Exhibit 99.1
| | | |
Imperial Oil Limited | | News Release |
| 111 St Clair Avenue West | | |
| Toronto, Ontario | | |
| Canada M5W 1K3 | | |
Imperial reports strong operating performance
in second quarter 2004
Toronto, July 22, 2004— Imperial Oil Limited today announced net earnings for the second quarter of 2004 of $454 million or $1.26 a share. This compared with record second-quarter earnings of $514 million or $1.38 a share in 2003, which included non-recurring gains of about $110 million in tax benefits and $55 million in foreign-exchange gains on U.S.-dollar denominated debt. Net earnings for the first half of 2004 were $963 million or $2.66 a share versus $1,052 million or $2.80 a share for the first half of 2003.
Imperial’s six-month earnings reflect the company’s strong operating and volume performance, despite lower production at Cold Lake due to the cyclic nature of the operation. The company was also able to capture the benefits of favourable market conditions including higher world oil prices and strong industry margins in petroleum refining and petrochemical products. However, when compared to the first six months of 2003, a higher Canadian dollar negatively affected realizations from resource and product sales by about $130 million.
Imperial’s total revenues were $5,466 million for the second quarter and $10,533 million for the first six months of 2004, compared with $4,510 million and $9,988 million for the corresponding periods of 2003. Capital and exploration expenditures were $305 million in the second quarter and $650 million in the first six months of 2004, versus $389 million and $744 million in the same periods last year. The company’s balance of cash and marketable securities was $439 million at June 30, 2004, versus $448 million at the end of 2003.
Through the first six months of 2004, Imperial repurchased about six million shares for $363 million. In June, the Toronto Stock Exchange approved continuation of Imperial’s share-purchase program, which enables the company to repurchase up to 17.9 million shares between June 23, 2004 and June 22, 2005.
Imperial’s chairman, president and chief executive officer, Tim Hearn said that the company’s operating performance remained strong through the second quarter. “Excluding non-recurring items, Imperial’s second-quarter and six-month earnings were higher this year than in 2003, reflecting favourable market conditions and solid operating performance,” Hearn said. “Earnings would have been even higher, without the effects of the Canadian dollar.”
“Progress was also made on projects to provide future growth, such as the Mackenzie Gas Project,” Hearn said. “Overall, Imperial remains well-positioned to continue to grow shareholder value.”
Imperial is one of Canada’s largest corporations and has been a leading member of the country’s petroleum industry for more than a century. It is also the country’s largest refiner
and marketer of petroleum products — sold primarily under the Esso and Mobil brands — with a coast-to-coast supply network that includes 2,100 gasoline retail outlets.
- 30 -
| | | |
| For further information: | | |
| Investor relations | | Media relations |
| Jean Côté | | Richard O’Farrell |
| (416) 968-4262 | | (416) 968-4875 |
Highlights
Mackenzie gas project progresses
Significant progress has been made on the Mackenzie Gas Project. Additional geotechnical fieldwork was completed in the second quarter, and regulatory agencies announced that they are prepared to receive applications on the project during the summer. In June, a draft agreement for an environmental review of the project and draft terms of reference for the environmental impact statement were issued for public comment. In addition, through the end of the second quarter 1.6 million work hours had been completed on the project without a lost-time or recordable safety incident.
3-D Seismic to begin in Orphan Basin
In the second quarter, a seismic vessel was mobilized to begin acquisition of 3-D seismic data on leases in the Orphan Basin, located off the east coast of Newfoundland. The seismic program is expected to continue through the third quarter.
Share-purchase program to continue
In June, Imperial received approval from the Toronto Stock Exchange for a new normal course issuer bid to continue its share-purchase program. This enables the company to repurchase up to 17.9 million shares between June 23, 2004 and June 22, 2005. During the first half of 2004, the company repurchased about six million shares for $363 million.
IMPERIAL OIL LIMITED
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
| | | 2004
| | 2003
| | 2004
| | 2003
|
| Earnings (millions of dollars) | | | | | | | | | | | | | | | | |
| Natural resources | | | 321 | | | | 351 | | | | 687 | | | | 690 | |
| Petroleum products | | | 108 | | | | 102 | | | | 243 | | | | 241 | |
| Chemicals | | | 29 | | | | 7 | | | | 41 | | | | 13 | |
| Corporate and other | | | (4 | ) | | | 54 | | | | (8 | ) | | | 108 | |
| | | |
| | | |
| | | |
| | | |
| |
| Net earnings | | | 454 | | | | 514 | | | | 963 | | | | 1,052 | |
| | | |
| | | |
| | | |
| | | |
| |
| Cash flow from operating activities | | | 652 | | | | 672 | | | | 1,042 | | | | 1,372 | |
| Capital and exploration expenditures | | | 305 | | | | 389 | | | | 650 | | | | 744 | |
| Per-share information (dollars) | | | | | | | | | | | | | | | | |
| Net earnings - - basic | | | 1.26 | | | | 1.38 | | | | 2.67 | | | | 2.80 | |
| Net earnings - - diluted | | | 1.26 | | | | 1.38 | | | | 2.66 | | | | 2.80 | |
| Dividends | | | 0.22 | | | | 0.22 | | | | 0.44 | | | | 0.43 | |
| Share prices - - close at June 30 | | | | | | | | | | | | | | | | |
| Toronto Stock Exchange (Canadian dollars) | | | | | | | | | | | 62.40 | | | | 47.10 | |
| American Stock Exchange (U.S. dollars) | | | | | | | | | | | 46.82 | | | | 34.92 | |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
The company’s net earnings for the second quarter were $454 million or $1.26 a share on a diluted basis, compared with $514 million or $1.38 a share for the same quarter of 2003. Net earnings for the first six months of 2004 were $963 million or $2.66 a share on a diluted basis, versus $1,052 million or $2.80 a share for the first half of 2003.
Earnings in the second quarter were positively impacted by higher realizations for crude oil and stronger refining and petrochemical margins partly offset by lower marketing margins. Operating and volume performance was strong despite lower production at Cold Lake due to the cyclic nature of the operation. However, those factors were more than offset by the negative earnings impact from the absence of tax rate reductions and settlement of tax matters totalling about $110 million and favourable foreign exchange effects on the company’s U.S.-dollar denominated debt of about $55 million, all reported in the second quarter of 2003. The higher Canadian dollar continued to have a negative earnings impact of about $25 million versus the same quarter last year.
For the first six months, higher realizations for crude oil, higher volumes of crude oil and natural gas, and stronger refining and petrochemical margins contributed positively to earnings, partly offset by lower marketing margins. However, when compared to the first six months of 2003, more than offsetting these factors were the combined negative effects of a higher Canadian dollar on resource and product prices of about $130 million, the absence of favourable foreign exchange effects on the company’s U.S.-dollar denominated debt of about $110 million, and lower benefits from tax matters of about $80 million.
IMPERIAL OIL LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued .....)
Total revenues were $5,466 million in the second quarter and $10,533 million in the first half of 2004, versus $4,510 million and $9,988 million in the same periods last year.
Natural resources
During the second quarter of 2004, net earnings from natural resources were $321 million compared with $351 million in the same period last year. Net earnings for the first six months were $687 million versus $690 million during the same period last year. For both these periods, the positive earnings effects of higher realizations for crude oil and higher Syncrude, natural gas liquids (NGLs) and natural gas volumes in 2004 were partly offset by lower Cold Lake bitumen production and higher expenses from stock-related compensation programs. However, those factors were more than offset by lower benefits from tax matters and the negative effects of a higher Canadian dollar.
While U.S.-dollar world oil prices in both the second quarter and first six months of 2004 were sharply higher than the same periods of 2003, increases in the company’s Canadian dollar realizations for conventional crude oil and Cold Lake bitumen were dampened by the effects of a higher Canadian dollar. Brent crude oil prices in U.S. dollars averaged 36 percent higher in the second quarter and 17 percent higher for the first six months, compared with the same periods last year. Realizations for the company’s conventional crude oil in the second quarter averaged 23 percent higher, and for the first half of the year four percent higher than the realizations of the same periods last year. Cold Lake bitumen realizations in the second quarter averaged about 15 percent higher, and for the first six months about three percent lower than the realizations of the same periods in 2003.
Realizations for natural gas averaged $6.87 a thousand cubic feet in the second quarter, compared with $6.80 a thousand cubic feet in the same quarter last year. For the first six-month period, realizations for natural gas averaged $6.72 a thousand cubic feet in 2004, down from $7.45 a thousand cubic feet in the same period of 2003.
Total gross production of crude oil and NGLs was 251 thousand barrels a day, down from 262 thousand barrels a day in the second quarter of 2003. For the first six months of the year, total gross production of crude oil and NGLs averaged 256 thousand barrels a day, compared with 252 thousand barrels a day in the same period of 2003.
Gross production of Cold Lake bitumen averaged 118 thousand barrels a day during the second quarter, down from 137 thousand barrels a day in the same quarter last year. For the first six-month period, gross production was 119 thousand barrels a day this year, versus 129 thousand barrels a day in the same period of 2003. Lower production was due to the cyclic nature of production at Cold Lake.
The company’s share of Syncrude’s gross production was 57 thousand barrels a day in the second quarter compared with 53 thousand barrels a day during the same period a year ago. During the first six-month period, the company’s share of gross production from Syncrude averaged 60 thousand barrels a day in 2004, up from 50 thousand barrels a day in the same period of 2003.
In the second quarter and first six months of this year, gross production of conventional crude oil averaged 44 thousand barrels a day, compared with 47 thousand barrels a day during the corresponding periods in 2003.
IMPERIAL OIL LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued .....)
Gross production of NGLs available for sale was 32 thousand barrels a day in the second quarter, up from 25 thousand barrels a day in the same quarter last year. During the first half of 2004, gross production of NGLs available for sale averaged 33 thousand barrels a day, compared with 26 thousand barrels a day in the same period of 2003.
Gross production of natural gas during the second quarter of 2004 increased to 535 million cubic feet a day from 489 million cubic feet a day in the same period last year. In the first half of the year, gross production was 558 million cubic feet a day, up from 488 million cubic feet a day in the first six months of 2003.
The increased natural gas and NGLs volumes were mainly due to higher production from the new facilities at Wizard Lake in Alberta, which were completed in the third quarter of 2003.
In April this year, the company, on behalf of the Mackenzie Gas Project participants, completed geotechnical fieldwork planned for the past winter session. During the same month, regulatory agencies responsible for the review of northern natural gas development issued a news release indicating they will be ready to receive applications on the Mackenzie Gas Project this summer. In June this year, the Inuvialuit Game Council, the Mackenzie Valley Environmental Impact Review Board and the Canadian Environmental Assessment Agency issued a draft agreement for an environmental impact review of the Mackenzie Gas Project and the draft terms of reference for the environmental impact statement for the Mackenzie Gas Project, for public comment.
On the East Coast, nine of 13 Nova Scotia exploration licenses expired on June 30, 2004, and $7 million was charged to second quarter earnings.
In June this year, the company sold its Mid Alberta Pipeline for a gain of $12 million.
Petroleum products
Net earnings from petroleum products were $108 million in the second quarter, up from $102 million in the same quarter of 2003. Earnings increased primarily because of improved international refining margins, and were partly offset by lower marketing margins, higher scheduled refinery turnaround impact of about $30 million and higher expenses from stock-related compensation programs. Six-month net earnings were $243 million, up from $241 million in the same period of 2003. Higher earnings were primarily due to improved international refining margins for petroleum products partly offset by lower marketing margins. Sales volumes of petroleum products were higher both in the second quarter and the first six months.
The planned maintenance activities at the company’s refineries were completed in the second quarter on schedule and without a safety incident.
Chemicals
Net earnings from chemical operations were $29 million in the second quarter, up from $7 million in the same quarter last year because of improved polyethylene and other chemical product margins and increased sales. Six-month net earnings were $41 million, compared with $13 million for the same period in 2003. Improved margins on sales of polyethylene and other chemical products contributed primarily to the increase.
IMPERIAL OIL LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued .....)
Corporate and other
Net earnings from corporate and other operations were negative $4 million in the second quarter compared with positive $54 million in the same period of 2003. Six-month net earnings were negative $8 million versus positive $108 million last year. Lower earnings were due to the absence of the favourable foreign exchange effects on the company’s U.S.-dollar-denominated debt, which was replaced with Canadian-dollar denominated debt in June and July of 2003.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities was $652 million during the second quarter of 2004, down slightly from $672 million in the same period last year. Year-to-date cash flow from operating activities was $1,042 million, versus $1,372 million during the first half of 2003. The decreased cash inflow was mainly due to the impact of higher commodity prices on working capital.
Capital and exploration expenditures were $305 million in the second quarter, down from $389 million during the same quarter of 2003, and $650 million in the first half of 2004, versus $744 million in the same period a year ago. For the resources segment, capital and exploration expenditures were used to invest in long-term growth opportunities in the oilsands and Mackenzie gas. The petroleum products segment spent its capital expenditures mainly on projects to reduce the sulphur content of diesel fuel and to improve operating efficiency.
On June 21, 2004, the company announced that it had received final acceptance from the Toronto Stock Exchange for a new normal course issuer bid to continue its existing share-purchase program that expired on June 22, 2004. The new share-purchase program enables the company to repurchase up to 17.9 million shares during the period from June 23, 2004, to June 22, 2005. During the first half of 2004, the company repurchased about six million shares for $363 million.
Cash dividends of $160 million were paid in the first six months of 2004, compared with dividends of $159 million paid in the same period of 2003. Per-share dividends have been increased since the second quarter of 2003, resulting in higher dividends paid. This was partly offset by the effects of the company’s share-purchase program.
The above factors led to a slight decrease in the company’s balance of cash and marketable securities to $439 million at June 30, 2004, from $448 million at the end of 2003.
On May 6, 2004, the company filed a final short form shelf prospectus in Canada in connection with the issuance of Medium Term Notes over the 25-month period that the shelf prospectus remains valid. The unsecured notes will be issued from time to time at the discretion of the company in an aggregate amount not to exceed $1 billion. There have been no notes issued under this shelf prospectus.
IMPERIAL OIL LIMITED
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information about market risks for the six months ended June 30, 2004 does not differ materially from that discussed on page 27 in the company’s annual report to shareholders for the year ended December 31, 2003 and interim report to shareholders for the quarter ended March 31, 2004, except for the following sensitivity:
Earnings sensitivity (a)
millions of dollars after tax |
| Eight cents decrease (increase) in the value of the Canadian dollar versus the U.S. dollar + (-) 380 |
The sensitivity to changes in the Canadian dollar versus the U.S. dollar increased from 2003 year-end and the first quarter of 2004 by about $5 million (after tax) for each one U.S.-cent difference due primarily to higher refining margins at the end of the second quarter.
(a) The amount quoted to illustrate the impact of the sensitivity represents a change of about 10 percent in the value of the commodity at the end of the second quarter 2004. The sensitivity calculation shows the impact on annual earnings that results from a change in one factor, after tax and royalties and holding all other factors constant. While the sensitivity is applicable under current conditions, it may not apply proportionately to larger fluctuations.
This report may contain forward-looking information. Actual results could differ materially due to market conditions, changes in law or government policy, changes in operating conditions and costs, changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors.
IMPERIAL OIL LIMITED
CONSOLIDATED STATEMENT OF EARNINGS
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| REVENUES | | | | | | | | | | | | | | | | |
| Operating revenues | | | 5,439 | | | | 4,472 | | | | 10,495 | | | | 9,924 | |
| Investment and other income (3) | | | 27 | | | | 38 | | | | 38 | | | | 64 | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL REVENUES | | | 5,466 | | | | 4,510 | | | | 10,533 | | | | 9,988 | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPENSES | | | | | | | | | | | | | | | | |
| Exploration | | | 15 | | | | 4 | | | | 31 | | | | 11 | |
| Purchases of crude oil and products | | | 3,174 | | | | 2,464 | | | | 6,007 | | | | 5,660 | |
| Operating (2) (4) | | | 738 | | | | 703 | | | | 1,421 | | | | 1,442 | |
| Selling and general (4) | | | 304 | | | | 292 | | | | 597 | | | | 613 | |
| Federal excise tax | | | 314 | | | | 312 | | | | 618 | | | | 614 | |
| Depreciation and depletion | | | 217 | | | | 177 | | | | 432 | | | | 357 | |
| Financing costs (6) | | | 9 | | | | (57 | ) | | | 19 | | | | (114 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL EXPENSES | | | 4,771 | | | | 3,895 | | | | 9,125 | | | | 8,583 | |
| | | |
| | | |
| | | |
| | | |
| |
| EARNINGS BEFORE INCOME TAXES | | | 695 | | | | 615 | | | | 1,408 | | | | 1,405 | |
| INCOME TAXES | | | 241 | | | | 101 | | | | 445 | | | | 353 | |
| | | |
| | | |
| | | |
| | | |
| |
| NET EARNINGS | | | 454 | | | | 514 | | | | 963 | | | | 1,052 | |
| | | |
| | | |
| | | |
| | | |
| |
| PER-SHARE INFORMATION - dollars | | | | | | | | | | | | | | | | |
| Net earnings - basic (7) | | | 1.26 | | | | 1.38 | | | | 2.67 | | | | 2.80 | |
| Net earnings - diluted (7) | | | 1.26 | | | | 1.38 | | | | 2.66 | | | | 2.80 | |
| Dividends | | | 0.22 | | | | 0.22 | | | | 0.44 | | | | 0.43 | |
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| RETAINED EARNINGS AT BEGINNING OF PERIOD | | | 4,214 | | | | 3,610 | | | | 3,919 | | | | 3,277 | |
| Net earnings for the period | | | 454 | | | | 514 | | | | 963 | | | | 1,052 | |
| Share purchases (7) | | | (198 | ) | | | (151 | ) | | | (332 | ) | | | (277 | ) |
| Dividends | | | (78 | ) | | | (83 | ) | | | (158 | ) | | | (162 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| RETAINED EARNINGS AT END OF PERIOD | | | 4,392 | | | | 3,890 | | | | 4,392 | | | | 3,890 | |
| | | |
| | | |
| | | |
| | | |
| |
Certain figures for the prior year have been reclassified in the financial statements to conform with the current year’s presentation.
IMPERIAL OIL LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
inflow/(outflow)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| OPERATING ACTIVITIES | | | | | | | | | | | | | | | | |
| Net earnings | | | 454 | | | | 514 | | | | 963 | | | | 1,052 | |
| Depreciation and depletion | | | 217 | | | | 177 | | | | 432 | | | | 357 | |
| (Gain)/loss on asset sales, after tax | | | (13 | ) | | | 1 | | | | (14 | ) | | | 1 | |
| Future income taxes and other | | | (69 | ) | | | (84 | ) | | | (158 | ) | | | (242 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| Cash flow from earnings | | | 589 | | | | 608 | | | | 1,223 | | | | 1,168 | |
| Accounts receivable | | | (4 | ) | | | 294 | | | | (183 | ) | | | 20 | |
| Inventories and prepaids | | | 93 | | | | (146 | ) | | | (202 | ) | | | (261 | ) |
| Income taxes payable | | | 104 | | | | (22 | ) | | | 143 | | | | 121 | |
| Accounts payable and other | | | (130 | ) | | | (62 | ) | | | 61 | | | | 324 | |
| | | |
| | | |
| | | |
| | | |
| |
| Change in operating assets and liabilities | | | 63 | | | | 64 | | | | (181 | ) | | | 204 | |
| | | |
| | | |
| | | |
| | | |
| |
| CASH FROM OPERATING ACTIVITIES | | | 652 | | | | 672 | | | | 1,042 | | | | 1,372 | |
| | | |
| | | |
| | | |
| | | |
| |
| INVESTING ACTIVITIES | | | | | | | | | | | | | | | | |
| Additions to property, plant and equipment and intangibles | | | (283 | ) | | | (380 | ) | | | (602 | ) | | | (725 | ) |
| Proceeds from asset sales | | | 53 | | | | 17 | | | | 66 | | | | 22 | |
| | | |
| | | |
| | | |
| | | |
| |
| CASH FROM (USED IN) INVESTING ACTIVITIES | | | (230 | ) | | | (363 | ) | | | (536 | ) | | | (703 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
| Short-term debt - net | | | 9 | | | | — | | | | 9 | | | | — | |
| Long-term debt issued | | | — | | | | 546 | | | | — | | | | 546 | |
| Repayment of long-term debt | | | (8 | ) | | | (546 | ) | | | (8 | ) | | | (546 | ) |
| Issuance of common shares under stock option plan (7) | | | 1 | | | | — | | | | 7 | | | | — | |
| Common shares purchased (7) | | | (216 | ) | | | (171 | ) | | | (363 | ) | | | (312 | ) |
| Dividends paid | | | (80 | ) | | | (80 | ) | | | (160 | ) | | | (159 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| CASH FROM(USED IN) FINANCING ACTIVITIES | | | (294 | ) | | | (251 | ) | | | (515 | ) | | | (471 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| INCREASE (DECREASE) IN CASH | | | 128 | | | | 58 | | | | (9 | ) | | | 198 | |
| CASH AT BEGINNING OF PERIOD | | | 311 | | | | 906 | | | | 448 | | | | 766 | |
| | | |
| | | |
| | | |
| | | |
| |
| CASH AT END OF PERIOD | | | 439 | | | | 964 | | | | 439 | | | | 964 | |
| | | |
| | | |
| | | |
| | | |
| |
Certain figures for the prior year have been reclassified in the financial statements to conform with the current year’s presentation.
IMPERIAL OIL LIMITED
CONSOLIDATED BALANCE SHEET
(unaudited)
| | | | | | | | | |
| | | As at | | As at |
| | | June 30 | | Dec. 31 |
millions of dollars
| | 2004
| | 2003
|
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| Cash | | | 439 | | | | 448 | |
| Accounts receivable | | | 1,498 | | | | 1,315 | |
| Inventories of crude oil and products | | | 569 | | | | 407 | |
| Materials, supplies and prepaid expenses | | | 145 | | | | 105 | |
| Future income tax assets | | | 448 | | | | 353 | |
| | | |
| | | |
| |
| Total current assets | | | 3,099 | | | | 2,628 | |
| Investments and other long-term assets | | | 232 | | | | 259 | |
| Property, plant and equipment (8) | | | 9,375 | | | | 9,218 | |
| Goodwill | | | 204 | | | | 204 | |
| Other intangible assets | | | 51 | | | | 52 | |
| | | |
| | | |
| |
| TOTAL ASSETS | | | 12,961 | | | | 12,361 | |
| | | |
| | | |
| |
| LIABILITIES | | | | | | | | |
| Current liabilities | | | | | | | | |
| Short-term debt | | | 81 | | | | 72 | |
| Accounts payable and accrued liabilities | | | 2,239 | | | | 2,222 | |
| Income taxes payable | | | 738 | | | | 595 | |
| Current portion of long-term debt | | | 743 | | | | 501 | |
| | | |
| | | |
| |
| Total current liabilities | | | 3,801 | | | | 3,390 | |
| Long-term debt (9) | | | 625 | | | | 859 | |
| Other long-term obligations | | | 1,003 | | | | 972 | |
| Future income tax liabilities | | | 1,305 | | | | 1,362 | |
| | | |
| | | |
| |
| TOTAL LIABILITIES | | | 6,734 | | | | 6,583 | |
| SHAREHOLDERS’ EQUITY | | | 6,227 | | | | 5,778 | |
| | | |
| | | |
| |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | | 12,961 | | | | 12,361 | |
| | | |
| | | |
| |
Certain figures for the prior year have been reclassified in the financial statements to conform with the current year’s presentation.
Approved by the directors July 22, 2004
| | | |
T.J Hearn | | P.A. Smith |
| | | |
| Chairman, president and | | Controller and |
| chief executive officer | | senior vice-president, |
| | finance and administration |
IMPERIAL OIL LIMITED
BUSINESS SEGMENTS(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Second quarter | | Resources | | | | | | Products | | Chemicals |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
| | 2004
| | 2003
|
| REVENUES | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues (a) | | | 855 | | | | 792 | | | | 4,265 | | | | 3,433 | | | | 319 | | | | 247 | |
| Intersegment sales (b) | | | 692 | | | | 573 | | | | 407 | | | | 327 | | | | 73 | | | | 62 | |
| Investment and other income | | | 18 | | | | 19 | | | | 7 | | | | 11 | | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL REVENUES | | | 1,565 | | | | 1,384 | | | | 4,679 | | | | 3,771 | | | | 392 | | | | 309 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration (c) | | | 15 | | | | 4 | | | | — | | | | — | | | | — | | | | — | |
| Purchases (b) | | | 490 | | | | 457 | | | | 3,585 | | | | 2,735 | | | | 271 | | | | 227 | |
| Operating (b) | | | 404 | | | | 410 | | | | 286 | | | | 262 | | | | 48 | | | | 38 | |
| Selling and general | | | 6 | | | | 3 | | | | 272 | | | | 261 | | | | 26 | | | | 28 | |
| Federal excise tax | | | — | | | | — | | | | 314 | | | | 312 | | | | — | | | | — | |
| Depreciation and depletion | | | 156 | | | | 122 | | | | 58 | | | | 49 | | | | 3 | | | | 6 | |
| Financing costs | | | — | | | | — | | | | 1 | | | | — | | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL EXPENSES | | | 1,071 | | | | 996 | | | | 4,516 | | | | 3,619 | | | | 348 | | | | 299 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| EARNINGS BEFORE INCOME TAXES | | | 494 | | | | 388 | | | | 163 | | | | 152 | | | | 44 | | | | 10 | |
| INCOME TAXES | | | 173 | | | | 37 | | | | 55 | | | | 50 | | | | 15 | | | | 3 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| NET EARNINGS | | | 321 | | | | 351 | | | | 108 | | | | 102 | | | | 29 | | | | 7 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPORT SALES TO THE UNITED STATES | | | 335 | | | | 305 | | | | 221 | | | | 158 | | | | 185 | | | | 147 | |
| CASH FLOW FROM EARNINGS | | | 439 | | | | 386 | | | | 123 | | | | 222 | | | | 30 | | | | 13 | |
| CAPEX (c) | | | 249 | | | | 232 | | | | 54 | | | | 144 | | | | 2 | | | | 13 | |
| | | | | | | | | | | | | | | | | |
| Second quarter | | Corporate | | Consolidated |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| REVENUES | | | | | | | | | | | | | | | | |
| Operating revenues (a) | | | — | | | | — | | | | 5,439 | | | | 4,472 | |
| Intersegment sales (b) | | | — | | | | — | | | | — | | | | — | |
| Investment and other income | | | 2 | | | | 8 | | | | 27 | | | | 38 | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL REVENUES | | | 2 | | | | 8 | | | | 5,466 | | | | 4,510 | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPENSES | | | | | | | | | | | | | | | | |
| Exploration (c) | | | — | | | | — | | | | 15 | | | | 4 | |
| Purchases (b) | | | — | | | | — | | | | 3,174 | | | | 2,464 | |
| Operating (b) | | | — | | | | — | | | | 738 | | | | 703 | |
| Selling and general | | | — | | | | — | | | | 304 | | | | 292 | |
| Federal excise tax | | | — | | | | — | | | | 314 | | | | 312 | |
| Depreciation and depletion | | | — | | | | — | | | | 217 | | | | 177 | |
| Financing costs | | | 8 | | | | (57 | ) | | | 9 | | | | (57 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL EXPENSES | | | 8 | | | | (57 | ) | | | 4,771 | | | | 3,895 | |
| | | |
| | | |
| | | |
| | | |
| |
| EARNINGS BEFORE INCOME TAXES | | | (6 | ) | | | 65 | | | | 695 | | | | 615 | |
| INCOME TAXES | | | (2 | ) | | | 11 | | | | 241 | | | | 101 | |
| | | |
| | | |
| | | |
| | | |
| |
| NET EARNINGS | | | (4 | ) | | | 54 | | | | 454 | | | | 514 | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPORT SALES TO THE UNITED STATES | | | — | | | | — | | | | 741 | | | | 610 | |
| CASH FLOW FROM EARNINGS | | | (3 | ) | | | (13 | ) | | | 589 | | | | 608 | |
| CAPEX (c) | | | — | | | | — | | | | 305 | | | | 389 | |
| (a) | | Includes crude sales made by Products in order to optimize refining operations. |
| |
| (b) | | Consolidated amounts exclude intersegment transactions, as follows: |
| | | | | | | | | |
| | | 2004
| | 2003
|
| Purchases | | | 1,172 | | | | 955 | |
| Operating expenses | | | — | | | | 7 | |
| | | |
| | | |
| |
| Total intersegment sales | | | 1,172 | | | | 962 | |
| | | |
| | | |
| |
| (c) | | Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant, equipment and intangibles and additions to capital leases. |
IMPERIAL OIL LIMITED
BUSINESS SEGMENTS(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months to June 30 | | Resources | | Products | | Chemicals |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
| | 2004
| | 2003
|
| REVENUES | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating revenues (a) | | | 1,745 | | | | 1,796 | | | | 8,188 | | | | 7,601 | | | | 562 | | | | 527 | |
| Intersegment sales (b) | | | 1,331 | | | | 1,208 | | | | 776 | | | | 705 | | | | 138 | | | | 127 | |
| Investment and other income | | | 18 | | | | 31 | | | | 15 | | | | 19 | | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL REVENUES | | | 3,094 | | | | 3,035 | | | | 8,979 | | | | 8,325 | | | | 700 | | | | 654 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration (c) | | | 31 | | | | 11 | | | | — | | | | — | | | | — | | | | — | |
| Purchases (b) | | | 968 | | | | 1,042 | | | | 6,791 | | | | 6,165 | | | | 493 | | | | 486 | |
| Operating (b) | | | 785 | | | | 833 | | | | 544 | | | | 538 | | | | 92 | | | | 78 | |
| Selling and general | | | 10 | | | | 9 | | | | 541 | | | | 546 | | | | 46 | | | | 58 | |
| Federal excise tax | | | — | | | | — | | | | 618 | | | | 614 | | | | — | | | | — | |
| Depreciation and depletion | | | 309 | | | | 241 | | | | 117 | | | | 103 | | | | 6 | | | | 13 | |
| Financing costs | | | — | | | | 1 | | | | 1 | | | | — | | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL EXPENSES | | | 2,103 | | | | 2,137 | | | | 8,612 | | | | 7,966 | | | | 637 | | | | 635 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| EARNINGS BEFORE INCOME TAXES | | | 991 | | | | 898 | | | | 367 | | | | 359 | | | | 63 | | | | 19 | |
| INCOME TAXES | | | 304 | | | | 208 | | | | 124 | | | | 118 | | | | 22 | | | | 6 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| NET EARNINGS | | | 687 | | | | 690 | | | | 243 | | | | 241 | | | | 41 | | | | 13 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPORT SALES TO THE UNITED STATES | | | 667 | | | | 657 | | | | 475 | | | | 406 | | | | 323 | | | | 295 | |
| CASH FLOW FROM EARNINGS | | | 933 | | | | 811 | | | | 254 | | | | 355 | | | | 43 | | | | 17 | |
| CAPEX (c) | | | 524 | | | | 459 | | | | 118 | | | | 264 | | | | 8 | | | | 21 | |
| TOTAL ASSETS AS AT June 30 (b) | | | 6,666 | | | | 6,172 | | | | 5,721 | | | | 5,455 | | | | 495 | | | | 390 | |
| CAPITAL EMPLOYED AS AT June 30 | | | 4,070 | | | | 3,510 | | | | 2,937 | | | | 2,575 | | | | 256 | | | | 176 | |
| | | | | | | | | | | | | | | | | |
| Six months to June 30 | | Corporate | | Consolidated |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| REVENUES | | | | | | | | | | | | | | | | |
| Operating revenues (a) | | | — | | | | — | | | | 10,495 | | | | 9,924 | |
| Intersegment sales (b) | | | — | | | | — | | | | — | | | | — | |
| Investment and other income | | | 5 | | | | 14 | | | | 38 | | | | 64 | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL REVENUES | | | 5 | | | | 14 | | | | 10,533 | | | | 9,988 | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPENSES | | | | | | | | | | | | | | | | |
| Exploration (c) | | | — | | | | — | | | | 31 | | | | 11 | |
| Purchases (b) | | | — | | | | — | | | | 6,007 | | | | 5,660 | |
| Operating (b) | | | — | | | | — | | | | 1,421 | | | | 1,442 | |
| Selling and general | | | — | | | | — | | | | 597 | | | | 613 | |
| Federal excise tax | | | — | | | | — | | | | 618 | | | | 614 | |
| Depreciation and depletion | | | — | | | | — | | | | 432 | | | | 357 | |
| Financing costs | | | 18 | | | | (115 | ) | | | 19 | | | | (114 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL EXPENSES | | | 18 | | | | (115 | ) | | | 9,125 | | | | 8,583 | |
| | | |
| | | |
| | | |
| | | |
| |
| EARNINGS BEFORE INCOME TAXES | | | (13 | ) | | | 129 | | | | 1,408 | | | | 1,405 | |
| INCOME TAXES | | | (5 | ) | | | 21 | | | | 445 | | | | 353 | |
| | | |
| | | |
| | | |
| | | |
| |
| NET EARNINGS | | | (8 | ) | | | 108 | | | | 963 | | | | 1,052 | |
| | | |
| | | |
| | | |
| | | |
| |
| EXPORT SALES TO THE UNITED STATES | | | — | | | | — | | | | 1,465 | | | | 1,358 | |
| CASH FLOW FROM EARNINGS | | | (7 | ) | | | (15 | ) | | | 1,223 | | | | 1,168 | |
| CAPEX (c) | | | — | | | | — | | | | 650 | | | | 744 | |
| TOTAL ASSETS AS AT June 30 (b) | | | 439 | | | | 964 | | | | 12,961 | | | | 12,664 | |
| CAPITAL EMPLOYED AS AT June 30 | | | 439 | | | | 1,006 | | | | 7,702 | | | | 7,267 | |
| (a) | | Includes crude sales made by Products in order to optimize refining operations. |
| |
| (b) | | Consolidated amounts exclude intersegment transactions, as follows: |
| | | | | | | | | |
| | | 2004
| | 2003
|
| Purchases | | | 2,245 | | | | 2,033 | |
| Operating expenses | | | — | | | | 7 | |
| | | |
| | | |
| |
| Total intersegment sales | | | 2,245 | | | | 2,040 | |
| | | |
| | | |
| |
| Intersegment receivables and payables | | | 360 | | | | 317 | |
| | | |
| | | |
| |
| (c) | | Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant, equipment and intangibles and additions to capital leases. |
IMPERIAL OIL LIMITED
OPERATING STATISTICS
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
| | | 2004
| | 2003
| | 2004
| | 2003
|
GROSS CRUDE OIL AND NGL PRODUCTION
(thousands of barrels a day) | | | | | | | | | | | | | | | | |
| Conventional | | | 44 | | | | 47 | | | | 44 | | | | 47 | |
| Cold Lake | | | 118 | | | | 137 | | | | 119 | | | | 129 | |
| Syncrude | | | 57 | | | | 53 | | | | 60 | | | | 50 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total crude oil production | | | 219 | | | | 237 | | | | 223 | | | | 226 | |
| Natural gas liquids (NGLs) available for sale | | | 32 | | | | 25 | | | | 33 | | | | 26 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total crude oil and NGL production | | | 251 | | | | 262 | | | | 256 | | | | 252 | |
| | | |
| | | |
| | | |
| | | |
| |
NET CRUDE OIL AND NGL PRODUCTION
(thousands of barrels a day) | | | | | | | | | | | | | | | | |
| Conventional | | | 34 | | | | 36 | | | | 34 | | | | 36 | |
| Cold Lake | | | 105 | | | | 122 | | | | 108 | | | | 114 | |
| Syncrude | | | 57 | | | | 52 | | | | 60 | | | | 49 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total crude oil production | | | 196 | | | | 210 | | | | 202 | | | | 199 | |
| Natural gas liquids (NGLs) available for sale | | | 26 | | | | 19 | | | | 27 | | | | 20 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total crude oil and NGL production | | | 222 | | | | 229 | | | | 229 | | | | 219 | |
