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 March 31, 2014

¨ 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 March 31, 2014
Common stock, without par value		4,294,374,730

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Statement of Income Three months ended March 31, 2014 and 2013	3
Condensed Consolidated Statement of Comprehensive Income Three months ended March 31, 2014 and 2013	4
Condensed Consolidated Balance Sheet As of March 31, 2014 and December 31, 2013	5

Condensed Consolidated Statement of Cash Flows Three months ended March 31, 2014 and 2013	6
Condensed Consolidated Statement of Changes in Equity Three months ended March 31, 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	18
Item 4. Controls and Procedures	18

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 6. Exhibits	20
Signature	21
Index to Exhibits	22

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

			Three Months Ended
			March 31,
			2014	2013
Revenues and other income
	Sales and other operating revenue (1)		101,760	103,378
	Income from equity affiliates		4,108	4,418
	Other income		905	561
		Total revenues and other income	106,773	108,357
Costs and other deductions
	Crude oil and product purchases		58,314	59,449
	Production and manufacturing expenses		10,088	9,736
	Selling, general and administrative expenses		3,132	3,118
	Depreciation and depletion		4,192	4,110
	Exploration expenses, including dry holes		317	445
	Interest expense		66	24
	Sales-based taxes (1)		7,416	7,492
	Other taxes and duties		8,021	7,945
		Total costs and other deductions	91,546	92,319
Income before income taxes			15,227	16,038
	Income taxes		5,857	6,277
Net income including noncontrolling interests			9,370	9,761
	Net income attributable to noncontrolling interests		270	261
Net income attributable to ExxonMobil			9,100	9,500


Earnings per common share (dollars)			2.10	2.12

Earnings per common share - assuming dilution (dollars)			2.10	2.12


Dividends per common share (dollars)			0.63	0.57


(1) Sales-based taxes included in sales and other operating revenue			7,416	7,492

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

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

					Three Months Ended
					March 31,
					2014	2013

	Net income including noncontrolling interests				9,370	9,761
	Other comprehensive income (net of income taxes)
		Foreign exchange translation adjustment			(786)	(1,209)
		Adjustment for foreign exchange translation (gain)/loss included in net income			82	-
		Postretirement benefits reserves adjustment (excluding amortization)			(84)	65
		Amortization and settlement of postretirement benefits reserves adjustment
				included in net periodic benefit costs	316	444
		Unrealized change in fair value of stock investments			(54)	-
			Total other comprehensive income		(526)	(700)
	Comprehensive income including noncontrolling interests				8,844	9,061
		Comprehensive income attributable to noncontrolling interests			59	144
	Comprehensive income attributable to ExxonMobil				8,785	8,917

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

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

				Mar. 31,	Dec. 31,
				2014	2013
Assets
	Current assets
		Cash and cash equivalents		5,601	4,644
		Cash and cash equivalents – restricted		204	269
		Notes and accounts receivable – net		32,480	33,152
		Inventories
			Crude oil, products and merchandise	14,439	12,117
			Materials and supplies	4,129	4,018
		Other current assets		5,011	5,108
			Total current assets	61,864	59,308
	Investments, advances and long-term receivables			37,169	36,328
	Property, plant and equipment – net			245,897	243,650
	Other assets, including intangibles – net			8,103	7,522
			Total assets	353,033	346,808

Liabilities
	Current liabilities
		Notes and loans payable		9,223	15,808
		Accounts payable and accrued liabilities		52,109	48,085
		Income taxes payable		8,776	7,831
			Total current liabilities	70,108	71,724
	Long-term debt			12,144	6,891
	Postretirement benefits reserves			20,215	20,646
	Deferred income tax liabilities			40,783	40,530
	Long-term obligations to equity companies			4,877	4,742
	Other long-term obligations			22,015	21,780
			Total liabilities	170,142	166,313

Commitments and contingencies (Note 2)

