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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 March 31, 2005


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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  X  No    


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.



                      Class                                                                     Outstanding as of March 31, 2005

Common stock, without par value                                                              6,365,734,547                




EXXON MOBIL CORPORATION


FORM 10-Q


FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005


TABLE OF CONTENTS


Page

Number


PART I.  FINANCIAL INFORMATION


Item 1.

Financial Statements


Condensed Consolidated Statement of Income

3

Three months ended March 31, 2005 and 2004


Condensed Consolidated Balance Sheet

4

As of March 31, 2005 and December 31, 2004


Condensed Consolidated Statement of Cash Flows

5

Three months ended March 31, 2005 and 2004


Notes to Condensed Consolidated Financial Statements

6-16


Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

17-21


Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22


Item 4.

Controls and Procedures

22


PART II.  OTHER INFORMATION


Item 1.

Legal Proceedings

22-23


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23


Item 6.

Exhibits

24


Signature

25

 

Index to Exhibits

26


-2-



PART I.  FINANCIAL INFORMATION



Item 1.  Financial Statements


EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(millions of dollars)


   

Three Months Ended

 
   

March 31,

 

  

       

2005

  

2004

 

REVENUES AND OTHER INCOME

            

Sales and other operating revenue (1) (2)

      

$

79,475

 

$

66,060

 

Income from equity affiliates

       

1,556

  

1,256

 

Other income

       

1,020

  

286

 

       Total revenues and other income

       

82,051

  

67,602

 

 

            

COSTS AND OTHER DEDUCTIONS

            

Crude oil and product purchases (2)

       

39,289

  

30,545

 

Production and manufacturing expenses

       

6,108

  

5,523

 

Selling, general and administrative expenses

       

3,451

  

3,242

 

Depreciation and depletion

       

2,553

  

2,373

 

Exploration expenses, including dry holes

       

173

  

175

 

Interest expense

       

56

  

48

 

Excise taxes (1)

       

7,238

  

6,416

 

Other taxes and duties

       

10,185

  

10,164

 

Income applicable to minority and preferred interests

       

95

  

154

 

       Total costs and other deductions

       

69,148

  

58,640

 

 

            

INCOME BEFORE INCOME TAXES

       

12,903

  

8,962

 

       Income taxes

       

5,043

  

3,522

 

NET INCOME

      

$

7,860

 

$

5,440

 
             

 

            

NET INCOME PER COMMON SHARE (dollars)

      

$

1.23

 

$

0.83

 

 

            

NET INCOME PER COMMON SHARE

            

 - ASSUMING DILUTION (dollars)

      

$

1.22

 

$

0.83

 

 

            
             

DIVIDENDS PER COMMON SHARE (dollars)

      

$

0.27

 

$

0.25

 

 

            
             

(1) Excise taxes included in sales and other

            

         operating revenue

      

$

7,238

 

$

6,416

 
             

(2) Amounts included in sales and other operating revenue for

            

         purchases/sales contracts with the same counterparty

            

         (associated costs are included in crude oil and product

            

         purchases).  See note 2 on page 6.

      

$

7,160

 

$

6,064

 



-3-



EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(millions of dollars)



 

March 31,

 

Dec. 31,

 
 

2005

 

2004

 

ASSETS

        

Current assets

        

   Cash and cash equivalents

 

$

25,165

  

$

18,531

 

   Cash and cash equivalents - restricted (note 3)

  

4,604

   

4,604

 

   Notes and accounts receivable - net

  

25,489

   

25,359

 

   Inventories

        

     Crude oil, products and merchandise

  

9,124

   

8,136

 

     Materials and supplies

  

1,338

   

1,351

 

   Prepaid taxes and expenses

  

2,870

   

2,396

 

     Total current assets

  

68,590

   

60,377

 

Property, plant and equipment - net

  

107,415

   

108,639

 

Investments and other assets

  

25,247

   

26,240

 
         

     TOTAL ASSETS

 

$

201,252

  

$

195,256

 
         

LIABILITIES

        

Current liabilities

        

   Notes and loans payable

 

$

3,309

  

$

3,280

 

   Accounts payable and accrued liabilities

  

35,489

   

31,763

 

   Income taxes payable

  

8,959

   

7,938

 

     Total current liabilities

  

47,757

   

42,981

 

Long-term debt

  

5,015

   

5,013

 

Deferred income tax liability

  

20,731

   

21,092

 

Other long-term liabilities

  

24,051

   

24,414

 
         

     TOTAL LIABILITIES

  

97,554

   

93,500

 
         

Commitments and contingencies (note 3)

        
         

SHAREHOLDERS' EQUITY

        

Benefit plan related balances

  

(942

)

  

(1,014

)

Common stock, without par value:

        

   Authorized:  

9,000 million shares

        

   Issued:      

8,019 million shares

  

5,070

   

5,067

 

Earnings reinvested

  

140,522

   

134,390

 

Accumulated other nonowner changes in equity

        

   Cumulative foreign exchange translation adjustment

  

2,699

   

3,598

 

   Minimum pension liability adjustment

  

(2,499

)

  

(2,499

)

   Unrealized gains on stock investments

  

0

   

428

 

Common stock held in treasury:

        

       1,654 million shares at March 31, 2005

  

(41,152

)

    

       1,618 million shares at December 31, 2004

      

(38,214

)

         

     TOTAL SHAREHOLDERS' EQUITY

  

103,698

   

101,756

 
         

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

201,252

  

$

195,256

 



The number of shares of common stock issued and outstanding at March 31, 2005 and

December 31, 2004 were 6,365,734,547 and 6,401,244,728, respectively.


-4-




EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(millions of dollars)



 

Three Months Ended

 
 

March 31,

 
   

2005

   

2004

 

CASH FLOWS FROM OPERATING ACTIVITIES

        

   Net income

 

$

7,860

  

$

5,440

 

   Depreciation and depletion

  

2,553

   

2,373

 

   Changes in operational working capital, excluding cash and debt

  

3,549

   

2,373

 

   All other items - net

  

(994

)

  

(48

)

         

    Net cash provided by operating activities

  

12,968

   

10,138

 
         

CASH FLOWS FROM INVESTING ACTIVITIES

        

   Additions to property, plant and equipment

  

(2,713

)

  

(2,810

)

   Sales of subsidiaries, investments, and property, plant and equipment

  

1,797

   

454

 

   Other investing activities - net

  

(170

)

  

775

 
         

    Net cash used in investing activities

  

(1,086

)

  

(1,581

)

         

CASH FLOWS FROM FINANCING ACTIVITIES

        

   Additions to long-term debt

  

0

   

367

 

   Reductions in long-term debt

  

(6

)

  

(7

)

   Additions/(reductions) in short-term debt - net

  

15

   

(40

)

   Cash dividends to ExxonMobil shareholders

  

(1,728

)

  

(1,642

)

   Cash dividends to minority interests

  

(94

)

