EARNINGS / Imperial Oil Q3 results, II
<< IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF EARNINGS
(unaudited) Nine months
Third quarter to September 30
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millions of dollars 1998 1997 1998 1997
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REVENUES
Operating revenues 2,290 2,668 6,789 7,936
Investment and other income (1) 54 61 112 132
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TOTAL REVENUES 2,344 2,729 6,901 8,068
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EXPENSES
Exploration 5 11 28 32
Purchases of crude oil and products 931 1,166 2,837 3,518
Operating 637 683 1,898 1,994
Federal excise tax 324 313 896 864
Depreciation and depletion 163 163 482 519
Financing costs (3) 49 42 132 120
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TOTAL EXPENSES 2,109 2,378 6,273 7,047
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EARNINGS BEFORE INCOME TAXES 235 351 628 1,021
Income taxes on earnings 98 150 269 446
Income tax refund (2) (59) - (59) -
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TOTAL INCOME TAXES 39 150 210 446
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NET EARNINGS 196 201 418 575
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PER-SHARE INFORMATION - dollars (7)
Net earnings 0.45 0.44 0.95 1.23
Dividends 0.185 0.183 0.553 0.550
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Approved by the directors October 21, 1998
Chairman, president and Senior vice-president,
chief executive officer finance and administration
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IMPERIAL OIL LIMITED
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CONSOLIDATED STATEMENT OF CASH FLOWS Nine months
(unaudited) Third quarter to September 30
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inflow/(outflow)
millions of dollars 1998 1997 1998 1997
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OPERATING ACTIVITIES
Net earnings 196 201 418 575
Exploration expenses (a) 5 11 28 32
Depreciation and depletion 163 163 482 519
After tax (gain)/loss from asset sales (23) (28) (41) (52)
Deferred income tax and other (22) (4) 18 39
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Total cash flow from earnings 319 343 905 1,113
Accounts receivable - 47 198 173
Inventories and prepaids (72) (55) (127) (181)
Income taxes payable (b) 96 54 (118) (319)
Accounts payable and other 52 98 (169) (5)
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Change in operating assets
and liabilities 76 144 (216) (332)
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CASH FROM OPERATING ACTIVITIES 395 487 689 781
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INVESTING ACTIVITIES
Capital and exploration expenditures (153) (164) (394) (428)
Proceeds from asset sales (1) 37 64 103 204
Proceeds from marketable securities 58 21 79 42
Additions to marketable securities (59) (21) (87) (43)
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CASH FROM (USED IN) INVESTING ACTIVITIES (117) (100) (299) (225)
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CASH FLOW BEFORE FINANCING ACTIVITIES 278 387 390 556
FINANCING ACTIVITIES
Repayment of long-term debt - - - (91)
Common shares purchased (4) (64) (150) (343) (520)
Dividends paid (81) (85) (245) (260)
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CASH FROM (USED IN) FINANCING ACTIVITIES (145) (235) (588) (871)
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INCREASE (DECREASE) IN CASH 133 152 (198) (315)
CASH AT BEGINNING OF PERIOD 417 94 748 561
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CASH AT END OF PERIOD (c) 550 246 550 246
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>> (a) Exploration expenses, deducted in arriving at net earnings, are
reclassified and included in investing activities in the consolidated
statement of cash flows.
(b) Includes outflows of $223 million in 1997 for taxes due on the
interest portion of a 1996 income tax refund.
(c) At September 30, 1998, cash was composed of cash in bank of
$28 million (1997 -- outstanding cheques, less cash in bank - negative
$78 million) and cash equivalents of $522 million (1997 -- $324
million); marketable securities were $30 million (1997 -- $22 million).
<< IMPERIAL OIL LIMITED
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CONSOLIDATED BALANCE SHEET As at As at
(unaudited) Sept. 30 Dec. 31
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millions of dollars 1998 1997
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ASSETS
Cash and marketable securities at cost 580 770
Accounts receivable 892 1,090
Inventories of crude oil and products 530 466
Materials, supplies and prepaid expenses 164 102
Investments and other long-term assets 173 203
Property, plant and equipment 7,031 7,172
Goodwill 247 257
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TOTAL ASSETS (a) 9,617 10,060
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LIABILITIES
Current payables and accrued liabilities 1,835 2,158
Long-term debt (5) 1,540 1,506
Other long-term obligations 1,041 1,013
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TOTAL LIABILITIES 4,416 4,677
DEFERRED INCOME TAXES 986 1,000
SHAREHOLDERS' EQUITY 4,215 4,383
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TOTAL LIABILITIES, DEFERRED INCOME TAXES AND
SHAREHOLDERS' EQUITY 9,617 10,060
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(a) TOTAL ASSETS BY SEGMENT
Natural resources 4,578 4,635
Petroleum products 3,870 4,010
Chemicals 390 425
Corporate and other 956 1,162
Intersegment receivables eliminated
in consolidation (177) (172)
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Total Assets 9,617 10,060
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IMPERIAL OIL LIMITED
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BUSINESS SEGMENTS Nine months
(unaudited) Third quarter to September 30
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millions of dollars 1998 1997 1998 1997
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REVENUES Natural resources
External 273 322 723 956
Intersegment 247 332 723 1,044
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Total 520 654 1,446 2,000
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Petroleum products
External 1,835 2,153 5,468 6,355
Intersegment 30 57 112 171
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Total 1,865 2,210 5,580 6,526
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Chemicals
External 213 245 654 727
Intersegment 1 5 19 32
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Total 214 250 673 759
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Corporate and other
External 23 9 56 30
Intersegment 2 3 6 7
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Total 25 12 62 37
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Total External Revenues (a) 2,344 2,729 6,901 8,068
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EARNINGS
Natural resources 55 98 66 292
Petroleum products 56 94 250 250
Chemicals 36 23 77 73
Corporate and other 49 (14) 25 (40)
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Net earnings 196 201 418 575
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CASH FLOW FROM EARNINGS
Natural resources 135 175 315 572
Petroleum products 97 147 437 454
Chemicals 23 30 77 92
Corporate and other 64 (9) 76 (5)
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Total cash flow from earnings 319 343 905 1,113
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CAPITAL AND EXPLORATION EXPENDITURES
Natural resources 99 105 282 303
Petroleum products 45 48 90 96
Chemicals 5 8 12 21
Corporate and other 4 3 10 8
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Total capital and exploration
expenditures 153 164 394 428
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(a) Includes export sales to
the United States 197 280 625 788
IMPERIAL OIL LIMITED
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OPERATING STATISTICS Nine months
(unaudited) Third quarter to September 30
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1998 1997 1998 1997
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GROSS CRUDE OIL PRODUCTION (thousands of barrels a day)
Conventional 70 74 70 85
Cold Lake 153 126 138 113
Syncrude 51 58 51 50
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Total crude oil production 274 258 259 248
Natural gas liquids (NGL's)
available for sale 19 19 19 22
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Total crude oil and
NGL production 293 277 278 270
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NATURAL GAS (millions of cubic feet a day)
Production (gross) 426 426 436 466
Production available
for sale (gross) 287 257 285 292
Sales 350 344 344 365
AVERAGE PRICES (dollars) Conventional crude oil sales
(a barrel) 17.49 23.53 17.77 25.33
Par crude oil price
at Edmonton (a barrel) 20.36 26.73 20.88 28.09
Heavy crude oil at Hardisty
(Bow River, a barrel) 16.30 20.77 14.46 21.76
Natural gas sales
(a thousand cubic feet) 1.86 1.79 1.86 2.08
PETROLEUM PRODUCTS SALES (millions of litres a day)
Gasolines 33.0 33.0 30.9 30.8
Heating, diesel and jet fuels 23.7 25.5 24.3 25.7
Heavy fuel oils 7.4 5.2 6.2 5.0
Liquefied petroleum gas, lube
oils and other products 14.2 13.7 12.2 11.8
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Total petroleum products 78.3 77.4 73.6 73.3
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Total refinery throughput
(millions of litres a day) 73.9 73.6 71.3 71.4
Refinery capacity utilization (percent) 95 95 92 92
PETROCHEMICAL SALES
(thousands of tonnes a day) 3.4 3.4 3.6 3.5
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IMPERIAL OIL LIMITED
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SHARE OWNERSHIP, TRADING AND PERFORMANCE Nine months
(unaudited) Third quarter to September 30
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1998 1997 1998 1997
