UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012

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) 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   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 June 30, 2012

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

 


 

 

EXXON MOBIL CORPORATION

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012

 

TABLE OF CONTENTS

 

 

 

 

 

Page

Number

                    PART I.  FINANCIAL INFORMATION

 

 

 

 

Item 1.       Financial Statements

 

 

 

     Condensed Consolidated Statement of Income

Three and six months ended June 30, 2012 and 2011

 

3

 

     Condensed Consolidated Statement of Comprehensive Income

Three and six months ended June 30, 2012 and 2011

 

4

 

     Condensed Consolidated Balance Sheet

As of June 30, 2012 and December 31, 2011

5

 

 

 

 

     Condensed Consolidated Statement of Cash Flows

          Six months ended June 30, 2012 and 2011

 

6

 

     Condensed Consolidated Statement of Changes in Equity

          Six months ended June 30, 2012 and 2011

 

7

 

     Notes to Condensed Consolidated Financial Statements

 

8

 

Item 2.       Management's Discussion and Analysis of Financial

                     Condition and Results of Operations

 

21

 

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

 

26

 

Item 4.       Controls and Procedures

 

26

 

 

 

 

                  PART II.  OTHER INFORMATION

 

 

 

 

Item 1.       Legal Proceedings

 

27

 

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

 

28

 

Item 6.       Exhibits

 

28

 

Signature

 

29

 

Index to Exhibits

 

30

 

       


-2-

 


 

 

PART I.  FINANCIAL INFORMATION

  

   

  

  

  

  

  

  

  

  

  

  

  

  

Item 1.  Financial Statements

  

   

  

  

  

  

  

  

  

  

  

  

  

  

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(millions of dollars)

  

   

  

  

  

  

  

  

  

  

  

  

  

  

  

   

  

Three Months Ended

  

Six Months Ended

  

   

  

June 30,

  

June 30,

  

   

  

  

2012 

  

  

2011 

  

  

2012 

  

  

2011 

REVENUES AND OTHER INCOME

  

  

  

  

  

  

  

  

  

  

  

  

Sales and other operating revenue (1) 

  

$

112,745 

  

$

121,394 

  

$

231,934 

  

$

230,645 

Income from equity affiliates

  

  

3,651 

  

  

3,720 

  

  

7,861 

  

  

7,547 

Other income

  

  

10,967 

  

  

372 

  

  

11,621 

  

  

1,298 

  

Total revenues and other income

  

  

127,363 

  

  

125,486 

  

  

251,416 

  

  

239,490 

  

   

  

  

  

  

  

  

  

  

  

  

  

  

COSTS AND OTHER DEDUCTIONS

  

  

  

  

  

  

  

  

  

  

  

  

Crude oil and product purchases

  

  

66,344 

  

  

69,447 

  

  

136,169 

  

  

129,944 

Production and manufacturing expenses

  

  

9,787 

  

  

10,322 

  

  

19,637 

  

  

19,842 

Selling, general and administrative expenses

  

  

3,486 

  

  

3,681 

  

  

7,087 

  

  

7,308 

Depreciation and depletion

  

  

3,899 

  

  

3,881 

  

  

7,741 

  

  

7,642 

Exploration expenses, including dry holes

  

  

372 

  

  

592 

  

  

894 

  

  

926 

Interest expense

  

  

50 

  

  

45 

  

  

157 

  

  

74 

Sales-based taxes (1) 

  

  

8,027 

  

  

8,613 

  

  

16,520 

  

  

16,529 

Other taxes and duties

  

  

9,207 

  

  

10,286 

  

  

19,505 

  

  

19,689 

  

Total costs and other deductions

  

  

101,172 

  

  

106,867 

  

  

207,710 

  

  

201,954 

  

   

  

  

  

  

  

  

  

  

  

  

  

  

Income before income taxes

  

  

26,191 

  

  

18,619 

  

  

43,706 

  

  

37,536 

  

Income taxes

  

  

8,537 

  

  

7,721 

  

  

16,253 

  

  

15,725 

Net income including noncontrolling interests

  

  

17,654 

  

  

10,898 

  

  

27,453 

  

  

21,811 

  

Net income attributable to noncontrolling interests

  

  

1,744 

  

  

218 

  

  

2,093 

  

  

481 

Net income attributable to ExxonMobil

  

$

15,910 

  

$

10,680 

  

$

25,360 

  

$

21,330 

  

   

  

  

  

  

  

  

  

  

  

  

  

  

  

   

  

  

  

  

  

  

  

  

  

  

  

  

Earnings per common share (dollars)

  

$

3.41 

  

$

2.19 

  

$

5.41 

  

$

4.33 

   

  

  

  

  

  

  

  

  

  

  

  

  

Earnings per common share - assuming dilution (dollars)

  

$

3.41 

  

$

2.18 

  

$

5.41 

  

$

4.32 

   

  

  

  

  

  

  

  

  

  

  

  

  

Dividends per common share (dollars) 

  

$

0.57 

  

$

0.47 

  

$

1.04 

  

$

0.91 

   

  

  

  

  

  

  

  

  

  

  

  

  

(1) Sales-based taxes included in sales and other

  

  

  

  

  

  

  

  

  

  

  

  

  

operating revenue

  

$

8,027 

  

$

8,613 

  

$

16,520 

  

$

16,529 

 

 

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.


-3-

 


 

 

EXXON MOBIL CORPORATION

  

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

  

(millions of dollars)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Three Months Ended

  

Six Months Ended

  

  

  

  

  

  

  

June 30,

  

June 30,

  

  

  

  

  

  

  

2012 

  

2011 

  

2012 

  

2011 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Net income including noncontrolling interests

  

$

17,654 

  

$

10,898 

  

$

27,453 

  

$

21,811 

  

  

Other comprehensive income (net of income taxes)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Foreign exchange translation adjustment

  

  

(1,367)

  

  

778 

  

  

(322)

  

  

2,112 

  

  

  

Adjustment for foreign exchange translation (gain)/loss

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 included in net income

  

  

(4,302)

  

  

  

  

(4,235)

  

  

  

  

  

Postretirement benefits reserves adjustment

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

(excluding amortization)

  

  

224 

  

  

(160)

  

  

(180)

  

  

(565)

  

  

  

Amortization and settlement of postretirement benefits reserves

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

adjustment included in net periodic benefit costs

  

  

1,236 

  

  

321 

  

  

1,629 

  

  

631 

  

  

  

Change in fair value of cash flow hedges

  

  

  

  

  

  

  

  

10 

  

  

  

Realized (gain)/loss from settled cash flow hedges

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

included in net income

  

  

  

  

(14)

  

  

  

  

(33)

  

  

  

  

Total other comprehensive income

  

  

(4,209)

  

  

932 

  

  

(3,108)

  

  

2,155 

  

  

Comprehensive income including noncontrolling interests

  

  

13,445 

  

  

11,830 

  

  

24,345 

  

  

23,966 

  

  

  

Comprehensive income attributable to

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

noncontrolling interests

  

  

196 

  

  

293 

  

  

521 

  

  

612 

  

  

Comprehensive income attributable to ExxonMobil

  

$

13,249 

  

$

11,537 

  

$

23,824 

  

$

23,354 

  

 

 

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.


-4-

 


 

 

EXXON MOBIL CORPORATION

  

CONDENSED CONSOLIDATED BALANCE SHEET

  

(millions of dollars)

  

  

  

   

  

  

  

  

  

  

  

  

  

   

  

June 30,

  

Dec. 31,

  

  

  

   

  

2012 

  

2011 

  

ASSETS

  

  

  

  

  

  

  

Current assets

  

  

  

  

  

  

  

  

Cash and cash equivalents

  

$

17,802 

  

$

12,664 

  

  

Cash and cash equivalents – restricted

  

  

215 

  

  

404 

  

  

Notes and accounts receivable – net

  

  

33,741 

  

  

38,642 

  

  

Inventories

  

  

  

  

  

  

  

  

  

Crude oil, products and merchandise

  

  

11,729 

  

  

11,665 

  

  

  

Materials and supplies

  

  

3,429 

  

  

3,359 

  

  

Other current assets

  

  

5,881 

  

  

6,229 

  

  

  

Total current assets

  

  

72,797 

  

  

72,963 

  

Investments, advances and long-term receivables

  

  

33,921 

  

  

34,333 

  

Property, plant and equipment – net

  

  

214,940 

  

  

214,664 

  

Other assets, including intangibles – net

  

  

7,987 

  

