CALGARY, Jan. 31 /CNW/ -- CALGARY, Jan. 31 /CNW/ -
---------------------- ---------------------- Fourth quarter Twelve
months (millions of dollars, ----------------------
---------------------- unless noted) 2010 2009 % 2010 2009 %
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Net income (U.S. GAAP) 799 534 50 2,210 1,579 40 Net income per
common share - assuming dilution (dollars) 0.94 0.62 50 2.59 1.84
40 Capital and exploration expenditures 1,065 834 28 4,045 2,438 66
Bruce March, chairman, president and chief executive officer of
Imperial Oil, commented: "Imperial Oil's focus on operational
excellence delivered strong results with fourth quarter earnings of
$799 million or $0.94 per share, up from $534 million in the fourth
quarter of 2009. The 50 percent earnings increase resulted
primarily from improved downstream margins, higher crude oil
commodity prices and improved refinery operations. These factors
were partially offset by unfavourable foreign exchange effects of
the stronger Canadian dollar. Strong operating performance in all
business segments allowed us to capture the higher crude oil
realizations in the Upstream and improved margins in petroleum
product markets. Earnings for the full year 2010 were $2,210
million or $2.59 per share, up from $1,579 million in the full year
2009, an increase of 40 percent. Our consistent long-term business
approach and disciplined investment strategy will continue to
position Imperial to grow without compromising base business
performance. Capital and exploration expenditures for 2010 were $4
billion, up 66 percent from last year and included continued
investment in the Kearl oil sands project. Capital expenditures in
the fourth quarter were funded almost entirely through internally
generated funds."
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Imperial Oil is one of Canada's largest corporations and a leading
member of the country's petroleum industry. The company is a major
producer of crude oil and natural gas, Canada's largest petroleum
refiner, a key petrochemical producer and a leading marketer with a
coast-to-coast supply network that includes about 1,850 retail
service stations. Fourth quarter items of interest - Net income was
$799 million, compared with $534 million for the fourth quarter of
2009, an increase of 50% or $265 million. - Net income per common
share was $0.94, an increase of 50% from the fourth quarter of
2009. - Cash generated from operating activities was $1,004
million, compared with $927 million in the same period last year
when changes in working capital also contributed cash flow. -
Capital and exploration expenditures were $1,065 million, up 28%
from the fourth quarter of 2009, as a result of progressing the
Kearl oil sands and other growth projects. - Gross oil-equivalent
barrels of production averaged 302,000 barrels a day, compared with
297,000 barrels a day in the same period last year. Higher
production volumes in the fourth quarter were primarily due to
increased Cold Lake bitumen production, a result of improved
facility reliability and the cyclic nature of production at Cold
Lake. - Safety performance - Imperial achieved another best-ever
safety performance year for employees and near-best year for
contractors in its relentless pursuit of a workplace where nobody
gets hurt. The company's Operations Integrity Management System
(OIMS) provides a rigorous and systematic approach to managing
safety, health, environmental and security risks throughout all
aspects of its business. - Oil sands tailings research - Imperial
will work with Canadian Natural Resources, Shell Canada, Suncor
Energy, Syncrude Canada, Teck Resources and Total E&P Canada to
advance tailings management. The companies agreed to share existing
technologies and research and to cooperate on a coordinated
research and development plan going forward to improve the pace of
oil sands reclamation. - Kearl oil sands project update - the
initial development at Kearl is more than 50 percent complete and
is progressing on schedule with expected start up in late 2012. The
production rate for the initial development will start at about 110
thousand barrels a day. - Mackenzie natural gas project update -
the National Energy Board announced its approval of plans to build
and operate the project, subject to federal cabinet approval and
264 conditions in areas such as engineering, safety and
environmental protection. - Horn River update - Imperial has begun
its 2011 winter program which includes drilling exploration wells
and beginning a horizontal multi-well pad pilot development to
evaluate longer term well productivity. Imperial also added
additional acreage, bringing its joint venture holdings to 346,000
net acres - one of industry's largest acreage positions in the
area. - Strong volumes in Fuels Marketing - total Retail fuel sales
volume in 2010 was the highest in the history of the business,
surpassing the prior record set in 2009. Growth was observed in
both company-owned same store sales and through our branded
wholesale network. In addition, the Aviation business also achieved
a sales record in 2010. - Capital and exploration expenditures -
cash generated by Imperial's businesses helped fund $4 billion in
2010 capital and exploration expenditures, including continued
investment in the Kearl oil sands project. Planned capital and
exploration expenditures in 2011 are between $4.0 and $4.5 billion
and the company is looking to invest about $35 to $40 billion in
growth projects over the next decade. - Contributed to Canadian
communities - Imperial contributed $15 million to Canadian
communities in 2010, including the launch of Imperial's signature
program, Indigenous Women in Community Leadership. The program
supports First Nations, Métis and Inuit women leaders in Canada in
their pursuit of community development and economic independence.
