We believe we are well positioned to meet our financial commitments, invest to grow the Company and continue to deliver on our commitment to return excess cash to shareholders.
SHORT-TERM OUTLOOK
Entering the second quarter, market conditions remain healthy and prices are stable.
The methanol price will ultimately depend on the strength of the global economy, industry operating rates, global energy prices, new supply additions and the strength of global demand. We believe that our financial position and financial flexibility, outstanding global supply network and competitive-cost position will provide a sound basis for Methanex to continue to be the leader in the methanol industry and to invest to grow the Company.
CONTROLS AND PROCEDURES
For the three months ended March 31, 2013, 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 International Financial Reporting Standards (IFRS), we present certain supplemental non-GAAP measures. These are Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, operating income and Adjusted cash flows from operating activities. These measures do not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental non-GAAP measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance and liquidity of the Company's ongoing business 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 (attributable to Methanex shareholders)
Adjusted EBITDA differs from the most comparable GAAP measure, net income attributable to Methanex shareholders, because it excludes depreciation and amortization, finance costs, finance income and other expenses, income tax expense (recovery), mark-to-market impact of share-based compensation and asset impairment charges. Adjusted EBITDA includes an amount representing our 63.1% interest in the Atlas facility and our 60% interest in the methanol facility in Egypt.
Adjusted EBITDA and Adjusted net income exclude the mark-to-market impact of share-based compensation related to the impact of changes in our share price on share appreciation rights, tandem share appreciation rights, deferred share units, restricted share units and performance share units. The mark-to-market impact related to performance share units that is excluded from Adjusted EBITDA and Adjusted net income is calculated as the difference between the grant date value determined using a Methanex total shareholder return factor of 100% and the fair value recorded at each period end. As share-based awards will be settled in future periods, the ultimate value of the units is unknown at the date of grant and therefore the grant date value recognized in Adjusted EBITDA and Adjusted net income may differ from the total settlement cost.
The following table shows a reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted EBITDA:
Three Months Ended --------------------------------- Mar 31 Dec 31 Mar 31($ millions) 2013 2012 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Net income (loss) attributable to Methanex shareholders $ 60 $ (140) $ 22 Finance costs 15 13 16 Finance income and other expenses 2 (3) (2) Income tax expense (recovery) 12 (93) 11 Depreciation and amortization 30 35 36 Mark-to-market impact of share-based compensation 31 8 18 Asset impairment charge - 297 - Earnings of associate, excluding amount included in Adjusted EBITDA (1) 8 10 4 Non-controlling interests adjustment (1) (9) (7) (12)----------------------------------------------------------------------------Adjusted EBITDA (attributable to Methanex shareholders) $ 149 $ 119 $ 93----------------------------------------------------------------------------(1) These adjustments represent depreciation and amortization, financecosts, finance income and other expenses and income tax expense associatedwith the 40% non-controlling interest in the methanol facility in Egypt andour 63.1% interest in the Atlas methanol facility which is accounted forusing equity accounting.
