##### 



FORM 10-Q
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
  IMPERIAL OIL LIMITED
  CANADA
(State or other jurisdiction of
incorporation or organization)
    
    98-0017682
(I.R.S. Employer
Identification No.)
 111 St. Clair Avenue West,
Toronto, Ontario, Canada
(Address of principal executive offices)
    
    M5W 1K3
(Postal Code)
  
 þ o
 þ o
 The number of common shares outstanding, as of June 30, 2005, was 340,830,234.




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##### 



IMPERIAL OIL LIMITED
 INDEX
 PAGEPART I
 Financial InformationItem 1
 Financial Statements
Consolidated Statement of Income 
 Three months ended June 30, 2005 and 2004
Six months ended June 30, 2005 and 2004
    
    
    3Consolidated
Statement of Cash Flows 

Three months ended June 30, 2005 and 2004

Six months ended June 30, 2005 and 2004
    
    
    4Consolidated
Balance Sheet 
As at June 30, 2005 and December 31, 2004
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6Item 2  Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3  Quantitative and Qualitative Disclosures about Market Risk
    
    
    18Item 4  Controls and Procedures
    
    
    18PART II  Other InformationItem 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 6  Exhibit
    
    
    19SIGNATURES
    
    
    20
   - 2 -




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##### 



IMPERIAL OIL LIMITED
 PART I  FINANCIAL INFORMATION
 Item 1. Financial Statements.
 
 Six monthsSecond quarter
    
    
    to June 30millions of Canadian dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES AND OTHER INCOMEOperating revenues (a)(b)(13)
    
    
    6,710
    
    
    
    5,439
    
    
    
    12,650
    
    
    
    10,495Investment and other income (4)
    
    
    92
    
    
    
    27
    
    
    
    110
    
    
    
    38TOTAL REVENUES AND OTHER INCOME
    
    
    6,802
    
    
    
    5,466
    
    
    
    12,760
    
    
    
    10,533EXPENSESExploration
    
    
    6
    
    
    
    15
    
    
    
    27
    
    
    
    31Purchases of crude oil and products (b) (2)
    
    
    4,250
    
    
    
    3,174
    
    
    
    7,889
    
    
    
    6,007Production and Manufacturing (5)
    
    
    850
    
    
    
    738
    
    
    
    1,667
    
    
    
    1,421Selling and general (5) (6)
    
    
    335
    
    
    
    304
    
    
    
    681
    
    
    
    597Federal excise tax (a)
    
    
    323
    
    
    
    314
    
    
    
    630
    
    
    
    618Depreciation and depletion
    
    
    217
    
    
    
    219
    
    
    
    455
    
    
    
    435Financing costs (7)
    
    
    8
    
    
    
    3
    
    
    
    10
    
    
    
    5TOTAL EXPENSES
    
    
    5,989
    
    
    
    4,767
    
    
    
    11,359
    
    
    
    9,114INCOME BEFORE INCOME TAXES
    
    
    813
    
    
    
    699
    
    
    
    1,401
    
    
    
    1,419INCOME TAXES
    
    
    274
    
    
    
    195
    
    
    
    469
    
    
    
    449NET INCOME (3)
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970NET INCOME PER COMMON SHARE  BASIC (dollars) (10)
    
    
    1.56
    
    
    
    1.40
    
    
    
    2.69
    
    
    
    2.69NET INCOME PER COMMON SHARE  DILUTED (dollars) (10)
    
    
    1.56
    
    
    
    1.40
    
    
    
    2.68
    
    
    
    2.69DIVIDENDS PER COMMON SHARE (dollars)
    
    
    0.24
    
    
    
    0.22
    
    
    
    0.46
    
    
    
    0.44(a)      Federal excise tax included in operating revenues
    
    
    323
    
    
    
    314
    
    
    
    630
    
    
    