Fourth quarter 2010 vs. fourth quarter 2009 The company's net
income for the fourth quarter of 2010 was $799 million or $0.94 a
share on a diluted basis, compared with $534 million or $0.62 a
share for the same period last year. Earnings in the fourth quarter
were higher than the same quarter in 2009 with improvements across
all operating segments. The higher fourth quarter earnings were
primarily attributable to stronger downstream margins of about $160
million, higher upstream crude oil commodity prices of about $80
million and improved refinery operations of about $65 million.
These factors were partially offset by the unfavourable foreign
exchange effects of the stronger Canadian dollar of about $85
million. Upstream net income in the fourth quarter was $526
million, $35 million higher than the same period of 2009. Earnings
benefited from higher crude oil commodity prices of about $80
million, including the $35 million negative impact from third-party
pipeline reliability issues, and increased Cold Lake bitumen
production of about $60 million. These factors were partially
offset by the unfavourable foreign exchange effects of the stronger
Canadian dollar of about $55 million, lower volumes at Syncrude of
about $20 million as a result of planned maintenance activities,
and higher royalties due to higher commodity prices of about $15
million. The average price of Brent crude oil was U.S. $86.49 a
barrel in the fourth quarter, up about 16 percent versus the
corresponding period last year. The company's average realizations
on sales of Canadian conventional crude oil and synthetic crude oil
from Syncrude production also increased. However, the company's
average bitumen realizations were slightly lower in the fourth
quarter of 2010 versus 2009, reflecting a widened price spread
between the lighter crude oils and Cold Lake bitumen, partly a
result of third-party pipeline outages. Gross production of Cold
Lake bitumen averaged 147 thousand barrels a day during the fourth
quarter, up from 134 thousand barrels in the same quarter last
year. Higher volumes were due to improved facility reliability as
well as the cyclic nature of production at Cold Lake. The company's
share of Syncrude's gross production in the fourth quarter was 79
thousand barrels a day, versus 82 thousand barrels in the fourth
quarter of 2009. Slightly lower volumes were the result of planned
maintenance activities, which began in September 2010 and were
successfully completed in the fourth quarter of 2010. Gross
production of conventional crude oil averaged 24 thousand barrels a
day in the fourth quarter, unchanged from the same period last
year. Gross production of natural gas during the fourth quarter of
2010 was 275 million cubic feet a day, down slightly from 298
million cubic feet in the same period last year. The lower
production volume was primarily a result of natural reservoir
decline. Downstream net income was $266 million in the fourth
quarter of 2010, $214 million higher than the same period a year
ago. Earnings benefited from stronger overall margins of about $160
million, improved refinery operations of about $65 million along
with improved sales volumes of about $15 million. These factors
were partially offset by the unfavourable effects of the stronger
Canadian dollar of about $30 million. Chemical net income was $25
million in the fourth quarter, $9 million higher than the same
quarter last year. Improved industry margins for polyethylene and
intermediate products were the main contributors to the increase.