  

(72

)

   Changes in minority interests and sales/(purchases)

        

      of affiliate stock

  

(103

)

  

(31

)

   Net ExxonMobil shares acquired

  

(3,087

)

  

(1,745

)

         

    Net cash used in financing activities

  

(5,003

)

  

(3,170

)

         

Effects of exchange rate changes on cash

  

(245

)

  

(119

)

         

Increase/(decrease) in cash and cash equivalents

  

6,634

   

5,268

 

Cash and cash equivalents at beginning of period

  

18,531

   

10,626

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

25,165

  

$

15,894

 
         

SUPPLEMENTAL DISCLOSURES

        

   Income taxes paid

 

$

3,820

  

$

1,502

 

   Cash interest paid

 

$

66

  

$

73

 


-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 2004 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 for Purchases and Sales of Inventory with the Same Counterparty


At its November 2004 meeting, the Emerging Issues Task Force (EITF) began discussion of Issue No. 04-13, "Accounting for Purchases and Sales of Inventory with the Same Counterparty".  This issue addresses the question of when it is appropriate to measure purchases and sales of inventory at fair value and record them in cost of sales and revenues and when they should be recorded as exchanges measured at the book value of the item sold.  The EITF did not reach consensus on this issue, but requested the FASB staff to further explore the alternative views.  The issue is expected to be addressed at a future EITF meeting.


ExxonMobil records certain crude oil, natural gas, petroleum product and chemical purchases and sales of inventory entered into contemporaneously with the same counterparty as cost of sales and revenues, measured at fair value as agreed upon by a willing buyer and a willing seller.  These transactions occur under contractual arrangements that establish the agreement terms either jointly, in a single contract, or separately, in individual contracts.  This accounting treatment is consistent with long-term, predominant industry practice based on the Corporation's knowledge of the industry (although the Corporation understands that some companies in the oil and gas industry may be accounting for these transactions differently as nonmonetary exchanges).  Should the EITF reach a consensus on the issue requiring these transactions to be recorded as exchanges measured at book value, the Corporation's accounts "Sales and other operating revenue" and "Crude oil and product purchases" on the Consolidated Statement of Income would be lower by associated amounts with no impact on net income.  All operating segments would be impacted by this change, but the largest effects are in the Downstream.  


In its 2004 Form 10-K, the Corporation disclosed that it would provide estimates of these amounts in the second quarter of 2005 at the completion of a special effort to accumulate the information.  This special effort was needed because heretofore it has never been necessary to identify these monetary transactions separately from other monetary purchases and monetary sales.  This effort has been completed and the purchase/sale amounts included in revenue for 2004, 2003 and 2002 are shown below along with total "Sales and other operating revenue" to provide context.


   

2004

 

2003

 

2002

 
   

(millions of dollars)

 


 

Sales and other operating revenue

$

291,252

$

237,054

$

200,949

 
 

Amounts included in sales and other operating

       
 

   revenue for purchases/sales contracts

       
 

   with the same counterparty (1)

 

25,289

 

20,936

 

18,150

 
 

Percent of sales and other operating revenue

 

9%

 

9%

 

9%

 


(1) Associated costs are in "Crude oil and product purchases"


The Corporation's net income would not be impacted if the EITF reached a consensus on use of an alternative accounting approach and the Corporation was required to reduce "Sales and other operating revenues" and "Crude oil and product purchases" by the above amounts.


-6-



3.

Litigation and Other Contingencies


Litigation


A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits and tax disputes. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a materially adverse effect upon the Corporation’s operations or financial condition.


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. The vast majority of the compensatory claims have been resolved. All of the punitive damage claims were consolidated in the civil trial that began in May 1994.


In that trial, on September 24, 1996, the United States District Court for the District of Alaska entered a judgment in the amount of $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. ExxonMobil appealed the judgment. On November 7, 2001, the United States Court of Appeals for the Ninth Circuit vacated the punitive damage award as being excessive under the Constitution and remanded the case to the District Court for it to determine the amount of the punitive damage award consistent with the Ninth Circuit’s holding. The Ninth Circuit upheld the compensatory damage award, which has been paid. On December 6, 2002, the District Court reduced the punitive damage award from $5 billion to $4 billion. Both the plaintiffs and ExxonMobil appealed that decision to the Ninth Circuit. The Nin th Circuit panel vacated the District Court’s $4 billion punitive damage award without argument and sent the case back for the District Court to reconsider in light of the recent U.S. Supreme Court decision in Campbell v. State Farm. On January 28, 2004, the District Court reinstated the punitive damage award at $4.5 billion plus interest. ExxonMobil and the plaintiffs have appealed the decision to the Ninth Circuit. The Corporation has posted a $5.4 billion letter of credit.


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. Management believes that the likelihood of the judgment being upheld is remote. While it is reasonably possible that a liability may have been incurred arising from the Exxon Valdez grounding, it is not possible to predict the ultimate outcome or to reasonably estimate any such potential liability.


-7-


On December 19, 2000, a jury in the 15th Judicial Circuit Court of Montgomery County, Alabama, returned a verdict against the Corporation in a dispute over royalties in the amount of $88 million in compensatory damages and $3.4 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. On December 20, 2002, the Alabama Supreme Court vacated the $3.5 billion jury verdict. The case was retried and on November 14, 2003, a state district court jury in Montgomery, Alabama, returned a verdict against Exxon Mobil Corporation. The verdict included $63.5 million in compensatory damages and $11.8 billion in punitive damages. On March 29, 2004, the district court judge reduced the amount of punitive damages to $3.5 billion. ExxonMobil believes the judgment is not justified by the evidence, that any punitive damage award is not justified by either the facts or the law, and that the amount of the award is grossly excessive and unconstitutional. ExxonMobil has appealed the decision. Management believes that the likelihood of the judgment being upheld is remote. While it is reasonably possible that a liability may have been incurred by ExxonMobil from this dispute over royalties, it is not possible to predict the ultimate outcome or to reasonably estimate any such potential liability. On May 4, 2004, the Corporation posted a $4.5 billion supersedeas bond as required by Alabama law to stay execution of the judgment pending appeal. The Corporation has pledged to the issuer of the bond collateral consisting of cash and short-term, high-quality securities with an aggregate value of approximately $4.6 billion. This collateral is reported as restricted cash and cash equivalents on the Condensed Consolidated Balance Sheet. Under the terms of the pledge agreement, the Corporation is entitled to receive the income generated from t he cash and securities and to make investment decisions, but is restricted from using the pledged cash and securities for any other purpose until such time the bond is canceled.


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 was upheld at the trial court. ExxonMobil appealed the judgment to the Louisiana Fourth Circuit Court of Appeals, which reduced the punitive damage award to $112 million. The Corporation plans to appeal this decision as it continues to believe that t he judgment should be substantially reduced on legal and constitutional grounds. While it is reasonably possible that a liability may have been incurred by ExxonMobil from this dispute over property damages, it is not possible to predict the ultimate outcome or to reasonably estimate any such potential liability.