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RETURN ON AVERAGE CAPITAL EMPLOYED (a)
(rolling 4 quarters, percent) 13.2 14.1
RETURN ON AVERAGE SHAREHOLDER EQUITY
(rolling 4 quarters, percent) 16.2 17.3
SHARE OWNERSHIP Outstanding shares (thousands)
Monthly weighted average 436,412 457,022 440,601 465,837
At September 30 435,075 453,965
Number of shareholders
At September 30 18,380 18,648
SHARE PRICES (dollars)
High 27.40 27.10 30.50 27.10
Low 20.80 22.58 20.80 19.87
Close at September 30 23.30 26.53
>> (a) Capital employed is defined as short and long-term debt and
shareholders' equity. IMPERIAL OIL LIMITED
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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1. Investment and other income
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Third quarter 1998 gains on asset sales were $31 million ($23 million
after tax) and include a gain of $30 million ($22 million after tax) on
the sale of the Chemicals Paramins business to Exxon Corporation. A
valuation by an independent third party confirmed that the selling price
represented a fair market value for the Paramins business. Third
quarter 1997 gains were $50 million ($28 million after tax). For the
nine-month period in 1998, gains were $56 million ($41 million after
tax). During the same period in 1997, gains of $97 million ($52 million
after tax) were recorded on the sale of assets. 2. Income Tax Refund
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In the third quarter 1998, final settlement was reached with Revenue
Canada for a $140 million tax refund including interest, relating to a
number of outstanding taxation issues pertaining to the natural
resources business for the period 1974 to 1990. A portion of the refund
was recognized in earnings in prior years and $59 million was included
in third quarter 1998 earnings. Final settlements for related
provincial tax refunds remain outstanding. <<
3. Financing Costs Nine months
Third quarter to September 30
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(millions of dollars) 1998 1997 1998 1997
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Debt related interest 33 30 96 90
Other interest 1 6 2 7
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Total interest expense 34 36 98 97
Foreign exchange expense on
long-term debt 15 6 34 23
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Total financing costs 49 42 132 120
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>> 4. Share Purchase Programs
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In 1995, 1996 and 1997 the company purchased shares under three
12-month normal course share-purchase programs. Also in 1996, the
company undertook an auction tender in which 72 million shares were
purchased at a total cost of $1,440 million. On June 19, 1998 another
12-month normal course program was implemented with an allowable
purchase of 21.9 million shares (five percent of the total at that
date), less any shares purchased by the employee savings plan and
company pension funds. The results of these activities are as shown
below. <<
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millions of
Year Shares (a) Dollars
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1995 and 1996 104.6 2,008
1997 - Third quarter 6.0 150
Full Year 28.9 694
1998 - Third quarter 2.6 64
Year to Date 12.9 343
Cumulative purchases to date 146.4 3,045
>>
Exxon Corporation's participation in the above maintained its ownership
interest in Imperial at 69.6 percent.
The excess of the purchase cost over the stated value of shares
purchased has been recorded as a distribution of retained earnings.
(a) Restated to reflect a three-for-one share split - see note 7. <<
5. Long-term Debt As at As at
Sept. 30 Dec. 31
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(millions of dollars) 1998 1997
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Long-term debt (at period-end exchange rates) 1,780 1,677
Foreign-exchange loss on U.S.$ debt (a) (240) (171)
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Long-term debt 1,540 1,506
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>> (a) The foreign-exchange loss on U.S.-dollar debt is being amortized
to earnings over the remaining life of the debt. 6. Year 2000 Uncertainty
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Date-sensitive computer systems, applications and field equipment
that use two digits rather than four to identify a year may recognize
the year 2000 as 1900 or some other date. Similar problems may arise
when certain dates in 1999 are used to represent something other than a
date. When information using such dates is processed before, on, or
after January 1, 2000, the impact on operations and financial reporting,
if not addressed, may range from minor errors to serious disruptions
that could affect the company's ability to conduct normal business
operations. The company believes that its Year 2000 compliance
activities are comprehensive; however, the company cannot be certain
that all aspects of the issue, including those related to the efforts of
customers, suppliers or other third parties, will be fully resolved.
7. Share Split
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Prior period share prices and number of shares purchased and
outstanding, as well as per-share information, have been changed to
reflect a three-for-one split of the company's shares during the second
quarter of 1998.
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For further information: Investor Relations, Jean Cote, (416) 968-4262;
Media Relations, Richard O'Farrell, (416) 968-4875
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