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 September 30, 2007
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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer X Accelerated filer Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X
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 September 30, 2007
Common stock, without par value 5,463,625,615
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Condensed Consolidated Statement of Income
3
Three and nine months ended September 30, 2007 and 2006
Condensed Consolidated Balance Sheet
4
As of September 30, 2007 and December 31, 2006
Condensed Consolidated Statement of Cash Flows
5
Nine months ended September 30, 2007 and 2006
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 | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
REVENUES AND OTHER INCOME | ||||||||||||
Sales and other operating revenue (1) | $ | 99,130 | $ | 96,268 | $ | 278,363 | $ | 278,609 | ||||
Income from equity affiliates | 2,158 | 1,778 | 6,088 | 5,265 | ||||||||
Other income | 1,049 | 1,547 | 3,459 | 3,733 | ||||||||
Total revenues and other income | 102,337 | 99,593 | 287,910 | 287,607 | ||||||||
| ||||||||||||
COSTS AND OTHER DEDUCTIONS | ||||||||||||
Crude oil and product purchases | 51,973 | 49,364 | 139,642 | 140,365 | ||||||||
Production and manufacturing expenses | 7,884 | 7,057 | 22,845 | 21,897 | ||||||||
Selling, general and administrative expenses | 3,656 | 3,412 | 10,836 | 10,435 | ||||||||
Depreciation and depletion | 3,159 | 2,730 | 9,095 | 8,134 | ||||||||
Exploration expenses, including dry holes | 349 | 352 | 974 | 810 | ||||||||
Interest expense | 73 | 281 | 272 | 553 | ||||||||
Sales-based taxes (1) | 7,970 | 7,764 | 23,064 | 23,639 | ||||||||
Other taxes and duties | 10,229 | 10,163 | 29,708 | 29,206 | ||||||||
Income applicable to minority interests | 284 | 292 | 722 | 727 | ||||||||
Total costs and other deductions | 85,577 | 81,415 | 237,158 | 235,766 | ||||||||
| ||||||||||||
INCOME BEFORE INCOME TAXES | 16,760 | 18,178 | 50,752 | 51,841 | ||||||||
Income taxes | 7,350 | 7,688 | 21,802 | 22,591 | ||||||||
NET INCOME | $ | 9,410 | $ | 10,490 | $ | 28,950 | $ | 29,250 | ||||
| ||||||||||||
NET INCOME PER COMMON SHARE (dollars) | $ | 1.72 | $ | 1.79 | $ | 5.21 | $ | 4.91 | ||||
| ||||||||||||
NET INCOME PER COMMON SHARE | ||||||||||||
- ASSUMING DILUTION (dollars) | $ | 1.70 | $ | 1.77 | $ | 5.15 | $ | 4.86 | ||||
DIVIDENDS PER COMMON SHARE (dollars) | $ | 0.35 | $ | 0.32 | $ | 1.02 | $ | 0.96 | ||||
(1) Sales-based taxes included in sales and other | ||||||||||||
operating revenue | $ | 7,970 | $ | 7,764 | $ | 23,064 | $ | 23,639 | ||||
The information in the Notes to Condensed Consolidated Financial Statements | ||||||||||||
is an integral part of these statements. |
-3-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
Sept. 30, | Dec. 31, | |||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 31,423 | $ | 28,244 | ||||
Cash and cash equivalents - restricted (note 3) | 4,604 | 4,604 | ||||||
Marketable securities | 190 | 0 | ||||||
Notes and accounts receivable - net | 31,832 | 28,942 | ||||||
Inventories | ||||||||
Crude oil, products and merchandise | 10,883 | 8,979 | ||||||
Materials and supplies | 2,136 | 1,735 | ||||||
Prepaid taxes and expenses | 4,179 | 3,273 | ||||||
Total current assets | 85,247 | 75,777 | ||||||
Property, plant and equipment - net | 119,102 | 113,687 | ||||||
Investments and other assets | 32,312 | 29,551 | ||||||
TOTAL ASSETS | $ | 236,661 | $ | 219,015 | ||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Notes and loans payable | $ | 2,095 | $ | 1,702 | ||||
Accounts payable and accrued liabilities | 43,525 | 39,082 | ||||||
Income taxes payable | 10,300 | 8,033 | ||||||
Total current liabilities | 55,920 | 48,817 | ||||||
Long-term debt | 6,896 | 6,645 | ||||||
Deferred income tax liabilities | 22,329 | 20,851 | ||||||
Other long-term liabilities | 32,913 | 28,858 | ||||||
TOTAL LIABILITIES | 118,058 | 105,171 | ||||||
Commitments and contingencies (note 3) | ||||||||
SHAREHOLDERS' EQUITY | ||||||||
Common stock, without par value: | ||||||||
Authorized: 9,000 million shares | ||||||||
Issued: 8,019 million shares | 4,988 | 4,786 | ||||||
Earnings reinvested | 218,761 | 195,207 | ||||||
Accumulated other comprehensive income | ||||||||
Cumulative foreign exchange translation adjustment | 7,433 | 3,733 | ||||||
Postretirement benefits reserves adjustment | (6,584 | ) | (6,495 | ) | ||||
Common stock held in treasury: | ||||||||
2,556 million shares at September 30, 2007 | (105,995 | ) | ||||||
2,290 million shares at December 31, 2006 | (83,387 | ) | ||||||
TOTAL SHAREHOLDERS' EQUITY | 118,603 | 113,844 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 236,661 | $ | 219,015 | ||||
The number of shares of common stock issued and outstanding at September 30, 2007 and | ||||||||
December 31, 2006 were 5,463,625,615 and 5,728,702,212, respectively. | ||||||||
The information in the Notes to Condensed Consolidated Financial Statements | ||||||||
is an integral part of these statements. |
-4-
EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
Nine Months Ended | ||||||||||
September 30, | ||||||||||
2007 | 2006 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
Net income | $ | 28,950 | $ | 29,250 | ||||||
Depreciation and depletion | 9,095 | 8,134 | ||||||||
Changes in operational working capital, excluding cash and debt | 1,283 | 3,836 | ||||||||
All other items - net | 1,339 | (796 | ) | |||||||
Net cash provided by operating activities | 40,667 | 40,424 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
Additions to property, plant and equipment | (10,827 | ) | (11,301 | ) | ||||||
Sales of subsidiaries, investments, and property, plant and equipment | 2,422 | 2,328 | ||||||||
Other investing activities - net | (1,660 | ) | (1,791 | ) | ||||||
Net cash used in investing activities | (10,065 | ) | (10,764 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
Additions to long-term debt | 104 | 123 | ||||||||
Reductions in long-term debt | (111 | ) | (31 | ) | ||||||
Additions/(reductions) in short-term debt - net | 186 | 245 | ||||||||
Cash dividends to ExxonMobil shareholders | (5,718 | ) | (5,775 | ) | ||||||
Cash dividends to minority interests | (252 | ) | (207 | ) | ||||||
Changes in minority interests and sales/(purchases) | ||||||||||
of affiliate stock | (510 | ) | (380 | ) | ||||||
Tax benefits related to stock-based awards | 356 | 270 | ||||||||
Common stock acquired | (23,884 | ) | (21,208 | ) | ||||||
Common stock sold | 891 | 829 | ||||||||
Net cash used in financing activities | (28,938 | ) | (26,134 | ) | ||||||
Effects of exchange rate changes on cash | 1,515 | 537 | ||||||||
Increase/(decrease) in cash and cash equivalents | 3,179 | 4,063 | ||||||||
Cash and cash equivalents at beginning of period | 28,244 | 28,671 | ||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 31,423 | $ | 32,734 | ||||||
SUPPLEMENTAL DISCLOSURES | ||||||||||
Income taxes paid | $ | 17,947 | $ | 18,637 | ||||||
Cash interest paid | $ | 376 | $ | 1,099 | ||||||
The information in the Notes to Condensed Consolidated Financial Statements | ||||||||||
is an integral part of these statements. |
-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 2006 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 for Uncertainty in Income Taxes
Effective January 1, 2007, the Corporation adopted the Financial Accounting Standards Boards (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes". FIN 48 is an interpretation of FASB Statement No. 109, "Accounting for Income Taxes", and prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements uncertain tax positions that the Corporation has taken or expects to take in its income tax returns. Upon the adoption of FIN 48, the Corporation recognized a transition gain of $267 million in shareholders equity. The gain reflected the recognition of several refund claims, partly offset by increased liability reserves.
The Corporation is subject to income taxation in many jurisdictions around the world. The total amount of unrecognized income tax benefits in these jurisdictions at January 1, 2007, was $3.7 billion, almost all of which is classified as long term. Resolution of the related tax positions through negotiations with the relevant tax authorities or through litigation will take many years to complete. Accordingly, it is difficult to predict the timing of resolution for individual tax positions. However, the Corporation does not anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months. Given the long time periods involved in resolving individual tax positions, the Corporation does not expect that the recognition of unrecognized tax benefits will have a material impact on the Corporations effective income tax rate in any given year.
The unrecognized tax benefits described above will not be included in the Corporation's annual Form 10-K contractual obligations table because the Corporation is unable to make reasonably reliable estimates of the timing of cash settlements with the respective taxing authorities. The total amount of unrecognized tax benefits will be disclosed in a footnote to the contractual obligations table.
