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Nutrien (NTR)

Filed: 7 May 20, 12:00am

Exhibit 99.3

 

 

 

LOGO

NUTRIEN LTD.

INTERIM FINANCIAL STATEMENTS AND NOTES

AS AT AND FOR THE THREE MONTHS ENDED

MARCH 31, 2020

 

 

 


Unaudited In millions of US dollars except as otherwise noted  

 

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of (Loss) Earnings

 

    

Three Months Ended

March 31

 
   Note 2020  2019 
       Note 1 

 SALES

 2  4,186   3,719 

 Freight, transportation and distribution

   212   171 

 Cost of goods sold

    3,101   2,573 

 GROSS MARGIN

   873   975 

 Selling expenses

   642   538 

 General and administrative expenses

   104   95 

 Provincial mining and other taxes

   57   65 

 Share-based compensation (recovery) expense

 3  (32  57 

 Impairment of assets

   -   33 

 Other expenses

 4  20   11 

 EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES

  82   176 

 Finance costs

    133   123 

 (LOSS) EARNINGS BEFORE INCOME TAXES

   (51  53 

 Income tax (recovery) expense

 5  (16  12 

 NET (LOSS) EARNINGS

    (35  41 

 NET (LOSS) EARNINGS PER SHARE (“EPS”)

   

   Basic

   (0.06  0.07 

   Diluted

    (0.06  0.07 

 Weighted average shares outstanding for basic EPS

   571,168,000   602,266,000 

 Weighted average shares outstanding for diluted EPS

    571,168,000   602,950,000 

Condensed Consolidated Statements of Comprehensive (Loss) Income

 

  

Three Months Ended

March 31

 
 (Net of related income taxes) 2020  2019 

 NET (LOSS) EARNINGS

  (35  41 

 Other comprehensive (loss) income

  

 Items that will not be reclassified to net (loss) earnings:

  

 Net actuarial gain on defined benefit plans

                          3   - 

 Net fair value (loss) gain on investments

  (19  9 

 Items that have been or may be subsequently reclassified to net (loss) earnings:

  

 (Loss) gain on currency translation of foreign operations

  (315  19 

 Other

  (27  4 

 OTHER COMPREHENSIVE (LOSS) INCOME

  (358  32 

 COMPREHENSIVE (LOSS) INCOME

  (393  73 

 (See Notes to the Condensed Consolidated Financial Statements)

 

20


Unaudited In millions of US dollars except as otherwise noted  

 

Condensed Consolidated Statements of Cash Flows

 

     

Three Months Ended

March 31

 
   Note  2020  2019 
        Note 1 

 OPERATING ACTIVITIES

   

 Net (loss) earnings

   (35  41 

 Adjustments for:

   

 Depreciation and amortization

   473   420 

 Share-based compensation (recovery) expense

   (32  57 

 Impairment of assets

   -   33 

 Recovery of deferred income tax

   (22  (3

 Other long-term liabilities and miscellaneous

      (40  2 

 Cash from operations before working capital changes

   344   550 

 Changes innon-cash operating working capital:

   

 Receivables

   (323  (146

 Inventories

   (1,428  (1,509

 Prepaid expenses and other current assets

   766   455 

 Payables and accrued charges

      115   135 

 CASH USED IN OPERATING ACTIVITIES

      (526  (515

 INVESTING ACTIVITIES

   

 Additions to property, plant and equipment

   (363  (290

 Additions to intangible assets

   (32  (38

 Business acquisitions, net of cash acquired

  10   (57  (487

 Proceeds from disposal of discontinued operations, net of tax

   -   10 

 Purchase of investments

   (37  (26

 Other

      44   22 

 CASH USED IN INVESTING ACTIVITIES

      (445  (809

 FINANCING ACTIVITIES

   

 Proceeds from short-term debt, net

   4,494   1,004 

 Proceeds from long-term debt

   6   - 

 Repayment of long-term debt

  8   (501  (500

 Repayment of principal portion of lease liabilities

   (64  (53

 Dividends paid

  9   (256  (264

 Repurchase of common shares

  9   (160  (798

 Issuance of common shares

      -   2 

 CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

      3,519   (609

 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

      (37  (8

 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

  2,511   (1,941

 CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

      671   2,314 

 CASH AND CASH EQUIVALENTS – END OF PERIOD

      3,182   373 

 Cash and cash equivalents comprised of:

   

 Cash

   389   247 

 Short-term investments

      2,793   126 
       3,182   373 

 SUPPLEMENTAL CASH FLOWS INFORMATION

   

 Interest paid

   96   114 

 Income taxes paid (received)

   35   (115

 Total cash outflow for leases

      92   76 

(See Notes to the Condensed Consolidated Financial Statements)

 

21


Unaudited In millions of US dollars except as otherwise noted  

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity

 

           Accumulated Other Comprehensive (Loss) Income (“AOCI”)       
   Number of
Common
Share0
  Share
Capital
  Contributed
Surplus
  Net Fair
Value (Loss)
Gain on
Investments
  

Net

Actuarial
Gain on
Defined
Benefit
Plans1

  Loss on
Currency
Translation of
Foreign
Operations
  Other  

Total

AOCI

  Retained
Earnings
  Total
Equity 2
 
    

BALANCE – DECEMBER 31, 2018

  608,535,477   16,740   231   (7  -   (251  (33  (291  7,745   24,425 
    

Net earnings

  -   -   -   -   -   -   -   -   41   41 
    

Other comprehensive income

  -   -   -   9   -   19   4   32   -   32 
    

Shares repurchased (Note 9)

  (15,476,202  (426  -   -   -   -   -   -   (376  (802
    

Dividends declared

  -   -   -   -   -   -   -   -   (1  (1
    

Effect of share-based compensation including issuance of common shares

  49,624   2   4   -   -   -   -   -   -   6 
    

Transfer of net loss on sale of investment

  -   -   -   4   -   -   -   4   (4  - 
    

BALANCE – MARCH 31, 2019

  593,108,899   16,316   235   6   -   (232  (29  (255  7,405   23,701 
    

BALANCE – DECEMBER 31, 2019

  572,942,809   15,771   248   (29  -   (204  (18  (251  7,101   22,869 
    

Net loss

  -   -   -   -   -   -   -   -   (35  (35
    

Other comprehensive (loss) income

  -   -   -   (19  3   (315  (27  (358  -   (358
    

Shares repurchased (Note 9)

  (3,832,580  (105  (55  -   -   -   -   -   -   (160
    

Dividends declared

  -   -   -   -   -   -   -   -   (254  (254
    

Effect of share-based compensation including issuance of common shares

  35,706   1   4   -   -   -   -   -   -   5 
    

Transfer of net loss on cash flow hedges

  -   -   -   -   -   -   5   5   -   5 
    

Transfer of net actuarial gain on defined benefit plans

  -   -   -   -   (3  -   -   (3  3   - 
    

BALANCE – MARCH 31, 2020

  569,145,935   15,667   197   (48  -   (519  (40  (607  6,815   22,072 

1 Any amounts incurred during a period were transferred to retained earnings at eachperiod-end. Therefore, no balance exists at the beginning or end of period.

2 All equity transactions were attributable to common shareholders.

(See Notes to the Condensed Consolidated Financial Statements)

 

22


Unaudited In millions of US dollars except as otherwise noted  

 

Condensed Consolidated Balance Sheets

 

      March 31      December 31 
As at Note   2020   2019      2019 

ASSETS

        

Current assets

        

Cash and cash equivalents

    3,182    373     671 

Receivables

    3,837    3,446     3,542 

Inventories

    6,290    6,560     4,975 

Prepaid expenses and other current assets

       716    688     1,477 
    14,025    11,067     10,665 

Non-current assets

        

Property, plant and equipment

    20,209    19,834     20,335 

Goodwill

  10    11,893    11,817     11,986 

Other intangible assets

    2,379    2,184     2,428 

Investments

    810    800     821 

Other assets

       552    564     564 

TOTAL ASSETS

                       49,868                    46,266                     46,799 

LIABILITIES

        

Current liabilities

        