    618(b)      Amounts
included in operating revenues for purchase/sale
      contracts with the same counterparty (associated costs are
      included in purchases of
crude oil and products)
    
    
    1,176
    
    
    
    815
    
    
    
    2,093
    
    
    
    1,620
  - 3 -




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##### 



IMPERIAL OIL LIMITED
 
 Six monthsSecond quarter
    
    
    to June 30millions of Canadian dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004OPERATING ACTIVITIESNet income
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970Adjustment for non-cash items:Depreciation and depletion
    
    
    217
    
    
    
    219
    
    
    
    455
    
    
    
    435(Gain)/loss on asset sales, after income tax (4)
    
    
    (55
    )
    
    
    (13
    )
    
    
    (57
    )
    
    
    (14
    )Deferred income taxes and other
    
    
    (88
    )
    
    
    (115
    )
    
    
    (151
    )
    
    
    (154
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    29
    
    
    
    (4
    )
    
    
    (180
    )
    
    
    (183
    )Inventories and prepaids
    
    
    (35
    )
    
    
    93
    
    
    
    (359
    )
    
    
    (202
    )Income taxes payable
    
    
    124
    
    
    
    104
    
    
    
    (188
    )
    
    
    143Accounts payable
    
    
    41
    
    
    
    (133
    )
    
    
    543
    
    
    
    18All other items  net (a)
    
    
    55
    
    
    
    35
    
    
    
    (225
    )
    
    
    75CASH FROM (USED IN) OPERATING ACTIVTIES
    
    
    827
    
    
    
    690
    
    
    
    770
    
    
    
    1,088INVESTING ACTIVITIESAdditions to property, plant and equipment and intangibles
    
    
    (347
    )
    
    
    (289
    )
    
    
    (651
    )
    
    
    (616
    )Proceeds from asset sales
    
    
    98
    
    
    
    53
    
    
    
    105
    
    
    
    66Loans to equity company
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    (32
    )CASH FROM (USED IN) INVESTING ACTIVITIES
    
    
    (249
    )
    
    
    (268
    )
    
    
    (546
    )
    
    
    (582
    )FINANCING ACTIVITIESShort-term debt  net
    
    
    18
    
    
    
    9
    
    
    
    18
    
    
    
    9Repayment of long-term debt
    
    
    (19
    )
    
    
    (8
    )
    
    
    (20
    )
    
    
    (8
    )Issuance of common shares under stock option plan
    
    
    6

    
    
    
    1
    
    
    
    19
    
    
    
    7Common shares purchased (10)
    
    
    (479
    )
    
    
    (216
    )
    
    
    (802
    )
    
    
    (363
    )Dividends paid
    
    
    (77
    )
    
    
    (80
    )
    
    
    (154
    )
    
    
    (160
    )CASH FROM (USED IN) FINANCING ACTIVITIES
    
    
    (551
    )
    
    
    (294
    )
    
    
    (939
    )
    
    
    (515
    )INCREASE (DECREASE) IN CASH
    
    
    27
    
    
    
    128
    
    
    
    (715
    )
    
    
    (9
    )CASH AT BEGINNING OF PERIOD
    
    
    537
    
    
    
    311
    
    
    
    1,279
    
    
    
    448CASH AT END OF PERIOD
    
    
    564
    
    
    
    439
    
    
    
    564
    
    
    
    439
 (a) Includes contribution to registered pension plans
    
    
    (3
    )
    
    
    (3
    )
    
    
    (342
    )
    
    
    (5
    )
  - 4 -




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##### 



IMPERIAL OIL LIMITED
 
 As at
    
    
    As atJune 30
    
    
    Dec.31millions of Canadian dollars
    
    2005
    
    
    2004ASSETSCurrent assetsCash
    
    
    564
    
    
    
    1,279Accounts receivable, less estimated doubtful accounts
    
    
    1,806
    
    
    
    1,626Inventories of crude oil and products
    
    
    716
    
    
    