The following table summarizes the tax years that remain subject to examination by major tax jurisdiction:
Country of Operation | Open Tax Years | ||
Abu Dhabi | 2000-2006 | ||
Angola | 2002-2006 | ||
Australia | 2000-2006 | ||
Canada | 1990-2006 | ||
Equatorial Guinea | 2004-2006 | ||
Germany | 1998-2006 | ||
Japan | 2002-2006 | ||
Malaysia | 1983-2006 | ||
Nigeria | 1998-2006 | ||
Norway | 1993-2006 | ||
United Kingdom | 2002-2006 | ||
United States | 1989-2006 |
The Corporation classifies interest on income tax related balances as interest expense or interest income and classifies tax related penalties as operating expense.
At January 1, 2007, the Corporation had accrued interest payable of $0.5 billion related to income tax reserve balances.
-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. Management has regular litigation and tax reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. 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. For contingencies where an unfavorable o utcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. 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 Corporations 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. All the compensatory claims have been resolved and paid. All of the punitive damage claims were consolidated in the civil trial that began in 1994. The first judgment from the United States District Court for the District of Alaska in the amount of $5 billion was vacated by the United States Court of Appeals for the Ninth Circuit as being excessive under the Constitution. The second judgment in the amount of $4 billion was vacated by the Ninth Circuit panel without argument and sent back for the District Court to reconsider in light of the recent U.S. Supreme Court decision in Campbell v. State Farm. The most recent District Court judgment for punitive damages was for $4.5 billion plus interest an d was entered in January 2004. The Corporation posted a $5.4 billion letter of credit. ExxonMobil and the plaintiffs appealed this decision to the Ninth Circuit, which ruled on December 22, 2006, that the award be reduced to $2.5 billion. On January 12, 2007, ExxonMobil petitioned the Ninth Circuit Court of Appeals for a rehearing en banc of its appeal. On May 23, 2007, with two dissenting opinions, the Ninth Circuit determined not to re-hear ExxonMobil's appeal before the full court. ExxonMobil filed a petition for writ of certiorari to the U.S. Supreme Court on August 20, 2007. On October 29, 2007, the U.S. Supreme Court granted ExxonMobil's petition for a writ of certiorari. While it is reasonably possible that a liability for punitive damages may have been incurred from the Exxon Valdez grounding, it is not possible to predict the ultimate outcome or to reasonably estimate any such potential liability.
In December 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 in May 2001. In December 2002, the Alabama Supreme Court vacated the $3.5 billion jury verdict. The case was retried and in November 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. In March 2004, the district court judge reduced the amount of punitive damages to $3.5 billion. ExxonMobil appealed the decision to the Alabama Supreme Court. On November 1, 2007, the Alabama Supreme Court reversed the trial court's fraud judgment and instructed the district court to enter judgment for ExxonMobil, eliminating the punitive damage award. The Court also ruled in ExxonMobil's favor on some of the disputed lease issues, reducing the compensatory award to $52 million. In May 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 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 the 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. The Company will pursue the cancellation of the bond and the release of the pledged collateral.
-7-
In 2001, a Louisiana state court jury awarded compensatory damages of $56 million and punitive damages of $1 billion to a landowner for damage caused by a third party that leased the property from the landowner. The third party provided pipe cleaning and storage services for the Corporation and other entities. The Louisiana Fourth Circuit Court of Appeals reduced the punitive damage award to $112 million in 2005. The Corporation appealed this decision to the Louisiana Supreme Court which, in March 2006, refused to hear the appeal. ExxonMobil has fully accrued and paid the compensatory and punitive damage awards. The Corporation appealed the punitive damage award to the U.S. Supreme Court, which on February 26, 2007, vacated the judgment and remanded the case to the Louisiana Fourth Circuit Court of Appeals for reconsideration in light of the recent U.S. Supreme Court decision in Williams v. Phillip Morris USA. On August 8, 2007, the Fourth Circuit issued its decision on remand and declined to reduce the punitive damage award. ExxonMobil is seeking further review in the Louisiana Supreme Court.
Tax issues for 1989 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 Corporations operations or financial condition.
Other Contingencies
As of September 30, 2007 | ||||||||||||||||||
Equity | Other | |||||||||||||||||
Company | Third Party | |||||||||||||||||
Obligations | Obligations | Total | ||||||||||||||||
(millions of dollars) | ||||||||||||||||||
Total guarantees | $ | 3,796 | $ | 697 | $ | 4,493 |
The Corporation and certain of its consolidated subsidiaries were contingently liable at September 30, 2007, for $4,493 million, primarily relating to guarantees for notes, loans and performance under contracts. Included in this amount were guarantees by consolidated affiliates of $3,796 million, representing ExxonMobils share of obligations of certain equity companies. These guarantees are not reasonably likely to have a material effect on the Corporations financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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 Corporations operations or financial condition. The Corporation's outstanding unconditional purchase obligations at September 30, 2007, 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.
In accordance with a nationalization decree issued by Venezuela's President Chavez in February of this year, by May 1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates (ExxonMobil) holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a "mixed enterprise" structure and an increase in PdVSA's or one of its affiliate's ownership interest in the Project, with the stipulation that if an agreement was not reached for the formation of the mixed enterprise during a specified period of time, the government would "directly take on the activities" carried out by the joint venture. ExxonMobil and Venezuela were not able to reach agreement on the formation of a mixed enterprise and on June 27, 2007, the government expropriated ExxonMobil's 41.67 percent interest in the Cerro Negro Project.
Subsequent discussions with Venezuelan authorities have not resulted in an agreement on the amount of compensation to be paid to ExxonMobil. On September 6, 2007, ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes. At this time the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, the Corporation does not expect the resolution to have a material effect upon the Corporation's operations or financial condition. At the time the assets were expropriated, ExxonMobil's remaining net book investment in Cerro Negro producing assets was about $750 million.
-8-
4.
Comprehensive Income
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(millions of dollars) | ||||||||||||||||
Net income | $ | 9,410 | $ | 10,490 | $ | 28,950 | $ | 29,250 | ||||||||
Other comprehensive income | ||||||||||||||||
(net of income taxes) | ||||||||||||||||
Foreign exchange translation adjustment | 2,052 | 43 | 3,700 | 1,933 | ||||||||||||
Postretirement benefits reserves adjustment | ||||||||||||||||
(excluding amortization) | (119 | ) | 0 | (694 | ) | 0 | ||||||||||
Amortization of postretirement benefits reserves | ||||||||||||||||
adjustment included in net periodic benefit costs | 190 | 0 | 605 | 0 | ||||||||||||
Minimum pension liability adjustment | ||||||||||||||||
(before December 31, 2006, adoption of FAS 158) | 0 | (8 | ) | 0 | (106 | ) | ||||||||||
Total comprehensive income | $ | 11,533 | $ | 10,525 | $ | 32,561 | $ | 31,077 |
5.
Earnings Per Share
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
NET INCOME PER COMMON SHARE | ||||||||||||
Net income (millions of dollars) | $ | 9,410 | $ | 10,490 | $ | 28,950 | $ | 29,250 | ||||
| ||||||||||||
Weighted average number of common shares | ||||||||||||
outstanding (millions of shares) | 5,470 | 5,861 | 5,559 | 5,967 | ||||||||
Net income per common share (dollars) | $ | 1.72 | $ | 1.79 | $ | 5.21 | $ | 4.91 | ||||
NET INCOME PER COMMON SHARE | ||||||||||||
- ASSUMING DILUTION | ||||||||||||
Net income (millions of dollars) | $ | 9,410 | $ | 10,490 | $ | 28,950 | $ | 29,250 | ||||
Weighted average number of common shares | ||||||||||||
outstanding (millions of shares) | 5,470 | 5,861 | 5,559 | 5,967 | ||||||||
Effect of employee stock-based awards | 66 | 61 | 61 | 55 | ||||||||
Weighted average number of common shares | ||||||||||||
outstanding - assuming dilution | 5,536 | 5,922 | 5,620 | 6,022 | ||||||||
Net income per common share | ||||||||||||
- assuming dilution (dollars) | $ | 1.70 | $ | 1.77 | $ | 5.15 | $ | 4.86 |
-9-
6.
Pension and Other Postretirement Benefits
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
(millions of dollars) | ||||||||||||
Pension Benefits - U.S. | ||||||||||||
Components of net benefit cost | ||||||||||||
Service cost | $ | 89 | $ | 85 | $ | 279 | $ | 253 | ||||
Interest cost | 172 | 159 | 516 | 476 | ||||||||
Expected return on plan assets | (212 | ) | (157 | ) | (634 | ) | (469 | ) | ||||
Amortization of actuarial loss/(gain) | ||||||||||||
and prior service cost | 67 | 69 | 201 | 205 | ||||||||
Net pension enhancement and | ||||||||||||
curtailment/settlement cost | 48 | 39 | 143 | 118 | ||||||||
Net benefit cost | $ | 164 | $ | 195 | $ | 505 | $ | 583 | ||||
Pension Benefits - Non-U.S. | ||||||||||||
Components of net benefit cost | ||||||||||||
Service cost | $ | 109 | $ | 109 | $ | 330 | $ | 319 | ||||
Interest cost | 261 | 225 | 745 | 661 | ||||||||
Expected return on plan assets | (283 | ) | (247 | ) | (816 | ) | (729 | ) | ||||
Amortization of actuarial loss/(gain) | ||||||||||||
and prior service cost | 108 | 131 | 331 | 384 | ||||||||
Net pension enhancement and | ||||||||||||
curtailment/settlement cost | (13 | ) | 10 | (4 | ) | 12 | ||||||
Net benefit cost | $ | 182 | $ | 228 | $ | 586 | $ | 647 | ||||
Other Postretirement Benefits | ||||||||||||
Components of net benefit cost | ||||||||||||
Service cost | $ | 26 | $ | 19 | $ | 83 | $ | 56 | ||||
Interest cost | 99 | 79 | 309 | 231 | ||||||||
Expected return on plan assets | (11 | ) | (10 | ) | (34 | ) | (30 | ) | ||||
Amortization of actuarial loss/(gain) | ||||||||||||
and prior service cost | 86 | 57 | 244 | 163 | ||||||||
Net benefit cost | $ | 200 | $ | 145 | $ | 602 | $ | 420 |
-10-
7.
Disclosures about Segments and Related Information
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
(millions of dollars) | ||||||||||||
EARNINGS AFTER INCOME TAX | ||||||||||||
Upstream | ||||||||||||
United States | $ | 1,196 | $ | 1,192 | $ | 3,595 | $ | 4,116 | ||||
Non-U.S. | 5,103 | 5,301 | 14,698 | 15,894 | ||||||||
Downstream | ||||||||||||
United States | 914 | 1,272 | 3,498 | 3,305 | ||||||||
Non-U.S. | 1,087 | 1,466 | 3,808 | 3,189 | ||||||||
Chemical | ||||||||||||
United States | 296 | 458 | 846 | 976 | ||||||||
Non-U.S. | 906 | 893 | 2,605 | 2,164 | ||||||||
All other | (92 | ) | (92 | ) | (100 | ) | (394 | ) | ||||
Corporate total | $ | 9,410 | $ | 10,490 | $ | 28,950 | $ | 29,250 | ||||
SALES AND OTHER OPERATING REVENUE (1) | ||||||||||||
Upstream | ||||||||||||
United States | $ | 1,311 | $ | 1,514 | $ | 4,109 | $ | 4,691 | ||||
Non-U.S. | 5,136 | 6,059 | 15,932 | 21,860 | ||||||||
Downstream | ||||||||||||
United States | 26,243 | 25,068 | 73,148 | 71,852 | ||||||||
Non-U.S. | 57,233 | 54,602 | 158,346 | 154,583 | ||||||||
Chemical | ||||||||||||
United States | 3,453 | 3,565 | 10,102 | 10,050 | ||||||||
Non-U.S. | 5,743 | 5,454 | 16,707 | 15,559 | ||||||||
All other | 11 | 6 | 19 | 14 | ||||||||
Corporate total | $ | 99,130 | $ | 96,268 | $ | 278,363 | $ | 278,609 | ||||
(1) Includes sales-based taxes | ||||||||||||
INTERSEGMENT REVENUE | ||||||||||||
Upstream | ||||||||||||
United States | $ | 1,868 | $ | 1,675 | $ | 5,211 | $ | 5,614 | ||||
Non-U.S. | 12,181 | 11,588 | 34,446 | 30,812 | ||||||||
Downstream | ||||||||||||
United States | 3,819 | 3,619 | 10,162 | 9,695 | ||||||||
Non-U.S. | 13,225 | 12,955 | 37,051 | 36,287 | ||||||||
Chemical | ||||||||||||
United States | 2,462 | 2,067 | 6,376 | 5,990 | ||||||||
Non-U.S. | 2,030 | 1,874 | 5,718 | 5,272 | ||||||||
All other | 70 | 65 | 239 | 197 |
8.
Accounting for Suspended Exploratory Well Costs
For the category of exploratory well costs at year-end 2006 that were suspended more than one year, a total of $46 million was expensed in the first nine months of 2007.
-11-
9.
Condensed Consolidating Financial Information Related to Guaranteed Securities Issued by Subsidiaries
Exxon Mobil Corporation has fully and unconditionally guaranteed the deferred interest debentures due 2012 ($1,683 million long-term at September 30, 2007) and the debt securities due 2007-2011 ($52 million long-term and $13 million short-term) of SeaRiver Maritime Financial Holdings, Inc., a 100 percent owned subsidiary of Exxon Mobil Corporation.
The following condensed consolidating financial information is provided for Exxon Mobil Corporation, as guarantor, and for SeaRiver Maritime Financial Holdings, Inc., as issuer, as an alternative to providing separate financial statements for the issuer. The accounts of Exxon Mobil Corporation and SeaRiver Maritime Financial Holdings, Inc. are presented utilizing the equity method of accounting for investments in subsidiaries.
-12-
SeaRiver | ||||||||||||||||||||||||||||
Exxon Mobil | Maritime | Consolidating | ||||||||||||||||||||||||||
Corporation | Financial | and | ||||||||||||||||||||||||||
Parent | Holdings, | All Other | Eliminating | |||||||||||||||||||||||||
Guarantor | Inc. | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||||
(millions of dollars) | ||||||||||||||||||||||||||||
Condensed consolidated statement of income for three months ended September 30, 2006 | ||||||||||||||||||||||||||||
Revenues and other income | ||||||||||||||||||||||||||||
Sales and other operating revenue, | ||||||||||||||||||||||||||||
including sales-based taxes | $ | 4,286 | $ | - | $ | 91,982 | $ | - | $ | 96,268 | ||||||||||||||||||
Income from equity affiliates | 10,302 | (5 | ) | 1,774 | (10,293 | ) | 1,778 | |||||||||||||||||||||
Other income | 314 | - | 1,233 | - | 1,547 | |||||||||||||||||||||||
Intercompany revenue | 10,558 | 26 | 89,101 | (99,685 | ) | - | ||||||||||||||||||||||
Total revenues and other income | 25,460 | 21 | 184,090 | (109,978 | ) | 99,593 | ||||||||||||||||||||||
Costs and other deductions | ||||||||||||||||||||||||||||
Crude oil and product purchases | 10,187 | - | 132,976 | (93,799 | ) | 49,364 | ||||||||||||||||||||||
Production and manufacturing | ||||||||||||||||||||||||||||
expenses | 1,799 | - | 6,464 | (1,206 | ) | 7,057 | ||||||||||||||||||||||
Selling, general and administrative | ||||||||||||||||||||||||||||
expenses | 584 | - | 2,987 | (159 | ) | 3,412 | ||||||||||||||||||||||
Depreciation and depletion | 374 | - | 2,356 | - | 2,730 | |||||||||||||||||||||||
Exploration expenses, including dry | ||||||||||||||||||||||||||||
holes | 60 | - | 292 | - | 352 | |||||||||||||||||||||||
Interest expense | 1,327 | 46 | 3,439 | (4,531 | ) | 281 | ||||||||||||||||||||||
Sales-based taxes | - | - | 7,764 | - | 7,764 | |||||||||||||||||||||||
Other taxes and duties | 10 | - | 10,153 | - | 10,163 | |||||||||||||||||||||||
Income applicable to minority interests | - | - | 292 | - | 292 | |||||||||||||||||||||||
Total costs and other deductions | 14,341 | 46 | 166,723 | (99,695 | ) | 81,415 | ||||||||||||||||||||||
Income before income taxes | 11,119 | (25 | ) | 17,367 | (10,283 | ) | 18,178 | |||||||||||||||||||||
Income taxes | 629 | (7 | ) | 7,066 | - | 7,688 | ||||||||||||||||||||||
Net income | $ | 10,490 | $ | (18 | ) | $ | 10,301 | $ | (10,283 | ) | $ | 10,490 |
Condensed consolidated statement of income for nine months ended September 30, 2007 | ||||||||||||||||
Revenues and other income | ||||||||||||||||
Sales and other operating revenue, | ||||||||||||||||
including sales-based taxes | $ | 12,063 | $ | - | $ | 266,300 | $ | - | $ | 278,363 | ||||||
Income from equity affiliates | 28,906 | 4 | 6,051 | (28,873 | ) | 6,088 | ||||||||||
Other income | 357 | - | 3,102 | - | 3,459 | |||||||||||
Intercompany revenue | 28,172 | 78 | 255,917 | (284,167 | ) | - | ||||||||||
Total revenues and other income | 69,498 | 82 | 531,370 | (313,040 | ) | 287,910 | ||||||||||
Costs and other deductions | ||||||||||||||||
Crude oil and product purchases | 26,587 | - | 378,106 | (265,051 | ) | 139,642 | ||||||||||
Production and manufacturing | ||||||||||||||||
expenses | 5,305 | - | 21,423 | (3,883 | ) | 22,845 | ||||||||||
Selling, general and administrative | ||||||||||||||||
expenses | 1,901 | - | 9,498 | (563 | ) | 10,836 | ||||||||||
Depreciation and depletion | 1,240 | - | 7,855 | - | 9,095 | |||||||||||
Exploration expenses, including dry | ||||||||||||||||
holes | 215 | - | 759 | - | 974 | |||||||||||
Interest expense | 4,566 | 151 | 10,824 | (15,269 | ) | 272 | ||||||||||
Sales-based taxes | - | - | 23,064 | - | 23,064 | |||||||||||
Other taxes and duties | 35 | - | 29,673 | - | 29,708 | |||||||||||
Income applicable to minority interests | - | - | 722 | - | 722 | |||||||||||
Total costs and other deductions | 39,849 | 151 | 481,924 | (284,766 | ) | 237,158 | ||||||||||
Income before income taxes | 29,649 | (69 | ) | 49,446 | (28,274 | ) | 50,752 | |||||||||
Income taxes | 699 | (26 | ) | 21,129 | - | 21,802 | ||||||||||
Net income | $ | 28,950 | $ | (43 | ) | $ | 28,317 | $ | (28,274 | ) | $ | 28,950 |
-13-
SeaRiver | ||||||||||||||||||||||||||||
Exxon Mobil | Maritime | Consolidating | ||||||||||||||||||||||||||
Corporation | Financial | and | ||||||||||||||||||||||||||
Parent | Holdings, | All Other | Eliminating | |||||||||||||||||||||||||
Guarantor | Inc. | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||||||||||
(millions of dollars) | ||||||||||||||||||||||||||||
Condensed consolidated statement of income for nine months ended September 30, 2006 | ||||||||||||||||||||||||||||
Revenues and other income | ||||||||||||||||||||||||||||
Sales and other operating revenue, | ||||||||||||||||||||||||||||
including sales-based taxes | $ | 12,436 | $ | - | $ | 266,173 | $ | - | $ | 278,609 | ||||||||||||||||||
Income from equity affiliates | 28,646 | 7 | 5,256 | (28,644 | ) | 5,265 | ||||||||||||||||||||||
Other income | 722 | - | 3,011 | - | 3,733 | |||||||||||||||||||||||
Intercompany revenue | 30,374 | 69 | 251,345 | (281,788 | ) | - | ||||||||||||||||||||||
Total revenues and other income | 72,178 | 76 | 525,785 | (310,432 | ) | 287,607 | ||||||||||||||||||||||
Costs and other deductions | ||||||||||||||||||||||||||||
Crude oil and product purchases | 28,914 | - | 377,212 | (265,761 | ) | 140,365 | ||||||||||||||||||||||
Production and manufacturing | ||||||||||||||||||||||||||||
expenses | 5,588 | - | 20,031 | (3,722 | ) | 21,897 | ||||||||||||||||||||||
Selling, general and administrative | ||||||||||||||||||||||||||||
expenses | 1,939 | - | 8,946 | (450 | ) | 10,435 | ||||||||||||||||||||||
Depreciation and depletion | 1,027 | - | 7,107 | - | 8,134 | |||||||||||||||||||||||
Exploration expenses, including dry | ||||||||||||||||||||||||||||
holes | 215 | - | 595 | - | 810 | |||||||||||||||||||||||
Interest expense | 3,403 | 137 | 8,884 | (11,871 | ) | 553 | ||||||||||||||||||||||
Sales-based taxes | - | - | 23,639 | - | 23,639 | |||||||||||||||||||||||
Other taxes and duties | 26 | - | 29,180 | - | 29,206 | |||||||||||||||||||||||
Income applicable to minority interests | - | - | 727 | - | 727 | |||||||||||||||||||||||
Total costs and other deductions | 41,112 | 137 | 476,321 | (281,804 | ) | 235,766 | ||||||||||||||||||||||
Income before income taxes | 31,066 | (61 | ) | 49,464 | (28,628 | ) | 51,841 | |||||||||||||||||||||
Income taxes | 1,816 | (24 | ) | 20,799 | - | 22,591 | ||||||||||||||||||||||
Net income | $ | 29,250 | $ | (37 | ) | $ | 28,665 | $ | (28,628 | ) | $ | 29,250 |
-14-
SeaRiver | ||||||||||||||||||||
Exxon Mobil | Maritime | Consolidating | ||||||||||||||||||
Corporation | Financial | and | ||||||||||||||||||
Parent | Holdings, | All Other | Eliminating | |||||||||||||||||
Guarantor | Inc. | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||
(millions of dollars) | ||||||||||||||||||||
Condensed consolidated balance sheet as of September 30, 2007 | ||||||||||||||||||||
Cash and cash equivalents | $ | 3,055 | $ | - | $ | 28,368 | $ | - | $ | 31,423 | ||||||||||
Cash and cash equivalents - restricted | - | - | 4,604 | - | 4,604 | |||||||||||||||
Notes and accounts receivable - net | 5,585 | 10 | 29,844 | (3,607 | ) | 31,832 | ||||||||||||||
Inventories | 1,352 | - | 11,667 | - | 13,019 | |||||||||||||||
Prepaid taxes and expenses | 471 | - | 3,898 | - | 4,369 | |||||||||||||||
Total current assets | 10,463 | 10 | 78,381 | (3,607 | ) | 85,247 | ||||||||||||||
Property, plant and equipment - net | 16,262 | - | 102,840 | - | 119,102 | |||||||||||||||
Investments and other assets | 216,886 | 427 | 433,474 | (618,475 | ) | 32,312 | ||||||||||||||
Intercompany receivables | 11,258 | 1,938 | 439,850 | (453,046 | ) | - | ||||||||||||||
Total assets | $ | 254,869 | $ | 2,375 | $ | 1,054,545 | $ | (1,075,128 | ) | $ | 236,661 | |||||||||
Notes and loan payables | $ | 261 | $ | 13 | $ | 1,821 | $ | - | $ | 2,095 | ||||||||||
Accounts payable and accrued liabilities | 2,955 | 1 | 40,569 | - | 43,525 | |||||||||||||||
Income taxes payable | - | - | 13,907 | (3,607 | ) | 10,300 | ||||||||||||||
Total current liabilities | 3,216 | 14 | 56,297 | (3,607 | ) | 55,920 | ||||||||||||||
Long-term debt | 276 | 1,735 | 4,885 | - | 6,896 | |||||||||||||||
Deferred income tax liabilities | 1,636 | 222 | 20,471 | - | 22,329 | |||||||||||||||
Other long-term liabilities | 11,954 | - | 20,959 | - | 32,913 | |||||||||||||||
Intercompany payables | 119,184 | 383 | 333,479 | (453,046 | ) | - | ||||||||||||||
Total liabilities | 136,266 | 2,354 | 436,091 | (456,653 | ) | 118,058 | ||||||||||||||
Earnings reinvested | 218,761 | (447 | ) | 152,343 | (151,896 | ) | 218,761 | |||||||||||||
Other shareholders' equity | (100,158 | ) | 468 | 466,111 | (466,579 | ) | (100,158 | ) | ||||||||||||
Total shareholders' equity | 118,603 | 21 | 618,454 | (618,475 | ) | 118,603 | ||||||||||||||
Total liabilities and | ||||||||||||||||||||
shareholders' equity | $ | 254,869 | $ | 2,375 | $ | 1,054,545 | $ | (1,075,128 | ) | $ | 236,661 |
Condensed consolidated balance sheet as of December 31, 2006 | |||||||||||||||||
Cash and cash equivalents | $ | 6,355 | $ | - | $ | 21,889 | $ | - | $ | 28,244 | |||||||
Cash and cash equivalents - restricted | - | - | 4,604 | - | 4,604 | ||||||||||||
Notes and accounts receivable - net | 2,057 | - | 26,885 | - | 28,942 | ||||||||||||
Inventories | 1,213 | - | 9,501 | - | 10,714 | ||||||||||||
Prepaid taxes and expenses | 357 | - | 2,916 | - | 3,273 | ||||||||||||
Total current assets | 9,982 | - | 65,795 | - | 75,777 | ||||||||||||
Property, plant and equipment - net | 16,730 | - | 96,957 | - | 113,687 | ||||||||||||
Investments and other assets | 201,257 | 423 | 415,910 | (588,039 | ) | 29,551 | |||||||||||
Intercompany receivables | 16,501 | 1,883 | 435,221 | (453,605 | ) | - | |||||||||||
Total assets | $ | 244,470 | $ | 2,306 | $ | 1,013,883 | $ | (1,041,644 | ) | $ | 219,015 | ||||||
Notes and loan payables | $ | 90 | $ | 13 | $ | 1,599 | $ | - | $ | 1,702 | |||||||
Accounts payable and accrued liabilities | 3,025 | 1 | 36,056 | - | 39,082 | ||||||||||||
Income taxes payable | 548 | 1 | 7,484 | - | 8,033 | ||||||||||||
Total current liabilities | 3,663 | 15 | 45,139 | - | 48,817 | ||||||||||||
Long-term debt | 274 | 1,602 | 4,769 | - | 6,645 | ||||||||||||
Deferred income tax liabilities | 1,975 | 237 | 18,639 | - | 20,851 | ||||||||||||
Other long-term liabilities | 8,044 | - | 20,814 | - | 28,858 | ||||||||||||
Intercompany payables | 116,670 | 387 | 336,548 | (453,605 | ) | - | |||||||||||
Total liabilities | 130,626 | 2,241 | 425,909 | (453,605 | ) | 105,171 | |||||||||||
Earnings reinvested | 195,207 | (404 | ) | 144,607 | (144,203 | ) | 195,207 | ||||||||||
Other shareholders' equity | (81,363 | ) | 469 | 443,367 | (443,836 | ) | (81,363 | ) | |||||||||
Total shareholders' equity | 113,844 | 65 | 587,974 | (588,039 | ) | 113,844 | |||||||||||
Total liabilities and | |||||||||||||||||
shareholders' equity | $ | 244,470 | $ | 2,306 | $ | 1,013,883 | $ | (1,041,644 | ) | $ | 219,015 |
-15-
SeaRiver | ||||||||||||||||||||
Exxon Mobil | Maritime | Consolidating | ||||||||||||||||||
Corporation | Financial | and | ||||||||||||||||||
Parent | Holdings, | All Other | Eliminating | |||||||||||||||||
Guarantor | Inc. | Subsidiaries | Adjustments | Consolidated | ||||||||||||||||
(millions of dollars) | ||||||||||||||||||||
Condensed consolidated statement of cash flows for nine months ended September 30, 2007 | ||||||||||||||||||||
Cash provided by/(used in) operating | ||||||||||||||||||||
activities | $ | 21,063 | $ | 60 | $ | 40,176 | $ | (20,632 | ) | $ | 40,667 | |||||||||
Cash flows from investing activities | ||||||||||||||||||||
Additions to property, plant and | ||||||||||||||||||||
equipment | (912 | ) | - | (9,915 | ) | - | (10,827 | ) | ||||||||||||
Sales of long-term assets | 187 | - | 2,235 | - | 2,422 | |||||||||||||||
Net intercompany investing | 4,554 | (56 | ) | (4,565 | ) | 67 | - | |||||||||||||
All other investing, net | - | - | (1,660 | ) | - | (1,660 | ) | |||||||||||||
Net cash provided by/(used in) | ||||||||||||||||||||
investing activities | 3,829 | (56 | ) | (13,905 | ) | 67 | (10,065 | ) | ||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Additions to long-term debt | - | - | 104 | - | 104 | |||||||||||||||
Reductions in long-term debt | - | - | (111 | ) | - | (111 | ) | |||||||||||||
Additions/(reductions) in short-term | ||||||||||||||||||||
debt - net | 163 | - | 23 | - | 186 | |||||||||||||||
Cash dividends | (5,718 | ) | - | (20,632 | ) | 20,632 | (5,718 | ) | ||||||||||||
Net ExxonMobil shares sold/(acquired) | (22,993 | ) | - | - | - | (22,993 | ) | |||||||||||||
Net intercompany financing activity | - | (4 | ) | 71 | (67 | ) | - | |||||||||||||
All other financing, net | 356 | - | (762 | ) | - | (406 | ) | |||||||||||||
Net cash provided by/(used in) | ||||||||||||||||||||
financing activities | (28,192 | ) | (4 | ) | (21,307 | ) | 20,565 | (28,938 | ) | |||||||||||
Effects of exchange rate changes | ||||||||||||||||||||
on cash | - | - | 1,515 | - | 1,515 | |||||||||||||||
Increase/(decrease) in cash and cash | ||||||||||||||||||||
equivalents | $ | (3,300 | ) | $ | - | $ | 6,479 | $ | - | $ | 3,179 |
Condensed consolidated statement of cash flows for nine months ended September 30, 2006 | ||||||||||||||||
Cash provided by/(used in) operating | ||||||||||||||||
activities | $ | 1,122 | $ | 74 | $ | 40,556 | $ | (1,328 | ) | $ | 40,424 | |||||
Cash flows from investing activities | ||||||||||||||||
Additions to property, plant and | ||||||||||||||||
equipment | (1,188 | ) | - | (10,113 | ) | - | (11,301 | ) | ||||||||
Sales of long-term assets | 226 | - | 2,102 | - | 2,328 | |||||||||||
Net intercompany investing | 20,711 | (75 | ) | (20,745 | ) | 109 | - | |||||||||
All other investing, net | - | - | (1,791 | ) | - | (1,791 | ) | |||||||||
Net cash provided by/(used in) | ||||||||||||||||
investing activities | 19,749 | (75 | ) | (30,547 | ) | 109 | (10,764 | ) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Additions to long-term debt | - | - | 123 | - | 123 | |||||||||||
Reductions in long-term debt | - | - | (31 | ) | - | (31 | ) | |||||||||
Additions/(reductions) in short-term | ||||||||||||||||
debt - net | (151 | ) | - | 396 | - | 245 | ||||||||||
Cash dividends | (5,775 | ) | - | (1,328 | ) | 1,328 | (5,775 | ) | ||||||||
Net ExxonMobil shares sold/(acquired) | (20,379 | ) | - | - | - | (20,379 | ) | |||||||||
Net intercompany financing activity | - | 1 | 108 | (109 | ) | - | ||||||||||
All other financing, net | 270 | - | (587 | ) | - | (317 | ) | |||||||||
Net cash provided by/(used in) | ||||||||||||||||
financing activities | (26,035 | ) | 1 | (1,319 | ) | 1,219 | (26,134 | ) | ||||||||
Effects of exchange rate changes | ||||||||||||||||
on cash | - | - | 537 | - | 537 | |||||||||||
Increase/(decrease) in cash and cash | ||||||||||||||||
equivalents | $ | (5,164 | ) | $ | - | $ | 9,227 | $ | - | $ | 4,063 |
-16-
EXXON MOBIL CORPORATION
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
Third Quarter | First Nine Months | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
(millions of dollars) | ||||||||||||
Net Income (U.S. GAAP) | ||||||||||||
Upstream | ||||||||||||
United States | $ | 1,196 | $ | 1,192 | $ | 3,595 | $ | 4,116 | ||||
Non-U.S. | 5,103 | 5,301 | 14,698 | 15,894 | ||||||||
Downstream | ||||||||||||
United States | 914 | 1,272 | 3,498 | 3,305 | ||||||||
Non-U.S. | 1,087 | 1,466 | 3,808 | 3,189 | ||||||||
Chemical | ||||||||||||
United States | 296 | 458 | 846 | 976 | ||||||||
Non-U.S. | 906 | 893 | 2,605 | 2,164 | ||||||||
Corporate and financing | (92 | ) | (92 | ) | (100 | ) | (394 | ) | ||||
Net Income (U.S. GAAP) | $ | 9,410 | $ | 10,490 | $ | 28,950 | $ | 29,250 | ||||
Net income per common share (dollars) | $ | 1.72 | $ | 1.79 | $ | 5.21 | $ | 4.91 | ||||
Net income per common share | ||||||||||||
- assuming dilution (dollars) | $ | 1.70 | $ | 1.77 | $ | 5.15 | $ | 4.86 |
REVIEW OF THIRD QUARTER AND FIRST NINE MONTHS 2007 RESULTS
Exxon Mobil Corporation reported third quarter 2007 net income of $9,410 million ($1.70 per share), down 10 percent from the third quarter of 2006, while earnings per share were down 4 percent for the same period. The decrease reflected lower downstream and chemical margins partly offset by higher crude oil realizations. Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, production on an oil-equivalent basis increased by 3 percent.
__________________________________________________________
Net income of $28,950 million for the first nine months of 2007 was $300 million lower than the record first nine months of 2006. Earnings per share of $5.15 reflected strong earnings and increased by 6 percent due to the reduction in the number of shares outstanding. Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, liquids production increased by 5 percent.
Third Quarter | First Nine Months | ||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||
(millions of dollars) | |||||||||||||||
Upstream earnings | |||||||||||||||
United States | $ | 1,196 | $ | 1,192 | $ | 3,595 | $ | 4,116 | |||||||
Non-U.S. | 5,103 | 5,301 | 14,698 | 15,894 | |||||||||||
Total | $ | 6,299 | $ | 6,493 | $ | 18,293 | $ | 20,010 |
Upstream earnings in the third quarter of 2007 were $6,299 million, down $194 million from the third quarter of 2006 primarily reflecting lower natural gas realizations and higher operating expenses, mostly offset by higher crude oil realizations. On an oil-equivalent basis, production decreased by 2 percent from the third quarter of 2006. Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, production was up 3 percent.
-17-
Liquids production of 2,536 kbd (thousands of barrels per day) was 111 kbd lower. Mature field decline and reduced entitlements were partly offset by increased production from projects in Africa and Russia. Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, liquids production was up 3 percent.
Third quarter natural gas production was 8,302 mcfd (millions of cubic feet per day), up 163 mcfd from 2006. Increased volume from projects in Qatar was partly offset by the impact of mature field decline. Excluding entitlement and divestment effects, natural gas production increased by 3 percent.
Earnings from U.S. Upstream operations were $1,196 million, $4 million higher than the third quarter of 2006. Non-U.S. Upstream earnings were $5,103 million, down $198 million from 2006.
__________________________________________________________
Upstream earnings for the first nine months of 2007 were $18,293 million, a decrease of $1,717 million from 2006 due to lower natural gas realizations and higher operating expenses, partly offset by higher crude oil realizations and favorable sales mix effects. On an oil-equivalent basis, production decreased 2 percent from last year. Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, production was up nearly 3 percent.
Liquids production of 2,649 kbd decreased by 33 kbd from 2006. Higher production from projects in Africa and Russia was offset by mature field decline and reduced entitlements. Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, liquids production increased 5 percent.
Natural gas production of 9,043 mcfd decreased 302 mcfd from 2006. Lower volume from mature field decline was partly offset by projects in Qatar, Europe, Canada and Malaysia.
Earnings from U.S. Upstream operations for 2007 were $3,595 million, a decrease of $521 million. Earnings outside the U.S. were $14,698 million, $1,196 million lower than 2006.
Third Quarter | First Nine Months | ||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||
(millions of dollars) | |||||||||||||||
Downstream earnings | |||||||||||||||
United States | $ | 914 | $ | 1,272 | $ | 3,498 | $ | 3,305 | |||||||
Non-U.S. | 1,087 | 1,466 | 3,808 | 3,189 | |||||||||||
Total | $ | 2,001 | $ | 2,738 | $ | 7,306 | $ | 6,494 |
Downstream earnings in the third quarter of 2007 were $2,001 million, down $737 million from the third quarter of 2006, driven by lower refining and fuels marketing margins. Petroleum product sales were 7,101 kbd, 201 kbd lower than last year's third quarter.
U.S. Downstream earnings were $914 million, down $358 million from the third quarter of 2006. Non-U.S. Downstream earnings of $1,087 million were $379 million lower.
__________________________________________________________
Downstream earnings for the first nine months of 2007 were a record $7,306 million, an increase of $812 million from 2006 reflecting stronger marketing margins, refinery optimization activities and the sale of the Ingolstadt refinery, partly offset by lower refining margins. Petroleum product sales of 7,090 kbd decreased from 7,180 kbd in 2006.
U.S. Downstream earnings were $3,498 million, up $193 million. Non-U.S. Downstream earnings were $3,808 million, $619 million higher than last year.
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Third Quarter | First Nine Months | ||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||
(millions of dollars) | |||||||||||||||
Chemical earnings | |||||||||||||||
United States | $ | 296 | $ | 458 | $ | 846 | $ | 976 | |||||||
Non-U.S. | 906 | 893 | 2,605 | 2,164 | |||||||||||
Total | $ | 1,202 | $ | 1,351 | $ | 3,451 | $ | 3,140 |
Chemical earnings in the third quarter of 2007 were $1,202 million, down $149 million from the third quarter of 2006 due to lower margins partly offset by favorable tax items. Prime product sales of 6,729 kt (thousands of metric tons) in the third quarter of 2007 were down 23 kt from the prior year.
__________________________________________________________
Chemical earnings for the first nine months of 2007 were a record $3,451 million, up $311 million from 2006 driven by higher margins. Prime product sales were 20,431 kt, down 92 kt from 2006.
Third Quarter | First Nine Months | ||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||
(millions of dollars) | |||||||||||||||
Corporate and financing earnings | $ | (92 | ) | $ | (92 | ) | $ | (100 | ) | $ | (394 | ) |
Corporate and financing expenses in the third quarter of 2007 of $92 million were flat with 2006.
__________________________________________________________
Corporate and financing expenses for the first nine months of 2007 of $100 million decreased $294 million, mainly due to favorable tax items.
LIQUIDITY AND CAPITAL RESOURCES
Third Quarter | First Nine Months | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
(millions of dollars) | ||||||||||||
Net cash provided by/(used in) | ||||||||||||
Operating activities | $ | 40,667 | $ | 40,424 | ||||||||
Investing activities | (10,065 | ) | (10,764 | ) | ||||||||
Financing activities | (28,938 | ) | (26,134 | ) | ||||||||
Effect of exchange rate changes | 1,515 | 537 | ||||||||||
Increase/(decrease) in cash and cash equivalents | $ | 3,179 | $ | 4,063 | ||||||||
Cash and cash equivalents | $ | 31,423 | $ | 32,734 | ||||||||
Cash and cash equivalents - restricted (note 3) | 4,604 | 4,604 | ||||||||||
Total cash and cash equivalents (at end of period) | $ | 36,027 | $ | 37,338 | ||||||||
Cash flow from operations and asset sales | ||||||||||||
Net cash provided by operating activities (U.S. GAAP) | $ | 15,063 | $ | 14,497 | $ | 40,667 | $ | 40,424 | ||||
Sales of subsidiaries, investments and property, | ||||||||||||
plant and equipment | 749 | 878 | 2,422 | 2,328 | ||||||||
Cash flow from operations and asset sales | $ | 15,812 | $ | 15,375 | $ | 43,089 | $ | 42,752 |
Because of the ongoing nature of our asset management and divestment program, we believe
it is useful for investors to consider asset sales proceeds together with cash provided by operating
activities when evaluating cash available for investment in the business and financing activities.
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Total cash and cash equivalents, including the $4.6 billion of restricted cash, was $36.0 billion at the end of the third quarter of 2007.
Cash provided by operating activities totaled $40,667 million for the first nine months of 2007, similar to 2006. The major source of funds was net income of $28,950 million, adjusted for the noncash provision of $9,095 million for depreciation and depletion. Net changes in operational working capital and other items in 2007 added $2.6 billion. For additional details, see the Condensed Consolidated Statement of Cash Flows on page 5.
Investing activities for the first nine months of 2007 used net cash of $10,065 million compared to $10,764 million in the prior year. Spending for additions to property, plant and equipment decreased $474 million to $10,827 million.
Cash flow from operations and asset sales in the third quarter of 2007 of $15.8 billion, including asset sales of $0.7 billion, was comparable to the prior year period. For the first nine months of 2007, cash flow from operations and asset sales was $43.1 billion, including $2.4 billion from asset sales.
Net cash used in financing activities of $28,938 million in the first nine months of 2007 increased $2,804 million reflecting a higher level of purchases of shares of ExxonMobil stock.
During the third quarter of 2007, Exxon Mobil Corporation purchased 90 million shares of its common stock for the treasury at a gross cost of $7.8 billion. These purchases included $7.0 billion to reduce the number of shares outstanding, with the balance used to offset shares issued in conjunction with the company's benefit plans and programs. Shares outstanding were reduced from 5,546 million at the end of the second quarter to 5,464 million at the end of the third quarter.
Gross share purchases in the first nine months of 2007 were $23.9 billion, which reduced shares outstanding by 4.6 percent. 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.
The Corporation distributed a total of $8.9 billion to shareholders in the third quarter through dividends of $1.9 billion and share purchases to reduce shares outstanding of $7.0 billion. For the first nine months of 2007 distributions to shareholders totaled $26.7 billion through dividends and share purchases to reduce shares outstanding, an increase of $2.9 billion versus 2006.
Total debt of $9.0 billion at September 30, 2007, increased from $8.3 billion at year-end 2006. The Corporation's debt to total capital ratio was 6.8 percent at the end of the third quarter of 2007 compared to 6.6 percent at year-end 2006.
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.
In accordance with a nationalization decree issued by Venezuela's President Chavez in February of this year, by May 1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates (ExxonMobil) holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a "mixed enterprise" structure and an increase in PdVSA's or one of its affiliate's ownership interest in the Project, with the stipulation that if an agreement was not reached for the formation of the mixed enterprise during a specified period of time, the government would "directly take on the activities" carried out by the joint venture. ExxonMobil and Venezuela were not able to reach agreement on the formation of a mixed enterprise and on June 27, 2007, the government expropriated ExxonMobil's 41.67 percent interest in the Cerro Negro Project.
Subsequent discussions with Venezuelan authorities have not resulted in an agreement on the amount of compensation to be paid to ExxonMobil. On September 6, 2007, ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes. At this time the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, the Corporation does not expect the resolution to have a material effect upon the Corporation's operations or financial condition. At the time the assets were expropriated, ExxonMobil's remaining net book investment in Cerro Negro producing assets was about $750 million.
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.
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TAXES
Third Quarter | First Nine Months | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
(millions of dollars) | ||||||||||||||
Taxes | ||||||||||||||
Income taxes | $ | 7,350 | $ | 7,688 | $ | 21,802 | $ | 22,591 | ||||||
Sales-based taxes | 7,970 | 7,764 | 23,064 | 23,639 | ||||||||||
All other taxes and duties | 10,953 | 10,793 | 32,026 | 31,573 | ||||||||||
Total | $ | 26,273 | $ | 26,245 | $ | 76,892 | $ | 77,803 | ||||||
Effective income tax rate | 46 | % | 44 | % | 45 | % | 45 | % |
Income, sales-based and all other taxes and duties for the third quarter of 2007 of $26,273 million were flat as compared to 2006. In the third quarter of 2007 income tax expense was $7,350 million and the effective income tax rate was 46 percent, compared to $7,688 million and 44 percent, respectively, in the prior year period.
__________________________________________________________
Income, sales-based and all other taxes and duties for the first nine months of 2007 of $76,892 million were down $911 million compared to 2006. In the first nine months of 2007 income tax expense was $21,802 million and the effective income tax rate was 45 percent, compared to $22,591 million and 45 percent, respectively, in the prior year period.
CAPITAL AND EXPLORATION EXPENDITURES
Third Quarter | First Nine Months | ||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||
(millions of dollars) | |||||||||||||||
Capital and exploration expenditures | |||||||||||||||
Upstream (including exploration expenses) | $ | 3,851 | $ | 4,142 | $ | 11,186 | $ | 12,161 | |||||||
Downstream | 984 | 658 | 2,389 | 1,981 | |||||||||||
Chemical | 601 | 195 | 1,096 | 525 | |||||||||||
Other | 5 | 66 | 31 | 119 | |||||||||||
Total | $ | 5,441 | $ | 5,061 | $ | 14,702 | $ | 14,786 |
ExxonMobil continued to actively invest in the third quarter, spending $5.4 billion on capital and exploration projects, an increase of 8 percent over 2006. For the first nine months of 2007, spending on capital and exploration projects was $14.7 billion.
Capital and exploration expenditures for full year 2006 were $19.9 billion and are expected to continue in this range for the next several years. Actual spending could vary depending on the progress of individual projects.
FORWARD-LOOKING STATEMENTS
Statements in this report relating to future plans, projections, events or conditions are forward-looking statements. Actual results, including project plans and related expenditures, resource recoveries, timing and capacities, could differ materially due to changes in long-term oil or gas prices or other market conditions affecting the oil and gas industry; political events or disturbances; reservoir performance; the outcome of commercial negotiations; potential liability resulting from pending or future litigation; wars and acts of terrorism or sabotage; changes in technical or operating conditions; and other factors discussed under the heading "Factors Affecting Future Results" on our website and in Item 1A of ExxonMobil's 2006 Form 10-K. We assume no duty to update these statements as of any future date.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the nine months ended September 30, 2007, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2006.
Item 4. Controls and Procedures
As indicated in the certifications in Exhibit 31 of this report, the Corporations chief executive officer, principal financial officer and principal accounting officer have evaluated the Corporations disclosure controls and procedures as of September 30, 2007. Based on that evaluation, these officers have concluded that the Corporations disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms. 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
On October 9, 2007, ExxonMobil Oil Corporation received a proposed agreed order from the Texas Commission on Environmental Quality (TCEQ) relating to three separate air emissions events (in January, April and May of 2007) at the Beaumont, Texas refinery. The events are associated with, respectively, a power disruption, a feed tank roof landing, and coker flaring due to low feedrate to the Wet Gas Compressor as the coker unit moved into turnaround. The TCEQ alleges that the three events were avoidable. In the proposed order, the TCEQ has assessed a penalty of $106,000. The Company is assessing the appropriate response to the proposed order.
