Exxon 2007 Annual Report Download - page 46

Frequently Used Terms
Listed below are definitions of several of ExxonMobil’s key business and financial performance measures and other terms.
These definitions are provided to facilitate understanding of the terms and their calculation.
CA S H FL OW FROM OPE R AT IONS A N D A S S E T SALE S
Cash flow from operations and asset sales is the sum of the net cash provided by operating activities and proceeds from sales of subsidiaries,
investments, and property, plant, and equipment from the Summary Statement of Cash Flows. This cash flow is the total sources of cash from
both operating the Corporation’s assets and from the divesting of assets. The Corporation employs a long-standing and regular disciplined review
process to ensure that all assets are contributing to the Corporation’s strategic and financial objectives. Assets are divested when they are no
longer meeting these objectives, or are worth considerably more to others. Because of the regular nature of this activity, we believe it is useful
for investors to consider sales proceeds together with cash provided by operating activities when evaluating cash available for investment in the
business and financing activities, including shareholder distributions.
(millions of dollars) 2007 2006 2005
Net cash provided by operating activities 52,002 49,286 48,138
Sales of subsidiaries, investments and property, plant, and equipment 4,204 3,080 6,036
Cash flow from operations and asset sales 56,206 52,366 54,174
CA P ITA L E M P LOY E D
Capital employed is a measure of net investment. When viewed from the perspective of how the capital is used by the businesses, it includes
ExxonMobil’s net share of property, plant, and equipment and other assets less liabilities, excluding both short-term and long-term debt. When
viewed from the perspective of the sources of capital employed in total for the Corporation, it includes ExxonMobil’s share of total debt and
shareholders’ equity. Both of these views include ExxonMobil’s share of amounts applicable to equity companies, which the Corporation believes
should be included to provide a more comprehensive measure of capital employed.
(millions of dollars) 2007 2006 2005
Business uses: asset and liability perspective
Total assets 242,082 219,015 208,335
Less liabilities and minority share of assets and liabilities
Total current liabilities excluding notes and loans payable (55,929) (47,115) (44,536)
Total long-term liabilities excluding long-term debt and equity of minority
and preferred shareholders in affiliated companies (50,543) (45,905) (41,095)
Minority share of assets and liabilities (5,332) (4,948) (4,863)
Add ExxonMobil share of debt-financed equity-company net assets 3,386 2,808 3,450
Total capital employed 133,664 123,855 121,291
Total corporate sources: debt and equity perspective
Notes and loans payable 2,383 1,702 1,771
Long-term debt 7,183 6,645 6,220
Shareholders’ equity 121,762 113,844 111,186
Less minority share of total debt (1,050) (1,144) (1,336)
Add ExxonMobil share of equity-company debt 3,386 2,808 3,450
Total capital employed 133,664 123,855 121,291
CA P ITA L A N D E X PLO R AT I O N E X PE NDIT U R E S ( C a p ex )
Capital and exploration expenditures are the combined total of additions at cost to property, plant, and equipment and exploration expenses
on a before-tax basis from the Consolidated Statement of Income. ExxonMobil’s Capex includes its share of similar costs for equity companies.
Capex excludes depreciation on the cost of exploration support equipment and facilities recorded to property, plant, and equipment when
acquired. While ExxonMobil’s management is responsible for all investments and elements of net income, particular focus is placed on managing
the controllable aspects of this group of expenditures.
RETUR N ON AV E R AG E CA PITA L E M P LOY E D ( ROC E )
Return on average capital employed is a performance measure ratio. From the perspective of the business segments, ROCE is annual business
segment earnings divided by average business segment capital employed (average of beginning- and end-of-year amounts). These segment
earnings include ExxonMobil’s share of segment earnings of equity companies, consistent with our definition of capital employed, and exclude the
cost of financing. The Corporation’s total ROCE is net income excluding the after-tax cost of financing, divided by total corporate average capital
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