01—Abstract
Summary
Summary of the 10-K filed March 11, 1994. Cited figures are marked; the original filing is the authoritative source.
Exxon Corporation's 1993 Form 10-K reports net income of $5.28 billiona, up 11% from $4.77 billion in 1992, and earnings per share of $4.21 versus $3.79 (restated).
The improvement came mainly from stronger petroleum product margins and lower operating expenses, which offset a decline in crude prices. Results also included $676 millionb of one-time credits from asset dispositions, tax rate changes and other special items, compared with $331 million in 1992. Revenue fell to $111.2 billion from $117.1 billion, and the company's operating cash flow rose to $11.5 billion, funding $6.9 billion of property additions and $3.6 billion of dividends.
The balance sheet remained solid. Total debt declined $0.8 billion to $12.6 billionc, a debt-to-capital ratio of about 25%, and shareholders' equity rose to $34.8 billion (book value of $28.02 per share). Working capital remained negative at $3.7 billion, which is typical for the company.
The quarterly dividend was $0.72d, or $2.88 per year, a payout of roughly 68% of earnings. Upstream earnings from exploration and production were $3.3 billion, of which $2.4 billion came from outside the U.S. Key risks include the Exxon Valdez litigation, with most remaining cases scheduled for federal trial starting May 1994, and an unresolved U.S. Tax Court matter on Saudi crude pricing, which the company won but which is subject to appeal.
Management states that these matters are not expected to have a materially adverse effect on operations or financial condition. Proved oil and gas reserves stood at 6.6 billion barrels of oil equivalent including oil sands, with production of 1.67 million barrels per day of liquids and 5.8 billion cubic feet per day of gas.
02—Key points
Key Highlights
- Net income rose 11% to $5.28 billion ($4.21 per share), though 1993 included $676 million of one-time credits from asset sales, tax changes and other special items.
- Downstream improved: U.S. refining and marketing earnings nearly tripled to $465 million, and non-U.S. refining earned $1.55 billion, up from $1.42 billion.
- Upstream earnings were $3.3 billion, down slightly from $3.4 billion, as crude realizations fell by more than $1.70 per barrel.
- Revenue declined 5% to $111.2 billion, while operating costs fell by more than $750 million on efficiency initiatives.
- Balance sheet strengthened: total debt fell $0.8 billion to $12.6 billion, the debt-to-capital ratio improved to 25%, and shareholders' equity reached $34.8 billion.
- Operating cash flow increased $1.9 billion to $11.5 billion, funding $6.9 billion of capital additions and $3.6 billion of dividends (a 68% payout).
- Litigation exposure remains significant: Exxon Valdez suits face federal trials starting May 1994, though management expects no materially adverse outcome.
03—Questions
Frequently Asked Questions
How did Exxon's 1993 earnings compare with 1992, and what drove the change?
Net income rose 11% to $5.28 billion from $4.77 billion. The increase came mainly from better petroleum product margins and lower operating expenses, which more than offset weaker crude prices. Special items contributed $676 million in 1993, compared with $331 million in 1992, so underlying growth was smaller than the headline figure.
Is the dividend safe, and how much of earnings does it consume?
The dividend was raised to $2.88 per share from $2.83. Dividend payments totaled $3.6 billion, about 68% of 1993 net income, down from a 75% payout in 1992. Cash from operations of $11.5 billion comfortably covers the dividend and capital spending, and management describes the financial position as strong.
How much debt does Exxon carry and how is it trending?
Total debt fell $0.8 billion to $12.6 billion at year-end 1993. The debt-to-capital ratio improved to 25% from 27% in 1992, and the fixed charge coverage ratio rose to 7.4 times from 6.6 times. Working capital remained negative at $3.7 billion, which the company treats as a normal feature of its operating model.
What are the main legal and financial risks disclosed in the filing?
The largest exposure is the Exxon Valdez litigation, including class actions, with most remaining cases scheduled for federal trial starting May 2, 1994. Management says the cost cannot be predicted but is not expected to be materially adverse. Other items include an appealable U.S. Tax Court ruling on Saudi crude pricing (decided in Exxon's favor) and a gas-lifting imbalance dispute between Germany and the Netherlands, which management does not expect to be materially adverse.
How is the company's production and reserve base positioned?
Worldwide liquids production was 1.67 million barrels per day, slightly down from 1.71 million, as field declines and North American divestments offset growth in the North Sea. Natural gas output rose to 5.8 billion cubic feet per day. Proved reserves were about 6.6 billion barrels of oil equivalent including oil sands, down from 6.8 billion a year earlier, and the company reported no major discoveries since year-end that would materially change those estimates.
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