On September 14, 2007, the TCEQ issued a proposed agreed order relating to the Company's Baytown, Texas refinery. The enforcement action relates to three separate air emissions events, occurring in October 2005, June 2006 and October 2006. The events are associated with, respectively, a forced draft fan trip at a fluid catalytic cracking unit, flooding/foaming in the delayed coker unit lean oil absorber, and a power plant relay trip. The TCEQ has assessed an administrative penalty of $160,000 in the aggregate. The Company is contesting enforcement related to the October 2006 power plant event (for which $60,000 of the penalty is being sought), and negotiations are ongoing regarding the amount of penalty for the other two events.
On September 4, 2007, the TCEQ issued a proposed agreed order in which it assessed an administrative penalty of $133,000 relating to two separate air emissions events occurring in February 2007 at the Company's Baytown, Texas refinery. The events are associated with, respectively, a compressor trip at Booster Station 4 and an air blower interval of surge at the Flexicoker. ExxonMobil is not contesting the enforcement of either event, but negotiations are in progress regarding the penalty amount.
Pursuant to a proposed agreed order received in August 2007, the Colorado Department of Public Health and Environment (CDPHE) is pursuing an enforcement action against the Company relating to excess air emissions (VOC, NOx, HAPs) events at the Piceance Creek Unit Gas Plant. The issues were identified during agency inspections and internal reviews in 2006 and 2007. The violations were due to reciprocating engine exhaust catalyst failure and glycol dehydrator control device failure, as well as associated recordkeeping issues. The Company also self-disclosed an issue associated with emissions that were not reflected in the air permit, but discovered during testing. The Company is engaged with the CDPHE in settlement discussions to enter into a Compliance Order on Consent that will require the installation of a new control device (thermal oxidizer) as well as payment of penalties. The initial administrative penalty demand and associated economic benefit penalty demand exceed $500,000, but are under negotiation.
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The Environmental Protection Agency (EPA) is evaluating enforcement under the Toxic Substances Control Act for alleged leaks of PCB-containing oil from transformers and related alleged violations of PCB disposal requirements at the Company's Santa Ynez Unit Platform Hondo facility, offshore California. The EPA has indicated that they intend to seek civil penalties in excess of $100,000.
The Department of Justice (DOJ) and the U.S. Fish and Wildlife Service are evaluating enforcement for alleged violations of the Migratory Bird Treaty Act at the Company's Piceance Creek production unit in Colorado, the LaBarge, Wyoming production facility, and isolated production facilities in Kansas, Oklahoma and Texas. The DOJ has indicated that it intends to seek fines and restitution in excess of $100,000.
Refer to the relevant portions of note 3 on pages 7 and 8 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
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.
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Item 6. Exhibits
Exhibit
Description
10(iii)(d)
ExxonMobil Executive Life Insurance and Death Benefit Plan.
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
Financial Officer.
31.3
Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal
Accounting 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 Financial Officer.
32.3
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by
Principal Accounting 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: November 7, 2007
By: /s/ Patrick T. Mulva
Name: Patrick T. Mulva
Title: Vice President, Controller and
Principal Accounting Officer
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INDEX TO EXHIBITS
Exhibit
Description
10(iii)(d)
ExxonMobil Executive Life Insurance and Death Benefit Plan.
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 Financial Officer.
31.3
Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by
Principal Accounting 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
Financial Officer.
32.3
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal
Accounting Officer.
-26-
Exhibit 10(iii)(d)
EDITION OF JANUARY 1, 2000
(Inclusive of amendments through October 2007)
EXXONMOBIL EXECUTIVE LIFE INSURANCE AND
DEATH BENEFIT PLAN
Articles
1.
Participation and Coverage
2.
Levels of Insurance Coverage
3.
Payment of Benefit
4.
Designation of Beneficiary
5.
Miscellaneous
EXXONMOBIL EXECUTIVE LIFE INSURANCE AND
DEATH BENEFIT PLAN
1. Participation
1.1
Covered Executive
Each covered executive is a participant in this Plan.
1.2
Retiree
(A)
In General
Except as provided in paragraph (B) below, each person who becomes a retiree on or after the effective date, and who is a covered executive immediately prior to becoming a retiree is a participant in this Plan. In addition, each grandfathered retiree is a participant in the Plan.
(B)
Exception
A retiree will cease to be a participant during the time the retiree is a suspended retiree.
1.3
Cessation of Participant Status
(A)
Termination of Employment
(1)
In General
Except as provided in paragraphs (2) through (4) below, a covered executive will cease to be a participant 31 days after the covered executive terminates employment without becoming a retiree.
(2)
Exception for Long Term Disability
A covered executive who terminates employment with eligibility for long-term disability benefits under the ExxonMobil Disability Plan, will cease to be a participant at the earlier of
(a)
one year after terminating employment, or
(b)
the date the person is no longer eligible for long-term disability benefits on account of ceasing to be disabled.
(3)
Exception for Coverage Provided Through Death Benefit
-1-
If, at the time a covered executive terminates employment he or she has elected to receive executive life coverage in the form of a death benefit, the covered executive will cease to be a participant on the date of such termination of employment.
(4)
Exception for Transition Severance Terminees
(a)
In General
A covered executive who terminates employment without becoming a retiree shall continue to be a participant for a period of one year from the date of such termination of employment, but only if the person is eligible for a benefit under the Exxon Transition Severance Plan, or if the Corporation, acting through its management, determines that the covered executive is otherwise eligible for such continued participation.
(b)
Termination of Provision
This paragraph (4) shall not apply to any covered executive who terminates employment after August 31, 2000.
(B)
Suspended Retirees
A retiree or grandfathered retiree will cease to be a participant during the time the person is a suspended retiree.
2. Coverage
2.1
When and How Coverage is Provided
(A)
In General
(1)
Executive Life Coverage
Executive life coverage is automatically provided to all participants other than grandfathered retirees.
(2)
Supplemental Group Life Coverage
-2-
Supplemental group life coverage is automatically provided to all participants who are grandfathered retirees.
(B)
Life Insurance or Death Benefit Option
(1)
In General
Both executive life coverage and supplemental group life coverage is automatically provided under the Plan as life insurance unless a participant elects to receive coverage in the form of a death benefit.
(2)
Election
Participants may, at any time, elect to receive executive life or supplemental group life coverage, whichever is applicable, as a death benefit, and may revoke any such election. An election or revocation under this paragraph (2) shall be made in accordance with procedures established by the administrator.
(3)
When Election is Effective
(a)
Death Benefit
An election under paragraph (2) above to receive executive life or supplemental group life coverage as a death benefit shall become effective on the first of the month following the receipt of such election by the administrator.
(b)
Revocation of Election
A participants revocation of a death benefit election in favor of receiving executive life or supplemental group life coverage as life insurance becomes effective on the first of the month following the date the administrator receives notification from the insurer that the insurer has, in its discretion, approved evidence of insurability submitted by the participant.
-3-
(4)
Reinstatement of Coverage
If a participants executive life or supplemental group life coverage is reinstated after a period in which the participant was ineligible for coverage under section 1.3(B) above on account of becoming a suspended retiree, such coverage shall be reinstated under the option (i.e., life insurance or a death benefit) in force at the time coverage was lost.
(C)
Termination of Coverage
Executive life or supplemental group life coverage terminates for an individual on the date the individual ceases to be a participant.
2.2
Amount of Benefit
(A)
Executive Life Coverage
(1)
In General
Except as provided in paragraph (2) below, the amount of executive life coverage in effect for a participant is equal to the applicable percentage determined under the following chart multiplied by the participants annual base pay:
If the participants age is | The percentage is |
Under 65 | 400% |
65-69 | 350% |
70-74 | 300% |
75 and over | 250% |
For this purpose, a participant attains a particular age as of the first day of the month in which the person will turn such age. In addition, a covered executives annual base pay is the base pay in effect at the time coverage is determined, and a retirees base pay is the base pay in effect for the person immediately before the person became a retiree.
-4-
(2)
Transition Severance Terminees
The amount of executive life coverage in effect for a person who is a participant solely on account of section 1.3(A)(4) above relating to transition severance terminees is 200% of the persons annual base pay in effect immediately before the persons termination of employment.
(B)
Supplemental Group Life Coverage
Supplemental Group Life Coverage is provided
(1)
during retirement to all grandfathered retirees, and
(2)
during employment to those persons who become grandfathered retirees after the effective date.
The amount of supplemental group life coverage in effect for a grandfathered retiree is equal to the amount of coverage in effect for the person under the provisions of the Supplemental Group Life Insurance Plan or Supplemental Group Death Benefit Plan (as such plans existed on December 31, 1999) as of the later of December 31, 1999 or the date the person retires. The amount of supplemental group life coverage in effect during employment for a person who becomes a grandfathered retiree after the effective date is the amount of coverage to which they are entitled under the terms of the Supplemental Group Life Insurance Plan or Supplemental Group Death Benefit Plan (as such plans existed on December 31, 1999).
3. Payment of Benefit
3.1
Conditions for Payment of Benefit
If a participant dies while executive life or supplemental group life coverage for that participant is in effect, then the amount of coverage then in effect for the participant becomes payable; provided, that proof of death satisfactory to the insurer must be provided before any benefit becomes payable as life insurance.
-5-
3.2
Form of Payment
A benefit payable under Section 3.1 above upon a participants death shall be paid in a lump sum.
3.3
Source of Payment
(A)
Life Insurance
Executive life and supplemental group life coverage in the form of life insurance shall be provided through one or more policies of insurance issued by an insurer selected by the Corporation, and any executive life or supplemental group life benefit payable as insurance shall be paid pursuant to such policy or policies.
