Listed: TSX, NYSE
Symbol:
POT
Key Highlights
- First-quarter earnings of $0.09
per share1, including:
- Notable non-cash charges in phosphate of $0.03 per share
- New Brunswick severance
charges of $0.03 per share
- Full-year 2016 capital expenditures guidance reduced by
approximately $100 million
- Full-year 2016 earnings guidance lowered to $0.60-$0.80 per share
- Second-quarter earnings guidance set at $0.15-$0.25 per share
CEO Commentary
"Lower prices for all nutrients weighed
on our performance for the quarter and contributed to a more
subdued outlook for the year," said PotashCorp President and Chief
Executive Officer Jochen Tilk. "In
potash, the deferral of new contracts in China led to cautious buying patterns in other
regions, resulting in a weaker demand environment and lower
prices."
"Amidst this backdrop, we took meaningful steps during the
quarter that align with our potash strategy, including the
suspension of operations in New
Brunswick and production curtailments in Saskatchewan. While these steps impacted our
first-quarter results, we are confident they best support medium to
long-term performance. Our approach to markets – like our approach
to the balance sheet – will continue to be proactive and prudent,"
said Tilk.
"Importantly, we believe this approach – coupled with supportive
economics and recognition of improved nutrient value by farmers –
is already making a difference. In recent weeks, spot markets have
begun to stabilize and customer sentiment is improving. We see
better conditions for the remainder of 2016, but recognize that the
timing and strength of a recovery is still unfolding."
SASKATOON, April 28, 2016 /CNW/ - Potash Corporation of
Saskatchewan Inc. (PotashCorp) reported first-quarter earnings of
$0.09 per share ($75 million) – including notable charges of
$0.06 per share ($52 million) – down from $0.44 ($370
million) generated in the same period of 2015.
Weaker prices – primarily for potash and nitrogen – and lower
offshore potash sales volumes negatively impacted performance for
the quarter, with gross margin of $234
million, cash provided by operating activities of
$188 million and earnings before
finance costs, income taxes, depreciation and amortization,
termination benefit costs and certain impairment charges (adjusted
EBITDA)2 of $385 million,
all well below 2015's respective totals.
Investments in Arab Potash Company (APC) in Jordan and Sociedad Quimica y Minera de Chile
S.A. (SQM) in Chile contributed
$21 million to our quarterly
earnings, trailing the $33 million
generated in the first quarter of 2015. The market value of our
investments in these two publicly traded companies, as well as
Israel Chemicals Ltd. (ICL) in Israel and Sinofert Holdings Limited
(Sinofert) in China, equated to
approximately $4 billion, or
$5 per PotashCorp share, at market
close on April 27, 2016.
Market Conditions
The absence of new contracts in
China, limited demand from
India and cautious buying patterns
in spot markets reduced global potash deliveries in the first
quarter. This weaker demand environment, combined with increased
competitive pressures, pushed spot prices lower – most notably in
North America – although they
stabilized late in the quarter as signs of strengthening demand
began to emerge ahead of the key application season.
Lower global energy costs and new nitrogen capacity pressured
prices for all nitrogen products, keeping them below those realized
in first-quarter 2015, although urea and UAN prices displayed
seasonal strength in the US as buyers prepared for the spring
planting season.
Global phosphate markets remained muted in the first quarter as
elevated inventories in India and
cautious buying in Brazil led to
weaker shipments than those in first-quarter 2015. Tighter supply
for feed, industrial and liquid fertilizer products supported more
stable demand and prices relative to solid fertilizers.
Potash
Weaker realized prices and offshore sales
volumes, combined with costs of suspending production at our
Picadilly facility in New Brunswick ($32
million), led to lower first-quarter potash gross margin of
$88 million, compared to the
$428 million generated during the
same period in 2015.
First-quarter sales volumes of 1.8 million tonnes were well
below the 2.3 million tonnes sold in the first quarter last year.
While shipments to North America
were relatively flat, offshore volumes were down 35 percent,
largely due to weaker deliveries to contract markets. The majority
of Canpotex's3 volumes were sold to Other Asian markets
outside of China and India (49 percent) and Latin America (28 percent), while China and India accounted for 11 percent and 4 percent,
respectively.
In this environment of constrained global demand, our average
realized potash price for the first quarter was $178 per tonne, well below the $284 per tonne generated in the first quarter of
2015.
Consistent with our practice of matching supply with market
demand, in January we announced suspension of production at our
Picadilly potash facility (2
million tonnes nameplate capacity). Additionally, in February we
announced approximately 0.4 million tonnes of production
curtailments at our Saskatchewan
operations. These decisions resulted in elevated per-tonne cost of
goods sold of $128 per tonne for the
first quarter, 27 percent higher than in the same period last
year.
Nitrogen
In nitrogen, gross margin of $107 million for the quarter trailed the
$181 million generated in the first
quarter of 2015 as weaker prices – particularly for ammonia – were
partially offset by higher volumes and lower natural gas costs. Our
US operations accounted for 73 percent of our nitrogen gross margin
for the quarter, with Trinidad
providing the remainder.
Sales volumes for the quarter of 1.7 million tonnes were up 27
percent compared to the first quarter of 2015, due to strong demand
and increased production at our recently expanded Lima facility.
Weaker benchmark pricing saw our average realizations drop to
$244 per tonne during the quarter,
down significantly from $351 in the
corresponding period of 2015.
Cost of goods sold for the first quarter was $182 per tonne, down from $215 in the same period last year, driven mainly
by lower natural gas costs in Trinidad and the US.
Phosphate
In phosphate, first-quarter gross margin
($39 million) was negatively impacted
by weaker prices and a non-cash impairment charge of $27 million. These factors more than offset the
benefit of lower input costs, causing this year's total to trail
the $58 million earned in the
comparable period last year.
Quarterly sales volumes of 0.7 million tonnes were up 10 percent
compared to 2015's first quarter, due primarily to fewer production
constraints.
Our average realized phosphate price for the first quarter was
$499 per tonne, down from the
$574 per tonne in the same period
last year as weaker demand weighed on prices, most notably for
solid fertilizers.
Per-tonne cost of goods sold in the quarter was $446, down from $487 in the first quarter last year as lower
input costs more than offset notable non-cash charges, primarily an
impairment of property, plant and equipment at Aurora related to an
industrial product that we will no longer produce.
Financial
Provincial mining and other taxes for the
quarter totaled $31 million, down
from $95 million in last year's
corresponding period, largely due to lower expected potash prices
in 2016.
Income tax expense for the first quarter ($32 million) was down from the comparable period
last year ($140 million) due to lower
total earnings.
Potash Market Outlook
We expect supportive crop
economics and agronomic need to support strong potash consumption
through the remainder of the year. Spring planting requirements and
the anticipation of contract settlements are expected to increase
shipments; however, given the slower start to 2016, we have lowered
the upper end of our annual global potash shipment range and now
estimate 59-61 million tonnes.
In North America, we anticipate
that an increase in planted acres will support potash demand in
2016. Our full-year shipment estimate in this market is now
expected in the range of 9.0-9.5 million tonnes, slightly lower
than our previous estimate. With improved demand, the negative
pricing trends of recent months appear to be abating.
In Latin America, favorable
farmer economics are expected to support another year of
consumption growth. Agronomic need and expectations of increased
soybean acreage in the key planting season are expected to support
demand of 10.8-11.3 million tonnes, slightly above 2015 levels.
Strong underlying consumption trends and new contracts are
expected to support shipments to China in the range of 13.5-14.5 million tonnes
for 2016, in line with our previous estimates but below 2015's
record levels.
In India, we expect an improved
monsoon, declining inventories and the potential for lower farm
retail prices will lead to new contracts and support shipments of
4.0-4.5 million tonnes. While weaker first-quarter deliveries have
reduced our annual expectations for this market, they mark an
increase from 2015's levels.
In Other Asian markets, higher palm oil prices are expected to
support demand of 8.7-9.0 million tonnes in 2016, above both our
previous expectations and total shipments in 2015.
Financial Outlook
In response to weaker demand, we
curtailed production and have lowered our expectations for 2016
potash sales volumes to a range of 8.3-8.8 million tonnes. The
combination of lower volumes and weaker prices – reflecting the
decline during the first quarter – has reduced expectations for our
full-year potash gross margin, which is now forecast at
$0.5-$0.7 billion. Similarly
challenging market conditions have caused us to lower our combined
nitrogen and phosphate gross margin guidance to a range of
$0.6-$0.8 billion in 2016.
In response to weaker cash flow projections, we have reduced our
full-year capital expenditures guidance and now anticipate a range
of $0.7-$0.8 billion.
We now expect our provincial mining and other taxes will be in
the range of 24-27 percent of potash gross margin (excluding
New Brunswick severance costs) due
to adjustments for the prior year's potash production tax
provision. Selling and administrative expenses are now forecast in
the range of $235-$245 million. Due
to the recent strength of the Canadian dollar, we have revised our
full-year foreign exchange rate assumption to CDN$1.34 per US dollar.
As a result of the changes noted, we have lowered our full-year
2016 earnings guidance to $0.60-$0.80
per share. For the second quarter, we forecast a range of
$0.15-$0.25 per share.
All annual guidance numbers – including those noted above – are
outlined in the table below.
2016
Guidance
|
Earnings per
share
|
Annual: $0.60-$0.80
Q2: $0.15-$0.25
|
Potash sales
volumes
|
8.3-8.8 million
tonnes
|
Potash gross
margin
|
$0.5-$0.7
billion
|
Nitrogen and
phosphate gross margin
|
$0.6-$0.8
billion
|
Capital
expenditures*
|
$0.7-$0.8
billion
|
Effective tax
rate
|
25-27
percent
|
Provincial mining and
other taxes**
|
24-27
percent
|
Selling and
administrative expenses
|
$235-$245
million
|
Finance
costs
|
$210-$220
million
|
Income from offshore
equity investments***
|
$120-$140
million
|
Annual foreign
exchange rate assumption
|
CDN$1.34 per
US$
|
Annual EPS
sensitivity to foreign exchange
|
US$ strengthens vs.
CDN$ by $0.02 = +$0.01 EPS
|
* Does not include
capitalized interest
|
** As a percentage of
potash gross margin, excluding New Brunswick severance
costs
|
*** Includes income
from dividends and share of equity earnings
|
Notes
1. All references to per-share amounts
pertain to diluted net income per share.
2. See
reconciliation and description of non-IFRS measures in the attached
section titled "Selected Non-IFRS Financial Measures and
Reconciliations and Supplemental Information."
3.
Canpotex Limited (Canpotex), the offshore marketing company for
PotashCorp and two other Saskatchewan potash producers.
PotashCorp is the world's largest crop nutrient company and
plays an integral role in global food production. The company
produces the three essential nutrients required to help farmers
grow healthier, more abundant crops. With global population rising
and diets improving in developing countries, these nutrients offer
a responsible and practical solution to meeting the long-term
demand for food. PotashCorp is the largest producer, by capacity,
of potash and one of the largest producers of nitrogen and
phosphate. While agriculture is its primary market, the company
also produces products for animal nutrition and industrial uses.
Common shares of Potash Corporation of Saskatchewan Inc. are listed
on the Toronto Stock Exchange and the New York Stock
Exchange.
This release contains "forward-looking statements" (within
the meaning of the US Private Securities Litigation Reform Act of
1995) or "forward-looking information"(within the meaning of
appropriate Canadian securities legislation) that relate to future
events or our future performance. These statements can be
identified by expressions of belief, expectation or intention, as
well as those statements that are not historical fact. These
statements often contain words such as "should," "could," "expect,"
"forecast," "may,""anticipate," "believe," "intend," "estimates,"
"plans" and similar expressions. These statements are based on
certain factors and assumptions as set forth in this document,
including with respect to: foreign exchange rates, expected growth,
results of operations, performance, business prospects and
opportunities, and effective tax rates. While we consider these
factors and assumptions to be reasonable based on information
currently available, they may prove to be incorrect.
Forward-looking statements are subject to risks and uncertainties
that are difficult to predict. The results or events set forth in
forward-looking statements may differ materially from actual
results or events. Several factors could cause actual results or
events to differ materially from those expressed in forward-looking
statements including, but not limited to, the following: variations
from our assumptions with respect to foreign exchange rates,
expected growth, results of operations, performance, business
prospects and opportunities, and effective tax rates; fluctuations
in supply and demand in the fertilizer, sulfur and petrochemical
markets; changes in competitive pressures, including pricing
pressures; risks and uncertainties related to any operating and
workforce changes made in response to our industry and the markets
we serve, including mine and inventory shutdowns; adverse or
uncertain economic conditions and changes in credit and financial
markets; economic and political uncertainty around the world;
changes in capital markets; the results of sales contract
negotiations; unexpected or adverse weather conditions; changes in
currency and exchange rates; risks related to reputational loss;
the occurrence of a major safety incident; inadequate insurance
coverage for a significant liability; inability to obtain relevant
permits for our operations; catastrophic events or malicious acts,
including terrorism; certain complications that may arise in our
mining process, including water inflows; risks and uncertainties
related to our international operations and assets; our ownership
of non-controlling equity interests in other companies; our
prospects to reinvest capital in strategic opportunities and
acquisitions; risks associated with natural gas and other hedging
activities; security risks related to our information technology
systems; imprecision in reserve estimates; costs and availability
of transportation and distribution for our raw materials and
products, including railcars and ocean freight; changes in, and the
effects of, government policies and regulations; earnings and the
decisions of taxing authorities which could affect our effective
tax rates; increases in the price or reduced availability of the
raw materials that we use; our ability to attract, develop, engage
and retain skilled employees; strikes or other forms of work
stoppage or slowdowns; rates of return on, and the risks associated
with, our investments and capital expenditures; timing and impact
of capital expenditures; the impact of further innovation; adverse
developments in new and pending legal proceedings or government
investigations; and violations of our governance and compliance
policies. These risks and uncertainties are discussed in more
detail under the headings "Risk Factors" and "Management's
Discussion and Analysis of Results and Operations and Financial
Condition" in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2015 and in other
documents and reports subsequently filed by us with the US
Securities and Exchange Commission and the Canadian provincial
securities commissions. Forward-looking statements are given only
as of the date hereof and we disclaim any obligation to update or
revise any forward-looking statements in this release, whether as a
result of new information, future events or otherwise, except as
required by law.
PotashCorp will host a Conference Call on Thursday, April 28, 2016 at 1:00 pm Eastern Time.
Telephone
Conference:
|
|
Dial-in
numbers:
|
|
|
- From Canada
and the US
|
1-800-597-1419
|
|
|
|
|
|
|
- From
Elsewhere
|
1-604-638-5350
|
|
|
|
|
|
|
|
Live
Webcast:
|
|
Visit
www.potashcorp.com
|
|
|
Webcast participants
can submit questions to management online from their audio player
pop-up window.
|
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Condensed Consolidated Statements of
Income
|
(in millions of US dollars except as otherwise
noted)
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
Sales (Note
2)
|
|
$
|
1,209
|
$
|
1,665
|
Freight,
transportation and distribution
|
|
|
(133)
|
|
(128)
|
Cost of goods
sold
|
|
|
(842)
|
|
(870)
|
Gross Margin
|
|
|
234
|
|
667
|
Selling and
administrative expenses
|
|
|
(53)
|
|
(60)
|
Provincial mining and
other taxes
|
|
|
(31)
|
|
(95)
|
Share of earnings of
equity-accounted investees
|
|
|
19
|
|
36
|
Other (expenses)
income (Note 3)
|
|
|
(10)
|
|
11
|
Operating Income
|
|
|
159
|
|
559
|
Finance
costs
|
|
|
(52)
|
|
(49)
|
Income Before Income Taxes
|
|
|
107
|
|
510
|
Income taxes (Note
4)
|
|
|
(32)
|
|
(140)
|
Net Income
|
|
$
|
75
|
$
|
370
|
|
|
|
|
|
|
Net Income per Share
|
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
$
|
0.45
|
|
Diluted
|
|
$
|
0.09
|
$
|
0.44
|
|
|
|
|
|
|
Dividends Declared per
Share
|
|
$
|
0.25
|
$
|
0.38
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
837,118,000
|
831,390,000
|
|
Diluted
|
|
837,811,000
|
837,099,000
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Condensed Consolidated Statements of Comprehensive
Income
|
(in millions of US dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
(Net of related
income taxes)
|
|
2016
|
2015
|
Net Income
|
|
$
|
75
|
$
|
370
|
Other comprehensive
income
|
|
|
|
|
|
|
Items that have been
or may be subsequently reclassified to net income:
|
|
|
|
|
|
|
|
Available-for-sale
investments (1)
|
|
|
|
|
|
|
|
|
Net fair value gain
during the period
|
|
|
1
|
|
38
|
|
|
Cash flow
hedges
|
|
|
|
|
|
|
|
|
Net fair value loss
during the period (2)
|
|
|
(6)
|
|
(22)
|
|
|
|
Reclassification to
income of net loss (3)
|
|
|
15
|
|
11
|
|
|
Other
|
|
|
1
|
|
(4)
|
Other Comprehensive Income
|
|
|
11
|
|
23
|
Comprehensive Income
|
|
$
|
86
|
$
|
393
|
(1)
Available-for-sale investments are comprised of shares in Israel
Chemicals Ltd., Sinofert Holdings
Limited and other.
|
(2) Cash
flow hedges are comprised of natural gas derivative instruments and
treasury lock derivatives
and were net of income taxes of $3 (2015
- $12).
|
(3) Net of
income taxes of $(8) (2015 - $(6)).
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Condensed Consolidated Statements of Cash
Flow
|
(in millions of US dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
Operating Activities
|
|
|
|
|
|
Net income
|
|
$
|
75
|
$
|
370
|
Adjustments to
reconcile net income to cash provided by
|
|
|
|
|
|
|
operating activities
(Note 5)
|
|
|
206
|
|
181
|
Changes in non-cash
operating working capital (Note 5)
|
|
|
(93)
|
|
(30)
|
Cash provided by operating
activities
|
|
|
188
|
|
521
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
|
(246)
|
|
(228)
|
Other assets and
intangible assets
|
|
|
-
|
|
(5)
|
Cash used in investing
activities
|
|
|
(246)
|
|
(233)
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
Proceeds from
long-term debt obligations
|
|
|
-
|
|
494
|
Finance costs on
long-term debt obligations
|
|
|
(2)
|
|
-
|
Proceeds from
(repayment of) short-term debt obligations
|
|
|
336
|
|
(536)
|
Dividends
|
|
|
(313)
|
|
(274)
|
Issuance of common
shares
|
|
|
20
|
|
30
|
Cash provided by (used in) financing
activities
|
|
|
41
|
|
(286)
|
(Decrease) Increase in Cash and Cash
Equivalents
|
|
|
(17)
|
|
2
|
Cash and Cash Equivalents, Beginning of
Period
|
|
|
91
|
|
215
|
Cash and Cash Equivalents, End of
Period
|
|
$
|
74
|
$
|
217
|
|
|
|
|
|
|
Cash and cash
equivalents comprised of:
|
|
|
|
|
|
|
Cash
|
|
$
|
16
|
$
|
96
|
|
Short-term
investments
|
|
|
58
|
|
121
|
|
|
$
|
74
|
$
|
217
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Condensed Consolidated Statement of Changes in
Equity
|
(in millions of US dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive (Loss)
Income
|
|
|
|
|
|
|
|
|
|
Net
unrealized
|
Net
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
gain on
|
(loss) gain
on
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
available-
|
derivatives
|
|
|
Other
|
|
|
|
|
|
Share
|
Contributed
|
for-sale
|
designated
as
|
|
|
Comprehensive
|
Retained
|
Total
|
|
Capital
|
Surplus
|
investments
|
cash flow
hedges
|
Other
|
(Loss) Income
|
Earnings
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2015
|
$
|
1,747
|
$
|
230
|
$
|
77
|
$
|
(117)
|
$
|
(10)
|
$
|
(50)
|
$
|
6,455
|
$
|
8,382
|
Net income
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
75
|
|
75
|
Other comprehensive
income
|
|
-
|
|
-
|
|
1
|
|
9
|
|
1
|
|
11
|
|
-
|
|
11
|
Dividends
declared
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(210)
|
|
(210)
|
Effect of share-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
including issuance of
common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
28
|
|
(7)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
21
|
Shares issued for
dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
reinvestment
plan
|
|
7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
7
|
Balance - March 31, 2016
|
$
|
1,782
|
$
|
223
|
$
|
78
|
$
|
(108)
|
$
|
(9)
|
$
|
(39)
|
$
|
6,320
|
$
|
8,286
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Potash Corporation of Saskatchewan
Inc.
|
Condensed Consolidated Statements of Financial
Position
|
(in millions of US dollars except share
amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
March 31
|
December 31
|
As at
|
|
2016
|
2015
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
74
|
$
|
91
|
|
|
Receivables
|
|
|
701
|
|
640
|
|
|
Inventories
|
|
|
751
|
|
749
|
|
|
Prepaid expenses and
other current assets
|
|
|
78
|
|
73
|
|
|
|
1,604
|
|
1,553
|
|
Non-current
assets
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
13,186
|
|
13,212
|
|
|
Investments in
equity-accounted investees
|
|
|
1,260
|
|
1,243
|
|
|
Available-for-sale
investments
|
|
|
985
|
|
984
|
|
|
Other
assets
|
|
|
287
|
|
285
|
|
|
Intangible
assets
|
|
|
188
|
|
192
|
Total Assets
|
|
$
|
17,510
|
$
|
17,469
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
|
$
|
853
|
$
|
517
|
|
|
Payables and accrued
charges
|
|
|
914
|
|
1,146
|
|
|
Current portion of
derivative instrument liabilities
|
|
|
78
|
|
84
|
|
|
|
1,845
|
|
1,747
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
3,711
|
|
3,710
|
|
|
Derivative instrument
liabilities
|
|
|
98
|
|
109
|
|
|
Deferred income tax
liabilities
|
|
|
2,449
|
|
2,438
|
|
|
Pension and other
post-retirement benefit liabilities
|
|
|
447
|
|
431
|
|
|
Asset retirement
obligations and accrued environmental costs
|
|
|
600
|
|
574
|
|
|
Other non-current
liabilities and deferred credits
|
|
|
74
|
|
78
|
Total Liabilities
|
|
|
9,224
|
|
9,087
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
Share
capital
|
|
|
1,782
|
|
1,747
|
|
|
Unlimited
authorization of common shares without par value;
issued and outstanding 838,923,638 and
836,540,151 at
March 31, 2016 and December 31, 2015,
respectively
|
|
|
|
|
|
|
Contributed
surplus
|
|
|
223
|
|
230
|
|
Accumulated other
comprehensive loss
|
|
|
(39)
|
|
(50)
|
|
Retained
earnings
|
|
|
6,320
|
|
6,455
|
Total Shareholders' Equity
|
|
|
8,286
|
|
8,382
|
Total Liabilities and Shareholders'
Equity
|
|
$
|
17,510
|
$
|
17,469
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
|
|
|
Potash Corporation of Saskatchewan Inc.
Notes to the Condensed Consolidated Financial
Statements
For the Three Months Ended March
31, 2016
(in millions of US dollars except as otherwise
noted)
(unaudited)
1. Significant Accounting Policies
With its subsidiaries, Potash Corporation of Saskatchewan
Inc. ("PCS") — together known as "PotashCorp" or "the company"
except to the extent the context otherwise requires — forms an
integrated fertilizer and related industrial and feed products
company. The company's accounting policies are in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS"). The accounting
policies and methods of computation used in preparing these
unaudited interim condensed consolidated financial statements are
consistent with those used in the preparation of the company's 2015
annual consolidated financial statements.
These unaudited interim condensed consolidated financial
statements include the accounts of PCS and its subsidiaries;
however, they do not include all disclosures normally provided in
annual consolidated financial statements and should be read in
conjunction with the company's 2015 annual consolidated financial
statements. Further, while the financial figures included in this
preliminary interim results announcement have been computed in
accordance with IFRS applicable to interim periods, this
announcement does not contain sufficient information to constitute
an interim financial report as that term is defined in
International Accounting Standard ("IAS") 34, "Interim Financial
Reporting". The company expects to publish an interim financial
report that complies with IAS 34 in its Quarterly Report on Form
10-Q in May 2016.
In management's opinion, the unaudited interim condensed
consolidated financial statements include all adjustments necessary
to present fairly such information. Interim results are not
necessarily indicative of the results expected for the fiscal
year.
2. Segment Information
The company has three reportable operating segments:
potash, nitrogen and phosphate. The accounting policies of the
segments are the same as those described in Note 1. Inter-segment
sales are made under terms that approximate market
value.
|
|
|
|
|
Three Months Ended March 31,
2016
|
|
|
Potash
|
|
Nitrogen
|
|
Phosphate
|
|
All Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
|
381
|
|
$
|
428
|
|
$
|
400
|
|
|
-
|
|
$
|
1,209
|
Freight,
transportation and distribution - third party
|
|
(59)
|
|
|
(33)
|
|
|
(41)
|
|
|
-
|
|
|
(133)
|
Net sales - third
party
|
|
322
|
|
|
395
|
|
|
359
|
|
|
-
|
|
|
|
Cost of goods sold -
third party
|
|
(234)
|
|
|
(298)
|
|
|
(310)
|
|
|
-
|
|
|
(842)
|
Margin (cost) on
inter-segment sales (1)
|
|
-
|
|
|
10
|
|
|
(10)
|
|
|
-
|
|
|
-
|
Gross
margin
|
|
88
|
|
|
107
|
|
|
39
|
|
|
-
|
|
|
234
|
Depreciation and
amortization
|
|
(48)
|
|
|
(54)
|
|
|
(57)
|
|
|
(8)
|
|
|
(167)
|
Termination benefit
costs
|
|
(32)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(32)
|
Impairment of
property, plant and equipment
|
|
-
|
|
|
-
|
|
|
(27)
|
|
|
-
|
|
|
(27)
|
Cash outflows for
additions to property,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
91
|
|
|
69
|
|
|
43
|
|
|
43
|
|
|
246
|
(1)
Inter-segment net sales were $17.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2015
|
|
|
Potash
|
|
|
Nitrogen
|
|
|
Phosphate
|
|
All Others
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - third
party
|
$
|
738
|
|
$
|
482
|
|
$
|
445
|
|
$
|
-
|
|
$
|
1,665
|
Freight,
transportation and distribution - third party
|
|
(64)
|
|
|
(23)
|
|
|
(41)
|
|
|
-
|
|
|
(128)
|
Net sales - third
party
|
|
674
|
|
|
459
|
|
|
404
|
|
|
-
|
|
|
|
Cost of goods sold -
third party
|
|
(246)
|
|
|
(290)
|
|
|
(334)
|
|
|
-
|
|
|
(870)
|
Margin (cost) on
inter-segment sales (1)
|
|
-
|
|
|
12
|
|
|
(12)
|
|
|
-
|
|
|
-
|
Gross
margin
|
|
428
|
|
|
181
|
|
|
58
|
|
|
-
|
|
|
667
|
Depreciation and
amortization
|
|
(58)
|
|
|
(46)
|
|
|
(64)
|
|
|
(4)
|
|
|
(172)
|
Cash outflows for
additions to property,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
111
|
|
|
60
|
|
|
36
|
|
|
21
|
|
|
228
|
(1)
Inter-segment net sales were $18.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Other (Expenses) Income
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31
|
|
|
|
|
2016
|
|
|
2015
|
Foreign exchange
(loss) gain
|
|
|
|
$
|
(17)
|
|
|
$
|
15
|
Other income
(expenses)
|
|
|
|
|
7
|
|
|
|
(4)
|
|
|
|
|
$
|
(10)
|
|
|
$
|
11
|
4. Income Taxes
A separate estimated average annual effective tax rate was
determined for each taxing jurisdiction and applied individually to
the interim period pre-tax income of each jurisdiction.
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31
|
|
|
|
|
2016
|
|
|
|
2015
|
Income tax
expense
|
|
|
|
$
|
32
|
|
|
|
$
|
140
|
Actual effective tax
rate on ordinary earnings
|
|
|
|
|
26%
|
|
|
|
|
27%
|
Actual effective tax
rate including discrete items
|
|
|
|
|
30%
|
|
|
|
|
27%
|
Discrete tax
adjustments that impacted the tax rate
|
|
|
|
$
|
4
|
|
|
|
$
|
3
|
5. Consolidated Statements of Cash Flow
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
Reconciliation of cash provided by operating
activities
|
|
|
|
|
Net income
|
$
|
75
|
$
|
370
|
Adjustments to
reconcile net income to cash provided by
|
|
|
|
|
|
operating
activities
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
167
|
|
172
|
|
|
Impairment of
property, plant and equipment
|
|
27
|
|
-
|
|
|
Share-based
compensation
|
|
2
|
|
15
|
|
|
Net undistributed
earnings of equity-accounted investees
|
|
(17)
|
|
(35)
|
|
|
Provision for
deferred income tax
|
|
6
|
|
25
|
|
|
Pension and other
post-retirement benefits
|
|
15
|
|
5
|
|
|
Asset retirement
obligations and accrued environmental costs
|
|
16
|
|
(13)
|
|
|
Other long-term
liabilities and miscellaneous
|
|
(10)
|
|
12
|
|
|
Subtotal of
adjustments
|
|
206
|
|
181
|
|
|
|
|
|
|
|
|
Changes in non-cash operating working
capital
|
|
|
|
|
|
|
Receivables
|
|
(41)
|
|
56
|
|
|
Inventories
|
|
8
|
|
(62)
|
|
|
Prepaid expenses and
other current assets
|
|
(2)
|
|
(8)
|
|
|
Payables and accrued
charges
|
|
(58)
|
|
(16)
|
|
|
Subtotal of changes
in non-cash operating working capital
|
|
(93)
|
|
(30)
|
Cash provided by operating
activities
|
$
|
188
|
$
|
521
|
|
|
|
|
|
|
Supplemental cash flow
disclosure
|
|
|
|
|
|
|
Interest
paid
|
$
|
29
|
$
|
38
|
|
|
Income taxes
paid
|
$
|
11
|
$
|
42
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
|
|
|
|
|
|
Potash Sales (tonnes -
thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
North
America
|
|
778
|
|
800
|
|
|
Offshore
|
|
1,005
|
|
1,549
|
|
Manufactured
Product
|
|
1,783
|
|
2,349
|
|
|
|
|
|
|
Potash Net Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
Sales
|
$
|
381
|
$
|
738
|
|
|
Freight,
transportation and distribution
|
|
(59)
|
|
(64)
|
|
|
Net Sales
|
$
|
322
|
$
|
674
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
North
America
|
$
|
138
|
$
|
279
|
|
|
Offshore
|
|
180
|
|
388
|
|
Other miscellaneous
and purchased product
|
|
4
|
|
7
|
|
Net Sales
|
$
|
322
|
$
|
674
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized Sales Price per
MT
|
|
|
|
|
|
|
North
America
|
$
|
178
|
$
|
349
|
|
|
Offshore
|
$
|
179
|
$
|
250
|
|
|
Average
|
$
|
178
|
$
|
284
|
|
Cost of Goods Sold per MT
|
$
|
(128)
|
$
|
(101)
|
|
Gross Margin per MT
|
$
|
50
|
$
|
183
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Average Natural Gas
Cost in Production per MMBtu
|
$
|
3.44
|
$
|
5.15
|
Nitrogen Sales (tonnes -
thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
(1)
|
|
601
|
|
489
|
|
|
Urea
|
|
306
|
|
252
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
757
|
|
568
|
|
Manufactured
Product
|
|
1,664
|
|
1,309
|
|
|
|
|
|
|
|
Fertilizer sales
tonnes (1)
|
|
666
|
|
388
|
|
Industrial/Feed sales
tonnes
|
|
998
|
|
921
|
|
Manufactured
Product
|
|
1,664
|
|
1,309
|
|
|
|
|
|
|
Nitrogen Net Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
Sales - third
party
|
$
|
428
|
$
|
482
|
|
|
Freight,
transportation and distribution - third party
|
|
(33)
|
|
(23)
|
|
|
Net sales - third
party
|
|
395
|
|
459
|
|
|
Inter-segment net
sales
|
|
17
|
|
18
|
|
|
Net Sales
|
$
|
412
|
$
|
477
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
(2)
|
$
|
188
|
$
|
228
|
|
|
Urea
|
|
86
|
|
97
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
|
133
|
|
134
|
|
Other miscellaneous
and purchased product (3)
|
|
5
|
|
18
|
|
Net Sales
|
$
|
412
|
$
|
477
|
|
|
|
|
|
|
|
Fertilizer net sales
(2)
|
$
|
155
|
$
|
133
|
|
Industrial/Feed net
sales
|
|
252
|
|
326
|
|
Other miscellaneous
and purchased product (3)
|
|
5
|
|
18
|
|
Net Sales
|
$
|
412
|
$
|
477
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized Sales Price per
MT
|
|
|
|
|
|
|
Ammonia
|
$
|
312
|
$
|
466
|
|
|
Urea
|
$
|
280
|
$
|
386
|
|
|
Solutions/Nitric
acid/Ammonium nitrate
|
$
|
176
|
$
|
235
|
|
|
Average
|
$
|
244
|
$
|
351
|
|
|
Fertilizer average
price per MT
|
$
|
232
|
$
|
342
|
|
|
Industrial/Feed
average price per MT
|
$
|
253
|
$
|
354
|
|
|
Average
|
$
|
244
|
$
|
351
|
|
Cost of Goods Sold per MT
|
$
|
(182)
|
$
|
(215)
|
|
Gross Margin per MT
|
$
|
62
|
$
|
136
|
|
|
|
|
|
|
(1)
Includes inter-segment ammonia sales (tonnes -
thousands)
|
|
40
|
|
33
|
(2)
Includes inter-segment ammonia net sales
|
$
|
17
|
$
|
18
|
(3)
Includes inter-segment other miscellaneous and purchased product
net sales
|
$
|
-
|
$
|
-
|
|
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Financial Data
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
|
|
|
|
|
|
Phosphate Sales (tonnes -
thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
|
437
|
|
371
|
|
|
Feed and
Industrial
|
|
280
|
|
280
|
|
Manufactured
Product
|
|
717
|
|
651
|
|
|
|
|
|
|
Phosphate Net Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
Sales
|
$
|
400
|
$
|
445
|
|
|
Freight,
transportation and distribution
|
|
(41)
|
|
(41)
|
|
|
Net Sales
|
$
|
359
|
$
|
404
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
$
|
191
|
$
|
194
|
|
|
Feed and
Industrial
|
|
167
|
|
179
|
|
Other miscellaneous
and purchased product
|
|
1
|
|
31
|
|
Net Sales
|
$
|
359
|
$
|
404
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized Sales Price per
MT
|
|
|
|
|
|
|
Fertilizer
|
$
|
436
|
$
|
524
|
|
|
Feed and
Industrial
|
$
|
596
|
$
|
640
|
|
|
Average
|
$
|
499
|
$
|
574
|
|
Cost of Goods Sold per MT
|
$
|
(446)
|
$
|
(487)
|
|
Gross Margin per MT
|
$
|
53
|
$
|
87
|
Potash Corporation of Saskatchewan
Inc.
|
Selected Additional Data
|
(unaudited)
|
|
|
|
Exchange Rate (Cdn$/US$)
|
|
|
|
|
|
2016
|
2015
|
|
|
|
|
December
31
|
|
|
1.3840
|
March 31
|
|
1.2971
|
1.2683
|
First-quarter average
conversion rate
|
|
1.3908
|
1.2049
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
|
|
|
|
Production
|
|
|
|
Potash production
(KCl Tonnes - thousands)
|
|
2,230
|
2,612
|
Potash shutdown weeks
(1)
|
|
7
|
-
|
Nitrogen production
(N Tonnes - thousands)
|
|
771
|
792
|
Ammonia operating
rate
|
|
86%
|
91%
|
Phosphate production
(P2O5 Tonnes - thousands)
|
|
411
|
366
|
Phosphate
P2O5 operating
rate
|
|
86%
|
62%
|
|
|
|
|
Shareholders
|
|
|
|
PotashCorp's total
shareholder return
|
|
2%
|
-8%
|
|
|
|
|
Customers
|
|
|
|
Product tonnes
involved in customer complaints (thousands)
|
|
25
|
18
|
|
|
|
|
Community
|
|
|
|
Taxes and royalties
($ millions) (2)
|
|
78
|
242
|
|
|
|
|
Employees
|
|
|
|
Annualized Employee
Turnover Rate (3)
|
|
3%
|
4%
|
|
|
|
|
Safety
|
|
|
|
Total site recordable
injury rate (per 200,000 work hours) (4)
|
|
1.15
|
0.92
|
|
|
|
|
Environment
|
|
|
|
Environmental
incidents (5)
|
|
9
|
5
|
|
|
|
|
|
|
|
|
|
March 31,
|
December 31,
|
As at
|
|
2016
|
2015
|
|
|
|
|
Number of employees
|
|
|
|
|
Potash
|
|
2,393
|
2,689
|
|
Nitrogen
|
|
814
|
812
|
|
Phosphate
|
|
1,444
|
1,438
|
|
Other
|
|
459
|
456
|
|
Total
|
|
5,110
|
5,395
|
(1)
Represents weeks of full production shutdown; excludes the impact
of any periods of reduced operating rates, planned routine annual
maintenance shutdowns and suspension of Picadilly potash
operations.
|
(2) Taxes
and royalties = current income tax expense - investment tax credits
- realized excess tax benefit related to share-based compensation +
potash production tax + resource surcharge + royalties + municipal
taxes + other miscellaneous taxes (calculated on an accrual
basis).
|
(3)
Excluding retirements and workforce changes related to suspension
of Picadilly potash operations.
|
(4) Total
site includes PotashCorp employees, contractors and others on site
(as defined in our 2015 Annual Integrated Report).
|
(5) Total
of reportable quantity releases, permit excursions and provincial
reportable spills (as defined in our 2015 Annual Integrated
Report).
|
Potash Corporation of Saskatchewan Inc.
Selected Non-IFRS Financial Measures and Reconciliations
and Supplemental Information
(in millions of US dollars except percentage
amounts)
(unaudited)
The following information is included for convenience
only. Generally, a non-IFRS financial measure is a numerical
measure of a company's performance, cash flows or financial
position that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with IFRS. EBITDA,
adjusted EBITDA, adjusted EBITDA margin, cash flow prior to working
capital changes and free cash flow are not measures of financial
performance (nor do they have standardized meanings) under IFRS. In
evaluating these measures, investors should consider that the
methodology applied in calculating such measures may differ among
companies and analysts.
The company uses both IFRS and certain non-IFRS measures
to assess performance. Management believes these non-IFRS measures
provide useful supplemental information to investors in order that
they may evaluate PotashCorp's financial performance using the same
measures as management. Management believes that, as a result, the
investor is afforded greater transparency in assessing the
financial performance of the company. These non-IFRS financial
measures should not be considered as a substitute for, nor superior
to, measures of financial performance prepared in accordance with
IFRS.
A. EBITDA, ADJUSTED EBITDA AND
ADJUSTED EBITDA MARGIN
Set forth below is a reconciliation of "EBITDA" and
"adjusted EBITDA" to net income and "adjusted EBITDA margin" to net
income as a percentage of sales, the most directly comparable
financial measures calculated and presented in accordance with
IFRS.
|
Three Months Ended
|
|
March 31
|
|
2016
|
2015
|
Net income
|
$
|
75
|
$
|
370
|
Finance
costs
|
|
52
|
|
49
|
Income
taxes
|
|
32
|
|
140
|
Depreciation and
amortization
|
|
167
|
|
172
|
EBITDA
|
$
|
326
|
$
|
731
|
Termination benefit
costs
|
|
32
|
|
-
|
Impairment of
property, plant and equipment
|
|
27
|
|
-
|
Adjusted EBITDA
|
$
|
385
|
$
|
731
|
EBITDA is calculated as net income before finance costs,
income taxes, and depreciation and amortization. Adjusted EBITDA is
calculated as net income before finance costs, income taxes,
depreciation and amortization, termination benefit costs and
certain impairment charges. PotashCorp uses EBITDA as a
supplemental financial measure of its operational performance.
Management believes EBITDA and adjusted EBITDA to be an important
measure as it excludes the effects of items which primarily reflect
the impact of long-term investment and financing decisions, rather
than the performance of the company's day-to-day operations. As
compared to net income according to IFRS, these measures are
limited in that they do not reflect the periodic costs of certain
capitalized tangible and intangible assets used in generating
revenues in the company's business, or the charges associated with
impairments. Management evaluates such items through other
financial measures such as capital expenditures and cash flow
provided by operating activities. The company believes that these
measurements are useful to measure a company's ability to service
debt and to meet other payment obligations or as a valuation
measurement.
|
|
Three Months Ended
|
|
|
March 31
|
|
|
|
2016
|
2015
|
Sales
|
|
|
$ 1,209
|
$ 1,665
|
Freight,
transportation and distribution
|
|
|
(133)
|
(128)
|
Net sales
|
|
|
$ 1,076
|
$ 1,537
|
|
|
|
|
|
Net income as a percentage of
sales
|
|
|
6%
|
22%
|
Adjusted EBITDA margin
|
|
|
36%
|
48%
|
Adjusted EBITDA margin is calculated as adjusted EBITDA
divided by net sales (sales less freight, transportation and
distribution). Management believes comparing adjusted EBITDA to net
sales earned (net of costs to deliver product) is an important
indicator of efficiency. In addition to the limitations given above
in using adjusted EBITDA as compared to net income, adjusted EBITDA
margin as compared to net income as a percentage of sales is also
limited in that freight, transportation and distribution costs are
incurred and valued independently of sales; adjusted EBITDA also
includes share of earnings of equity-accounted investees whose
sales are not included in consolidated sales. Management evaluates
these items individually on the consolidated statements of
income.
B. CASH FLOW
Set forth below is a reconciliation of "cash flow prior to
working capital changes" and "free cash flow" to cash provided by
operating activities, the most directly comparable financial
measure calculated and presented in accordance with
IFRS.
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
2015
|
Cash flow prior to working capital
changes
|
$
|
281
|
$
|
551
|
Changes in non-cash
operating working capital
|
|
|
|
|
|
Receivables
|
|
(41)
|
|
56
|
|
Inventories
|
|
8
|
|
(62)
|
|
Prepaid expenses and
other current assets
|
|
(2)
|
|
(8)
|
|
Payables and accrued
charges
|
|
(58)
|
|
(16)
|
Changes in non-cash operating working
capital
|
|
(93)
|
|
(30)
|
Cash provided by operating
activities
|
$
|
188
|
$
|
521
|
Additions to
property, plant and equipment
|
|
(246)
|
|
(228)
|
Other assets and
intangible assets
|
|
-
|
|
(5)
|
Changes in non-cash
operating working capital
|
|
93
|
|
30
|
Free cash flow
|
$
|
35
|
$
|
318
|
Management uses cash flow prior to working capital changes
as a supplemental financial measure in its evaluation of liquidity.
Management believes that adjusting principally for the swings in
non-cash working capital items due to seasonality or other timing
issues assists management in making long-term liquidity
assessments. The company also believes that this measurement is
useful as a measure of liquidity or as a valuation
measurement.
The company uses free cash flow as a supplemental
financial measure in its evaluation of liquidity and financial
strength. Management believes that adjusting principally for the
swings in non-cash operating working capital items due to
seasonality or other timing issues, additions to property, plant
and equipment, and changes to other assets assists management in
the long-term assessment of liquidity and financial strength.
Management also believes that this measurement is useful as an
indicator of its ability to service its debt, meet other payment
obligations and make strategic investments. Readers should be
aware that free cash flow does not represent residual cash flow
available for discretionary expenditures.
C. ITEMS INCLUDED IN GROSS
MARGIN
|
|
Three Months Ended March 31,
2016
|
|
|
Potash
|
Nitrogen
|
Phosphate
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
$
|
88
|
$
|
107
|
$
|
39
|
$
|
234
|
Expenses included in
the above:
|
|
|
|
|
|
|
|
|
|
Termination benefit
costs
|
|
32
|
|
-
|
|
-
|
|
32
|
|
Impairment of
property, plant and equipment
|
|
-
|
|
-
|
|
27
|
|
27
|
SOURCE Potash Corporation of Saskatchewan Inc.