  

9,092 

  

  

  

Total assets

  

$

329,645 

  

$

331,052 

  

  

  

   

  

  

  

  

  

  

  

LIABILITIES

  

  

  

  

  

  

  

Current liabilities

  

  

  

  

  

  

  

  

Notes and loans payable

  

$

6,704 

  

$

7,711 

  

  

Accounts payable and accrued liabilities

  

  

51,322 

  

  

57,067 

  

  

Income taxes payable

  

  

12,110 

  

  

12,727 

  

  

  

Total current liabilities

  

  

70,136 

  

  

77,505 

  

Long-term debt

  

  

8,877 

  

  

9,322 

  

Postretirement benefits reserves

  

  

22,117 

  

  

24,994 

  

Deferred income tax liabilities

  

  

36,851 

  

  

36,618 

  

Other long-term obligations

  

  

23,679 

  

  

21,869 

  

  

  

Total liabilities

  

  

161,660 

  

  

170,308 

  

  

  

   

  

  

  

  

  

  

  

Commitments and contingencies (Note 2)

  

  

  

  

  

  

  

   

  

  

  

  

  

  

  

EQUITY

  

  

  

  

  

  

  

Common stock, without par value:

  

  

  

  

  

  

  

  

Authorized:   9,000 million shares

  

  

  

  

  

  

  

  

Issued:         8,019 million shares

  

  

9,221 

  

  

9,512 

  

Earnings reinvested

  

  

351,421 

  

  

330,939 

  

Accumulated other comprehensive income

  

  

(10,659)

  

  

(9,123)

  

Common stock held in treasury:

  

  

  

  

  

  

  

  

  

3,403 million shares at June 30, 2012

  

  

(187,172)

  

  

  

  

  

  

3,285 million shares at December 31, 2011

  

  

  

  

  

(176,932)

  

  

ExxonMobil share of equity  

  

  

162,811 

  

  

154,396 

  

Noncontrolling interests

  

  

5,174 

  

  

6,348 

  

  

Total equity

  

  

167,985 

  

  

160,744 

  

  

Total liabilities and equity

  

$

329,645 

  

$

331,052 

  

 

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

 

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.


-5-

 


 

 

EXXON MOBIL CORPORATION

  

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

  

(millions of dollars)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Six Months Ended

  

  

  

  

  

  

June 30,

  

  

  

  

  

  

2012 

  

2011 

  

CASH FLOWS FROM OPERATING ACTIVITIES

  

  

  

  

  

  

  

  

Net income including noncontrolling interests

  

$

27,453 

  

$

21,811 

  

  

Depreciation and depletion

  

  

7,741 

  

  

7,642 

  

  

Changes in operational working capital, excluding cash and debt

  

  

3,408 

  

  

1,078 

  

  

Net (gain) on asset sales

  

  

(11,109)

  

  

(600)

  

  

All other items – net

  

  

2,011 

  

  

(186)

  

  

  

  

Net cash provided by operating activities

  

  

29,504 

  

  

29,745 

  

  

  

  

  

  

  

  

  

  

  

  

CASH FLOWS FROM INVESTING ACTIVITIES

  

  

  

  

  

  

  

  

Additions to property, plant and equipment

  

  

(16,188)

  

  

(14,863)

  

  

Proceeds associated with sales of subsidiaries, property, plant and

  

  

  

  

  

  

  

  

  

equipment, and sales and returns of investments

  

  

6,243 

  

  

2,838 

  

  

Additional investments and advances

  

  

(397)

  

  

(2,949)

  

  

Additions to marketable securities

  

  

  

  

(1,754)

  

  

Other investing activities – net

  

  

1,235 

  

  

871 

  

  

  

  

Net cash used in investing activities

  

  

(9,107)

  

  

(15,857)

  

  

  

  

  

  

  

  

  

  

  

  

CASH FLOWS FROM FINANCING ACTIVITIES

  

  

  

  

  

  

  

  

Additions to long-term debt

  

  

389 

  

  

249 

  

  

Reductions in long-term debt

  

  

(11)

  

  

(43)

  

  

Additions/(reductions) in short-term debt – net

  

  

(214)

  

  

1,182 

  

  

Cash dividends to ExxonMobil shareholders

  

  

(4,878)

  

  

(4,496)

  

  

