated Certificate of Incorporation, as restated November 30, 1999,
and as further amended effective June 20, 2001.
<page> -29-