    432Materials, supplies and prepaid expenses
    
    
    187
    
    
    
    112Deferred income tax assets
    
    
    620
    
    
    
    448Total current assets
    
    
    3,893
    
    
    
    3,897Investments and other long-term assets
    
    
    128
    
    
    
    130Property, plant and equipment
    
    
    21,055
    
    
    
    20,503less accumulated depreciation and depletion
    
    
    (11,234
    )
    
    
    (10,856
    )Property, plant and equipment (net)
    
    
    9,821
    
    
    
    9,647Goodwill
    
    
    204
    
    
    
    204Other intangible assets, net
    
    
    147
    
    
    
    149TOTAL ASSETS
    
    
    14,193
    
    
    
    14,027LIABILITIESCurrent liabilitiesShort-term debt
    
    
    99
    
    
    
    81Accounts payable and accrued liabilities (6)
    
    
    3,072
    
    
    
    2,525Income taxes payable
    
    
    874
    
    
    
    1,057Current portion of long-term debt (8)
    
    
    795
    
    
    
    995Total current liabilities
    
    
    4,840
    
    
    
    4,658Long-term debt (8)
    
    
    547
    
    
    
    367Other long-term obligations (9)
    
    
    1,297
    
    
    
    1,525Deferred income tax liabilities
    
    
    1,197
    
    
    
    1,155TOTAL LIABILITIES
    
    
    7,881
    
    
    
    7,705SHAREHOLDERS EQUITYCommon shares at stated value (10)
    
    
    1,774
    
    
    
    1,801Earnings reinvested (11)
    
    
    4,906
    
    
    
    4,889Accumulated other nonowner changes in equity (12)
    
    
    (368
    )
    
    
    (368
    )TOTAL SHAREHOLDERS EQUITY
    
    
    6,312
    
    
    
    6,322TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    14,193
    
    
    
    14,027
  - 5 -




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##### 



IMPERIAL OIL LIMITED
 
 1. Basis of financial statement presentation
 Form 10-K
 2. Accounting for purchases and sales of inventory with the same counterparty
    millions of dollars
    
    2004
    
    
    2003
    
    
    2002Operating revenues
    
    
    22,408
    
    
    
    19,094
    
    
    
    16,890Amounts included in operating revenues for purchase/sale contracts
with the same counterparty (a)
    
    
    3,584
    
    
    
    2,851
    
    
    
    2,431Percent of operating revenues
    
    
    16
    %
    
    
    15
    %
    
    
    14
    %
 
 (a)
    
    Associated costs are in purchases of crude oil and products  - 6 -




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##### 



IMPERIAL OIL LIMITED
 
 3. Business segments
 Natural
    
    
    PetroleumSecond quarter
    
    Resources
    
    
    Products
    
    
    Chemicalsmillions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES AND OTHER INCOMEExternal sales (a)
    
    
    1,098
    
    
    
    855
    
    
    
    5,297
    
    
    
    4,265
    
    
    
    315
    
    
    
    319Intersegment sales
    
    
    853
    
    
    
    692
    
    
    
    524
    
    
    
    407
    
    
    
    83
    
    
    
    73Investment and other income
    
    
    70
    
    
    
    18
    
    
    
    18
    
    
    
    7
    
    
    
    
    
    
    
    2,021
    
    
    
    1,565
    
    
    
    5,839
    
    
    
    4,679
    
    
    
    398
    
    
    
    392EXPENSESExploration (b)
    
    
    6
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases
    
    
    713
    
    
    
    490
    
    
    
    4,722
    
    
    
    3,585
    
    
    
    274
    
    
    
    271Production and
manufacturing
    
    
    458
    
    
    
    404
    
    
    
    339
    
    
    
    286
    
    
    
    54
    
    
    
    48Selling and general
    
    
    13
    
    
    
    6
    
    
    
    299
    
    
    
    272
    
    
    
    23
    
    
    