Cash dividends to noncontrolling interests

  

  

(137)

  

  

(152)

  

  

Changes in noncontrolling interests

  

  

198 

  

  

(12)

  

  

Tax benefits related to stock-based awards

  

  

  

  

171 

  

  

Common stock acquired

  

  

(10,716)

  

  

(11,165)

  

  

Common stock sold

  

  

86 

  

  

452 

  

  

  

  

Net cash used in financing activities

  

  

(15,283)

  

  

(13,814)

  

  

  

  

  

  

  

  

  

  

  

  

Effects of exchange rate changes on cash

  

  

24 

  

  

388 

  

Increase/(decrease) in cash and cash equivalents

  

  

5,138 

  

  

462 

  

Cash and cash equivalents at beginning of period

  

  

12,664 

  

  

7,825 

  

Cash and cash equivalents at end of period

  

$

17,802 

  

$

8,287 

  

  

  

  

  

  

  

  

  

  

  

  

SUPPLEMENTAL DISCLOSURES

  

  

  

  

  

  

  

  

Income taxes paid

  

$

12,327 

  

$

13,547 

  

  

Cash interest paid

  

$

290 

  

$

262 

  

 

 

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.


-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, 2010

  

$

9,371 

  

$

298,899 

  

$

(4,823)

  

$

(156,608)

  

$

146,839 

  

$

5,840 

  

$

152,679 

Amortization of stock-based awards

  

  

383 

  

  

  

  

  

  

  

  

383 

  

  

  

  

383 

Tax benefits related to stock-based awards

133 

  

  

  

  

  

  

  

  

133 

  

  

  

  

133 

Other

  

  

(535)

  

  

  

  

  

  

  

  

(535)

  

  

(4)

  

  

(539)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Net income for the period

  

  

  

  

21,330 

  

  

  

  

  

  

21,330 

  

  

481 

  

  

21,811 

Dividends – common shares

  

  

  

  

(4,496)

  

  

  

  

  

  

(4,496)

  

  

(152)

  

  

(4,648)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Other comprehensive income

  

  

  

  

  

  

2,024 

  

  

  

  

2,024 

  

  

131 

  

  

2,155 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Acquisitions, at cost

  

  

  

  

  

  

  

  

(11,165)

  

  

(11,165)

  

  

(12)

  

  

(11,177)

Dispositions

  

  

  

  

  

  

  

  

1,038 

  

  

1,038 

  

  

  

  

1,038 

Balance as of June 30, 2011

  

$

9,352 

  

$

315,733 

  

$

(2,799)

  

$

(166,735)

  

$

155,551 

  

$

6,284 

  

$

161,835 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Balance as of December 31, 2011

  

$

9,512 

  

$

330,939 

  

$

(9,123)

  

$

(176,932)

  

$

154,396 

  

$

6,348 

  

$

160,744 

Amortization of stock-based awards

  

  

439 

  

  

  

  

  

  

  

  

439 

  

  

  

  

439 

Tax benefits related to stock-based awards

  

  

23 

  

  

  

  

  

  

  

  

23 

  

  

  

  

23 

Other

  

  

(753)

  

  

  

  

  

  

  

  

(753)

  

  

(1,450)

  

  

(2,203)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Net income for the period

  

  

  

  

25,360 

  

  

  

  

  

  

25,360 

  

  

2,093 

  

  

27,453 

Dividends – common shares

  

  

  

  

(4,878)

  

  

  

  

  

  

(4,878)

  

  

(214)

  

  

(5,092)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Other comprehensive income

  

  

  

  

  

  

(1,536)

  

  

  

  

(1,536)

  

  

(1,572)

  

  

(3,108)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Acquisitions, at cost

  

  

  

  

  

  

  

  

(10,716)

  

  

(10,716)

  

  

(31)

  

  

(10,747)

Dispositions

  

  

  

  

  

  

  

  

476 

  

  

476 

  

  

  

  

476 

Balance as of June 30, 2012

  

$

9,221 

  

$

351,421 

  

$

(10,659)

  

$

(187,172)

  

$

162,811 

  

$

5,174 

  

$

167,985 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Six Months Ended June 30, 2012

  

  

  

  

Six Months Ended June 30, 2011

  

  

  

  

  

  

Held in

  

  

  

  

  

  

  

  

  

  

