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, 2011
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 incorporation or organization) |
(I.R.S. Employer 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 | x | 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, 2011 | |
| Common stock, without par value | 4,926,085,717 |
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011
-2-
| Item 1. | Financial Statements |
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| REVENUES AND OTHER INCOME |
||||||||
| Sales and other operating revenue (1) |
$ | 109,251 | $ | 87,037 | ||||
| Income from equity affiliates |
3,827 | 2,537 | ||||||
| Other income |
926 | 677 | ||||||
| Total revenues and other income |
114,004 | 90,251 | ||||||
| COSTS AND OTHER DEDUCTIONS |
||||||||
| Crude oil and product purchases |
60,497 | 46,785 | ||||||
| Production and manufacturing expenses |
9,520 | 8,435 | ||||||
| Selling, general and administrative expenses |
3,627 | 3,514 | ||||||
| Depreciation and depletion |
3,761 | 3,280 | ||||||
| Exploration expenses, including dry holes |
334 | 686 | ||||||
| Interest expense |
29 | 55 | ||||||
| Sales-based taxes (1) |
7,916 | 6,815 | ||||||
| Other taxes and duties |
9,403 | 8,613 | ||||||
| Total costs and other deductions |
95,087 | 78,183 | ||||||
| Income before income taxes |
18,917 | 12,068 | ||||||
| Income taxes |
8,004 | 5,493 | ||||||
| Net income including noncontrolling interests |
10,913 | 6,575 | ||||||
| Net income attributable to noncontrolling interests |
263 | 275 | ||||||
| Net income attributable to ExxonMobil |
$ | 10,650 | $ | 6,300 | ||||
| Earnings per common share (dollars) |
$ | 2.14 | $ | 1.33 | ||||
| Earnings per common share - assuming dilution (dollars) |
$ | 2.14 | $ | 1.33 | ||||
| Dividends per common share (dollars) |
$ | 0.44 | $ | 0.42 | ||||
| (1) Sales-based taxes included in sales and other operating revenue |
$ | 7,916 | $ | 6,815 | ||||
The information in the Notes to Condensed Consolidated Financial Statements
is an integral part of these statements.
-3-
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
| Mar. 31, 2011 |
Dec. 31, 2010 |
|||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 12,833 | $ | 7,825 | ||||
| Cash and cash equivalents - restricted |
401 | 628 | ||||||
| Notes and accounts receivable - net |
35,146 | 32,284 | ||||||
| Inventories |
||||||||
| Crude oil, products and merchandise |
13,026 | 9,852 | ||||||
| Materials and supplies |
3,236 | 3,124 | ||||||
| Other current assets |
7,380 | 5,271 | ||||||
| Total current assets |
72,022 | 58,984 | ||||||
| Investments, advances and long-term receivables |
35,207 | 35,338 | ||||||
| Property, plant and equipment - net |
203,726 | 199,548 | ||||||
| Other assets, including intangibles, net |
8,578 | 8,640 | ||||||
| Total assets |
$ | 319,533 | $ | 302,510 | ||||
| LIABILITIES |
||||||||
| Current liabilities |
||||||||
| Notes and loans payable |
$ | 3,560 | $ | 2,787 | ||||
| Accounts payable and accrued liabilities |
57,700 | 50,034 | ||||||
| Income taxes payable |
12,316 | 9,812 | ||||||
| Total current liabilities |
73,576 | 62,633 | ||||||
| Long-term debt |
12,316 | 12,227 | ||||||
| Postretirement benefits reserves |
20,076 | 19,367 | ||||||
| Deferred income tax liabilities |
36,121 | 35,150 | ||||||
| Other long-term obligations |
19,913 | 20,454 | ||||||
| Total liabilities |
162,002 | 149,831 | ||||||
| Commitments and contingencies (note 2) |
||||||||
| EQUITY |
||||||||
| Common stock, without par value: |
||||||||
| Authorized: 9,000 million shares |
||||||||
| Issued: 8,019 million shares |
9,156 | 9,371 | ||||||
| Earnings reinvested |
307,361 | 298,899 | ||||||
| Accumulated other comprehensive income |
||||||||
| Cumulative foreign exchange translation adjustment |
6,260 | 5,011 | ||||||
| Postretirement benefits reserves adjustment |
(9,955 | ) | (9,889 | ) | ||||
| Unrealized gain/(loss) on cash flow hedges |
39 | 55 | ||||||
| Common stock held in treasury: |
||||||||
| 3,093 million shares at March 31, 2011 |
(161,381 | ) | ||||||
| 3,040 million shares at December 31, 2010 |
(156,608 | ) | ||||||
| ExxonMobil share of equity |
151,480 | 146,839 | ||||||
| Noncontrolling interests |
6,051 | 5,840 | ||||||
| Total equity |
157,531 | 152,679 | ||||||
| Total liabilities and equity |
$ | 319,533 | $ | 302,510 | ||||
The number of shares of common stock issued and outstanding at March 31, 2011 and December 31, 2010 were 4,926,085,717 and 4,978,538,898, respectively.
The information in the Notes to Condensed Consolidated Financial Statements
is an integral part of these statements.
-4-
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income including noncontrolling interests |
$ | 10,913 | $ | 6,575 | ||||
| Depreciation and depletion |
3,761 | 3,280 | ||||||
| Changes in operational working capital, excluding cash and debt |
2,887 | 3,201 | ||||||
| All other items - net |
(705 | ) | (10 | ) | ||||
| Net cash provided by operating activities |
16,856 | 13,046 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Additions to property, plant and equipment |
(7,051 | ) | (5,756 | ) | ||||
| Sales of subsidiaries, investments, and property, plant and equipment |
1,341 | 424 | ||||||
| Other investing activities - net |
357 | 165 | ||||||
| Net cash used in investing activities |
(5,353 | ) | (5,167 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Additions to long-term debt |
98 | 27 | ||||||
| Reductions in long-term debt |
(29 | ) | (3 | ) | ||||
| Additions/(reductions) in short-term debt - net |
743 | (121 | ) | |||||
| Cash dividends to ExxonMobil shareholders |
(2,188 | ) | (1,986 | ) | ||||
| Cash dividends to noncontrolling interests |
(95 | ) | (83 | ) | ||||
| Changes in noncontrolling interests |
(9 | ) | (1 | ) | ||||
| Common stock acquired |
(5,653 | ) | (2,495 | ) | ||||
| Common stock sold |
384 | 42 | ||||||
| Net cash used in financing activities |
(6,749 | ) | (4,620 | ) | ||||
| Effects of exchange rate changes on cash |
254 | (210 | ) | |||||
| Increase/(decrease) in cash and cash equivalents |
5,008 | 3,049 | ||||||
| Cash and cash equivalents at beginning of period |
7,825 | 10,693 | ||||||
| Cash and cash equivalents at end of period |
$ | 12,833 | $ | 13,742 | ||||
| SUPPLEMENTAL DISCLOSURES |
||||||||
| Income taxes paid |
$ | 5,173 | $ | 3,896 | ||||
| Cash interest paid |
$ | 103 | $ | 130 | ||||
The information in the Notes to Condensed Consolidated Financial Statements
is an integral part of these statements.