    26Federal excise tax
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    314
    
    
    
    
    
    
    
    Depreciation and depletion
    
    
    154
    
    
    
    156
    
    
    
    59
    
    
    
    58
    
    
    
    3
    
    
    
    3Financing costs
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    TOTAL EXPENSES
    
    
    1,344
    
    
    
    1,071
    
    
    
    5,743
    
    
    
    4,516
    
    
    
    354
    
    
    
    348INCOME BEFORE INCOME TAXES
    
    
    677
    
    
    
    494
    
    
    
    96
    
    
    
    163
    
    
    
    44
    
    
    
    44INCOME TAXES
    
    
    228
    
    
    
    126
    
    
    
    32
    
    
    
    55
    
    
    
    15
    
    
    
    15NET INCOME
    
    
    449
    
    
    
    368
    
    
    
    64
    
    
    
    108
    
    
    
    29
    
    
    
    29Export sales to the United States
    
    
    364
    
    
    
    335
    
    
    
    233
    
    
    
    221
    
    
    
    172
    
    
    
    185Cash flows from (used in) operating activities
    
    
    527
    
    
    
    438
    
    
    
    255
    
    
    
    204
    
    
    
    48
    
    
    
    45CAPEX(b)
    
    
    218
    
    
    
    249
    
    
    
    127
    
    
    
    54
    
    
    
    4
    
    
    
    2
 CorporateSecond quarter
    
    and Other
    
    
    Eliminations
    
    
    Consolidatedmillions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES AND OTHER INCOMEExternal sales (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,710
    
    
    
    5,439Intersegment sales
    
    
    
    
    
    
    
    
    
    
    (1,460
    )
    
    
    (1,172
    )
    
    
    
    
    
    
    Investment and other income
    
    
    4
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    92
    
    
    
    274
    
    
    
    2
    
    
    
    (1,460
    )
    
    
    (1,172
    )
    
    
    6,802
    
    
    
    5,466EXPENSESExploration (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    15Purchases
    
    
    
    
    
    
    
    
    
    
    (1,459
    )
    
    
    (1,172
    )
    
    
    4,250
    
    
    
    3,174Production and
manufacturing
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    850
    
    
    
    738Selling and general
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    335
    
    
    
    304Federal excise tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    314Depreciation and depletion
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    217
    
    
    
    219Financing costs
    
    
    7
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    3TOTAL EXPENSES
    
    
    8
    
    
    
    4
    
    
    
    (1,460
    )
    
    
    (1,172
    )
    
    
    5,989
    
    
    
    4,767INCOME BEFORE INCOME TAXES
    
    
    (4
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    813
    
    
    
    699INCOME TAXES
    
    
    (1
    )
    
    
    (1
    )
    
    

    
    
    
    
    
    
    
    
    274
    
    
    
    195NET INCOME
    
    
    (3
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    539
    
    
    
    504Export sales to the United States
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    769
    
    
    
    741Cash flows from (used in) operating activities
    
    
    (3
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    827
    
    
    
    690CAPEX (b)
    
    
    4
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    311
 
 (a)
    
    Includes crude sales made by Products in order to optimize refining operations.(b)
    
    Capital and exploration expenditures (CAPEX) include exploration expenses, additions
to property, plant, equipment and intangibles and additions to capital leases. - 7 -




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##### 



IMPERIAL OIL LIMITED
 
 3. Business segments (continued)
 Natural
    
    
    PetroleumSix months to June 30
    
    Resources
    
    
    Products
    
    
    Chemicalsmillions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES AND OTHER INCOMEExternal sales (a)
    
    
    2,097
    
    
    
    1,745
    
    
    
    9,896
    
    
    
    8,188
    
    
    
    657
    
    
    
    562Intersegment sales
    
    
    1,553
    
    
    
    1,331
    
    
    
    1,120
    
    
    
    776
    
    
    
    161
    
    
    