Held in

  

  

  

Common Stock Share Activity

  

Issued

  

Treasury

  

Outstanding

  

  

  

  

Issued

  

Treasury

  

Outstanding

  

  

(millions of shares)

  

  

  

  

(millions of shares)

Balance as of December 31

  

  

8,019 

  

  

(3,285)

  

  

4,734 

  

  

  

  

  

8,019 

  

  

(3,040)

  

  

4,979 

  

Acquisitions

  

  

  

  

(127)

  

  

(127)

  

  

  

  

  

  

  

(136)

  

  

(136)

  

Dispositions

  

  

  

  

  

  

  

  

  

  

  

  

  

19 

  

  

19 

Balance as of June 30

  

  

8,019 

  

  

(3,403)

  

  

4,616 

  

  

  

  

  

8,019 

  

  

(3,157)

  

  

4,862 

 

 

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.


-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 2011 Annual Report on Form 10-K.  In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein.  All such adjustments are of a normal recurring nature.  The Corporation's exploration and production activities are accounted for under the "successful efforts" method.

 

2.     Litigation and Other Contingencies

 

Litigation

 

A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters as well as other matters which management believes should be disclosed. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a materially adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole.

 

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

 

Other Contingencies

 

The Corporation and certain of its consolidated subsidiaries were contingently liable at June 30, 2012, for guarantees relating to notes, loans and performance under contracts. These guarantees are not reasonably likely to have a material effect on the Corporation’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.


-8-

 


 

 

 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

As of June 30, 2012

  

  

  

  

  

  

  

Equity

  

Other

  

  

  

  

  

  

  

  

  

  

Company

  

Third Party

  

  

  

  

  

  

  

  

  

  

Obligations (1) 

  

Obligations

  

Total

  

  

  

  

  

  

  

(millions of dollars)

  

  

  

Guarantees

  

  

  

  

  

  

  

  

  

  

  

  

  

Debt-related

  

$

1,990 

  

$

64 

  

$

2,054 

  

  

  

  

Other

  

  

3,774 

  

  

3,977 

  

  

7,751 

  

  

  

  

  

Total

  

$

5,764 

  

$

4,041 

  

$

9,805 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

(1) ExxonMobil share

  

  

  

  

  

  

  

  

  

  

  

 

Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. The Corporation's outstanding unconditional purchase obligations at June 30, 2012, were similar to those at the prior year-end period. Unconditional purchase obligations as defined by accounting standards are those long-term commitments that are noncancelable or cancelable only under certain conditions, and that third parties have used to secure financing for the facilities that will provide the contracted goods or services.

 

The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations.  Both the likelihood of such occurrences and their overall effect upon the Corporation vary greatly from country to country and are not predictable.

 

In accordance with a nationalization decree issued by Venezuela’s president in February 2007, by May 1, 2007 a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates holding a 41.67 percent ownership interest in the Project.  The decree also required conversion of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s or one of its affiliate’s ownership interest in the Project, with the stipulation that if ExxonMobil refused to accept the terms for the formation of the mixed enterprise within a specified period of time, the government would “directly assume the activities” carried out by the joint venture.  ExxonMobil refused to accede to the terms proffered by the government, and on June 27, 2007, the government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro Project.  ExxonMobil’s remaining net book investment in Cerro Negro producing assets is about $750 million.

 

On September 6, 2007, affiliates of ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID) invoking ICSID jurisdiction under Venezuela’s Investment Law and the Netherlands-Venezuela Bilateral Investment Treaty. The ICSID Tribunal issued a decision on June 10, 2010, finding that it had jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral Investment Treaty. The ICSID arbitration proceeding is continuing and a hearing on the merits was held in February 2012.  At this time, the net impact of these matters on the Corporation’s consolidated financial results cannot be reasonably estimated. Regardless, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition.

