UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2014

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   No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes   No    

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

  

Non-accelerated filer

 

Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No   

 

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

 

Class

 

Outstanding as of September 30, 2014

Common stock, without par value

 

 4,234,528,643  

  

 


 

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2014

 

TABLE OF CONTENTS

 

 

PART I.  FINANCIAL INFORMATION

 

 

 

Item 1.       Financial Statements

 

 

     Condensed Consolidated Statement of Income

Three and nine months ended September 30, 2014 and 2013

 

3

     Condensed Consolidated Statement of Comprehensive Income

Three and nine months ended September 30, 2014 and 2013

 

4

     Condensed Consolidated Balance Sheet

As of September 30, 2014 and December 31, 2013

5

 

 

     Condensed Consolidated Statement of Cash Flows

          Nine months ended September 30, 2014 and 2013

 

6

     Condensed Consolidated Statement of Changes in Equity

          Nine months ended September 30, 2014 and 2013

 

7

     Notes to Condensed Consolidated Financial Statements

 

8

Item 2.       Management's Discussion and Analysis of Financial

                     Condition and Results of Operations

 

13

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

 

20

Item 4.       Controls and Procedures

 

20

 

 

PART II.  OTHER INFORMATION

 

Item 1.       Legal Proceedings

 

21

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

 

22

Item 6.       Exhibits

 

22

Signature

 

23

Index to Exhibits

 

24

  


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,

 

 

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

Revenues and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and other operating revenue (1) 

 

 

103,566

 

 

108,390

 

 

311,484

 

 

314,818

 

Income from equity affiliates

 

 

3,211

 

 

3,444

 

 

10,631

 

 

10,960

 

Other income

 

 

713

 

 

538

 

 

3,795

 

 

1,617

 

 

Total revenues and other income

 

 

107,490

 

 

112,372

 

 

325,910

 

 

327,395

Costs and other deductions

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil and product purchases

 

 

60,428

 

 

63,961

 

 

181,391

 

 

183,088

 

Production and manufacturing expenses

 

 

9,951

 

 

9,842

 

 

30,517

 

 

29,856

 

Selling, general and administrative expenses

 

 

3,169

 

 

3,150

 

 

9,470

 

 

9,536

 

Depreciation and depletion

 

 

4,362

 

 

4,287

 

 

12,839

 

 

12,802

 

Exploration expenses, including dry holes

 

 

319

 

 

486

 

 

1,132

 

 

1,385

 

Interest expense

 

 

88

 

 

52

 

 

218

 

 

161

 

Sales-based taxes (1) 

 

 

7,519

 

 

7,882

 

 

22,806

 

 

22,926

 

Other taxes and duties

 

 

8,244

 

 

8,523

 

 

24,749

 

 

24,646

 

 

Total costs and other deductions

 

 

94,080

 

 

98,183

 

 

283,122

 

 

284,400

Income before income taxes

 

 

13,410

 

 

14,189

 

 

42,788

 

 

42,995

 

Income taxes

 

 

5,064

 

 

6,120

 

 

15,955

 

 

18,190

Net income including noncontrolling interests

 

 

8,346

 

 

8,069

 

 

26,833

 

 

24,805

 

Net income attributable to noncontrolling interests

 

 

276

 

 

199

 

 

883

 

 

575

Net income attributable to ExxonMobil

 

 

8,070

 

 

7,870

 

 

25,950

 

 

24,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) 

 

 

1.89

 

 

1.79

 

 

6.04

 

 

5.46

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - assuming dilution (dollars) 

 

 

1.89

 

 

1.79

 

 

6.04

 

 

5.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share (dollars) 

 

 

0.69

 

 

0.63

 

 

2.01

 

 

1.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Sales-based taxes included in sales and other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operating revenue

 

 

7,519

 

 

7,882

 

 

22,806

 

 

22,926



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


3  


 

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

8,346

 

 

8,069

 

 

26,833

 

 

24,805

Other comprehensive income (net of income taxes)

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

(3,828)

 

 

1,229

 

 

(2,986)

 

 

(2,317)

 

Adjustment for foreign exchange translation (gain)/loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 included in net income

 

 

-

 

 

-

 

 

163

 

 

-

 

Postretirement benefits reserves adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(excluding amortization)

 

 

372

 

 

(222)

 

 

196

 

 

(58)

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

289

 

 

455

 

 

918

 

 

1,353

 

Unrealized change in fair value of stock investments

 

 

(21)

 

 

-

 

 

(57)

 

 

-

 

 

Total other comprehensive income

 

 

(3,188)

 

 

1,462

 

 

(1,766)

 

 

(1,022)

Comprehensive income including noncontrolling interests

 

 

5,158

 

 

9,531

 

 

25,067

 

 

23,783

 

Comprehensive income attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests

 

 

(27)

 

 

331

 

 

588

 

 

420

Comprehensive income attributable to ExxonMobil

 

 

5,185

 

 

9,200

 

 

24,479

 

 

23,363



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


4  


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED BALANCE SHEET

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sept. 30,

 

 

Dec. 31,

 

 

 

 

 

 

 

2014

 

 

2013

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

4,962

 

 

4,644

 

 

 

Cash and cash equivalents – restricted

 

 

52

 

 

269

 

 

 

Notes and accounts receivable – net

 

 

30,963

 

 

33,152

 

 

 

Inventories

 

 

 

 

 

 

 

 

 

 

Crude oil, products and merchandise

 

 

13,441

 

 

12,117

 

 

 

 

Materials and supplies

 

 

4,320

 

 

4,018

 

 

 

Other current assets

 

 

4,857

 

 

5,108

 

 

 

 

Total current assets

 

 

58,595

 

 

59,308

 

 

Investments, advances and long-term receivables

 

 

35,012

 

 

36,328

 

 

Property, plant and equipment – net

 

 

251,406

 

 

243,650

 

 

Other assets, including intangibles – net

 

 

7,751

 

 

7,522

 

 

 

 

Total assets

 

 

352,764

 

 

346,808

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Notes and loans payable

 

 

10,243

 

 

15,808

 

 

 

Accounts payable and accrued liabilities

 

 

49,272

 

 

48,085

 

 

 

Income taxes payable

 

 

6,469

 

 

7,831

 

 

 

 

Total current liabilities

 

 

65,984

 

 

71,724

 

 

Long-term debt

 

 

11,591

 

 

6,891

 

 

Postretirement benefits reserves

 

 

19,268

 

 

20,646

 

 

Deferred income tax liabilities

 

 

41,132

 

 

40,530

 

 

Long-term obligations to equity companies

 

 

5,132

 

 

4,742

 

 

Other long-term obligations

 

 

22,162

 

 

21,780

 

 

 

 

Total liabilities

 

 

165,269

 

 

166,313

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock without par value

 

 

 

 

 

 

 

 

 

(9,000 million shares authorized,  8,019 million shares issued)

 

 

10,681

 

 

10,077

 

 

Earnings reinvested

 

 

404,738

 

 

387,432

 

 

Accumulated other comprehensive income

 

 

(12,196)

 

 

(10,725)

 

 

Common stock held in treasury

 

 

 

 

 

 

 

 

 

(3,784 million shares at Sept. 30, 2014 and

 

 

 

 

 

 

 

 

   3,684 million shares at Dec. 31, 2013)

 

 

(222,636)

 

 

(212,781)

 

 

 

 

ExxonMobil share of equity

 

 

180,587

 

 

174,003

 

 

Noncontrolling interests

 

 

6,908

 

 

6,492

 

 

 

 

Total equity

 

 

187,495

 

 

180,495

 

 

 

 

Total liabilities and equity

 

 

352,764

 

 

346,808

 



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


5  


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2014

 

 

2013

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

26,833

 

 

24,805

 

 

Depreciation and depletion

 

 

12,839

 

 

12,802

 

 

Changes in operational working capital, excluding cash and debt

 

 

(460)

 

 

(2,676)

 

 

All other items – net

 

 

(1,511)

 

 

(225)

 

 

 

 

Net cash provided by operating activities

 

 

37,701

 

 

34,706

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(24,068)

 

 

(25,243)

 

 

Proceeds associated with sales of subsidiaries, property, plant and

 

 

 

 

 

 

 

 

 

equipment, and sales and returns of investments

 

 

3,794

 

 

871

 

 

Additional investments and advances

 

 

(1,269)

 

 

(3,644)

 

 

Other investing activities – net

 

 

3,415

 

 

527

 

 

 

 

Net cash used in investing activities

 

 

(18,128)

 

 

(27,489)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Additions to long-term debt

 

 

5,503

 

 

206

 

 

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

 

 

(514)

 

 

(386)

 

 

Additions/(reductions) in debt with three months or less maturity

 

 

(5,413)

 

 

9,869

 

 

Cash dividends to ExxonMobil shareholders

 

 

(8,644)

 

 

(8,125)

 

 

Cash dividends to noncontrolling interests

 

 

(172)

 

 

(225)

 

 

Changes in noncontrolling interests

 

 

 -  

 

 

(1)

 

 

Tax benefits related to stock-based awards

 

 

10

 

 

14

 

 

Common stock acquired

 

 

(9,865)

 

 

(12,696)

 

 

Common stock sold

 

 

10

 

 

46

 

 

 

 

Net cash used in financing activities

 

 

(19,085)

 

 

(11,298)

 

Effects of exchange rate changes on cash

 

 

(170)

 

 

(191)

 

Increase/(decrease) in cash and cash equivalents

 

 

318

 

 

(4,272)

 

Cash and cash equivalents at beginning of period

 

 

4,644

 

 

9,582

 

Cash and cash equivalents at end of period

 

 

4,962

 

 

5,310

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

 

 

 

 

Income taxes paid

 

 

14,338

 

 

19,871

 

 

Cash interest paid

 

 

295

 

 

318

 



Non-Cash Transaction

In the third quarter of 2014, ExxonMobil completed an asset exchange, primarily a noncash transaction, of approximately $600 million. This amount is not included in the “Proceeds associated with sales of subsidiaries, property, plant and equipment, and sales and returns of investments” or the “Additions to property, plant and equipment” lines on the Statement of Cash Flows

 

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


6  


 

 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ExxonMobil Share of Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compre-

 

Stock

 

ExxonMobil

 

Non-

 

 

 

 

 

 

 

 

Common

 

Earnings

 

hensive

 

Held in

 

Share of

 

controlling

 

Total

 

 

 

 

 

Stock

 

Reinvested

 

Income

 

Treasury

 

Equity

 

Interests

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2012

 

 

9,653

 

 

365,727

 

 

(12,184)

 

 

(197,333)

 

 

165,863

 

 

5,797

 

 

171,660

 

Amortization of stock-based awards

 

 

593

 

 

 -  

 

 

 -  

 

 

 -  

 

 

593

 

 

 -  

 

 

593

 

Tax benefits related to stock-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

awards

 

 

200

 

 

 -  

 

 

 -  

 

 

 -  

 

 

200

 

 

 -  

 

 

200

 

Other

 

 

(384)

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(384)

 

 

242

 

 

(142)

 

Net income for the period

 

 

 -  

 

 

24,230

 

 

 -  

 

 

 -  

 

 

24,230

 

 

575

 

 

24,805

 

Dividends – common shares

 

 

 -  

 

 

(8,125)

 

 

 -  

 

 

 -  

 

 

(8,125)

 

 

(225)

 

 

(8,350)

 

Other comprehensive income

 

 

 -  

 

 

 -  

 

 

(867)

 

 

 -  

 

 

(867)

 

 

(155)

 

 

(1,022)

 

Acquisitions, at cost

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(12,696)

 

 

(12,696)

 

 

(1)

 

 

(12,697)

 

Dispositions

 

 

 -  

 

 

 -  

 

 

 -  

 

 

431

 

 

431

 

 

 -  

 

 

431

Balance as of September 30, 2013

 

 

10,062

 

 

381,832

 

 

(13,051)

 

 

(209,598)

 

 

169,245

 

 

6,233

 

 

175,478

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2013

 

 

10,077

 

 

387,432

 

 

(10,725)

 

 

(212,781)

 

 

174,003

 

 

6,492

 

 

180,495

 

Amortization of stock-based awards

 

 

588

 

 

 -  

 

 

 -  

 

 

 -  

 

 

588

 

 

 -  

 

 

588

 

Tax benefits related to stock-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

awards

 

 

10

 

 

 -  

 

 

 -  

 

 

 -  

 

 

10

 

 

 -  

 

 

10

 

Other

 

 

6

 

 

 -  

 

 

 -  

 

 

 -  

 

 

6

 

 

 -  

 

 

6

 

Net income for the period

 

 

 -  

 

 

25,950

 

 

 -  

 

 

 -  

 

 

25,950

 

 

883

 

 

26,833

 

Dividends – common shares

 

 

 -  

 

 

(8,644)

 

 

 -  

 

 

 -  

 

 

(8,644)

 

 

(172)

 

 

(8,816)

 

Other comprehensive income

 

 

 -  

 

 

 -  

 

 

(1,471)

 

 

 -  

 

 

(1,471)

 

 

(295)

 

 

(1,766)

 

Acquisitions, at cost

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(9,865)

 

 

(9,865)

 

 

 -  

 

 

(9,865)

 

Dispositions

 

 

 -  

 

 

 -  

 

 

 -  

 

 

10

 

 

10

 

 

 -  

 

 

10

Balance as of September 30, 2014

 

 

10,681

 

 

404,738

 

 

(12,196)

 

 

(222,636)

 

 

180,587

 

 

6,908

 

 

187,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2014

 

 

 

 

Nine Months Ended September 30, 2013

 

 

 

 

 

 

 

 

Held in

 

 

 

 

 

 

 

 

 

 

Held in

 

 

 

 

Common Stock Share Activity

 

Issued

 

Treasury

 

Outstanding

 

 

 

 

Issued

 

Treasury

 

Outstanding

 

 

 

 

(millions of shares)

 

 

 

 

(millions of shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31

 

 

8,019

 

 

(3,684)

 

 

4,335

 

 

 

 

 

8,019

 

 

(3,517)

 

 

4,502

 

 

 

Acquisitions

 

 

 -  

 

 

(100)

 

 

(100)

 

 

 

 

 

 -  

 

 

(141)

 

 

(141)

 

 

 

Dispositions

 

 

 -  

 

 

 -  

 

 

 -  

 

 

 

 

 

 -  

 

 

8

 

 

8

 

Balance as of September 30

 

 

8,019

 

 

(3,784)

 

 

4,235

 

 

 

 

 

8,019

 

 

(3,650)

 

 

4,369



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


7  


 

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 2013 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. Prior data has been reclassified in certain cases to conform to the current presentation basis.

 

The Corporation's exploration and production activities are accounted for under the "successful efforts" method.

 

2.      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. Management has regular litigation 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 outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters as well as other matters which management believes should be disclosed. 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 material adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole.

 

Other Contingencies

 

The Corporation and certain of its consolidated subsidiaries were contingently liable at September 30, 2014, for guarantees relating to notes, loans and performance under contracts. Where guarantees for environmental remediation and other similar matters do not include a stated cap, the amounts reflect management’s estimate of the maximum potential exposure. These guarantees are not reasonably likely to have a material effect on the Corporation’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

 

 

 

 

 

 

As of September 30, 2014

 

 

 

 

 

 

 

 

Equity

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

Third Party

 

 

 

 

 

 

 

 

 

 

 

Obligations (1) 

 

 

Obligations

 

 

Total

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

Guarantees

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt-related

 

 

3,398

 

 

44

 

 

3,442

 

 

 

 

Other

 

 

3,267

 

 

4,273

 

 

7,540

 

 

 

 

 

Total

 

 

6,665

 

 

4,317

 

 

10,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) ExxonMobil share

 

 

 

 

 

 

 

 

 

 

 


8  


 

Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. The Corporation's outstanding unconditional purchase obligations at September 30, 2014, 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 in February 2007, 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 holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s or one of its affiliate’s ownership interest in the Project, with the stipulation that if ExxonMobil refused to accept the terms for the formation of the mixed enterprise within a specified period of time, the government would “directly assume the activities” carried out by the joint venture. ExxonMobil refused to accede to the terms proffered by the government, and on June 27, 2007, the government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro Project. ExxonMobil’s remaining net book investment in Cerro Negro producing assets is about $750 million.

 

On September 6, 2007, affiliates of ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID) invoking ICSID jurisdiction under Venezuela’s Investment Law and the Netherlands-Venezuela Bilateral Investment Treaty. The ICSID Tribunal issued a decision on June 10, 2010, finding that it had jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral Investment Treaty. On October 9, 2014, the ICSID Tribunal issued its final award finding in favor of the ExxonMobil affiliates and awarding $1.6 billion as of the date of expropriation, June 27, 2007, and interest from that date at 3.25% compounded annually until the date of payment in full. The Tribunal also noted that one of the Cerro Negro Project agreements provides a mechanism to prevent double recovery between the ICISD award and all or part of an earlier award of $908 million to an ExxonMobil affiliate, Mobil Cerro Negro, Ltd., against PdVSA and a PdVSA affiliate, PdVSA CN, in an arbitration under the rules of the International Chamber of Commerce (ICC). Judgment was entered on the ICSID award by the United States District Court for the Southern District of New York on October 10, 2014. A motion to vacate that judgment on procedural grounds was filed by the Republic of Venezuela on October 14, 2014, and is pending before the court. On October 23, 2014, the Republic of Venezuela filed with ICSID an application to revise the ICSID award such that it requires repayment of the value of the ICC award to PdVSA at the same time as payment is made to the ExxonMobil affiliates for the ICSID award and that provision be made for interest on the amount to be repaid. Thereafter, pursuant to ICSID arbitration rules, the ICSID award was stayed pending further action of the Tribunal. On October 27, 2014, ExxonMobil filed a response with ICSID that contests the application for revision of that award on both factual and jurisdictional grounds. The ICSID award has yet to be satisfied and proceedings concerning the award remain pending and so the net impact of these matters on the Corporation’s consolidated financial results cannot be reasonably estimated. Regardless, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition.

 

An affiliate of ExxonMobil is one of the Contractors under a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) covering the Erha block located in the offshore waters of Nigeria. ExxonMobil's affiliate is the operator of the block and owns a 56.25 percent interest under the PSC. The Contractors are in dispute with NNPC regarding NNPC's lifting of crude oil in excess of its entitlement under the terms of the PSC. In accordance with the terms of the PSC, the Contractors initiated arbitration in Abuja, Nigeria, under the Nigerian Arbitration and Conciliation Act. On October 24, 2011, a three-member arbitral Tribunal issued an award upholding the Contractors' position in all material respects and awarding damages to the Contractors jointly in an amount of approximately $1.8 billion plus $234 million in accrued interest. The Contractors petitioned a Nigerian federal court for enforcement of the award, and NNPC petitioned the same court to have the award set aside. On May 22, 2012, the court set aside the award. The Contractors have appealed that judgment. In June 2013, the Contractors filed a lawsuit against NNPC in the Nigerian federal high court in order to preserve their ability to seek enforcement of the PSC in the courts if necessary. In October 2014, the Contractors filed suit in the United States District Court for the Southern District of New York to enforce, if necessary, the arbitration award against NNPC assets residing within that jurisdiction. At this time, the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, regardless of the outcome of enforcement proceedings, the Corporation does not expect the proceedings to have a material effect upon the Corporation's operations or financial condition.   


9  


 

3.     Other Comprehensive Income Information

 

 

 

 

 

 

 

Cumulative

 

 

Post-

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

retirement

 

 

Unrealized

 

 

 

 

 

 

 

Exchange

 

 

Benefits

 

 

Change in

 

 

ExxonMobil Share of Accumulated Other

 

 

Translation

 

 

Reserves

 

 

Stock

 

 

Comprehensive Income

 

 

Adjustment

 

 

Adjustment

 

 

Investments

Total

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2012

 

 

2,410

 

 

(14,594)

 

 

 -  

(12,184)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(2,118)

 

 

(52)

 

 

 -  

(2,170)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

 -  

 

 

1,303

 

 

 -  

1,303

 

Total change in accumulated other comprehensive income

 

 

(2,118)

 

 

1,251

 

 

 -  

(867)

 

Balance as of September 30, 2013

 

 

292

 

 

(13,343)

 

 

 -  

(13,051)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2013

 

 

(846)

 

 

(9,879)

 

 

 -  

(10,725)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(2,637)

 

 

176

 

 

(57)

(2,518)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

 163  

 

 

884

 

 

 -  

1,047

 

Total change in accumulated other comprehensive income

 

 

(2,474)

 

 

1,060

 

 

(57)

(1,471)

 

Balance as of September 30, 2014

 

 

(3,320)

 

 

(8,819)

 

 

(57)

(12,196)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

Amounts Reclassified Out of Accumulated Other

 

 

September 30,

 

 

September 30,

 

Comprehensive Income - Before-tax Income/(Expense)

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation gain/(loss) included in net income

 

 

 

 

 

 

 

 

 

 

 

 

(Statement of Income line: Other income)

 -    

 

 

 -  

 

 

 (163) 

 

 

 -  

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs (1)

(430)

 

 

(648)

 

 

 (1,315) 

 

 

(1,951)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)   These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 5 – Pension and Other Postretirement Benefits for additional details.)



 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

Income Tax (Expense)/Credit For

 

 

September 30,

 

 

September 30,

 

Components of Other Comprehensive Income

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

 70  

 

 

 (16) 

 

 

 99  

 

 

 100  

 

Postretirement benefits reserves adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(excluding amortization)

 

 

 (138) 

 

 

 85  

 

 

 (61) 

 

 

 28  

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

 (141) 

 

 

 (193) 

 

 

 (397) 

 

 

 (598) 

 

Unrealized change in fair value of stock investments

 

 11  

 

 

 -  

 

 

 30  

 

 

 -  

 

Total

 

 

 (198) 

 

 

 (124) 

 

 

 (329) 

 

 

 (470) 


10  


 

4.     Earnings Per Share

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to ExxonMobil (millions of dollars)

 

8,070

 

 

7,870

 

 

25,950

 

 

24,230

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

outstanding (millions of shares)

 

4,267

 

 

4,395

 

 

4,297

 

 

4,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) (1)

 

1.89

 

 

1.79

 

 

6.04

 

 

5.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)  The calculation of earnings per common share and earnings per common share – assuming dilution are the same in each period shown.

 

5.     Pension and Other Postretirement Benefits

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(millions of dollars)

 

Components of net benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits - U.S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

156

 

 

206

 

 

515

 

 

581

 

 

 

Interest cost

 

 

202

 

 

188

 

 

605

 

 

562

 

 

 

Expected return on plan assets

 

 

(200)

 

 

(209)

 

 

(600)

 

 

(626)

 

 

 

Amortization of actuarial loss/(gain) and prior

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service cost

 

 

105

 

 

165

 

 

313

 

 

493

 

 

 

Net pension enhancement and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

curtailment/settlement cost

 

 

113

 

 

182

 

 

338

 

 

546

 

 

 

Net benefit cost

 

 

376

 

 

532

 

 

1,171

 

 

1,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits - Non-U.S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

144

 

 

170

 

 

448

 

 

521

 

 

 

Interest cost

 

 

285

 

 

265

 

 

859

 

 

803

 

 

 

Expected return on plan assets

 

 

(300)

 

 

(278)

 

 

(899)

 

 

(841)

 

 

 

Amortization of actuarial loss/(gain) and prior

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service cost

 

 

183

 

 

239

 

 

564

 

 

724

 

 

 

Net pension enhancement and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

curtailment/settlement cost

 

 

 -  

 

 

1

 

 

 -  

 

 

2

 

 

 

Net benefit cost

 

 

312

 

 

397

 

 

972

 

 

1,209