In Allapattah v. Exxon, a jury in the United States District Court for the Southern District of Florida determined in January 2001 that a class of all Exxon dealers between March 1983 and August 1994 had been overcharged between 1.03 and 1.4 cents per gallon for gasoline. Exxon sold a total of 39.8 billion gallons of gasoline to its dealers during this period. The estimated value of the potential claims associated with the 39.8 billion gallons of gasoline is $494 million. Including related interest, the total is approximately $1.3 billion. On June 11, 2003, the Eleventh Circuit Court of Appeals affirmed the judgment and on March 15, 2004, denied a petition for Rehearing En Banc. On October 12, 2004, the U.S. Supreme Court granted review of an issue raised by ExxonMobil as to whether the class in the District Court judgment should include members that individually do not satisfy the $50,000 minimum amount-in-controve rsy requirement in federal court. Members of the class had until December 1, 2004 to file claims. Claims representing over 90 percent of the gallons have been filed. In light of the Supreme Court’s decision to grant review of only part of ExxonMobil’s appeal, ExxonMobil took an after-tax charge of $550 million in the third quarter of 2004 reflecting the estimated liability, including interest and after considering potential set-offs and defenses, for the claims in excess of $50,000.


-8-



Exxon Mobil Corporation and Saudi Basic Industries Corporation (SABIC) have been involved in litigation related to charges by SABIC for license agreements to a joint venture between the companies.  On February 22, 2005, the Delaware Supreme Court affirmed a trial court's judgment in the Corporation's favor and denied SABIC's motion for reconsideration. SABIC paid $475 million to the Corporation per the Delaware Supreme Court ruling. The litigation can be appealed by SABIC to the United States Supreme Court.  Final income statement recognition of this payment continues to be deferred in view of the uncertainty related to the outcome of the possible additional appeals available to SABIC.


Tax issues for 1983 to 1993 remain pending before the U.S. 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.


Other Contingencies

 

As of March 31, 2005

 

Equity

 

Other

 
 

Company

 

Third Party

 
 

Obligations

 

Obligations

Total

 

(millions of dollars)

Guarantees of excise taxes and custom duties   

          

    under reciprocal arrangements

 

$

0

 

$

1,076

 

$

1,076

 

Other guarantees

  

2,964

  

327

  

3,291

 

Total

 

$

2,964

 

$

1,403

 

$

4,367

 


The Corporation and certain of its consolidated subsidiaries were contingently liable at March 31, 2005 for $4,367 million, primarily relating to guarantees for notes, loans and performance under contracts. This included $1,076 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. Also included in this amount were guarantees by consolidated affiliates of $2,964 million, representing ExxonMobil’s share of obligations of certain equity companies.


Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. The Corporation's outstanding unconditional purchase obligations at March 31, 2005 were similar to those at the prior year-end period. Unconditional purchase obligations as defined by accounting standards are those long-term commitments that are noncancelable or cancelable only under certain conditions, and that third parties have used to secure financing for the facilities that will provide the contracted goods or services.


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.


-9-



4.

Nonowner Changes in Shareholders' Equity


   

Three Months Ended

 
   

March 31,

 
     

2005

 

2004

 
  

(millions of dollars)

 

Net income

      

$

7,860

 

$

5,440

 

Changes in other nonowner changes in equity

            

Foreign exchange translation adjustment


       

(899

)

 

(252

)

Minimum pension liability adjustment

       

0

  

0

 

Unrealized gains/(losses) on stock investments

       

0

  

(130

)

Reclassification adjustment for gain on sale of

            

    stock investment included in net income

       

(428

)

 

0

 

Total nonowner changes in shareholders' equity

      

$

6,533

 

$

5,058

 



5.

Earnings Per Share


   

Three Months Ended

 
   

March 31,

 
        

2005

  

2004

 
             

NET INCOME PER COMMON SHARE

            

Net Income (millions of dollars)

      

$

7,860

 

$

5,440

 

 

            

Weighted average number of common shares

            

  outstanding (millions of shares)

       

6,365

  

6,544

 
             

Net income per common share (dollars)

      

$

1.23

 

$

0.83

 
             

NET INCOME PER COMMON SHARE

            

 - ASSUMING DILUTION

            

Net Income (millions of dollars)

      

$

7,860

 

$

5,440

 
             

Weighted average number of common shares

            

  outstanding (millions of shares)

       

6,365

  

6,544

 

    Effect of employee stock-based awards

       

56

  

38

 

Weighted average number of common shares

            

  outstanding - assuming dilution

       

6,421

  

6,582

 
             

Net income per common share

            

   - assuming dilution (dollars)

      

$

1.22

 

$

0.83

 


-10-


6.

Annuity Benefits and Other Postretirement Benefits


   

Three Months Ended

 
   

March 31,

 
     

2005

 

2004

 
 

                          

(millions of dollars)

 


Annuity Benefits - U.S.

            

   Components of net benefit cost

            

      Service cost

      

$

82

 

$

76

 

      Interest cost

       

151

  

151

 

      Expected return on plan assets

       

(155

)

 

(152

)

      Amortization of actuarial loss/(gain)

            

        and prior service cost

       

68

  

71

 

      Net pension enhancement and

            

        curtailment/settlement expense

       

30

  

44

 

      Net benefit cost

      

$

176

 

$

190

 
             
             

Annuity Benefits - Non-U.S.

            

   Components of net benefit cost

            

      Service cost

      

$

93

 

$

86

 

      Interest cost

       

213

  

199

 

      Expected return on plan assets

       

(202

)

 

(169

)

      Amortization of actuarial loss/(gain)

            

        and prior service cost

       

106

  

93

 

      Net pension enhancement and

            

        curtailment/settlement expense

       

0

  

4

 

      Net benefit cost

      

$

210

 

$

213

 
             
             

Other Postretirement Benefits

            

   Components of net benefit cost

            

      Service cost

      

$

16

 

$

9

 

      Interest cost

       

74

  

57

 

      Expected return on plan assets

       

(9

)

 

(7

)

      Amortization of actuarial loss/(gain)

            

        and prior service cost

       

49

  

24

 

      Net benefit cost

      

$

130

 

$

83

 


The Company does not expect to make a contribution to its U.S. pension plans in 2005.  Contributions to the non-U.S. plans are expected to be $1.3 billion in 2005.



-11-



7.

Disclosures about Segments and Related Information


   

Three Months Ended

 
   

March 31,

 
     

2005

 

2004

 
  

(millions of dollars)

 

EARNINGS AFTER INCOME TAX

            

  Upstream

            

    United States

      

$

1,353

 

$

1,154

 

    Non-U.S.

       

3,701

  

2,859

 

  Downstream

            

    United States

       

645

  

392

 

    Non-U.S.