-5-
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(millions of dollars)
| ExxonMobil Share of Equity | ||||||||||||||||||||||||||||
| Common Stock |
Earnings Reinvested |
Accumulated Other Compre- hensive Income |
Common Stock Held in Treasury |
ExxonMobil Share of Equity |
Noncontrolling Interest |
Total Equity |
||||||||||||||||||||||
| Balance as of December 31, 2009 |
$ | 5,503 | $ | 276,937 | $ | (5,461 | ) | $ | (166,410 | ) | $ | 110,569 | $ | 4,823 | $ | 115,392 | ||||||||||||
| Amortization of stock-based awards |
188 | 188 | 188 | |||||||||||||||||||||||||
| Tax benefits related to stock- based awards |
(1 | ) | (1 | ) | (1 | ) | ||||||||||||||||||||||
| Other |
(390 | ) | (390 | ) | 12 | (378 | ) | |||||||||||||||||||||
| Net income for the period |
6,300 | 6,300 | 275 | 6,575 | ||||||||||||||||||||||||
| Dividends - common shares |
(1,986 | ) | (1,986 | ) | (83 | ) | (2,069 | ) | ||||||||||||||||||||
| Foreign exchange translation adjustment |
(587 | ) | (587 | ) | 70 | (517 | ) | |||||||||||||||||||||
| Postretirement benefits reserves adjustment |
196 | 196 | 16 | 212 | ||||||||||||||||||||||||
| Amortization of postretirement benefits reserves adjustment included in periodic benefit costs |
315 | 315 | 13 | 328 | ||||||||||||||||||||||||
| Acquisitions at cost |
(2,495 | ) | (2,495 | ) | (1 | ) | (2,496 | ) | ||||||||||||||||||||
| Dispositions |
432 | 432 | 432 | |||||||||||||||||||||||||
| Balance as of March 31, 2010 |
$ | 5,300 | $ | 281,251 | $ | (5,537 | ) | $ | (168,473 | ) | $ | 112,541 | $ | 5,125 | $ | 117,666 | ||||||||||||
| Balance as of December 31, 2010 |
$ | 9,371 | $ | 298,899 | $ | (4,823 | ) | $ | (156,608 | ) | $ | 146,839 | $ | 5,840 | $ | 152,679 | ||||||||||||
| Amortization of stock-based awards |
203 | 203 | 203 | |||||||||||||||||||||||||
| Tax benefits related to stock-based awards |
81 | 81 | 81 | |||||||||||||||||||||||||
| Other |
(499 | ) | (499 | ) | (4 | ) | (503 | ) | ||||||||||||||||||||
| Net income for the period |
10,650 | 10,650 | 263 | 10,913 | ||||||||||||||||||||||||
| Dividends - common shares |
(2,188 | ) | (2,188 | ) | (95 | ) | (2,283 | ) | ||||||||||||||||||||
| Foreign exchange translation adjustment |
1,249 | 1,249 | 85 | 1,334 | ||||||||||||||||||||||||
| Postretirement benefits reserves adjustment |
(362 | ) | (362 | ) | (43 | ) | (405 | ) | ||||||||||||||||||||
| Amortization of postretirement benefits reserves adjustment included in periodic benefit costs |
296 | 296 | 14 | 310 | ||||||||||||||||||||||||
| Change in fair value of cash flow hedges |
3 | 3 | 3 | |||||||||||||||||||||||||
| Realized (gain)/loss from settled cash flow hedges included in net income |
(19 | ) | (19 | ) | (19 | ) | ||||||||||||||||||||||
| Acquisitions at cost |
(5,653 | ) | (5,653 | ) | (9 | ) | (5,662 | ) | ||||||||||||||||||||
| Dispositions |
880 | 880 | 880 | |||||||||||||||||||||||||
| Balance as of March 31, 2011 |
$ | 9,156 | $ | 307,361 | $ | (3,656 | ) | $ | (161,381 | ) | $ | 151,480 | $ | 6,051 | $ | 157,531 | ||||||||||||
| Three Months Ended March 31, 2011 | Three Months Ended March 31, 2010 | |||||||||||||||||||||||||||
| Common Stock Share Activity |
Issued | Held in Treasury |
Outstanding | Issued | Held in Treasury |
Outstanding | ||||||||||||||||||||||
| (millions of shares) | (millions of shares) | |||||||||||||||||||||||||||
| Balance as of December 31 |
8,019 | (3,040 | ) | 4,979 | 8,019 | (3,292 | ) | 4,727 | ||||||||||||||||||||
| Acquisitions |
(69 | ) | (69 | ) | (37 | ) | (37 | ) | ||||||||||||||||||||
| Dispositions |
16 | 16 | 8 | 8 | ||||||||||||||||||||||||
| Balance as of March 31 |
8,019 | (3,093 | ) | 4,926 | 8,019 | (3,321 | ) | 4,698 | ||||||||||||||||||||
The information in the Notes to Condensed Consolidated Financial Statements
is an integral part of these statements.
-6-
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 2010 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. The Corporation’s exploration and production activities are accounted for under the “successful efforts” method.
| 2. | Litigation and Other Contingencies |
Litigation
A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a materially adverse effect upon the Corporation’s operations, financial condition, or financial statements taken as a whole.
Other Contingencies
| As of March 31, 2011 | ||||||||||||
| Equity Company Obligations |
Other Third Party Obligations |
Total | ||||||||||
| (millions of dollars) | ||||||||||||
| Total guarantees |
$ | 7,189 | $ | 3,706 | $ | 10,895 | ||||||
The Corporation and certain of its consolidated subsidiaries were contingently liable at March 31, 2011, for $10,895 million, primarily relating to guarantees for notes, loans and performance under contracts. Included in this amount were guarantees by consolidated affiliates of $7,189 million, representing ExxonMobil’s share of obligations of certain equity companies. 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.
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, 2011, 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.
