10-Q 1 xom10q1q2018.htm FORM 10-Q  

 

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 March 31, 2018

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) 940-6000

(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, smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

  

Non-accelerated filer

 

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

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 March 31, 2018

Common stock, without par value

 

 4,233,834,437 

 


 

   

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018

 

TABLE OF CONTENTS

 

 

PART I.  FINANCIAL INFORMATION

 

 

 

Item 1.       Financial Statements

 

 

     Condensed Consolidated Statement of Income

Three months ended March 31, 2018 and 2017

 

3

     Condensed Consolidated Statement of Comprehensive Income

Three months ended March 31, 2018 and 2017

 

4

     Condensed Consolidated Balance Sheet

As of March 31, 2018 and December 31, 2017

5

 

 

     Condensed Consolidated Statement of Cash Flows

          Three months ended March 31, 2018 and 2017

 

6

     Condensed Consolidated Statement of Changes in Equity

          Three months ended March 31, 2018 and 2017

 

7

     Notes to Condensed Consolidated Financial Statements

 

8

Item 2.       Management's Discussion and Analysis of Financial

                     Condition and Results of Operations

 

16

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

 

23

Item 4.       Controls and Procedures

 

23

 

 

PART II.  OTHER INFORMATION

 

Item 1.       Legal Proceedings

 

24

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

 

25

Item 6.       Exhibits

 

25

Index to Exhibits

 

26

Signature

 

27


2 


 

   

PART I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2018

 

 

2017

 

Revenues and other income

 

 

 

 

 

 

 

 

Sales and other operating revenue

 

 

65,436

 

 

56,474

 

 

Income from equity affiliates

 

 

1,910

 

 

1,710

 

 

Other income

 

 

865

 

 

487

 

 

 

Total revenues and other income

 

 

68,211

 

 

58,671

 

Costs and other deductions

 

 

 

 

 

 

 

 

Crude oil and product purchases

 

 

36,288

 

 

30,359

 

 

Production and manufacturing expenses

 

 

8,491

 

 

7,566

 

 

Selling, general and administrative expenses

 

 

2,747

 

 

2,505

 

 

Depreciation and depletion

 

 

4,470

 

 

4,519

 

 

Exploration expenses, including dry holes

 

 

287

 

 

289

 

 

Non-service pension and postretirement benefit expense

 

 

337

 

 

373

 

 

Interest expense

 

 

204

 

 

146

 

 

Other taxes and duties

 

 

8,147

 

 

6,996

 

 

 

Total costs and other deductions

 

 

60,971

 

 

52,753

 

Income before income taxes

 

 

7,240

 

 

5,918

 

 

Income taxes

 

 

2,457

 

 

1,828

 

Net income including noncontrolling interests

 

 

4,783

 

 

4,090

 

 

Net income attributable to noncontrolling interests

 

 

133

 

 

80

 

Net income attributable to ExxonMobil

 

 

4,650

 

 

4,010

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) 

 

 

1.09

 

 

0.95

 

  

 

 

 

 

 

 

 

 

Earnings per common share - assuming dilution (dollars) 

 

 

1.09

 

 

0.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share (dollars) 

 

 

0.77

 

 

0.75

 



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

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

 

4,783

 

 

4,090

 

 

Other comprehensive income (net of income taxes)

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

 

(804)

 

 

1,408

 

 

 

Adjustment for foreign exchange translation (gain)/loss included in net income

 

 

168

 

 

-

 

 

 

Postretirement benefits reserves adjustment (excluding amortization)

 

 

(434)

 

 

(25)

 

 

 

Amortization and settlement of postretirement benefits reserves adjustment

 

 

 

 

 

 

 

 

 

 

 

included in net periodic benefit costs

 

 

 

237

 

 

256

 

 

 

 

Total other comprehensive income

 

 

 

(833)

 

 

1,639

 

 

Comprehensive income including noncontrolling interests

 

 

3,950

 

 

5,729

 

 

 

Comprehensive income attributable to noncontrolling interests

 

 

(9)

 

 

159

 

 

