Edgar Filing: EXXON MOBIL CORP

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 June 30, 2012

¨ 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 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 x 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 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 June 30, 2012

Common stock, without par value 4,615,939,496

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012

TABLE OF CONTENTS

		Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income Three and six months ended June 30, 2012 and 2011	3
Condensed Consolidated Statement of Comprehensive Income Three and six months ended June 30, 2012 and 2011	4
Condensed Consolidated Balance Sheet As of June 30, 2012 and December 31, 2011	5

Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2012 and 2011	6
Condensed Consolidated Statement of Changes in Equity Six months ended June 30, 2012 and 2011	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
Item 4. Controls and Procedures	26

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6. Exhibits	28
Signature	29
Index to Exhibits	30

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)

		Three Months Ended				Six Months Ended
		June 30,				June 30,
			2012		2011		2012		2011
REVENUES AND OTHER INCOME
Sales and other operating revenue (1)		$	112,745	$	121,394	$	231,934	$	230,645
Income from equity affiliates			3,651		3,720		7,861		7,547
Other income			10,967		372		11,621		1,298
	Total revenues and other income		127,363		125,486		251,416		239,490

COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases			66,344		69,447		136,169		129,944
Production and manufacturing expenses			9,787		10,322		19,637		19,842
Selling, general and administrative expenses			3,486		3,681		7,087		7,308
Depreciation and depletion			3,899		3,881		7,741		7,642
Exploration expenses, including dry holes			372		592		894		926
Interest expense			50		45		157		74
Sales-based taxes (1)			8,027		8,613		16,520		16,529
Other taxes and duties			9,207		10,286		19,505		19,689
	Total costs and other deductions		101,172		106,867		207,710		201,954

Income before income taxes			26,191		18,619		43,706		37,536
	Income taxes		8,537		7,721		16,253		15,725
Net income including noncontrolling interests			17,654		10,898		27,453		21,811
	Net income attributable to noncontrolling interests		1,744		218		2,093		481
Net income attributable to ExxonMobil		$	15,910	$	10,680	$	25,360	$	21,330


Earnings per common share (dollars)		$	3.41	$	2.19	$	5.41	$	4.33

Earnings per common share - assuming dilution (dollars)		$	3.41	$	2.18	$	5.41	$	4.32

Dividends per common share (dollars)		$	0.57	$	0.47	$	1.04	$	0.91

(1) Sales-based taxes included in sales and other
	operating revenue	$	8,027	$	8,613	$	16,520	$	16,529

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.

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EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(millions of dollars)

					Three Months Ended				Six Months Ended
					June 30,				June 30,
					2012		2011		2012		2011

	Net income including noncontrolling interests				$	17,654	$	10,898	$	27,453	$	21,811
	Other comprehensive income (net of income taxes)
		Foreign exchange translation adjustment				(1,367)		778		(322)		2,112
		Adjustment for foreign exchange translation (gain)/loss
				included in net income		(4,302)		-		(4,235)		-
		Postretirement benefits reserves adjustment
				(excluding amortization)		224		(160)		(180)		(565)
		Amortization and settlement of postretirement benefits reserves
				adjustment included in net periodic benefit costs		1,236		321		1,629		631
		Change in fair value of cash flow hedges				-		7		-		10
		Realized (gain)/loss from settled cash flow hedges
				included in net income		-		(14)		-		(33)
			Total other comprehensive income			(4,209)		932		(3,108)		2,155
	Comprehensive income including noncontrolling interests					13,445		11,830		24,345		23,966
		Comprehensive income attributable to
				noncontrolling interests		196		293		521		612
	Comprehensive income attributable to ExxonMobil				$	13,249	$	11,537	$	23,824	$	23,354

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.

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EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)

			June 30,		Dec. 31,
			2012		2011
ASSETS
Current assets
	Cash and cash equivalents		$	17,802	$	12,664
	Cash and cash equivalents – restricted			215		404
	Notes and accounts receivable – net			33,741		38,642
	Inventories
		Crude oil, products and merchandise		11,729		11,665
		Materials and supplies		3,429		3,359
	Other current assets			5,881		6,229
		Total current assets		72,797		72,963
Investments, advances and long-term receivables				33,921		34,333
Property, plant and equipment – net				214,940		214,664
Other assets, including intangibles – net				7,987		9,092
		Total assets	$	329,645	$	331,052

LIABILITIES
Current liabilities
	Notes and loans payable		$	6,704	$	7,711
	Accounts payable and accrued liabilities			51,322		57,067
	Income taxes payable			12,110		12,727
		Total current liabilities		70,136		77,505
Long-term debt				8,877		9,322
Postretirement benefits reserves				22,117		24,994
Deferred income tax liabilities				36,851		36,618
Other long-term obligations				23,679		21,869
		Total liabilities		161,660		170,308

Commitments and contingencies (Note 2)

EQUITY
Common stock, without par value:
	Authorized: 9,000 million shares
	Issued: 8,019 million shares			9,221		9,512
Earnings reinvested				351,421		330,939
Accumulated other comprehensive income				(10,659)		(9,123)
Common stock held in treasury:
		3,403 million shares at June 30, 2012		(187,172)
		3,285 million shares at December 31, 2011				(176,932)
	ExxonMobil share of equity			162,811		154,396
Noncontrolling interests				5,174		6,348
	Total equity			167,985		160,744
	Total liabilities and equity		$	329,645	$	331,052

The number of shares of common stock issued and outstanding at June 30, 2012 and December 31, 2011 were 4,615,939,496 and 4,733,948,268, respectively.

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.

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EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)

				Six Months Ended
				June 30,
				2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income including noncontrolling interests			$	27,453	$	21,811
	Depreciation and depletion				7,741		7,642
	Changes in operational working capital, excluding cash and debt				3,408		1,078
	Net (gain) on asset sales				(11,109)		(600)
	All other items – net				2,011		(186)
			Net cash provided by operating activities		29,504		29,745

CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to property, plant and equipment				(16,188)		(14,863)
	Proceeds associated with sales of subsidiaries, property, plant and
		equipment, and sales and returns of investments			6,243		2,838
	Additional investments and advances				(397)		(2,949)
	Additions to marketable securities				-		(1,754)
	Other investing activities – net				1,235		871
			Net cash used in investing activities		(9,107)		(15,857)

CASH FLOWS FROM FINANCING ACTIVITIES
	Additions to long-term debt				389		249
	Reductions in long-term debt				(11)		(43)
	Additions/(reductions) in short-term debt – net				(214)		1,182
	Cash dividends to ExxonMobil shareholders				(4,878)		(4,496)
	Cash dividends to noncontrolling interests				(137)		(152)
	Changes in noncontrolling interests				198		(12)
	Tax benefits related to stock-based awards				-		171
	Common stock acquired				(10,716)		(11,165)
	Common stock sold				86		452
			Net cash used in financing activities		(15,283)		(13,814)

Effects of exchange rate changes on cash					24		388
Increase/(decrease) in cash and cash equivalents					5,138		462
Cash and cash equivalents at beginning of period					12,664		7,825
Cash and cash equivalents at end of period				$	17,802	$	8,287

SUPPLEMENTAL DISCLOSURES
	Income taxes paid			$	12,327	$	13,547
	Cash interest paid			$	290	$	262

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.

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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, 2010		$	9,371	$	298,899		$	(4,823)	$	(156,608)	$	146,839	$	5,840	$	152,679
Amortization of stock-based awards			383		-			-		-		383		-		383
Tax benefits related to stock-based awards			133		-			-		-		133		-		133
Other			(535)		-			-		-		(535)		(4)		(539)

Net income for the period			-		21,330			-		-		21,330		481		21,811
Dividends – common shares			-		(4,496)			-		-		(4,496)		(152)		(4,648)

Other comprehensive income			-		-			2,024		-		2,024		131		2,155

Acquisitions, at cost			-		-			-		(11,165)		(11,165)		(12)		(11,177)
Dispositions			-		-			-		1,038		1,038		-		1,038
Balance as of June 30, 2011		$	9,352	$	315,733		$	(2,799)	$	(166,735)	$	155,551	$	6,284	$	161,835

Balance as of December 31, 2011		$	9,512	$	330,939		$	(9,123)	$	(176,932)	$	154,396	$	6,348	$	160,744
Amortization of stock-based awards			439		-			-		-		439		-		439
Tax benefits related to stock-based awards			23		-			-		-		23		-		23
Other			(753)		-			-		-		(753)		(1,450)		(2,203)

Net income for the period			-		25,360			-		-		25,360		2,093		27,453
Dividends – common shares			-		(4,878)			-		-		(4,878)		(214)		(5,092)

Other comprehensive income			-		-			(1,536)		-		(1,536)		(1,572)		(3,108)

Acquisitions, at cost			-		-			-		(10,716)		(10,716)		(31)		(10,747)
Dispositions			-		-			-		476		476		-		476
Balance as of June 30, 2012		$	9,221	$	351,421		$	(10,659)	$	(187,172)	$	162,811	$	5,174	$	167,985

		Six Months Ended June 30, 2012									Six Months Ended June 30, 2011
				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		(3,285)			4,734				8,019		(3,040)		4,979
	Acquisitions		-		(127)			(127)				-		(136)		(136)
	Dispositions		-		9			9				-		19		19
Balance as of June 30			8,019		(3,403)			4,616				8,019		(3,157)		4,862

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.

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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 2011 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. 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 materially adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole.

On June 30, 2011, a state district court jury in Baltimore County, Maryland returned a verdict against Exxon Mobil Corporation in Allison, et al v. Exxon Mobil Corporation, a case involving an accidental 26,000 gallon gasoline leak at a suburban Baltimore service station. The verdict included approximately $497 million in compensatory damages and approximately $1.0 billion in punitive damages in a finding that ExxonMobil fraudulently misled the plaintiff-residents about the events leading up to the leak, the leak's discovery, and the nature and extent of any groundwater contamination. ExxonMobil believes the verdict is not justified by the evidence and that the amount of the compensatory award is grossly excessive and the imposition of punitive damages is improper and unconstitutional. The trial court denied a post-trial motion that ExxonMobil filed to overturn the punitive damages verdict and entered a Final Judgment in the amount of $1,488 million. ExxonMobil has appealed the verdict and judgment. The appeal is pending before the Maryland Court of Appeals. In an earlier trial involving the same leak and different plaintiffs, the jury awarded compensatory damages but rejected the plaintiffs' punitive damages claims. Those plaintiffs did not appeal the jury's denial of punitive damages. On February 9, 2012, the Maryland Court of Special Appeals reversed in part and affirmed in part the trial court's decision on compensatory damages in that case. The Maryland Court of Appeals granted writs of certiorari to both parties in response to their separate petitions seeking reversals of portions of the Court of Special Appeals' decision. The appeals in both of these cases have been consolidated before the Maryland Court of Appeals. The ultimate outcome of all of this litigation is not expected to 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 June 30, 2012, for guarantees relating to notes, loans and performance under contracts. 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.

-8-


			As of June 30, 2012
			Equity		Other
			Company		Third Party
			Obligations *(1)*		Obligations		Total
			(millions of dollars)
Guarantees
	Debt-related		$	1,990	$	64	$	2,054
	Other			3,774		3,977		7,751
		Total	$	5,764	$	4,041	$	9,805

(1) ExxonMobil share

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 June 30, 2012, 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. The ICSID arbitration proceeding is continuing and a hearing on the merits was held in February 2012. At this time, 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. 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.

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3. Other Comprehensive Income Information

			ExxonMobil Share of Accumulated
			Other Comprehensive Income
			Cumulative		Post-		Unrealized
			Foreign		retirement		Change in
			Exchange		Benefits		Fair Value
			Translation		Reserves		on Cash
			Adjustment		Adjustment		Flow Hedges		Total
		(millions of dollars)

Balance as of December 31, 2010			$	5,011	$	(9,889)	$	55	$	(4,823)
Current period change excluding amounts reclassified
	from accumulated other comprehensive income			1,939		(492)		10		1,457
Amounts reclassified from accumulated other
	comprehensive income			-		600		(33)		567
Total change in accumulated other comprehensive
	income			1,939		108		(23)		2,024
Balance as of June 30, 2011			$	6,950	$	(9,781)	$	32	$	(2,799)


Balance as of December 31, 2011			$	4,168	$	(13,291)	$	-	$	(9,123)
Current period change excluding amounts reclassified
	from accumulated other comprehensive income			(266)		(152)		-		(418)
Amounts reclassified from accumulated other
	comprehensive income			(2,484)		1,366		-		(1,118)
Total change in accumulated other comprehensive
	income			(2,750)		1,214		-		(1,536)
Balance as of June 30, 2012			$	1,418	$	(12,077)	$	-	$	(10,659)

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
			(millions of dollars)
Income Tax (Expense)/Credit For
	Components of Other Comprehensive Income
Foreign exchange translation adjustment			$	23	$	(51)	$	(37)	$	(87)
Postretirement benefits reserves adjustment
	Postretirement benefits reserves adjustment
		(excluding amortization)		(71)		60		90		237
	Amortization and settlement of postretirement benefits reserves
		adjustment included in net periodic benefit costs		(743)		(146)		(932)		(301)
Unrealized change in fair value on cash flow hedges			<