FORM 10-K IMPERIAL OIL LIMITED

Notes to consolidated financial statements (continued)
The company’s common share activities are summarized below:
At stated value,
Thousands millions
of shares of dollars
Balance as at January 1, 2002 379 159 1 941
Issued for cash under the stock option plan – –
Purchases (296) (2)
Balance as at December 31, 2002 378 863 1 939
Issued for cash under the stock option plan 49 2
Purchases (16 259) (82)
Balance as at December 31, 2003 362 653 1 859
Issued for cash under the stock option plan 274 13
Purchases (13 607) (71)
Balance as at December 31, 2004 349 320 1 801
The following table provides the calculation of basic and diluted earnings per share:
2004 2003 2002
Net income per common share – basic
Income before cumulative effect of accounting change (millions of dollars) 2 052 1 701 1 214
Net income (millions of dollars) 2 052 1 705 1 214
Weighted average number of common shares outstanding (thousands of share s ) 356 834 372 011 378 875
Net income per common share ( d o l l a r s )
Income before cumulative effect of accounting change 5.75 4.57 3.20
Cumulative effect of accounting change, after income tax – 0.01 –
Net income 5.75 4.58 3.20
Net income per common share – diluted
Income before cumulative effect of accounting change (millions of dollars) 2 052 1 701 1 214
Net income (millions of dollars) 2 052 1 705 1 214
Weighted average number of common shares outstanding (thousands of share s ) 356 834 372 011 378 875
Effect of employee stock-based awards (thousands of share s ) 818 143 1
Weighted average number of common shares outstanding,
assuming dilution (thousands of share s ) 357 652 372 154 378 876
Net income per common share ( d o l l a r s )
Income before cumulative effect of accounting change 5.74 4.57 3.20
Cumulative effect of accounting change, after income tax – 0.01 –
Net income 5.74 4.58 3.20
14. Miscellaneous financial information
In 2004, net income included an after-tax gain of $23 million (2003 – $9 million gain; 2002 – $2 million loss) attributable to the effect of
changes in last-in, first-out (LIFO) inventories. The replacement cost of inventories was estimated to exceed their LIFO carrying values at
December 31, 2004, by $1,013 million (2003 – $797 million). Inventories of crude oil and products at year-end consisted of the following:
millions of dollars 2004 2003
Crude oil 165 161
Petroleum products 190 175
Chemical products 59 57
Natural gas and other 18 14
Total inventories of crude oil and products 432 407
Research and development costs in 2004 were $70 million (2003 – $63 million; 2002 – $64 million) before investment tax credits
earned on these expenditures of $7 million (2003 – $10 million; 2002 – $10 million). The net costs are included in expenses due to
the uncertainty of future benefits.
Cash flow from operating activities included dividends of $18 million received from equity investments in 2004 (2003 – $15 million;
2002 – $18 million).
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