-7-
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) 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 is currently scheduled for the first quarter of 2012. An affiliate of ExxonMobil has also filed an arbitration under the rules of the International Chamber of Commerce (ICC) against PdVSA and a PdVSA affiliate for breach of their contractual obligations under certain Cerro Negro Project agreements. A hearing on the merits of the ICC arbitration concluded in September 2010 and the parties have filed post-hearing briefs. At this time, the net impact of this matter on the Corporation’s consolidated financial results cannot be reasonably estimated. However, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition. ExxonMobil’s remaining net book investment in Cerro Negro producing assets is about $750 million.
| 3. | Comprehensive Income |
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Net income including noncontrolling interests |
$ | 10,913 | $ | 6,575 | ||||
| Other comprehensive income (net of income taxes) |
||||||||
| Foreign exchange translation adjustment |
1,334 | (517 | ) | |||||
| Postretirement benefits reserves adjustment (excluding amortization) |
(405 | ) | 212 | |||||
| Amortization of postretirement benefits reserves adjustment included in net periodic benefit costs |
310 | 328 | ||||||
| Change in fair value of cash flow hedges |
3 | 0 | ||||||
| Realized (gain)/loss from settled cash flow hedges included in net income |
(19 | ) | 0 | |||||
| Comprehensive income including noncontrolling interests |
12,136 | 6,598 | ||||||
| Comprehensive income attributable to noncontrolling interests |
319 | 374 | ||||||
| Comprehensive income attributable to ExxonMobil |
$ | 11,817 | $ | 6,224 | ||||
-8-
| 4. | Earnings Per Share |
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| EARNINGS PER COMMON SHARE |
||||||||
| Net income attributable to ExxonMobil (millions of dollars) |
$ | 10,650 | $ | 6,300 | ||||
| Weighted average number of common shares outstanding (millions of shares) |
4,963 | 4,722 | ||||||
| Earnings per common share (dollars) |
$ | 2.14 | $ | 1.33 | ||||
| EARNINGS PER COMMON SHARE - ASSUMING DILUTION |
||||||||
| Net income attributable to ExxonMobil (millions of dollars) |
$ | 10,650 | $ | 6,300 | ||||
| Weighted average number of common shares outstanding (millions of shares) |
4,963 | 4,722 | ||||||
| Effect of employee stock-based awards |
8 | 14 | ||||||
| Weighted average number of common shares outstanding - assuming dilution |
4,971 | 4,736 | ||||||
| Earnings per common share - assuming dilution (dollars) |
$ | 2.14 | $ | 1.33 | ||||
-9-
| 5. | Pension and Other Postretirement Benefits |
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Pension Benefits - U.S. |
||||||||
| Components of net benefit cost |
||||||||
| Service cost |
$ | 125 | $ | 110 | ||||
| Interest cost |
198 | 199 | ||||||
| Expected return on plan assets |
(192 | ) | (181 | ) | ||||
| Amortization of actuarial loss/(gain) and prior service cost |
123 | 131 | ||||||
| Net pension enhancement and curtailment/settlement cost |
101 | 127 | ||||||
| Net benefit cost |
$ | 355 | $ | 386 | ||||
| Pension Benefits - Non-U.S. |
||||||||
| Components of net benefit cost |
||||||||
| Service cost |
$ | 139 | $ | 123 | ||||
| Interest cost |
316 | 296 | ||||||
| Expected return on plan assets |
(290 | ) | (252 | ) | ||||
| Amortization of actuarial loss/(gain) and prior service cost |
184 | 165 | ||||||
| Net pension enhancement and curtailment/settlement cost |
0 | 1 | ||||||
| Net benefit cost |
$ | 349 | $ | 333 | ||||
| Other Postretirement Benefits |
||||||||
| Components of net benefit cost |
||||||||
| Service cost |
$ | 26 | $ | 24 | ||||
| Interest cost |
103 | 103 | ||||||
| Expected return on plan assets |
(10 | ) | (9 | ) | ||||
| Amortization of actuarial loss/(gain) and prior service cost |
57 | 62 | ||||||
| Net benefit cost |
$ | 176 | $ | 180 | ||||
| 6. | Financial and Derivative Instruments |
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, including capitalized lease obligations, was $12.8 billion at March 31, 2011, and $12.8 billion at December 31, 2010, as compared to recorded book values of $12.3 billion at March 31, 2011, and $12.2 billion at December 31, 2010. The fair value hierarchy for long-term debt is primarily Level 1 (quoted prices for identical assets in active markets).
Derivative Instruments. The Corporation’s size, strong capital structure, geographic diversity and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the Corporation’s enterprise-wide risk from changes in interest rates, currency rates and commodity prices. As a result, the Corporation makes limited use of derivatives to mitigate the impact of such changes. The Corporation does not engage in speculative derivative activities or derivative trading activities nor does it use derivatives with leveraged features.
-10-
When the Corporation does enter into derivative transactions, it is to offset exposures associated with interest rates, foreign currency exchange rates and hydrocarbon prices that arise from existing assets, liabilities and forecasted transactions. For derivatives designated as cash flow hedges, the Corporation’s activity is intended to manage the price risk posed by physical transactions.
The estimated fair value of derivative instruments outstanding and recorded on the balance sheet was a net asset of $168 million and $172 million at March 31, 2011, and at year-end 2010, respectively. This is the amount that the Corporation would have received from third parties if these derivatives had been settled in the open market. Assets and liabilities associated with derivatives are predominantly recorded either in “Other current assets” or “Accounts payable and accrued liabilities”. The March 31, 2011, net asset balance includes the Corporation’s outstanding cash flow hedge position, acquired as a result of the June 2010 XTO merger, of $164 million. As the current cash flow hedge positions settle, these programs will be discontinued.
The fair value hierarchy for derivative instruments is primarily Level 2 (either market prices for similar assets in active markets or prices quoted by a broker or other market-corroborated prices).
The Corporation recognized a before-tax gain related to derivative instruments of $20 million during the three month period ended March 31, 2011, and $2 million during the three month period ended March 31, 2010. Income statement effects associated with derivatives are recorded either in “Sales and other operating revenue” or “Crude oil and product purchases”. Of the amount stated above for 2011, cash flow hedges resulted in a before-tax gain of $33 million. The ineffective portion of derivatives designated as hedges is de minimis.
The principal natural gas futures contracts and swap agreements acquired as part of the XTO merger that are in place as of March 31, 2011, will expire at the end of 2011. The associated volume of natural gas is 250 mcfd at a weighted average NYMEX price of $7.02 per thousand cubic feet. These derivative contracts qualify for cash flow hedge accounting. The Corporation will receive the cash flow related to these derivative contracts at the price indicated above. However, the amount of the income statement gain or loss realized from these contracts will be limited to the change in fair value of the derivative instruments from the acquisition date of XTO.
The Corporation believes that there are no material market or credit risks to the Corporation’s financial position, results of operations or liquidity as a result of the derivative activities described above.
-11-
| 7. | Disclosures about Segments and Related Information |
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| EARNINGS AFTER INCOME TAX |
||||||||
| Upstream |
||||||||
| United States |
$ | 1,279 | $ | 1,091 | ||||
| Non-U.S. |
7,396 | 4,723 | ||||||
| Downstream |
||||||||
| United States |
694 | (60 | ) | |||||
| Non-U.S. |
405 | 97 | ||||||
| Chemical |
||||||||
| United States |
669 | 539 | ||||||
| Non-U.S. |
847 | 710 | ||||||
| All other |
(640 | ) | (800 | ) | ||||
| Corporate total |
$ | 10,650 | $ | 6,300 | ||||
| SALES AND OTHER OPERATING REVENUE (1) |
||||||||
| Upstream |
||||||||
| United States |
$ | 3,286 | $ | 1,266 | ||||
| Non-U.S. |
8,878 | 6,308 | ||||||
| Downstream |
||||||||
| United States |
27,537 | 21,813 | ||||||
| Non-U.S. |
59,191 | 48,857 | ||||||
| Chemical |
||||||||
| United States |
3,647 | 3,397 | ||||||
| Non-U.S. |
6,708 | 5,393 | ||||||
| All other |
4 | 3 | ||||||
| Corporate total |
$ | 109,251 | $ | 87,037 | ||||
| (1) Includes sales-based taxes |
||||||||
| INTERSEGMENT REVENUE |
||||||||
| Upstream |
||||||||
| United States |
$ | 2,359 | $ | 2,142 | ||||
| Non-U.S. |
12,305 | 9,552 | ||||||
| Downstream |
||||||||
| United States |
4,530 | 3,384 | ||||||
| Non-U.S. |
16,501 | 12,957 | ||||||
| Chemical |
||||||||
| United States |
2,816 | 2,308 | ||||||
| Non-U.S. |
2,450 | 2,037 | ||||||
| All other |
64 | 70 | ||||||
-12-
| 8. | Condensed Consolidating Financial Information Related to Guaranteed Securities Issued by Subsidiaries |
Exxon Mobil Corporation has fully and unconditionally guaranteed the deferred interest debentures due 2012 ($2,457 million long-term at March 31, 2011) and the debt securities due 2011 ($13 million short-term) of SeaRiver Maritime Financial Holdings, Inc., a 100 percent owned subsidiary of Exxon Mobil Corporation.
The following condensed consolidating financial information is provided for Exxon Mobil Corporation, as guarantor, and for SeaRiver Maritime Financial Holdings, Inc., as issuer, as an alternative to providing separate financial statements for the issuer. The accounts of Exxon Mobil Corporation and SeaRiver Maritime Financial Holdings, Inc. are presented utilizing the equity method of accounting for investments in subsidiaries.
| Exxon Mobil Corporation Parent Guarantor |
SeaRiver Maritime Financial Holdings Inc. |
All Other Subsidiaries |
Consolidating and Eliminating Adjustments |
Consolidated | ||||||||||||||||
| (millions of dollars) | ||||||||||||||||||||
| Condensed consolidated statement of income for three months ended March 31, 2011 |
| |||||||||||||||||||
| Revenues and other income |
||||||||||||||||||||
| Sales and other operating revenue, |
$ | 4,247 | $ | — | $ | 105,004 | $ | — | $ | 109,251 | ||||||||||
| Income from equity affiliates |
11,154 | (4 | ) | 3,795 | (11,118 | ) | 3,827 | |||||||||||||
| Other income |
30 | — | 896 | — | 926 | |||||||||||||||
| Intercompany revenue |
12,228 | 1 | 107,781 | (120,010 | ) | — | ||||||||||||||
| Total revenues and other income |
27,659 | (3 | ) | 217,476 | (131,128 | ) | 114,004 | |||||||||||||
| Costs and other deductions |
||||||||||||||||||||
| Crude oil and product purchases |
14,106 | — | 163,771 | (117,380 | ) | 60,497 | ||||||||||||||
| Production and manufacturing expenses |
1,877 | — | 8,989 | (1,346 | ) | 9,520 | ||||||||||||||
| Selling, general and administrative expenses |
730 | — | 3,069 | (172 | ) | 3,627 | ||||||||||||||
| Depreciation and depletion |
386 | — | 3,375 | — | 3,761 | |||||||||||||||
| Exploration expenses, including dry holes |
64 | — | 270 | — | 334 | |||||||||||||||
| Interest expense |
54 | 68 | 1,039 | (1,132 | ) | 29 | ||||||||||||||
| Sales-based taxes |
— | — | 7,916 | — | 7,916 | |||||||||||||||
| Other taxes and duties |
9 | — | 9,394 | — | 9,403 | |||||||||||||||
| Total costs and other deductions |
17,226 | 68 | 197,823 | (120,030 | ) | 95,087 | ||||||||||||||
| Income before income taxes |
10,433 | (71 | ) | 19,653 | (11,098 | ) | 18,917 | |||||||||||||
| Income taxes |
(217 | ) | (25 | ) | 8,246 | — | 8,004 | |||||||||||||
| Net income including noncontrolling interests |
10,650 | (46 | ) | 11,407 | (11,098 | ) | 10,913 | |||||||||||||
| Net income attributable to noncontrolling interests |
— | — | 263 | — | 263 | |||||||||||||||
| Net income attributable to ExxonMobil |
$ | 10,650 | $ | (46 | ) | $ | 11,144 | $ | (11,098 | ) | $ | 10,650 | ||||||||
-13-
| Exxon Mobil Corporation Parent Guarantor |
SeaRiver Maritime Financial Holdings Inc. |
All Other Subsidiaries |
Consolidating and Eliminating Adjustments |
Consolidated | ||||||||||||||||
| (millions of dollars) | ||||||||||||||||||||
| Condensed consolidated statement of income for three months ended March 31, 2010 |
| |||||||||||||||||||
| Revenues and other income |
||||||||||||||||||||
| Sales and other operating revenue, |
$ | 3,933 | $ | — | $ | 83,104 | $ | — | $ | 87,037 | ||||||||||
| Income from equity affiliates |
6,212 | — | 2,514 | (6,189 | ) | 2,537 | ||||||||||||||
| Other income |
62 | — | 615 | — | 677 | |||||||||||||||
| Intercompany revenue |
9,486 | 1 | 80,646 | (90,133 | ) | — | ||||||||||||||
| Total revenues and other income |
19,693 | 1 | 166,879 | (96,322 | ) | 90,251 | ||||||||||||||
| Costs and other deductions |
||||||||||||||||||||
| Crude oil and product purchases |
9,800 | — | 124,635 | (87,650 | ) | 46,785 | ||||||||||||||
| Production and manufacturing expenses |
1,937 | — | 7,804 | (1,306 | ) | 8,435 | ||||||||||||||
| Selling, general and administrative expenses |
730 | — | 2,952 | (168 | ) | 3,514 | ||||||||||||||
| Depreciation and depletion |
418 | — | 2,862 | — | 3,280 | |||||||||||||||
| Exploration expenses, including dry holes |
75 | — | 611 | — | 686 | |||||||||||||||
| Interest expense |
68 | 61 | 954 | (1,028 | ) | 55 | ||||||||||||||
| Sales-based taxes |
— | — | 6,815 | — | 6,815 | |||||||||||||||
| Other taxes and duties |
8 | — | 8,605 | — | 8,613 | |||||||||||||||
| Total costs and other deductions |
13,036 | 61 | 155,238 | (90,152 | ) | 78,183 | ||||||||||||||
| Income before income taxes |
6,657 | (60 | ) | 11,641 | (6,170 | ) | 12,068 | |||||||||||||
| Income taxes |
357 | (23 | ) | 5,159 | — | 5,493 | ||||||||||||||
| Net income including noncontrolling interests |
6,300 | (37 | ) | 6,482 | (6,170 | ) | 6,575 | |||||||||||||
| Net income attributable to noncontrolling interests |
— | — | 275 | — | 275 | |||||||||||||||
| Net income attributable to ExxonMobil |
$ | 6,300 | $ | (37 | ) | $ | 6,207 | $ | (6,170 | ) | $ | 6,300 | ||||||||
-14-
| Exxon Mobil Corporation Parent Guarantor |
SeaRiver Maritime Financial Holdings Inc. |
All Other Subsidiaries |
Consolidating and Eliminating Adjustments |
Consolidated | ||||||||||||||||
| (millions of dollars) | ||||||||||||||||||||
| Condensed consolidated balance sheet as of March 31, 2011 |
| |||||||||||||||||||
| Cash and cash equivalents |
$ | 367 | $ | — | $ | 12,466 | $ | — | $ | 12,833 | ||||||||||
| Cash and cash equivalents - restricted |
225 | — | 176 | — | 401 | |||||||||||||||
| Notes and accounts receivable - net |
2,630 | 11 | 33,046 | (541 | ) | 35,146 | ||||||||||||||
| Inventories |
1,712 | — | 14,550 | — | 16,262 | |||||||||||||||
| Other current assets |
403 | — | 6,977 | — | 7,380 | |||||||||||||||
| Total current assets |
5,337 | 11 | 67,215 | (541 | ) | 72,022 | ||||||||||||||
| Property, plant and equipment - net |
18,983 | — | 184,743 | — | 203,726 | |||||||||||||||
| Investments and other assets |
266,465 | 454 | 474,943 | (698,077 | ) | 43,785 | ||||||||||||||
| Intercompany receivables |
20,088 | 2,633 | 561,228 | (583,949 | ) | — | ||||||||||||||
| Total assets |
$ | 310,873 | $ | 3,098 | $ | 1,288,129 | $ | (1,282,567 | ) | $ | 319,533 | |||||||||
| Notes and loan payables |
$ | 1,776 | $ | 13 | $ | 1,771 | $ | — | $ | 3,560 | ||||||||||
| Accounts payable and accrued liabilities |
3,263 | — | 54,437 | — | 57,700 | |||||||||||||||
| Income taxes payable |
— | — | 12,857 | (541 | ) | 12,316 | ||||||||||||||
| Total current liabilities |
5,039 | 13 | 69,065 | (541 | ) | 73,576 | ||||||||||||||
| Long-term debt |
295 | 2,457 | 9,564 | — | 12,316 | |||||||||||||||
| Postretirement benefits reserves |
9,994 | — | 10,082 | — | 20,076 | |||||||||||||||
| Deferred income tax liabilities |
557 | 96 | 35,468 | — | 36,121 | |||||||||||||||
| Other long-term obligations |
4,756 | — | 15,157 | — | 19,913 | |||||||||||||||
| Intercompany payables |
138,752 | 382 | 444,815 | (583,949 | ) | — | ||||||||||||||
| Total liabilities |
159,393 | 2,948 | 584,151 | (584,490 | ) | 162,002 | ||||||||||||||
| Earnings reinvested |
307,361 | (894 | ) | 143,400 | (142,506 | ) | 307,361 | |||||||||||||
| Other ExxonMobil equity |
(155,881 | ) | 1,044 | 554,527 | (555,571 | ) | (155,881 | ) | ||||||||||||
| ExxonMobil share of equity |
151,480 | 150 | 697,927 | (698,077 | ) | 151,480 | ||||||||||||||
| Noncontrolling interests |
— | — | 6,051 | — | 6,051 | |||||||||||||||
| Total equity |
151,480 | 150 | 703,978 | (698,077 | ) | 157,531 | ||||||||||||||
| Total liabilities and equity |
$ | 310,873 | $ | 3,098 | $ | 1,288,129 | $ | (1,282,567 | ) | $ | 319,533 | |||||||||
| Condensed consolidated balance sheet as of December 31, 2010 |
| |||||||||||||||||||
| Cash and cash equivalents |
$ | 309 | $ | — | $ | 7,516 | $ | — | $ | 7,825 | ||||||||||
| Cash and cash equivalents - restricted |
371 | — | 257 | — | 628 | |||||||||||||||
| Notes and accounts receivable - net |
2,104 | — | 30,346 | (166 | ) | 32,284 | ||||||||||||||
| Inventories |
1,457 | — | 11,519 | — | 12,976 | |||||||||||||||
| Other current assets |
239 | — | 5,032 | — | 5,271 | |||||||||||||||
| Total current assets |
4,480 | — | 54,670 | (166 | ) | 58,984 | ||||||||||||||
| Property, plant and equipment - net |
18,830 | — | 180,718 | — | 199,548 | |||||||||||||||
| Investments and other assets |
255,005 | 458 | 462,893 | (674,378 | ) | 43,978 | ||||||||||||||
| Intercompany receivables |
18,186 | 2,457 | 528,405 | (549,048 | ) | — | ||||||||||||||
| Total assets |
$ | 296,501 | $ | 2,915 | $ | 1,226,686 | $ | (1,223,592 | ) | $ | 302,510 | |||||||||
| Notes and loan payables |
$ | 1,042 | $ | 13 | $ | 1,732 | $ | — | $ | 2,787 | ||||||||||
| Accounts payable and accrued liabilities |
2,987 | — | 47,047 | — | 50,034 | |||||||||||||||
| Income taxes payable |
— | 3 | 9,975 | (166 | ) | 9,812 | ||||||||||||||
| Total current liabilities |
4,029 | 16 | 58,754 | (166 | ) | 62,633 | ||||||||||||||
| Long-term debt |
295 | 2,389 | 9,543 | — | 12,227 | |||||||||||||||
| Postretirement benefits reserves |
9,660 | — | 9,707 | — | 19,367 | |||||||||||||||
| Deferred income tax liabilities |
642 | 107 | 34,401 | — | 35,150 | |||||||||||||||
| Other long-term obligations |
5,632 | — | 14,822 | — | 20,454 | |||||||||||||||
| Intercompany payables |
129,404 | 382 | 419,262 | (549,048 | ) | — | ||||||||||||||
| Total liabilities |
149,662 | 2,894 | 546,489 | (549,214 | ) | 149,831 | ||||||||||||||
| Earnings reinvested |
298,899 | (848 | ) | 132,357 | (131,509 | ) | 298,899 | |||||||||||||
| Other ExxonMobil equity |
(152,060 | ) | 869 | 542,000 | (542,869 | ) | (152,060 | ) | ||||||||||||
| ExxonMobil share of equity |
146,839 | 21 | 674,357 | (674,378 | ) | 146,839 | ||||||||||||||
| Noncontrolling interests |
— | — | 5,840 | — | 5,840 | |||||||||||||||
| Total equity |
146,839 | 21 | 680,197 | (674,378 | ) | 152,679 | ||||||||||||||
| Total liabilities and equity |
$ | 296,501 | $ | 2,915 | $ | 1,226,686 | $ | (1,223,592 | ) | $ | 302,510 | |||||||||
-15-
| Exxon Mobil Corporation Parent Guarantor |
SeaRiver Maritime Financial Holdings Inc. |
All Other Subsidiaries |
Consolidating and Eliminating Adjustments |
Consolidated | ||||||||||||||||
| (millions of dollars) | ||||||||||||||||||||
| Condensed consolidated statement of cash flows for three months ended March 31, 2011 |