       

808

  

612

 

  Chemical

            

    United States

       

492

  

118

 

    Non-U.S.

       

940

  

446

 

  All other

       

(79

)

 

(141

)

  Corporate total

      

$

7,860

 

$

5,440

 
             

SALES AND OTHER OPERATING REVENUE (1) (2)

          

  Upstream

            

     United States

      

$

1,536

 

$

1,486

 

     Non-U.S.

       

4,972

  

4,695

 

  Downstream

            

     United States

       

19,313

  

15,832

 

     Non-U.S.

       

45,489

  

38,185

 

  Chemical

            

     United States

       

3,155

  

2,237

 

     Non-U.S.

       

5,006

  

3,616

 

  All other

       

4

  

9

 

  Corporate total

      

$

79,475

 

$

66,060

 
             

(1) Includes excise taxes

            

(2) Includes amounts in sales and other operating

            

        revenue for purchases/sales contracts with

            

        the same counterparty

            
             

INTERSEGMENT REVENUE

            

  Upstream

            

     United States

      

$

1,807

 

$

1,500

 

     Non-U.S.

       

6,340

  

4,482

 

  Downstream

            

     United States

       

2,080

  

1,598

 

     Non-U.S.

       

8,727

  

6,578

 

  Chemical

            

     United States

       

1,405

  

1,016

 

     Non-U.S.

       

1,289

  

964

 

  All other

       

72

  

88

 



-12-


8.

Condensed Consolidating Financial Information Related to Guaranteed Securities Issued by Subsidiaries


Exxon Mobil Corporation has fully and unconditionally guaranteed the 6.125% notes due 2008 ($160 million of long-term debt at March 31, 2005) of Exxon Capital Corporation and the deferred interest debentures due 2012 ($1,285 million long-term) and the debt securities due 2006-2011 ($75 million long-term and $10 million short-term) 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.



 

Exxon Mobil Corporation Parent  Guarantor

 



Exxon Capital Corporation

 

SeaRiver Maritime Financial Holdings, Inc.

 




All Other Subsidiaries

 


Consolidating and Eliminating Adjustments

 





Consolidated

 
 

(millions of dollars)

 
                   

Condensed consolidated statement of income for three months ended March 31, 2005

      

Revenues and other income

                  

Sales and other operating revenue,

including excise taxes


$


3,980

 


$


-

 


$


-

 


$


75,495

 


$


-

 


$


79,475

 

Income from equity affiliates

 

7,050

  

-

  

3

  

1,556

  

(7,053

)

 

1,556

 

Other income

 

130

  

-

  

-

  

890

  

-

  

1,020

 

Intercompany revenue

 

6,857

  

11

  

10

  

59,340

  

(66,218

)

 

-

 

Total revenues and other income

 

18,017

  

11

  

13

  

137,281

  

(73,271

)

 

82,051

 

Costs and other deductions

                  

Crude oil and product purchases

 

6,578

  

-

  

-

  

95,621

  

(62,910

)

 

39,289

 

Production and manufacturing

expenses

 


1,633

  


-

  


-

  


5,762

  


(1,287


)

 


6,108

 

 

Selling, general and administrative

expenses

 


557

  


-

  


-

  


3,000

  


(106


)

 


3,451

 

Depreciation and depletion

 

331

  

1

  

-

  

2,221

  

-

  

2,553

 

Exploration expenses, including dry

holes

 


28

  


-

  


-

  


145

  


-

  


173

 

Interest expense

 

407

  

4

  

39

  

1,553

  

(1,947

)

 

56

 

Excise taxes

 

-

  

-

  

-

  

7,238

  

-

  

7,238

 

Other taxes and duties

 

5

  

-

  

-

  

10,180

  

-

  

10,185

 

Income applicable to minority and

preferred interests

 


-

  


-

  


-

  


95

  


-

  


95

 

Total costs and other deductions

 

9,539

  

5

  

39

  

125,815

  

(66,250

)

 

69,148

 

Income before income taxes

 

8,478

  

6

  

(26

)

 

11,466

  

(7,021

)

 

12,903

 

Income taxes

 

618

  

2

  

(10

)

 

4,433

  

-

  

5,043

 

Net income

$

7,860

 

$

4

 

$

(16

)

$

7,033

 

$

(7,021

)

$

7,860

 



-13-



 

Exxon Mobil Corporation Parent  Guarantor

 



Exxon Capital Corporation

 

SeaRiver Maritime Financial Holdings,  Inc.

 




All Other Subsidiaries

 


Consolidating and Eliminating Adjustments

 





Consolidated

 
 

(millions of dollars)

 
                   

Condensed consolidated statement of income for three months ended March 31, 2004

       

Revenues and other income

                  

Sales and other operating revenue,

   including excise taxes


$


3,023

 


$


-

 


$


-

 


$


63,037

 


$


-

 


$


66,060

 

Income from equity affiliates

 

5,057

  

-

  

7

  

1,258

  

(5,066

)

 

1,256

 

Other income

 

63

  

-

  

-

  

223

  

-

  

286

 

Intercompany revenue

 

4,995

  

7

  

4

  

42,539

  

(47,545

)

 

-

 

Total revenues and other income

 

13,138

  

7

  

11

  

107,057

  

(52,611

)

 

67,602

 

Costs and other deductions

                  

Crude oil and product purchases

 

4,861

  

-

  

-

  

70,633

  

(44,949

)

 

30,545

 

Production and manufacturing

expenses

 


1,591

  


-

  


-

  


5,102

  


(1,170


)

 


5,523

 

 

Selling, general and administrative

expenses

 


472

  


-

  


-

  


2,822

  


(52


)

 


3,242

 

Depreciation and depletion

 

353

  

1

  

-

  

2,019

  

-

  

2,373

 

Exploration expenses, including dry

holes

 


46

  


-

  


-

  


129

  


-

 



175

 

Interest expense

 

161

  

5

  

34

  

1,226

  

(1,378

)

 

48

 

Excise taxes

 

-

  

-

  

-

  

6,416

  

-

  

6,416

 

Other taxes and duties

 

3

  

-

  

-

  

10,161

  

-

  

10,164

 

Income applicable to minority and

  preferred interests

 


-

  


-

  


-

  


154

  


-

  


154

 

Total costs and other deductions

 

7,487

  

6

  

34

  

98,662

  

(47,549

)

 

58,640

 

Income before income taxes

 

5,651

  

1

  

(23

)

 

8,395

  

(5,062

)

 

8,962

 

Income taxes

 

211

  

-

  

(10

)

 

3,321

  

-

  

3,522

 

Net income

$

5,440

 

$

1

 

$

(13

)

$

5,074

 

$

(5,062

)

$

5,440

 



-14-



 

Exxon Mobil Corporation Parent  Guarantor

 



Exxon Capital Corporation

 

SeaRiver Maritime Financial Holdings,  Inc.

