8-KRegulation FD

EXXON MOBIL CORP 8-K Report, Regulation FD Disclosure (Jan 19, 2018)

Filed January 19, 2018For Securities:XOM

Summary

ExxonMobil Corporation (XOM) filed an 8-K on January 19, 2018, to inform investors about changes in its financial reporting that will be reflected in its upcoming earnings report, effective December 31, 2017. The most significant change is the adoption of net reporting for sales, excise, and value-added taxes assessed on customers. This means these "sales-based taxes" will now be excluded from "Sales and other operating revenue" and also from a separate "Sales-based taxes" line item. The company elected this method to better reflect its role as a tax collector and align with industry reporting practices. Crucially, this accounting policy change is applied retrospectively and does not impact ExxonMobil's net income attributable to the company. Additionally, ExxonMobil is reclassifying U.S. Federal excise tax from "Sales-based taxes" to "Other taxes and duties." These specific federal excise taxes are not considered customer-assessed and will continue to be reported on a gross basis. This reclassification, while not affecting net income, did adjust prior-year reported revenues, with $3,110 million and $3,044 million reclassified in 2016 and 2015, respectively. Investors should note that these changes primarily affect the presentation of revenue and tax line items, not the company's overall profitability.

Key Highlights

  • 1ExxonMobil is changing its accounting policy for sales, excise, and value-added taxes assessed on customers, moving from gross to net reporting.
  • 2The revised policy will exclude sales-based taxes from "Sales and other operating revenue" and "Sales-based taxes" line items.
  • 3This change aims to better represent the company's role as a tax collector and align with industry peers.
  • 4The accounting change was applied retrospectively to prior periods.
  • 5Importantly, the change in reporting sales-based taxes does NOT affect ExxonMobil's net income.
  • 6U.S. Federal excise tax is being reclassified from "Sales-based taxes" to "Other taxes and duties."
  • 7This reclassification of U.S. Federal excise tax is also retrospective and does not impact net income.

Frequently Asked Questions

The main change is how ExxonMobil reports sales, excise, and value-added taxes assessed on customers. The company is switching to a 'net reporting' method, meaning these taxes will be excluded from both "Sales and other operating revenue" and a separate "Sales-based taxes" line item. Previously, these were reported on a 'gross' basis.

No, the company explicitly states that this change in accounting policy for sales-based taxes does not affect net income attributable to ExxonMobil. The impact is on the presentation of revenue and certain tax line items, not on the company's overall earnings.

ExxonMobil is reclassifying U.S. Federal excise tax from the "Sales-based taxes" category to "Other taxes and duties." This change is because these specific federal taxes are not considered to be assessed on customers and will continue to be reported on a gross basis. This reclassification was also applied retrospectively and does not affect net income.

ExxonMobil is making these changes to better reflect its role as an agent for the government in collecting taxes assessed on customers. The company also states the new methods are more consistent with reporting practices of other major international oil and gas companies and large U.S. corporations.