Net income effects from Corporate and other were negative $18
million in the fourth quarter, compared with negative $25 million
in the same period of 2009. Cash flow generated from operating
activities was $1,004 million during the fourth quarter of 2010,
compared with $927 million in the same period of 2009. Higher cash
flow was primarily driven by increased earnings partially offset by
working capital effects. Investing activities used net cash of $992
million in the fourth quarter compared to $785 million in the
corresponding period in 2009. Additions to property, plant and
equipment were $1,045 million in the fourth quarter, compared with
$807 million during the same quarter in 2009. For the Upstream
segment, expenditures were primarily directed towards the
advancement of the Kearl oil sands project. Other investments
included development drilling at Cold Lake, exploration drilling at
Horn River as well as environmental projects at Syncrude. In the
fourth quarter, the company increased its debt level by $300
million by drawing on existing facilities. The company's balance of
cash was $267 million at December 31, 2010, compared with $513
million at the end of 2009. Full year highlights - 2010 net income
was $2,210 million, up from $1,579 million in 2009. - 2010 net
income per common share increased to $2.59 compared to $1.84 in
2009. - Cash generated from operations was $3,207 million, more
than double the $1,591 million generated in 2009. - Capital and
exploration expenditures were $4,045 million, up 66 percent,
supporting the Kearl oil sands and other growth projects. - Gross
oil-equivalent barrels of production averaged 294 thousands of
barrels a day, slightly higher than 293 thousands of barrels a day
in 2009. - Per-share dividends declared in 2010 totaled $0.43, up
from $0.40 in 2009.
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Full year 2010 vs. full year 2009 Net income in 2010 was $2,210
million or $2.59 a share on a diluted basis, versus $1,579 million
or $1.84 a share for the full year 2009. For the full year 2010,
earnings increased primarily due to the impacts of higher upstream
commodity prices of about $880 million, improved refinery
operations and lower refinery maintenance activities totaling about
$145 million, increased Cold Lake bitumen production of about $90
million, improved Syncrude volumes of about $70 million, and higher
Downstream sales volumes and margins of about $35 million and $30
million respectively. These factors were partially offset by the
unfavourable effects of the stronger Canadian dollar of about $410
million and higher royalty costs due to higher commodity prices of
about $255 million. Gains from sale of non-operating assets in 2010
were about $40 million higher than the previous year. Upstream net
income for the year was $1,764 million, up $440 million from 2009.
Higher crude oil and natural gas commodity prices in 2010 increased
revenues, contributing to higher earnings of about $880 million.
Earnings were also positively impacted by higher Cold Lake bitumen
production of about $90 million and higher Syncrude volumes,
reflecting improved reliability, of about $70 million. These
factors were partially offset by the impact of the stronger
Canadian dollar of about $320 million and higher royalty costs due
to higher commodity prices of about $255 million. Third-party
pipeline reliability issues in the second half of 2010 negatively
impacted the supply and transportation of western crude oil. The
company estimates the negative impact on earnings of about $80
million mostly from lower realizations in the third quarter and
October of 2010, the effect of which has been reflected in the
commodity price factor above. The average price of Brent crude was
U.S. $79.50 a barrel in 2010, up about 29 percent from the previous
year. The company's average realizations on sales of Canadian
conventional crude oil and synthetic crude oil from Syncrude
production also increased. The company's average bitumen
realizations were slightly higher in 2010, but by less than the
relative increase in light crude oil prices, reflecting a widened
price spread between the lighter crude oils and Cold Lake bitumen,
attributable to third-party pipeline outages. Gross production of
Cold Lake bitumen increased to 144 thousand barrels a day in 2010
from 141 thousand barrels in 2009. Higher volumes in 2010 were due
to improved facility reliability as well as the cyclic nature of
production at Cold Lake. The company's share of gross production
from Syncrude averaged 73 thousand barrels a day this year, up from
70 thousand barrels in 2009. Increased production was due to
improved operational reliability. 2010 gross production of
conventional crude oil averaged 23 thousand barrels a day, compared
with 25 thousand barrels in 2009. Planned maintenance activities at
the Norman Wells field and natural reservoir decline were the main
contributors to the lower production. Gross production of natural
gas in 2010 was 280 million cubic feet a day, down from 295 million
cubic feet in 2009. The lower production volume was primarily a
result of natural reservoir decline and maintenance activities.
2010 Downstream net income was $442 million, an increase of $164
million over 2009. Higher earnings were primarily due to favourable
impacts of about $145 million associated with improved refinery
operations and lower refinery maintenance activities, improved
sales volumes of about $35 million and an additional contribution
from sale of non-operating assets of about $35 million. Stronger
overall margins also contributed about $30 million to the earnings
increase, despite a negative impact from alternate sourcing of
crude oil as a result of third-party pipeline outages. These
factors were partially offset by the unfavourable effects of the
stronger Canadian dollar of about $90 million. Twelve-month
Chemical net income was $69 million, up $23 million from 2009.