    138Investment and other income
    
    
    70
    
    
    
    18
    
    
    
    29
    
    
    
    15
    
    
    
    
    
    
    
    3,720
    
    
    
    3,094
    
    
    
    11,045
    
    
    
    8,979
    
    
    
    818
    
    
    
    700EXPENSESExploration (b)
    
    
    27
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases
    
    
    1,360
    
    
    
    968
    
    
    
    8,805
    
    
    
    6,791
    
    
    
    557
    
    
    
    493Production and manufacturing
    
    
    930
    
    
    
    785
    
    
    
    635
    
    
    
    544
    
    
    
    103
    
    
    
    92Selling and general
    
    
    33
    
    
    
    10
    
    
    
    593
    
    
    
    541
    
    
    
    55
    
    
    
    46Federal excise tax
    
    
    
    
    
    
    
    
    
    
    630
    
    
    
    618
    
    
    
    
    
    
    
    Depreciation and depletion
    
    
    330
    
    
    
    309
    
    
    
    118
    
    
    
    117
    
    
    
    6
    
    
    
    6Financing costs
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    TOTAL EXPENSES
    
    
    2,680
    
    
    
    2,103
    
    
    
    10,782
    
    
    
    8,612
    
    
    
    721
    
    
    
    637INCOME BEFORE INCOME TAXES
    
    
    1,040
    
    
    
    991
    
    
    
    263
    
    
    
    367
    
    
    
    97
    
    
    
    63INCOME TAXES
    
    
    349
    
    
    
    304
    
    
    
    87
    
    
    
    124
    
    
    
    34
    
    
    
    22NET INCOME
    
    
    691
    
    
    
    687
    
    
    
    176
    
    
    
    243
    
    
    
    63
    
    
    
    41Export sales to the United States
    
    
    701
    
    
    
    667
    
    
    
    399
    
    
    
    475
    
    
    
    370
    
    
    
    323Cash flows from (used in) operating activities
    
    
    544
    
    
    
    833
    
    
    
    157
    
    
    
    200
    
    
    
    73
    
    
    
    48CAPEX (b)
    
    
    461
    
    
    
    524
    
    
    
    197
    
    
    
    118
    
    
    
    7
    
    
    
    8Total assets as at June 30
    
    
    7,127
    
    
    
    6,664
    
    
    
    6,349
    
    
    
    5,713
    
    
    
    484
    
    
    
    493Capital employed as at June 30
    
    
    4,297
    
    
    
    4,011
    
    
    
    2,621
    
    
    
    2,756
    
    
    
    193
    
    
    
    230
 CorporateSix months to June 30
    
    and Other
    
    
    Eliminations
    
    
    Consolidatedmillions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES AND OTHER INCOMEExternal sales (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,650
    
    
    
    10,495Intersegment sales
    
    
    
    
    
    
    
    
    
    
    (2,834
    )
    
    
    (2,245
    )
    
    
    
    
    
    
    Investment and other income
    
    
    11
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    110
    
    
    
    3811
    
    
    
    5
    
    
    
    (2,834
    )
    
    
    (2,245
    )
    
    
    12,760
    
    
    
    10,533EXPENSESExploration (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    31Purchases
    
    
    
    
    
    
    
    
    
    
    (2,833
    )
    
    
    (2,245
    )
    
    
    7,889
    
    
    
    6,007Production and manufacturing
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1,667
    
    
    
    1,421Selling and general
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    681
    
    
    
    597Federal excise tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    630
    
    
    
    618Depreciation and depletion
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    455
    
    
    
    435Financing costs
    
    
    9
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    5TOTAL EXPENSES
    
    
    10
    
    
    
    7
    
    
    
    (2,834
    )
    
    
    (2,245
    )
    
    
    11,359
    
    
    
    9,114INCOME BEFORE INCOME TAXES
    
    
    1
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    1,401
    
    
    