(B)
Death Benefit
Any executive life or supplemental group life benefit payable as a death benefit shall be paid from the general assets of the Corporation.
3.4
To Whom Paid
A benefit payable under Section 3.1 above upon a participants death shall be paid as follows:
(A)
If a beneficiary designation is in effect at the time of the participants death, the benefit shall be paid in accordance with such designation.
(B)
If no beneficiary designation is in effect, the benefit shall be paid to the first of the following groups that has at least one member that survives the participant:
(1)
The participants spouse.
(2)
The participants children. In this event, the benefit will be divided equally among the children who survive the participant as well as the children who die before the participant leaving children of their own who survive the participant. In the case of a participant's child who dies before the participant leaving children of his or her own who survive the participant, such childs share shall be divided equally among his or her surviving children.
(3)
The participants parents. In this event, the benefit will be divided equally among the parents if they both survive the participant.
-6-
(4)
The participants brothers and sisters. In this event, the benefit will be divided equally among the brothers and sisters who survive the participant as well as the brothers and sisters who die before the participant leaving children of their own who survive the participant. In the case of a brother or sister who dies before the participant leaving children of his or her own who survive the participant, such brother or sisters share shall be divided equally among his or her surviving children.
(5)
The participants executors or administrators.
For purposes of this Paragraph (B), a spouse of a participant shall include only someone who is the legal spouse of the participant, and a child, parent, brother, or sister of a participant shall include only someone who is a legitimate blood relative of the participant or whose relationship with the participant is established by virtue of a legal adoption.
4. Designation of Beneficiary
4.1
Designation
A participant may designate one or more beneficiaries to receive the payment of benefits upon the death of the participant, or may at any time change or cancel a previously made beneficiary designation.
4.2
Forms and Submission
Any beneficiary designation or change or cancellation thereof shall be made on such forms and in such manner as is satisfactory to the insurer. No beneficiary designation or change or cancellation thereof shall become effective until received by the insurer or its designated agent.
4.3
Designation Made Under Prior Plans
Any beneficiary designation made by a participant under the Supplemental Group Life Insurance Plan or Supplemental Death Benefit Plan that remains in
-7-
effect on December 31, 1999, shall continue to be valid under this Plan on and after the effective date until and unless properly superceded.
5. Miscellaneous
5.1
Plan Funding
The funding for executive life and supplemental group life coverage, including the funding of premiums under any life insurance policy issued in connection with such coverage, shall be paid for by the Corporation; no participant contributions will be required or permitted.
5.2
Assignment of Insurance
(A)
Assignment
A participant may assign to another owner the participant's interest in his or her executive life or supplemental group life coverage provided in the form of life insurance. Such assignment shall be made on such forms and in such manner as is acceptable to the administrator and the insurer.
(B)
Effect of Assignment
(1)
In General
When an assignment of a participants coverage is in effect as described in paragraph (A) above, then, except as provided in paragraph (2) below, the participants assignee shall have the right to take all actions under the terms of this Plan with respect to such coverage that the participant would otherwise have the right to take, including, without limitation, the right to designate a beneficiary.
(2)
Exception
An assignee shall not have the right under this Plan to elect to receive executive life or supplemental group life coverage as a death benefit under section 2.1(B)(2) above or to revoke an already existing election.
-8-
(C)
Assignment Under Prior Plan
Any assignment of coverage made by a participant under the Supplemental Group Life Insurance Plan shall continue to be valid under this Plan with respect to executive life and supplemental group life coverage.
5.3
Amendment and Termination
The Corporation at any time, by action of any duly authorized officer, may amend or terminate this Plan in whole or in part.
5.4
Responsibilities and Authority of Administrator
The administrator shall fulfill all duties and responsibilities of a plan administrator required by the Employee Retirement Income Security Act of 1974, as amended. The administrator shall have the authority to control and manage the operation and administration of this Plan, including, without limitation:
(A)
discretionary and final authority to determine eligibility and to administer this Plan in its application to each participant and beneficiary; and
(B)
discretionary and final authority to interpret this Plan, in whole or in part, including but not limited to, exercising such authority in conducting a full and fair review, with such interpretation being conclusive for all participants and beneficiaries under this Plan.
-9-
5.5
Claim Appeal Process
(A)
Submission of Appeal
In the event a claim for benefits is denied, the claimant has the right to appeal to the administrator. A written request to review a denied claim must be received by the administrator within 90 days after the claim denial. The request may state the reasons the claimant believes he or she is entitled to Plan benefits, and may be accompanied by supporting information and documentation for the administrators consideration.
(B)
Decision
The administrator shall decide appeals in accordance with the administrators fiduciary authority set out in section 5.4 above. Appeal decisions will be made within 60 days of the receipt of the claim by the administrator unless special circumstances warrant an extension of time. If an extension of time is required, the administrator will notify the claimant of the extension. In all cases, the decision will be made no later than 120 days after the receipt of the claim by the administrator. The appeal decision shall be in writing, specify the reasons for the decision, and refer to the relevant Plan provision(s) on which the decision is based.
5.6
Definitions
The following terms shall have the following meanings ascribed to them:
(A)
Administrator means the Manager, Compensation and Executive Plans, Human Resources Department, Exxon Mobil Corporation.
(B)
Corporation means Exxon Mobil Corporation.
(C)
Covered Employee has the meaning set out in the ExxonMobil Benefit Plans Common Provisions.
(D)
Covered Executive means a covered employee who has a classification level of 35 or higher; provided, however, that the group of covered executives shall be frozen as of September 30, 2007, and no individual shall become a covered executive on or after October 1, 2007.
(E)
Effective Date means January 1, 2000.
(F)
Grandfathered retiree means a person who
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(1)
became a retiree prior to the effective date, and was covered under the Supplemental Group Life Insurance Plan or Supplemental Death Benefit Plan immediately prior to the effective date, or who
(2)
becomes a retiree after the effective date after having been given the opportunity to elect and having elected continued coverage under the Supplemental Group Life Insurance Plan or Supplemental Death Benefit Plan.
(G)
"Insurer" means the insurance company that is the issuer of the policy of insurance described in section 3.3(A) above.
(H)
Participant means a covered executive, retiree, or grandfathered retiree, as the context requires.
(I)
Retiree
(1)
In General
Retiree has the meaning set out in the ExxonMobil Benefit Plans Common Provisions.
(2)
Transition Severance Cases
(a)
Treatment as Covered Annuitant
Solely for purposes of this Plan, a person who is described in paragraph (b) below shall be treated as if he or she were a retiree.
(b)
Eligibility
A person is described in this paragraph (b) if the person
(i)
terminates employment as a covered executive;
(ii)
is at least 50 years old by the end of the month in which the termination of employment occurs;
(iii)
has at least 10 years of benefit plan service (as defined in the ExxonMobil Benefit Plans Common Provisions) at the time of the termination of employment; and
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(iv)
upon termination of employment receives a benefit under the Exxon Transition Severance Plan.
(c)
Termination of Provision
This paragraph (2) shall not apply to any person who fails to meet the eligibility requirements set out in paragraph (b) above on or before August 31, 2000.
(J)
"Suspended retiree"
(1)
In General
"Suspended Retiree" means a person who becomes a retiree by virtue of being incapacitated within the meaning of the ExxonMobil Disability Plan and commences long-term disability benefits under such Plan, but whose benefits under such Plan thereafter cease by virtue of
(a)
the person no longer being incapacitated, or
(b)
the person's failure to report non-rehabilitative employment.
(2)
Period
A person remains a suspended retiree until the earlier of (1) the date the person attains age 55, or (2) the date the person commences his or her benefit or receives a lump-sum settlement under the ExxonMobil Pension Plan, at which time the person is again considered a retiree.
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EXHIBIT 31.1
Certification by Rex W. Tillerson
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Rex W. Tillerson, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Exxon Mobil Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 7, 2007
/s/ Rex W. Tillerson
Rex W. Tillerson
Chief Executive Officer
EXHIBIT 31.2
Certification by Donald D. Humphreys
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Donald D. Humphreys, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Exxon Mobil Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 7, 2007
/s/ Donald D. Humphreys
Donald D. Humphreys
Senior Vice President and Treasurer
(Principal Financial Officer)
EXHIBIT 31.3
Certification by Patrick T. Mulva
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Patrick T. Mulva, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Exxon Mobil Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 7, 2007
/s/ Patrick T. Mulva
Patrick T. Mulva
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT 32.1
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Rex W. Tillerson, the chief executive officer of Exxon Mobil Corporation (the Company), hereby certifies that, to his knowledge:
(i)
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 7, 2007
/s/ Rex W. Tillerson
Rex W. Tillerson
Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to Exxon Mobil Corporation and will be retained by Exxon Mobil Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Donald D. Humphreys, the principal financial officer of Exxon Mobil Corporation (the Company), hereby certifies that, to his knowledge:
(i)
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 7, 2007
/s/ Donald D. Humphreys
Donald D. Humphreys
Senior Vice President and Treasurer
(Principal Financial Officer)
A signed original of this written statement required by Section 906 has been provided to Exxon Mobil Corporation and will be retained by Exxon Mobil Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.3
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Patrick T. Mulva, the principal accounting officer of Exxon Mobil Corporation (the Company), hereby certifies that, to his knowledge:
(i)
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 7, 2007
/s/ Patrick T. Mulva
Patrick T. Mulva
Vice President and Controller
(Principal Accounting Officer)
A signed original of this written statement required by Section 906 has been provided to Exxon Mobil Corporation and will be retained by Exxon Mobil Corporation and furnished to the Securities and Exchange Commission or its staff upon request.