 




All Other Subsidiaries

 


Consolidating and Eliminating Adjustments

 





Consolidated

 
 

(millions of dollars)

 
                   

Condensed consolidated balance sheet as of March 31, 2005

       

Cash and cash equivalents

$

11,033

 

$

-

 

$

-

 

$

14,132

 

$

-

 

$

25,165

 

Cash and cash equivalents - restricted

 

4,604

  

-

  

-

  

-

  

-

  

4,604

 

Notes and accounts receivable - net

 

3,439

  

-

  

-

  

22,050

  

-

  

25,489

 

Inventories

 

1,346

  

-

  

-

  

9,116

  

-

  

10,462

 

Prepaid taxes and expenses

 

168

  

-

  

7

  

2,695

  

-

  

2,870

 

      Total current assets

 

20,590

  

-

  

7

  

47,993

  

-

  

68,590

 

Property, plant and equipment - net

 

15,525

  

94

  

-

  

91,796

  

-

  

107,415

 

Investments and other assets

 

145,201

  

-

  

508

  

382,855

  

(503,317

)

 

25,247

 

Intercompany receivables

 

8,630

  

1,022

  

1,582

  

336,932

  

(348,166

)

 

-

 

      Total assets

$

189,946

 

$

1,116

 

$

2,097

 

$

859,576

 

$

(851,483

)

$

201,252

 
                   

Notes and loan payables

$

-

 

$

-

 

$

10

 

$

3,299

 

$

-

 

$

3,309

 

Accounts payable and accrued liabilities

 

3,161

  

6

  

-

  

32,322

  

-

  

35,489

 

Income taxes payable

 

1,274

  

3

  

-

  

7,682

  

-

  

8,959

 

      Total current liabilities

 

4,435

  

9

  

10

  

43,303

  

-

  

47,757

 

Long-term debt

 

261

  

160

  

1,360

  

3,234

  

-

  

5,015

 

Deferred income tax liabilities

 

2,954

  

28

  

267

  

17,482

  

-

  

20,731

 

Other long-term liabilities

 

5,589

  

16

  

-

  

18,446

  

-

  

24,051

 

Intercompany payables

 

73,009

  

108

  

382

  

274,667

  

(348,166

)

 

-

 

      Total liabilities

 

86,248

  

321

  

2,019

  

357,132

  

(348,166

)

 

97,554

 
                   

Earnings reinvested

 

140,522

  

10

  

(316

)

 

88,115

  

(87,809

)

 

140,522

 

Other shareholders' equity

 

(36,824

)

 

785

  

394

  

414,329

  

(415,508

)

 

(36,824

)

      Total shareholders' equity

 

103,698

  

795

  

78

  

502,444

  

(503,317

)

 

103,698

 

      Total liabilities and

        shareholders' equity


$


189,946

 


$


1,116

 


$


2,097

 


$


859,576

 


$


(851,483


)


$


201,252

 


Condensed consolidated balance sheet as of December 31, 2004

       

Cash and cash equivalents

$

10,055

 

$

4

 

$

-

 

$

8,472

 

$

-

 

$

18,531

 

Cash and cash equivalents - restricted

 

4,604

  

-

  

-

  

-

  

-

  

4,604

 

Notes and accounts receivable - net

 

3,262

  

-

  

-

  

22,097

  

-

  

25,359

 

Inventories

 

1,117

  

-

  

-

  

8,370

  

-

  

9,487

 

Prepaid taxes and expenses

 

79

  

-

  

-

  

2,317

  

-

  

2,396

 

      Total current assets

 

19,117

  

4

  

-

  

41,256

  

-

  

60,377

 

Property, plant and equipment - net

 

15,601

  

95

  

-

  

92,943

  

-

  

108,639

 

Investments and other assets

 

139,907

  

-

  

506

  

375,689

  

(489,862

)

 

26,240

 

Intercompany receivables

 

9,728

  

1,090

  

1,594

  

322,469

  

(334,881

)

 

-

 

      Total assets

$

184,353

 

$

1,189

 

$

2,100

 

$

832,357

 

$

(824,743

)

$

195,256

 
                   

Notes and loan payables

$

-

 

$

-

 

$

10

 

$

3,270

 

$

-

 

$

3,280

 

Accounts payable and accrued liabilities

 

2,934

  

3

  

-

  

28,826

  

-

  

31,763

 

Income taxes payable

 

1,348

  

-

  

1

  

6,589

  

-

  

7,938

 

      Total current liabilities

 

4,282

  

3

  

11

  

38,685

  

-

  

42,981

 

Long-term debt

 

261

  

160

  

1,324

  

3,268

  

-

  

5,013

 

Deferred income tax liabilities

 

3,152

  

28

  

268

  

17,644

  

-

  

21,092

 

Other long-term liabilities

 

5,461

  

22

  

-

  

18,931

  

-

  

24,414

 

Intercompany payables

 

69,441

  

185

  

403

  

264,852

  

(334,881

)

 

-

 

      Total liabilities

 

82,597

  

398

  

2,006

  

343,380

  

(334,881

)

 

93,500

 
                   

Earnings reinvested

 

134,390

  

6

  

(300

)

 

81,380

  

(81,086

)

 

134,390

 

Other shareholders' equity

 

(32,634

)

 

785

  

394

  

407,597

  

(408,776

)

 

(32,634

)

      Total shareholders' equity

 

101,756

  

791

  

94

  

488,977

  

(489,862

)

 

101,756

 

      Total liabilities and

        shareholders' equity


$


184,353

 


$


1,189

 


$


2,100

 


$


832,357

 


$


(824,743


)


$


195,256

 


-15-



 

Exxon Mobil Corporation Parent Guarantor

 



Exxon Capital Corporation

 

SeaRiver Maritime Financial Holdings, Inc.

 




All Other Subsidiaries

 


Consolidating and Eliminating Adjustments

 





Consolidated

 
 

(millions of dollars)

 
                   

Condensed consolidated statement of cash flows for three months ended March 31, 2005

    

Cash provided by/(used in) operating

activities


$


1,342

 


$


4

 


$


7

 


$


11,913

 


$


(298


)


$


12,968

 

Cash flows from investing activities

                  

Additions to property, plant and

equipment

 


(278


)

 


-

  


-

  


(2,435


)

 


-

  


(2,713


)

Sales of long-term assets

 

24

  

-

  

-

  

1,773

  

-

  

1,797

 

Net intercompany investing

 

4,705

  

68

  

13

  

(4,719

)

 

(67

)

 

-

 

All other investing, net

 

-

  

-

  

-

  

(170

)

 

-

  

(170

)

Net cash provided by/(used in)

investing activities

 


4,451

  


68


 


13

  


(5,551


)

 


(67


)

 


(1,086


)

Cash flows from financing activities

                  

Additions to long-term debt

 

-

  

-

  

-

  

-

  

-

  

-

 

Reductions in long-term debt

 

-

  

-

  

-

  

(6

)

