What changed in this filing

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Item 1. Financial Statements

2020-08-05 compared with 2020-05-06 · 124 added, 64 removed, 298 unchanged (39% of the section changed)

2 unchanged sentences

GAAP, unaudited)

Second Quarter

millions of Canadian dollars

6 unchanged sentences

Federal excise tax and fuel charge

Depreciation and depletion

Depreciation and depletion (note 13)

pension and postretirement benefit

6 unchanged sentences

Net income (loss) per common share - diluted (note 11)

Amounts from related parties included in revenues.

Amounts to related parties included in purchases of crude oil and products.

Amounts to related parties included in production and manufacturing, and selling and general expenses.

Amounts to related parties included in financing, (note 7).

(a) Amounts from related parties included in revenues.

(b) Amounts to related parties included in purchases of crude oil and products.

(d) Amounts to related parties included in financing, (note 7).

The information in the notes to consolidated financial statements is an integral part of these statements.

2 unchanged sentences

GAAP, unaudited)

Second Quarter

millions of Canadian dollars

33 unchanged sentences

Earnings reinvested

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) (note 12)

Total shareholders’ equity

9 unchanged sentences

GAAP, unaudited)

Second Quarter

millions of Canadian dollars

10 unchanged sentences

At end of period

Accumulated other comprehensive income (loss) (note 12)

Accumulated other comprehensive income (loss)

At beginning of period

7 unchanged sentences

Inflow (outflow)

Second Quarter

millions of Canadian dollars

30 unchanged sentences

(b) Included contributions to registered pension plans.

taxes (paid) refunded.

(paid), net of capitalization.

Income taxes (paid) refunded.

Interest (paid), net of capitalization.

The information in the notes to consolidated financial statements is an integral part of these statements.

7 unchanged sentences

The company’s exploration and production activities are accounted for under the “successful efforts” method.

The results for the three months ended March 31, 2020, are not necessarily indicative of the operations to be expected for the full year.

The results for the six months ended June 30, 2020, are not necessarily indicative of the operations to be expected for the full year.

All amounts are in Canadian dollars unless otherwise indicated.

4 unchanged sentences

The valuation allowance considers the risk of loss, even if remote and considers past events, current conditions and expectations of the future.

The standard did not have a material impact on the

company’s financial statements.

The standard did not have a material impact on the company’s financial statements.

IMPERIAL OIL LIMITED

Business segments

Three Months to March 31

Second Quarter

millions of Canadian dollars

6 unchanged sentences

Federal excise tax and fuel charge

Depreciation and depletion

Depreciation and depletion (note 13)

pension and postretirement benefit

2 unchanged sentences

Income (loss) before income taxes

Net income (loss)

Cash flows from (used in) operating activities

Capital and exploration expenditures

Second Quarter

Corporate and other

millions of Canadian dollars

Revenues and other income

Intersegment sales

Investment and other income (note 4)

Purchases of crude oil and products (note 13)

Production and manufacturing

Selling and general

Federal excise tax and fuel charge

Depreciation and depletion (note 13)

pension and postretirement

Financing (note 7)

Total expenses

Income (loss) before income taxes

Net income (loss)

Cash flows from (used in) operating activities

Capital and exploration expenditures

IMPERIAL OIL LIMITED

Included export sales to the United States of $ 739 million (2019 - $ 2,152 million).

Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.

Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to finance leases, additional investments and acquisitions.

CAPEX excludes the purchase of carbon emission credits.

IMPERIAL OIL LIMITED

Six Months to June 30

millions of Canadian dollars

Revenues and other income

Intersegment sales

Investment and other income (note 4)

Purchases of crude oil and products (note 13)

Production and manufacturing

Selling and general

Federal excise tax and fuel charge

Depreciation and depletion (note 13)

pension and postretirement

Financing (note 7)

Total expenses

Income (loss) before income taxes

Income tax expense (benefit)

2 unchanged sentences

Capital and exploration expenditures

Total assets as at March 31

Three Months to March 31

Total assets as at June 30 (note 13)

Six Months to June 30

Corporate and other

2 unchanged sentences

Intersegment sales

Investment and other income

Investment and other income (note 4)

Purchases of crude oil and products (note 13)

2 unchanged sentences

Federal excise tax and fuel charge

Depreciation and depletion

Depreciation and depletion (note 13)

pension and postretirement benefit

6 unchanged sentences

Capital and exploration expenditures

Total assets as at March 31

Total assets as at June 30

IMPERIAL OIL LIMITED

3 unchanged sentences

CAPEX excludes the purchase of carbon emission credits.

In 2019, the company removed $ 570 million from Total assets and corresponding liabilities in the Downstream segment associated with the Government of Ontario’s revocation of its cap and trade legislation.