    1,419INCOME TAXES
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    469
    
    
    
    449NET INCOME
    
    
    2
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    932
    
    
    
    970Export sales to the United States
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,470
    
    
    
    1,465Cash flows from (used in) operating activities
    
    
    (4
    )
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    770
    
    
    
    1,088CAPEX (b)
    
    
    13
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    678
    
    
    
    664Total assets as at June 30
    
    
    680
    
    
    
    499
    
    
    
    (447
    )
    
    
    (360
    )
    
    
    14,193
    
    
    
    13,009Capital employed as at June 30
    
    
    702
    
    
    
    479
    
    
    
    
    
    
    
    
    
    
    
    7,813
    
    
    
    7,476
 
 (a)
    
    Includes crude sales made by Products in order to optimize refining operations.(b)
    
    Capital and exploration expenditures (CAPEX) include exploration expenses, additions
to property, plant, equipment and intangibles and additions to capital leases. - 8 -




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##### 



IMPERIAL OIL LIMITED
 
 4. Investment and other income
  Six monthsSecond quarter
    
    
    to June 30millions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Proceeds from asset sales
    
    
    98
    
    
    
    53
    
    
    
    105
    
    
    
    66Book value of assets sold
    
    
    20
    
    
    
    35
    
    
    
    25
    
    
    
    47Gain/(loss) on asset sales, before tax (a)
    
    
    78
    
    
    
    18
    
    
    
    80
    
    
    
    19Gain/(loss) on asset sales, after tax (a)
    
    
    55
    
    
    
    13
    
    
    
    57
    
    
    
    14
 
 (a)
    
    Second quarter 2005 included gains of $66 million ($43 million after tax) from the
sale of the Berrymoor and Buck Creek producing properties. Second quarter 2004 included a
gain of $16 million ($12 million after tax) from the sale of the Mid Alberta Pipeline. 5. Employee retirement benefits
  Six monthsSecond quarter
    
    
    to June 30millions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Pension benefits:Current service cost
    
    
    21
    
    
    
    19
    
    
    
    43
    
    
    
    39Interest cost
    
    
    60
    
    
    
    59
    
    
    
    120
    
    
    
    118Expected return on plan assets
    
    
    (64
    )
    
    
    (56
    )
    
    
    (128
    )
    
    
    (112
    )Amortization of prior service
cost
    
    
    6
    
    
    
    7
    
    
    
    12
    
    
    
    14Recognized actuarial loss
    
    
    21
    
    
    
    17
    
    
    
    42
    
    
    
    34Net benefit cost
    
    
    44
    
    
    
    46
    
    
    
    89
    
    
    
    93Other post-retirement benefits:Current service cost
    
    
    2
    
    
    
    1
    
    
    
    4
    
    
    
    3Interest cost
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Recognized actuarial loss
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    2Net benefit cost
    
    
    9
    
    
    
    8
    
    
    
    19
    
    
    
    17
 6. Headquarters relocation
    As at
    
    
    As atJune 30
    
    
    Dec. 31millions of dollars
    
    2005
    
    
    2004Beginning as of January 1
    
    
    
    
    
    
    Additions
    
    
    30
    
    
    
    Settlement
    
    
    (10
    )
    
    
    Ending
    
    
    20
    
    
    
    
  - 9 -




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##### 



IMPERIAL OIL LIMITED
 
 7. Financing costs
 Six monthsSecond quarter
    
    
    to June 30millions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Debt related interest
    
    
    10
    
    
    
    7
    
    
    
    21
    
    
    
    17Capitalized interest
    
    
    (4
    )
    
    
    (6
    )
    
    
    (13
    )
    
    
    (14
    )Net interest expense
    
    
    6
    
    
    
    1
    
    
    
    8
    
    
    
    3Other interest
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2Total financing costs
    
    
    8
    
    
    
    3
    
    
    
    10
    
    
    
