UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF JANUARY 2009
METHANEX CORPORATION
(Registrants name)
SUITE 1800, 200 BURRARD STREET, VANCOUVER, BC V6C 3M1 CANADA
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form
20-F or Form 40-F.
Indicate by check mark whether the registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b):
82
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NEWS RELEASE
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Methanex Corporation
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1800 200 Burrard St.
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Vancouver, BC Canada V6C 3M1
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Investor Relations: (604) 661-2600
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http://www.methanex.com
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For immediate release
METHANEX REPORTS Q4 RESULTS AND COMPLETES THE YEAR IN A STRONG FINANCIAL POSITION
January 28, 2009
For the fourth quarter of 2008, Methanex reported Adjusted EBITDA
1
of negative $12.4
million after recording a $33 million pre-tax charge to write-down inventories to net realizable
value and a net loss of $3.1 million ($0.03 per share on a diluted basis). Also included in
earnings in the fourth quarter is the benefit of a reduction of $27 million to future tax
liabilities related to a resolution of a tax position. For the year ended December 31, 2008,
Methanex reported Adjusted EBITDA
1
of $334.0 million and net income of $172.3 million
($1.82 per share on a diluted basis).
Bruce Aitken, President and CEO of Methanex commented, The slowdown in the global economy led to a
significant decline in methanol demand in the fourth quarter. This resulted in lower sales volumes
and a sharp drop in methanol prices which triggered a write-down in the value of our inventories.
These factors contributed to significantly lower earnings in the fourth quarter.
Mr. Aitken added, However, with the slowdown in demand, supply has also reacted quickly. Many
plants, particularly in China, are either operating at lower rates or have shut down and this has
provided some stability to pricing. Overall demand remains constrained and we expect that any
recovery in demand is dependant on a more positive global economic outlook.
Mr. Aitken concluded, Despite reporting losses in the fourth quarter, we generated $51 million in
cash flow from operations during the quarter and we continue to be in a strong financial position
to endure the current weak economic environment. With US$328 million of cash on hand at the end of
the quarter, a strong balance sheet, no near term refinancing requirements and a US$250 million
undrawn credit facility, we believe we are well positioned to meet our financial commitments
through this period of uncertainty and continue to invest to grow the Company.
A conference call is scheduled for Thursday, January 29, 2009 at 10:30 am EST (7:30 am PST) to
review these fourth quarter results. To access the call, dial the Telus Conferencing operator ten
minutes prior to the start of the call at (416) 883-7132, or toll free at (888) 205-4499. The
passcode for the call is 45654. A playback version of the conference call will be available for
fourteen days at (877) 653-0545. The reservation number for the playback version is 668310. There
will be a simultaneous audio-only webcast of the conference call, which can be accessed from our
website at www.methanex.com. In addition, an audio recording of the conference call can be
downloaded from our website for three weeks after the call.
Methanex is a Vancouver based, publicly traded company engaged in the worldwide production,
distribution and marketing of methanol. Methanex shares are listed for trading on the Toronto Stock
Exchange in Canada under the trading symbol MX, on the NASDAQ Global Market in the United States
under the trading symbol MEOH, and on the foreign securities market of the Santiago Stock
Exchange in Chile under the trading symbol Methanex. Methanex can be visited online at
www.methanex.com.
- more -
FORWARD-LOOKING STATEMENTS
This Fourth Quarter 2008 Managements Discussion and Analysis contains forward-looking statements
with respect to us and the chemical industry. Statements that include the words believes,
expects, may, will, should, seeks, intends, plans, estimates, anticipates, or the
negative version of those words or other comparable terminology and similar statements of a future
or forward-looking nature identify forward-looking statements.
We believe that we have a reasonable basis for making such forward-looking statements. The
forward-looking statements in this document are based on our experience, our perception of trends,
current conditions and expected future developments as well as other factors. Certain material
factors or assumptions were applied in drawing the conclusions or making the forecasts or
projections that are included in these forward-looking statements.
However, forward-looking statements, by their nature, involve risks and uncertainties that could
cause actual results to differ materially from those contemplated by the forward-looking
statements. The risks and uncertainties include those attendant with producing and marketing
methanol and successfully carrying out major capital expenditure projects in various jurisdictions,
including the on-time and on-budget completion of our new methanol joint venture project in Egypt,
the ability to successfully carry out corporate initiatives and strategies, conditions in the
methanol and other industries, fluctuations in supply, demand and price for methanol and its
derivatives, including demand for methanol for energy uses, the price of oil, the success of
natural gas exploration and development activities in southern Chile and New Zealand and our
ability to obtain any additional gas in those regions on commercially acceptable terms, actions of
competitors and suppliers, actions of governments and governmental authorities, changes in laws or
regulations in foreign jurisdictions, world-wide economic conditions and other risks described in
our 2007 Managements Discussion & Analysis and this Fourth Quarter 2008 Managements Discussion
and Analysis. In addition to the foregoing risk factors, the current global financial crisis and
its impact on global economies has added additional risks and uncertainties including changes in
capital markets and corresponding effects on the companys investments, our ability to access
existing or future credit and defaults by customers, suppliers or insurers.
Having in mind these and other factors, investors and other readers are cautioned not to place
undue reliance on forward-looking statements. They are not a substitute for the exercise of ones
own due diligence and judgment. The outcomes anticipated in forward-looking statements may not
occur and we do not undertake to update forward-looking statements.
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1
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Adjusted EBITDA is a non-GAAP measure that does not have any standardized meaning
prescribed by Canadian generally accepted accounting principles (GAAP) and therefore is
unlikely to be comparable to similar measures presented by other companies. Refer to
Additional Information Supplemental Non-GAAP Measures in the attached Fourth Quarter 2008
Managements Discussion and Analysis for a description of each supplemental non-GAAP measure
and a reconciliation to the most comparable GAAP measure.
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-end-
For further information, contact:
Jason Chesko
Director, Investor Relations
Tel: 604.661.2600
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Share
Information
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Investor
Information
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Methanex Corporations common
shares are listed for trading
on the Toronto Stock Exchange
under the symbol MX, on the
Nasdaq Global Market under the
symbol MEOH and on the foreign
securities market of the
Santiago Stock Exchange in
Chile under the trading symbol
Methanex.
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All financial reports, news
releases and corporate
information can be accessed
on our website at
www.methanex.com.
Contact Information
Methanex Investor Relations
1800 200 Burrard Street
Vancouver, BC Canada V6C 3M1
E-mail: invest@methanex.com
Methanex Toll-Free:
1-800-661-8851
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At January 28,
2009 the Company
had 92,031,392
common shares
issued and
outstanding and
stock options
exercisable for
1,606,743
additional common
shares.
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Transfer Agents & Registrars
CIBC Mellon Trust Company
320 Bay Street
Toronto, Ontario, Canada M5H 4A6
Toll free in North America:
1-800-387-0825
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FOURTH QUARTER MANAGEMENTS DISCUSSION AND ANALYSIS
Except where otherwise noted, all currency amounts are stated in United States dollars.
This Fourth Quarter 2008 Managements Discussion and Analysis dated January 28, 2009 should be read
in conjunction with the 2007 Annual Consolidated Financial Statements and the Managements
Discussion and Analysis included in the Methanex 2007 Annual Report. The Methanex 2007 Annual
Report and additional information relating to Methanex is available on SEDAR at
www.sedar.com
and on EDGAR at
www.sec.gov
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Three Months Ended
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Years Ended
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Dec 31
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Sep 30
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Dec 31
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Dec 31
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Dec 31
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($ millions, except where noted)
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2008
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2008
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2007
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2008
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2007
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Sales volumes (thousands of tonnes)
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Produced methanol
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829
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946
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997
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3,363
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4,569
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Purchased methanol
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435
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429
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421
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2,074
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1,453
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Commission sales
1
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134
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172
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195
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617
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590
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Total sales volumes
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1,398
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1,547
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1,613
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6,054
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6,612
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Methanex average non-discounted posted price ($ per tonne)
2
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388
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499
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637
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526
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451
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Average realized price ($ per tonne)
3
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321
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413
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514
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424
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375
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Adjusted EBITDA
4
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(12.4
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140.4
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270.3
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334.0
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652.3
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Cash flows from operating activities
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51.1
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129.1
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79.9
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325.1
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527.3
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Cash flows from operating activities before working
capital
4 5
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(33.2
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104.9
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187.8
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242.5
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493.9
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Operating income (loss)
4
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(38.8
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109.2
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241.3
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226.8
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539.9
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Net income (loss)
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(3.1
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70.9
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171.7
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172.3
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375.7
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Basic net income (loss) per common share
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(0.03
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0.76
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1.74
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1.82
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3.69
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Diluted net income (loss) per common share
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(0.03
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0.75
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1.72
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1.82
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3.68
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Common share information (millions of shares):
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Weighted average number of common shares
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92.6
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93.9
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98.9
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94.5
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101.7
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Diluted weighted average number of common shares
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92.7
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94.3
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99.6
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94.9
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102.1
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Number of common shares outstanding, end of period
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92.0
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93.4
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98.3
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92.0
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98.3
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1
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Commission sales represent volumes marketed on a commission basis. Commission income is included in revenue when earned.
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2
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Methanex average non-discounted posted price represents the average of our non-discounted posted prices in North America, Europe and Asia
Pacific weighted by sales volume. Current and historical pricing information is available at
www.methanex.com
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3
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Average realized price is calculated as revenue, net of commissions earned, divided by the total sales volumes of produced and purchased
methanol.
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4
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These items are non-GAAP measures that do not have any standardized meaning prescribed by Canadian generally accepted accounting principles
(GAAP) and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to
Additional Information Supplemental Non-GAAP
Measures
for a description of each non-GAAP measure and a reconciliation to the most comparable GAAP measure. Included in Adjusted EBITDA for the fourth
quarter of 2008 is a pre-tax charge of $33 million to write-down inventory to estimated net realizable value at December 31, 2008.
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5
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Represents cash flows from operating activities before changes in non-cash working capital.
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METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
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MANAGEMENTS DISCUSSION AND ANALYSIS
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PAGE 1
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PRODUCTION SUMMARY
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Annual
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2008
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2007
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Q4
2008
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Q3
2008
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Q4
2007
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(thousands of tonnes)
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Capacity
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Production
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Production
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Production
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Production
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Production
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Chile I, II, III and IV
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3,840
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1,088
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1,841
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272
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246
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288
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Titan
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850
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871
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861
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225
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200
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220
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Atlas (63.1% interest)
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1,073
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1,134
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982
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269
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284
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278
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New Zealand
1
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1,430
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570
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435
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200
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126
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75
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7,193
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3,663
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4,119
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966
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856
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861
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1
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In early October 2008, we restarted one of our two idled 900,000 tonne per year
facilities at our Motunui site in New Zealand and we shutdown our 530,000 tonne Waitara Valley
facility.
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Chile
Our methanol facilities in Chile produced 272,000 tonnes during the fourth quarter of 2008 compared
with 246,000 tonnes during the third quarter of 2008. We have natural gas supply contracts for
approximately 60% of our requirements for our production facilities in Chile with suppliers in
Argentina with the remaining natural gas supply coming from suppliers in Chile. Since June 2007,
the government of Argentina has curtailed all natural gas exports to our plants and we do not
expect to receive natural gas supply from Argentina. We currently source natural gas for our
methanol facilities in Chile primarily from Empresa Nacional del Petroleo (ENAP), the Chilean
state-owned energy company, and from GeoPark Chile Limited (GeoPark).
We believe the solution to the issue of natural gas supply for our Chile operations is to source
more natural gas from suppliers in Chile. On May 5, 2008, we announced that we signed an agreement
with ENAP to accelerate natural gas exploration and development in the Dorado Riquelme exploration
block in southern Chile and supply natural gas to our production facilities in Chile. Under the
arrangement, we expect to contribute approximately $100 million in capital, over a two to three
year period to fund a 50% participation in the block. The arrangement is subject to approval by the
government of Chile which is expected in the first half of 2009. We have invested $42 million in
the Dorado Riquelme block to date, of which approximately $33 million has been placed in escrow
until final approval is received and approximately $9 million has been paid to fund development and
exploration activities. We have been receiving some natural gas deliveries from the Dorado Riquelme
block since May 2008. Also, in late 2007, we signed a natural gas prepayment agreement with GeoPark
under which we agreed to provide US$40 million in financing to support and accelerate GeoParks
natural gas exploration and development activities in the Fell block in southern Chile. Under the
arrangement, GeoPark will also provide us with natural gas supply sourced from the Fell block under
a 10-year exclusive supply agreement. GeoPark continues to increase its deliveries of natural gas
to our plants and during the fourth quarter of 2008 approximately 25% of total production at our
Chile facilities was produced with natural gas from the Fell block.