| | | |
| | | |
| | | |
| | | |
| |
| COLD LAKE BLEND SALES (thousands of barrels a day) | | | 157 | | | | 180 | | | | 160 | | | | 171 | |
| NGL SALES (thousands of barrels a day) | | | 32 | | | | 29 | | | | 40 | | | | 38 | |
NATURAL GAS
(millions of cubic feet a day) | | | | | | | | | | | | | | | | |
| Production (gross) | | | 535 | | | | 489 | | | | 558 | | | | 488 | |
| Production (net) | | | 493 | | | | 426 | | | | 509 | | | | 427 | |
| Production available for sale (gross) | | | 476 | | | | 417 | | | | 491 | | | | 418 | |
| Production available for sale (net) | | | 434 | | | | 354 | | | | 442 | | | | 357 | |
| Sales | | | 511 | | | | 444 | | | | 511 | | | | 442 | |
| AVERAGE PRICES (dollars) | | | | | | | | | | | | | | | | |
| Conventional crude oil sales (a barrel) | | | 47.45 | | | | 38.53 | | | | 45.08 | | | | 43.20 | |
| Par crude oil price at Edmonton (a barrel) | | | 51.35 | | | | 42.39 | | | | 49.04 | | | | 47.04 | |
| Heavy crude oil at Hardisty (Bow River, a barrel) | | | 37.66 | | | | 31.80 | | | | 36.58 | | | | 35.96 | |
| NGL sales (a barrel) | | | 28.79 | | | | 29.68 | | | | 30.64 | | | | 35.51 | |
| Natural gas sales (a thousand cubic feet) | | | 6.87 | | | | 6.80 | | | | 6.72 | | | | 7.45 | |
PETROLEUM PRODUCTS SALES
(millions of litres a day) | | | | | | | | | | | | | | | | |
| Gasolines | | | 33.0 | | | | 33.2 | | | | 32.5 | | | | 32.6 | |
| Heating, diesel and jet fuels | | | 24.6 | | | | 23.2 | | | | 27.1 | | | | 26.8 | |
| Heavy fuel oils | | | 6.2 | | | | 5.1 | | | | 5.7 | | | | 4.8 | |
| Lube oils and other products | | | 7.2 | | | | 5.7 | | | | 5.9 | | | | 5.2 | |
| | | |
| | | |
| | | |
| | | |
| |
| Net petroleum products sales | | | 71.0 | | | | 67.2 | | | | 71.2 | | | | 69.4 | |
| Sales under purchase and sale agreements | | | 12.7 | | | | 14.8 | | | | 13.9 | | | | 14.8 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total petroleum products sales | | | 83.7 | | | | 82.0 | | | | 85.1 | | | | 84.2 | |
| | | |
| | | |
| | | |
| | | |
| |
| TOTAL REFINERY THROUGHPUT (millions of litres a day) | | | 70.2 | | | | 72.9 | | | | 73.0 | | | | 71.9 | |
| REFINERY CAPACITY UTILIZATION (percent) | | | 88 | | | | 91 | | | | 92 | | | | 90 | |
| PETROCHEMICAL SALES (thousands of tonnes a day) | | | 3.6 | | | | 3.1 | | | | 3.3 | | | | 3.4 | |
IMPERIAL OIL LIMITED
SHARE OWNERSHIP, TRADING AND PERFORMANCE
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
| | | 2004
| | 2003
| | 2004
| | 2003
|
| RETURN ON AVERAGE CAPITAL EMPLOYED (a) (rolling 4 quarters, percent) | | | | | | | | | | | 21.7 | | | | 27.2 | |
| RETURN ON AVERAGE SHAREHOLDERS’ EQUITY (rolling 4 quarters, percent) | | | | | | | | | | | 26.6 | | | | 34.7 | |
| INTEREST COVERAGE RATIO - EARNINGS BASIS (rolling 4 quarters, times covered) | | | | | | | | | | | 61.6 | | | | 72.7 | |
| SHARE OWNERSHIP | | | | | | | | | | | | | | | | |
| Outstanding shares (thousands) | | | | | | | | | | | | | | | | |
| Monthly weighted average | | | 358,772 | | | | 374,194 | | | | 360,236 | | | | 376,022 | |
| At June 30 | | | | | | | | | | | 356,802 | | | | 372,067 | |
| Number of shareholders | | | | | | | | | | | | | | | | |
| At June 30 | | | | | | | | | | | 15,256 | | | | 15,738 | |
| SHARE PRICES | | | | | | | | | | | | | | | | |
| Toronto Stock Exchange (Canadian dollars) | | | | | | | | | | | | | | | | |
| High | | | 64.25 | | | | 47.40 | | | | 64.45 | | | | 47.80 | |
| Low | | | 58.40 | | | | 43.20 | | | | 56.42 | | | | 43.20 | |
| Close at June 30 | | | | | | | | | | | 62.40 | | | | 47.10 | |
| American Stock Exchange (U.S. dollars) | | | | | | | | | | | | | | | | |
| High | | | 47.13 | | | | 34.99 | | | | 48.70 | | | | 34.99 | |
| Low | | | 43.17 | | | | 29.94 | | | | 42.34 | | | | 28.25 | |
| Close at June 30 | | | | | | | | | | | 46.82 | | | | 34.92 | |
(a) Return on capital employed is the rolling four quarters’ net earnings excluding the after-tax cost of financing divided by the average rolling four quarters’ capital employed.
IMPERIAL OIL LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Accounting principles
These consolidated financial statements follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual consolidated financial statements.
2. Reporting of fuel consumed in operations
Beginning in 2004, fuel consumed in operations, previously included in purchases of crude oil and products, is reclassified as operating expenses in the consolidated statement of earnings. Prior period amounts have been reclassified for comparative purposes. This reclassification has no impact on total expenses and net earnings or on the cash flow profile of the company.
3. Divestments
Investment and other income includes gains and losses on asset sales as follows:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| Proceeds from asset sales | | | 53 | | | | 17 | | | | 66 | | | | 22 | |
| Book value of assets sold (a) | | | 35 | | | | 18 | | | | 47 | | | | 23 | |
| | | |
| | | |
| | | |
| | | |
| |
| Gain/(loss) on asset sales, before tax (b) | | | 18 | | | | (1 | ) | | | 19 | | | | (1 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| Gain/(loss) on asset sales, after tax (b) | | | 13 | | | | (1 | ) | | | 14 | | | | (1 | ) |
| | | |
| | | |
| | | |
| | | |
| |
(a) Assets sold did not include cash.
(b) Second quarter 2004 included a gain of $16 million ($12 million after income taxes) from the sale of the company’s Mid Alberta Pipeline.
