Agrium Announces Second Quarter Results-Earnings of $0.53 per Common Share More Than Triple Last Year.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--July 30, 2003 ALL AMOUNTS ARE STATED IN U.S.$ Agrium Agrium Inc. NYSE: AGU TSX: AGU engages in the production, marketing, and distribution of agricultural products and services, and nutrients for agricultural and industrial markets in the United States and Argentina. Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension and NYSE NYSE See: New York Stock Exchange : AGU AGU Aoyama Gakuin University, Tokyo, Japan AGU American Geophysical Union AGU Arabian Gulf University (Bahrain) AGU All Grown Up (TV show) AGU Aguascalientes, Aguascalientes, Mexico ) announced today that its net earnings for the second quarter ended June June: see month. 30, 2003, were $69-million ($0.53 per common share), a significant improvement over net earnings of $23-million ($0.16 per common share) for the same period in 2002. Earnings for the first six months of the year were $63-million ($0.46 per common share), also a significant improvement over the loss of $13-million ($0.16 per common share) during the first half of 2002. "Our increased profitability reflects the upturn in the agriculture sector and the tightening nitrogen nitrogen (nī`trəjən), gaseous chemical element; symbol N; at. no. 7; at. wt. 14.0067; m.p. −209.86°C;; b.p. −195.8°C;; density 1.25 grams per liter at STP; valence principally −3, +3, or +5. global supply and demand balance," said John Van Brunt brunt n. 1. The main impact or force, as of an attack. 2. The main burden: bore the brunt of the household chores. , Agrium's Vice Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Industry fundamentals continue to improve, especially for nitrogen. A return to more normal moisture moisture wetness due to any liquid; usually refers to water as a component, e.g. in feed. moisture free a substance heated at 220°F (105°C) to constant weight. Called also oven-dry or 100% dry matter. conditions early in the spring in our Western Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. markets also meant increased demand for crop nutrients." Agrium exceeded market expectations for the second quarter and first six months of 2003. These results were achieved despite increased costs as a result of the strengthening Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents and higher North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. natural gas prices. For the second half of 2003, Agrium predicts the trend in year-over-year earnings improvement to continue. Agrium is comfortable with current market consensus estimates of $0.26 basic earnings per common share, compared to $0.06 basic earnings per common share for the same period in 2002. HIGHLIGHTS -- North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Retail achieved record performance during the first half of 2003. Earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) was $37-million for the first six months of the year, a 32 percent improvement over the previous year. -- South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. Wholesale benefited from strong international urea prices and high operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. . A new urea heat exchange unit was successfully installed at the Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. nitrogen facility in April. This resolved the reliability issues which affected the plant earlier in the year. During May and June, the urea plant ran uninterrupted setting new daily and monthly production records. -- North America Wholesale results continued to benefit from improving fundamentals and better than anticipated operating rates at the Kenai, Alaska This article is about a city in Alaska. For the character from Disney's Brother Bear, see Kenai (Brother Bear). Kenai is a city in Kenai Peninsula Borough in the U.S. state of Alaska. nitrogen facility. The facility operated at an average rate of 79 percent of capacity during the first six months of 2003. Current gas deliveries from Union Oil Company of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). (Unocal) remain above earlier indications and the facility is currently running at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 70 percent capacity. Agrium continues to work with Unocal and Cook Inlet Cook Inlet Inlet, Gulf of Alaska in the northern Pacific Ocean. Bounded by the Kenai Peninsula on the east, it extends northeast for 220 mi (350 km), narrowing from 80 to 9 mi (129 to 14 km). Anchorage is situated near its head. suppliers to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. gas supply in 2003. KEY INDICATORS The following table summarizes certain key commodity prices affecting the Corporation's profitability:
------------------------------------------------------------------
Second Quarter First Six Months
2003 2002 2003 2002
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Grain Prices (U.S.$/bushel)
Wheat (#2 Soft Red St. L -
weekly averages) $3.23 $2.83 $3.30 $2.89
Corn (#2 Yellow - weekly
averages) $2.40 $1.98 $2.36 $1.96
------------------------------------------------------------------
Natural Gas (U.S.$/MMBtu)
NYMEX (last three day
average price) $5.48 $3.37 $6.04 $2.88
Agrium (average cost) $3.48 $2.58 $3.54 $2.46
------------------------------------------------------------------
Nitrogen - Ammonia
(U.S.$/metric tonne)
NOLA $ 281 $ 148 $ 264 $ 139
Black sea $ 159 $ 99 $ 159 $ 88
Agrium N.A. (average
realized price) $ 302 $ 186 $ 285 $ 184
Agrium International (average
realized price) $ 158 $ 103 $ 161 $ 92
------------------------------------------------------------------
Nitrogen - Urea
(U.S.$/metric tonne)
NOLA $ 184 $ 121 $ 182 $ 116
Black sea (prilled) $ 127 $ 88 $ 127 $ 93
Agrium N.A. (average
realized price) $ 235 $ 140 $ 221 $ 140
Agrium International (average
realized price) $ 150 $ 112 $ 146 $ 109
------------------------------------------------------------------
Higher crop prices in the spring period helped support the fertilizer fertilizer, organic or inorganic material containing one or more of the nutrients—mainly nitrogen, phosphorus, and potassium, and other essential elements required for plant growth. market. North American natural gas prices were also up significantly although Agrium's natural gas costs did not increase as much due to Agrium's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. natural gas contracts. The result was that Agrium benefited from the substantial increase in nitrogen prices. MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: RESULTS Net earnings for the second quarter of 2003 were $69-million compared to $23-million for the same quarter in 2002. Basic earnings per share for the quarter were $0.53 ($0.47 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per common share) compared to $0.16 ($0.15 diluted earnings per common share) for the second quarter in 2002. Agrium's consolidated earnings before interest expense and income tax (EBIT) increased by $75-million to $130-million for the second quarter of 2003 compared to $55-million during the same period in 2002. This increase in earnings is largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to improved nitrogen profitability in Wholesale operations as a result of higher pricing. Business Unit Discussion North America Wholesale -- Wholesale second quarter gross profit grew $74-million as Agrium's average realized selling price for nitrogen increased 56 percent from 2002. Reduced nitrogen production in North America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. as a result of high natural gas costs further tightened global supply causing prices to increase. -- Phosphate phosphate, salt or ester of phosphoric acid, H3PO4. Because phosphoric acid is tribasic (having three replaceable hydrogen atoms), it forms monophosphate, diphosphate, and triphosphate salts in which one, two, or three of the hydrogens of the gross profit improved by 40 percent during the quarter also due to improved pricing. Global prices rose in response to higher sulphur Sulphur, city, United States Sulphur, city (1990 pop. 20,125), Calcasieu parish, SW La.; inc. 1914. It is a trade center for an area producing natural gas, oil, and timber as well as sorghum, soybeans, cattle, and crawfish. and ammonia ammonia, chemical compound, NH3, colorless gas that is about one half as dense as air at ordinary temperatures and pressures. It has a characteristic pungent, penetrating odor. costs facing the major Southern U.S. producers. North America Retail -- EBIT for the second quarter was up $6-million compared to the same period in 2002. This is largely due to higher nitrogen selling prices and chemical sales volumes, which resulted in higher revenue and gross profit. South America -- Wholesale EBIT for the second quarter increased by $10-million over the previous year. This is due to both higher international nitrogen prices and higher production rates. In addition, foreign exchange losses during the second quarter of 2002 totaled $7-million, while a relatively stable Argentine peso against the U.S. dollar resulted in limited foreign currency effects to 2003 results. -- Second quarter EBIT for Retail decreased $11-million from the same period in 2002. In 2002, Retail realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. from the collection of receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed at better exchange rates than provided for and benefited from a weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. Argentine peso The peso (originally established as the nuevo peso argentino or peso convertible) is the currency of Argentina. Its ISO 4217 code is ARS, and the symbol used locally for it is $ (to avoid confusion, Argentines frequently use US$,
through lower selling and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. and appreciation in the value of its inventory. Selling, general and administrative costs for the second quarter of 2003 were up $7-million to $74-million as a result of the strengthening Canadian dollar on 2003 costs and the postponement of salary adjustments and project costs in 2002. Financial Cash flow from operating activities for the second quarter was $36-million compared to $75-million in 2002. This decline is due to an increase in working capital, largely the result of higher ending Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. nitrogen inventory. OUTLOOK As Agrium looks toward the second half of 2003, there are a number of factors that may have a positive impact on results: -- Nitrogen plant maintenance shutdowns in major exporting regions, combined with good demand from Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , the U.S. and parts of Asia during what is normally a slow summer period, have all contributed to strengthening global nitrogen prices. -- As of the end of July July: see month. , Agrium estimates approximately 32 percent of North American nitrogen capacity and close to 37 percent of U.S. production capacity was idled in response to high natural gas prices. The lower production is expected to reduce North American inventory to historic levels. -- North American crop yields are expected to be high this year due to favourable growing conditions. This should support fall fertilizer sales due to larger grain volumes leading to higher farm incomes and greater nutrient nutrient /nu·tri·ent/ (noo´tre-int) 1. nourishing; providing nutrition. 2. a food or other substance that provides energy or building material for the survival and growth of a living organism. removal from the soil. This may be partially offset by downward pressure on grain prices as a result of higher North American production. However, global grain inventories are expected to decline for the fifth consecutive year and U.S. grain inventories are expected to remain well below the five-year average. -- Legislation adopted during the second quarter by the Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States State Legislature A state legislature may refer to a legislative branch or body of a political subdivision in a federal system. The following legislatures exist in the following political subdivisions:
certainty CERTAINTY, UNCERTAINTY, contracts. In matters of obligation, a thing is certain, when its essence, quality, and quantity, are described, distinctly set forth, Dig. 12, 1, 6. It is uncertain, when the description is not that of one individual object, but designates only the kind. Louis. in price with respect to State royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. . The law establishes a method to determine the royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. rate for natural gas produced from State leases. This removes a disincentive dis·in·cen·tive n. Something that prevents or discourages action; a deterrent. disincentive Noun something that discourages someone from behaving or acting in a particular way Noun 1. for natural gas exploration in Cook Inlet, Alaska. -- The agricultural economy in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. remains strong and increased demand for crop inputs is anticipated for the upcoming South American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of spring season. Grain export revenues are at record high levels reflecting both increased domestic production and improved international grain prices. The current fertilizer year's demand is expected be equal to the all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high of 1996/1997. -- For South America Wholesale, natural gas costs in the first half of 2003 reflected the benefits of the devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Argentine peso. Negotiations for natural gas pricing for the second half of the year are currently under way and prices are expected to continue to be globally competitive. Offsetting these positive indicators are some factors that may impact second half results: -- The ban on Canadian beef by key trading partners as a result of Bovine Spongiform Encephalopathy bovine spongiform encephalopathy: see prion. (Mad Cow Disease mad cow disease: see prion. mad cow disease or bovine spongiform encephalopathy (BSE) Fatal neurodegenerative disease of cattle. Symptoms include behavioral changes (e.g. ) could have an impact on fall fertilizer sales to mixed grain/livestock farmers in Western Canada
Western Canada, commonly referred to as the West . While many of these farmers will switch to producing grain for export, there will be a negative impact on Western Canadian farm income if the ban continues into the fall. -- Speculation speculation, practice of engaging in business in order to make quick profits from fluctuations in prices, as opposed to the practice of investing in a productive enterprise in order to share in its earnings. is that China is planning to export 100,000 tonnes of urea to the U.S. in the third quarter of 2003. While of relatively modest volume, it may temporarily impact the strengthening nitrogen market. -- Costs at Agrium's Canadian-based production facilities and Corporate office are expected to be negatively impacted by the stronger Canadian dollar relative to 2002. -- While North American natural gas prices are expected to be lower than the first half of 2003, they are expected to remain significantly higher than 2002. Natural gas prices are also expected to remain volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. into 2004 and Agrium will continue to respond with tactical decisions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc production and hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. of input costs. -- Natural gas deliveries from Unocal to Agrium's Kenai, Alaska nitrogen facility for the second half of 2003 remain uncertain and may be greater or less than current levels. OTHER Agrium Inc. is a leading global producer and marketer of agricultural nutrients and industrial products and a major retail supplier of agricultural products and services in both North America and Argentina. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash potash: see potassium carbonate. potash Name used for various inorganic compounds of potassium, chiefly the carbonate (K2CO3), a white crystalline material formerly obtained from wood ashes. . Agrium's strategy is to grow through incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. expansion of its existing operations and acquisitions as well as the development, commercialization and marketing of new products and international opportunities. Certain statements in this press release constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Such forward-looking statements involve known and unknown risks and uncertainties, including those referred to in the Corporation's annual report to shareholders for 2002, which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the future gas supply demand for fertilizers, the future gas prices of nitrogen, phosphate and potash, the level and volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of natural gas prices, the differential pricing of natural gas in various markets, the outcome of the dispute between the Corporation and Unocal, the future gas prices and availability at Kenai, the U.S. dollar-Argentine peso exchange rate, economic activity in the Argentine agricultural sector, the outcome of the Argentine gas price negotiations, Argentine governmental agricultural policies Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultural product markets. and Argentine domestic fertilizer consumption, future fertilizer inventory levels, future nitrogen, potassium potassium (pətăs`ēəm), a metallic chemical element; symbol K [Lat. kalium=alkali]; at. no. 19; at. wt. 39.0983; m.p. 63.25°C;; b.p. 760°C;; sp. gr. .862 at 20°C;; valence +1. and phosphate consumption in North America, weather conditions in North America, the carry-over The designation of the process by which net operating loss for one year may be applied, as provided by federal tax law, to each of several taxable years following the taxable year of such loss. of nitrogen and soil in farmlands, future grain and crop prices, future levels of nitrogen imports into North America and future nitrogen capacity. A WEBSITE SIMULCAST Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. of the 2003 2nd Quarter Conference Call will be available in a listen-only mode beginning Thursday Thursday: see week. , July 31 at 8:30 a.m. MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → (10:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ). Please visit the following website: www.agrium.com
AGRIUM INC.
Consolidated Statements of Operations and Retained Earnings
(Millions of U.S. dollars, except per share amounts)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
2003 2002 2003 2002
------------------ ----------------
Sales $ 966 $ 829 $ 1,361 $ 1,167
Direct freight 37 37 60 58
------------------ ----------------
Net sales 929 792 1,301 1,109
Cost of product 677 619 938 865
------------------ ----------------
Gross profit 252 173 363 244
------------------ ----------------
Expenses
Selling, general and
administrative 74 67 133 121
Depreciation, depletion and
amortization 35 32 66 66
Royalties and other taxes 4 3 9 8
Other expenses and Argentine
charges 9 16 20 31
------------------ ----------------
122 118 228 226
------------------ ----------------
Earnings before interest
expense and income taxes 130 55 135 18
Interest on long-term debt 15 15 29 30
Other interest 3 1 4 3
------------------ ----------------
Earnings (loss) before
income taxes 112 39 102 (15)
------------------ ----------------
Current income tax (recovery) 29 1 29 (5)
Future income tax 14 15 10 3
------------------ ----------------
Income taxes (recovery) 43 16 39 (2)
------------------ ----------------
Net earnings (loss) 69 23 63 (13)
Retained earnings -
beginning of period 182 206 191 245
Common share dividends
declared (7) (7) (7) (7)
Preferred securities charges (2) (2) (5) (5)
------------------ ----------------
Retained earnings - end of
period $ 242 $ 220 $ 242 $ 220
------------------ ----------------
------------------ ----------------
Basic earnings (loss) per
common share $ 0.53 $ 0.16 $ 0.46 ($ 0.16)
Average outstanding shares
(in millions) 126 126 126 121
Diluted earnings (loss) per
common share $ 0.47 $ 0.15 $ 0.43 ($ 0.16)
Average outstanding shares
(in millions) 147 149 147 121
Shares outstanding at end of
period (in millions) 126 126 126 126
AGRIUM INC.
Consolidated Statements of Cash Flows
(Millions of U.S. dollars)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
2003 2002 2003 2002
------------------ ----------------
Operating:
Net earnings (loss) for the
period $ 69 $ 23 $ 63 $ (13)
Depreciation, depletion and
amortization 35 32 66 66
Future income tax 14 15 10 3
Foreign exchange and
Argentine charges (6) (2) (8) 9
Net changes in non-cash
working capital (76) 7 (60) 12
------------------ ----------------
Cash provided by operating
activities 36 75 71 77
------------------ ----------------
Investing:
Capital assets (22) (3) (31) (9)
Decrease (increase) in other
assets (3) 7 - 8
Proceeds from disposal of
assets and investments 6 - 11 -
Other 3 12 7 13
------------------ ----------------
Cash provided by (used in)
investing activities (16) 16 (13) 12
------------------ ----------------
Financing:
Common shares issued - 2 - 108
Bank indebtedness repayment (2) (66) (1) (203)
Long-term debt repayment - (3) (2) (4)
Common share dividends paid - - (7) (6)
Preferred securities charges
paid (2) - (5) (3)
------------------ ----------------
Cash used in financing
activities (4) (67) (15) (108)
------------------ ----------------
Increase (decrease) in cash
and cash-equivalents 16 24 43 (19)
Cash and cash-equivalents -
beginning of period 136 8 109 51
------------------ ----------------
Cash and cash-equivalents -
end of period $ 152 $ 32 $ 152 $ 32
------------------ ----------------
------------------ ----------------
AGRIUM INC.
Consolidated Balance Sheets
(Millions of U.S. dollars)
As at As at
June 30, December 31,
----------------- -----------
2003 2002 2002
----------------- -----------
(Unaudited)
ASSETS
Current assets
Cash and cash-equivalents $ 152 $ 32 $ 109
Accounts receivable 287 243 187
Inventories 405 352 353
Prepaid expenses 26 14 35
------- -------- --------
870 641 684
Capital assets 1,450 1,459 1,400
Other assets 90 99 85
Goodwill - 45 -
------- -------- --------
$ 2,410 $ 2,244 $ 2,169
------- -------- --------
------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ - $ 10 $ 1
Accounts payable and accrued
liabilities 383 339 340
Income and other taxes payable 28 9 -
Current portion of long-term debt 104 7 25
------- -------- --------
515 365 366
Long-term debt
Recourse debt 533 623 604
Non-recourse financing - Profertil 124 137 132
Other liabilities 157 143 140
Future income taxes 185 168 163
------- -------- --------
1,514 1,436 1,405
Shareholders' equity
Share capital
Authorized: unlimited common shares
and preferred securities Issued:
Common shares: 2003 - 126 million
(2002 -126 million) 485 484 484
Preferred securities:
8% Non-convertible 2003 - 7
million (2002 -7 million) 172 171 171
6% Convertible 2003 - 2
million (2002 - 2 million) 50 50 50
Retained earnings 242 220 191
Cumulative translation adjustment (53) (117) (132)
------- -------- --------
896 808 764
------- -------- --------
$ 2,410 $ 2,244 $ 2,169
------- -------- --------
------- -------- --------
AGRIUM INC. Summarized Notes to the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge For the six months ended June 30, 2003 (Millions of U.S. dollars, except per share amounts) (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES The Corporation's accounting policies are in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and are consistent with those outlined in the annual audited financial statements except where stated below. These interim consolidated financial statements do not include all disclosures normally provided in annual financial statements and should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Corporation's audited consolidated financial statements for the year ended December December: see month. 31, 2002. In management's opinion, the interim consolidated financial statements include all adjustments necessary to present fairly such information. Certain comparative figures have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current year's presentation. The interim consolidated financial statements include the accounts of Agrium Inc. and its subsidiaries. 2. STOCK BASED COMPENSATION Had the Corporation expensed the fair value of stock based compensation to net earnings (loss), the following is pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net earnings (loss) and basic earnings (loss) per share amounts for each period.
Three months ended
June 30,
-------------------------------------------
2003 2002
--------------------- ---------------------
As Reported Pro forma As Reported Pro forma
--------------------- ---------------------
Net earnings $ 69 $ 68 $ 23 $ 22
Earnings per common share
Basic $ 0.53 $ 0.52 $ 0.16 $ 0.15
Six months ended
June 30,
-------------------------------------------
2003 2002
--------------------- ---------------------
As Reported Pro forma As Reported Pro forma
--------------------- ---------------------
Net earnings (loss) $ 63 $ 60 $ (13) $ (16)
Earnings (loss) per common
share
Basic $ 0.46 $ 0.43 $ (0.16) $ (0.17)
3. EARNINGS (LOSS) PER COMMON SHARE The following table summarizes the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of net earnings (loss) per common share:
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
2003 2002 2003 2002
------------------ -----------------
Numerator:
Net earnings (loss) $ 69 $ 23 $ 63 $ (13)
Preferred securities charges
net of tax (2) (2) (5) (5)
-------- -------- ------- -------
Numerator for basic earnings
(loss) per share 67 21 58 (18)
-------- -------- ------- -------
-------- -------- ------- -------
Preferred securities charges
net of tax 2 2 5 5
-------- -------- ------- -------
Numerator for diluted
earnings (loss) per share $ 69 $ 23 $ 63 $ (13)
-------- -------- ------- -------
-------- -------- ------- -------
Denominator:
Weighted average denominator
for basic common shares 126 126 126 121
-------- -------- ------- -------
Dilutive instruments:
Stock options using the
treasury stock method 1 1 1 -
Preferred securities
converted to common shares
$175 million, eight percent 16 18 16 -
$50 million, six percent 4 4 4 -
-------- -------- ------- -------
Denominator for diluted
earnings per share 147 149 147 121
-------- -------- ------- -------
-------- -------- ------- -------
Basic earnings (loss) per
share $ 0.53 $ 0.16 $ 0.46 $ (0.16)
Diluted earnings (loss) per
share $ 0.47 $ 0.15 $ 0.43 $ (0.16)
As at June 30, 2003, the Corporation has outstanding approximately ten million options to acquire common shares. 4. SEASONALITY The fertilizer business is seasonal in nature. Sales are concentrated in the spring and fall planting seasons while produced inventories are accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. throughout the year. Cash collections generally occur after the planting seasons in North America and after harvest (tool, networking) Harvest - A highly scalable, customisable system for discovering resources on the Internet. Version: 1.3. http://tardis.ed.ac.uk/harvest/. in South America. 5. SEGMENTED INFORMATION The Corporation's primary activity is the production and wholesale marketing of nitrogen, potash and phosphate and the retail sales of fertilizers, chemicals and other agricultural inputs and services. The Corporation operates principally in Canada, the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Argentina. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight between segments are accounted for at prices which approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. fair market value and are eliminated on consolidation. The reportable segment entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Other" includes Corporate functions and inter-segment eliminations.
AGRIUM INC.
Segmented Earnings Before Interest Expense and Income Taxes
(Millions of U.S. dollars)
(Unaudited)
Three months ended June 30,
-----------------------------------------------------
2003
-----------------------------------------------------
North America South America
Whole- Whole-
sale Retail sale Retail Other Total
Net sales
- external
customers $ 476 $ 407 $ 23 $ 23 $ - $ 929
- internal
customers 21 - 2 - (23) -
-----------------------------------------------------
Total
net sales 497 407 25 23 (23) 929
Cost of
product 367 308 7 20 (25) 677
-----------------------------------------------------
Gross profit 130 99 18 3 2 252
Gross
profit % 26% 24% 72% 13% -9% 27%
Expenses:
Selling,
general and
administrative 8 54 1 3 8 74
Depreciation,
depletion
and
amortization 24 5 4 - 2 35
Royalties
and other
taxes 2 1 - - 1 4
Other (income)
expenses and
Argentine
charges 10 (3) - (2) 4 9
-----------------------------------------------------
44 57 5 1 15 122
-----------------------------------------------------
Earnings
(loss) before
interest
expense and
income taxes $ 86 $ 42 $ 13 $ 2 $ (13) $ 130
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
2002
-----------------------------------------------------
North America South America
Whole- Whole-
sale Retail sale Retail Other Total
Net sales
- external
customers $ 379 $ 383 $ 18 $ 12 $ - $ 792
- internal
customers 25 - 2 - (27) -
-----------------------------------------------------
Total net
sales 404 383 20 12 (27) 792
Cost of
product 348 288 6 5 (28) 619
-----------------------------------------------------
Gross profit 56 95 14 7 1 173
Gross
profit % 14% 25% 70% 58% -4% 22%
Expenses:
Selling,
general and
administrative 8 54 1 1 3 67
Depreciation,
depletion
and
amortization 22 5 4 - 1 32
Royalties and
other taxes 4 1 1 - - 6
Other (income)
expenses and
Argentine
charges 13 (1) 5 (7) 3 13
-----------------------------------------------------
47 59 11 (6) 7 118
-----------------------------------------------------
Earnings
(loss) before
interest
expense and
income taxes $ 9 $ 36 $ 3 $ 13 $ (6) $ 55
-----------------------------------------------------
-----------------------------------------------------
Six months ended June 30,
-----------------------------------------------------
2003
-----------------------------------------------------
North America South America
Whole- Whole-
sale Retail sale Retail Other Total
Net sales
- external
customers $ 695 $ 533 $ 43 $ 30 $ - $1,301
- internal
customers 37 - 3 - (40) -
-----------------------------------------------------
Total net
sales 732 533 46 30 (40) 1,301
Cost of
product 546 392 14 26 (40) 938
-----------------------------------------------------
Gross profit 186 141 32 4 - 363
Gross
profit % 25% 26% 70% 13% 0% 28%
Expenses:
Selling,
general and
administrative 15 99 2 4 13 133
Depreciation,
depletion and
amortization 46 9 8 - 3 66
Royalties and
other taxes 6 2 - - 1 9
Other (income)
expenses and
Argentine
charges 20 (6) (2) (2) 10 20
-----------------------------------------------------
87 104 8 2 27 228
-----------------------------------------------------
Earnings
(loss) before
interest
expense and
income taxes $ 99 $ 37 $ 24 $ 2 $ (27) $ 135
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
2002
-----------------------------------------------------
North America South America
Whole- Whole-
sale Retail sale Retail Other Total
Net sales
- external
customers $ 570 $ 497 $ 27 $ 15 $ - $1,109
- internal
customers 39 - 2 - (41) -
-----------------------------------------------------
Total net
sales 609 497 29 15 (41) 1,109
Cost of
product 523 366 12 6 (42) 865
-----------------------------------------------------
Gross profit 86 131 17 9 1 244
Gross
profit % 14% 26% 59% 60% -2% 22%
Expenses:
Selling,
general
and
administrative 17 95 2 3 4 121
Depreciation,
depletion and
amortization 44 10 8 1 3 66
Royalties and
other taxes 5 2 - - 1 8
Other (income)
expenses and
Argentine
charges 16 (4) 18 (9) 10 31
-----------------------------------------------------
82 103 28 (5) 18 226
-----------------------------------------------------
Earnings
(loss) before
interest
expense and
income
taxes $ 4 $ 28 $ (11) $ 14 $ (17) $ 18
-----------------------------------------------------
-----------------------------------------------------
AGRIUM INC.
Net Sales and Gross Profit by Operating Unit and Product Line
(Millions of U.S. dollars, unless otherwise noted)
(Unaudited)
Three months ended June 30,
------------------------------------------------------
2003
------------------------------------------------------
Net Cost of Gross Tonnes (000's) Margin
Sales Product Profit Sales Inventory ($/Tonne)
------------------------------------------------------
North America
Wholesale
Nitrogen
Ammonia $ 145 $ 106 $ 39 571 229 $ 68
Urea 133 99 34 661 271 51
Nitrate
and other 66 52 14 375 113 37
------------------------------------------------------
Total
Nitrogen 344 257 87 1,607 613 54
Phosphate
- Dry 63 52 11 260 80 42
Phosphate
- Liquid 15 12 3 45 12 67
Potash 47 29 18 480 238 38
Sulphate and
other products 28 17 11 158 115 70
------------------------------------------------------
497 367 130 2,550 1,058 51
-------------------------
North America
Retail
Fertilizers 174 124 50
Chemicals 175 148 27
Other products
and services 58 36 22
-------------------------
407 308 99
South America
Wholesale
Nitrogen 24 7 17 145 76 117
Other products
and services 1 - 1
-------------------------
25 7 18
South America
Retail
Fertilizers 19 16 3
Other products
and services 4 4 -
-------------------------
23 20 3
Other (23) (25) 2
-------------------------
Total $ 929 $ 677 $ 252
-------------------------
-------------------------
------------------------------------------------------
2002
------------------------------------------------------
Net Cost of Gross Tonnes (000's) Margin
Sales Product Profit Sales Inventory ($/Tonne)
------------------------------------------------------
North America
Wholesale
Nitrogen
Ammonia $ 87 $ 81 $ 6 530 266 $ 11
Urea 102 95 7 789 144 9
Nitrate and
other 59 59 - 487 135 -
------------------------------------------------------
Total Nitrogen 248 235 13 1,806 545 7
Phosphate
- Dry 64 57 7 334 86 21
Phosphate
- Liquid 14 11 3 39 9 77
Potash 52 30 22 523 255 42
Sulphate and
other products 26 15 11 157 88 70
------------------------------------------------------
404 348 56 2,859 983 20
-------------------------
North America
Retail
Fertilizers 161 115 46
Chemicals 165 139 26
Other products
and services 57 34 23
-------------------------
383 288 95
South America
Wholesale
Nitrogen 18 5 13 178 32 73
Other products
and services 2 1 1
-------------------------
20 6 14
South America
Retail
Fertilizers 10 4 6
Other products
and services 2 1 1
-------------------------
12 5 7
Other (27) (28) 1
-------------------------
Total $ 792 $ 619 $ 173
-------------------------
-------------------------
AGRIUM INC.
Net Sales and Gross Profit by Operating Unit and Product Line
(Millions of U.S. dollars, unless otherwise noted)
(Unaudited)
Six months ended June 30,
------------------------------------------------------
2003
------------------------------------------------------
Net Cost of Gross Tonnes (000's) Margin
Sales Product Profit Sales Inventory ($/Tonne)
------------------------------------------------------
North America
Wholesale
Nitrogen
Ammonia $ 194 $ 145 $ 49 817 229 $ 60
Urea 203 154 49 1,070 271 46
Nitrate and
other 92 74 18 531 113 34
------------------------------------------------------
Total Nitrogen 489 373 116 2,418 613 48
Phosphate
- Dry 94 78 16 411 80 39
Phosphate
- Liquid 30 23 7 90 12 78
Potash 79 49 30 820 238 37
Sulphate and
other products 40 23 17 217 115 78
------------------------------------------------------
732 546 186 3,956 1,058 47
-------------------------
North America
Retail
Fertilizers 233 167 66
Chemicals 230 182 48
Other products
and services 70 43 27
-------------------------
533 392 141
South America
Wholesale
Nitrogen 45 13 32 284 76 113
Other products
and services 1 1 -
-------------------------
46 14 32
South America
Retail
Fertilizers 22 19 3
Other products
and services 8 7 1
-------------------------
30 26 4
Other (40) (40) -
-------------------------
Total $1,301 $ 938 $ 363
-------------------------
-------------------------
------------------------------------------------------
2002
------------------------------------------------------
Net Cost of Gross Tonnes (000's) Margin
Sales Product Profit Sales Inventory ($/Tonne)
------------------------------------------------------
North America
Wholesale
Nitrogen
Ammonia $ 120 $ 111 $ 9 791 266 $ 11
Urea 158 147 11 1,254 144 9
Nitrate and
other 85 85 - 680 135 -
------------------------------------------------------
Total Nitrogen 363 343 20 2,725 545 7
Phosphate
- Dry 95 85 10 498 86 20
Phosphate
- Liquid 25 20 5 71 9 70
Potash 88 51 37 890 255 42
Sulphate and
other products 38 24 14 240 88 58
------------------------------------------------------
609 523 86 4,424 983 19
-------------------------
North America
Retail
Fertilizers 217 156 61
Chemicals 209 166 43
Other products
and services 71 44 27
-------------------------
497 366 131
South America
Wholesale
Nitrogen 27 11 16 264 32 61
Other products
and services 2 1 1
-------------------------
29 12 17
South America
Retail
Fertilizers 11 4 7
Other products
and services 4 2 2
-------------------------
15 6 9
Other (41) (42) 1
-------------------------
Total $1,109 $ 865 $ 244
-------------------------
-------------------------
AGRIUM INC.
Net Sales and Gross Profit by Market Destination
(Millions of U.S. dollars, unless otherwise noted)
(Unaudited)
Three months ended June 30,
------------------------------------------------------
2003
------------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit% (000's) ($/Tonne)
------------------------------------------------------
North America
Nitrogen $ 283 $ 219 $ 64 23% 1,191 $ 54
Phosphate 78 64 14 18% 305 46
Potash 33 23 10 30% 310 32
Sulphate and
other
products 26 14 12 46% 132 -
North America
Retail 407 308 99 24% - -
Other (21) (23) 2 -9% - -
------------------------------------------------------
806 605 201 25% 1,938 -
International
Nitrogen 86 45 41 48% 561 73
Potash 13 6 7 54% 170 41
Sulphate and
other products 3 3 - 0% 26 -
South America
Retail 23 20 3 13% - -
Other (2) (2) - 0% - -
------------------------------------------------------
123 72 51 41% 757 -
------------------------------------------------------
Total $ 929 $ 677 $ 252 27% $2,695 $ -
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
2002
------------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit% (000's) ($/Tonne)
------------------------------------------------------
North America
Nitrogen $ 212 $ 199 $ 13 6% 1,444 $ 9
Phosphate 79 68 11 14% 373 29
Potash 40 25 15 38% 379 40
Sulphate and
other products 24 14 10 42% 145 -
North America
Retail 383 288 95 25% - -
Other (25) (26) 1 -4% - -
------------------------------------------------------
713 568 145 20% 2,341 -
International
Nitrogen 53 39 14 26% 540 26
Potash 12 5 7 58% 144 49
Sulphate and
other products 4 4 - 0% 12 -
South America
Retail 12 5 7 58% - -
Other (2) (2) - 0% - -
------------------------------------------------------
79 51 28 35% 696 -
------------------------------------------------------
Total $ 792 $ 619 $ 173 22% $3,037 $ -
------------------------------------------------------
------------------------------------------------------
Six months ended June 30,
------------------------------------------------------
2003
------------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit% (000's) ($/Tonne)
------------------------------------------------------
North America
Nitrogen $ 387 $ 305 $ 82 21% 1,722 $ 48
Phosphate 124 101 23 19% 501 46
Potash 55 38 17 31% 514 33
Sulphate and
other products 36 20 16 44% 178 -
North America
Retail 533 392 141 26% - -
Other (37) (37) - - - -
------------------------------------------------------
1,098 819 279 25% 2,915 -
International
Nitrogen 147 80 67 46% 980 68
Potash 24 11 13 54% 306 42
Sulphate and
other products 5 5 - 0% 39 -
South America
Retail 30 26 4 13% - -
Other (3) (3) - 0% - -
------------------------------------------------------
203 119 84 41% 1,325 -
------------------------------------------------------
Total $1,301 $ 938 $ 363 28% $4,240 $ -
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
2002
------------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit% (000's) ($/Tonne)
------------------------------------------------------
North America
Nitrogen $ 289 $ 267 $ 22 8% 1,976 $ 11
Phosphate 120 106 14 12% 568 25
Potash 64 41 23 36% 604 38
Sulphate and
other
products 34 21 13 38% 205 -
North America
Retail 497 366 131 26% - -
Other (39) (40) 1 -2% - -
------------------------------------------------------
965 761 204 21% 3,353 -
International
Nitrogen 100 85 15 15% 1,013 15
Potash 24 10 14 58% 286 49
Sulphate and
other products 7 5 2 29% 36 -
South America
Retail 15 6 9 60% - -
Other (2) (2) - 0% - -
------------------------------------------------------
144 104 40 28% 1,335 -
------------------------------------------------------
Total $1,109 $ 865 $ 244 22% $4,688 $ -
------------------------------------------------------
------------------------------------------------------
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