Equity
	Common stock without par value
		(9,000 million shares authorized, 8,019 million shares issued)		10,276	10,077
	Earnings reinvested			393,800	387,432
	Accumulated other comprehensive income			(11,040)	(10,725)
	Common stock held in treasury
		(3,725 million shares at Mar. 31, 2014 and
		3,684 million shares at Dec. 31, 2013)		(216,638)	(212,781)
			ExxonMobil share of equity	176,398	174,003
	Noncontrolling interests			6,493	6,492
			Total equity	182,891	180,495
			Total liabilities and equity	353,033	346,808

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

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

				Three Months Ended
				March 31,
				2014	2013
Cash flows from operating activities
	Net income including noncontrolling interests			9,370	9,761
	Depreciation and depletion			4,192	4,110
	Changes in operational working capital, excluding cash and debt			2,452	2,321
	All other items – net			(911)	(2,600)
			Net cash provided by operating activities	15,103	13,592

Cash flows from investing activities
	Additions to property, plant and equipment			(7,328)	(7,494)
	Proceeds associated with sales of subsidiaries, property, plant and
		equipment, and sales and returns of investments		1,111	360
	Additional investments and advances			(457)	(3,032)
	Other investing activities – net			368	112
			Net cash used in investing activities	(6,306)	(10,054)

Cash flows from financing activities
	Additions to long-term debt			5,500	5
	Additions/(reductions) in short-term debt – net			(6,668)	1,587
	Cash dividends to ExxonMobil shareholders			(2,732)	(2,561)
	Cash dividends to noncontrolling interests			(58)	(105)
	Changes in noncontrolling interests			-	(1)
	Common stock acquired			(3,860)	(5,621)
	Common stock sold			2	2
			Net cash used in financing activities	(7,816)	(6,694)
Effects of exchange rate changes on cash				(24)	(212)
Increase/(decrease) in cash and cash equivalents				957	(3,368)
Cash and cash equivalents at beginning of period				4,644	9,582
Cash and cash equivalents at end of period				5,601	6,214

Supplemental Disclosures
	Income taxes paid			4,145	7,220
	Cash interest paid			87	105

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

	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			212		-			-		-		212		-		212
	Tax benefits related to stock-based
		awards		188		-			-		-		188		-		188
	Other			(388)		-			-		-		(388)		241		(147)
	Net income for the period			-		9,500			-		-		9,500		261		9,761
	Dividends – common shares			-		(2,561)			-		-		(2,561)		(105)		(2,666)
	Other comprehensive income			-		-			(583)		-		(583)		(117)		(700)
	Acquisitions, at cost			-		-			-		(5,621)		(5,621)		(1)		(5,622)
	Dispositions			-		-			-		391		391		-		391
Balance as of March 31, 2013				9,665		372,666			(12,767)		(202,563)		167,001		6,076		173,077

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			201		-			-		-		201		-		201
	Tax benefits related to stock-based
		awards		3		-			-		-		3		-		3
	Other			(5)		-			-		-		(5)		-		(5)
	Net income for the period			-		9,100			-		-		9,100		270		9,370
	Dividends – common shares			-		(2,732)			-		-		(2,732)		(58)		(2,790)
	Other comprehensive income			-		-			(315)		-		(315)		(211)		(526)
	Acquisitions, at cost			-		-			-		(3,860)		(3,860)		-		(3,860)
	Dispositions			-		-			-		3		3		-		3
Balance as of March 31, 2014				10,276		393,800			(11,040)		(216,638)		176,398		6,493		182,891



			Three Months Ended March 31, 2014									Three Months Ended March 31, 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		-		(41)			(41)				-		(63)		(63)
		Dispositions		-		-			-				-		7		7
	Balance as of March 31			8,019		(3,725)			4,294				8,019		(3,573)		4,446

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

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 March 31, 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 March 31, 2014

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

3,187

3,233

Other

4,309

4,437

8,746

Total

7,496

4,483

11,979

(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 March 31, 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. 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. 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. 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.