Short-term debt

  7    5,498    1,652     976 

Current portion of long-term debt

  8    -    1,001     502 

Current portion of lease liabilities

    221    196     214 

Payables and accrued charges

       7,362    6,602     7,437 
    13,081    9,451     9,129 

Non-current liabilities

        

Long-term debt

  8    8,544    7,080     8,553 

Lease liabilities

    848    837     859 

Deferred income tax liabilities

  5    3,130    2,955     3,145 

Pension and other post-retirement benefit liabilities

    426    405     433 

Asset retirement obligations and accrued environmental costs

    1,620    1,675     1,650 

Othernon-current liabilities

       147    162     161 

TOTAL LIABILITIES

       27,796    22,565     23,930 

SHAREHOLDERS’ EQUITY

        

Share capital

  9    15,667    16,316     15,771 

Contributed surplus

    197    235     248 

Accumulated other comprehensive loss

    (607   (255    (251

Retained earnings

       6,815    7,405     7,101 

TOTAL SHAREHOLDERS’ EQUITY

       22,072    23,701     22,869 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

       49,868    46,266     46,799 

(See Notes to the Condensed Consolidated Financial Statements)

 

23


Unaudited In millions of US dollars except as otherwise noted  

 

Notes to the Condensed Consolidated Financial Statements

As at and for the Three Months Ended March 31, 2020

NOTE 1  BASIS OF PRESENTATION

Nutrien Ltd. (collectively with its subsidiaries, known as “Nutrien”, “we”, “us, “our” or the “Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.

These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are consistent with those used in the preparation of our 2019 annual consolidated financial statements. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2019 annual consolidated financial statements.

Certain immaterial 2019 figures have been reclassified in the condensed consolidated statements of (loss) earnings, condensed consolidated statements of cash flows and segment information.

In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year. On March 11, 2020, the World Health Organization declared the novel strain of coronavirus(“COVID-19”) a global pandemic. We have assessed our accounting estimates and other matters that require the use of forecasted financial information for the impact of the COVID-19 pandemic. The assessment included estimates of the unknown future impacts of the pandemic using information that is reasonably available at this time. Accounting estimates and other matters assessed include the allowance for expected credit losses of receivables from customers, inventory valuation, goodwill and other long-lived assets, financial assets, tax assets, pension obligation and assets, and revenue recognition. Based on the current assessment, there was not a material impact to these interim financial statements. As additional information becomes available, the future assessment of these estimates, including expectations about the severity, duration and scope of the pandemic, could differ materially in future reporting periods.

These interim financial statements were authorized by the audit committee of the Board of Directors for issue on May 6, 2020.

NOTE 2  SEGMENT INFORMATION

The Company has four reportable operating segments: Retail, Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and provides services directly to growers through a network of farm centers in North and South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produces. Sales reported under our Corporate and Others segment primarily relates to ournon-core Canadian business.

 

24


Unaudited In millions of US dollars except as otherwise noted  

 

   Three Months Ended March 31, 2020 
    Retail  Potash   Nitrogen   Phosphate  Corporate
and Others
  Eliminations  Consolidated 

 Sales   – third party

   2,640   547    646    326   27   -   4,186 

   – intersegment

   9   64    132    57   -   (262  - 

 Sales   – total

   2,649   611    778    383   27   (262  4,186 

 Freight, transportation and distribution

   -   94    100    70   -   (52  212 

 Net sales

   2,649   517    678    313   27   (210  3,974 

 Cost of goods sold

   2,120   265    581    320   25   (210  3,101 

 Gross margin

   529   252    97    (7  2   -   873 

 Selling expenses

   635   3    7    2   (5  -   642 

 General and administrative expenses

   38   2    2    2   60   -   104 

 Provincial mining and other taxes

   -   57    -    -   -   -   57 

 Share-based compensation recovery

   -   -    -    -   (32  -   (32

 Other expenses

   4   1    2    6   7   -   20 

 (Loss) earnings before finance costs and income taxes

   (148  189    86    (17  (28  -   82 

 Depreciation and amortization

   155   96    150    63   9   -   473 

 EBITDA1

   7   285    236    46   (19  -   555 

 Assets – at March 31, 2020

   20,455   11,836    10,946    2,170   4,720   (259  49,868 

1 EBITDA is calculated as net (loss) earnings before finance costs, income taxes, and depreciation and amortization.

 