| |||||||||||||||||||
| Cash provided by/(used in) operating activities |
$ | (36 | ) | $ | 1 | $ | 16,992 | $ | (101 | ) | $ | 16,856 | ||||||||
| Cash flows from investing activities |
||||||||||||||||||||
| Additions to property, plant and equipment |
(600 | ) | — | (6,451 | ) | — | (7,051 | ) | ||||||||||||
| Sales of long-term assets |
39 | — | 1,302 | — | 1,341 | |||||||||||||||
| Net intercompany investing |
7,232 | (176 | ) | (7,457 | ) | 401 | — | |||||||||||||
| All other investing, net |
146 | — | 211 | — | 357 | |||||||||||||||
| Net cash provided by/(used in) investing activities |
6,817 | (176 | ) | (12,395 | ) | 401 | (5,353 | ) | ||||||||||||
| Cash flows from financing activities |
||||||||||||||||||||
| Additions to long-term debt |
— | — | 98 | — | 98 | |||||||||||||||
| Reductions in long-term debt |
— | — | (29 | ) | — | (29 | ) | |||||||||||||
| Additions/(reductions) in short-term debt - net |
734 | — | 9 | — | 743 | |||||||||||||||
| Cash dividends |
(2,188 | ) | — | (101 | ) | 101 | (2,188 | ) | ||||||||||||
| Net ExxonMobil shares sold/(acquired) |
(5,269 | ) | — | — | — | (5,269 | ) | |||||||||||||
| Net intercompany financing activity |
— | — | 226 | (226 | ) | — | ||||||||||||||
| All other financing, net |
— | 175 | (104 | ) | (175 | ) | (104 | ) | ||||||||||||
| Net cash provided by/(used in) financing activities |
(6,723 | ) | 175 | 99 | (300 | ) | (6,749 | ) | ||||||||||||
| Effects of exchange rate changes on cash |
— | — | 254 | — | 254 | |||||||||||||||
| Increase/(decrease) in cash and cash equivalents |
$ | 58 | $ | — | $ | 4,950 | $ | — | $ | 5,008 | ||||||||||
| Condensed consolidated statement of cash flows for three months ended March 31, 2010 |
| |||||||||||||||||||
| Cash provided by/(used in) operating activities |
$ | 1,253 | $ | 1 | $ | 11,898 | $ | (106 | ) | $ | 13,046 | |||||||||
| Cash flows from investing activities |
||||||||||||||||||||
| Additions to property, plant and equipment |
(711 | ) | — | (5,045 | ) | — | (5,756 | ) | ||||||||||||
| Sales of long-term assets |
58 | — | 366 | — | 424 | |||||||||||||||
| Net intercompany investing |
3,699 | (151 | ) | (3,901 | ) | 353 | — | |||||||||||||
| All other investing, net |
— | — | 165 | — | 165 | |||||||||||||||
| Net cash provided by/(used in) investing activities |
3,046 | (151 | ) | (8,415 | ) | 353 | (5,167 | ) | ||||||||||||
| Cash flows from financing activities |
||||||||||||||||||||
| Additions to long-term debt |
— | — | 27 | — | 27 | |||||||||||||||
| Reductions in long-term debt |
— | — | (3 | ) | — | (3 | ) | |||||||||||||
| Additions/(reductions) in short-term debt - net |
(30 | ) | — | (91 | ) | — | (121 | ) | ||||||||||||
| Cash dividends |
(1,986 | ) | — | (106 | ) | 106 | (1,986 | ) | ||||||||||||
| Net ExxonMobil shares sold/(acquired) |
(2,453 | ) | — | — | — | (2,453 | ) | |||||||||||||
| Net intercompany financing activity |
— | — | 203 | (203 | ) | — | ||||||||||||||
| All other financing, net |
— | 150 | (84 | ) | (150 | ) | (84 | ) | ||||||||||||
| Net cash provided by/(used in) financing activities |
(4,469 | ) | 150 | (54 | ) | (247 | ) | (4,620 | ) | |||||||||||
| Effects of exchange rate changes on cash |
— | — | (210 | ) | — | (210 | ) | |||||||||||||
| Increase/(decrease) in cash and cash equivalents |
$ | (170 | ) | $ | — | $ | 3,219 | $ | — | $ | 3,049 | |||||||||
-16-
EXXON MOBIL CORPORATION
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
FUNCTIONAL EARNINGS SUMMARY
| First Three Months | ||||||||
| Earnings (U.S. GAAP) |
2011 | 2010 | ||||||
| (millions of dollars) | ||||||||
| Upstream |
||||||||
| United States |
$ | 1,279 | $ | 1,091 | ||||
| Non-U.S. |
7,396 | 4,723 | ||||||
| Downstream |
||||||||
| United States |
694 | (60 | ) | |||||
| Non-U.S. |
405 | 97 | ||||||
| Chemical |
||||||||
| United States |
669 | 539 | ||||||
| Non-U.S. |
847 | 710 | ||||||
| Corporate and financing |
(640 | ) | (800 | ) | ||||
| Net Income attributable to ExxonMobil (U.S. GAAP) |
$ | 10,650 | $ | 6,300 | ||||
| Earnings per common share (dollars) |
$ | 2.14 | $ | 1.33 | ||||
| Earnings per common share - assuming dilution (dollars) |
$ | 2.14 | $ | 1.33 | ||||
References in this discussion to total corporate earnings mean net income attributable to ExxonMobil (U.S. GAAP) from the income statement. Unless otherwise indicated, references to earnings, special items, Upstream, Downstream, Chemical and Corporate and Financing segment earnings, and earnings per share are ExxonMobil’s share after excluding amounts attributable to noncontrolling interests.
REVIEW OF FIRST QUARTER 2011 RESULTS
ExxonMobil’s earnings reflect continued leadership in operational performance during a period of strong commodity prices. Earnings were $10.7 billion, up 69 percent from the first quarter of 2010, reflecting higher crude oil and natural gas realizations, increased refining margins and record Chemical performance.
In the first quarter, capital and exploration expenditures were $7.8 billion, up 14 percent from last year.
The Corporation returned over $7 billion to shareholders in the first quarter through dividends and share purchases to reduce shares outstanding.
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Upstream earnings |
||||||||
| United States |
$ | 1,279 | $ | 1,091 | ||||
| Non-U.S. |
7,396 | 4,723 | ||||||
| Total |
$ | 8,675 | $ | 5,814 | ||||
Upstream earnings for the first three months were $8,675 million, up $2,861 million from the first quarter of 2010. Higher crude oil and natural gas realizations increased earnings by nearly $2.6 billion. Production mix and volume effects decreased earnings by $160 million, while asset management activity and lower expenses increased earnings by $470 million.
On an oil-equivalent basis, production increased over 10 percent from the first quarter of 2010. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, production was up 12 percent.
-17-
Liquids production totaled 2,399 kbd (thousands of barrels per day), down 15 kbd from the first quarter of 2010. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, liquids production was up 2 percent, as increased production in Qatar and the U.S. more than offset field decline.
First quarter natural gas production was 14,525 mcfd (millions of cubic feet per day), up 2,836 mcfd from 2010, driven by additional U.S. unconventional gas volumes and project ramp-ups in Qatar.
Earnings from U.S. Upstream operations were $1,279 million, $188 million higher than the first quarter of 2010. Non-U.S. Upstream earnings were $7,396 million, up $2,673 million from last year.
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Downstream earnings |
||||||||
| United States |
$ | 694 | $ | (60 | ) | |||
| Non-U.S. |
405 | 97 | ||||||
| Total |
$ | 1,099 | $ | 37 | ||||
First quarter Downstream earnings of $1,099 million were up $1,062 million from the first quarter of 2010. Higher industry refining margins, partly offset by lower marketing margins, increased earnings by $470 million. Positive volume and mix effects increased earnings by $350 million, while all other items, mainly favorable foreign exchange impacts, increased earnings by $240 million. Petroleum product sales of 6,267 kbd were 72 kbd higher than last year’s first quarter.
Earnings from the U.S. Downstream were $694 million, up $754 million from the first quarter of 2010. Non-U.S. Downstream earnings of $405 million were $308 million higher than last year.
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Chemical earnings |
||||||||
| United States |
$ | 669 | $ | 539 | ||||
| Non-U.S. |
847 | 710 | ||||||
| Total |
$ | 1,516 | $ | 1,249 | ||||
Record Chemical earnings of $1,516 million for the first three months were $267 million higher than 2010. Improved margins increased earnings by $470 million, while other items, including the absence of asset management gains from 2010, decreased earnings by $200 million. First quarter prime product sales of 6,322 kt (thousands of metric tons) were 166 kt lower than the prior year.
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Corporate and financing earnings |
$ | (640 | ) | $ | (800 | ) | ||
Corporate and financing expenses were $640 million during the first quarter of 2011, down $160 million from the first quarter of 2010 due to the absence of last year’s tax charge related to the U.S. health care legislation.
-18-
LIQUIDITY AND CAPITAL RESOURCES
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Net cash provided by/(used in) |
||||||||
| Operating activities |
$ | 16,856 | $ | 13,046 | ||||
| Investing activities |
(5,353 | ) | (5,167 | ) | ||||
| Financing activities |
(6,749 | ) | (4,620 | ) | ||||
| Effect of exchange rate changes |
254 | (210 | ) | |||||
| Increase/(decrease) in cash and cash equivalents |
$ | 5,008 | $ | 3,049 | ||||
| Cash and cash equivalents (at end of period) |
$ | 12,833 | $ | 13,742 | ||||
| Cash and cash equivalents - restricted (at end of period) |
401 | 0 | ||||||
| Total cash and cash equivalents (at end of period) |
$ | 13,234 | $ | 13,742 | ||||
| Cash flow from operations and asset sales |
||||||||
| Net cash provided by operating activities (U.S. GAAP) |
$ | 16,856 | $ | 13,046 | ||||
| Sales of subsidiaries, investments and property, plant and equipment |
1,341 | 424 | ||||||
| Cash flow from operations and asset sales |
$ | 18,197 | $ | 13,470 | ||||
Because of the ongoing nature of our asset management and divestment program, we believe it is useful for investors to consider asset sales proceeds together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities.
Total cash and cash equivalents of $13.2 billion at the end of the first quarter of 2011 compared to $13.7 billion at the end of the first quarter of 2010.
Cash provided by operating activities totaled $16.9 billion for the first three months of 2011, $3.8 billion higher than 2010. The major source of funds was net income including noncontrolling interests of $10.9 billion, adjusted for the noncash provision of $3.8 billion for depreciation and depletion, both of which increased. Changes in operational working capital added to cash flows in both periods. For additional details, see the Condensed Consolidated Statement of Cash Flows on page 5.
Investing activities for the first three months of 2011 used net cash of $5.4 billion compared to $5.2 billion in the prior year. Spending for additions to property, plant and equipment increased $1.3 billion to $7.1 billion. Proceeds from asset sales increased $0.9 billion to $1.3 billion.
Cash flow from operations and asset sales for the first three months of 2011 of $18.2 billion, including asset sales of $1.3 billion, increased $4.7 billion from the comparable 2010 period.
Net cash used in financing activities of $6.7 billion in the first three months of 2011 was $2.1 billion higher than 2010, mostly reflecting a higher level of purchases of shares of ExxonMobil stock.
During the first quarter of 2011, Exxon Mobil Corporation purchased 69 million shares of its common stock for the treasury at a gross cost of $5.7 billion. These purchases included $5 billion to reduce the number of shares outstanding, with the balance used to offset shares issued in conjunction with the company’s benefit plans and programs. Shares outstanding decreased from 4,979 million at the end of the fourth quarter 2010 to 4,926 million at the end of the first quarter 2011. Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.
The Corporation distributed to shareholders a total of $7.2 billion in the first quarter of 2011 through dividends and share purchases to reduce shares outstanding.
Total debt of $15.9 billion at March 31, 2011, compared to $15.0 billion at year-end 2010. The Corporation’s debt to total capital ratio was 9.2 percent at the end of the first quarter of 2011 compared to 9.0 percent at year-end 2010.
Although the Corporation issues long-term debt from time to time and maintains a revolving commercial paper program, internally generated funds are expected to cover the majority of its net near-term financial requirements.
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The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade. Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses. Additionally, the Corporation continues to evaluate opportunities to enhance its business portfolio through acquisitions of assets or companies, and enters into such transactions from time to time. Key criteria for evaluating acquisitions include potential for future growth and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation’s common stock, or both.
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) 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 is currently scheduled for the first quarter of 2012. An affiliate of ExxonMobil has also filed an arbitration under the rules of the International Chamber of Commerce (ICC) against PdVSA and a PdVSA affiliate for breach of their contractual obligations under certain Cerro Negro Project agreements. A hearing on the merits of the ICC arbitration concluded in September 2010 and the parties have filed post-hearing briefs. At this time, the net impact of this matter on the Corporation’s consolidated financial results cannot be reasonably estimated. However, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition. ExxonMobil’s remaining net book investment in Cerro Negro producing assets is about $750 million.
TAXES
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Income taxes |
$ | 8,004 | $ | 5,493 | ||||
| Effective income tax rate |
47 | % | 50 | % | ||||
| Sales-based taxes |
7,916 | 6,815 | ||||||
| All other taxes and duties |
10,316 | 9,349 | ||||||
| Total |
$ | 26,236 | $ | 21,657 | ||||
Income, sales-based and all other taxes and duties for the first quarter of 2011 of $26.2 billion were higher than 2010. In the first quarter of 2011, income tax expense increased to $8.0 billion reflecting the higher level of earnings, and the effective income tax rate was 47 percent, compared to $5.5 billion and 50 percent, respectively, in the prior year period. Sales-based taxes and all other taxes and duties increased in 2011 reflecting higher prices.
CAPITAL AND EXPLORATION EXPENDITURES
| First Three Months | ||||||||
| 2011 | 2010 | |||||||
| (millions of dollars) | ||||||||
| Upstream (including exploration expenses) |
$ | 6,900 | $ | 5,546 | ||||
| Downstream |
450 | 674 | ||||||
| Chemical |
449 | 614 | ||||||
| Other |
22 | 43 | ||||||
| Total |
$ | 7,821 | $ | 6,877 | ||||
In the first quarter of 2011, capital and exploration expenditures were $7.8 billion, up 14 percent from last year, as ExxonMobil continues with plans to invest between $33 billion and $37 billion per year over the next several years to develop new energy supplies to meet future demand growth. Actual spending could vary depending on the progress of individual projects.
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FORWARD-LOOKING STATEMENTS
Statements in this report relating to future plans, projections, events or conditions are forward-looking statements. Actual results, including project plans, costs, timing, and capacities; capital and exploration expenditures; and share purchase levels, could differ materially due to factors including: changes in long-term oil or gas prices or other market or economic conditions affecting the oil and gas industry; unforeseen technical difficulties; political events or disturbances; reservoir performance; the outcome of commercial negotiations; wars and acts of terrorism or sabotage; changes in technical or operating conditions; and other factors discussed under the heading “Factors Affecting Future Results” in the “Investors” section of our website and in Item 1A of ExxonMobil’s 2010 Form 10-K. We assume no duty to update these statements as of any future date.
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Information about market risks for the three months ended March 31, 2011, does not differ materially from that discussed under Item 7A of the registrant’s Annual Report on Form 10-K for 2010.
| Item 4. | Controls and Procedures |
As indicated in the certifications in Exhibit 31 of this report, the Corporation’s chief executive officer, principal financial officer and principal accounting officer have evaluated the Corporation’s disclosure controls and procedures as of March 31, 2011. Based on that evaluation, these officers have concluded that the Corporation’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no changes during the Corporation’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
| Item 1. | Legal Proceedings |
Regarding a matter reported in the Corporation’s Form 10-Q for the first quarter of 2007, on January 11, 2011, Exxon Mobil Corporation settled a suit brought in September 2000 by The State of New York in Albany County, New York, against a number of parties, including ExxonMobil, relating to an alleged discharge of petroleum in Baldwin, New York, at a former Mobil-branded service station and a service station owned/operated by an unrelated party. The suit (captioned State of New York v. Task Oil Corp., Exxon Mobil Corp., et al.) alleged that discharges from each service station had commingled and contaminated the soil and groundwater in the vicinity of the service stations. To resolve the matter with ExxonMobil, the New York State Department of Environmental Conservation issued a general release in favor of ExxonMobil in exchange for a payment of $730,000 by ExxonMobil for all State costs and interest. There was no penalty assessed in this matter against ExxonMobil.
As reported in the Corporation’s Form 10-K for 2010, the New York State Attorney General, Exxon Mobil Corporation and ExxonMobil Oil Corporation have agreed to enter into a Consent Decree to resolve issues relating to alleged contamination at ExxonMobil’s former Brooklyn, New York, terminal and refinery at issue in a lawsuit brought on July 17, 2007, in the U.S. District Court for the Eastern District of New York. The Consent Decree required ExxonMobil to undertake actions to investigate and remediate certain environmental conditions at the Brooklyn terminal and refinery, pay $19.5 million to fund Environmental Benefit Projects to benefit the Greenpoint Community; pay a civil penalty of $250,000; pay $250,000 for Natural Resources Damages Restoration Projects; pay past costs of the State for oversight of, investigation and remedial activities in the amount of $1.5 million and pay future State oversight costs, up to $3.5 million. On March 2, 2011, the Court approved the Consent Decree.
As reported in the Corporation’s 2010 Form 10-K, on February 17, 2011, the United States District Court for the District of New Jersey granted defendants’ motion to dismiss a purported shareholder lawsuit captioned Resnik v. Boskin et al., filed in 2009, alleging direct and derivative claims against the Corporation’s directors serving at the time, the “named executive officers” listed in the Corporation’s 2009 Proxy Statement (as defined in Securities and Exchange Commission regulations) and Exxon Mobil Corporation. The court found fatal flaws in the plaintiff’s three causes of action. On March 21, 2011, the court entered a final order dismissing the plaintiff’s amended complaint with prejudice. Plaintiff’s counsel has advised that the plaintiff does not plan to appeal the dismissal of the case.
Refer to the relevant portions of note 2 on pages 7 and 8 of this Quarterly Report on Form 10-Q for further information on legal proceedings.
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Issuer Purchase of Equity Securities for Quarter Ended March 31, 2011
| Period |
Total Number Of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number Of Shares that May Yet Be Purchased Under the Plans or Programs |
||||||||||||
| January, 2011 |
23,616,900 | $ | 77.17 | 23,616,900 | ||||||||||||
| February, 2011 |
20,684,993 | $ | 84.02 | 20,684,993 | ||||||||||||
| March, 2011 |
25,124,067 | $ | 83.29 | 25,124,067 | ||||||||||||
| Total |
69,425,960 | $ | 81.42 | 69,425,960 | (See Note 1 | ) | ||||||||||
| Note 1 — | On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding. The announcement did not specify an amount or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases. In its most recent earnings release dated April 28, 2011, the Corporation stated that second quarter 2011 share purchases to reduce shares outstanding are anticipated to equal $5 billion. Purchases may be made in both the open market and through negotiated transactions, and purchases may be increased, decreased or discontinued at any time without prior notice. |
| Item 6. | Exhibits |
| Exhibit |
Description | |
| 3(ii) | By-laws, as revised to April 27, 2011 (incorporated by reference to Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K filed on April 29, 2011). | |
| 31.1 | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief Executive Officer. | |
| 31.2 | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Financial Officer. | |
| 31.3 | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Accounting Officer. | |
| 32.1 | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer. | |
| 32.2 | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Financial Officer. | |
| 32.3 | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Accounting Officer. | |
| 101 | Interactive Data Files. | |
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EXXON MOBIL CORPORATION
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| EXXON MOBIL CORPORATION | ||||||||
| Date: May 5, 2011 |
By: | /s/ Patrick T. Mulva | ||||||
| Name: Title: |
Patrick T. Mulva Vice President, Controller and Principal Accounting Officer | |||||||
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| Exhibit |
Description | |
| 3(ii) | By-laws, as revised to April 27, 2011 (incorporated by reference to Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K filed on April 29, 2011). | |
| 31.1 | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief Executive Officer. | |
| 31.2 | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Financial Officer. | |
| 31.3 | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Accounting Officer. | |
| 32.1 | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer. | |
| 32.2 | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Financial Officer. | |
| 32.3 | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Accounting Officer. | |
| 101 | Interactive Data Files. | |
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