Agrium Inc. Announces 2nd Quarter, 2000 Earnings of $51 Million on Higher Sales.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--July 24, 2000 Agrium Agrium Inc. NYSE: AGU TSX: AGU engages in the production, marketing, and distribution of agricultural products and services, and nutrients for agricultural and industrial markets in the United States and Argentina. Inc.(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :AGU AGU Aoyama Gakuin University, Tokyo, Japan AGU American Geophysical Union AGU Arabian Gulf University (Bahrain) AGU All Grown Up (TV show) AGU Aguascalientes, Aguascalientes, Mexico .)(NYSE NYSE See: New York Stock Exchange :AGU) ALL AMOUNTS ARE STATED IN US$ Agrium Inc. (TSE and NYSE: AGU) announced today that its 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 for the first six months of 2000 were just over $1 billion and for the second quarter, 2000 were $700 million. Net earnings were $46 million ($0.38 per common share) for the first six months of 2000 and $51 million ($0.44 per common share) for the second quarter, 2000. "We are extremely proud of our results for both this quarter and for the first six months of the year," 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. . "Our gross profit in nitrogen, 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. and Retail is up year-over-year, with our only setback setback In architecture, a steplike recession in the profile of a high-rise building. Usually dictated by building codes to allow sunlight to reach streets and lower floors, the building must take another step back from the street for every specified added height interval. being on the 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 side. Higher sales volumes were the main reason for the improvement in nitrogen, potash and Retail, reflecting the increase in seeded acreage and favourable weather in our primary markets. International phosphate markets were weaker which indirectly impacted our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. markets both from a price and volume perspective. Phosphate costs and volumes were also adversely affected by the lower than expected output at our 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. 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. operation. Looking ahead, we are very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the second half of 2000 and the year 2001. The supply/demand fundamentals for the industry look very favourable, particularly for nitrogen. While higher gas costs will impact industry economics in nitrogen and to some extent in phosphate, we are well hedged for both this year and next year at gas prices which are significantly lower than current levels. We are also looking forward to two significant events for the Company: the anticipated closing of the Unocal asset purchase and the start-up Start-up The earliest stage of a new business venture. of our 50% owned facility 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. . Both of these assets add significantly to our nitrogen production capability, have 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. low cost gas supply contracts and are coming on-stream on-stream adv. & adj. In or into operation or production. at a time of increasing nitrogen prices. We are also in the final stages of completing operational changes to address our start-up problems at Kapuskasing and expect to experience declining phosphate production costs through the second half of this year." 2ND QUARTER PERFORMANCE HIGHLIGHTS - Completion of the acquisition of Unocal's 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. [pilcrow (paragraph sign)] assets. Purchase of Unocal's agricultural products business is in the process of US Federal Trade Commission ("FTC FTC See Federal Trade Commission (FTC). ") review. These discussions have been very positive and productive to date and the parties anticipate completing the transaction within the next few weeks. A Purchase and Sale agreement has been entered into with J.R. Simplot The J. R. Simplot Company, commonly referred to as Simplot, was founded in 1923 by 14-year-old J. R. Simplot near the small agricultural community of Declo in south central Idaho. J. R. Company for the sale of the Rivergate terminal and a portion of the Hedges storage site, contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent FTC clearance and the closing of the Unocal transaction. - Commissioning the Profertil nitrogen production facility in Argentina. The process of starting-up this 50% owned facility began in the second quarter and commercial production is expected to be achieved by the end of the third quarter. The milestone of igniting the primary reformer occurred on June June: see month. 7th and further commissioning activities are continuing. On July July: see month. 18, 2000, while the plant was in start-up mode, some minor damage occurred due to the failure of a flange flange (flanj) a projecting border or edge; in dentistry, that part of the denture base which extends from around the embedded teeth to the border of the denture. flange n. 1. in the flow element assembly which will require approximately three weeks to repair, delaying production until late August. Marketing contracts with the major national Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. accounts are now in place. - Resolution of a number of the start-up problems at Kapuskasing. During the second quarter, three significant projects were completed to bring production at the facility closer to design capacity. These projects included the installation of a surge tank A surge tank is a standpipe or storage reservoir at the downstream end of a closed aqueduct or feeder pipe - as for a water wheel - to absorb sudden rises of pressure and to furnish water quickly during a drop in pressure. Also known as surge drum. between the concentrate thickener thick·en tr. & intr.v. thick·ened, thick·en·ing, thick·ens 1. To make or become thick or thicker: Thicken the sauce with cornstarch. The crowd thickened near the doorway. 2. and drum filters and additional equipment for low intensity magnetic separation and for split feed conditioning of ore prior to flotation flotation or froth flotation Most widely used process for extracting many minerals from their ores. The method separates and concentrates ores by altering their surfaces so that they are either repelled or attracted by water. . - Signed agreement with TransCanada The term TransCanada can refer to several things:
trichloroethylene. TCE Environment A volatile chlorinated hydrocarbon that boils at 88ºC and is highly soluble–1000 ppm in water, with various industrial uses Toxicity Peripheral neuropathy, carcinogenic. "), a wholly-owned subsidiary of TransCanada PipeLines The TransCanada pipeline is a system of natural gas pipelines, up to 48 inches (1219 millimetres) in diameter, that carries gas through Alberta, Saskatchewan, Manitoba, Ontario and Quebec. It is maintained by TransCanada PipeLines, LP. It is the longest pipeline in Canada. Limited, to purchase electrical power and steam produced at an 80-Megawatt Electrical Cogeneration cogeneration In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power. project to be built by TCE at Agrium's Carseland, Alberta Carseland is a hamlet located along Highway 24 approximately 19km South of Cheadle, in south central Alberta, Canada. nitrogen fertilizer plant. The project will provide a secure, cost effective source of supply for 20 years for the electrical and steam requirements of the Carseland plant, which manufactures 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. and urea. The agreement also provides an option to supply some power to the Corporation's other Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. facilities. The facility is expected to come on-stream in November November: see month. , 2001. - Suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. production of ammonium nitrate ammonium nitrate, chemical compound, NH4NO3, that exists as colorless, rhombohedral crystals at room temperature but changes to monoclinic crystals when heated above 32°C;. at Homestead Homestead. 1 City (1990 pop. 26,866), Dade co., SE Fla.; inc. 1913. A large Miami suburb with a growing Hispanic population, Homestead is a trade center for the redland district, known for its many varieties of citrus and other fruits and vegetables. Nitrogen Operations due to high inventory levels and market conditions. Production is expected to resume this fall with customer requirements being met from inventory during the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down . OVERVIEW Wholesale sales volumes for the first six months of 2000 exceeded 3.8 million tonnes, a 6% increase over the similar period for 1999. This increase in sales was a reflection of the strong demand for nutrients during the recent spring application season. Sales in Agrium's Retail operations also maintained their record pace from the first quarter resulting in higher than expected results for the six months to date. Revenue growth occurred despite delays in ramping-up production at the new Kapuskasing phosphate rock facility which restricted the amount of phosphate fertilizer available for sale. Costs were also adversely affected by Kapuskasing and by sharply higher natural gas prices, the major cost component of nitrogen fertilizer and a cost component of ammonia used in phosphate production. Higher North American natural gas prices have lead to industry production curtailments which have resulted in improved nitrogen prices. As a result of higher costs, unaudited net earnings for the second quarter, 2000 were $51 million ($0.44 per common share) compared to $54 million ($0.46 per common share) after one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $11 million ($6 million after taxes) for the second quarter, 1999. Net earnings for the six months ended June 30, 2000 were $46 million ($0.38 per common share) compared to $54 million ($0.44 per common share) after the restructuring charges in 1999. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the quarter and six months ended June 30, 2000, was $70 million and $90 million respectively, virtually unchanged from 1999. SEGMENTED RESULTS The following commentary should be read in conjunction with the segmented financial and operating data tables attached. 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. - Wholesale The Corporation's second quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. North America Wholesale results benefited from strong demand in its primary markets. Year-to-date sales volumes were up for nitrogen and potash. Unfortunately, phosphate sales were lower year-over-year mainly due to lower phosphate rock production at Kapuskasing and the impact this had on Redwater redwater red urine; see hemoglobinuria, hematuria, myoglobinuria, phenothiazine, phenolphthalein, xanthorrhoea. redwater fever see babesiosis. phosphate production and product availability, along with lower overall demand for phosphate. Prices for nitrogen were up year-over-year reflecting a tightening in the supply/demand balance world-wide. This tightening was the result of strong demand growth in Asia and 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. combined with production curtailments, primarily in 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 Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . The offset to higher nitrogen prices
was higher natural gas prices, the major cost component of nitrogen
production. For the first six months of this year, the average US NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). gas price was 53% higher than the first six months of 1999. In Agrium's case, gas costs were up 36% over the same period as much of the market increase was 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 a significant gas hedging position. However, nitrogen margins were slightly lower than the prior year margins. Potash sales are up year-to-date due to strong international demand while prices and costs remain relatively constant. The Corporation's phosphate production costs were up because of the lower production and increased spending at Kapuskasing which together resulted in significantly higher unit costs than anticipated. Phosphate prices were also down slightly reflecting the indirect effect of lower international phosphate prices as a result of new production coming on-stream in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. . North America Wholesale's second quarter and year-to-date gross profit and EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). declined compared to the same period in 1999, primarily due to the decline in the phosphate segment. Nitrogen products' gross profit for the second quarter amounted to $50 million, a slight decrease of $2 million from the same period in 1999 mainly due to the timing of spring sales between the first and second quarter. Year-to-date nitrogen gross profit of $71 million increased $2 million from 1999. Second quarter potash gross profit amounted to $21 million, unchanged from the same quarter in 1999. Year-to-date potash gross profit of $41 million increased $3 million from 1999. However, second quarter phosphate gross profit totalled $13 million, a decrease of $11 million compared to 1999. Year-to-date phosphate gross profit of $18 million for 2000 also decreased $23 million from 1999. North America - Retail Retail continues to demonstrate improved results year-over-year despite the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the farming economy. In the past six months, Retail's sales have increased as a result of favourable weather conditions and a strategic focus on the seed business. This has led to higher gross profit and EBIT. Agricultural commodity prices, however, continue to remain depressed. Retail's year-to-date net sales amounted to $495 million, an increase of $26 million from the same period in 1999. Gross profit of $134 million increased $7 million from the same period in 1999. Finally, EBIT of $33 million increased $7 million from the same period in 1999 also benefiting from higher interest income. 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. The results for South America reflect the impact of low agricultural commodity prices, adverse weather conditions in Argentina and the change in ownership of the wholesale business from 100% during the same period in 1999 to 50% in 2000. During the first six months of this year, Argentina experienced a significant amount of rainfall which damaged crops and delayed harvests. As a result of these factors, net sales for the second quarter and year-to-date 2000 decreased by $4 million in each period over 1999. Gross profit for the second quarter and year-to-date 2000 also decreased by $1 million and $2 million respectively over 1999. Looking forward, results for the second half of 2000 for South America will benefit from the start-up of the Profertil nitrogen facility and higher retail sales volumes during the upcoming spring planting season. Selling, General and Administrative Expenses ("SG&A") North America Wholesale's SG&A expenses for the six months ended June 30, 2000 are $14 million compared to $19 million for the same period in 1999. The decrease in North America Wholesale's SG&A expenses over 1999 levels reflects the impact of the 1999 restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and cost reduction initiatives. For the first six months of 2000, the North America Wholesale SG&A costs are $10 million below 1998 levels, the base for the SG&A cost reduction initiative. This was offset by an increase in North American Retail SG&A expenses due to increased activity and higher fuel costs. In South America, SG&A increased due to the commencement of administrative operations in Profertil. All cost reduction initiatives announced in the past year have met their targets to date and are expected to continue to benefit the Corporation's cost structure on an ongoing basis. FINANCIAL Working capital at June 30, 2000 was $164 million, a decrease of $126 million from the prior year comprised primarily of a decrease in cash and cash-equivalents of $41 million, a decrease in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying of $21 million, a decrease in inventories of $23 million and an increase in 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. of $46 million. The bank indebtedness of $157 million at June 30, 2000 relates to the Corporation's 50% share in the Profertil nitrogen project and is being replaced with a long-term non-recourse facility which is expected to close before the end of the third quarter. At June 30, 2000, bank indebtedness and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was $660 million or 46% of combined total debt and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. compared to $589 million or 44% in 1999. Cash flow provided by operating activities of $90 million, before changes in non-cash working capital, for the six months ending June 30, 2000 was virtually unchanged from 1999 despite lower earnings. In February February: see month. 2000, the Corporation arranged a bridge financing Bridge Financing A method of financing, used by companies before their IPO, to obtain necessary cash for the maintenance of operations. Notes: These funds are usually supplied by the investment bank underwriting the new issue. of up to $250 million non-revolving term credit facility to finance the acquisition of the Unocal assets. The termination date termination date, n See expiration date. on this facility is currently October October: see month. 31, 2000. The bridge financing is expected to be replaced through the issue of long-term securities. On May 10, 2000, the Board of Directors of the Corporation declared a semi-annual dividend of 5.5 cents per common share. OUTLOOK Looking to the fall season, we expect North American fertilizer demand to be firm for all three nutrients despite low grain prices. The impact of lower crop prices should be offset by higher crop acreage levels along with significant farm financial support from the US Government. The anticipation of good yields and an early harvest is also expected to favor an early replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. of soil nutrients. North American natural gas prices reached record levels in the second quarter, 2000. The US NYMEX benchmark averaged $4.01 per MMBTU MMBTU Million British Thermal Units for the second quarter, 2000 versus $2.12 per MMBTU for the same quarter last year. The Corporation hedged the majority of its gas requirements resulting in gas prices significantly below the NYMEX average. Natural gas prices for the second half of this year are expected to be high and volatile. However, the Corporation is extremely well positioned over the 2000 and 2001 gas contract years, with gas prices hedged approximately 90% to the end of October 31, 2000 and 41% to the end of October 31, 2001, not including the benefits of long-term gas purchase contracts related to the Unocal assets and the Profertil plant. In North America, recent high gas prices led to a number of nitrogen plant shutdowns, some permanent, others 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 and temporary. As of mid-July n. 1. the middle part of July. Noun 1. mid-July - the middle part of July period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" , approximately 17% of North American ammonia capacity was shut-in shut-in n. A person confined indoors by illness or disability. adj. 1. Confined to a home or hospital, as by illness. 2. Disposed to avoid social contact; excessively withdrawn or introverted. . Higher gas costs have resulted in upward pressure on nitrogen product prices. We expect high gas prices to be largely reflected in higher nitrogen product prices in the second half of 2000. Production curtailments and a reluctance to discount prices by phosphate producers could result in higher phosphate prices in the second half of 2000. At the Kapuskasing Phosphate Operation, all of the capital projects within the mill except the new crushing crushing deaths of newborn animals, especially those in litters, caused by the mother lying on them accidentally. Contributed to by weakness of the neonate or awkward accommodation. A problem in piglets and puppies. Called also overlying. unit have been completed. The crushing unit is scheduled for completion by November 15, 2000, and is designed to deal with frozen material mined during the winter months. Recent improvements are proving successful as daily production has met or exceeded design-rates on a number of occasions. In the coming months, production from Kapuskasing is expected to meet the supply requirements of the Redwater phosphate operations. OTHER Agrium Inc. is a leading producer and marketer of fertilizer in North America 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, including those referred to in the Corporation's annual report to shareholders for 1999, 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 gas and other input costs, changes in capital and foreign exchange markets, unexpected agricultural or environmental conditions and government policy changes.
AGRIUM INC.
Consolidated Balance Sheets
(Millions of US dollars)
(Unaudited)
As at As at
June 30 December 31
-----------------------------
2000 1999 1999
---------------- -----------
ASSETS
Current Assets
Cash and cash-equivalents $ 105 $ 146 $ 104
Accounts receivable 282 303 268
Inventories 251 274 256
Prepaid expenses 15 20 15
---------------- -----------
653 743 643
Capital assets 1,166 1,051 1,149
Other assets 128 91 115
Goodwill 51 54 52
---------------- -----------
$1,998 $1,939 $1,959
---------------- -----------
---------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Bank indebtedness $ 157 $ 111 $ 179
Accounts payable and
accrued liabilities 296 301 261
Income and other taxes payable 29 34 22
Dividends payable 6 6 6
Current portion of long-term debt 1 1 1
---------------- -----------
489 453 469
Long-term debt 502 477 497
Other liabilities 76 69 76
Future income taxes 155 180 164
---------------- -----------
1,222 1,179 1,206
---------------- -----------
Shareholders' Equity
Preferred securities 171 171 171
Common shares 348 353 347
Retained earnings 290 267 255
Cumulative translation adjustment (33) (31) (20)
---------------- -----------
776 760 753
---------------- -----------
$1,998 $1,939 $1,959
---------------- -----------
---------------- -----------
As at June 30, 2000, there were 7 million preferred securities outstanding, 112 million common shares, and 7 million options to acquire common shares outstanding.
AGRIUM INC.
Consolidated Statements of Operations and Retained Earnings
(Millions of US dollars except per share information) (Unaudited)
Three months ended Six months ended
June 30 June 30
--------------------------------------
2000 1999 2000 1999
------------------ -----------------
Net sales $ 700 $ 675 $1,009 $ 965
Cost of product 507 468 730 671
------------------ -----------------
Gross profit 193 207 279 294
------------------ -----------------
Expenses
Selling 58 57 102 102
General and administrative 13 13 23 21
Depreciation and amortization 26 23 50 45
Other (income) expense - net* 10 18 16 20
------------------ -----------------
107 111 191 188
------------------ -----------------
Earnings before interest
expense and income taxes 86 96 88 106
Interest on long-term debt 9 9 18 18
Other interest - - - 1
Income taxes 26 33 24 33
------------------ -----------------
Net earnings for the period 51 54 46 54
Retained earnings -
beginning of period 247 223 255 233
Repurchase of common shares - (2) - (9)
Common share dividends declared (6) (6) (6) (6)
Preferred securities charges (2) (2) (5) (5)
------------------ -----------------
Retained earnings -
end of period $ 290 $ 267 $ 290 $ 267
------------------ -----------------
------------------ -----------------
Basic earnings per common
share $ 0.44 $ 0.46 $ 0.38 $ 0.44
Average outstanding shares
(in millions) 112 113 112 114
Fully diluted earnings per
common share $ 0.42 $ 0.44 $ 0.37 $ 0.43
Average outstanding shares
(in millions) 118 119 118 119
Shares outstanding at end of
period (in millions) 112 113 112 113
- 1999 includes one-time restructuring costs of $11 million
AGRIUM INC.
Consolidated Statements of Cash Flow
(Millions of US dollars)
(Unaudited)
Three months ended Six months ended
June 30 June 30
--------------------------------------
2000 1999 2000 1999
------------------ -----------------
Operating:
Net earnings for the period $51 $54 $46 $54
Depreciation and amortization 26 23 50 45
Future income taxes (7) (7) (6) (8)
------------------ -----------------
Cash provided by operating
activities, before changes
in non-cash working capital 70 70 90 91
Net changes in non-cash
working capital 59 36 58 34
------------------ -----------------
Cash provided by
operating activities 129 106 148 125
------------------ -----------------
Investing:
Capital assets (43) (66) (82) (122)
Other assets (12) (15) (22) (27)
Net changes in non-cash
working capital (14) (2) (28) (3)
Other 5 3 13 8
------------------ -----------------
Cash used in
investing activities (64) (80) (119) (144)
------------------ -----------------
Financing:
Common shares - (1) - (16)
Bank indebtedness - 43 (22) 83
Long-term debt 4 (4) 5 (4)
Common share dividends paid - - (6) (6)
Preferred securities
charges paid (2) (2) (5) (5)
------------------ -----------------
Cash provided by (used in)
financing activities 2 36 (28) 52
------------------ -----------------
Increase in cash position 67 62 1 33
Cash and cash-equivalents
- beginning of period 38 84 104 113
------------------ -----------------
Cash and cash-equivalents
- end of period $105 $146 $105 $146
------------------ -----------------
------------------ -----------------
AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
(Millions of US dollars)
(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. [pilcrow (paragraph sign)] 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 . They are consistent with the policies outlined in the Corporation's audited financial statements for the year ended December December: see month. 31, 1999 except those stated below. When necessary, the financial statements include amounts based on informed estimates and best judgements of management. Certain comparative figures have been reclassified to conform with the current year's presentation. 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 include the accounts of Agrium Inc. and its subsidiaries. 2. CHANGE IN ACCOUNTING POLICY In March 1999, the 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. Institute of Chartered [pilcrow (paragraph sign)] Accountants introduced a new accounting standard requiring recognition of the expense relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc any obligation to provide certain benefits to retired employees. The Corporation has retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adopted the provisions of this Section effective January 1, 2000, resulting in restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of all prior year cost of product sold and SG&A expenses. As a result of this change, at December 31, 1999, Other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. increased $19 million, Future income taxes decreased $8 million and Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. decreased $11 million. There was no significant impact on net earnings of the prior periods being reported. 3. COMMITMENT In January 2000, the Corporation signed an agreement with 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") to acquire the nitrogen-based production and distribution businesses operated by Unocal in Alaska, Washington, 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. and California. The consideration to be paid by the Corporation to Unocal is approximately $325 million, including net working capital at the time of closing, estimated to be approximately $73 million. Upon closing of the Unocal transaction ("Closing"), the consideration payable will consist of $50 million principal amount of 6% convertible preferred securities which will be convertible into the Corporation's common shares at a 20% premium to the weighted average common share price for the 20 days preceding Closing; $25 million of the Corporation's common shares based on 96% of the average of the closing common share price on the 20 days prior to Closing; and the balance in cash which is expected to be financed through the issue of long-term securities. In addition, the Corporation and Unocal have negotiated an "Earn-Out Earn-out Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement. " under which Unocal will have the opportunity to receive an annual payment for each of the six years following Closing equal to 35% of the excess of an international commodity price index for ammonia and urea over certain forecasted prices for the production volumes of 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. facilities. In February 2000, the Corporation arranged a bridge financing of up to $250 million non-revolving term credit facility to finance the acquisition of the Unocal assets. The termination date on this facility is currently October 31, 2000. Completion of the acquisition is subject to the fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. of certain conditions, including obtaining all necessary regulatory approvals. The Corporation anticipates the transaction to close within the next few weeks. 4. SEGMENTED INFORMATION The Corporation's primary activity is the production and wholesale marketing of nitrogen, potash, phosphate, sulphate sulphate: see sulfate. 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 and South America. Net sales between segments are accounted for at prices which approximate fair market value and are eliminated on consolidation. Other Unallocated includes the Corporate functions and eliminations of product transfers between segments.
Segmented EBIT for the three months ended June 30
North America
----------------- South Other
Wholesale Retail America Unallocated Total
-------------------------------------------------------------------
2000
Net sales
- external customers $307 379 14 - 700
- internal customers 18 - - (18) -
-------------------------------------------------------------------
Total net sales 325 379 14 (18) 700
Cost of product 235 281 10 (19) 507
-------------------------------------------------------------------
Gross profit 90 98 4 1 193
Expenses:
Selling, general and
administrative 8 54 4 5 71
Depreciation and
amortization 17 5 1 3 26
Other (income) expense 5 - 2 3 10
-------------------------------------------------------------------
30 59 7 11 107
-------------------------------------------------------------------
EBIT $ 60 $ 39 $ (3) $(10) $ 86
-------------------------------------------------------------------
-------------------------------------------------------------------
1999
Net sales
- external customers $292 365 18 - 675
- internal customers 14 - - (14) -
-------------------------------------------------------------------
Total net sales 306 365 18 (14) 675
Cost of product 202 268 13 (15) 468
-------------------------------------------------------------------
Gross profit 104 97 5 1 207
Expenses:
Selling, general and
administrative 11 52 3 4 70
Depreciation and
amortization 14 5 2 2 23
Other (income) expense 4 1 1 12 18
-------------------------------------------------------------------
29 58 6 18 111
-------------------------------------------------------------------
EBIT $ 75 $ 39 $ (1) $(17) $ 96
-------------------------------------------------------------------
-------------------------------------------------------------------
Segmented EBIT for the six months ended June 30
North America
----------------- South Other
Wholesale Retail America Unallocated Total
-------------------------------------------------------------------
2000
Net sales
- external customers $493 495 21 - 1,009
- internal customers 30 - - (30) -
-------------------------------------------------------------------
Total net sales 523 495 21 (30) 1,009
Cost of product 384 361 16 (31) 730
-------------------------------------------------------------------
Gross profit 139 134 5 1 279
Expenses:
Selling, general
and administrative 14 94 8 9 125
Depreciation and
amortization 33 10 2 5 50
Other (income)
expense 8 (3) 2 9 16
-------------------------------------------------------------------
55 101 12 23 191
-------------------------------------------------------------------
EBIT $ 84 $ 33 $ (7) $(22) $ 88
-------------------------------------------------------------------
-------------------------------------------------------------------
1999
Net sales
- external customers $471 469 25 - 965
- internal customers 31 - - (31) -
-------------------------------------------------------------------
Total net sales 502 469 25 (31) 965
Cost of product 342 342 18 (31) 671
-------------------------------------------------------------------
Gross profit 160 127 7 - 294
Expenses:
Selling, general
and administrative 19 90 7 7 123
Depreciation and
amortization 28 11 3 3 45
Other (income)
expense 6 - 1 13 20
-------------------------------------------------------------------
53 101 11 23 188
-------------------------------------------------------------------
EBIT $107 $ 26 $ (4) $(23) $106
-------------------------------------------------------------------
-------------------------------------------------------------------
Net Sales and Gross Profit by Operating Unit and Product Line
Three months ended Three months ended
June 30, 2000 June 30, 1999
-------------------------------------------------------------------
Net Cost of Gross Net Cost of Gross
Sales Product Profit Sales Product Profit
-------------------------------------------------------------------
North America
- Wholesale
Nitrogen $ 181 $ 131 $ 50 $ 154 $ 102 $ 52
Phosphate 78 65 13 82 58 24
Potash 44 23 21 45 24 21
Sulphate and
other products 22 16 6 25 18 7
-------------------------------------------------------------------
325 235 90 306 202 104
-------------------------------------------------------------------
North America
- Retail
Fertilizers 157 113 44 163 116 47
Chemicals 175 155 20 161 141 20
Other products
and services 47 13 34 41 11 30
-------------------------------------------------------------------
379 281 98 365 268 97
-------------------------------------------------------------------
South America
Fertilizers 12 8 4 14 12 2
Other products
and services 2 2 - 4 1 3
-------------------------------------------------------------------
14 10 4 18 13 5
-------------------------------------------------------------------
Other Unallocated (18) (19) 1 (14) (15) 1
-------------------------------------------------------------------
Total $ 700 $ 507 $ 193 $ 675 $ 468 $ 207
-------------------------------------------------------------------
-------------------------------------------------------------------
Six months ended Six months ended
June 30, 2000 June 30, 1999
-------------------------------------------------------------------
Net Cost of Gross Net Cost of Gross
Sales Product Profit Sales Product Profit
-------------------------------------------------------------------
North America
- Wholesale
Nitrogen $ 288 $ 217 $ 71 $ 229 $ 160 $ 69
Phosphate 113 95 18 150 109 41
Potash 85 44 41 82 44 38
Sulphate and
other products 37 28 9 41 29 12
-------------------------------------------------------------------
523 384 139 502 342 160
-------------------------------------------------------------------
North America
- Retail
Fertilizers 214 155 59 215 155 60
Chemicals 222 195 27 204 178 26
Other products
and services 59 11 48 50 9 41
-------------------------------------------------------------------
495 361 134 469 342 127
-------------------------------------------------------------------
South America
Fertilizers 16 12 4 18 15 3
Other products
and services 5 4 1 7 3 4
-------------------------------------------------------------------
21 16 5 25 18 7
-------------------------------------------------------------------
Other Unallocated (30) (31) 1 (31) (31) -
-------------------------------------------------------------------
Total $1,009 $ 730 $ 279 $ 965 $ 671 $ 294
-------------------------------------------------------------------
-------------------------------------------------------------------
AGRIUM INC.
North America - Wholesale
Selected Operating Data
(Unaudited)
---------------------------------
Three months Six months
ended June 30 ended June 30
---------------------------------
2000 1999 2000 1999
-------------------------------------------------------------------
NITROGEN
Production tonnes (000s) 1,054 965 1,913 1,918
Sales tonnes (000s)
North America 1,157 1,053 1,923 1,667
Offshore 32 63 70 69
Intercompany 49 44 79 65
-------------------------------------------------------------------
Total sales tonnes 1,238 1,160 2,072 1,801
-------------------------------------------------------------------
Gross Profit (US$ millions) 50 52 71 69
Gross Margin (US$/tonne) 40.39 44.83 34.27 38.31
-------------------------------------------------------------------
-------------------------------------------------------------------
PHOSPHATE
Production tonnes (000s) 229 260 506 548
Sales tonnes (000s)
North America 329 307 474 552
Intercompany 26 20 41 62
-------------------------------------------------------------------
Total sales tonnes 355 327 515 614
-------------------------------------------------------------------
Gross Profit (US$ millions) 13 24 18 41
Gross Margin (US$/tonne) 36.62 73.39 34.95 66.78
-------------------------------------------------------------------
-------------------------------------------------------------------
POTASH
Production tonnes (000s) 435 461 876 879
Sales tonnes (000s)
North America 237 274 434 488
Offshore 167 123 358 252
Intercompany 38 38 73 59
-------------------------------------------------------------------
Total sales tonnes 442 435 865 799
-------------------------------------------------------------------
Gross Profit (US$ millions) 21 21 41 38
Gross Margin (US$/tonne) 47.51 48.28 47.40 47.56
-------------------------------------------------------------------
-------------------------------------------------------------------
SULPHATE AND OTHER
Production tonnes (000s) 65 68 148 132
Sales tonnes (000s)
North America 219 253 341 397
Offshore 13 - 27 3
Intercompany 20 18 29 26
-------------------------------------------------------------------
Total sales tonnes 252 271 397 426
-------------------------------------------------------------------
Gross Profit (US$ millions) 6 7 9 12
Gross Margin (US$/tonne) 23.81 25.83 22.67 28.17
-------------------------------------------------------------------
-------------------------------------------------------------------
TOTAL
Production tonnes (000s) 1,783 1,754 3,443 3,477
Sales tonnes (000s)
North America 1,942 1,887 3,172 3,104
Offshore 212 186 455 324
Intercompany 133 120 222 212
Total sales tonnes 2,287 2,193 3,849 3,640
-------------------------------------------------------------------
Gross Profit (US$ millions) 90 104 139 160
Gross Margin (US$/tonne) 39.35 47.42 36.11 43.96
-------------------------------------------------------------------
-------------------------------------------------------------------
GLOSSARY OF TERMS
EBIT - Earnings before interest expense and income taxes. DAP -
Diammonium Phosphate MAP - Monoammonium Phosphate
Phosphate volumes are P2O5 equivalent for SPA and MGA; cargo
weight for the remaining phosphate products. Cash flow is cash
provided by operating activities, before changes in non-cash working
capital.
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