 

An affiliate of ExxonMobil is one of the Contractors under a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) covering the Erha block located in the offshore waters of Nigeria. ExxonMobil's affiliate is the operator of the block and owns a 56.25 percent interest under the PSC. The Contractors are in dispute with NNPC regarding NNPC's lifting of crude oil in excess of its entitlement under the terms of the PSC. In accordance with the terms of the PSC, the Contractors initiated arbitration in Abuja, Nigeria, under the Nigerian Arbitration and Conciliation Act. On October 24, 2011, a three-member arbitral Tribunal issued an award upholding the Contractors' position in all material respects and awarding damages to the Contractors jointly in an amount of approximately $1.8 billion plus $234 million in accrued interest. The Contractors petitioned a Nigerian federal court for enforcement of the award, and NNPC petitioned the same court to have the award set aside. On May 22, 2012, the court set aside the award.  The Contractors have appealed that judgment. At this time, the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, regardless of the outcome of enforcement proceedings, the Corporation does not expect the proceedings to have a material effect upon the Corporation's operations or financial condition.


-9-

 


 

 

3.     Other Comprehensive Income Information

 

  

  

  

  

  

ExxonMobil Share of Accumulated

  

  

  

  

  

Other Comprehensive Income

  

  

  

  

  

Cumulative

  

Post-

  

Unrealized

  

  

  

  

  

  

  

  

Foreign

  

retirement

  

Change in

  

  

  

  

  

  

  

  

Exchange

  

Benefits

  

Fair Value

  

  

  

  

  

  

  

  

Translation

  

Reserves

  

on Cash

  

  

  

  

  

  

  

  

Adjustment

  

Adjustment

  

Flow Hedges

  

Total

  

  

  

  

(millions of dollars)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Balance as of December 31, 2010

  

$

 5,011 

  

$

 (9,889) 

  

$

 55 

  

$

 (4,823) 

  

Current period change excluding amounts reclassified

  

  

  

  

  

  

  

  

  

  

  

  

  

  

from accumulated other comprehensive income

  

  

 1,939 

  

  

 (492) 

  

  

 10 

  

  

 1,457 

  

Amounts reclassified from accumulated other

  

  

  

  

  

  

  

  

  

  

  

  

  

  

comprehensive income

  

  

 - 

  

  

 600 

  

  

 (33) 

  

  

 567 

  

Total change in accumulated other comprehensive

  

  

  

  

  

  

  

  

  

  

  

  

  

  

income

  

  

 1,939 

  

  

 108 

  

  

 (23) 

  

  

 2,024 

  

Balance as of June 30, 2011

  

$

 6,950 

  

$

 (9,781) 

  

$

 32 

  

$

 (2,799) 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Balance as of December 31, 2011

  

$

 4,168 

  

$

 (13,291) 

  

$

 - 

  

$

 (9,123) 

  

Current period change excluding amounts reclassified

  

  

  

  

  

  

  

  

  

  

  

  

  

  

from accumulated other comprehensive income

  

  

 (266) 

  

  

 (152) 

  

  

 - 

  

  

 (418) 

  

Amounts reclassified from accumulated other

  

  

  

  

  

  

  

  

  

  

  

  

  

  

comprehensive income

  

  

 (2,484) 

  

  

 1,366 

  

  

 - 

  

  

 (1,118) 

  

Total change in accumulated other comprehensive

  

  

  

  

  

  

  

  

  

  

  

  

  

  

income

  

  

 (2,750) 

  

  

 1,214 

  

  

 - 

  

  

 (1,536) 

  

Balance as of June 30, 2012

  

$

 1,418 

  

$

 (12,077) 

  

$

 - 

  

$

 (10,659) 

 

 

  

  

  

  

  

Three Months Ended

  

Six Months Ended

  

  

  

  

  

June 30,

  

June 30,

  

  

  

  

  

2012 

  

2011 

  

2012 

  

2011 

  

  

  

  

  

(millions of dollars)

  

Income Tax (Expense)/Credit For

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Components of Other Comprehensive Income

  

  

  

  

  

  

  

  

  

  

  

  

  

Foreign exchange translation adjustment

  

$

 23 

  

$

 (51) 

  

$

 (37) 

  

$

 (87) 

  

Postretirement benefits reserves adjustment

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Postretirement benefits reserves adjustment

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

(excluding amortization)

  

  

 (71) 

  

  

 60 

  

  

 90 

  

  

 237 

  

  

Amortization and settlement of postretirement benefits reserves

  

  

  

  

  

  

  

  

  

  

  

  

  

  

adjustment included in net periodic benefit costs

  

  

 (743) 

  

  

 (146) 

  

  

 (932) 

  

  

 (301) 

  

Unrealized change in fair value on cash flow hedges

  

&#