Agrium Inc.: Q1 Interim Report.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)--May 2, 2002 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. (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 )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :AGU) announced today that its net loss for the first quarter ended March 31, 2002, was $27-million ($0.25 per common share), before net losses 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. from currency translation (Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. Charges). This compares to net earnings of $7-million ($0.04 per common share) for the same period in 2001. After including the Argentine Charges, the net loss for 2002 was $36-million ($0.33 per common share). "Agrium's quarterly earnings reflect the current low international and domestic prices for 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. ," 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 President 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. . "Weather related problems in many growing regions A growing region is an area suited by climate and soil conditions to the cultivation of a certain type of crop. Most crops are cultivated not in one place only, but in several distinct regions in diverse parts of the world. of the world in early 2001 led to a drop of approximately three percent in global demand for all of the major nutrients for the year. Along with weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. industrial demand in the
latter half of 2001, as a result of the global economic slowdown For articles with similar titles, see Slow Down (disambiguation).A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. , a temporary oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies situation was created which depressed prices Depressed price In the context of stocks, stock whose market price is low in comparison to stocks in its sector. . Although international supply and demand fundamentals are improving, prices have not yet reflected this, particularly in our primary markets." Despite the current weak conditions, there are a number of signs pointing to a recovery in 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. markets. The U.S. Department of Agriculture is forecasting a three million acre increase in U.S. corn acreage this year to 79 million acres, a recovery from the four million acre decline in 2001. Corn is a key indicator of fertilizer demand because it has the highest 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. input requirement among the major commodity crops. Secondly, China gained admission to the World Trade Organization (WTO See World Trade Organization. ) effective January January: see month. 1, 2002. This is a significant development as China is the world's largest consumer of nutrients and is expected to resume importing nitrogen for the first time since mid- mid- pref. Middle: midbrain. 1997. China is also expected to increase its imports of 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 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. . Thirdly, North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. fertilizer inventory levels have declined, and at the end of March 2002, were below the 5-year average for both nitrogen and phosphate. Finally, the world grain stocks-to-use ratio, a key predictor of grain prices, is projected to fall once again this year to the lowest level since 1995/1996, the last peak in international grain prices. These factors are positive for the industry in the medium-term. While nitrogen prices remained weak throughout the first quarter of 2002, North American natural gas prices rallied late in the quarter. This created negative cash margins for some U.S. producers as natural gas is the largest cost component of nitrogen production. As a result, a number of North American producers announced temporary closures or reduced production of nitrogen plants in late March and April. Currently, the North American nitrogen industry is operating at about 70 percent of capacity, down from the 90 percent it operated at during most of the winter. These production curtailments are adding to an already tightening global nitrogen supply and demand balance and as a result, international and gulf 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. prices recently started to react. In early April, the U.S. Gulf coast ammonia price jumped $16 from its previous level of $127 per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. but this increase has not yet been reflected in our key markets due to competitive pressures. However, global urea inventories currently remain somewhat high and accordingly, prices have not yet rallied and are not expected to do so until the second half of the year. NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). , the North American benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. , 3-day average natural gas price averaged $2.38 per MMBtu during the first quarter 2002 compared to $7.27 for the same period of 2001. Agrium's first quarter natural gas costs were $2.39 per MMBtu, compared to $2.95 for the same period of 2001. The 2002 first quarter gas costs incorporate approximately $17-million in hedging losses from contracts entered into in 2001 and previously. Of this amount approximately $6-million has been included in inventory at March 31, 2002 and the remainder expensed as cost of product sold or other expense. Based on existing hedging contracts in place and the current forward strip, the expected additional natural gas hedging loss for the remainder of 2002 is approximately $17-million. This is an improvement of $13-million from the previously forecasted hedging losses of $47-million stated in the fourth quarter news release. FIRST QUARTER HIGHLIGHTS -- Argentina currency translation. The Argentina situation remains volatile as the Argentine Peso continued to weaken against the U.S. dollar throughout the first quarter. The Peso closed at a rate of three Pesos to one U.S. dollar at the end of the first quarter. The net charge Agrium recorded in the first quarter 2002 relating to this further weakening was $9-million, comprised primarily of additional losses on long-term Value-Added Tax receivables from the Argentine government of $15-million offset by gains on other Peso denominated net liabilities of $6-million. In addition, further losses of $33-million relating to retail operations have been reflected directly in the cumulative translation account in shareholder's equity. -- 11.2 million common share equity offering. On March 5, 2002, Agrium announced that it had entered into an agreement to sell 11.2 million common shares at $9.85 per common share to a syndicate of underwriters on a "bought-deal" basis. The offering closed on March 20, 2002, and Agrium received net proceeds of $106-million from the underwriters. This offering increased Agrium's outstanding common shares from 115 million shares to 126 million shares. The net proceeds of the offering were used to repay existing bank indebtedness. OUTLOOK In 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. , the outlook is for a recovery in volumes from the poor spring season of 2001, driven primarily by more favourable weather conditions and higher corn acreage. U.S. farmers are looking at essentially flat pricing year-over-year for the major commodity crops. 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 , however, prices for wheat wheat, cereal plant of the genus Triticum of the family Gramineae (grass family), a major food and an important commodity on the world grain market. Wheat Varieties and Their Uses , barley barley, annual cereal plant (Hordeum vulgare and sometimes other species) of the family Gramineae (grass family), cultivated by humans probably as early as any cereal. and canola canola see brassicanapus. are all up; the wheat price partly due to the weaker 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 . Farmers are also facing significantly lower input costs this year, especially for nitrogen. There are still concerns over drought drought, abnormally long period of insufficient rainfall. Drought cannot be defined in terms of inches of rainfall or number of days without rain, since it is determined by such variable factors as the distribution in time and area of precipitation during and before for certain areas in Western Canada
Western Canada, commonly referred to as the West , especially in Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. and southern Alberta Southern Alberta is a region located in the Canadian province of Alberta. As of the year 2004, the region's population was approximately 272,017[1][2]. . In the Pacific Northwest For names and places containing the slightly longer word 'northwestern' (or variants), see . Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. , 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 have improved significantly over last year. The combination of good winter precipitation precipitation, in chemistry precipitation, in chemistry, a process in which a solid is separated from a suspension, sol, or solution. In a suspension such as sand in water the solid spontaneously precipitates (settles out) on standing. and greater snow pack in the mountains for irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice. water has alleviated al·le·vi·ate tr.v. al·le·vi·at·ed, al·le·vi·at·ing, al·le·vi·ates To make (pain, for example) more bearable: a drug that alleviates cold symptoms. See Synonyms at relieve. many of the concerns facing farmers last year. Fertilizer shipments during the fall of 2001 and the first quarter of this year are still well below the previous years' numbers. This indicates that this year's spring sales volumes should be up over spring sales volumes in 2001. However, competitive pressures are expected to result in lower nitrogen prices and lower nitrogen margins and therefore lower overall gross profit in the first half of 2002 compared to the first half of 2001. April Retail sales activity for the Pacific Northwest is encouraging. The Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). and Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. areas in particular are displaying strong sales activity. The Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. area outlook continues to be positive but sales will occur somewhat later than normal. The attitudes in the U.S. Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians are also optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op . Lower nitrogen prices and increased corn acres should result in more fertilizer sales tonnes. Currently, Agrium is 22 percent financially hedged and 57 percent hedged in total for the remainder of 2002 for natural gas. Financial hedges are forward contracts entered into to secure natural gas pricing for North American fertilizer production. The total hedge position includes these financial hedges and natural gas purchased under fixed base-price contracts for 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. and Argentina. Agrium has also locked in a favourable differential between NYMEX and AECO AECO Aeromedical Evacuation Control Officer AECO Advance Engineering Change Order AECO Architecture, Engineering, Construction and Owner-operated on approximately 25 percent of its North American requirement for the remainder of the year to preserve its cost advantage. The recent increase in international ammonia prices improves the outlook for sales from Agrium's Kenai, Alaska facility and from Argentina. This should result in a significant improvement from the first quarter 2002, which produced poor profitability on low international prices. Agrium's business in Argentina also suffered from the economic uncertainty facing that country in the first quarter of 2002. Agrium continues to monitor the situation in Argentina, and the impact on its operations as the Peso continues to deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. . The Peso reached a ratio of 3:1 at the end of the first quarter of 2002. Business activity in the country has slowed considerably and convertibility to U.S. dollars is difficult. The Civil Code in Argentina still allows the agricultural sector to operate in equivalent U.S. dollars. Therefore, both Profertil and ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). , Agrium's retail operation, can sell product at prices which are adjusted for changes in the U.S. to Peso exchange rate. 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 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$, reduces Profertil's input costs and therefore should improve its international competitiveness. Profertil also has the ability to sell domestically or to export product, thereby mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. some of the risk of operating in an environment of political and fiscal uncertainty. Profertil is required to bring U.S. dollars back to Argentina and convert them to Pesos at the market rate, except to meet foreign debt servicing agreements. This year, the normal appreciation in nitrogen prices leading up to the spring application season did not materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. as expected. Except for the recent jump in the international ammonia price, nitrogen prices have lagged and are currently below prices experienced during the 2001 fall application season. This situation is causing Agrium to be less optimistic about the earnings outlook for the year. The current First Call consensus forecast for Agrium is $0.35 per share for the second quarter of 2002. Given current prices, the outlook for prices for the remainder of the spring season would indicate second quarter earnings of $0.25 to $0.30 per common share. 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 Overview North America Wholesale recorded a loss before interest expense and income taxes of $3-million for the first quarter 2002 compared to earnings before interest expense and income taxes (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) of $48-million from the same quarter in 2001. This significant drop in earnings was primarily due to international nitrogen prices, which were significantly below last year's levels. For the first quarter of 2002, the U.S. gulf coast ammonia price averaged $130 per tonne, compared to $288 per tonne for the first quarter of 2001. In 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, losses before interest expense and income taxes were $2-million, before Argentine Charges, compared to EBIT of $4-million in the first quarter of 2001, reflecting low international nitrogen prices and lower sales activity in Argentina as a result of the economic situation. After including the Argentine Charges the losses before interest expense and income taxes were $14-million. North America Retail recorded a loss of $8-million before interest expense and income taxes for the first quarter, a slight improvement compared to the loss of $9-million in the first quarter of 2001. South America Retail losses before interest expense and income taxes for the first quarter 2002 were $1-million, excluding Argentine Charges, compared to a loss of $2-million in 2001, an improvement over the results for 2001, due mainly to the impact of devaluation on Peso denominated expenses. After including the Argentine Charges EBIT was $2-million. Segmented Results The following commentary should be read in conjunction with the segmented financial and operating data tables attached. North America - Wholesale Nitrogen Gross profit for nitrogen was $7-million for the first quarter 2002 compared to $62-million for the same period in 2001. Sales volumes were down six percent from the first quarter of 2001 to 921,000 tonnes, primarily due to the timing of shipments to U.S. and 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. customers leading up to the spring season. The major reason for the sharp decline in gross profit was significantly lower prices. Compared to the first quarter of 2001, average realized prices were lower by $110 per tonne or 44 percent for ammonia and $65 per tonne or 33 percent for urea. This reflects the decline in international prices, measured by the U.S. gulf coast ammonia price, which was off 55 percent from the first quarter 2001. Per tonne cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold for nitrogen products were nine percent lower for the first quarter 2002 compared to first quarter 2001, reflecting lower natural gas costs, despite natural gas hedging losses recorded in the first quarter of 2002. Overall, nitrogen margins fell from $63 per tonne in the first quarter 2001 to $8 per tonne. Phosphate Gross profit for phosphate was $3-million for the first quarter 2002 consistent with the same period in 2001. Sales volumes were up 67 percent from the first quarter of 2001 to 196,000 tonnes. This increase was primarily the result of better production volumes from both the Conda, Idaho facility and Redwater, Alberta Redwater is a town in northern Alberta, Canada. It is located km ( mi) north of Edmonton on Highway 38, in Sturgeon County. Its population, as of 2006, was 2,192. Redwater is placed in the federal riding of Westlock—St. . Redwater's performance was also related to improved phosphate rock phosphate rock n. Any of various rocks composed largely of phosphate minerals, especially apatite, used as fertilizer and as a source of phosphorous compounds. production from the Kapuskasing Kapuskasing (kăpəskā`sĭng), town (1991 pop. 10,344), central Ont., Canada, on the Kapuskasing River, N of Timmins. It has lumbering and pulp and paper mills, a cold-weather automotive testing center, and a large tourism industry. , Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. facility. Prices for dry phosphate for the first quarter 2002 were down nine percent from the first quarter 2001. However, per tonne costs of good sold were down even more at 18 percent or $39 per tonne, resulting in an overall margin of $12 per tonne compared to break-even in the first quarter 2001. Potash Gross profit for potash was $15-million for the first quarter 2002 compared to $13-million for the same period in 2001. Sales volumes were up 23 percent from the first quarter of 2001 to 367,000 tonnes. This increase was due to higher sales volumes in both the North American and export markets. However, prices were $7 per tonne lower in North America for the quarter compared to first quarter 2001, while offshore prices were slightly higher than prices for the first quarter of last year. Gross margin for the quarter was $41 per tonne compared to $43 per tonne for the first quarter 2001. Sulphate sulphate: see sulfate. and Other Products Gross profit for sulphate and other products was $5-million for the first quarter 2002 compared to $3-million for the same period last year. North America - Retail First quarter revenues were $114-million, $5-million higher than 2001 primarily due to stronger chemical sales in the western region. A 10 percent increase in fertilizer sales tonnes more than offset lower fertilizer prices. The balance of the sales increase was due to higher seed and service revenue. Gross profit was unchanged at $36-million. Lower fuel costs were the primary contributor to a $1-million selling expense decrease. The combination of the above factors resulted in a loss before interest expense and income taxes that was $1-million lower than the prior year. South America - Wholesale Gross profit for the first quarter 2002 was $3-million compared to $8-million in the first quarter of 2001. Lower international nitrogen prices and lower sales activity were the primary reasons for the decline. Agrium's first quarter natural gas costs have been accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. on a pre-devaluation U.S. dollar basis as the effect of devaluation on input costs has yet to be finalized See finalization. . On March 4, 2002, the Government announced the imposition The printing of pages on a single sheet of paper in a particular order so that they come out in the correct sequence when cut and folded. of temporary new taxes on exports. At April 30, 2002, the government export tax on secondary agricultural products was five percent, which includes manufactured product such as fertilizer. It is unclear if this rate will prevail and may be subject to further change. South America - Retail First quarter 2002 gross profit of $2-million for South America Retail was identical to first quarter of 2001, despite significantly lower revenue as a result of reduced sales activity related to Argentina's current economic situation. The impact of reduced sales has been mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by the impact of devaluation on Peso denominated expenses, but the sustainability of EBIT remains unclear. Financial Cash provided by (used in) operating activities for the quarter was negative $9-million, a decrease of $47-million from the $38-million in 2001, due primarily to the net loss for the quarter. In March 2002, Agrium entered into a "bought-deal" financing with a syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism of underwriters to issue 11.2 million common shares at $9.85 per common share. Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with this financing, the revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities were reduced from $375-million to $281-million, and certain related covenants were favourably Adv. 1. favourably - showing approval; "he reviewed the play favorably" favorably favourably U.S. favorably adverb 1. amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . The total proceeds from the issue, net of expenses, was $106-million. SUPPLEMENTARY DISCLOSURE The Corporation believes that the disclosure of certain Supplementary information is useful to the investor although such information is not a recognized measure under Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Management believes that in addition to net earnings (loss), earnings before interest expense and income tax (EBIT) is a useful supplementary measure as it provides investors with historical perspective of earnings available prior to debt service and income taxes. The Corporation's method of calculating EBIT may differ from other companies and accordingly EBIT may not be comparable to measures used by other companies. Management also believes that disclosure of net earnings (losses) before and after the impact of Argentine Charges provides the investor with an understanding of its exposure to Argentina, and the impact of Argentina on its other operations. Investors should be cautious, however, that these measures not be construed as an alternative to net earnings (loss) determined 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 GAAP as an indicator of the Corporation's performance. OTHER Agrium Inc. is a leading global producer and marketer of fertilizer and a major retail supplier of agricultural products and services in both North America and Argentina. The Corporation produces and markets four primary groups of fertilizers: nitrogen, phosphate, potash and 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. . The Corporation'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, uncertainties and other factors 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 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, fluctuations in supply and demand of fertilizer, changes in natural gas and other input costs, changes in capital and foreign exchange markets, unexpected agricultural or environmental conditions and government policy changes. 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 1st Quarter Conference Call will be available in a listen-only mode beginning Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , May 3, 2002 at 8:30 a.m. MST See micro systems technology. (10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy ) Please log in through the following website: www.agrium.com.
AGRIUM INC.
Consolidated Statements of Operations and Retained Earnings
(Millions of U.S. dollars except per share information)
(Unaudited)
Three months ended
March 31,
-------------------------
2002 2001
-------------------------
Sales $ 338 $ 410
Direct freight 21 29
-------------------------
Net sales 317 381
Cost of product 246 256
-------------------------
Gross profit 71 125
-------------------------
Expenses
Selling, general and administrative 54 58
Depreciation, depletion and amortization 33 32
Other expenses 12 6
Argentine charges - Peso translation 12 -
- US dollar forced
conversion recovery (3) -
-------------------------
108 96
-------------------------
Earnings (loss) before interest expense
and income taxes (37) 29
Interest on long-term debt 15 11
Other interest 2 7
-------------------------
Earnings (loss) before income taxes (54) 11
Income tax (recovery) expense (18) 4
-------------------------
Net earnings (loss) (36) 7
Retained earnings - beginning of period 245 315
Preferred securities charges (3) (3)
-------------------------
Retained earnings - end of period $206 $319
-------------------------
-------------------------
Basic earnings (loss) per common share ($0.33) $0.04
Average outstanding shares (in millions) 117 115
Diluted earnings (loss) per common share ($0.33) $0.03
Average outstanding shares (in millions) 117 116
Shares outstanding at end of period (in
millions) 126 115
AGRIUM INC.
Consolidated Statements of Cash Flows
(Millions of U.S. dollars)
(Unaudited)
Three months ended
March 31,
---------------------
2002 2001
---------------------
Operating:
Net earnings (loss) for the period $(36) $7
Depreciation, depletion and amortization 33 32
Future income taxes (reduction) (12) (1)
Argentine charges - Peso translation 7 -
- US dollar forced
conversion recovery (1) -
---------------------
Cash provided by (used in) operating
activities (9) 38
Net changes in non-cash working capital 10 (150)
---------------------
Cash provided by (used in) operating
activities after
changes in non-cash working capital 1 (112)
---------------------
Investing:
Capital assets (6) (37)
Other assets 1 (21)
Other 2 3
---------------------
Cash used in investing activities (3) (55)
---------------------
Financing:
Common shares 106 1
Bank indebtedness (137) (73)
Issue (repayment) of long-term debt (1) 230
Common share dividends paid (6) (6)
Preferred securities charges paid (3) (3)
---------------------
Cash provided by (used in) financing
activities (41) 149
---------------------
Decrease in cash position (43) (18)
Cash and cash-equivalents - beginning of
period 51 18
---------------------
Cash and cash-equivalents - end of
period $ 8 $ -
---------------------
---------------------
AGRIUM INC.
Consolidated Balance Sheets
(Millions of U.S. dollars)
As at As at
March 31, December 31,
------------------------------
2002 2001 2001
------------------------------
(Unaudited)
ASSETS
Current assets
Cash and cash-equivalents $ 8 $ - $ 51
Accounts receivable 184 271 218
Income and other taxes receivable - 11 -
Inventories 507 531 400
Prepaid expenses 46 45 34
------------------------------
745 858 703
Capital assets 1,462 1,465 1,494
Other assets 111 167 132
Goodwill 45 48 45
-----------------------------
$2,363 $2,538 $2,374
------------------------------
------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ 74 $ 235 $ 211
Accounts payable and accrued liabilities 448 408 349
Income and other taxes payable 5 - 13
Current portion of long-term debt 6 1 7
------------------------------
533 644 580
Long-term debt 619 631 621
Non-recourse financing - Profertil 141 103 141
Other liabilities 139 124 127
Future income taxes 150 192 162
-----------------------------
1,582 1,694 1,631
Shareholders' equity
Share capital
Authorized: unlimited common shares and
preferred securities
Issued:
Common shares: 2002- 126 million
(2001-115 million) 482 376 376
Preferred securities:
8% Non-convertible 2002- 7 million
(2001- 7 million) 171 171 171
6% Convertible 2002- 2 million
(2001-2 million) 50 50 50
Retained earnings 206 319 245
Cumulative translation adjustment (128) (72) (99)
-----------------------------
781 844 743
------------------------------
$2,363 $2,538 $2,374
------------------------------
------------------------------
As at March 31, 2002, the Corporation has outstanding nine million
options to acquire common shares. The six percent convertible
preferred securities are convertible into four million common shares.
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 three months ended March 31, 2002 (Millions of U.S. Dollars) (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES The Corporation's accounting policies are in accordance with accounting principles generally accepted in Canada. These accounting policies 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 with the Corporation's audited financial statements for the year ended December December: see month. 31, 2001. In management's opinion, the unaudited financial information includes all adjustments (consisting solely of normal recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year. 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 consolidated financial statements include the accounts of Agrium Inc. and its subsidiaries. 2. CHANGE IN ACCOUNTING POLICY Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. - Section 3062 Effective January 1, 2002 the Corporation has adopted this new standard. This standard requires that goodwill and other indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those life intangible assets be subject to an annual impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. test rather than being amortized. Under the transitional provisions of the new standard, the Corporation is required to complete an initial impairment test by June June: see month. 30, 2002. Amortization expense in 2001 was approximately $1-million per quarter, before income taxes. 3. SHARE CAPITAL In March 2002, the Corporation sold 11.2 million common shares at $9.85 per common share to a syndicate of underwriters on a "bought-deal" basis. The total proceeds from the issue, net of expenses, were $106-million, and were used to pay down bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. . Concurrent with this financing the Corporation's revolving credit facilities were reduced from $375-million to $281-million, and certain related covenants were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. amended. 4. STOCK BASED COMPENSATION The following is the 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 had the Corporation charged the fair value of stock based compensation to net earnings (loss) in each period:
Three months ended
March 31,
----------------------------------------------
2002 2001
----------------------------------------------
As Reported Pro forma As Reported Pro forma
----------------------------------------------
Net earnings (loss) $ (36) $ (37) $ 7 $ 6
Earnings (loss) per
common share
Basic $ (0.33) $ (0.34) $ 0.04 $ 0.03
5. EARNINGS (LOSS) PER COMMON SHARE
The following table summarizes the computation of net earnings
(loss) per common share:
Three months ended
March 31,
----------------------
2002 2001
----------------------
Numerator:
Net earnings (loss) $ (36) $ 7
Preferred securities charges net of tax (3) (3)
----------------------
Numerator for basic earnings (loss) per share (39) 4
----------------------
Preferred securities charges net of tax - -
----------------------
Numerator for diluted earnings (loss)
per share $ (39) $ 4
----------------------
Denominator:
Weighted average denominator for basic
common shares 117 115
----------------------
Dilutive instruments:
Stock options using the treasury stock method - 1
Preferred securities converted to common shares
$175 million, eight percent - -
$50 million, six percent - -
----------------------
Denominator for diluted earnings per share 117 116
----------------------
Basic earnings (loss) per share $(0.33) $0.04
Diluted earnings (loss) per share $(0.33) $0.03
6. 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 in South America. 7. SEGMENTED INFORMATION The Corporation's primary activity is the production and wholesale marketing of nitrogen, potash, phosphate, sulphate and other fertilizer products, 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. Other includes the Corporate functions and inter-segment eliminations.
AGRIUM INC.
(Millions of U.S. dollars)
(Unaudited)
Segmented EBIT for the three months ended March 31,
----------------------------------------------------------------------
2002
----------------------------------------------------------------------
North America South America
Wholesale Retail Wholesale Retail Other Total
----------------------------------------------------------------------
Net sales
- external customers $191 $114 $ 9 $ 3 $ - $ 317
- internal customers 14 - - - (14) -
-----------------------------------------------
Total net sales 205 114 9 3 (14) 317
Cost of product 175 78 6 1 (14) 246
-----------------------------------------------
Gross profit 30 36 3 2 - 71
Gross profit % 15% 32% 33% 67% 0% 22%
Expenses:
Selling, general and
administrative 9 41 1 2 1 54
Depreciation, depletion
and amortization 21 5 4 1 2 33
Other (income) expenses 3 (2) - - 11 12
Argentine charges
- Peso translation - - 12 - - 12
- US dollar forced
conversion recovery - - - (3) - (3)
-----------------------------------------------
33 44 17 - 14 108
-----------------------------------------------
Earnings before interest
expense and income
taxes $ (3) $ (8) $ (14) $ 2 $ (14) $ (37)
-----------------------------------------------
Segmented EBIT for the three months ended March 31,
----------------------------------------------------------------------
2001
----------------------------------------------------------------------
North America South America
Wholesale Retail Wholesale Retail Other Total
----------------------------------------------------------------------
Net sales
- external customers $251 $109 $ 14 $ 7 $ - $ 381
- internal customers 12 - 1 - (13) -
-----------------------------------------------
Total net sales 263 109 15 7 (13) 381
Cost of product 182 73 7 5 (11) 256
-----------------------------------------------
Gross profit 81 36 8 2 (2) 125
Gross profit % 31% 33% 53% 29% 15% 33%
Expenses:
Selling, general and
administrative 7 42 1 3 5 58
Depreciation, depletion
and amortization 21 5 3 1 2 32
Other (income) expenses 5 (2) - - 3 6
Argentine charges
- Peso translation - - - - - -
- US dollar forced
conversion recovery - - - - - -
-----------------------------------------------
33 45 4 4 10 96
-----------------------------------------------
Earnings before interest
expense and income
taxes $ 48 $ (9) $ 4 $ (2) $ (12) $ 29
----------------------------------------------------------------------
AGRIUM INC.
Net Sales and Gross Profit by Operating Unit and Product Line
(Millions of U.S. dollars)
(Unaudited)
Three months ended March 31,
----------------------------------------------------------------------
2002
----------------------------------------------------------------------
Net Cost of Gross Tonnes (000's) Margin
Sales Product Profit Sales Inventory ($/Tonne)
----------------------------------------------------------------------
North America Wholesale
Nitrogen
Ammonia $ 33 $ 30 $ 3 262 429 $ 11
Urea 56 53 3 466 388 6
Nitrate and other 26 25 1 193 307 5
------------------------------------------------
Total Nitrogen 115 108 7 921 1,124 8
Phosphate - Dry 31 29 2 165 188 12
Phosphate - Liquid 10 9 1 31 20 32
Potash 36 21 15 367 312 41
Sulphate and other
products 13 8 5 83 128 60
------------------------------------------------
205 175 30 1,567 1,772 19
-------------------------
North America Retail
Fertilizers 56 41 15
Chemicals 45 29 16
Other products
and services 13 8 5
----------------------
114 78 36
South America Wholesale
Nitrogen 9 6 3 86 54 35
Other products
and services - - -
----------------------
9 6 3
South America Retail
Fertilizers 1 - 1
Other products
and services 2 1 1
----------------------
3 1 2
Other (14) (14) -
----------------------
Total $ 317 $ 246 $ 71
----------------------
Three months ended March 31,
----------------------------------------------------------------------
2001
----------------------------------------------------------------------
Net Cost of Gross Tonnes (000's) Margin
Sales Product Profit Sales Inventory ($/Tonne)
----------------------------------------------------------------------
North America Wholesale
Nitrogen
Ammonia $ 77 $ 46 $ 31 343 464 $ 90
Urea 77 55 22 434 401 51
Nitrate and other 35 26 9 208 330 43
------------------------------------------------
Total Nitrogen 189 127 62 985 1,195 63
Phosphate - Dry 19 19 - 88 220 -
Phosphate - Liquid 11 8 3 29 20 103
Potash 30 17 13 299 358 43
Sulphate and other
products 14 11 3 77 143 39
------------------------------------------------
263 182 81 1,478 1,936 55
-------------------------
North America Retail
Fertilizers 57 42 15
Chemicals 41 25 16
Other products
and services 11 6 5
----------------------
109 73 36
South America Wholesale
Nitrogen 15 7 8 92 102 87
Other products
and services - - -
----------------------
15 7 8
South America Retail
Fertilizers 3 2 1
Other products
and services 4 3 1
----------------------
7 5 2
Other (13) (11) (2)
----------------------
Total $ 381 $ 256 $ 125
----------------------
AGRIUM INC.
Net Sales and Gross Profit by Operating Unit and Product Line
(Millions of U.S. dollars)
(Unaudited)
Three months ended March 31,
----------------------------------------------------------------------
2002
----------------------------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit % (000's) ($/Tonne)
----------------------------------------------------------------------
North America
Nitrogen $ 77 $ 68 $ 9 12% 533 $ 17
Phosphate 41 38 3 7% 196 15
Potash 24 16 8 33% 225 36
Sulphate and
other products 10 7 3 30% 59 51
North America
Retail 114 78 36 32% - -
Other (14) (14) - 0% - -
--------------------------------------------
252 193 59 23% 1,013
International
Nitrogen 47 46 1 2% 474 2
Potash 12 5 7 58% 142 49
Sulphate and
other products 3 1 2 67% 23 -
South America
Retail 3 1 2 67% - -
--------------------------------------------
65 53 12 18% 639
--------------------------------------------
Total $ 317 $ 246 $ 71 22% 1,652
--------------------------------------------
Three months ended March 31,
----------------------------------------------------------------------
2001
----------------------------------------------------------------------
Net Cost of Gross Gross Tonnes Margin
Sales Product Profit Profit % (000's) ($/Tonne)
----------------------------------------------------------------------
North America
Nitrogen $ 125 $ 89 $ 36 29% 628 $ 57
Phosphate 30 27 3 10% 117 26
Potash 19 12 7 37% 165 42
Sulphate and
other products 13 10 3 23% 65 46
North America
Retail 109 73 36 33% - -
Other (13) (11) (2) 15% - -
--------------------------------------------
283 200 83 29% 975
International
Nitrogen 79 45 34 43% 449 76
Potash 11 5 6 55% 134 45
Sulphate and
other products 1 1 - 0% 12 -
South America
Retail 7 5 2 29% - -
--------------------------------------------
98 56 42 43% 595
--------------------------------------------
Total $ 381 $ 256 $ 125 33% 1,570
--------------------------------------------
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