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		(1,088)	78	-	(1,010)
Amounts reclassified from accumulated other
	comprehensive income		-	427	-	427
Total change in accumulated other comprehensive income			(1,088)	505	-	(583)
Balance as of March 31, 2013			1,322	(14,089)	-	(12,767)

Balance as of December 31, 2013			(846)	(9,879)	-	(10,725)
Current period change excluding amounts reclassified
	from accumulated other comprehensive income		(555)	(93)	(54)	(702)
Amounts reclassified from accumulated other
	comprehensive income		82	305	-	387
Total change in accumulated other comprehensive income			(473)	212	(54)	(315)
Balance as of March 31, 2014			(1,319)	(9,667)	(54)	(11,040)

Three Months Ended

Amounts Reclassified Out of Accumulated Other

March 31,

Comprehensive Income - Before-tax Income/(Expense)

2014

2013

(millions of dollars)

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

(Statement of Income line: Other income)

(82)

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs (1)

(451)

(644)

(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
Income Tax (Expense)/Credit For		March 31,
Components of Other Comprehensive Income		2014	2013
		(millions of dollars)

Foreign exchange translation adjustment		(32)	37
Postretirement benefits reserves adjustment (excluding amortization)		50	(19)
Amortization and settlement of postretirement benefits reserves
	adjustment included in net periodic benefit costs	(135)	(200)
Unrealized change in fair value of stock investments		29	-
Total		(88)	(182)

4. Earnings Per Share

	Three Months Ended
	March 31,
	2014	2013

Earnings per common share

Net income attributable to ExxonMobil (millions of dollars)	9,100	9,500

Weighted average number of common shares outstanding (millions of shares)	4,328	4,485

Earnings per common share (dollars) (1)	2.10	2.12

(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
			March 31,
			2014	2013
			(millions of dollars)
Components of net benefit cost
	Pension Benefits - U.S.
		Service cost	177	187
		Interest cost	202	187
		Expected return on plan assets	(200)	(209)
		Amortization of actuarial loss/(gain) and prior service cost	104	164
		Net pension enhancement and curtailment/settlement cost	112	167
		Net benefit cost	395	496


	Pension Benefits - Non-U.S.
		Service cost	150	178
		Interest cost	285	277
		Expected return on plan assets	(298)	(292)
		Amortization of actuarial loss/(gain) and prior service cost	192	250
		Net benefit cost	329	413


	Other Postretirement Benefits
		Service cost	37	36
		Interest cost	92	91
		Expected return on plan assets	(9)	(10)
		Amortization of actuarial loss/(gain) and prior service cost	43	63
		Net benefit cost	163	180

6. Financial Instruments

The fair value of financial instruments is determined by reference to observable market data and other valuation techniques as appropriate. The only category of financial instruments where the difference between fair value and recorded book value is notable is long-term debt. The estimated fair value of total long-term debt, excluding capitalized lease obligations, was $12,086 million at March 31, 2014, and $6,787 million at December 31, 2013, as compared to recorded book values of $11,786 million at March 31, 2014, and $6,516 million at December 31, 2013. The increase in the estimated fair value and book value of long-term debt reflects the Corporation’s issuance of $5,500 million of long-term debt in the first quarter of 2014. The $5,500 million of long-term debt is comprised of $750 million of floating-rate notes due in 2017, $500 million of floating-rate notes due in 2019, $1,500 million of 0.921% notes due in 2017, $1,750 million of 1.819% notes due in 2019, and $1,000 million of 3.176% notes due in 2024.

The fair value of long-term debt by hierarchy level at March 31, 2014, is: Level 1 $11,142 million; Level 2 $880 million; and Level 3 $64 million. Level 1 represents quoted prices in active markets. Level 2 includes debt whose fair value is based upon a publicly available index. Level 3 involves using internal data augmented by relevant market indicators if available.

7. Disclosures about Segments and Related Information

			Three Months Ended
			March 31,
			2014	2013
Earnings After Income Tax			(millions of dollars)
	Upstream
		United States	1,244	859
		Non-U.S.	6,539	6,178
	Downstream
		United States	623	1,039
		Non-U.S.	190	506
	Chemical
		United States	679	752
		Non-U.S.	368	385
	All other		(543)	(219)
	Corporate total		9,100	9,500

Sales and Other Operating Revenue (1)
	Upstream
		United States	4,322	2,872
		Non-U.S.	5,827	6,160
	Downstream
		United States	30,412	30,998
		Non-U.S.	51,288	53,407
	Chemical