ExxonMobil Provides Merger Update / Benefits Greater Than Previously Forecast
15.12.1999, 15:45
New York (PROTEXT) - Exxon Mobil Corporation (NYSE: XOM)
Chairman Lee Raymond today briefed investors and the media on the
new ExxonMobil organization, and the updated outlook for merger
benefits.
"We have moved from a year of planning to combine Exxon and
Mobil, to actually operating as a merged company, ExxonMobil,"
Raymond said.
"When we announced plans for the merger -- about a year ago --
both companies recognized this was a once in a lifetime
opportunity. Since that time, we have further refined the
opportunities and benefits available to the merged company. While
we were excited about the prospects for ExxonMobil in 1998, we
are even more positive today," Raymond said. "This enthusiasm is
shared by the many Exxon and Mobil people who have worked so hard
to make this merger a reality."
Raymond commented that "the synergy benefits of the merger are
expected to be greater than previously forecasted and are likely
to be realized sooner. Our enthusiasm, however, goes beyond
numbers. What we see is a company positioned exceptionally well
for the future. . .in terms of its talented workforce, its
existing portfolio of high quality assets, and its technological
leadership. These characteristics coupled with strong financial
resources place ExxonMobil in a unique position to capture many
of the excellent opportunities likely to be available to our
industry over the coming years."
Transition Efforts
"Lou Noto said it best last December. The merger of Exxon and
Mobil was born of opportunity, not necessity," Raymond noted.
"Our clear objective has been to maximize the value of that
opportunity for our shareholders by creating the premier company
in the industry," he added. "We are moving from a
multifunctional, geographically based regional structure to 11
global functional businesses, each responsible for guiding their
operations and stewarding results on a worldwide basis."
Raymond said that the task of combining two companies the size
of Exxon and Mobil "was simplified by the inherent compatibility
and shared values of the two organizations. This compatibility
was abundantly evident on the transition teams, which functioned
extremely well, building strong confidence in how well the
organizations will blend together."
As a result of the merger and other identified organizational
efficiency steps, Raymond said staffing requirements are expected
to decline by almost 16,000 people between year-end 1998 and
year-end 2002. About 2,000 of that reduction already occurred in
1999, prior to completion of the merger. Executive positions will
decrease by more than 1,000 or about one-third of the two
companies' pre-merger totals. These staffing numbers do not
reflect required divestments or any additional productivity
improvements in the base business beyond those already
identified.
"This is clearly the most difficult aspect of implementing a
merger as large as this one," noted Raymond. "We certainly
appreciate the contributions all employees have made to Exxon and
Mobil over the years, and we have plans in place to help cushion
the impact on those who must separate."
Merger Benefits Update
Since the merger was announced in December 1998, Exxon and
Mobil have been designing the merged company and developing plans
for capturing near-term synergy benefits. "We now have a much
better understanding of what we can achieve and how to achieve
it," Raymond said.
A year ago, the companies expected pre-tax synergy benefits to
be significant at about $2.8 billion per year by year three of
the merger.
"Our current view is that near-term merger synergies will be
considerably higher than we originally estimated," Raymond said.
"We expect the synergies directly attributable to the merger
itself to amount to $3.8 billion annually, on a pre-tax basis.
This figure does not include any cost or margin improvements from
our traditional ongoing efficiency programs -- that would occur
with or without the merger. For instance, in 1999 the two
companies' base business efficiency efforts will yield a $1.2
billion reduction in cash operating costs compared to 1998. These
savings are not included in the $3.8 billion -- nor are the
expected results of similar efforts in 2000 and beyond. In
addition, the $3.8 billion does not include any cost savings
associated with divestments."
Raymond noted that a key objective of the merger planning
effort was to achieve readiness to begin operating on a combined
basis -- and start capturing synergy benefits -- rapidly
following completion of the merger. "We have only just started to
review forward plans together," Raymond said. "But I am confident
that we can achieve at least the $3.8 billion, and we can do it
faster than we thought at this time last year."
Raymond noted that the merger is forecast to improve net
income by about $1 billion in 2000, with the positive impact
rising to around $2.5 billion by 2003. These figures include the
impact of one-time restructuring costs and asset divestments.
ExxonMobil expects to capture the full market value of the
assets identified by the regulators for divestment. Sales
proceeds from these assets are estimated to be in the range of
$4-$5 billion. Raymond said that the earnings impact from
divestitures was more difficult to estimate, "but current figures
indicate a net gain of around $1 billion after tax."
He noted that the asset sales alone would likely add about $3
billion to ExxonMobil's cash flow. "On a one-time basis, the
merger should generate more like $3.5 billion in positive cash
flow -- when you include the impact of reduced working capital
requirements and restructuring costs."
Raymond also stated that, "By year three, the merger is
expected to provide recurring positive cash flow of about $4
billion per year, reflecting the after-tax impact of synergy
benefits and optimization of the merged company's capital
investment program."
World Class Businesses
In addition to the discussion of merger planning and the
expected financial benefits, Raymond provided an overview of
ExxonMobil's worldwide operating organizations. His comments
highlighted the strategic fit -- both functionally and
geographically -- between the assets of the two companies. He
noted ExxonMobil's excellent competitive position in the global
upstream, downstream, and petrochemicals businesses -- and placed
special emphasis on the company's continued commitment to
technological leadership.
In closing, Raymond noted that "While the merger will
necessarily result in many changes, it is important to remember
that many things will remain the same -- the most important of
which are our fundamental strategies for generating superior
long-term performance."
CAUTIONARY STATEMENT: Projections, estimates, and business
plans described in this news release are forward-looking
statements. Actual future results, including cash flow and
earnings effects, synergy benefits, staffing impacts, and changes
in capital productivity resulting from the merger, could differ
materially due to a number of factors. These factors include
changes in market conditions affecting the oil and gas industry,
changes in law or government regulation, the outcome of
commercial negotiations, our ability to integrate the businesses
of Exxon and Mobil as planned and other factors discussed under
the heading "Cautionary Statement Concerning Forward-Looking
Statements" in our Joint Proxy Statement/Prospectus dated April
5, 1999. ots Original Text Service: Exxon Mobil Corporation
Internet: http://www.newsaktuell.de Contact: Tom Cirigliano of
Exxon Mobil Corporation (USA) 972-444-1109 Web site:
http://www.exxon.mobil.com
Subscribers please note that material bearing the slug
"PROTEXT" is not part of CTK's news service and is not to be
published under the "CTK" slug. Protext is a commercial service
providing distribution of press releases from clients, who are
identified in the text of Protext reports and who bear full
responsibility for their contents.
Nabízíme klientům, že uspořádáme
semináře o Infobance
přímo u vás ve firmě. Téma
semináře a termín konání
přizpůsobíme potřebám klienta.
(mail: