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CASH COST
The change in 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 current period total methanol sales volume excluding commission sales volume in the current period. The cash costs per tonne is the weighted average of the cash cost per tonne of Methanex-produced methanol and the cash cost per tonne of purchased methanol. The cash cost per tonne of Methanex-produced methanol includes absorbed fixed cash costs per tonne and variable cash costs per tonne. The cash cost per tonne of purchased methanol consists principally of the cost of methanol itself. In addition, the change in Adjusted EBITDA as a result of changes in cash costs includes the changes from period to period in unabsorbed fixed production costs, consolidated selling, general and administrative expenses and fixed storage and handling costs.
VOLUME
The change in Adjusted EBITDA as a result of changes in sales volume is calculated as the difference from period to period in total methanol sales volume excluding commission sales volumes multiplied by the margin per tonne for the prior period. The margin per tonne for the prior period is the weighted average margin per tonne of Methanex-produced methanol and margin per tonne of purchased methanol. The margin per tonne for Methanex-produced methanol is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne. The margin per tonne for purchased methanol is calculated as the selling price per tonne of methanol less the cost of purchased methanol per tonne.
We own 63.1% of the Atlas methanol facility and market the remaining 36.9% of its production through a commission offtake agreement. A contractual agreement between us and our partners establishes joint control over Atlas. As a result, we account for this investment using the equity method of accounting, which results in 63.1% of the net assets and net earnings of Atlas being presented separately in the consolidated statements of financial position and consolidated statements of income, respectively. For purposes of analyzing our business, Adjusted EBITDA, Adjusted net income and Adjusted cash flows from operating activities include an amount representing our 63.1% equity share in Atlas.
We own 60% of the 1.26 million tonne per year Egypt methanol facility and market the remaining 40% of its production through a commission offtake agreement. We account for this investment using consolidation accounting, which results in 100% of the revenues and expenses being included in our financial statements with the other investors' interests in the methanol facility being presented as "non-controlling interests". For purposes of analyzing our business, Adjusted EBITDA, Adjusted net income and Adjusted cash flows from operating activities exclude the amount associated with the other investors' 40% non-controlling interests.
Methanex CorporationConsolidated Statements of Income (unaudited)(thousands of U.S. dollars, except number of common shares and per share amounts) Three Months Ended ------------------------------ Mar 31 Mar 31 2013 2012-------------------------------------------------------------------------------------------------------------------------------------------------------- (As adjusted - note 11)Revenue $ 651,899 $ 653,538Cost of sales and operating expenses (527,995) (552,964)Depreciation and amortization (29,817) (35,401)----------------------------------------------------------------------------Operating income 94,087 65,173Earnings (loss) of associate (note 4) 1,286 (7,328)Finance costs (note 6) (15,451) (16,033)Finance income and other expenses (1,627) 1,838----------------------------------------------------------------------------Income before income tax expense 78,295 43,650Income tax expense: Current (4,391) (5,297) Deferred (7,671) (5,542)---------------------------------------------------------------------------- (12,062) (10,839)----------------------------------------------------------------------------Net income $ 66,233 $ 32,811--------------------------------------------------------------------------------------------------------------------------------------------------------Attributable to: Methanex Corporation shareholders 60,267 22,081 Non-controlling interests 5,966 10,730---------------------------------------------------------------------------- $ 66,233 $ 32,811--------------------------------------------------------------------------------------------------------------------------------------------------------Income for the period attributable to Methanex Corporation shareholders Basic net income per common share $ 0.64 $ 0.24 Diluted net income per common share $ 0.63 $ 0.23Weighted average number of common shares outstanding (note 7) 94,514,188 93,407,866Diluted weighted average number of common shares outstanding (note 7) 95,717,869 94,714,364See accompanying notes to condensed consolidated interim financial statements.Methanex CorporationConsolidated Statements of Comprehensive Income (unaudited)(thousands of U.S. dollars) Three Months Ended ---------------------- Mar 31 Mar 31 2013 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Net income $ 66,233 $ 32,811Other comprehensive income, net of taxes: Items that may be reclassified to income: Change in fair value of forward exchange contracts (184) (305) Change in fair value of interest rate swap contracts (296) (2,613) Realized loss on interest rate swap contracts reclassified to interest expense 2,591 2,936---------------------------------------------------------------------------- 2,111 18----------------------------------------------------------------------------Comprehensive income $ 68,344 $ 32,829--------------------------------------------------------------------------------------------------------------------------------------------------------Attributable to: Methanex Corporation shareholders 61,460 21,970 Non-controlling interests 6,884 10,859---------------------------------------------------------------------------- $ 68,344 $ 32,829--------------------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to condensed consolidated interim financial statements.Methanex CorporationConsolidated Statements of Financial Position (unaudited)(thousands of U.S. dollars) Mar 31 Dec 31 Jan 1AS AT 2013 2012 2012-------------------------------------------------------------------------------------------------------------------------------------------------------- (As (As adjusted - adjusted - note 11) note 11)ASSETSCurrent assets: Cash and cash equivalents $ 726,851 $ 727,385 $ 341,445 Trade and other receivables 441,584 417,156 374,287 Inventories (note 2) 289,467 256,340 274,276 Prepaid expenses 21,697 25,588 22,614---------------------------------------------------------------------------- 1,479,599 1,426,469 1,012,622Non-current assets: Property, plant and equipment (note 3) 1,813,520 1,762,873 1,976,693 Investment in associate (note 4) 185,990 184,665 171,707 Other assets 71,813 68,554 122,627---------------------------------------------------------------------------- 2,071,323 2,016,092 2,271,027---------------------------------------------------------------------------- $ 3,550,922 $ 3,442,561 $ 3,283,649--------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND EQUITYCurrent liabilities: Trade, other payables and accrued liabilities $ 437,807 $ 377,666 $ 360,712 Current maturities on long-term debt (note 5) 40,444 38,290 236,063 Current maturities on other long- term liabilities 40,517 30,322 21,441---------------------------------------------------------------------------- 518,768 446,278 618,216Non-current liabilities: Long-term debt (note 5) 1,146,443 1,156,081 601,293 Other long-term liabilities 177,495 200,212 188,149 Deferred income tax liabilities 170,623 162,253 274,028---------------------------------------------------------------------------- 1,494,561 1,518,546 1,063,470Equity: Capital stock 498,999 481,779 455,434 Contributed surplus 11,572 15,481 22,281 Retained earnings 848,394 805,661 942,978 Accumulated other comprehensive loss (11,852) (13,045) (15,968)---------------------------------------------------------------------------- Shareholders' equity 1,347,113 1,289,876 1,404,725 Non-controlling interests 190,480 187,861 197,238---------------------------------------------------------------------------- Total equity 1,537,593 1,477,737 1,601,963---------------------------------------------------------------------------- $ 3,550,922 $ 3,442,561 $ 3,283,649--------------------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to condensed consolidated interim financial statements.Methanex CorporationConsolidated Statements of Changes in Equity (unaudited)(thousands of U.S. dollars, except number of common shares) Number of Common Capital Contributed Retained Shares Stock Surplus Earnings----------------------------------------------------------------------------Balance, December 31, 2011 93,247,755 $ 455,434 $ 22,281 $ 942,978 Net income - - - 22,081 Other comprehensive income (loss) - - - - Compensation expense recorded for stock options - - 227 - Issue of shares on exercise of stock options 458,920 8,068 - - Reclassification of grant date fair value on exercise of stock options - 3,083 (3,083) - Dividend payments to Methanex Corporation shareholders - - - (15,908) Distributions to non-controlling interests - - - - Equity contributions by non-controlling interests - - - -----------------------------------------------------------------------------Balance, March 31, 2012 93,706,675 466,585 19,425 949,151 Net income (loss) (90,186) Other comprehensive income (loss) (1,135) Compensation expense recorded for stock options - - 499 - Issue of shares on exercise of stock options 603,295 10,751 - - Reclassification of grant date fair value on exercise of stock options - 4,443 (4,443) - Dividend payments to Methanex Corporation shareholders - - - (52,169) Distributions to non-controlling interests - - - - Equity contributions by non-controlling interests - - - -----------------------------------------------------------------------------Balance, December 31, 2012 94,309,970 481,779 15,481 805,661 Net income - - - 60,267 Other comprehensive income - - - - Compensation expense recorded for stock options - - 223 - Issue of shares on exercise of stock options 587,689 13,088 - - Reclassification of grant date fair value on exercise of stock options - 4,132 (4,132) - Dividend payments to Methanex Corporation shareholders - - - (17,534) Distributions to non-controlling interests - - - - Equity contributions by