Comprehensive income attributable to ExxonMobil

 

 

 

3,959

 

 

5,570

 



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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

 

 

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

4,125

 

 

3,177

 

 

 

Notes and accounts receivable – net

 

 

24,686

 

 

25,597

 

 

 

Inventories

 

 

 

 

 

 

 

 

 

 

Crude oil, products and merchandise

 

 

13,879

 

 

12,871

 

 

 

 

Materials and supplies

 

 

4,169

 

 

4,121

 

 

 

Other current assets

 

 

1,456

 

 

1,368

 

 

 

 

Total current assets

 

 

48,315

 

 

47,134

 

 

Investments, advances and long-term receivables

 

 

40,350

 

 

39,160

 

 

Property, plant and equipment – net

 

 

250,352

 

 

252,630

 

 

Other assets, including intangibles – net

 

 

9,809

 

 

9,767

 

 

 

 

Total assets

 

 

348,826

 

 

348,691

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Notes and loans payable

 

 

19,836

 

 

17,930

 

 

 

Accounts payable and accrued liabilities

 

 

37,207

 

 

36,796

 

 

 

Income taxes payable

 

 

3,263

 

 

3,045

 

 

 

 

Total current liabilities

 

 

60,306

 

 

57,771

 

 

Long-term debt

 

 

20,781

 

 

24,406

 

 

Postretirement benefits reserves

 

 

21,696

 

 

21,132

 

 

Deferred income tax liabilities

 

 

26,760

 

 

26,893

 

 

Long-term obligations to equity companies

 

 

4,818

 

 

4,774

 

 

Other long-term obligations

 

 

19,554

 

 

19,215

 

 

 

 

Total liabilities

 

 

153,915

 

 

154,191

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock without par value

 

 

 

 

 

 

 

 

 

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

 

 

14,888

 

 

14,656

 

 

Earnings reinvested

 

 

415,970

 

 

414,540

 

 

Accumulated other comprehensive income

 

 

(16,992)

 

 

(16,262)

 

 

Common stock held in treasury

 

 

 

 

 

 

 

 

 

(3,785 million shares at March 31, 2018 and

 

 

 

 

 

 

 

 

   3,780 million shares at December 31, 2017)

 

 

(225,671)

 

 

(225,246)

 

 

 

 

ExxonMobil share of equity

 

 

188,195

 

 

187,688

 

 

Noncontrolling interests

 

 

6,716

 

 

6,812

 

 

 

 

Total equity

 

 

194,911

 

 

194,500

 

 

 

 

Total liabilities and equity

 

 

348,826

 

 

348,691

 



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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2018

 

 

2017

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

4,783

 

 

4,090

 

 

Depreciation and depletion

 

 

4,470

 

 

4,519

 

 

Changes in operational working capital, excluding cash and debt

 

 

351

 

 

793

 

 

All other items – net

 

 

(1,085)

 

 

(1,229)

 

 

 

 

Net cash provided by operating activities

 

 

8,519

 

 

8,173

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(3,349)

 

 

(2,890)

 

 

Proceeds associated with sales of subsidiaries, property, plant and

 

 

 

 

 

 

 

 

 

equipment, and sales and returns of investments

 

 

1,441

 

 

687

 

 

Additional investments and advances

 

 

(138)

 

 

(1,738)

 

 

Other investing activities including collection of advances

 

 

187

 

 

180

 

 

 

 

Net cash used in investing activities

 

 

(1,859)

 

 

(3,761)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Additions to long-term debt

 

 

-

 

 

60

 

 

Additions to short-term debt

 

 

-

 

 

1,734

 

 

Reductions in short-term debt

 

 

(3,872)

 

 

(2,669)

 

 

Additions/(reductions) in commercial paper, and debt with three

 

 

 

 

 

 

 

 

 

months or less maturity (1) 

 

 

1,950

 

 

1,308

 

 

Cash dividends to ExxonMobil shareholders

 

 

(3,291)

 

 

(3,134)

 

 

Cash dividends to noncontrolling interests

 

 

(43)

 

 

(44)

 

 

Changes in noncontrolling interests

 

 

(59)

 

 

-

 

 

Common stock acquired

 

 

(427)

 

 

(501)

 

 

 

 

Net cash used in financing activities

 

 

(5,742)

 

 

(3,246)

 

Effects of exchange rate changes on cash

 

 

30

 

 

74

 

Increase/(decrease) in cash and cash equivalents

 

 

948

 

 

1,240

 

Cash and cash equivalents at beginning of period

 

 

3,177

 

 

3,657

 

Cash and cash equivalents at end of period

 

 

4,125

 

 

4,897

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

 

 

 

 

Income taxes paid

 

 

2,117

 

 

1,970

 

 

Cash interest paid

 

 

360

 

 

368

 



2017 Noncash Transactions

In the first three months of 2017, the Corporation completed the acquisitions of InterOil Corporation and of companies that own certain oil and gas properties in the Permian Basin and other assets. These transactions included a significant noncash component associated with the issuance of a combined 96 million shares of Exxon Mobil Corporation common stock in acquisition consideration.

 

 (1) Includes a net reduction of commercial paper with a maturity of over three months of $0.3 billion in 2018 and a net addition of $0.1 billion in 2017. The gross amount of commercial paper with a maturity of over three months issued was $0.4 billion in 2018 and $1.1 billion in 2017, while the gross amount repaid was $0.7 billion in 2018 and $1.0 billion in 2017.

 

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, 2016

 

 

12,157

 

 

407,831

 

 

(22,239)

 

 

(230,424)

 

 

167,325

 

 

6,505

 

 

173,830

 

Amortization of stock-based awards

 

 

264

 

 

-

 

 

-

 

 

-

 

 

264

 

 

-

 

 

264

 

Other

 

 

(84)

 

 

-

 

 

-

 

 

-

 

 

(84)

 

 

-

 

 

(84)

 

Net income for the period

 

 

-

 

 

4,010

 

 

-

 

 

-

 

 

4,010

 

 

80

 

 

4,090

 

Dividends

 

 

-

 

 

(3,134)

 

 

-

 

 

-

 

 

(3,134)

 

 

(44)

 

 

(3,178)

 

Other comprehensive income

 

 

-

 

 

-

 

 

1,560

 

 

-

 

 

1,560

 

 

79

 

 

1,639

 

Acquisitions, at cost

 

 

-

 

 

-

 

 

-

 

 

(582)

 

 

(582)

 

 

-

 

 

(582)

 

Issued for acquisitions

 

 

2,078

 

 

-

 

 

-

 

 

5,711

 

 

7,789

 

 

-

 

 

7,789

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

3

 

 

3

 

 

-

 

 

3

Balance as of March 31, 2017

 

 

14,415

 

 

408,707

 

 

(20,679)

 

 

(225,292)

 

 

177,151

 

 

6,620

 

 

183,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

 

14,656

 

 

414,540

 

 

(16,262)

 

 

(225,246)

 

 

187,688

 

 

6,812

 

 

194,500

 

Amortization of stock-based awards

 

 

237

 

 

-

 

 

-

 

 

-

 

 

237

 

 

-

 

 

237

 

Other

 

 

(5)

 

 

-

 

 

-

 

 

-

 

 

(5)

 

 

-

 

 

(5)

 

Net income for the period

 

 

-

 

 

4,650

 

 

-

 

 

-

 

 

4,650

 

 

133

 

 

4,783

 

Dividends

 

 

-

 

 

(3,291)

 

 

-

 

 

-

 

 

(3,291)

 

 

(43)

 

 

(3,334)

 

Cumulative effect of accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

change

 

 

-

 

 

71

 

 

(39)

 

 

-

 

 

32

 

 

15

 

 

47

 

Other comprehensive income

 

 

-

 

 

-

 

 

(691)

 

 

-

 

 

(691)

 

 

(142)

 

 

(833)

 

Acquisitions, at cost

 

 

-

 

 

-

 

 

-

 

 

(427)

 

 

(427)

 

 

(59)

 

 

(486)

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

2

 

 

2

 

 

-

 

 

2

Balance as of March 31, 2018

 

 

14,888

 

 

415,970

 

 

(16,992)

 

 

(225,671)

 

 

188,195

 

 

6,716

 

 

194,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2018

 

 

 

 

Three Months Ended March 31, 2017

 

 

 

 

 

 

 

 

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

 

 

(3,780)

 

 

4,239

 

 

 

 

 

8,019

 

 

(3,871)

 

 

4,148

 

 

 

Acquisitions

 

 

-

 

 

(5)

 

 

(5)

 

 

 

 

 

-

 

 

(7)

 

 

(7)

 

 

 

Issued for acquisitions

 

 

-

 

 

-

 

 

-

 

 

 

 

 

-

 

 

96

 

 

96

 

 

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

 

 

 

-

 

 

-

 

 

-

 

Balance as of March 31

 

 

8,019

 

 

(3,785)

 

 

4,234

 

 

 

 

 

8,019

 

 

(3,782)

 

 

4,237



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 2017 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.      Accounting Changes

 

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s standard, Revenue from Contracts with Customers (Topic 606), as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted using the Modified Retrospective method, under which prior year results are not restated, but supplemental information is provided for any material impacts of the standard on 2018 results. The adoption of the standard did not have a material impact on any of the lines reported in the Corporation’s financial statements. The cumulative effect of adoption of the standard was de minimis. The Corporation did not elect any practical expedients that require disclosure. See Note 9.

 

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value with changes in the fair value recognized through net income. The Corporation elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The cumulative effect adjustment related to the adoption of this standard increased equity $47 million. The portion of unrealized gains and losses recognized during the reporting period on equity securities still held at March 31, 2018 and the carrying value of equity securities without readily determinable fair values at March 31, 2018 were not significant to the Corporation. The standard also expanded disclosures related to financial instruments. See Note 7.

 

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the Corporation’s Statement of Income, “Non-service pension and postretirement benefit expense.” The Corporation elected to use the practical expedient which uses the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and financing segment. The estimated after-tax impact from the change in segmentation is an increase of about $100 million in Corporate and financing expenses for the first quarter of 2018, offset across the operating segments. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.

 

The impact of the retrospective presentation change on ExxonMobil's consolidated statement of income for the period ended March 31, 2017, is shown below.  

 

 

 

 

 

As of March 31, 2017

 

 

 

 

 

 

 

As Reported

 

Change

 

As Adjusted

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production and manufacturing expenses

 

 

7,845

 

(279)

 

7,566

 

 

 

Selling, general and administrative expenses

 

 

2,599

 

(94)

 

2,505

 

 

 

Non-service pension and postretirement benefit expense

 

 

-

 

373

 

373

 

 


8 


 

Effective January 1, 2019, ExxonMobil will adopt the Financial Accounting Standards Board’s standard, Leases (Topic 842), as amended. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as an asset and a lease liability. The Corporation is gathering and evaluating data and recently acquired a system to facilitate implementation. We are progressing an assessment of the magnitude of the effect on the Corporation’s financial statements.

  



3.      Litigation and Other Contingencies

 

Litigation

 

A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. 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, 2018, 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, 2018

 

 

 

 

 

 

 

 

Equity

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

Third Party

 

 

 

 

 

 

 

 

 

 

 

Obligations (1) 

 

 

Obligations

 

 

Total

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

Guarantees

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt-related

 

 

96

 

 

328

 

 

424

 

 

 

 

Other

 

 

1,558

 

 

4,887

 

 

6,445

 

 

 

 

 

Total

 

 

1,654

 

 

5,215

 

 

6,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 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.

 

 


9 


 

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.

 

On September 6, 2007, affiliates of ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID). 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 percent 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 ICSID 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.

 

On February 2, 2015, Venezuela filed a Request for Annulment of the ICSID award. On March 9, 2017, the ICSID Committee hearing the Request for Annulment issued a decision partially annulling the award of the Tribunal issued on October 9, 2014. The Committee affirmed the compensation due for the La Ceiba project and for export curtailments at the Cerro Negro project, but annulled the portion of the award relating to the Cerro Negro Project’s expropriation ($1.4 billion) based on its determination that the prior Tribunal failed to adequately explain why the cap on damages in the indemnity owed by PdVSA did not affect or limit the amount owed for the expropriation of the Cerro Negro project. As a result, ExxonMobil retains an award for $260 million (including accrued interest). ExxonMobil reached an agreement with Venezuela for full payment of the $260 million. To date, Venezuela continues to meet its payment obligations. The agreement does not impact ExxonMobil’s ability to re-arbitrate the issue that was the basis for the annulment in a new ICSID arbitration proceeding.

 

The United States District Court for the Southern District of New York entered judgment on the ICSID award on October 10, 2014. On July 11, 2017, the United States Court of Appeals for the Second Circuit rendered its opinion overturning the District Court’s decision and vacating the judgment on the grounds that a different procedure should have been used to reduce the award to judgment. The Corporation did not seek a writ of certiorari and the court case is now concluded.

 

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 appealed that judgment to the Court of Appeal, Abuja Judicial Division. On July 22, 2016, the Court of Appeal upheld the decision of the lower court setting aside the award. On October 21, 2016, the Contractors appealed the decision to the Supreme Court of Nigeria. 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. Following dismissal by this court, the Contractors appealed to the Nigerian Court of Appeal in June 2016. 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. NNPC has moved to dismiss the lawsuit. The stay in the proceedings in the Southern District of New York has been lifted. 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.  


10 


 

   

4.     Other Comprehensive Income Information

 

 

 

 

 

 

Cumulative

 

 

Post-

 

 

 

 

 

 

 

 

 

Foreign

 

 

retirement

 

 

 

 

 

 

 

 

 

Exchange

 

 

Benefits

 

 

 

 

ExxonMobil Share of Accumulated Other

 

 

Translation

 

 

Reserves

 

 

 

 

Comprehensive Income

 

 

Adjustment

 

 

Adjustment

 

 

Total

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2016

 

 

(14,501)

 

 

(7,738)

 

 

(22,239)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

1,342

 

 

(29)

 

 

1,313

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

-

 

 

247

 

 

247

 

Total change in accumulated other comprehensive income

 

 

1,342

 

 

218

 

 

1,560

 

Balance as of March 31, 2017

 

 

(13,159)

 

 

(7,520)

 

 

(20,679)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

 

(9,482)

 

 

(6,780)

 

 

(16,262)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(686)

 

 

(440)

 

 

(1,126)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

168

 

 

228

 

 

396

 

Total change in accumulated other comprehensive income

 

 

(518)

 

 

(212)

 

 

(730)

 

Balance as of March 31, 2018

 

 

(10,000)

 

 

(6,992)

 

 

(16,992)



 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Amounts Reclassified Out of Accumulated Other

 

 

 

 

 

March 31,

 

Comprehensive Income - Before-tax Income/(Expense)

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

(Statement of Income line: Other income)

 

 

 

 

 

(168)

 

 

-

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

 

 

 

 

 

 

 

 

 

(Statement of Income line: Non-service pension and postretirement benefit expense)

 

 

(320)

 

 

(359)

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Income Tax (Expense)/Credit For

 

 

 

 

 

March 31,

 

Components of Other Comprehensive Income

 

 

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

 

 

 

-

 

 

(18)

 

Postretirement benefits reserves adjustment (excluding amortization)

 

 

 

 

 

124

 

 

5

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

 

 

 

(83)

 

 

(103)

 

Total

 

 

 

 

 

41

 

 

(116)


11 


 

   

5.     Earnings Per Share

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to ExxonMobil (millions of dollars)

 

 

4,650

 

 

4,010

 

  

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (millions of shares)

 

 

4,270

 

 

4,223

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) (1)

 

 

1.09

 

 

0.95

 

 

 

 

 

 

 

 

 

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

 

       each period shown.



6.     Pension and Other Postretirement Benefits

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

(millions of dollars)

 

Components of net benefit cost

 

 

 

 

 

 

 

 

 

Pension Benefits - U.S.