 

-

  

(6

)

Additions/(reductions) in short-term

debt - net

 


-

  


-


 


-

  


15


 


-

  


15

 

Cash dividends

 

(1,728

)

 

-

  

-

  

(298

)

 

298

  

(1,728

)

Net ExxonMobil shares sold/(acquired)

 

(3,087

)

 

-

  

-

  

-

  

-

  

(3,087

)

Net intercompany financing activity

 

-

  

(76

)

 

(20

)

 

29

  

67

  

-

 

All other financing, net

 

-

  

-

  

-

  

(197

)

 

-

  

(197

)

Net cash provided by/(used in)

financing activities

 


(4,815


)

 


(76


)

 


(20


)

 


(457


)

 


365

  


(5,003


)

Effects of exchange rate changes

on cash

 


-

  


-

  


-

  


(245


)

 


-

  


(245


)

Increase/(decrease) in cash and cash

equivalents


$


978



$


(4


)


$


-

 


$


5,660

 


$


-

 


$


6,634

 



Condensed consolidated statement of cash flows for three months ended March 31, 2004

      

Cash provided by/(used in) operating

activities


$


655

 


$


(9


)


$


3



$


9,693

 


$


(204


)


$


10,138

 

Cash flows from investing activities

                  

Additions to property, plant and

equipment

 


(302


)

 


-

  


-

  


(2,508


)

 


-

  


(2,810


)

Sales of long-term assets

 

172

  

-

  

-

  

282

  

-

  

454

 

Net intercompany investing

 

3,215

  

(80

)

 

(3

)

 

(3,251

)

 

119

  

-

 

All other investing, net

 

-

  

-

  

-

  

775

  

-

  

775

 

Net cash provided by/(used in)

investing activities

 


3,085

  


(80


)

 


(3


)

 


(4,702


)

 


119

  


(1,581


)

Cash flows from financing activities

                  

Additions to long-term debt

 

-

  

-

  

-

  

367

  

-

  

367

 

Reductions in long-term debt

 

-

  

-

  

-

  

(7

)

 

-

  

(7

)

Additions/(reductions) in short-term

debt - net

 


-

  


-

  


-

  


(40


)

 


-

  


(40


)

Cash dividends

 

(1,642

)

 

-

  

-

  

(204

)

 

204

  

(1,642

)

Net ExxonMobil shares sold/(acquired)

 

(1,745

)

 

-

  

-

  

-

  

-

  

(1,745

)

Net intercompany financing activity

 

-

  

89

  

-

  

30

  

(119

)

 

-

 

All other financing, net

 

-

  

-

  

-

  

(103

)

 

-

  

(103

)

Net cash provided by/(used in)

financing activities

 


(3,387


)

 


89


 


-

  


43

  


85

  


(3,170


)

Effects of exchange rate changes

on cash

 


-

  


-

  


-

  


(119


)

 


-

  


(119


)

Increase/(decrease) in cash and cash

equivalents


$


353



$


-

 


$


-

 


$


4,915

 


$


-

 


$


5,268

 


-16-



EXXON MOBIL CORPORATION


Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations


FUNCTIONAL EARNINGS SUMMARY

   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

Net Income (U.S. GAAP)

            

Upstream

            

   United States

      

$

1,353

 

$

1,154

 

   Non-U.S.

       

3,701

  

2,859

 

Downstream

            

   United States

       

645

  

392

 

   Non-U.S.

       

808

  

612

 

Chemical

            

   United States

       

492

  

118

 

   Non-U.S.

       

940

  

446

 

Corporate and financing

       

(79

)

 

(141

)

Net Income (U.S. GAAP)

      

$

7,860

 

$

5,440

 
             
             

Net income per common share

      

$

1.23

 

$

0.83

 

Net income per common share

            

   - assuming dilution

      

$

1.22

 

$

0.83

 
             

Special items included in net income

            

Non-U.S. Downstream

            

   Gain on sale of Sinopec investment

      

$

310

 

$

0

 

Non-U.S. Chemical

            

   Gain on sale of Sinopec investment

      

$

150

 

$

0

 



REVIEW OF FIRST QUARTER 2005 RESULTS


Exxon Mobil Corporation estimated first quarter 2005 net income of $7,860 million ($1.22 per share) increased $2,420 million from the first quarter of 2004.  First quarter 2005 net income included a $460 million positive impact (Downstream - $310 million; Chemical - $150 million) from sale of the Corporation's stake in China Petroleum and Chemical Corporation ("Sinopec").



   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

Upstream earnings

            

   United States

      

$

1,353

 

$

1,154

 

   Non-U.S.

       

3,701

  

2,859

 

Total

      

$

5,054

 

$

4,013

 


Upstream earnings were a record $5,054 million, an increase of $1,041 million from first quarter 2004 results reflecting continued strength in crude and natural gas prices.


Liquids production of 2,543 kbd (thousands of barrels per day) was 92 kbd lower than the first quarter of 2004.  Higher production from new fields in West Africa and Norway was more than offset by natural field declines in mature areas, planned and unplanned maintenance, entitlement and divestment impacts.

-17-



First quarter natural gas production decreased to 10,753 mcfd (millions of cubic feet per day), compared with 11,488 mcfd last year reflecting natural field decline in mature areas, lower demand in Europe and divestment impacts partly offset by higher volumes in Qatar.


On an oil-equivalent basis, production decreased by 5 percent from the first quarter of 2004.  Excluding divestment and entitlement effects, production decreased by 2 percent.


Earnings from U.S. Upstream operations were $1,353 million, $199 million higher than last year's first quarter.  Non-U.S. Upstream earnings of $3,701 million were up $842 million from 2004.


   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

Downstream earnings

            

   United States

      

$

645

 

$

392

 

   Non-U.S.

       

808

  

612

 

Total

      

$

1,453

 

$

1,004

 

Special items included in net income

            

Non-U.S. Downstream

            

   Gain on sale of Sinopec investment

      

$

310

 

$

0

 


Downstream earnings were $1,453 million, up $449 million from the first quarter of 2004, reflecting improved U.S. refining margins and higher refinery throughput and the $310 million Sinopec gain partly offset by weaker marketing conditions.  Petroleum product sales were 8,229 kbd, 103 kbd higher than last year's first quarter.


U.S. Downstream earnings were $645 million, up $253 million mainly due to higher refining margins.  Non-U.S. Downstream earnings of $808 million decreased $114 million before the Sinopec gain, due to lower marketing earnings.


   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

Chemical earnings

            

   United States

      

$

492

 

$

118

 

   Non-U.S.

       

940

  

446

 
       

$

1,432

 

$

564

 

Special items included in net income

            

Non-U.S. Chemical

            

   Gain on sale of Sinopec investment

      

$

150

 

$

0

 



Chemical earnings were a record $1,432 million, up from the same quarter a year ago due to improved market conditions and the $150 million Sinopec gain.  Prime product sales of 6,938 kt (thousands of metric tons) were up 146 kt from last year's first quarter.  