    5
 8. Long-term debt
 As at
    
    
    As atJune 30
    
    
    Dec.31Issued           Maturity date
    
    Interest rate
    
    2005
    
    
    20042003          $250 million due May 26, 2007 and$250 million due August 26, 2007 (a)
    
    Variable
    
    
    500
    
    
    
    2003          January 19, 2006
    
    Variable
    
    
    
    
    
    
    318Long-term debt
    
    
    
    
    
    
    500
    
    
    
    318Capital leases
    
    
    
    
    
    
    47
    
    
    
    49Total long-term debt (b)
    
    
    
    
    
    
    547
    
    
    
    367
 
 (a)
    
    The long-term variable-rate loans of $500 million from Exxon Overseas Corporation have been extended
to the maturity dates noted above.(b)
    
    These amounts exclude that portion of long-term debt totalling $795 million (December 31, 2004  $995
million), which matures within one year and is included in current liabilities. 9. Other long-term obligations
 As at
    
    
    As atJune 30
    
    
    Dec.31millions of dollars
    
    2005
    
    
    2004Employee retirement benefits (a)
    
    
    792
    
    
    
    1,052Asset retirement obligations and other environmental liabilities (b)
    
    
    375
    
    
    
    380Other obligations
    
    
    130
    
    
    
    93Total other long-term obligations
    
    
    1,297
    
    
    
    1,525
 
 (a)
    
    Total recorded employee retirement benefits obligations also include $48 million in current liabilities
(December 31, 2004  $48 million).(b)
    
    Total asset retirement obligations and other environmental liabilities also include $76 million in current
liabilities (December 31, 2004  $76 million). - 10 -




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##### 



IMPERIAL OIL LIMITED
 
 10. Common shares
 As at
    
    
    As atJune 30
    
    
    Dec.31thousands of shares
    
    2005
    
    
    2004Authorized
    
    
    450,000
    
    
    
    450,000Common shares outstanding
    
    
    340,830
    
    
    
    349,320
  millions ofYear
    
    Shares
    
    
    Dollars1995  2003
    
    
    218.9
    
    
    
    5,9682004  Second quarter
    
    
    3.5
    
    
    
    216Full year
    
    
    13.6
    
    
    
    8722005  Second quarter
    
    
    5.2
    
    
    
    479Year-to-date
    
    
    8.9
    
    
    
    802Cumulative purchases to date
    
    
    241.4
    
    
    
    7,642
   Six monthsSecond quarter
    
    
    to June 302005
    
    
    2004
    
    
    2005
    
    
    2004Net income per common share  basicNet income (millions of dollars)
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970Weighted average number of common
shares outstanding (millions of shares)
    
    
    343.8
    
    
    
    358.8
    
    
    
    346.0
    
    
    
    360.2Net income per common share (dollars)
    
    
    1.56
    
    
    
    1.40
    
    
    
    2.69
    
    
    
    2.69Net income per common share  dilutedNet income (millions of dollars)
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970Weighted average number of common shares
outstanding (millions of shares)
    
    
    343.8
    
    
    
    358.8
    
    
    
    346.0
    
    
    
    360.2Effect of employee stock-based awards (millions of shares)
    
    
    1.4
    
    
    
    0.7
    
    
    
    1.3
    
    
    
    0.7Weighted average number of common shares
outstanding, assuming dilution (millions of shares)
    
    
    345.2
    
    
    
    359.5
    
    
    
    347.3
    
    
    
    360.9Net income per common share (dollars)
    
    
    1.56
    
    
    
    1.40
    
    
    
    2.68
    
    
    
    2.69
  - 11 -




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##### 



IMPERIAL OIL LIMITED
 
 11. Earnings reinvested
 Six monthsSecond quarter
    
    
    to June 30millions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Earnings reinvested at beginning of period
    
    
    4,902
    
    
    
    4,204
    
    
    
    4,889
    
    
    