   Three Months Ended March 31, 2019 
    Retail  Potash  Nitrogen  Phosphate   Corporate
and Others
  Eliminations  Consolidated 

 Sales   – third party

   2,030   707   612   342    28   -   3,719 

   – intersegment

   9   63   137   57    -   (266  - 

 Sales   – total

   2,039   770   749   399    28   (266  3,719 

 Freight, transportation and distribution

   -   73   72   50    -   (24  171 

 Net sales

   2,039   697   677   349    28   (242  3,548 

 Cost of goods sold

   1,630   272   511   335    28   (203  2,573 

 Gross margin

   409   425   166   14    -   (39  975 

 Selling expenses

   532   4   7   1    (6  -   538 

 General and administrative expenses

   27   -   2   2    64   -   95 

 Provincial mining and other taxes

   -   63   1   -    1   -   65 

 Share-based compensation expense

   -   -   -   -    57   -   57 

 Impairment of assets

   -   -   -   -    33   -   33 

 Other expenses (income)

   12   (3  (5  3    4   -   11 

 (Loss) earnings before finance costs and income taxes

   (162  361   161   8    (153  (39  176 

 Depreciation and amortization

   136   100   113   60    11   -   420 

 EBITDA

   (26  461   274   68    (142  (39  596 

 Assets – at December 31, 2019

   19,990   11,696   10,991   2,198    2,129   (205  46,799 

 

25


Unaudited In millions of US dollars except as otherwise noted  

 

Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment to show how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

 

  

Three Months Ended  

March 31  

 
   2020  2019 

 Retail sales by product line

  

 Crop nutrients

  785   687 

 Crop protection products

  1,010   744 

 Seed

  394   356 

 Merchandise

  216   108 

 Services and other

  244   144 
   2,649                2,039 

 Potash sales by geography

  

 Manufactured product

  

 North America

  319   318 

 Offshore1

  292   451 

 Other potash and purchased products

  -   1 
   611   770 

 Nitrogen sales by product line

  

 Manufactured product

  

 Ammonia

  156   187 

 Urea

              262   231 

 Solutions, nitrates and sulfates

  196   191 

 Other nitrogen and purchased products

  164   140 
   778   749 

 Phosphate sales by product line

  

 Manufactured product

  

 Fertilizer

  221   240 

 Industrial and feed

  120   124 

 Other phosphate and purchased products

  42   35 
   383   399 

1 Relates to Canpotex Limited. (“Canpotex”) (Note 12).

NOTE 3  SHARE-BASED COMPENSATION

The following table summarizes the awards granted under our existing share-based compensation plans described in Note 6 of our 2019 annual consolidated financial statements:

 

  

Three Months Ended  

March 31  

 
   2020  2019 

 Stock options:

  

 Granted (number of units)

  2,293,802   1,376,533 

 Weighted average grant date fair value (US dollars)

  6.93   11.27 

 Cash-settled share-based awards granted (number of units)

  1,278,324   1,129,263 

 

26


Unaudited In millions of US dollars except as otherwise noted  

 

NOTE 4  OTHER EXPENSES (INCOME)

 

  

Three Months Ended

March 31

 
   2020  2019  

 Merger and related costs

  -   11  

 Acquisition and integration related costs

  10    

 Foreign exchange (gain) loss, net of related derivatives

  (31   

 Earnings of equity-accounted investees

  (10  (17) 

 Bad debts

  6    

 COVID-19 related expenses

  2    

 Other expenses

  43    
   20   11  

NOTE 5  INCOME TAXES

A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim periodpre-tax earnings for each jurisdiction.