We continue to pursue other investment opportunities to help accelerate natural gas exploration and
development in areas of southern Chile. In late 2007, the government of Chile completed an
international bidding round to assign natural gas exploration areas that lie close to our
production facilities and announced the participation of five international oil and gas companies.
Under the terms of the agreements from the bidding round there are minimum investment commitments.
Planning and exploration activities have commenced. On July 16, 2008, we announced that under the
international bidding round, the government of Chile awarded the Otway hydrocarbon exploration
block in southern Chile to a consortium that includes Wintershall, GeoPark, and ourselves.
Wintershall and GeoPark each own a 42% interest in the consortium and we own a 16% interest.
Exploration work is expected to commence by the end of this year. The minimum exploration
investment committed in the block by the consortium for the first phase is US$11 million over the
next three years.
We cannot provide assurance that ENAP, GeoPark or others will be successful in the exploration and
development of natural gas or that we would obtain any additional natural gas from suppliers in
Chile on commercially acceptable terms.
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METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
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MANAGEMENTS DISCUSSION AND ANALYSIS
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PAGE 2
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Trinidad
Our methanol facilities in Trinidad represent over 2.0 million tonnes of low cost annual capacity.
These methanol facilities continue to operate well and operated at or above design capacity during
the fourth quarter of 2008. Our methanol facilities in Trinidad produced a total of 494,000 tonnes
during the fourth quarter of 2008 compared with 484,000 tonnes during the third quarter of 2008.
New Zealand
Our New Zealand facilities produced 200,000 tonnes during the fourth quarter of 2008 compared with
126,000 tonnes during third quarter of 2008.
In early October, we restarted one of our two idled 900,000 tonne per year facilities at our
Motunui site in New Zealand and we shut down our smaller scale 530,000 tonne Waitara Valley
facility. We have the flexibility to operate the Motunui plant or the Waitara Valley plant or both
depending on methanol supply and demand dynamics and the availability of natural gas on
commercially acceptable terms.
EARNINGS ANALYSIS
We analyze the results of produced methanol sales separately from purchased methanol sales as the
margin characteristics of each are very different. We discuss changes in average realized price,
sales volumes and total cash costs related to our produced methanol sales whereas we discuss
purchased methanol on a net margin basis.
For a further discussion of the definitions and calculations used in our Adjusted EBITDA analysis,
refer to
How We Analyze Our Business
.
For the fourth quarter of 2008, we recorded Adjusted EBITDA of negative $12.4 million after
recording a $33 million pre-tax charge to write-down inventories to net realizable value and a net
loss of $3.1 million ($0.03 per share on a diluted basis). Also included in earnings for the fourth
quarter of 2008 is the benefit of a reduction of $27 million to future tax liabilities related to a
resolution of a tax position. This compares with Adjusted EBITDA of $140.4 million and net income
of $70.9 million ($0.75 per share on a diluted basis) for the third quarter of 2008 and Adjusted
EBITDA of $270.3 million and net income of $171.7 million ($1.72 per share on a diluted basis) for
the fourth quarter of 2007. For the year ended December 31, 2008, we recorded Adjusted EBITDA of
$334.0 million and net income of $172.3 million ($1.82 per share on a diluted basis). This compares
with Adjusted EBITDA of $652.3 million and net income of $375.7 million ($3.68 per share on a
diluted basis) during the same period in 2007.
During the fourth quarter of 2008, as a result of the major slowdown in the global economy there
was a significant reduction in global demand for methanol and an increase in global inventories.
This impacted our business through lower sales volumes and lower methanol pricing during the fourth
quarter of 2008 and into early 2009. In addition, these factors resulted in a pre-tax charge to
earnings of $33 million related to a write-down of our inventory value to estimated net realizable
value at December 31, 2008. Refer to our discussion of changes in Adjusted EBITDA below for more
details.
Adjusted EBITDA
The increase (decrease) in Adjusted EBITDA resulted from changes in the following:
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Q4 2008
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Q4 2008
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YTD
Q4
2008
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compared with
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compared with
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compared with
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($ millions)
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Q3
2008
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Q4
2007
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YTD
Q4
2007
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Average realized price
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$
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(74
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$
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(150
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)
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$
|
118
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Sales volumes
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(27
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(51
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)
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(210
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)
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Total cash costs
1
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3
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12
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(73
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)
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Inventory write-down charge
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(33
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)
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(33
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)
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(33
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Purchased methanol margin
|
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(22
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|
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(61
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(120
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$
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(153
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)
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$
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(283
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)
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$
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(318
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1
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Includes cash costs related to methanol produced at our Chile, Trinidad, and New
Zealand facilities as well as consolidated selling, general and administrative expenses and
fixed storage and handling costs.
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 3
|
Average realized price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
($ per tonne, except where noted)
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Methanex average non-discounted posted price
1
|
|
|
388
|
|
|
|
499
|
|
|
|
637
|
|
|
|
526
|
|
|
|
451
|
|
Methanex average realized price
2
|
|
|
321
|
|
|
|
413
|
|
|
|
514
|
|
|
|
424
|
|
|
|
375
|
|
Average discount
|
|
|
17
|
%
|
|
|
17
|
%
|
|
|
19
|
%
|
|
|
19
|
%
|
|
|
17
|
%
|
|
|
|
1
|
|
Methanex average non-discounted posted price represents the average of our
non-discounted posted prices in North America, Europe and Asia Pacific weighted by sales
volume. Current and historical pricing information is available at
www.methanex.com
.
|
|
2
|
|
Methanex average realized price disclosed above is calculated as revenue, net of
commissions earned, divided by the total sales volumes of produced and purchased methanol. For
the purposes of our Adjusted EBITDA analysis, we analyze changes in our average realized price
for sales of our produced methanol and this price will differ from the Methanex average
realized price disclosed above as sales under long-term contracts, where the prices are either
fixed or linked to our costs plus a margin, are included as sales of produced methanol.
|
We entered the fourth quarter of 2008 in a balanced methanol market environment and our average
non-discounted posted price for October was approximately $450 per tonne. During the fourth
quarter of 2008, there was a major slowdown in the global economy which resulted in a sudden and
significant reduction in global methanol demand and an increase in global inventories. As a result,
there was a decrease in contract methanol pricing during the fourth quarter of 2008 and our average
realized price for the fourth quarter of 2008 was $321 per tonne compared with $413 per tonne for
the third quarter of 2008 and $514 per tonne for the fourth quarter of 2007. The change in our
average realized price for produced methanol for the fourth quarter of 2008 decreased our Adjusted
EBITDA by $74 million compared with the third quarter of 2008 and by $150 million compared with the
fourth quarter of 2007.
For the year ended December 31, 2008, our average realized price was $424 per tonne compared with
$375 per tonne in 2007. The change in our average realized price for produced methanol for the year
ended December 31, 2008 compared with 2007 increased our Adjusted EBITDA by $118 million. For the
year ended December 31, 2008, sales under contracts where pricing is fixed or linked to our costs
plus a margin represented a higher proportion of our produced methanol sales volumes compared with
2007. As a result, the increase in Adjusted EBITDA as a result of the change in our average
realized price for produced methanol is lower than would be determined using the change in the
Methanex average realized price disclosed above.
Sales volumes of produced methanol
Sales volumes of produced methanol for the fourth quarter of 2008 were lower by 117,000 tonnes
compared with the third quarter of 2008 and this decreased Adjusted EBITDA by $27 million.
Sales volumes of produced methanol for the fourth quarter of 2008 and year ended December 31, 2008
were lower by 168,000 tonnes and 1,206,000 tonnes, respectively, compared with the same periods in
2007 primarily as a result of lower production at our Chile facilities and timing of inventory
flows during 2008. Lower sales volumes for these periods decreased Adjusted EBITDA by $51 million
and $210 million, respectively.
Total cash costs
Our production facilities are underpinned by natural gas purchase agreements with pricing terms
that include base and variable price components. The variable component is adjusted in relation to
changes in methanol prices above pre-
determined prices at the time of production. Accordingly, the changes in Adjusted EBITDA as a
result of changes in natural gas costs will depend heavily on the timing of inventory flows.
Total cash costs for the fourth quarter of 2008 were lower than in the third quarter of 2008 by $3
million. The change in cash costs was a result of lower natural gas costs for produced methanol,
lower ocean freight costs as a result of lower fuel costs, and a decrease to our global site
restoration provision which we review on an annual basis. As a result of decreases in our share
price, we recorded a recovery of stock-based compensation expense during the third quarter of 2008
and fourth quarter of 2008. The recovery of stock-based compensation was higher in the third
quarter of 2008 compared with the fourth quarter of 2008. This change partially offset the lower
cash costs described above.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 4
|
Total cash costs for the fourth quarter of 2008 were lower than in the fourth quarter of 2007 by
$12 million. The change in cash costs was a result of lower stock-based compensation expense as a
result of changes in our share price, lower ocean freight as a result of lower fuel costs, lower
insurance and other fixed costs at our Chile facilities, and the decrease to our global site
restoration provision. Partially offsetting these lower cash costs during the fourth quarter of
2008 compared with the fourth quarter of 2007 were higher natural gas costs as a result of timing
of inventory flows and increased sales of New Zealand production.
Total cash costs for the year ended December 31, 2008 were higher than the same period in 2007 by
$73 million. The change in cash costs was primarily a result of higher natural gas costs and other
costs for produced methanol as a result of higher methanol pricing in 2008. Other changes in cash
costs for the year ended December 31, 2008 compared with 2007 were higher ocean freight and other
logistics costs primarily as a result of higher fuel costs which were offset by lower selling,
general and administrative expenses as a result of the impact of changes in our share price on
stock-based compensation expense.
Inventory write-down charge
We record inventory at lower of cost and estimated net realizable value. The carrying value of our
inventory, for both produced methanol as well as methanol we purchase from others, will reflect
methanol pricing at the time of production or purchase and this will differ from methanol pricing
at period end. Methanol prices fell sharply in late 2008 and early 2009 and we recorded a pre-tax
charge to earnings of $33 million to write-down the carrying value of inventory to estimated net
realizable value at December 31, 2008.
Margin on sale of purchased methanol
We purchase additional methanol produced by others through long-term and short-term offtake
contracts or on the spot market. This provides us with flexibility and certainty in managing our
supply chain while continuing to meet customer needs and support our marketing efforts.
Consequently, we realize holding gains or losses on the resale of this product depending on the
methanol price at the time of resale. During the fourth quarter of 2007, as a result of reduced
production rates at our Chile facilities, we increased our purchasing levels to continue to meet
commitments to our customers. As these purchases were made in a period of significantly increasing
methanol pricing, we recorded cash margin on sale of purchased methanol of $35 million during the
fourth quarter of 2007 and recorded a total cash margin of $39 million for the year ended December
31, 2007. We commenced 2008 in this very high methanol price environment and methanol pricing
moderated during first half of 2008 and then sharply decreased at the end of the fourth quarter of
2008 as a result of the slowdown in the global economy. During the fourth quarter of 2008 and year
ended December 31, 2008, we recorded negative cash margin on sale of purchased methanol of $26
million and $81 million, respectively.
Depreciation and Amortization
Depreciation and amortization was $26 million for the fourth quarter of 2008 compared with $31
million for the third quarter of 2008. For the fourth quarter of 2008 and the year ended December
31, 2008, depreciation and amortization was $26 million and $107 million, respectively, compared
with $29 million and $112 million, respectively, for the same periods in 2007. The decrease in
depreciation and amortization for the fourth quarter of 2008 and the year ended
December 31, 2008 compared with all periods is primarily due to lower sales volumes of produced
methanol which includes depreciation charges.
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
($ millions)
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Interest expense before capitalized interest
|
|
$
|
14
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
53
|
|
|
$
|
48
|
|
Less capitalized interest
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(2
|
)
|
|
|
(15
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
38
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 5
|
Interest expense before capitalized interest for the fourth quarter of 2008 was $14 million
compared with $13 million for the third quarter of 2008 and $13 million for the fourth quarter of
2007. Interest expense before capitalized interest for the year ended December 31, 2008 was $53
million compared with $48 million for the same period in 2007. In May 2007, we reached financial
close and secured limited recourse debt of $530 million for our joint venture project to construct
a 1.3 million tonne per year methanol facility in Egypt. Interest costs related to this project
have been capitalized since that date.
Interest and Other Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
($ millions)
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Interest and other income (expense)
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
27
|
|
Interest and other income for the fourth quarter of 2008 was an expense of $2 million compared with
income of $1 million for the third quarter of 2008. The decrease in interest and other income
during the fourth quarter of 2008 compared with the third quarter of 2008 was primarily due to the
impact of changes in foreign exchange gains and losses.
Interest and other income for the fourth quarter of 2008 and year ended December 31, 2008 decreased
by $5 million and $16 million, respectively, compared with the same periods in 2007. Interest and
other income during 2008 was lower than 2007 due to the impact of lower interest earned on cash
balances during 2008 and the impact of changes in foreign exchange gains and losses.
Income Taxes
For the year ended December 31, 2008, the effective tax rate was 13% compared with 28% for 2007.
The decrease in the effective tax rate for 2008 compared with 2007 is primarily attributed to the
resolution of a tax position during the fourth quarter of 2008 that resulted in a reduction of $27
million to future income tax liabilities.
The statutory tax rate in Chile and Trinidad, where we earn a substantial portion of our pre-tax
earnings, is 35%. Our Atlas facility in Trinidad has partial relief from corporation income tax
until 2014. In Chile the tax rate consists of a first tier tax that is payable when income is
earned and a second tier tax that is due when earnings are distributed from Chile. The second tier
tax is initially recorded as future income tax expense and is subsequently reclassified to current
income
tax expense when earnings are distributed. Accordingly, the ratio of current income tax expense to
total income tax expense is highly dependent on the level of cash distributed from Chile.
SUPPLY/DEMAND FUNDAMENTALS
We entered the fourth quarter with healthy methanol demand and a balanced methanol market
environment and our average non-discounted posted price across the major regions was approximately
$450 per tonne. During the fourth quarter of 2008, the global financial crisis and weak economic
environment led to a major reduction in global demand for most traditional methanol derivatives
(which make up approximately three quarters of global methanol demand). While there has been some
softness in methanol demand into DME, overall demand into energy related derivatives, including
MTBE, have remained relatively stable. Overall, we estimate global methanol demand declined by
about 15% in the fourth quarter compared to the third quarter and we estimate total global demand
is currently approximately 35 million tonnes measured on an annualized basis. In reaction to this
decrease in demand, many high cost methanol plants have been operating at lower rates or have shut
down, particularly in China, where we estimate approximately 6 million tonnes of annualized
methanol production shut down during the fourth quarter. Net imports into China have increased to
displace some of the high cost domestic production that has been shut down. In reaction to this
decrease in demand, there was a significant decrease in spot and contract methanol pricing during
the fourth quarter and at the beginning of the first quarter of 2009. In January, our average
non-discounted price across all of the major regions is approximately $220 per tonne.
Methanex Non-Discounted Regional Posted Prices
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan
|
|
|
Dec
|
|
|
Nov
|
|
|
Oct
|
|
(US$ per tonne)
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
United States
|
|
|
233
|
|
|
|
333
|
|
|
|
466
|
|
|
|
499
|
|
Europe
2
|
|
|
220
|
|
|
|
426
|
|
|
|
426
|
|
|
|
426
|
|
Asia
|
|
|
200
|
|
|
|
285
|
|
|
|
385
|
|
|
|
450
|
|
|
|
|
1
|
|
Discounts from our posted prices are offered to customers based on
various factors.
|
|
2
|
|
159 for Q1 2009 (Q4 2008 295) converted to United States
dollars.
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 6
|
The next increments of world scale capacity additions outside of China are two 1.7 million tonne
per year plants in Malaysia and Iran. The Malaysian plant is in the process of starting up and we
expect product from this plant to be available during the first quarter of 2009. We expect product
from the Iranian plant to be available to the market in the first half of 2009.
The global financial crisis and weak economic environment poses significant uncertainty for our
business and the future demand for methanol. Methanol demand into traditional derivatives is
correlated to industrial production and we believe that methanol demand into traditional
derivatives should improve when the macro economic environment improves. Over the past two years,
high energy prices have driven demand for methanol into emerging energy applications such as
gasoline blending and DME, primarily in China. While demand into these derivatives in China has
remained steady during the recent decline in energy prices, we believe demand potential into these
emerging energy derivatives will be stronger in a higher energy price environment.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities in the fourth quarter of 2008 were $51 million compared with
$80 million for the same period in 2007. The change in cash flows for the fourth quarter of 2008
compared with the fourth quarter of 2007 is primarily a result of lower earnings and the changes in
net working capital position. For the fourth quarter of 2008 we had a net working capital inflow
of $84 million compared with a net working capital outflow of $108 millon for the fourth quarter of
2007. These changes in net working capital were primarily driven by the impact of changes in
methanol pricing and its impact on payables, receivables, and inventory during the period.
For the fourth quarter of 2008, we repurchased 1.4 million common shares at an average price of
US$12.39, totaling $17 million, under a normal course issuer bid that expires May 19, 2009 and
allows us to repurchase for cancellation up to 7.9 million common shares. For the year ended
December 31, 2008, we repurchased a total of 6.5 million common shares at an average price of
US$23.04 per share, totaling $150 million, inclusive of 4.3 million common shares repurchased in
2008 under a normal course issuer bid that expired May 16, 2008.
During the fourth quarter of 2008 we paid a quarterly dividend of US$0.155 per share, or $14
million. For the year ended December 31, 2008 we paid total dividends of US$0.605 per share, or $57
million.
We are constructing a 1.3 million tonne per year methanol facility at Damietta on the Mediterranean
Sea in Egypt. We expect commercial operations of the methanol facility to begin in early 2010. We
own 60% of Egyptian Methanex Methanol Company S.A.E. (EMethanex) which is the company that is
developing the project and we will sell 100% of the methanol from the facility. We account for our
investment in EMethanex using consolidation accounting. This results in 100% of the assets and
liabilities of EMethanex being included in our financial statements. The other investors interest
in the project is presented as non-controlling interest. During the fourth quarter of 2008, total
plant and equipment construction costs related to our project in Egypt were $109 million. EMethanex
has limited recourse debt of $530 million. As at December 31, 2008, a total of $321 million of this
limited recourse debt was drawn with $68 million being drawn during the fourth quarter of 2008. The
total estimated future costs to complete the project over the next two years, excluding financing
costs and working capital, are expected to be approximately $320 million. Our 60% share of future
equity contributions, excluding financing costs and working capital, over the next two years is
estimated to be approximately $90 million and we expect to fund these expenditures from cash
generated from operations and cash on hand.
As previously mentioned, we have an agreement with ENAP to accelerate natural gas exploration and
development in the Dorado Riquelme hydrocarbon exploration block in southern Chile. Under the
arrangement, we expect to contribute approximately $100 million in capital, including the $42
million we have invested to date, over the next two to three years and will have a 50%
participation in the block. The arrangement is subject to approval by the government of Chile which
is expected during the first half of 2009.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 7
|
We operate in a highly competitive commodity industry and believe it is appropriate to maintain a
conservative balance sheet and to retain financial flexibility. This is particularly important in
the current uncertain economic environment. We have excellent financial capacity and flexibility.
Our cash balance at December 31, 2008 was $328 million and we have a strong balance sheet, no near
term re-financing requirements, and an undrawn $250 million credit facility provided by highly
rated financial institutions that expires in mid-2010. We invest our cash only in highly rated
instruments that have maturities of three months or less to ensure preservation of capital and
appropriate liquidity. Our planned capital maintenance expenditure program directed towards major
maintenance, turnarounds and catalyst changes for current operations, is currently estimated to
total approximately $100 million for the period to the end of 2011. Of this amount, approximately
$40 million relates to costs for major maintenance and turnarounds for our Atlas and Titan
facilities in Trinidad scheduled for 2009.
We believe we are well positioned to meet our financial commitments in this time of economic
uncertainty and continue to invest to grow the Company.
The credit ratings for our unsecured notes at
December 31, 2008 were as follows:
|
|
|
|
|
Standard & Poors Rating Services
|
|
BBB-
|
|
(stable)
|
Moodys Investor Services
|
|
Ba1
|
|
(stable)
|
Fitch Ratings
|
|
BBB
|
|
(negative)
|
Credit ratings are not recommendations to purchase,
hold or sell securities and do not comment on market
price or suitability for a particular investor.
There is no assurance that any rating will remain in
effect for any given period of time or that any
rating will not be revised or withdrawn entirely by
a rating agency in the future.
SHORT-TERM OUTLOOK
In the short term there is significant uncertainty caused by the global economic slowdown and its
impact on our business. The significant slowdown in the global economy that was seen in the fourth
quarter of 2008 has persisted into the first quarter of 2009 and it is uncertain how long the
current weak economic environment will last or how severe it may become. These global economic
conditions materially affect both the supply and demand for methanol and the price at which
methanol is sold. The degree to which our business is impacted is dependent upon the duration and
severity of these economic conditions.
We do not expect these conditions to materially improve in the first quarter of 2009 and we expect
global demand for methanol in the first quarter of 2009 to be similar to levels seen in the fourth
quarter of 2008.
We have recently embarked upon a broad corporate cost saving plan. This plan includes reviewing
our operating costs and cancelling or postponing almost all discretionary capital spending.
In January 2009, our average non-discounted price across all of the major regions is approximately
$220 per tonne. We currently believe that methanol prices should remain relatively stable during
the first quarter. However, the methanol price will ultimately depend on industry operating rates,
global energy prices, the rate of industry restructuring and the strength of global demand. We
believe that our excellent financial position and financial flexibility, outstanding global supply
network and low cost position will provide a sound basis for Methanex continuing to be the leader
in the methanol industry and investing to grow the Company.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 8
|
CONTROLS AND PROCEDURES
For the three months ended December 31, 2008, no changes were made in our internal control over
financial reporting that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
ADDITIONAL INFORMATION SUPPLEMENTAL NON-GAAP MEASURES
In addition to providing measures prepared in accordance with Canadian generally accepted
accounting principles (GAAP), we present certain supplemental non-GAAP measures. These are Adjusted
EBITDA, operating income and cash flows from operating activities before changes in non-cash
working capital. These measures do not have any standardized meaning prescribed by Canadian GAAP
and therefore are unlikely to be comparable to similar measures presented by other companies. We
believe these measures are useful in evaluating the operating performance and liquidity of the
Companys ongoing business. These measures should be considered in addition to, and not as a
substitute for, net income, cash flows and other measures of financial performance and liquidity
reported in accordance with Canadian GAAP.
Adjusted EBITDA
This supplemental non-GAAP measure is provided to assist readers in determining our ability to
generate cash from operations. We believe this measure is useful in assessing performance and
highlighting trends on an overall basis. We also believe Adjusted EBITDA is frequently used by
securities analysts and investors when comparing our results with those of other companies.
Adjusted EBITDA differs from the most comparable GAAP measure, cash flows from operating
activities, primarily because it does not include changes in non-cash working capital, other cash
payments related to operating activities, stock-based compensation expense, other non-cash items,
interest expense, interest and other income, and current income taxes.