   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

All other segments earnings

            

Corporate and financing

      

$

(79

)

$

(141

)


Corporate and financing expenses of $79 million were lower by $62 million mainly due to higher interest income.


-18-


LIQUIDITY AND CAPITAL RESOURCES


   

First Three Months

 

 


 


 

2005

 

2004

 
 


(millions of dollars)

 

Net cash provided by/(used in)

            

Operating activities

      

$

12,968

 

$

10,138

 

Investing activities

       

(1,086

)

 

(1,581

)

Financing activities

       

(5,003

)

 

(3,170

)

Effect of exchange rate changes

       

(245

)

 

(119

)

Increase/(decrease) in cash and cash equivalents

      

$

6,634

 

$

5,268

 
             

Cash and cash equivalents

      

$

25,165

 

$

15,894

 

Cash and cash equivalents - restricted (note 3)

       

4,604

  

0

 

Total cash and cash equivalents (at end of period)

      

$

29,769

 

$

15,894

 


Cash provided by operating activities totaled $12,968 million for the first three months of 2005 versus $10,138 million in the same period last year.  Major sources of funds were net income of $7,860 million and non-cash provisions of $2,553 million for depreciation and depletion.  For additional details, see the Condensed Consolidated Statement of Cash Flows on page 5.


Investing activities for the first three months of 2005 used net cash of $1,086 million compared to $1,581 million in the prior year. Spending for additions to property, plant and equipment of $2,713 million was comparable to the prior year.  Proceeds from asset divestments of $1,797 million in 2005 included almost $1.4 billion from the sale of the Corporation's interest in Sinopec.


Net cash used in financing activities of $5,003 million in the first three months of 2005 compared to $3,170 million in the 2004 period reflecting a higher level of purchases of ExxonMobil shares in the current year.


Total cash and cash equivalents, including the $4.6 billion of restricted cash, was $29.8 billion at the end of the first quarter of 2005.


During the first quarter of 2005, the Corporation purchased 64 million shares of its common stock for the treasury at a gross cost of $3,624 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 6,401 million at the end of the fourth quarter of 2004 to 6,366 million at the end of the first quarter.  In April, the Corporation increased its rate of share purchases.  Purchases to reduce shares outstanding are anticipated to increase from $2.5 billion in the first quarter to approximately $3.5 billion in the second quarter.  Purchases may be made in both the open market and through negotiated transactions and may be increased, decreased or discontinued at any time without prior notice.


Total debt of $8.3 billion at March 31, 2005 was comparable to year-end 2004.  The Corporation's debt to total capital ratio was 7.2 percent at the end of the first quarter of 2005, also comparable to year-end 2004.


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.


Litigation and other contingencies are discussed in note 3 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.


-19-



The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade.  Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses.  On November 1, 2004, the Corporation announced that its subsidiary, Esso Nederland B.V., had signed a Heads of Agreement (HOA) with the State of the Netherlands and Shell Nederland B.V. to restructure its interest in the Dutch gas transportation business.  The HOA contains the principal terms and conditions under which Esso Nederland B.V. and Shell Nederland B.V. will agree to transfer their ownership share of 25 percent each in Gasunie's gas transportation business to the State of the Netherlands. The Corporation's net compensation is expected to be 1.4 billion Euros.  The final transaction remains subject to regulatory reviews.  The p arties intend to finalize the restructuring by mid-2005. It is anticipated that this restructuring will have a positive impact on the Corporation's results.



TAXES

   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

Taxes

            

Income taxes

      

$

5,043

 

$

3,522

 

Excise taxes

       

7,238

  

6,416

 

All other taxes and duties

       

10,944

  

10,853

 

Total

      

$

23,225

 

$

20,791

 
             

Effective income tax rate

       

41.3

%

 

41.8

%


Income, excise and all other taxes for the first quarter of 2005 of $23,225 million were up $2,434 million compared to last year.  In the first quarter of 2005 income tax expense was $5,043 million and the effective income tax rate was 41.3 percent, compared to $3,522 million and 41.8 percent, respectively, in the prior year period. During both years, the Corporation continued to benefit from the favorable resolution of tax related issues.  Excise and all other taxes and duties were higher reflecting higher prices and foreign exchange effects.



CAPITAL AND EXPLORATION EXPENDITURES


   

First Three Months

 

 


 


 

2005

 

2004

 

 


(millions of dollars)

 

Capital and exploration expenditures

            

Upstream (including exploration expenses)

      

$

2,812

 

$

2,704

 

Downstream

       

452

  

510

 

Chemical

       

148

  

132

 

Other

       

5

  

55

 

Total

      

$

3,417

 

$

3,401

 


ExxonMobil continued its active investment program, spending $3,417 million in the first quarter on capital and exploration projects, compared with $3,401 million last year, reflecting continued strong levels of upstream spending.


The Corporation expects the level of capital and exploration spending to be about $16 billion in 2005.


-20-



RECENTLY ISSUED ACCOUNTING STANDARDS


In December 2004, the Financial Accounting Standards Board (FASB) issued a revised Statement of Financial Accounting Standards No. 123 (FAS 123R), “Share-based Payment.” FAS 123R requires compensation costs related to share-based payments to be recognized in the income statement over the vesting period. The amount of the compensation cost will be measured based on the grant-date fair value of the instrument issued. FAS 123R is effective for the Corporation as of January 1, 2006, for all awards granted or modified after that date and for those awards granted prior to that date that have not vested. The Corporation does not believe that FAS 123R will have an earnings impact because in 2003 the Corporation adopted a policy of expensing all share-based payments that is consistent with the provisions of FAS 123R, and all prior year outstanding awards have vested.


On April 4, 2005, the FASB adopted FASB Staff Position FSP FAS 19-1 that amends Statement of Financial Accounting Standards No. 19 (FAS 19), "Financial Accounting and Reporting by Oil and Gas Producing Companies," to permit the continued capitalization of exploratory well costs beyond one year if (a) the well found a sufficient quantity of reserves to justify its completion as a producing well and (b) the entity is making sufficient progress assessing the reserves and the economic and operating viability of the project.  The guidance in the FSP is required to be applied prospectively in the third quarter of 2005.


ExxonMobil continues to carry as an asset the cost of drilling exploratory wells that find sufficient quantities of reserves to justify their completion as producing wells if the required capital expenditure is made and drilling of additional exploratory wells is under way or firmly planned for the near future.  Once exploration activities demonstrate that sufficient quantities of commercially producible reserves have been discovered, continued capitalization is dependent on project reviews, which take place at least annually, to ensure that satisfactory progress toward ultimate development of the reserves is being achieved.  Exploratory well costs not meeting these criteria are charged to expense.  ExxonMobil does not believe that this issue will have a material impact on its financial statements.