    3,952Net income for the period
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970Share purchases in excess of stated value
    
    
    (452
    )
    
    
    (198
    )
    
    
    (756
    )
    
    
    (332
    )Dividends
    
    
    (83
    )
    
    
    (78
    )
    
    
    (159
    )
    
    
    (158
    )Earnings reinvested at end of period
    
    
    4,906
    
    
    
    4,432
    
    
    
    4,906
    
    
    
    4,432
 12. Nonowner changes in shareholders equity
 Six monthsSecond quarter
    
    
    to June 30millions of dollars
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net income
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970Other nonowner changes in equity (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total nonowner changes in shareholders equity
    
    
    539
    
    
    
    504
    
    
    
    932
    
    
    
    970
 
 (a)
    
    Minimum pension liability adjustmemt. - 12 -




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##### 



IMPERIAL OIL LIMITED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations.
 OPERATING RESULTS
     Natural resources
   - 13 -




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##### 



IMPERIAL OIL LIMITED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued)
         - 14 -




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##### 



IMPERIAL OIL LIMITED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued)
   Petroleum products
    Chemicals
  Corporate and other
  - 15 -




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##### 



IMPERIAL OIL LIMITED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued)
 LIQUIDITY AND CAPITAL RESOURCES
       RECENTLY ISSUED ACCOUNTING STANDARDS
  - 16 -




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##### 



IMPERIAL OIL LIMITED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations. (continued)
  - 17 -




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##### 



IMPERIAL OIL LIMITED
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
  Item 4.
    
    Controls and Procedures.
   - 18 -




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##### 



IMPERIAL OIL LIMITED
 PART II    OTHER INFORMATION
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 Securities Act
 Issuer Purchases of Equity Securities (1)
 (d)Maximum number(or approximate(c)Total number
    
    dollar value) ofof shares purchased
    
    shares that may yet(a)Total number
    
    (b)Average price
    
    as part of publicly
    
    be purchasedof shares (or
    
    paid per share (or
    
    announced plans or
    
    under the plans orPeriod
    
    units) purchased
    
    unit)
    
    programs
    
    programsApril 2005
(April 1  April 30)
    
    
    990,875
    
    
    $
    92.61
    
    
    
    990,875
    
    
    
    4,852,978May 2005
(May 1  May 31)
    
    
    2,062,813
    
    
    $
    86.67
    
    
    
    2,062,813
    
    
    
    2,761,125June 2005
(June 1  June 30)
    
    
    2,135,703
    
    
    $
    97.92
    
    
    
    2,135,703
    
    
    
    16,514,348
 
 (1)
    
    On June 21, 2004, the company announced by press release that it had received
final approval from the Toronto Stock Exchange for another normal course issuer bid to
continue its share repurchase program. That enabled the company to repurchase up to a
maximum of 17,864,398 common shares, including common shares purchased for the companys
employee savings plan and employee retirement plan, during the period June 23, 2004 to June
22, 2005. That program ended on June 22, 2005.On June 21, 2005, the company announced by press release that it had received final approval
from the Toronto Stock Exchange for a new normal course issuer bid to continue its share
repurchase program. The new program enables the company to repurchase up to a maximum of
17,080,605 common shares, including common shares purchased for the companys employee
savings plan and employee retirement plan during the period June 23, 2005 to June 22, 2006.
If not previously terminated, the program will end on June 22, 2006. Item 6. Exhibits.
   - 19 -




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##### 



IMPERIAL OIL LIMITED
 SIGNATURES
 Securities Exchange Act
 IMPERIAL OIL LIMITED
(Registrant)Date: August 8, 2005
    /s/ Paul A. Smith(Signature)Paul A. Smith
Controller and Senior Vice-President,
Finance and Administration
(Principal Accounting Officer) Date: August 8, 2005
    /s/ Marilyn Henderson(Signature)Marilyn Henderson
Assistant Secretary - 20 -