4. Employee retirement benefits
The components of net benefit cost included in total expenses in the consolidated statement of earnings are as follows:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| Pension benefits: | | | | | | | | | | | | | | | | |
| Current service cost | | | 19 | | | | 18 | | | | 39 | | | | 36 | |
| Interest cost | | | 59 | | | | 55 | | | | 118 | | | | 110 | |
| Expected return on plan assets | | | (56 | ) | | | (45 | ) | | | (112 | ) | | | (90 | ) |
| Amortization of prior service cost | | | 7 | | | | 6 | | | | 14 | | | | 13 | |
| Recognized actuarial loss | | | 17 | | | | 17 | | | | 34 | | | | 34 | |
| | | |
| | | |
| | | |
| | | |
| |
| Net benefit cost | | | 46 | | | | 51 | | | | 93 | | | | 103 | |
| | | |
| | | |
| | | |
| | | |
| |
| Other post-retirement benefits: | | | | | | | | | | | | | | | | |
| Current service cost | | | 1 | | | | 2 | | | | 3 | | | | 3 | |
| Interest cost | | | 6 | | | | 5 | | | | 12 | | | | 11 | |
| Recognized actuarial loss | | | 1 | | | | — | | | | 2 | | | | 1 | |
| | | |
| | | |
| | | |
| | | |
| |
| Net benefit cost | | | 8 | | | | 7 | | | | 17 | | | | 15 | |
| | | |
| | | |
| | | |
| | | |
| |
IMPERIAL OIL LIMITED
| 5. | | Incentive compensation programs |
| |
| | | The company accounts for its incentive compensation programs, except for the incentive stock option plan issued prior to January 1, 2003, by using the fair-value-based method. Under this method, compensation expense related to the units of these programs is recorded in the consolidated statement of earnings over the vesting period. The company accounts for its incentive stock option plan by using the intrinsic-value-based method and does not recognize compensation expense on the issuance of stock options because the exercise price is equal to the market value at the date of grant. If the fair-value-based method of accounting had been adopted to account for the incentive stock option plan, the impact on net earnings and earnings per share would have been negligible. |
| |
| | | The company purchased shares on the market to fully offset the dilutive effects from the exercise of incentive stock options. The company does not plan to issue stock options in the future. |
| |
| 6. | | Financing costs |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
millions of dollars
| | 2004
| | 2003
| | 2004
| | 2003
|
| Debt related interest | | | 7 | | | | 8 | | | | 17 | | | | 16 | |
| Other interest | | | 2 | | | | 1 | | | | 2 | | | | 2 | |
| | | |
| | | |
| | | |
| | | |
| |
| Total interest expense | | | 9 | | | | 9 | | | | 19 | | | | 18 | |
| Foreign exchange expense (gain) on long-term debt | | | — | | | | (66 | ) | | | — | | | | (132 | ) |
| | | |
| | | |
| | | |
| | | |
| |
| Total financing costs | | | 9 | | | | (57 | ) | | | 19 | | | | (114 | ) |
| | | |
| | | |
| | | |
| | | |
| |
IMPERIAL OIL LIMITED
7. Common shares
| | | | | | | | | |
| | | As at | | As at |
| | | June 30 | | Dec. 31 |
thousands of shares
| | 2004
| | 2003
|
| Authorized | | | 450,000 | | | | 450,000 | |
| Common shares outstanding | | | 356,802 | | | | 362,653 | |
In 1995 through 2003, the company purchased shares under nine 12-month normal course share purchase programs, as well as an auction tender. On June 23, 2004, another 12-month normal course program was implemented with an allowable purchase up to 17.9 million shares (five percent of the total on June 21, 2004), less any shares purchased by the employee savings plan and company pension fund. The results of these activities are as shown below:
| | | | | | | | | |
| | | millions of |
Year
| | Shares
| | Dollars
|
| 1995 - 2002 | | | 202.7 | | | | 5,169 | |
| 2003 - Second quarter | | | 3.8 | | | | 171 | |
| Full year | | | 16.3 | | | | 799 | |
| 2004 - Second quarter | | | 3.5 | | | | 216 | |
| Full year | | | 6.0 | | | | 363 | |
| Cumulative purchases to date | | | 225.0 | | | | 6,331 | |
Exxon Mobil Corporation’s participation in the above maintained its ownership interest in Imperial at 69.6 percent.
The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of retained earnings.
The following table provides the calculation of basic and diluted earnings per share:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Six months |
| | | Second quarter | | to June 30 |
| | | 2004
| | 2003
| | 2004
| | 2003
|
| Net earnings (millions of dollars) | | | 454 | | | | 514 | | | | 963 | | | | 1,052 | |
| (thousands of shares) | | | | | | | | | | | | | | | | |
| Average number of common shares outstanding, weighted monthly | | | 358,772 | | | | 374,194 | | | | 360,236 | | | | 376,022 | |
| Plus: average number of shares issued on assumed exercise of stock options | | | 718 | | | | — | | | | 705 | | | | — | |
| | | |
| | | |
| | | |
| | | |
| |
| Weighted average number of diluted common shares | | | 359,490 | | | | 374,194 | | | | 360,941 | | | | 376,022 | |
| | | |
| | | |
| | | |
| | | |
| |
| Earnings per share - basic (dollars) | | | 1.26 | | | | 1.38 | | | | 2.67 | | | | 2.80 | |
| Earnings per share - diluted (dollars) | | | 1.26 | | | | 1.38 | | | | 2.66 | | | | 2.80 | |
IMPERIAL OIL LIMITED
8. Investment in oil, gas and mineral leases
The company’s net investment in oil, gas and mineral leases reported in property, plant and equipment as of June 30, 2004 was $819 million, and as of December 31, 2003 was $935 million.
9. Long-term debt
| | | | | | | | | | | | | |
| | | | | | | As at | | As at |
| | | | | Interest | | June 30 | | Dec. 31 |
Issued
| | Maturity date
| | rate
| | 2004
| | 2003
|
| 2003 | | $250 million due May 26, 2005 and
| | | | | | | | | | |
| | | $250 million due August 26, 2005 (a) | | Variable | | | 250 | | | | 500 | |
| 2003 | | January 19, 2006 | | Variable | | | 318 | | | | 318 | |
| | | | | | | |
| | | |
| |
| Long-term debt | | | | | | | 568 | | | | 818 | |
| Capital leases | | | | | | | 57 | | | | 41 | |
| | | | | | | |
| | | |
| |
| Total long-term debt | | | | | | | 625 | | | | 859 | |
| | | | | | | |
| | | |
| |
(a) The portion of variable-rate loan from Exxon Overseas Corporation of $250 million due on May 26, 2005 has been reclassified to the current portion of long-term debt in the balance sheet.