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

 

209

 

 

197

 

 

 

Interest cost

 

 

 

180

 

 

199

 

 

 

Expected return on plan assets

 

 

 

(182)

 

 

(194)

 

 

 

Amortization of actuarial loss/(gain) and prior service cost

 

 

91

 

 

110

 

 

 

Net pension enhancement and curtailment/settlement cost

 

 

63

 

 

105

 

 

 

Net benefit cost

 

 

 

361

 

 

417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits - Non-U.S.

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

 

158

 

 

145

 

 

 

Interest cost

 

 

 

200

 

 

187

 

 

 

Expected return on plan assets

 

 

 

(252)

 

 

(239)

 

 

 

Amortization of actuarial loss/(gain) and prior service cost

 

 

118

 

 

127

 

 

 

Net pension enhancement and curtailment/settlement cost

 

 

33

 

 

(5)

 

 

 

Net benefit cost

 

 

 

257

 

 

215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Postretirement Benefits

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

 

36

 

 

26

 

 

 

Interest cost

 

 

 

75

 

 

72

 

 

 

Expected return on plan assets

 

 

 

(6)

 

 

(6)

 

 

 

Amortization of actuarial loss/(gain) and prior service cost

 

 

17

 

 

17

 

 

 

Net benefit cost

 

 

 

122

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 


12 


 

7.     Financial Instruments

 

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities  The estimated fair value of financial instruments at March 31, 2018, and the related hierarchy level for the fair value measurement is as follows:

 

 

 

 

 

 

At March 31, 2018

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

Fair Value

 

 

 

 

 

Value

 

Level 1

 

Level 2

 

Level 3

 

Total

Assets

 

 

 

 

 

 

 

 

 

 

 

Advances to/receivables from equity companies (included in

 

 

 

 

 

 

 

 

 

 

 

 

the Balance Sheet line: Investments, advances and

 

 

 

 

 

 

 

 

 

 

 

 

long-term receivables)

 

9,240

 

-

 

2,221

 

7,171

 

9,392

 

Other long-term financial assets (included in the Balance

 

 

 

 

 

 

 

 

 

 

 

 

Sheet lines: Investments, advances and long-term receivables

 

 

 

 

 

 

 

 

 

 

 

 

and Other assets, including intangibles – net)

 

1,695

 

742

 

-

 

976

 

1,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Long-term debt (excluding capitalized lease obligations)

 

19,315

 

19,266

 

152

 

4

 

19,422

 

Long-term obligations to equity companies

 

4,818

 

-

 

-

 

5,058

 

5,058

 

Other long-term financial liabilities (included in the

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet line: Other long-term obligations)

 

1,066

 

-

 

-

 

1,059

 

1,059


13 


 

8.     Disclosures about Segments and Related Information

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2018

 

 

2017

 

Earnings After Income Tax

 

 

 

(millions of dollars)

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

429

 

 

(18)

 

 

 

Non-U.S.

 

 

 

3,068

 

 

2,270

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

319

 

 

292

 

 

 

Non-U.S.

 

 

 

621

 

 

824

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

503

 

 

529

 

 

 

Non-U.S.

 

 

 

508

 

 

642

 

 

Corporate and financing (1) 

 

 

 

(798)

 

 

(529)

 

 

Corporate total

 

 

 

4,650

 

 

4,010

 

 

 

 

 

 

 

 

 

 

 

 

Sales and Other Operating Revenue

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

2,361

 

 

2,324

 

 

 

Non-U.S.

 

 

 

3,628

 

 

3,509

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

16,995

 

 

14,582

 

 

 

Non-U.S.

 

 

 

34,372

 

 

29,044

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

2,989

 

 

2,783

 

 

 

Non-U.S.

 

 

 

5,078

 

 

4,218

 

 

Corporate and financing

 

 

 

13

 

 

14

 

 

Corporate total

 

 

 

65,436

 

 

56,474

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment Revenue

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

2,062

 

 

1,290

 

 

 

Non-U.S.

 

 

 

6,871