 

  

Three Months Ended

March 31

 
   2020  2019  

 Income tax (recovery) expense

  (16  12  

 Actual effective tax rate on loss/earnings (%)

  37   (5) 

 Actual effective tax rate including discrete items (%)

  32   23  

 Discrete tax adjustments that impacted the tax rate

  2   15  

Income tax balances within the condensed consolidated balance sheets were comprised of the following:

 

 Income Tax Assets and Liabilities Balance Sheet Location As at March 31, 2020  As at December 31, 2019  

 Income tax assets

   

 Current

 Receivables  156   104  

 Non-current

 Other assets  34   36  

 Deferred income tax assets

 Other assets  271   249  

 Total income tax assets

    461   389  

 Income tax liabilities

   

 Current

 Payables and accrued charges  46   43  

 Non-current

 Othernon-current liabilities  44   44  

 Deferred income tax liabilities

 Deferred income tax liabilities  3,130   3,145  

 Total income tax liabilities

    3,220   3,232  

 

27


Unaudited In millions of US dollars except as otherwise noted  

 

NOTE 6  FINANCIAL INSTRUMENTS

Cash Flow Hedges

During the three months ended March 31, 2020, we entered into the following derivative contracts, which we designated as cash flow hedges:

 

 Risk Managed Hedging Instrument Objective  Effective Portion  Ineffective Portion

 Foreign

 exchange risk

 

 Forward contracts

 To manage the risk resulting from foreign exchange rate fluctuations related to forecasted costs denominated in Canadian dollars  

Change in fair value: Other comprehensive income (loss) (“OCI”)

 

Occurrence of hedged forecast transaction: inventory, related liability or net earnings, issuance of debt, repayment of interest

  Net earnings

 Interest rate risk

 

 Swap

 Collar

 Treasury lock

 

To limit our exposure to future interest rate changes and the impact on probable forecasted transactions

 

   

We assess whether these derivatives used in hedging transactions are expected to be or were highly effective both at the inception of the hedges and on an ongoing basis. Potential sources of ineffectiveness are changes in timing or amounts of forecasted cash flows, embedded optionality, and changes in our credit risk or the credit risk of a counterparty. Measurement of ineffectiveness is based on a comparison of the cumulative changes in fair value of the hedging instrument and the cumulative change in the fair value of a hypothetical derivative with terms based on the hedged forecast cash flows.

The following table presents our significant foreign currency derivatives that existed at:

 

  March 31, 2020   December 31, 2019 
Sell/buy Notional   Maturities   Average
contract
rate
   Notional   Maturities   Average
contract
rate
 

Derivatives not designated as hedges

           

Forwards

           

USD/CDN

  350    2020    1.3993    337    2020    1.3096 

CDN/USD

  135    2020    1.4003    120    2020    1.3138 

USD/AUD1

  110    2020    1.4846    78    2020    1.4593 

AUD/USD

  54    2020    1.5862    47    2020    1.4563 

Derivatives designated as hedges

           

Forwards

           

USD/CDN

  296    2020    1.3420    -    -    - 

1 Australian Dollar

As at March 31, 2020, our interest rate derivative contracts we designated as hedges had a total notional amount of $680.

Fair Value

Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a currentarm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 12 of the 2019 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.

 

28


Unaudited In millions of US dollars except as otherwise noted  

 

The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost:

 

  March 31, 2020  December 31, 2019 
Financial assets (liabilities) measured at Carrying
Amount
  Level 11  Level 21  Carrying
Amount
  Level 11  Level 21 

Fair value on a recurring basis

      

Cash and cash equivalents

  3,182   -   3,182   671   -   671 

Derivative instrument assets

  20   -   20   5   -   5 

Other current financial assets - marketable securities2

  187   21   166   193   27   166 

Investments at FVTOCI3

  141   141   -   161   161   - 

Derivative instrument liabilities

  (80  -   (80  (33  -   (33

Amortized cost

      

Current portion of long-term debt

      

Notes and debentures

  -   -   -   (494  -   (503

Fixed and floating rate debt

  -   -   -   (8  -   (8

Long-term debt

      

Notes and debentures

  (8,519  (4,112  (4,960  (8,528  (1,726  (7,440

Fixed and floating rate debt

  (25  -   (25  (25  -   (25

1 During the period ended March 31, 2020, there were no transfers between Level 1 and Level 2 for financial instruments measured at fair value on a recurring basis. Our policy is to recognize transfers at the end of the reporting period.

2 Marketable securities consist of equity and fixed income securities. We determine the fair value of equity securities based on the bid price of identical instruments in active markets. We value fixed income securities using quoted prices of instruments with similar terms and credit risk.

3 Investments at fair value through other comprehensive income (“FVTOCI”) are comprised of shares in Sinofert Holdings Ltd.

The following table presents the carrying amounts of recognized financial instruments that are subject to master netting or similar agreements:

 

  March 31, 2020  December 31, 2019 
Financial assets (liabilities) Gross  Offset   Net Amounts
Presented
  Gross  Offset   Net Amounts
Presented
 

Derivative instrument assets

        

Natural gas derivatives

  1   -    1   -   -    - 

Foreign currency forwards

  19   -    19   5   -    5 

Derivative instrument liabilities

        

Natural gas derivatives1

  (30  -    (30  (30  -    (30

Foreign currency forwards

  (29  -    (29  (3  -    (3

Interest rate derivatives

  (21  -    (21  -   -    - 

Other long-term debt instruments2

  (150  150    -   (150  150    - 
   (210  150    (60  (178  150    (28

1 Cash margin deposits of $16 (December 31, 2019 – $17) were placed with counterparties related to legally enforceable master netting arrangements.

2Back-to-back loan arrangements that are not subject to any financial test covenants but are subject to certain customary covenants and events of default. We were in compliance with these covenants as at March 31, 2020.

 

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Unaudited In millions of US dollars except as otherwise noted  

 

NOTE 7  SHORT-TERM DEBT

Short-term debt was comprised of:

 

    Rate of Interest (%)   Total Facility Limit 1  March 31, 2020  December 31, 2019 

Credit facilities

      

Unsecured revolving term credit facility

   2.0 - 2.4    4,500   3,050   - 

Uncommitted revolving demand facility

   2.7 - 2.8    500   450   - 

Committed revolving credit facilities

   Nil    300   -   - 

Other credit facilities2

   1.3 - 10.4    710   347   326 

Commercial paper

   1.4 - 2.8        1,651   650 
             5,498   976 

1 As at March 31, 2020.

2 Other credit facilities are unsecured and consist of South American facilities with debt of $150 (December 31, 2019 – $149) and interest rates ranging from 2.8 percent to 10.4 percent, Australian facilities with debt of $155 (December 31, 2019 – $157) and interest rates ranging from 1.9 percent to 2.2 percent, and Other facilities with debt of $42 (December 31, 2019 – $20) and interest rates ranging from 1.3 percent to 2.5 percent.

The amount available under the commercial paper program is limited to the availability of backup funds under the $4,500 unsecured revolving term credit facility and excess cash invested in highly liquid securities.

Subsequent to March 31, 2020, and in addition to the $300 new committed revolving credit facilities entered into during the first quarter, we entered into new committed revolving credit facilities totaling approximately $1.2 billion, all with the same principal covenants and events of default as our existing credit facilities. At May 5, 2020, our short-term debt balance decreased by approximately $2.4 billion from March 31, 2020, as a result of repayments on our unsecured revolving term credit facility and commercial paper settlements net of drawdowns with a corresponding decrease in cash and cash equivalents.

NOTE 8  LONG-TERM DEBT

The following tables summarize our long-term debt repayment activities during the three months ended March 31, 2020:

 

    Rate of interest (%)   Maturity   Amount 

Notes repaid 2020

   4.875     March 30, 2020    500 

In March 2020, we filed a base shelf prospectus in Canada and the US qualifying the issuance of up to $5 billion of common shares, debt and other securities during a period of 25 months from March 16, 2020. Issuance of securities requires us to file a prospectus supplement and is subject to availability of funding in capital markets.

NOTE 9  SHARE CAPITAL

Share repurchase programs

 

   Board of Directors Approval Expiry Maximum Shares for Repurchase 

2019 Normal Course Issuer Bid1

 February 20, 2019 February 26, 2020  42,164,420 

2020 Normal Course Issuer Bid2

 February 18, 2020 February 26, 2021  28,572,458 

1 The 2019 normal course issuer bid permitted the repurchase of up to 7 percent of our outstanding common shares for cancellation. As of the expiry date, we had repurchased 33,256,668 of the maximum shares for repurchase.

2 The 2020 normal course issuer bid permits the repurchase of up to 5 percent of our outstanding common shares for cancellation and can expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.

Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities regulatory authorities, including private agreements.

 

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Unaudited In millions of US dollars except as otherwise noted  

 

The following table summarizes our share repurchase activities during the period:

 

   

Three Months Ended 

March 31 

 
    2020   2019  

Number of common shares repurchased for cancellation

   3,832,580    15,476,202  

Average price per share (US dollars)

   41.96    51.80  

Total cost

   160    802  

Dividends declared

We declared dividends per share of $0.45 (2019 – $Nil) during the three months ended March 31, 2020, payable on April 16, 2020 to shareholders of record on March 31, 2020.

Subsequent to March 31, 2020, our Board of Directors declared a quarterly dividend of $0.45 per share payable on July 17, 2020 to shareholders of record on June 30, 2020. The total estimated dividend to be paid is $256.

Anti-dilutive shares

As we recorded a net loss for the three months ended March 31, 2020, all stock options had an anti-dilutive effect. If we had net earnings, the diluted weighted average shares calculation would have included 66,806 stock options for the three months ended March 31, 2020.

NOTE 10  BUSINESS ACQUISITIONS

On September 30, 2019, we acquired Ruralco Holdings Limited (“Ruralco”) for a purchase price, net of cash and cash equivalents acquired, of $330 million. We have engaged independent valuation experts to assist in determining the fair value of certain assets acquired and liabilities assumed.

The preliminary values allocated to the acquired assets and assumed liabilities based upon fair values were as follows:

 

   March 31, 2020 
   Ruralco (Estimate) 
    Preliminary 1   Adjustments 2  Revised Fair Value 

Receivables

   289    29   318 3 

Inventories

   117    (2  115 

Prepaid expenses and other current assets

   8    -   8 

Property, plant and equipment

   136    -   136 

Goodwill

   202    (13  189 

Other intangible assets

   165    45   210 

Investments

   15    -   15 

Other assets

   16    -   16 

Total assets

   948    59                           1,007 

Short-term debt

   112    55   167 

Payables and accrued charges

   345    (3  342 

Lease liabilities, including current portion

   110    -   110 

Deferred income tax liabilities

   38    7   45 

Othernon-current liabilities

   13    -   13 

Total liabilities

   618    59   677 

Total consideration

   330    -   330 

1 Preliminary value as previously reported in our 2019 annual consolidated financial statements. The purchase price allocation is not final as we continue to obtain and verify information required to determine the fair value of certain assets and liabilities and the amount of deferred income taxes arising on their recognition. We estimated the preliminary purchase price allocation as of the date of the acquisition based on information that was available and continue to adjust those estimates as new information that existed at the date of acquisition becomes available. We expect to finalize the amounts recognized when we obtain the information necessary to complete the analysis, and in any event, not later than September 30, 2020.

2 We recorded adjustments to the preliminary fair value to reflect facts and circumstances in existence as of the date of acquisition. These adjustments primarily related to changes in the preliminary valuation assumptions, including refinement of intangible assets. All measurement period adjustments were offset against goodwill.

3 Includes receivables from customers with gross contractual amounts of $260, of which $5 are considered to be uncollectible.

 

31


Unaudited In millions of US dollars except as otherwise noted  

 

NOTE 11  SEASONALITY

Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets and trade payables. Our short-term debt also fluctuates during the year to meet working capital needs. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our vendors are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.

NOTE 12  RELATED PARTY TRANSACTIONS

We sell potash from our Canadian mines for use outside Canada and the United States exclusively to Canpotex. Sales are at prevailing market prices and are settled on normal trade terms. Sales to Canpotex for the three months ended March 31, 2020 were $292 (2019 – $451). At March 31, 2020, the related receivables owing from Canpotex was $251 (December 31, 2019 – $194).

 

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