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, 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 June 30, 2014
Common stock, without par value		4,264,692,028

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2014

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Statement of Income Three and six months ended June 30, 2014 and 2013	3
Condensed Consolidated Statement of Comprehensive Income Three and six months ended June 30, 2014 and 2013	4
Condensed Consolidated Balance Sheet As of June 30, 2014 and December 31, 2013	5

Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2014 and 2013	6
Condensed Consolidated Statement of Changes in Equity Six months ended June 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

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,
			2014	2013	2014	2013
Revenues and other income
	Sales and other operating revenue (1)		106,158	103,050	207,918	206,428
	Income from equity affiliates		3,312	3,098	7,420	7,516
	Other income		2,177	518	3,082	1,079
		Total revenues and other income	111,647	106,666	218,420	215,023
Costs and other deductions
	Crude oil and product purchases		62,649	59,678	120,963	119,127
	Production and manufacturing expenses		10,478	10,278	20,566	20,014
	Selling, general and administrative expenses		3,169	3,268	6,301	6,386
	Depreciation and depletion		4,285	4,405	8,477	8,515
	Exploration expenses, including dry holes		496	454	813	899
	Interest expense		64	85	130	109
	Sales-based taxes (1)		7,871	7,552	15,287	15,044
	Other taxes and duties		8,484	8,178	16,505	16,123
		Total costs and other deductions	97,496	93,898	189,042	186,217
Income before income taxes			14,151	12,768	29,378	28,806
	Income taxes		5,034	5,793	10,891	12,070
Net income including noncontrolling interests			9,117	6,975	18,487	16,736
	Net income attributable to noncontrolling interests		337	115	607	376
Net income attributable to ExxonMobil			8,780	6,860	17,880	16,360


Earnings per common share (dollars)			2.05	1.55	4.15	3.67

Earnings per common share - assuming dilution (dollars)			2.05	1.55	4.15	3.67


Dividends per common share (dollars)			0.69	0.63	1.32	1.20


(1) Sales-based taxes included in sales and other
		operating revenue	7,871	7,552	15,287	15,044

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		Six Months Ended
				June 30,		June 30,
				2014	2013	2014	2013

Net income including noncontrolling interests				9,117	6,975	18,487	16,736
Other comprehensive income (net of income taxes)
	Foreign exchange translation adjustment			1,628	(2,337)	842	(3,546)
	Adjustment for foreign exchange translation (gain)/loss
			included in net income	81	-	163	-
	Postretirement benefits reserves adjustment
			(excluding amortization)	(92)	99	(176)	164
	Amortization and settlement of postretirement benefits reserves
			adjustment included in net periodic benefit costs	313	454	629	898
	Unrealized change in fair value of stock investments			18	-	(36)	-
		Total other comprehensive income		1,948	(1,784)	1,422	(2,484)
Comprehensive income including noncontrolling interests				11,065	5,191	19,909	14,252
	Comprehensive income attributable to
			noncontrolling interests	556	(55)	615	89
Comprehensive income attributable to ExxonMobil				10,509	5,246	19,294	14,163

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)

				June 30,	Dec. 31,
				2014	2013
Assets
	Current assets
		Cash and cash equivalents		6,083	4,644
		Cash and cash equivalents – restricted		198	269
		Notes and accounts receivable – net		34,182	33,152
		Inventories
			Crude oil, products and merchandise	13,944	12,117
			Materials and supplies	4,233	4,018
		Other current assets		5,373	5,108
			Total current assets	64,013	59,308
	Investments, advances and long-term receivables			35,110	36,328
	Property, plant and equipment – net			251,353	243,650
	Other assets, including intangibles – net			8,110	7,522
			Total assets	358,586	346,808

Liabilities
	Current liabilities
		Notes and loans payable		9,948	15,808
		Accounts payable and accrued liabilities		52,363	48,085
		Income taxes payable		7,218	7,831
			Total current liabilities	69,529	71,724
	Long-term debt			11,817	6,891
	Postretirement benefits reserves			20,161	20,646
	Deferred income tax liabilities			41,000	40,530
	Long-term obligations to equity companies			5,041	4,742
	Other long-term obligations			22,907	21,780
			Total liabilities	170,455	166,313

Commitments and contingencies (Note 2)

Equity
	Common stock without par value
		(9,000 million shares authorized, 8,019 million shares issued)		10,487	10,077
	Earnings reinvested			399,614	387,432
	Accumulated other comprehensive income			(9,311)	(10,725)
	Common stock held in treasury
		(3,754 million shares at June 30, 2014 and
		3,684 million shares at Dec. 31, 2013)		(219,635)	(212,781)
			ExxonMobil share of equity	181,155	174,003
	Noncontrolling interests			6,976	6,492
			Total equity	188,131	180,495
			Total liabilities and equity	358,586	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)

				Six Months Ended
				June 30,
				2014	2013
Cash flows from operating activities
	Net income including noncontrolling interests			18,487	16,736
	Depreciation and depletion			8,477	8,515
	Changes in operational working capital, excluding cash and debt			3	(2,962)
	All other items – net			(1,662)	(1,014)
			Net cash provided by operating activities	25,305	21,275

Cash flows from investing activities
	Additions to property, plant and equipment			(15,870)	(16,145)
	Proceeds associated with sales of subsidiaries, property, plant and
		equipment, and sales and returns of investments		3,667	665
	Additional investments and advances			(678)	(3,464)
	Other investing activities – net			2,398	397
			Net cash used in investing activities	(10,483)	(18,547)

Cash flows from financing activities
	Additions to long-term debt			5,500	202
	Additions/(reductions) in short-term debt – net			(489)	(362)
	Additions/(reductions) in debt with three months or less maturity			(5,747)	7,928
	Cash dividends to ExxonMobil shareholders			(5,698)	(5,355)
	Cash dividends to noncontrolling interests			(131)	(185)
	Changes in noncontrolling interests			-	(1)
	Tax benefits related to stock-based awards			7	7
	Common stock acquired			(6,863)	(9,652)
	Common stock sold			9	9
			Net cash used in financing activities	(13,412)	(7,409)
Effects of exchange rate changes on cash				29	(292)
Increase/(decrease) in cash and cash equivalents				1,439	(4,973)
Cash and cash equivalents at beginning of period				4,644	9,582
Cash and cash equivalents at end of period				6,083	4,609

Supplemental Disclosures
	Income taxes paid			10,366	14,660
	Cash interest paid			174	219

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			428		-			-		-		428		-		428
	Tax benefits related to stock-based
		awards		192		-			-		-		192		-		192
	Other			(391)		-			-		-		(391)		241		(150)
	Net income for the period			-		16,360			-		-		16,360		376		16,736
	Dividends – common shares			-		(5,355)			-		-		(5,355)		(185)		(5,540)
	Other comprehensive income			-		-			(2,197)		-		(2,197)		(287)		(2,484)
	Acquisitions, at cost			-		-			-		(9,652)		(9,652)		(1)		(9,653)
	Dispositions			-		-			-		399		399		-		399
Balance as of June 30, 2013				9,882		376,732			(14,381)		(206,586)		165,647		5,941		171,588

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			402		-			-		-		402		-		402
	Tax benefits related to stock-based
		awards		7		-			-		-		7		-		7
	Other			1		-			-		-		1		-		1
	Net income for the period			-		17,880			-		-		17,880		607		18,487
	Dividends – common shares			-		(5,698)			-		-		(5,698)		(131)		(5,829)
	Other comprehensive income			-		-			1,414		-		1,414		8		1,422
	Acquisitions, at cost			-		-			-		(6,863)		(6,863)		-		(6,863)
	Dispositions			-		-			-		9		9		-		9
Balance as of June 30, 2014				10,487		399,614			(9,311)		(219,635)		181,155		6,976		188,131



			Six Months Ended June 30, 2014									Six Months Ended June 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		-		(70)			(70)				-		(108)		(108)
		Dispositions		-		-			-				-		8		8
	Balance as of June 30			8,019		(3,754)			4,265				8,019		(3,617)		4,402

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 June 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 June 30, 2014

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

3,328

3,378

Other

3,925

4,700

8,625

Total

7,253

4,750

12,003

(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, 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. On July 31, 2014, the European Union (EU) issued its latest sanctions against Russia relating to the situation in Ukraine which became effective on August 1, 2014. On August 1, 2014, the United States (U.S.) through the Department of Commerce, Bureau of Industry and Security issued its latest sanctions against Russia relating to the situation in Ukraine which will become effective when published in the Federal Register. The extent of the impact of these latest EU and U.S. sanctions on ExxonMobil cannot be determined at this time and continues under evaluation.

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		(3,214)	152	-	(3,062)
Amounts reclassified from accumulated other
	comprehensive income		-	865	-	865
Total change in accumulated other comprehensive income			(3,214)	1,017	-	(2,197)
Balance as of June 30, 2013			(804)	(13,577)	-	(14,381)

Balance as of December 31, 2013			(846)	(9,879)	-	(10,725)
Current period change excluding amounts reclassified
	from accumulated other comprehensive income		849	(168)	(36)	645
Amounts reclassified from accumulated other
	comprehensive income		163	606	-	769
Total change in accumulated other comprehensive income			1,012	438	(36)	1,414
Balance as of June 30, 2014			166	(9,441)	(36)	(9,311)

Three Months Ended

Six Months Ended

Amounts Reclassified Out of Accumulated Other

June 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)

(81)

(163)

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs (1)

(434)

(659)

(885)

(1,303)

(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		Six Months Ended
Income Tax (Expense)/Credit For			June 30,		June 30,
Components of Other Comprehensive Income			2014	2013	2014	2013
		(millions of dollars)

Foreign exchange translation adjustment			61	79	29	116
Postretirement benefits reserves adjustment
	(excluding amortization)		27	(38)	77	(57)
Amortization and settlement of postretirement benefits reserves
	adjustment included in net periodic benefit costs		(121)	(205)	(256)	(405)
Unrealized change in fair value of stock investments			(10)	-	19	-
Total			(43)	(164)	(131)	(346)

4. Earnings Per Share

		Three Months Ended		Six Months Ended
		June 30,		June 30,
		2014	2013	2014	2013

Earnings per common share
Net income attributable to ExxonMobil (millions of dollars)		8,780	6,860	17,880	16,360

Weighted average number of common shares
	outstanding (millions of shares)	4,297	4,433	4,312	4,459

Earnings per common share (dollars) (1)		2.05	1.55	4.15	3.67

(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		Six Months Ended
					June 30,		June 30,
					2014	2013	2014	2013
				(millions of dollars)
Components of net benefit cost
	Pension Benefits - U.S.
		Service cost			182	188	359	375
		Interest cost			201	187	403	374
		Expected return on plan assets			(200)	(208)	(400)	(417)
		Amortization of actuarial loss/(gain) and prior
			service cost		104	164	208	328
		Net pension enhancement and
			curtailment/settlement cost		113	197	225	364
		Net benefit cost			400	528	795	1,024