The following table shows a reconciliation of cash flows from operating activities to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
($ thousands)
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Cash flows from operating activities
|
|
$
|
51,147
|
|
|
$
|
129,099
|
|
|
$
|
79,911
|
|
|
$
|
325,053
|
|
|
$
|
527,335
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in non-cash working capital
|
|
|
(84,377
|
)
|
|
|
(24,183
|
)
|
|
|
107,923
|
|
|
|
(82,532
|
)
|
|
|
(33,396
|
)
|
Other cash payments
|
|
|
545
|
|
|
|
435
|
|
|
|
11,938
|
|
|
|
3,101
|
|
|
|
16,824
|
|
Stock-based compensation recovery (expense)
|
|
|
1,155
|
|
|
|
5,870
|
|
|
|
(6,755
|
)
|
|
|
(2,811
|
)
|
|
|
(22,410
|
)
|
Other non-cash items
|
|
|
2,937
|
|
|
|
(685
|
)
|
|
|
(3,105
|
)
|
|
|
(2,797
|
)
|
|
|
(13,574
|
)
|
Interest expense
|
|
|
8,675
|
|
|
|
9,444
|
|
|
|
10,878
|
|
|
|
38,439
|
|
|
|
43,911
|
|
Interest and other income
|
|
|
1,823
|
|
|
|
(615
|
)
|
|
|
(2,583
|
)
|
|
|
(10,626
|
)
|
|
|
(26,862
|
)
|
Current income taxes
|
|
|
5,697
|
|
|
|
21,050
|
|
|
|
72,139
|
|
|
|
66,148
|
|
|
|
160,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
(12,398
|
)
|
|
$
|
140,415
|
|
|
$
|
270,346
|
|
|
$
|
333,975
|
|
|
$
|
652,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income and Cash Flows from Operating Activities before Non-Cash Working Capital
Operating income and cash flows from operating activities before changes in non-cash working
capital are reconciled to Canadian GAAP measures in our consolidated statements of income and
consolidated statements of cash flows, respectively.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 9
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of selected financial information for the prior eight quarters is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Jun 30
|
|
|
Mar 31
|
|
($ thousands, except per share amounts)
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
Revenue
|
|
$
|
408,384
|
|
|
$
|
569,876
|
|
|
$
|
600,025
|
|
|
$
|
735,934
|
|
Net income (loss)
|
|
|
(3,063
|
)
|
|
|
70,931
|
|
|
|
38,945
|
|
|
|
65,484
|
|
Basic net income (loss) per common share
|
|
|
(0.03
|
)
|
|
|
0.76
|
|
|
|
0.41
|
|
|
|
0.67
|
|
Diluted net income (loss) per common share
|
|
|
(0.03
|
)
|
|
|
0.75
|
|
|
|
0.41
|
|
|
|
0.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Jun 30
|
|
|
Mar 31
|
|
($ thousands, except per share amounts)
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
Revenue
|
|
$
|
731,057
|
|
|
$
|
395,118
|
|
|
$
|
466,414
|
|
|
$
|
673,932
|
|
Net income
|
|
|
171,697
|
|
|
|
23,610
|
|
|
|
35,654
|
|
|
|
144,706
|
|
Basic net income per common share
|
|
|
1.74
|
|
|
|
0.24
|
|
|
|
0.35
|
|
|
|
1.38
|
|
Diluted net income per common share
|
|
|
1.72
|
|
|
|
0.24
|
|
|
|
0.35
|
|
|
|
1.37
|
|
NORMAL COURSE ISSUER BID
On May 6, 2008 the Company filed a Notice of Intention to Make a Normal Course Issuer Bid with
Toronto Stock Exchange (TSX) pursuant to which the Company may repurchase up to 7,909,393 common
shares of the Company, representing 10% of the public float of the issued and outstanding common
shares of the Company as at May 2, 2008. This normal course issuer bid repurchase program, which is
carried out through the facilities of the TSX, commenced on May 20, 2008 and will expire on the
earlier of May 19, 2009 and the date upon which the Company has acquired the maximum number of
common shares permitted under the purchase program or otherwise decided not to make further
purchases. The Company has entered into an automatic securities purchase plan with its broker in
connection with purchases to be made under this program. Shareholders may obtain a copy of the
Notice of Intention without charge by contacting the Corporate Secretary at 604-661-2600.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 10
|
FORWARD-LOOKING STATEMENTS
This Fourth Quarter 2008 Managements Discussion and Analysis contains forward-looking statements
with respect to us and the chemical industry. Statements that include the words believes,
expects, may, will, should, seeks, intends, plans, estimates, anticipates, or the
negative version of those words or other comparable terminology and similar statements of a future
or forward-looking nature identify forward-looking statements.
We believe that we have a reasonable basis for making such forward-looking statements. The
forward-looking statements in this document are based on our experience, our perception of trends,
current conditions and expected future developments as well as other factors. Certain material
factors or assumptions were applied in drawing the conclusions or making the forecasts or
projections that are included in these forward-looking statements.
However, forward-looking statements, by their nature, involve risks and uncertainties that could
cause actual results to differ materially from those contemplated by the forward-looking
statements. The risks and uncertainties include those attendant with producing and marketing
methanol and successfully carrying out major capital expenditure projects in various jurisdictions,
including the on-time and on-budget completion of our new methanol joint venture project in Egypt,
the ability to successfully carry out corporate initiatives and strategies, conditions in the
methanol and other industries, fluctuations in supply, demand and price for methanol and its
derivatives, including demand for methanol for energy uses, the price of oil, the success of
natural gas exploration and development activities in southern Chile and New Zealand and our
ability to obtain any additional gas in those regions on commercially acceptable terms, actions of
competitors and suppliers, actions of governments and governmental authorities, changes in laws or
regulations in foreign jurisdictions, world-wide economic conditions and other risks described in
our 2007 Managements Discussion & Analysis and this Fourth Quarter 2008 Managements Discussion
and Analysis. In addition to the foregoing risk factors, the current global financial crisis and
its impact on global economies has added additional risks and uncertainties including changes in
capital markets and corresponding effects on the companys investments, our ability to access
existing or future credit and defaults by customers, suppliers or insurers.
Having in mind these and other factors, investors and other readers are cautioned not to place
undue reliance on forward-looking statements. They are not a substitute for the exercise of ones
own due diligence and judgment. The outcomes anticipated in forward-looking statements may not
occur and we do not undertake to update forward-looking statements.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 11
|
HOW WE ANALYZE OUR BUSINESS
We review our results of operations by analyzing changes in the components of our Adjusted EBITDA
(refer to
Supplemental Non-GAAP Measures
for a reconciliation to the most comparable GAAP measure),
depreciation and amortization, interest expense, interest and other income, unusual items and
income taxes. In addition to the methanol that we produce at our facilities, we also purchase and
re-sell methanol produced by others. We analyze the results of produced methanol sales separately
from purchased methanol sales as the margin characteristics of each are very different.
Methanex-Produced Methanol
Our production facilities generate the substantial portion of our Adjusted EBITDA, and accordingly,
the key drivers of changes in our Adjusted EBITDA for produced methanol are analyzed separately.
The key drivers of changes in our Adjusted EBITDA for produced methanol are average realized price,
sales volume and cash costs. Changes in Adjusted EBITDA related to our produced methanol include
sales of methanol from our facilities in Chile, Trinidad and New Zealand.
The price, cash cost and volume variances included in our Adjusted EBITDA analysis for produced
methanol are defined and calculated as follows:
|
|
|
PRICE
|
|
The change in Adjusted EBITDA as a result of changes in average
realized price is calculated as the difference from period to
period in the selling price of produced methanol multiplied by the
current period sales volume of produced methanol. Sales under
long-term contracts where the prices are either fixed or linked to
our costs plus a margin are included as sales of produced methanol.
Accordingly, the selling price of produced methanol will differ
from the selling price of purchased methanol.
|
|
|
|
COST
|
|
The change in our Adjusted EBITDA as a result of changes in cash
costs is calculated as the difference from period to period in cash
costs per tonne multiplied by the sales volume of produced methanol
in the current period plus the change in unabsorbed fixed cash
costs. The change in consolidated selling, general and
administrative expenses and fixed storage and handling costs are
included in the analysis of produced methanol.
|
|
|
|
VOLUME
|
|
The change in Adjusted EBITDA as a result of changes in sales
volumes is calculated as the difference from period to period in
the sales volumes of produced methanol multiplied by the margin per
tonne for the prior period. The margin per tonne is calculated as
the selling price per tonne of produced methanol less absorbed
fixed cash costs per tonne and variable cash costs per tonne
(excluding Argentina natural gas export duties per tonne).
|
Purchased Methanol
In addition to the methanol we produce, we purchase methanol produced by others under methanol
offtake contracts and on the spot market to meet customer requirements and support our marketing
efforts (purchased methanol). The cost of sales of purchased methanol consists principally of the
cost of the methanol itself, which is directly related to the price of methanol at the time of
purchase. Accordingly, the analysis of purchased methanol and its impact on our Adjusted EBITDA is
discussed on a net margin basis.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS
|
|
PAGE 12
|
Methanex Corporation
Consolidated Statements of Income
(unaudited)
(thousands of U.S. dollars, except number of common shares and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
408,384
|
|
|
$
|
731,057
|
|
|
$
|
2,314,219
|
|
|
$
|
2,266,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and operating expenses
|
|
|
387,409
|
|
|
|
460,711
|
|
|
|
1,946,871
|
|
|
|
1,614,179
|
|
Inventory write-down (note 3)
|
|
|
33,373
|
|
|
|
|
|
|
|
33,373
|
|
|
|
|
|
Depreciation and amortization
|
|
|
26,366
|
|
|
|
29,070
|
|
|
|
107,126
|
|
|
|
112,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before undernoted items
|
|
|
(38,764
|
)
|
|
|
241,276
|
|
|
|
226,849
|
|
|
|
539,914
|
|
Interest expense (note 7)
|
|
|
(8,675
|
)
|
|
|
(10,878
|
)
|
|
|
(38,439
|
)
|
|
|
(43,911
|
)
|
Interest and other income (expense)
|
|
|
(1,823
|
)
|
|
|
2,583
|
|
|
|
10,626
|
|
|
|
26,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(49,262
|
)
|
|
|
232,981
|
|
|
|
199,036
|
|
|
|
522,865
|
|
Income tax (expense) recovery:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(5,697
|
)
|
|
|
(72,139
|
)
|
|
|
(66,148
|
)
|
|
|
(160,514
|
)
|
Future
|
|
|
51,896
|
|
|
|
10,855
|
|
|
|
39,410
|
|
|
|
13,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,199
|
|
|
|
(61,284
|
)
|
|
|
(26,738
|
)
|
|
|
(147,198
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(3,063
|
)
|
|
$
|
171,697
|
|
|
$
|
172,298
|
|
|
$
|
375,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.03
|
)
|
|
$
|
1.74
|
|
|
$
|
1.82
|
|
|
$
|
3.69
|
|
Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
1.72
|
|
|
$
|
1.82
|
|
|
$
|
3.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
92,566,393
|
|
|
|
98,935,669
|
|
|
|
94,520,945
|
|
|
|
101,717,341
|
|
Diluted
|
|
|
92,682,793
|
|
|
|
99,616,275
|
|
|
|
94,913,956
|
|
|
|
102,129,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of common shares outstanding at period end
|
|
|
92,031,392
|
|
|
|
98,310,254
|
|
|
|
92,031,392
|
|
|
|
98,310,254
|
|
See accompanying notes to consolidated financial statements.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 13
|
Methanex Corporation
Consolidated Balance Sheets
(unaudited)
(thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
328,430
|
|
|
$
|
488,224
|
|
Receivables
|
|
|
213,419
|
|
|
|
401,843
|
|
Inventories
|
|
|
177,637
|
|
|
|
312,143
|
|
Prepaid expenses
|
|
|
16,840
|
|
|
|
20,889
|
|
|
|
|
|
|
|
|
|
|
|
736,326
|
|
|
|
1,223,099
|
|
Property, plant and equipment (note 4)
|
|
|
1,924,258
|
|
|
|
1,542,100
|
|
Other assets
|
|
|
157,397
|
|
|
|
104,700
|
|
|
|
|
|
|
|
|
|
|
$
|
2,817,981
|
|
|
$
|
2,869,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
235,369
|
|
|
$
|
466,020
|
|
Current maturities on long-term debt (note 6)
|
|
|
15,282
|
|
|
|
15,282
|
|
Current maturities on other long-term liabilities
|
|
|
8,048
|
|
|
|
16,965
|
|
|
|
|
|
|
|
|
|
|
|
258,699
|
|
|
|
498,267
|
|
Long-term debt (note 6)
|
|
|
772,021
|
|
|
|
581,987
|
|
Other long-term liabilities
|
|
|
97,441
|
|
|
|
74,431
|
|
Future income tax liabilities
|
|
|
299,192
|
|
|
|
338,602
|
|
Non-controlling interest
|
|
|
108,728
|
|
|
|
41,258
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
427,265
|
|
|
|
451,640
|
|
Contributed surplus
|
|
|
22,669
|
|
|
|
16,021
|
|
Retained earnings
|
|
|
871,984
|
|
|
|
876,348
|
|
Accumulated other comprehensive loss
|
|
|
(40,018
|
)
|
|
|
(8,655
|
)
|
|
|
|
|
|
|
|
|
|
|
1,281,900
|
|
|
|
1,335,354
|
|
|
|
|
|
|
|
|
|
|
$
|
2,817,981
|
|
|
$
|
2,869,899
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 14
|
Methanex Corporation
Consolidated Statements of Shareholders Equity
(unaudited)
(thousands of U.S. dollars, except number of common shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common
|
|
|
Capital
|
|
|
Contributed
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Surplus
|
|
|
Earnings
|
|
|
Loss
|
|
|
Equity
|
|
Balance, December 31, 2006
|
|
|
105,800,942
|
|
|
$
|
474,739
|
|
|
$
|
10,346
|
|
|
$
|
724,166
|
|
|
$
|
|
|
|
$
|
1,209,251
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375,667
|
|
|
|
|
|
|
|
375,667
|
|
Compensation expense recorded
for stock options
|
|
|
|
|
|
|
|
|
|
|
9,343
|
|
|
|
|
|
|
|
|
|
|
|
9,343
|
|
Issue of shares on exercise of
stock options
|
|
|
552,175
|
|
|
|
9,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,520
|
|
Reclassification of grant date
fair value on exercise of
stock options
|
|
|
|
|
|
|
3,668
|
|
|
|
(3,668
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for shares repurchased
|
|
|
(8,042,863
|
)
|
|
|
(36,287
|
)
|
|
|
|
|
|
|
(168,440
|
)
|
|
|
|
|
|
|
(204,727
|
)
|
Dividend payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,045
|
)
|
|
|
|
|
|
|
(55,045
|
)
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,655
|
)
|
|
|
(8,655
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007
|
|
|
98,310,254
|
|
|
|
451,640
|
|
|
|
16,021
|
|
|
|
876,348
|
|
|
|
(8,655
|
)
|
|
|
1,335,354
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,361
|
|
|
|
|
|
|
|
175,361
|
|
Compensation expense recorded
for stock options
|
|
|
|
|
|
|
|
|
|
|
6,411
|
|
|
|
|
|
|
|
|
|
|
|
6,411
|
|
Issue of shares on exercise of
stock options
|
|
|
218,766
|
|
|
|
3,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,982
|
|
Reclassification of grant date
fair value on exercise of
stock options
|
|
|
|
|
|
|
1,392
|
|
|
|
(1,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for shares repurchased
|
|
|
(5,132,878
|
)
|
|
|
(23,641
|
)
|
|
|
|
|
|
|
(109,239
|
)
|
|
|
|
|
|
|
(132,880
|
)
|
Dividend payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(42,568
|
)
|
|
|
|
|
|
|
(42,568
|
)
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,111
|
)
|
|
|
(5,111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2008
|
|
|
93,396,142
|
|
|
|
433,373
|
|
|
|
21,040
|
|
|
|
899,902
|
|
|
|
(13,766
|
)
|
|
|
1,340,549
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,063
|
)
|
|
|
|
|
|
|
(3,063
|
)
|
Compensation expense recorded
for stock options
|
|
|
|
|
|
|
|
|
|
|
1,814
|
|
|
|
|
|
|
|
|
|
|
|
1,814
|
|
Issue of shares on exercise of
stock options
|
|
|
5,250
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93
|
|
Reclassification of grant date
fair value on exercise of
stock options
|
|
|
|
|
|
|
185
|
|
|
|
(185
|
)
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Payments for shares repurchased
|
|
|
(1,370,000
|
)
|
|
|
(6,386
|
)
|
|
|
|
|
|
|
(10,590
|
)
|
|
|
|
|
|
|
(16,976
|
)
|
Dividend payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,265
|
)
|
|
|
|
|
|
|
(14,265
|
)
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,252
|
)
|
|
|
(26,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
92,031,392
|
|
|
$
|
427,265
|
|
|
$
|
22,669
|
|
|
$
|
871,984
|
|
|
$
|
(40,018
|
)
|
|
$
|
1,281,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
Consolidated Statements of Comprehensive Income
(unaudited)
(thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
|
Years
ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Net income (loss)
|
|
$
|
(3,063
|
)
|
|
$
|
171,697
|
|
|
$
|
172,298
|
|
|
$
|
375,667
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
fair value of forward exchange contracts
(note 13)
|
|
|
(35
|
)
|
|
|
79
|
|
|
|
9
|
|
|
|
(45
|
)
|
Change in
fair value of interest rate swap contracts
(note 13)
|
|
|
(26,217
|
)
|
|
|
(6,534
|
)
|
|
|
(31,372
|
)
|
|
|
(8,610
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,252
|
)
|
|
|
(6,455
|
)
|
|
|
(31,363
|
)
|
|
|
(8,655
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(29,315
|
)
|
|
$
|
165,242
|
|
|
$
|
140,935
|
|
|
$
|
367,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 15
|
Methanex Corporation
Consolidated Statements of Cash Flows
(unaudited)
(thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(3,063
|
)
|
|
$
|
171,697
|
|
|
$
|
172,298
|
|
|
$
|
375,667
|
|
Add (deduct) non-cash items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
26,366
|
|
|
|
29,070
|
|
|
|
107,126
|
|
|
|
112,428
|
|
Future income taxes
|
|
|
(51,896
|
)
|
|
|
(10,855
|
)
|
|
|
(39,410
|
)
|
|
|
(13,316
|
)
|
Stock-based compensation expense
|
|
|
(1,155
|
)
|
|
|
6,755
|
|
|
|
2,811
|
|
|
|
22,410
|
|
Other
|
|
|
(2,937
|
)
|
|
|
3,105
|
|
|
|
2,797
|
|
|
|
13,574
|
|
Other cash payments, including stock-based compensation
|
|
|
(545
|
)
|
|
|
(11,938
|
)
|
|
|
(3,101
|
)
|
|
|
(16,824
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities before undernoted
|
|
|
(33,230
|
)
|
|
|
187,834
|
|
|
|
242,521
|
|
|
|
493,939
|
|
Changes in non-cash working capital
(note 11)
|
|
|
84,377
|
|
|
|
(107,923
|
)
|
|
|
82,532
|
|
|
|
33,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,147
|
|
|
|
79,911
|
|
|
|
325,053
|
|
|
|
527,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for shares repurchased
|
|
|
(16,976
|
)
|
|
|
(39,955
|
)
|
|
|
(149,856
|
)
|
|
|
(204,727
|
)
|
Dividend payments
|
|
|
(14,265
|
)
|
|
|
(13,768
|
)
|
|
|
(56,833
|
)
|
|
|
(55,045
|
)
|
Proceeds from limited recourse debt (note 6)
|
|
|
68,000
|
|
|
|
35,000
|
|
|
|
204,000
|
|
|
|
131,574
|
|
Financing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,725
|
)
|
Equity contribution by non-controlling interest
|
|
|
18,604
|
|
|
|
11,601
|
|
|
|
67,470
|
|
|
|
32,109
|
|
Repayment of limited recourse debt
|
|
|
(7,330
|
)
|
|
|
(7,328
|
)
|
|
|
(15,282
|
)
|
|
|
(14,344
|
)
|
Proceeds on issue of shares on exercise of stock options
|
|
|
93
|
|
|
|
5,357
|
|
|
|
4,075
|
|
|
|
9,520
|
|
Changes in debt service reserve accounts
|
|
|
175
|
|
|
|
135
|
|
|
|
(1,820
|
)
|
|
|
1,035
|
|
Repayment of other long-term liabilities
|
|
|
(1,340
|
)
|
|
|
(1,384
|
)
|
|
|
(10,454
|
)
|
|
|
(5,153
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,961
|
|
|
|
(10,342
|
)
|
|
|
41,300
|
|
|
|
(113,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(18,654
|
)
|
|
|
(24,165
|
)
|
|
|
(96,956
|
)
|
|
|
(76,239
|
)
|
Egypt plant under construction
|
|
|
(109,007
|
)
|
|
|
(87,804
|
)
|
|
|
(388,001
|
)
|
|
|
(201,922
|
)
|
Dorado Riquelme investment (note 15)
|
|
|
(3,453
|
)
|
|
|
|
|
|
|
(41,781
|
)
|
|
|
|
|
Other assets
|
|
|
(7,045
|
)
|
|
|
(14,610
|
)
|
|
|
(26,307
|
)
|
|
|
(19,788
|
)
|
Changes in non-cash working capital
(note 11)
|
|
|
10,480
|
|
|
|
12,027
|
|
|
|
26,898
|
|
|
|
17,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(127,679
|
)
|
|
|
(114,552
|
)
|
|
|
(526,147
|
)
|
|
|
(280,409
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(29,571
|
)
|
|
|
(44,983
|
)
|
|
|
(159,794
|
)
|
|
|
133,170
|
|
Cash and cash equivalents, beginning of period
|
|
|
358,001
|
|
|
|
533,207
|
|
|
|
488,224
|
|
|
|
355,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
328,430
|
|
|
$
|
488,224
|
|
|
$
|
328,430
|
|
|
$
|
488,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
4,834
|
|
|
$
|
5,641
|
|
|
$
|
45,401
|
|
|
$
|
38,454
|
|
Income taxes paid, net of amounts refunded
|
|
$
|
6,198
|
|
|
$
|
41,176
|
|
|
$
|
78,591
|
|
|
$
|
144,169
|
|
See accompanying notes to consolidated financial statements.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 16
|
Methanex Corporation
Notes to Consolidated Financial Statements
(unaudited)
Except where otherwise noted, tabular dollar amounts are stated in thousands of U.S. dollars.
1.
|
|
Basis of presentation:
|
|
|
|
These interim consolidated financial statements are prepared in accordance with generally
accepted accounting principles in Canada on a basis consistent with those followed in the most
recent annual consolidated financial statements, except as described in Note 2 below. These
accounting principles are different in some respects from those generally accepted in the United
States and the significant differences are described and reconciled in Note 16. These interim
consolidated financial statements do not include all note disclosures required by Canadian
generally accepted accounting principles for annual financial statements, and therefore should
be read in conjunction with the annual consolidated financial statements included in the
Methanex Corporation 2007 Annual Report.
|
|
2.
|
|
Changes in accounting policies and new accounting developments:
|
|
|
|
On January 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants (CICA)
Handbook Section 3031
Inventories
, Section 1535
Capital Disclosures
, Section 3862
Financial
Instruments Disclosure
and Section 3863
Financial Instruments Presentation
. Section 3031
provides more extensive guidance on the measurement and disclosure of inventory. The adoption of
this standard has had no impact on the Companys measurement of inventory at January 1, 2008.
Section 1535 establishes standards for disclosing information about an entitys capital and how
it is managed. Sections 3862 and 3863 revise and enhance disclosure and presentation of
financial instruments and place increased emphasis on disclosures about the nature and extent of
risks arising from financial instruments and how those risks are managed.
|
|
|
|
In February 2008, the CICA issued Handbook Section 3064,
Goodwill and Intangible Assets.
This
new accounting standard, which applies to fiscal years beginning on or after October 1, 2008,
replaces Section 3062
Goodwill and Other Intangible Assets.
Section 3064 expands on the
standards for recognition, measurement and disclosure of intangible assets. The Company is
currently evaluating the impact of this new standard on the consolidated financial statements.
|
|
3.
|
|
Inventories:
|
|
|
|
Inventories are valued at the lower of cost, determined on a first-in first-out basis, and
estimated net realizable value. The amount of inventories included in cost of sales and
operating expense and depreciation and amortization during the three months and year ended
December 31, 2008 was $375 million (2007 $417 million) and $1,860 million (2007 $1,497
million), respectively. At December 31, 2008, the Company recorded a pre-tax charge to earnings
of $33.4 million to write-down inventories to the lower of cost and estimated net realizable
value.
|
|
4.
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and equipment
|
|
$
|
2,544,163
|
|
|
$
|
1,299,296
|
|
|
$
|
1,244,867
|
|
Egypt plant under construction
|
|
|
615,784
|
|
|
|
|
|
|
|
615,784
|
|
Other
|
|
|
127,731
|
|
|
|
64,124
|
|
|
|
63,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,287,678
|
|
|
$
|
1,363,420
|
|
|
$
|
1,924,258
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and equipment
|
|
$
|
2,450,175
|
|
|
$
|
1,206,730
|
|
|
$
|
1,243,445
|
|
Egypt plant under construction
|
|
|
227,783
|
|
|
|
|
|
|
|
227,783
|
|
Other
|
|
|
124,779
|
|
|
|
53,907
|
|
|
|
70,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,802,737
|
|
|
$
|
1,260,637
|
|
|
$
|
1,542,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 17
|
5.
|
|
Interest in Atlas joint venture:
|
|
|
|
The Company has a 63.1% joint venture interest in Atlas Methanol Company (Atlas). Atlas owns a
1.7 million tonne per year methanol production facility in Trinidad. Included in the
consolidated financial statements are the following amounts representing the Companys
proportionate interest in Atlas:
|
|
|
|
|
|
|
|
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
Consolidated Balance Sheets
|
|
2008
|
|
|
2007
|
|
Cash and cash equivalents
|
|
$
|
35,749
|
|
|
$
|
20,128
|
|
Other current assets
|
|
|
59,435
|
|
|
|
107,993
|
|
Property, plant and equipment
|
|
|
249,609
|
|
|
|
263,942
|
|
Other assets
|
|
|
18,149
|
|
|
|
16,329
|
|
Accounts payable and accrued liabilities
|
|
|
19,927
|
|
|
|
56,495
|
|
Long-term debt, including current maturities (note 6)
|
|
|
106,592
|
|
|
|
119,891
|
|
Future income tax liabilities
|
|
|
17,942
|
|
|
|
16,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
Consolidated Statements of Income
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Revenue
|
|
$
|
53,357
|
|
|
$
|
114,324
|
|
|
$
|
286,906
|
|
|
$
|
258,418
|
|
Expenses
|
|
|
54,799
|
|
|
|
80,242
|
|
|
|
271,493
|
|
|
|
214,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(1,442
|
)
|
|
|
34,082
|
|
|
|
15,413
|
|
|
|
43,437
|
|
Income tax expense
|
|
|
(354
|
)
|
|
|
(5,902
|
)
|
|
|
(4,488
|
)
|
|
|
(9,458
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(1,796
|
)
|
|
$
|
28,180
|
|
|
$
|
10,925
|
|
|
$
|
33,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
Consolidated Statements of Cash Flows
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Cash inflows (outflows) from operating activities
|
|
$
|
22,249
|
|
|
$
|
(818
|
)
|
|
$
|
44,681
|
|
|
$
|
40,317
|
|
Cash outflows from financing activities
|
|
|
(6,842
|
)
|
|
|
(6,881
|
)
|
|
|
(15,852
|
)
|
|
|
(12,997
|
)
|
Cash outflows from investing activities
|
|
|
(1,921
|
)
|
|
|
(2,521
|
)
|
|
|
(2,977
|
)
|
|
|
(16,380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
Unsecured notes
|
|
|
|
|
|
|
|
|
8.75% due August 15, 2012
|
|
$
|
198,182
|
|
|
$
|
197,776
|
|
6.00% due August 15, 2015
|
|
|
148,518
|
|
|
|
148,340
|
|
|
|
|
|
|
|
|
|
|
|
346,700
|
|
|
|
346,116
|
|
Atlas limited recourse debt facilities
|
|
|
106,592
|
|
|
|
119,891
|
|
Egypt limited recourse debt facilities
|
|
|
320,574
|
|
|
|
116,574
|
|
Other limited recourse debt facilities
|
|
|
13,437
|
|
|
|
14,688
|
|
|
|
|
|
|
|
|
|
|
|
787,303
|
|
|
|
597,269
|
|
Less current maturities
|
|
|
(15,282
|
)
|
|
|
(15,282
|
)
|
|
|
|
|
|
|
|
|
|
$
|
772,021
|
|
|
$
|
581,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Interest expense before capitalized interest
|
|
$
|
14,083
|
|
|
$
|
13,242
|
|
|
$
|
53,778
|
|
|
$
|
48,104
|
|
Less: capitalized interest related to Egypt project
|
|
|
(5,408
|
)
|
|
|
(2,364
|
)
|
|
|
(15,339
|
)
|
|
|
(4,193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
8,675
|
|
|
$
|
10,878
|
|
|
$
|
38,439
|
|
|
$
|
43,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2007, the Company reached financial close and secured limited recourse debt of $530 million
for its joint venture project to construct a 1.3 million tonne per year methanol facility in
Egypt. For the three months and year ended December 31, 2008, interest costs related to this
project of $5.4 million and $15.3 million were capitalized, respectively.
|
|
8.
|
|
Net income per common share:
|
|
|
|
A reconciliation of the weighted average number of common shares outstanding is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Denominator for basic net income per common share
|
|
|
92,566,393
|
|
|
|
98,935,669
|
|
|
|
94,520,945
|
|
|
|
101,717,341
|
|
Effect of dilutive stock options
|
|
|
116,400
|
|
|
|
680,606
|
|
|
|
393,011
|
|
|
|
412,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted net income per common share
|
|
|
92,682,793
|
|
|
|
99,616,275
|
|
|
|
94,913,956
|
|
|
|
102,129,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
|
Stock-based compensation:
|
|
(i)
|
|
Incentive stock options:
|
|
|
|
|
Common shares reserved for outstanding incentive stock options at December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Denominated in CAD
|
|
|
Options Denominated in USD
|
|
|
|
Number of Stock
|
|
|
Weighted Average
|
|
|
Number of Stock
|
|
|
Weighted Average
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Options
|
|
|
Exercise Price
|
|
Outstanding at December 31, 2007
|
|
|
104,450
|
|
|
$
|
7.79
|
|
|
|
2,920,981
|
|
|
$
|
21.17
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
1,088,068
|
|
|
|
28.40
|
|
Exercised
|
|
|
(21,000
|
)
|
|
|
9.59
|
|
|
|
(182,766
|
)
|
|
|
19.76
|
|
Cancelled
|
|
|
(7,000
|
)
|
|
|
11.60
|
|
|
|
(77,916
|
)
|
|
|
24.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2008
|
|
|
76,450
|
|
|
$
|
6.95
|
|
|
|
3,748,367
|
|
|
$
|
23.27
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
(5,250
|
)
|
|
|
17.85
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
76,450
|
|
|
$
|
6.95
|
|
|
|
3,743,117
|
|
|
$
|
23.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 19
|
9.
|
|
Stock-based compensation (continued):
|
Information regarding the incentive stock options outstanding at December 31, 2008 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding at
|
|
|
Options Exercisable at
|
|
|
|
December 31, 2008
|
|
|
December 31, 2008
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
Number of Stock
|
|
|
Weighted
|
|
|
Number of
|
|
|
Weighted
|
|
|
|
Contractual
|
|
|
Options
|
|
|
Average Exercise
|
|
|
Stock Options
|
|
|
Average
|
|
Range of Exercise Prices
|
|
Life (Years)
|
|
|
Outstanding
|
|
|
Price
|
|
|
Exercisable
|
|
|
Exercise Price
|
|
Options denominated in CAD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$3.29 to 9.56
|
|
|
1.6
|
|
|
|
76,450
|
|
|
$
|
6.95
|
|
|
|
76,450
|
|
|
$
|
6.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options denominated in USD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$6.45 to 11.56
|
|
|
4.0
|
|
|
|
187,550
|
|
|
$
|
8.57
|
|
|
|
187,550
|
|
|
$
|
8.57
|
|
$17.85 to 22.52
|
|
|
4.0
|
|
|
|
1,467,650
|
|
|
|
20.27
|
|
|
|
984,183
|
|
|
|
20.01
|
|
$23.92 to 28.43
|
|
|
5.7
|
|
|
|
2,087,917
|
|
|
|
26.71
|
|
|
|
323,560
|
|
|
|
24.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
|
|
3,743,117
|
|
|
$
|
23.27
|
|
|
|
1,495,293
|
|
|
$
|
19.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii)
|
|
Performance stock options:
|
|
|
|
|
As at December 31, 2008, there were 35,000 shares (December 31, 2007 50,000 shares)
reserved for performance stock options with an exercise price of CAD $4.47. All
outstanding performance stock options have vested and are exercisable.
|
|
|
(iii)
|
|
Compensation expense related to stock options:
|
|
|
|
|
For the three months and year ended December 31, 2008, compensation expense related to
stock options included in cost of sales and operating expenses was $1.8 million (2007 -
$2.2 million) and $8.2 million (2007 $9.3 million), respectively. The fair value of
each stock option grant was estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Risk-free interest rate
|
|
|
2.5
|
%
|
|
|
4.5
|
%
|
Expected dividend yield
|
|
|
2
|
%
|
|
|
2
|
%
|
Expected life
|
|
5 years
|
|
|
5 years
|
|
Expected volatility
|
|
|
32
|
%
|
|
|
31
|
%
|
Expected forfeitures
|
|
|
5
|
%
|
|
|
5
|
%
|
Weighted average fair value of options granted (USD per share)
|
|
$
|
7.52
|
|
|
$
|
7.06
|
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 20
|
9.
|
|
Stock-based compensation (continued):
|
|
b)
|
|
Deferred, restricted and performance share units:
|
|
|
|
|
Deferred, restricted and performance share units outstanding at December 31, 2008 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
Deferred Share
|
|
|
Restricted
|
|
|
Performance
|
|
|
|
Units
|
|
|
Share Units
|
|
|
Share Units
|
|
Outstanding at December 31, 2007
|
|
|
359,684
|
|
|
|
14,482
|
|
|
|
725,262
|
|
Granted
|
|
|
35,641
|
|
|
|
6,000
|
|
|
|
330,993
|
|
Granted in-lieu of dividends
|
|
|
7,681
|
|
|
|
358
|
|
|
|
18,136
|
|
Redeemed
|
|
|
(3,083
|
)
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
(30,500
|
)
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2008
|
|
|
399,923
|
|
|
|
20,840
|
|
|
|
1,043,891
|
|
Granted
|
|
|
5,931
|
|
|
|
|
|
|
|
|
|
Granted in-lieu of dividends
|
|
|
5,541
|
|
|
|
179
|
|
|
|
15,156
|
|
Redeemed
|
|
|
|
|
|
|
(8,496
|
)
|
|
|
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
(1,399
|
)
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
411,395
|
|
|
|
12,523
|
|
|
|
1,057,648
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense for deferred, restricted and performance share units is initially
measured at fair value based on the market value of the Companys common shares and is
recognized over the related service period. Changes in fair value are recognized in earnings
for the proportion of the service that has been rendered at each reporting date. The fair
value of deferred, restricted and performance share units at December 31, 2008 was $17.6
million compared with the recorded liability of $16.2 million. The difference between the
fair value and the recorded liability of $1.4 million will be recognized over the weighted
average remaining service period of approximately 1.6 years.
For the three months and year ended December 31, 2008, compensation expense related to
deferred, restricted and performance share units included a recovery in cost of sales and
operating expenses of $3.0 million (2007 expense of $4.5 million) and $5.4 million (2007
expense of $13.1 million), respectively. This included a recovery of $6.2 million (2007
expense of $2.5 million) and a recovery of $17.4 million (2007 expense of $3.5 million)
for the three months and year ended December 31, 2008, respectively, related to the effect
of the change in the Companys share price.
10.
|
|
Retirement plans:
|
|
|
|
Total net pension expense for the Companys defined benefit and defined contribution pension
plans during the three months and year ended December 31, 2008 was $2.5 million (2007 $1.6
million) and $8.1 million (2007 $6.9 million), respectively.
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 21
|
11.
|
|
Changes in non-cash working capital:
|
|
|
|
The change in cash flows related to changes in non-cash working capital for the three months and
year ended December 31, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Decrease (increase) in non-cash working capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
$
|
77,898
|
|
|
$
|
(190,066
|
)
|
|
$
|
188,424
|
|
|
$
|
(35,456
|
)
|
Inventories
|
|
|
68,625
|
|
|
|
(163,339
|
)
|
|
|
134,506
|
|
|
|
(67,377
|
)
|
Prepaid expenses
|
|
|
16,260
|
|
|
|
3,333
|
|
|
|
4,049
|
|
|
|
3,158
|
|
Accounts payable and accrued liabilities
|
|
|
(70,190
|
)
|
|
|
255,472
|
|
|
|
(230,651
|
)
|
|
|
156,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,593
|
|
|
|
(94,600
|
)
|
|
|
96,328
|
|
|
|
56,366
|
|
Adjustments for items not having a cash effect
|
|
|
2,264
|
|
|
|
(1,296
|
)
|
|
|
13,102
|
|
|
|
(5,430
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in non-cash working capital having a cash effect
|
|
$
|
94,857
|
|
|
$
|
(95,896
|
)
|
|
$
|
109,430
|
|
|
$
|
50,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These changes relate to the following activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
$
|
84,377
|
|
|
$
|
(107,923
|
)
|
|
$
|
82,532
|
|
|
$
|
33,396
|
|
Investing
|
|
|
10,480
|
|
|
|
12,027
|
|
|
|
26,898
|
|
|
|
17,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in non-cash working capital
|
|
$
|
94,857
|
|
|
$
|
(95,896
|
)
|
|
$
|
109,430
|
|
|
$
|
50,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.
|
|
Capital disclosures:
|
|
|
|
The Companys objectives in managing its liquidity and capital are to safeguard the Companys
ability to continue as a going concern, to provide financial capacity and flexibility to meet
its strategic objectives, to provide an adequate return to shareholders commensurate with the
level of risk, and to return excess cash through a combination of dividends and share
repurchases.
|
|
|
|
|
|
|
|
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
Liquidity:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
328,430
|
|
|
$
|
488,224
|
|
Undrawn Egypt limited recourse debt facilities
|
|
|
209,426
|
|
|
|
413,426
|
|
Undrawn credit facilities
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
Total Liquidity
|
|
$
|
787,856
|
|
|
$
|
1,151,650
|
|
|
Capitalization:
|
|
|
|
|
|
|
|
|
Unsecured notes
|
|
$
|
346,700
|
|
|
$
|
346,116
|
|
Limited recourse debt facilities, including current portion
|
|
|
440,603
|
|
|
|
251,153
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
787,303
|
|
|
|
597,269
|
|
Non-controlling interest
|
|
|
108,728
|
|
|
|
41,258
|
|
Shareholders equity
|
|
|
1,281,900
|
|
|
|
1,335,354
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
2,177,931
|
|
|
$
|
1,973,881
|
|
Total debt to capitalization
1
|
|
|
36
|
%
|
|
|
30
|
%
|
Net debt to capitalization
2
|
|
|
25
|
%
|
|
|
7
|
%
|
|
|
|
1
|
|
Total debt divided by total capitalization.
|
|
2
|
|
Total debt less cash and cash equivalents divided by total capitalization less cash
and cash equivalents.
|
The Company manages its liquidity and capital structure and makes adjustments to it in light of
changes to
economic conditions, the underlying risks inherent in its operations and capital requirements to
maintain and grow its operations. The strategies employed by the Company include the issue or
repayment of general corporate debt, the issue of project debt, the payment of dividends and the
repurchase of shares.
The Company is not subject to any statutory capital requirements and has no commitments to sell
or otherwise issue common shares.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 22
|
12.
|
|
Capital disclosures (continued):
|
|
|
|
The undrawn credit facility in the amount of $250 million is provided by highly rated financial
institutions, expires in mid-2010 and is subject to certain financial covenants including an
EBITDA to interest coverage ratio and a debt to capitalization ratio as defined.
|
|
|
|
The credit ratings for our unsecured notes are as follows:
|
|
|
|
|
|
Standard & Poors Rating Services
|
|
BBB-
|
|
(stable)
|
Moodys Investor Services
|
|
Ba1
|
|
(stable)
|
Fitch Ratings
|
|
BBB
|
|
(negative)
|
13.
|
|
Financial instruments:
|
|
|
|
Under CICA Section 3862
Financial Instruments Disclosures
, the Company is required to provide
disclosures regarding its financial instruments. Financial instruments are either measured at
amortized cost or fair value. Held-to-maturity investments, loans and receivables and other
financial liabilities are measured at amortized cost. Held for trading financial assets and
liabilities and available-for-sale financial assets are measured on the balance sheet at fair
value. Derivative financial instruments are classified as held for trading and are recorded on
the balance sheet at fair value unless exempted as a normal purchase and sale arrangement.
Changes in fair value of derivative financial instruments are recorded in earnings unless the
instruments are designated as cash flow hedges.
|
|
|
|
The following table provides the carrying value of each category of financial assets and
liabilities and the related balance sheet item:
|
|
|
|
|
|
|
|
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
Held for trading financial assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
328,430
|
|
|
$
|
488,224
|
|
Debt service reserve accounts included in other assets
|
|
|
18,149
|
|
|
|
16,329
|
|
|
|
|
|
|
|
|
|
|
Loans and receivables:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
207,419
|
|
|
|
401,843
|
|
Dorado Riquelme investment included in other assets (note 15)
|
|
|
42,123
|
|
|
|
|
|
GeoPark financing, including current portion
|
|
|
36,616
|
|
|
|
13,738
|
|
|
|
|
|
|
|
|
|
|
$
|
632,737
|
|
|
$
|
920,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
Other financial liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
235,369
|
|
|
$
|
466,020
|
|
Long-term debt, including current portion
|
|
|
787,303
|
|
|
|
597,269
|
|
Capital lease obligation included in other long-term
liabilities, including current portion
|
|
|
20,742
|
|
|
|
24,676
|
|
|
|
|
|
|
|
|
|
|
Held for trading financial liabilities:
|
|
|
|
|
|
|
|
|
Derivative instruments designated as cash flow hedges
|
|
|
38,100
|
|
|
|
8,749
|
|
Derivative instruments
|
|
|
1,771
|
|
|
|
955
|
|
|
|
|
|
|
|
|
|
|
$
|
1,083,285
|
|
|
$
|
1,097,669
|
|
|
|
|
|
|
|
|
At December 31, 2008, all of the Companys financial instruments are recorded on the balance
sheet at amortized cost with the exception of cash and cash equivalents, derivative financial
instruments and debt service reserve accounts included in other assets which are recorded at
fair value.
The Egypt limited recourse debt facilities bear interest at LIBOR plus a spread. The Company has
entered into interest rate swap contracts to swap the LIBOR-based interest payments for an
average aggregated fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited
recourse debt facilities for the period September 28, 2007 to March 31, 2015.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 23
|
13.
|
|
Financial instruments (continued):
|
|
|
|
These interest rate swaps had outstanding notional amounts of $231 million as at December 31,
2008. Under the interest rate swap contracts the maximum notional amount during the term is $368
million. The notional amount increases over the period of expected draw-downs on the Egypt
limited recourse debt and decreases over the expected repayment period. At December 31, 2008,
these interest rate swap contracts had a negative fair value of $38.1 million (December 31, 2007
negative $8.6 million) recorded in other long-term liabilities. The fair value of these
interest rate swap contracts will fluctuate until maturity. The Company also designates as cash
flow hedges forward exchange contracts to sell euro at a fixed USD exchange rate. At December
31, 2008, the Company had outstanding forward exchange contracts designated as cash flow hedges
to sell a notional amount of 6.3 million euro in exchange for US dollars. These euro contracts
have a nil fair value (December 31, 2007 fair value of $0.1 million). Changes in fair value
of derivative financial instruments designated as cash flow hedges have been recorded in other
comprehensive income.
|
|
|
|
At December 31, 2008, the Companys derivative financial instruments that have not been
designated as cash flow hedges include forward exchange contracts to purchase $8.9 million New
Zealand dollars at an average exchange rate of $0.7022 with a negative fair value of $1.1
million (December 31, 2007 nil) which is recorded in payables and a floating-for-fixed
interest rate swap contract with a negative fair value of $0.6 million (December 31, 2007 $1.0
million) recorded in other long-term liabilities. For the three months ended December 31, 2008,
the total change in fair value of these derivative financial instruments was an increase of $0.1
million, which has been recorded in earnings during the period.
|
|
14.
|
|
Financial risk management:
|
|
a)
|
|
Market risks
|
|
|
|
|
The Companys operations consist of the production and sale of methanol. Market fluctuations
may result in significant cash flow and profit volatility risk for the Company. Its
worldwide operating business as well as its investment and financing activities are affected
by changes in methanol and natural gas prices and interest and foreign exchange rates. The
Company seeks to manage and control these risks primarily through its regular operating and
financing activities and uses derivative instruments to hedge these risks when deemed
appropriate. This is not an exhaustive list of all risks, nor will the risk management
strategies eliminate these risks.
|
Methanol price risk
The methanol industry is a highly competitive commodity industry and methanol prices
fluctuate based on supply and demand fundamentals and other factors. Accordingly it is
important to maintain financial flexibility. The Company has adopted a prudent approach
to financial management by maintaining a strong balance sheet including back-up
liquidity. The Company has also entered into long-term contracts with certain customers
where prices are either fixed or linked to our costs plus a margin.
Natural gas price risk
Natural gas is the primary feedstock for the production of methanol and the Company has
entered into long-term natural gas supply contracts for its production facilities in
Chile, Trinidad and Egypt and shorter term natural gas supply contracts for its New
Zealand operations. These natural gas supply contracts include base and variable price
components to reduce the commodity price risk exposure. The variable price component is
adjusted by formulas related to methanol prices above a certain level.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 24
|
14.
|
|
Financial risk management (continued):
|
Interest rate risk
Interest rate risk is the risk that the Company suffers financial loss due to changes in
the value of an asset or liability or in the value of future cash flows due to movements
in interest rates.
The Companys interest rate risk exposure is mainly related to long term debt
obligations. Approximately two thirds of its debt obligations are subject to interest at
fixed rates. We also seek to limit this risk through the use of interest rate swaps
which allows us to hedge cash flow changes by swapping variable rates of interest into
fixed rates of interest.
|
|
|
|
|
|
|
Dec 31
|
|
Long-Term Debt
|
|
2008
|
|
Fixed interest rate debt:
|
|
|
|
|
Unsecured notes
|
|
$
|
346,700
|
|
Atlas limited recourse debt facilities (63.1% proportionate share)
|
|
|
76,483
|
|
|
|
|
|
|
|
$
|
423,183
|
|
|
|
|
|
Variable interest rate debt:
|
|
|
|
|
Atlas limited recourse debt facilities (63.1% proportionate share)
|
|
$
|
30,109
|
|
Egypt limited recourse debt facilities
|
|
|
320,574
|
|
Other limited recourse debt facilities
|
|
|
13,437
|
|
|
|
|
|
|
|
$
|
364,120
|
|
|
|
|
|
The Company has entered into interest rate swap contracts to hedge the variability in
LIBOR-based interest payments on its Egypt limited recourse debt facilities described in
Note 13. The notional amount increases over the period of expected drawdowns on the
Egypt limited recourse debt and decreases over the expected repayment period. The
aggregate impact of these contracts is to swap the LIBOR-based interest payments for an
average fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited
recourse debt facilities for the period September 28, 2007 to March 31, 2015. The net
fair value of cash flow interest rate swaps was negative $38.1 million as at December
31, 2008. The change in fair value of the interest rate swaps assuming a 1% change in
the interest rates along the yield curve would result in a change of approximately $15.5
million as of December 31, 2008.
For fixed interest rate debt, a 1% change in interest rates would result in a change in
fair value of the debt of approximately $15.5 million. The fair value of variable
interest rate debt fluctuates primarily with changes in credit spreads. For variable
interest rate debt, a 1% change in credit spreads would result in a change in fair value
of the debt of approximately $13.5 million.
Foreign currency exchange rate risk
The Companys international operations expose the Company to foreign currency exchange
risks in the ordinary course of business. Accordingly, the Company has established a
policy which provides a framework for foreign currency management, hedging strategies
and defines the approved hedging instruments. The Company reviews all significant
exposures to foreign currencies arising from operating and investing activities and
hedges exposures if deemed appropriate.
The dominant currency in which we conduct business is the United States dollar, which is
also our reporting currency.
Methanol is a global commodity chemical which is priced in United States dollars. In
certain jurisdictions, however, the transaction price is set either quarterly or monthly
in local currency. Accordingly, a portion of our revenue is transacted in Canadian
dollars, euros and to a lesser extent other currencies. For the period from when the
price is set in local currency to when the amount due is collected, we are exposed to
declines in the value of these currencies compared to the United States dollar, which
could have the effect
of decreasing the United States dollar equivalent of our revenue. We also purchase
varying quantities of methanol for which the transaction currency is the euro and to a
lesser extent other currencies. In addition, some of our underlying operating costs and
capital expenditures are incurred in other currencies. We are exposed to increases in
the value of these currencies that could have the effect of increasing the United States
dollar equivalent of cost of sales and operating expenses and capital expenditures.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 25
|
14.
|
|
Financial risk management (continued):
|
We have elected not to actively manage these exposures at this time except for our net
exposure to euro revenues which we hedge through forward exchange contracts each quarter
when the euro price for methanol is established.
As of December 31, 2008, we had a net working capital asset of $41.8 million in non-US
dollar currencies. Each 1% strengthening (weakening) of the US dollar against these
currencies would decrease (increase) the value of net working capital and pre-tax cash
flow by $0.4 million.
|
b)
|
|
Liquidity risk
|
|
|
|
|
Liquidity risk is the risk that the Company will not have sufficient funds to meet its
liabilities such as the settlement of financial debt and lease obligations and payment to
its suppliers. The Company maintains liquidity and makes adjustments to it in light of
changes to economic conditions, underlying risks inherent in its operations and capital
requirements to maintain and grow its operations. At December 31, 2008 the Company holds
$328 million of cash and cash equivalents. In addition, the Company has an undrawn $250
million credit facility that expires in 2010 provided by highly rated financial
institutions.
|
|
|
|
|
In addition to the above mentioned sources of liquidity, the Company constantly monitors
funding options available in the capital markets, as well as trends in the availability and
costs of such funding, with a view to maintaining financial flexibility and limiting
refinancing risks.
|
|
|
c)
|
|
Credit risk
|
|
|
|
|
Counterparty credit risk is the risk that the financial benefits of contracts with a
specific counterparty will be lost if a counterparty defaults on its obligations under the
contract. This includes any cash amounts owed to the Company by those counterparties, less
any amounts owed to the counterparty by the Company where a legal right of set-off exists
and also includes the fair values of contracts with individual counterparties which are
recorded in the financial statements.
|
Trade credit risk
Trade credit risk is defined as an unexpected loss in cash and earnings if the customer
is unable to pay its obligations in due time or if the value of security provided
declines. The Company has implemented a credit policy which includes approvals for new
customers, annual credit evaluations of all customers and specific approval for any
exposures beyond approved limits. We employ a variety of risk mitigation alternatives
including certain contractual rights in the event of deterioration in customer credit
quality and various forms of bank and parent company guarantees and letters of credit to
upgrade the credit risk to a credit rating equivalent or better than the stand-alone
rating of the counterparty. Historically trade credit losses have been minimal. However,
in the current economic environment the risk of trade credit losses has increased.
Cash and cash equivalents
In order to manage credit and liquidity risk we invest only in highly rated investment
grade instruments that have maturities of three months or less. Limits are also
established based on the type of investment, the counterparty and the credit rating.
Derivative financial instruments
In order to manage credit risk, we only enter into derivative financial instruments with
highly rated investment grade counterparties.
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 26
|
15.
|
|
Dorado Riquelme investment:
|
|
|
|
On May 5, 2008, the Company signed an agreement with Empresa Nacional del Petroleo (ENAP), the
Chilean state-owned oil and gas company to accelerate gas exploration and development in the
Dorado Riquelme exploration block and supply new Chilean-sourced natural gas to the Companys
production facilities in Chile. Under the arrangement, the Company expects to contribute
approximately $100 million in capital over the next two or three years and will have a 50%
participation in the block. As of December 31, 2008, the amount contributed under the agreement
was approximately $42 million, which has been recorded in other assets. The arrangement is
subject to approval by the government of Chile and $33.5 million of the amount contributed has
been placed in escrow until final approval is received. Additionally, the Company invested $8.6
million related to developmental and exploratory wells in the Dorado Riquelme block, which has
been recorded in other assets.
|
|
16.
|
|
United States Generally Accepted Accounting Principles:
|
|
|
|
The Company follows generally accepted accounting principles in Canada (Canadian GAAP) which
are different in some respects from those applicable in the United States and from practices
prescribed by the United States Securities and Exchange Commission (U.S. GAAP).
|
|
|
|
The significant differences between Canadian GAAP and U.S. GAAP with respect to the Companys
consolidated statements of income for the three months and years ended December 31, 2008 and
2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
Dec 31
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Net income (loss) in accordance with Canadian GAAP
|
|
$
|
(3,063
|
)
|
|
$
|
171,697
|
|
|
$
|
172,298
|
|
|
$
|
375,667
|
|
Add (deduct) adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
a
|
|
|
(478
|
)
|
|
|
(478
|
)
|
|
|
(1,911
|
)
|
|
|
(1,911
|
)
|
Stock-based compensation
b
|
|
|
200
|
|
|
|
(44
|
)
|
|
|
347
|
|
|
|
277
|
|
Uncertainty in income taxes
c
|
|
|
1,154
|
|
|
|
(1,648
|
)
|
|
|
(2,892
|
)
|
|
|
(5,455
|
)
|
Income tax effect of above adjustments
d
|
|
|
167
|
|
|
|
167
|
|
|
|
669
|
|
|
|
669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) in accordance with U.S. GAAP
|
|
$
|
(2,020
|
)
|
|
$
|
169,694
|
|
|
$
|
168,511
|
|
|
$
|
369,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information in accordance with U.S. GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
1.72
|
|
|
$
|
1.78
|
|
|
$
|
3.63
|
|
Diluted net income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
1.70
|
|
|
$
|
1.78
|
|
|
$
|
3.62
|
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 27
|
16.
|
|
United States Generally Accepted Accounting Principles (continued):
|
|
|
|
The significant differences between Canadian GAAP and U.S. GAAP with respect to the Companys
consolidated statements of comprehensive income for the three months and years ended December
31, 2008 and 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31, 2008
|
|
|
Dec 31, 2007
|
|
|
|
Canadian GAAP
|
|
|
Adjustments
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
Net income (loss)
|
|
$
|
(3,063
|
)
|
|
$
|
1,043
|
|
|
$
|
(2,020
|
)
|
|
$
|
169,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of forward exchange contracts, net of tax
|
|
|
(35
|
)
|
|
|
|
|
|
|
(35
|
)
|
|
|
79
|
|
Change in fair value of interest rate swap, net of tax
|
|
|
(26,217
|
)
|
|
|
|
|
|
|
(26,217
|
)
|
|
|
(6,534
|
)
|
Change related to pension, net of tax
e
|
|
|
|
|
|
|
(3,858
|
)
|
|
|
(3,858
|
)
|
|
|
(1,018
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(29,315
|
)
|
|
$
|
(2,815
|
)
|
|
$
|
(32,130
|
)
|
|
$
|
162,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
|
December 31, 2008
|
|
|
Dec 31, 2007
|
|
|
|
Canadian GAAP
|
|
|
Adjustments
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
Net income
|
|
$
|
172,298
|
|
|
$
|
(3,787
|
)
|
|
$
|
168,511
|
|
|
$
|
369,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of forward exchange contracts, net of tax
|
|
|
9
|
|
|
|
|
|
|
|
9
|
|
|
|
(45
|
)
|
Change in fair value of interest rate swap, net of tax
|
|
|
(31,372
|
)
|
|
|
|
|
|
|
(31,372
|
)
|
|
|
(8,610
|
)
|
Change related to pension, net of tax
e
|
|
|
|
|
|
|
(3,381
|
)
|
|
|
(3,381
|
)
|
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
140,935
|
|
|
$
|
(7,168
|
)
|
|
$
|
133,767
|
|
|
$
|
360,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a)
|
|
Business combination:
|
|
|
|
|
Effective January 1, 1993, the Company combined its business with a methanol business
located in New Zealand and Chile. Under Canadian GAAP, the business combination was
accounted for using the pooling-of-interest method. Under U.S. GAAP, the business
combination would have been accounted for as a purchase with the Company identified as the
acquirer. In accordance with U.S. GAAP, an increase to depreciation expense by $0.5 million
(2007 $0.5 million) and $1.9 million (2007 $1.9 million) was recorded for the three
months and year ended December 31, 2008, respectively.
|
|
|
b)
|
|
Stock-based compensation:
|
|
|
|
|
The Company has 22,350 stock options that are accounted for as variable plan options under
U.S. GAAP because the exercise price of the stock options is denominated in a currency other
than the Companys functional currency or the currency in which the optionee is normally
compensated. For Canadian GAAP purposes, no compensation expense has been recorded as these
options were granted in 2001 which is prior to the effective implementation date for fair
value accounting under Canadian GAAP. In accordance with U.S. GAAP, a recovery to
stock-based compensation of $0.2 million (2007 $0.04 million expense) and $0.3 million
(2007 $0.3 million recovery) was recorded for the three months and year ended December 31,
2008, respectively.
|
|
|
c)
|
|
Accounting for uncertainty in income taxes:
|
|
|
|
|
Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB)
Interpretation No. 48,
Accounting for Uncertainty in Income Taxes An Interpretation of
FASB Statement No. 109 (FIN48).
FIN 48 clarifies the accounting for income taxes recognized
in a Companys financial statements in accordance with FASB Statement No. 109,
Accounting
for Income Taxes
(SFAS 109). FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. In accordance with FIN 48, an income
tax recovery of $1.2 million (2007 $1.6 million expense) and an income tax expense of $2.9
million (2007 $5.5 million expense) was recorded for the three months and year ended
December 31, 2008, respectively.
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 28
|
16.
|
|
United States Generally Accepted Accounting Principles (continued):
|
|
d)
|
|
Income tax accounting:
|
|
|
|
|
The income tax differences include the income tax effect of the adjustments related to
accounting differences between Canadian and U.S. GAAP. In accordance with U.S. GAAP, an
increase to net income of $0.2 million (2007 $0.2 million) and $0.7 million (2007 $0.7
million) was recorded for the three months and year ended December 31, 2008, respectively.
|
|
|
e)
|
|
Defined benefit pension plans:
|
|
|
|
|
Effective January 1, 2006, U.S. GAAP requires the Company to measure the funded status of a
defined benefit pension plan at its balance sheet reporting date and recognize the
unrecorded overfunded or underfunded status as an asset or liability with the change in that
unrecorded funded status recorded to other comprehensive income. Under U.S. GAAP, all
deferred pension amounts from Canadian GAAP are reclassified to accumulated other
comprehensive income. In accordance with U.S. GAAP, a decrease to other comprehensive income
of $3.9 million (2007 a reduction of $1.0 million) and $3.4 million (2007 a reduction of
$0.3 million) was recorded for the three months and year ended December 31, 2008,
respectively.
|
|
|
f)
|
|
Interest in Atlas joint venture:
|
|
|
|
|
U.S. GAAP requires interests in joint ventures to be accounted for using the equity method.
Canadian GAAP requires proportionate consolidation of interests in joint ventures. The
Company has not made an adjustment in this reconciliation for this difference in accounting
principles because the impact of applying the equity method of accounting does not result in
any change to net income or shareholders equity. This departure from U.S. GAAP is
acceptable for foreign private issuers under the practices prescribed by the United States
Securities and Exchange Commission.
|
|
|
|
|
|
|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
PAGE 29
|
Methanex Corporation
Quarterly History
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
2007
|
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
METHANOL SALES VOLUMES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(thousands of tonnes)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company produced
|
|
|
3,363
|
|
|
|
829
|
|
|
|
946
|
|
|
|
910
|
|
|
|
678
|
|
|
|
4,569
|
|
|
|
997
|
|
|
|
1,073
|
|
|
|
1,360
|
|
|
|
1,139
|
|
Purchased methanol
|
|
|
2,074
|
|
|
|
435
|
|
|
|
429
|
|
|
|
541
|
|
|
|
669
|
|
|
|
1,453
|
|
|
|
421
|
|
|
|
387
|
|
|
|
269
|
|
|
|
376
|
|
Commission sales
1
|
|
|
617
|
|
|
|
134
|
|
|
|
172
|
|
|
|
168
|
|
|
|
143
|
|
|
|
590
|
|
|
|
195
|
|
|
|
168
|
|
|
|
89
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,054
|
|
|
|
1,398
|
|
|
|
1,547
|
|
|
|
1,619
|
|
|
|
1,490
|
|
|
|
6,612
|
|
|
|
1,613
|
|
|
|
1,628
|
|
|
|
1,718
|
|
|
|
1,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METHANOL PRODUCTION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(thousands of tonnes)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chile
|
|
|
1,088
|
|
|
|
272
|
|
|
|
246
|
|
|
|
261
|
|
|
|
309
|
|
|
|
1,841
|
|
|
|
288
|
|
|
|
233
|
|
|
|
569
|
|
|
|
751
|
|
Titan, Trinidad
|
|
|
871
|
|
|
|
225
|
|
|
|
200
|
|
|
|
229
|
|
|
|
217
|
|
|
|
861
|
|
|
|
220
|
|
|
|
191
|
|
|
|
225
|
|
|
|
225
|
|
Atlas, Trinidad (63.1%)
|
|
|
1,134
|
|
|
|
269
|
|
|
|
284
|
|
|
|
288
|
|
|
|
293
|
|
|
|
982
|
|
|
|
278
|
|
|
|
290
|
|
|
|
234
|
|
|
|
180
|
|
New Zealand
|
|
|
570
|
|
|
|
200
|
|
|
|
126
|
|
|
|
124
|
|
|
|
120
|
|
|
|
435
|
|
|
|
75
|
|
|
|
122
|
|
|
|
120
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,663
|
|
|
|
966
|
|
|
|
856
|
|
|
|
902
|
|
|
|
939
|
|
|
|
4,119
|
|
|
|
861
|
|
|
|
836
|
|
|
|
1,148
|
|
|
|
1,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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AVERAGE REALIZED METHANOL PRICE
2
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($/tonne)
|
|
|
424
|
|
|
|
321
|
|
|
|
413
|
|
|
|
412
|
|
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|
545
|
|
|
|
375
|
|
|
|
514
|
|
|
|
270
|
|
|
|
286
|
|
|
|
444
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($/gallon)
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|
1.28
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|
0.97
|
|
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|
1.24
|
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|
1.24
|
|
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|
1.64
|
|
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|
1.13
|
|
|
|
1.55
|
|
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|
0.81
|
|
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|
0.86
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1.34
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PER SHARE INFORMATION ($ per
share)
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Basic net income (loss)
|
|
$
|
1.82
|
|
|
|
(0.03
|
)
|
|
|
0.76
|
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0.41
|
|
|
|
0.67
|
|
|
|
3.69
|
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|
|
1.74
|
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|
0.24
|
|
|
|
0.35
|
|
|
|
1.38
|
|
Diluted net income (loss)
|
|
$
|
1.82
|
|
|
|
(0.03
|
)
|
|
|
0.75
|
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|
0.41
|
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|
|
0.67
|
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|
|
3.68
|
|
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1.72
|
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0.24
|
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0.35
|
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1.37
|
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1
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|
Commission sales represent volumes marketed on a commission basis. Commission income
is included in revenue when earned.
|
|
2
|
|
Average realized price is calculated as revenue, net of commissions earned, divided by
the total sales volumes of produced and purchased methanol.
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|
METHANEX CORPORATION 2008 FOURTH QUARTER REPORT
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|
QUARTERLY HISTORY
|
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PAGE 30
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.
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METHANEX CORPORATION
|
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Date: January 28, 2009
|
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By:
|
|
/s/ RANDY MILNER
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Name:
|
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Randy Milner
|
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Title:
|
|
Senior Vice President, General
Counsel & Corporate Secretary
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