IMPERIAL OIL LIMITED

1 unchanged sentence

Investment and other income included gains and losses on asset sales as follows:

Second Quarter

millions of Canadian dollars

19 unchanged sentences

The company manages receivable portfolios using past due balances as a key credit quality indicator.

The company recognizes a credit allowance for

-sheet credit exposures as a liability on the balance sheet, separate from the allowance for credit losses related to recognized financial assets.

The company recognizes a credit allowance for off-balance-sheet

credit exposures as a liability on the balance sheet, separate from the allowance for credit losses related to recognized financial assets.

These exposures could include unfunded loans to equity companies and financial guarantees that cannot be cancelled unilaterally by the company.

During the first quarter of 2020, the

pandemic spread rapidly through most areas of the world resulting in economic uncertainty, global financial market volatility, and negative effects in the credit markets.

During the first half of 2020, the COVID-19 pandemic spread rapidly through most areas of the world resulting in economic uncertainty, global financial market volatility, and negative effects in the credit markets.

The company has considered these effects, along with the significantly lower balances of trade receivables at the end of the quarter, in its estimate of credit losses and concluded no material adjustment to credit allowances in the quarter was required.

As of March 31, 2020, the company’s evaluation of financial assets under

Financial Instruments – Credit Losses (Topic 326)

, as amended included $

1,158 million of accounts receivable, net of allowances of $ 3 million, investments and long-term receivables of $ 319 million, and off-balance -sheet

credit exposure of $ 29 million.

The company has determined that, at this time, no credit allowance is required for investments and long-term receivables, and for off-balance

-sheet credit exposures.

At June 30, 2020, the company’s evaluation of financial assets under Financial Instruments – Credit Losses (Topic 326)

, as amended included $ 1,420 million of accounts receivable, net of allowances of $ 4 million, and investments and long-term receivables of $ 326 million.

The company has determined that, at this time, no credit allowance is required for investments and long-term receivables.

There is currently no off-balance-sheet

credit exposure.

IMPERIAL OIL LIMITED

1 unchanged sentence

The components of net benefit cost were as follows:

Second Quarter

millions of Canadian dollars

12 unchanged sentences

Financing costs

Second Quarter

millions of Canadian dollars

4 unchanged sentences

Total financing

During the second

quarter of 2020, in addition to existing credit facilities of $ 500 million, the company entered into a $ 500 million committed short-term line of credit to May 2021, and a $ 300 million committed short-term line of credit to June 2021.

The company has not drawn on any of its credit facilities.

Long-term debt

9 unchanged sentences

Share-based incentive compensation liabilities

Operating lease liability

Operating lease liability (c)

Other obligations

8 unchanged sentences

There are no material differences between the fair value of the company’s financial instruments and the recorded carrying value.

At March 31, 2020 and December 31, 2019 the fair value of long-term debt ($ 4,447 million, excluding finance lease obligations) was primarily a level 2 measurement.

At June 30, 2020 and December 31, 2019 the fair value of long-term debt ($ 4,447 million, excluding finance lease obligations) was primarily a level 2 measurement.

Derivative instruments

4 unchanged sentences

The company maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity.

The carrying values of derivative instruments on the Consolidated balance sheet were gross assets of $ 46 million, gross liabilities of $ 12 million and collateral payable of $ 28 million.

At June 30, 2020, the carrying values of derivative instruments on the Consolidated balance sheet were gross assets of $ 27 million, gross liabilities of $ 74 million and collateral receivable of $ 70 million, with the net effects reflected in “Accounts receivable, less estimated doubtful accounts” on the Consolidated balance sheet.

At December 31, 2019 the carrying values of derivative instruments on the Consolidated balance sheet were gross assets of $ 0 million, gross liabilities of $ 2 million and collateral receivable of $ 6 million.

At March 31, 2020, the net notion a

l forward long / (short) position of derivative instruments was ( 450,000 ) barrels for crude and ( 60,000 ) barrels for products.

At June 30, 2020, the net notional forward long / (short) position of derivative instruments was ( 1,920,000 ) barrels for crude and ( 240,000 ) barrels for products.

At December 31, 2019, the net notional forward long / (short) position of derivative instruments was ( 590,000 ) barrels for crude and 0 barrels for products.

Realized and unrealized gain or (loss) on derivative instruments recognized in the Consolidated statement of income is included in the following lines on a before-tax

Realized and unrealized gain or (loss) on derivative instruments recognized on the Consolidated statement of income is included in the following lines on a before-tax

Second Quarter

millions of Canadian dollars

4 unchanged sentences

Common shares outstanding

The current 12 -month normal course issuer bid program came into effect June 27, 2019, under which Imperial will continue its existing share purchase program.

The program enables the company to purchase up to a maximum of 38,211,086 common shares ( 5 percent of the total shares on June 13, 2019) which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid.