non-controlling interests - - - -----------------------------------------------------------------------------Balance, March 31, 2013 94,897,659 $ 498,999 $ 11,572 $ 848,394--------------------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to condensed consolidated interim financial statements.Methanex CorporationConsolidated Statements of Changes in Equity (unaudited)(thousands of U.S. dollars, except number of common shares) Accumulated Other Non- Comprehensive Shareholders' Controlling Total Loss Equity Interests Equity----------------------------------------------------------------------------Balance, December 31, 2011 $ (15,968) $ 1,404,725 $ 197,238 $ 1,601,963 Net income - 22,081 10,730 32,811 Other comprehensive income (loss) (111) (111) 129 18 Compensation expense recorded for stock options - 227 - 227 Issue of shares on exercise of stock options - 8,068 - 8,068 Reclassification of grant date fair value on exercise of stock options - - - - Dividend payments to Methanex Corporation shareholders - (15,908) - (15,908) Distributions to non-controlling interests - - (9,405) (9,405) Equity contributions by non-controlling interests - - 1,000 1,000----------------------------------------------------------------------------Balance, March 31, 2012 (16,079) 1,419,082 199,692 1,618,774 Net income (loss) - (90,186) 22,800 (67,386) Other comprehensive income (loss) 3,034 1,899 2,032 3,931 Compensation expense recorded for stock options - 499 - 499 Issue of shares on exercise of stock options - 10,751 - 10,751 Reclassification of grant date fair value on exercise of stock options - - - - Dividend payments to Methanex Corporation shareholders - (52,169) - (52,169) Distributions to non-controlling interests - - (36,663) (36,663) Equity contributions by non-controlling interests - - - -----------------------------------------------------------------------------Balance, December 31, 2012 (13,045) 1,289,876 187,861 1,477,737 Net income - 60,267 5,966 66,233 Other comprehensive income 1,193 1,193 918 2,111 Compensation expense recorded for stock options - 223 - 223 Issue of shares on exercise of stock options - 13,088 - 13,088 Reclassification of grant date fair value on exercise of stock options - - - - Dividend payments to Methanex Corporation shareholders - (17,534) - (17,534) Distributions to non-controlling interests - - (5,265) (5,265) Equity contributions by non-controlling interests - - 1,000 1,000----------------------------------------------------------------------------Balance, March 31, 2013 $ (11,852) $ 1,347,113 $ 190,480 $ 1,537,593--------------------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to condensed consolidated interim financial statements.Methanex CorporationConsolidated Statements of Cash Flows (unaudited)(thousands of U.S. dollars) Three Months Ended ------------------------ Mar 31 Mar 31 2013 2012-------------------------------------------------------------------------------------------------------------------------------------------------------- (As adjusted - note 11)CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 66,233 $ 32,811 Add (deduct) loss (earnings) of associate (1,286) 7,328 Add non-cash items: Depreciation and amortization 29,817 35,401 Income tax expense 12,062 10,839 Share based compensation expense 36,313 25,058 Finance costs 15,451 16,033 Other 464 5,786 Income taxes paid (8,783) (7,074) Other cash payments, including share-based compensation (17,555) (12,030)---------------------------------------------------------------------------- Cash flows from operating activities before undernoted 132,716 114,152 Changes in non-cash working capital (note 9) (15,037) (40,194)---------------------------------------------------------------------------- 117,679 73,958----------------------------------------------------------------------------CASH FLOWS FROM FINANCING ACTIVITIES Dividend payments to Methanex Corporation shareholders (17,534) (15,908) Interest paid, including interest rate swap settlements (21,211) (24,249) Net proceeds on issue of long-term debt - 246,548 Repayment of long-term debt and limited recourse debt (18,267) (17,154) Equity contributions by non-controlling interests 1,000 1,000 Cash distributions to non-controlling interests (5,265) (12,745) Proceeds from limited recourse debt 10,000 - Proceeds on issue of shares on exercise of stock options 13,088 8,068 Other (919) (13,450)---------------------------------------------------------------------------- (39,108) 172,110----------------------------------------------------------------------------CASH FLOWS FROM INVESTING ACTIVITIES Property, plant and equipment (33,619) (42,551) Louisiana project expenditures (43,398) - Oil and gas assets (7,656) (6,801) GeoPark repayments 6,864 6,630 Changes in non-cash working capital related to investing activities (note 9) (1,296) 12,832---------------------------------------------------------------------------- (79,105) (29,890)---------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (534) 216,178 Cash and cash equivalents, beginning of period 727,385 341,445---------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 726,851 $ 557,623--------------------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to condensed consolidated interim financial statements.