Improved industry margins were partially offset by lower sales
volumes for polyethylene products and higher costs due to planned
maintenance activities. 2010 net income effects from Corporate and
other were negative $65 million, in line with the negative $69
million reported last year. Key financial and operating data
follow. Forward-Looking Statements Statements in this report
relating to future plans, projections, events or conditions are
forward-looking statements. Actual future results, including
project plans, costs, timing and capacities; financing sources; the
resolution of contingencies and uncertain tax positions; the effect
of changes in prices and other market conditions; and environmental
and capital expenditures could differ materially depending on a
number of factors, such as the outcome of commercial negotiations;
changes in the supply of and demand for crude oil, natural gas, and
petroleum and petrochemical products; political or regulatory
events; and other factors discussed in Item 1A of the company's
2010 Form 10K. IMPERIAL OIL LIMITED FOURTH QUARTER 2010
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millions of Canadian dollars, Fourth Quarter Twelve Months unless
noted 2010 2009 2010 2009
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Net income (U.S. GAAP) Total revenues and other income 6,936 5,864
25,092 21,398 Total expenses 5,883 5,119 22,138 19,198
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Income before income taxes 1,053 745 2,954 2,200 Income taxes 254
211 744 621
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Net income 799 534 2,210 1,579
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Net income per common share (dollars) 0.95 0.63 2.61 1.86 Net
income per common share - assuming dilution (dollars) 0.94 0.62
2.59 1.84 Gain/(loss) on asset sales, after tax 30 12 80 38 Total
assets at December 31 20,580 17,473 Total debt at December 31 756
140 Interest coverage ratio - earnings basis (times covered) 370.3
276.0 Other long-term obligations at December 31 2,753 2,839
Shareholders' equity at December 31 11,177 9,439 Capital employed
at December 31 11,966 9,615 Return on average capital employed (a)
(percent) 20.5 16.8 Dividends on common stock Total 93 85 364 340
Per common share (dollars) 0.11 0.10 0.43 0.40 Millions of common
shares outstanding At December 31 847.6 847.6 Average - assuming
dilution 853.6 854.0 854.2 856.7
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(a) Return on capital employed is the net income excluding
after-tax cost of financing, divided by the average of beginning
and ending capital employed. IMPERIAL OIL LIMITED FOURTH QUARTER
2010
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Fourth Quarter Twelve Months millions of Canadian dollars 2010 2009
2010 2009
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Total cash and cash equivalents at period end 267 513 267 513 Net
income 799 534 2,210 1,579 Adjustment for non-cash items:
Depreciation and depletion 186 197 747 781 (Gain)/loss on asset
sales (37) (13) (95) (45) Deferred income taxes and other 97 (12)
152 (61) Changes in operating assets and liabilities (41) 221 193
(a) (663)
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Cash from (used in) operating activities 1,004 927 3,207 1,591
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Cash from (used in) investing activities (992) (785) (3,709)
(2,216) Proceeds from asset sales 49 22 144 67 Cash from (used in)
financing activities 204 (87) 256 (836)
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(a) 2010 cash flow from operating activities was positively
impacted by the higher payable balances due to timing of
expenditures and other working capital effects. IMPERIAL OIL
LIMITED FOURTH QUARTER 2010
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Fourth Quarter Twelve Months millions of Canadian dollars 2010 2009
2010 2009
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Net income (U.S. GAAP) Upstream 526 491 1,764 1,324 Downstream 266
52 442 278 Chemical 25 16 69 46 Corporate and other (18) (25) (65)
(69)
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Net income 799 534 2,210 1,579
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Total revenues Upstream 2,159 2,025 8,144 6,919 Downstream 6,027
5,019 21,619 18,381 Chemical 358 336 1,386 1,236 Eliminations/Other
(1,608) (1,516) (6,057) (5,138)
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Revenues 6,936 5,864 25,092 21,398
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Purchases of crude oil and products Upstream 707 624 2,692 2,024
Downstream 4,698 4,002 17,169 14,164 Chemical 255 248 1,009 898
Eliminations (1,608) (1,517) (6,059) (5,152)
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Purchases of crude oil and products 4,052 3,357 14,811 11,934
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Production and manufacturing expenses Upstream 608 560 2,375 2,385
Downstream 334 323 1,413 1,372 Chemical 52 52 209 194 Eliminations
(1) - (1) -
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Production and manufacturing expenses 993 935 3,996 3,951
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Capital and exploration expenditures Upstream 1,006 745 3,844 2,167
Downstream 55 84 184 251 Chemical 1 3 10 15 Corporate and other 3 2
7 5
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Capital and exploration expenditures 1,065 834 4,045 2,438
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Exploration expenses charged to income included above 20 27 191 153
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IMPERIAL OIL LIMITED FOURTH QUARTER 2010
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Operating statistics Fourth Quarter Twelve Months 2010 2009 2010
2009
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Gross crude oil and Natural Gas Liquids (NGL) production (thousands
of barrels a day) Cold Lake 147 134 144 141 Syncrude 79 82 73 70
Conventional 24 24 23 25
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Total crude oil production 250 240 240 236 NGLs available for sale
6 7 7 8
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Total crude oil and NGL production 256 247 247 244
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Gross natural gas production (millions of cubic feet a day) 275 298
280 295 Gross oil-equivalent production (a) (thousands of
oil-equivalent barrels a day) 302 297 294 293 Net crude oil and NGL
production (thousands of barrels a day) Cold Lake 116 107 115 120
Syncrude 73 73 67 65 Conventional 18 18 17 20
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Total crude oil production 207 198 199 205 NGLs available for sale
4 6 5 6
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Total crude oil and NGL production 211 204 204 211
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Net natural gas production (millions of cubic feet a day) 252 264
254 274 Net oil-equivalent production (a) (thousands of
oil-equivalent barrels a day) 253 248 246 257 Cold Lake blend sales
(thousands of barrels a day) 190 174 188 184 NGL Sales (thousands
of barrels a day) 7 12 10 10 Natural gas sales (millions of cubic
feet a day) 270 277 264 272 Average realizations (Canadian dollars)
Conventional crude oil realizations (a barrel) 74.14 69.92 71.64
60.32 NGL realizations (a barrel) 58.94 48.15 50.09 41.19 Natural
gas realizations (a thousand cubic feet) 3.60 4.23 4.04 4.11
Synthetic oil realizations (a barrel) 84.31 78.64 80.63 69.69
Bitumen realizations (a barrel) 58.91 59.77 58.36 51.81 Refinery
throughput (thousands of barrels a day) 467 412 444 413 Refinery
capacity utilization (percent) 93 82 88 82 Petroleum product sales
(thousands of barrels a day) Gasolines 226 200 218 200 Heating,
diesel and jet fuels 177 142 153 143 Heavy fuel oils 29 31 28 27
Lube oils and other products 41 42 43 39
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Net petroleum products sales 473 415 442 409
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Petrochemical Sales (thousands of tonnes a day) 2.7 2.9 2.7 2.8
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(a) Gas converted to oil-equivalent at 6 million cubic feet = 1
thousand barrels IMPERIAL OIL LIMITED FOURTH QUARTER 2010
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Net income Net income (U.S. GAAP) per common share (millions of
Canadian dollars) (dollars)
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2006 First Quarter 591 0.60 Second Quarter 837 0.85 Third Quarter
822 0.84 Fourth Quarter 794 0.83
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Year 3,044 3.12
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2007 First Quarter 774 0.82 Second Quarter 712 0.76 Third Quarter
816 0.88 Fourth Quarter 886 0.97
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Year 3,188 3.43
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2008 First Quarter 681 0.76 Second Quarter 1,148 1.29 Third Quarter
1,389 1.57 Fourth Quarter 660 0.77
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Year 3,878 4.39
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2009 First Quarter 289 0.34 Second Quarter 209 0.25 Third Quarter
547 0.64 Fourth Quarter 534 0.63
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Year 1,579 1.86
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2010 First Quarter 476 0.56 Second Quarter 517 0.61 Third Quarter
418 0.49 Fourth Quarter 799 0.95
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Year 2,210 2.61
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To view the graph "Factors affecting net income", please visit
http://files.newswire.ca/832/Q4_earnings_graphs.jpg Pius Rolheiser
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