FORWARD-LOOKING STATEMENTS


Statements in this discussion relating to future plans, projections, events, or conditions are forward-looking statements.  Actual results, including production growth and capital spending, could differ materially due to changes in long-term oil or gas prices or other changes in market conditions affecting the oil and gas industry; political events or disturbances; reservoir performance; changes in OPEC quotas; timely completion of development projects; changes in technical or operating conditions; and other factors including those discussed herein and under the heading "Factors Affecting Future Results" in Item 1 of ExxonMobil's 2004 Form 10-K.


-21-


EXXON MOBIL CORPORATION



Item 3.  Quantitative and Qualitative Disclosures About Market Risk


Information about market risks for the three months ended March 31, 2005, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2004.


Item 4.  Controls and Procedures


As indicated in the certifications in Exhibit 31 of this report, the Corporation's chief executive officer, principal accounting officer and principal financial officer have evaluated the Corporation's disclosure controls and procedures as of March 31, 2005.  Based on that evaluation, these officers have concluded that the Corporation's disclosure controls and procedures are effective in ensuring that material information required to be in this quarterly report is made known to them on a timely basis.  There were no changes during the Corporation's last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.



PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings


Regarding a previously reported matter, on April 8, 2005, the Department of Justice, on behalf of the Environmental Protection Agency, filed a complaint and a proposed consent decree for the matter of United States of America v. Mobil Exploration and Producing U.S., Inc. ("MEPUS") in the Federal District Court in Salt Lake City, Utah.  This was a consolidation of a 1997 and a 1999 notice and finding of violation.  The complaint related to allegations that MEPUS's operations of the Aneth Field in Utah had violated the federal Clean Air Act, including violations of a Prevention of Significant Deterioration permit, New Source Performance Standards for Equipment Leaks of VOC from Onshore Natural Gas Processing Plants and the National Emission Standards for Hazardous Air Pollution for asbestos.  Under the Consent Decree, MEPUS must pay a civil penalty in the amount of $350,000, plus interest at a rate of 1.29% from August 21, 2003, until date of payment, and undertake a supplemental environmental project in the amount of $99,849.  The Consent Decree is subject to a 30-day public comment period following publication in the Federal Register on April 28, 2005.


In another previously reported matter, the Corporation and the State of New York have settled a case captioned "State of New York v. Exxon Corporation, Arrow Petroleum, and Tartan Oil Corp, and 3rd party action Exxon Corporation v. 150 Fulton Realty Corp., Oil City Gas Company, and Martin Meyer".  The case related to allegations that petroleum discharged at an Exxon-branded service station in Farmingdale, New York impacted soil and groundwater in the vicinity of a Dart service station located across the street, in violation of New York State Navigation Law.  The New York State Department of Environmental Conservation began remediation at the Dart service station in 1988.  Prior to commencement of trial, the State amended its complaint to demand penalties in excess of $100 million.   In the settlement, ExxonMobil agreed to pay $3.2 million in past and future costs, plus interest, and no penalty.


Also in a previously reported matter, a settlement has been reached in the case captioned "Illinois v. Wolverine Pipeline Company", relating to alleged violations of Illinois water pollution laws by Wolverine Pipeline Company ("Wolverine"). ExxonMobil Oil Corporation


-22-


("EMOC") owns 36.1% of the common stock of Wolverine, and provides certain services on behalf of Wolverine.  The incident in question involves a September 1, 2001, alleged product release at Lockport, Illinois.  After the incident, Wolverine commenced a voluntary, remedial clean-up of the affected area. On February 17, 2005, the Circuit Court of Will County, Illinois entered into a Consent Order, which reflects the terms of the settlement.  Wolverine agreed to the payment of a civil penalty in the amount of $85,000, which has been paid. Wolverine is also obligated to continue certain monitoring and remediation activities.


On March 8, 2005, the Corporation received an Administrative Consent Agreement and Enforcement Order captioned "In the Matter of Exxon Mobil Corporation; Ashburn, Virginia; Underground Oil Storage Tank and Air Activities" from the Maine Department of Environmental Protection ("MDEP").  The MDEP alleges violations at 12 service stations of regulations under the state's Stage II vapor recovery program and underground storage tank program, including those relating to record-keeping, monitoring, equipment, clean-up and testing.  The MDEP is seeking a civil penalty in the amount of $292,400 for all violations. Settlement discussions are underway.


On March 31, 2005, the Montana Department of Environmental Quality ("MDEQ") issued an Enforcement Action for Air Quality Violation, alleging that the Corporation's Billings, Montana refinery violated particulate matter emission limits on two days in October 2003 during stack testing (as self-reported) and that the refinery had 198 opacity exceedances between February 2003 and April 2004 related to startups and shutdowns to address malfunctioning cyclones.  The initial penalty demand is $266,484.  The Corporation has requested a meeting with the MDEQ to discuss the allegations.


Refer to the relevant portions of note 3 on pages 7 through 9 of this Quarterly Report on Form 10-Q for further information on legal proceedings.


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds


 

ISSUER PURCHASE OF EQUITY SECURITIES FOR QUARTER ENDED MARCH 31, 2005

          
       

Total Number of

 

Maximum Number

       

Shares Purchased

 

of Shares that May

   

Total Number

 

Average

 

as Part of Publicly

 

Yet Be Purchased

   

of Shares

 

Price Paid

 

Announced Plans

 

Under the Plans or

 

Period

 

Purchased

 

per Share

 

or Programs

 

Programs


 

January, 2005

 

19,453,368

 

$50.76

 

19,453,368

  
          
 

February, 2005

 

18,969,895

 

$57.37

 

18,969,895

  
          
 

March, 2005

 

25,281,531

 

$61.25

 

25,281,531

  
          
 

Total

 

63,704,794

 

$56.89

 

63,704,794

 

(See Note 1)


Note 1 -- On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding.  The announcement did not specify an amount or expiration date.  The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases.  Purchases may be made in both the open market and through negotiated transactions, and purchases may be increased, decreased or discontinued at any time without prior notice.


-23-


Item 6.  Exhibits


Exhibit

Description


31.1

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief

 

  Executive Officer.


31.2

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal

  Accounting Officer.


31.3

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal

  Financial Officer.


32.1

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief

  

 

  Executive Officer.


32.2

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by

  Principal Accounting Officer.


32.3

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by

  Principal Financial Officer.



-24-






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: May 5, 2005  

By:   /s/  Patrick T. Mulva                        

        Name:  Patrick T. Mulva

           

        Title:     Vice President, Controller and

                      Principal Accounting Officer



-25-




INDEX TO EXHIBITS


Exhibit

Description


31.1

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by

  Chief Executive Officer.


31.2

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by

  Principal Accounting Officer.


31.3

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by

  Principal Financial Officer.


32.1

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief

  

  Executive Officer.


32.2

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal

 

   Accounting Officer.


32.3

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal

 

   Financial Officer.






-26-