The 12 -month

normal course issuer bid program that was in place during the second quarter of 2020, came into effect on June 27, 2019.

The program enabled the company to purchase up to a maximum of 38,211,086 common shares ( 5 percent of the total shares on June 13, 2019), which included shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid.

Exxon Mobil Corporation participated to maintain its ownership percentage at approximately 69.6 percent.

The program ended on June 26, 2020, and purchases under this program were suspended on April 1, 2020.

Upon expiration, the company had purchased 28,697,514 shares under the program.

The current 12-month

limited normal course issuer bid program came into effect on June 29, 2020 and is used primarily to eliminate dilution from shares issued in conjunction with Imperial’s restricted stock unit plan.

The program enables the company to purchase up to a maximum of 50,000 common shares, which includes shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course issuer bid.

As in the past, Exxon Mobil Corporation has advised the company that it intends to participate to maintain its ownership percentage at approximately 69.6 percent.

Effective April 1, 2020, Imperial suspended its share purchase program.

The company purchased 28,697,514 common shares out of the 38,211,086 common shares allowable under the existing normal course issuer bid set to expire on June 26, 2020, including shares purchased from Exxon Mobil Corporation.

Purchase plans may be modified at any time without prior notice.

The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution of earnings reinvested.

6 unchanged sentences

Purchases at stated value

Balance as at March 31, 2020

Balance as at June 30, 2020

The following table provides the calculation of basic and diluted earnings per common share and the dividends declared by the company on its outstanding common shares:

Second Quarter

Net income (loss) per common share - basic

Net income (loss) (millions of Canadian dollars)

Weighted average number of common shares outstanding (millions of shares)

Net income (loss) per common share (dollars)

Net income (loss)

(millions of Canadian dollars)

Weighted average number of common shares outstanding

(millions of shares)

Net income (loss) per common share

Net income (loss) per common share - diluted

Net income (loss) (millions of Canadian dollars)

Weighted average number of common shares outstanding (millions of shares)

Effect of employee share-based awards (millions of shares)

Weighted average number of common shares outstanding, assuming dilution (millions of shares)

Net income (loss) per common share (dollars)

Net income (loss)

(millions of Canadian dollars)

Weighted average number of common shares outstanding

(millions of shares)

Effect of employee share-based awards

(millions of shares) (a)

Weighted average number of common shares outstanding, assuming dilution

(millions of shares)

Net income (loss) per common share

Dividends per common share - declared

For Second Quarter 2020 and Six Months to June 30, 2020, the Net income (loss) per common share – diluted excludes the effect of 2.0 million employee share-based awards.

Share-based awards have the potential to dilute basic earnings per share in the future.

IMPERIAL OIL LIMITED

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive income

Balance at March 31

Amounts reclassified out of accumulated other comprehensive income (loss) - before tax income (expense):

Balance at June 30

Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax

income (expense):

Second Quarter

millions of Canadian dollars

Amortization of postretirement benefits liability adjustment included in net periodic benefit cost (a)

This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (note 6).

(a) This accumulated other comprehensive income component is included in the computation of net periodic benefit cost, (note 6).

Income tax expense (credit) for components of other comprehensive income (loss):

Second Quarter

millions of Canadian dollars

7 unchanged sentences

charge of $ 281 million after-tax

(Upstream - $ 229 million;

Downstream - $ 52 million) was recorded associated with the carrying value of crude oil inventory exceeding the current market value.

The adjustment will be re-evaluated

at the end of each quarter in 2020.

The earnings impact may be adjusted upward or downward based on prevailing market prices at the time of future evaluations.

the adjustment is considered permanent and is incorporated into the carrying value of the inventory.

was recorded associated with the carrying value of crude oil inventory exceeding the current market value.

In the second quarter of 2020, the first quarter’s temporary non-cash

inventory charge was reversed.

The inventory balance will continue to be re-evaluated

at the end of each quarter.

any adjustment to the carrying value is considered a permanent adjustment.

As disclosed in Imperial’s 2019 Form 10-K,

goodwill is tested for impairment annually or more frequently if events or circumstances indicate it might be impaired.

In light of recent changes in economic conditions and the reduction in the company’s market capitalization during the first quarter of 2020, the company assessed its goodwill balances for impairment and recognized a non-cash

In the first quarter of 2020, with the change in economic conditions and the reduction in the company’s market capitalization, the company assessed its goodwill balances for impairment and recognized a non-cash

goodwill impairment charge of $ 20 million in the company’s Upstream segment.

The goodwill impairment is reflected in “Depreciation and depletion” in the Consolidated statement of income and “Goodwill” in the Consolidated balance sheet.

The goodwill impairment is reflected in “Depreciation and depletion” on the Consolidated statement of income and “Goodwill” on the Consolidated balance sheet.

The remaining balance of goodwill is associated with the Downstream segment.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements