EX-99.3

EX-99.3 4 d441580dex993.htm EX-99.3 EX-99.3

EXHIBIT 99.3

LOGO

AGRIUM INC.

CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2017

AGRIUM INC.

Condensed Consolidated Interim Statements of Operations

(Unaudited)


			Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars, unless otherwise stated)	Notes		2017			2016			2017			2016
Sales				6,319			6,415			9,039			9,140
Cost of product sold				4,792			4,890			6,954			7,061

Gross profit				1,527			1,525			2,085			2,079
Expenses
Selling				575			574			1,026			988
General and administrative				61			62			121			117
Share-based payments				(3	)		13			—			17
Earnings from associates and joint ventures				(5	)		(23	)		(28	)		(28	)
Other expenses		4		43			51			53			62

Earnings before finance costs and income taxes				856			848			913			923
Finance costs related to long-term debt				52			50			99			102
Other finance costs				24			20			47			38

Earnings before income taxes				780			778			767			783
Income taxes				222			213			219			215

Net earnings				558			565			548			568

Attributable to
Equity holders of Agrium				557			564			546			566
Non-controlling interests				1			1			2			2

Net earnings				558			565			548			568

Earnings per share attributable to equity holders of Agrium
Basic and diluted earnings per share				4.03			4.08			3.95			4.09
Weighted average number of shares outstanding for basic and diluted earnings per share (millions of common shares)				138			138			138			138

See accompanying notes.

Basis of preparation and statement of compliance

These condensed consolidated interim financial statements (“interim financial statements”) were approved for issuance by the Audit Committee on August 9, 2017. We prepared these interim financial statements in accordance with International Accounting Standard 34 Interim Financial Reporting. These interim financial statements do not include all information and disclosures normally provided in annual financial statements and should be read in conjunction with our audited annual financial statements and related notes contained in our 2016 Annual Report, available at www.agrium.com.

The accounting policies applied in these interim financial statements are the same as those applied in our audited annual financial statements in our 2016 Annual Report.

AGRIUM INC.

Condensed Consolidated Interim Statements of Comprehensive Income

(Unaudited)


			Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars)	Notes		2017			2016			2017			2016
Net earnings				558			565			548			568
Other comprehensive income (loss)
Items that are or may be reclassified to earnings
Cash flow hedges		3
Effective portion of changes in fair value				(7	)		17			(30	)		(6	)
Deferred income taxes				3			(4	)		8			3
Associates and joint ventures
Share of comprehensive (loss) income				(22	)		(1	)		(51	)		1
Deferred income taxes				2			—			10			—
Foreign currency translation
Gains (losses)				100			(26	)		165			153
Reclassifications to earnings				1			—			6			—

				77			(14	)		108			151

Items that will never be reclassified to earnings
Post-employment benefits
Actuarial losses				—			(24	)		(3	)		(24	)
Deferred income taxes				—			7			1			7

				—			(17	)		(2	)		(17	)

Other comprehensive income (loss)				77			(31	)		106			134

Comprehensive income				635			534			654			702

Attributable to
Equity holders of Agrium				633			533			651			700
Non-controlling interests				2			1			3			2

Comprehensive income				635			534			654			702

See accompanying notes.

AGRIUM INC.

Condensed Consolidated Interim Balance Sheets

(Unaudited)


			June 30,						December 31,
(millions of U.S. dollars)	Notes		2017			2016			2016
Assets
Current assets
Cash and cash equivalents				319			307			412
Accounts receivable				3,803			3,638			2,208
Income taxes receivable				62			95			33
Inventories				2,846			2,605			3,230
Prepaid expenses and deposits				112			131			855
Other current assets				130			124			123

				7,272			6,900			6,861
Property, plant and equipment				7,028			6,832			6,818
Intangibles				561			635			566
Goodwill				2,115			2,023			2,095
Investments in associates and joint ventures				513			665			541
Other assets				55			52			48
Deferred income tax assets				20			44			34

				17,564			17,151			16,963

Liabilities and shareholders’ equity
Current liabilities
Short-term debt		5		1,227			1,069			604
Accounts payable				4,155			3,830			4,662
Income taxes payable				4			128			17
Current portion of long-term debt		5		10			107			110
Current portion of other provisions				48			74			59

				5,444			5,208			5,452
Long-term debt		5		4,400			4,412			4,398
Post-employment benefits				134			162			141
Other provisions				336			338			322
Other liabilities				51			54			68
Deferred income tax liabilities				601			491			408

				10,966			10,665			10,789

Shareholders’ equity
Share capital				1,770			1,762			1,766
Retained earnings				5,939			5,839			5,634
Accumulated other comprehensive loss				(1,116	)		(1,119	)		(1,231	)

Equity holders of Agrium				6,593			6,482			6,169
Non-controlling interests				5			4			5

Total equity				6,598			6,486			6,174

				17,564			17,151			16,963

See accompanying notes.

AGRIUM INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)


			Three months ended						Six months ended
			June 30,						June 30,
(millions of U.S. dollars)	Notes		2017			2016			2017			2016
Operating
Net earnings				558			565			548			568
Adjustments for
Depreciation and amortization				156			145			295			259
Earnings from associates and joint ventures				(5	)		(23	)		(28	)		(28	)
Share-based payments				(3	)		13			—			17
Unrealized loss (gain) on derivative financial instruments				12			(61	)		7			22
Unrealized foreign exchange loss (gain)				—			83			—			(41	)
Interest income				(13	)		(16	)		(26	)		(29	)
Finance costs				76			70			146			140
Income taxes				222			213			219			215
Other				4			(7	)		(7	)		(1	)
Interest received				14			15			27			29
Interest paid				(63	)		(51	)		(147	)		(140	)
Income taxes paid				(15	)		(24	)		(54	)		(165	)
Dividends from associates and joint ventures				4			1			9			2
Net changes in non-cash working capital				(1,062	)		(828	)		(926	)		(410	)

Cash (used in) provided by operating activities				(115	)		95			63			438

Investing
Business acquisitions, net of cash acquired				(44	)		(81	)		(74	)		(175	)
Capital expenditures				(164	)		(230	)		(307	)		(404	)
Capitalized borrowing costs				(4	)		(7	)		(12	)		(12	)
Purchase of investments				(17	)		(18	)		(50	)		(41	)
Proceeds from sale of investments				21			46			49			64
Proceeds from sale of property, plant and equipment				12			6			21			10
Other				(4	)		(5	)		(8	)		(8	)
Net changes in non-cash working capital				(45	)		(8	)		(51	)		(8	)

Cash used in investing activities				(245	)		(297	)		(432	)		(574	)

Financing
Short-term debt		5		551			426			615			222
Repayment of long-term debt		5		(2	)		(4	)		(105	)		(6	)
Dividends paid				(120	)		(122	)		(241	)		(241	)

Cash provided by (used in) financing activities				429			300			269			(25	)

Effect of exchange rate changes on cash and cash equivalents				(12	)		(67	)		7			(47	)

Increase (decrease) in cash and cash equivalents				57			31			(93	)		(208	)
Cash and cash equivalents – beginning of period				262			276			412			515

Cash and cash equivalents – end of period				319			307			319			307

See accompanying notes.

AGRIUM INC.

Condensed Consolidated Interim Statements of Shareholders’ Equity

(Unaudited)


								Other comprehensive income (loss)
	Millions										Comprehensive
	of							Cash			loss of			Foreign						Equity			Non-
(millions of U.S. dollars, except per share data)	common shares		Share capital		Retained earnings			flow hedges			associates and joint ventures			currency translation			Total			holders of Agrium			controlling interests			Total equity
December 31, 2015		138		1,757		5,533			(56	)		(17	)		(1,214	)		(1,287	)		6,003			4			6,007

Net earnings		—		—		566			—			—			—			—			566			2			568
Other comprehensive income (loss), net of tax
Post-employment benefits		—		—		(17	)		—			—			—			—			(17	)		—			(17	)
Other		—		—		—			(3	)		1			153			151			151			—			151

Comprehensive income (loss), net of tax		—		—		549			(3	)		1			153			151			700			2			702
Dividends ($1.75 per share)		—		—		(243	)		—			—			—			—			(243	)		—			(243	)
Non-controlling interest transactions		—		—		—			—			—			—			—			—			(2	)		(2	)
Share-based payment transactions		—		5		—			—			—			—			—			5			—			5
Reclassification of cash flow hedges, net of tax		—		—		—			17			—			—			17			17			—			17

June 30, 2016		138		1,762		5,839			(42	)		(16	)		(1,061	)		(1,119	)		6,482			4			6,486

December 31, 2016		138		1,766		5,634			(25	)		(51	)		(1,155	)		(1,231	)		6,169			5			6,174

Net earnings		—		—		546			—			—			—			—			546			2			548
Other comprehensive income (loss), net of tax
Post-employment benefits		—		—		(2	)		—			—			—			—			(2	)		—			(2	)
Other		—		—		—			(22	)		(41	)		170			107			107			1			108

Comprehensive income (loss), net of tax		—		—		544			(22	)		(41	)		170			107			651			3			654
Dividends ($1.75 per share)		—		—		(241	)		—			—			—			—			(241	)		—			(241	)
Non-controlling interest transactions		—		—		2			—			—			(2	)		(2	)		—			(3	)		(3	)
Share-based payment transactions		—		4		—			—			—			—			—			4			—			4
Reclassification of cash flow hedges, net of tax		—		—		—			10			—			—			10			10			—			10

June 30, 2017		138		1,770		5,939			(37	)		(92	)		(987	)		(1,116	)		6,593			5			6,598

See accompanying notes.

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)

1. Corporate Management

Corporate information

Agrium Inc. (“Agrium”) is incorporated under the laws of Canada with common shares listed under the symbol “AGU” on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). Our Corporate head office is located at 13131 Lake Fraser Drive S.E., Calgary, Canada. We conduct our operations globally from our Wholesale head office in Calgary and our Retail head office in Loveland, Colorado, United States. In these financial statements, “we”, “us”, “our” and “Agrium” mean Agrium Inc., its subsidiaries and joint arrangements.

We categorize our operating segments within the Retail and Wholesale business units as follows:

•

Retail: Distributes crop nutrients, crop protection products, seed and merchandise and provides financial and other services directly to growers through a network of farm centers in two geographical segments:

•

North America including the United States and Canada

•

International including Australia and South America

•

Wholesale: Produces, markets and distributes crop nutrients and industrial products as follows:

•

Nitrogen: Manufacturing in Alberta and Texas

•

Potash: Mining and processing in Saskatchewan

•

Phosphate: Production facilities in Alberta and production and mining facilities in Idaho

•

Wholesale Other: Producing blended crop nutrients and Environmentally Smart Nitrogen^® (ESN) polymer-coated nitrogen crop nutrients, and operating joint ventures and associates

Additional information on our operating segments is included in note 2.

Seasonality in our business results from increased demand for our products during planting seasons. Sales are generally higher in spring and fall.

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)

2.	Operating Segments


Segment information by business unit	Three months ended June 30,
	2017												2016
	Retail			Wholesale			Other ^(a)			Total			Retail			Wholesale			Other ^(a)			Total
Sales - external		5,694			625			—			6,319			5,780			635			—			6,415
- inter-segment		13			223			(236	)		—			11			247			(258	)		—

Total sales		5,707			848			(236	)		6,319			5,791			882			(258	)		6,415
Cost of product sold		4,408			652			(268	)		4,792			4,512			681			(303	)		4,890

Gross profit		1,299			196			32			1,527			1,279			201			45			1,525

Gross profit (%)		23			23						24			22			23						24

Expenses
Selling		574			6			(5	)		575			570			8			(4	)		574
General and administrative		28			7			26			61			28			8			26			62
Share-based payments		—			—			(3	)		(3	)		—			—			13			13
(Earnings) loss from associates and joint ventures		(4	)		(3	)		2			(5	)		(3	)		(21	)		1			(23	)
Other expenses		1			11			31			43			8			26			17			51

Earnings (loss) before finance costs and income taxes		700			175			(19	)		856			676			180			(8	)		848
Finance costs		—			—			76			76			—			—			70			70

Earnings (loss) before income taxes		700			175			(95	)		780			676			180			(78	)		778
Depreciation and amortization		71			80			5			156			68			74			3			145
Finance costs		—			—			76			76			—			—			70			70

EBITDA ^(b)		771			255			(14	)		1,012			744			254			(5	)		993

(a)	Includes inter-segment eliminations

(b)	EBITDA is net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations.

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Segment information by business unit	Six months ended June 30,
	2017												2016
	Retail			Wholesale			Other ^(a)			Total			Retail			Wholesale			Other ^(a)			Total
Sales - external		7,921			1,118			—			9,039			8,058			1,082			—			9,140
- inter-segment		26			405			(431	)		—			23			449			(472	)		—

Total sales		7,947			1,523			(431	)		9,039			8,081			1,531			(472	)		9,140
Cost of product sold		6,214			1,185			(445	)		6,954			6,400			1,177			(516	)		7,061

Gross profit		1,733			338			14			2,085			1,681			354			44			2,079

Gross profit (%)		22			22						23			21			23						23

Expenses
Selling		1,022			13			(9	)		1,026			980			16			(8	)		988
General and administrative		53			13			55			121			50			16			51			117
Share-based payments		—			—			—			—			—			—			17			17
(Earnings) loss from associates and joint ventures		(10	)		(19	)		1			(28	)		(7	)		(22	)		1			(28	)
Other (income) expenses		(11	)		25			39			53			5			45			12			62

Earnings (loss) before finance costs and income taxes		679			306			(72	)		913			653			299			(29	)		923
Finance costs		—			—			146			146			—			—			140			140

Earnings (loss) before income taxes		679			306			(218	)		767			653			299			(169	)		783
Depreciation and amortization		142			144			9			295			135			118			6			259
Finance costs		—			—			146			146			—			—			140			140

EBITDA		821			450			(63	)		1,208			788			417			(23	)		1,182

(a)	Includes inter-segment eliminations

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Segment information – Retail	Three months ended June 30,
	2017									2016
	North America			International			Retail ^(a)			North America			International			Retail ^(a)
Sales - external		5,031			663			5,694			5,038			742			5,780
- inter-segment		13			—			13			11			—			11

Total sales		5,044			663			5,707			5,049			742			5,791
Cost of product sold		3,876			532			4,408			3,893			619			4,512

Gross profit		1,168			131			1,299			1,156			123			1,279
Expenses
Selling		486			88			574			484			86			570
General and administrative		21			7			28			20			8			28
Earnings from associates and joint ventures		(4	)		—			(4	)		(2	)		(1	)		(3	)
Other expenses (income)		11			(10	)		1			16			(8	)		8

Earnings before income taxes		654			46			700			638			38			676
Depreciation and amortization		67			4			71			63			5			68

EBITDA		721			50			771			701			43			744

(a)	Included within the Retail business unit is a separate Financial Services operating segment with total sales of $8-million (2016 – $4-million) and EBITDA of $7-million (2016 – $4-million).

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Segment information – Retail	Six months ended June 30,
	2017									2016
	North America			International			Retail ^(a)			North America			International			Retail ^(a)
Sales - external		6,789			1,132			7,921			6,835			1,223			8,058
- inter-segment		26			—			26			23			—			23

Total sales		6,815			1,132			7,947			6,858			1,223			8,081
Cost of product sold		5,327			887			6,214			5,399			1,001			6,400

Gross profit		1,488			245			1,733			1,459			222			1,681
Expenses
Selling		850			172			1,022			821			159			980
General and administrative		39			14			53			35			15			50
Earnings from associates and joint ventures		(9	)		(1	)		(10	)		(6	)		(1	)		(7	)
Other expenses (income)		4			(15	)		(11	)		22			(17	)		5

Earnings before income taxes		604			75			679			587			66			653
Depreciation and amortization		133			9			142			124			11			135

EBITDA		737			84			821			711			77			788

(a)	Included within the Retail business unit is a separate Financial Services operating segment with total sales of $14-million (2016 – $4-million) and EBITDA of $15-million (2016 – $4-million).

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Segment information – Wholesale	Three months ended June 30,
	2017												2016
	Nitrogen		Potash		Phosphate		Wholesale Other ^(a)			Wholesale			Nitrogen		Potash			Phosphate			Wholesale Other ^(a)			Wholesale
Sales - external		277		116		86		146			625			296		85			110			144			635
- inter-segment		91		34		51		47			223			98		50			50			49			247

Total sales		368		150		137		193			848			394		135			160			193			882
Cost of product sold		255		106		129		162			652			246		119			155			161			681

Gross profit		113		44		8		31			196			148		16			5			32			201
Expenses
Selling		3		2		1		—			6			3		2			1			2			8
General and administrative		3		1		1		2			7			3		1			1			3			8
Earnings from associates and joint ventures		—		—		—		(3	)		(3	)		—		—			—			(21	)		(21	)
Other expenses (income)		6		5		2		(2	)		11			16		14			(1	)		(3	)		26
Earnings (loss) before income taxes		101		36		4		34			175			126		(1	)		4			51			180

Depreciation and amortization		26		32		17		5			80			23		31			13			7			74

EBITDA		127		68		21		39			255			149		30			17			58			254

(a)	Includes ammonium sulfate, ESN and other products

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Segment information – Wholesale	Six months ended June 30,
	2017												2016
	Nitrogen		Potash		Phosphate		Wholesale Other ^(a)			Wholesale			Nitrogen		Potash		Phosphate		Wholesale Other ^(a)			Wholesale
Sales - external		459		206		176		277			1,118			469		133		190		290			1,082
- inter-segment		149		76		95		85			405			175		93		100		81			449

Total sales		608		282		271		362			1,523			644		226		290		371			1,531
Cost of product sold		418		203		256		308			1,185			401		196		265		315			1,177

Gross profit		190		79		15		54			338			243		30		25		56			354
Expenses
Selling		6		3		2		2			13			7		4		2		3			16
General and administrative		5		2		2		4			13			7		3		2		4			16
Earnings from associates and joint ventures		—		—		—		(19	)		(19	)		—		—		—		(22	)		(22	)
Other expenses (income)		15		7		4		(1	)		25			22		20		3		—			45

Earnings before income taxes		164		67		7		68			306			207		3		18		71			299
Depreciation and amortization		42		61		33		8			144			36		51		23		8			118

EBITDA		206		128		40		76			450			243		54		41		79			417

(a)	Includes ammonium sulfate, ESN and other products

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Gross profit by product line	Three months ended June 30,																Six months ended June 30,
	2017								2016								2017								2016
	Sales			Cost of product sold			Gross profit		Sales			Cost of product sold			Gross profit		Sales			Cost of product sold			Gross profit		Sales			Cost of product sold			Gross profit
Retail
Crop nutrients		1,989			1,570			419		2,190			1,757			433		2,703			2,143			560		3,029			2,462			567
Crop protection products		2,236			1,751			485		2,250			1,779			471		3,108			2,493			615		3,081			2,489			592
Seed		1,080			881			199		926			745			181		1,462			1,209			253		1,302			1,070			232
Merchandise		175			148			27		162			134			28		309			260			49		279			232			47
Services and other ^(a)		227			58			169		263			97			166		365			109			256		390			147			243

		5,707			4,408			1,299		5,791			4,512			1,279		7,947			6,214			1,733		8,081			6,400			1,681

Wholesale
Nitrogen		368			255			113		394			246			148		608			418			190		644			401			243
Potash		150			106			44		135			119			16		282			203			79		226			196			30
Phosphate		137			129			8		160			155			5		271			256			15		290			265			25
Ammonium sulfate, ESN and other		193			162			31		193			161			32		362			308			54		371			315			56

		848			652			196		882			681			201		1,523			1,185			338		1,531			1,177			354

Other inter-segment eliminations		(236	)		(268	)		32		(258	)		(303	)		45		(431	)		(445	)		14		(472	)		(516	)		44

Total		6,319			4,792			1,527		6,415			4,890			1,525		9,039			6,954			2,085		9,140			7,061			2,079


Wholesale share of joint ventures
Nitrogen		46			36			10		40			37			3		70			55			15		65			58			7

Total Wholesale including proportionate share in joint ventures		894			688			206		922			718			204		1,593			1,240			353		1,596			1,235			361

(a)	Includes financial services products

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Selected volumes and per tonne information	Three months ended June 30,
	2017								2016
	Sales tonnes (000’s)		Selling price ($/tonne)		Cost of product sold ($/tonne)		Margin ($/tonne)		Sales tonnes (000’s)		Selling price ($/tonne)		Cost of product sold ($/tonne)		Margin ($/tonne)
Retail
Crop nutrients
North America		4,249		415		321		94		4,133		462		361		101
International		648		351		323		28		715		390		366		24

Total crop nutrients		4,897		406		320		86		4,848		452		363		89


Wholesale
Nitrogen
North America
Ammonia		414		412						394		443
Urea		459		281						503		303
Other		308		223						271		249

Total nitrogen		1,181		312		216		96		1,168		337		210		127


Potash
North America		377		254						440		219
International		337		161						257		152

Total potash		714		210		149		61		697		194		172		22


Phosphate		279		492		464		28		305		526		508		18
Ammonium sulfate		111		290		109		181		114		296		120		176
ESN and other		466								452

Total Wholesale		2,751		308		237		71		2,736		322		248		74


Wholesale share of joint ventures
Nitrogen		82		556		434		122		133		305		285		20

Total Wholesale including proportionate share in joint ventures		2,833		315		242		73		2,869		322		251		71

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


Selected volumes and per tonne information	Six months ended June 30,
	2017								2016
	Sales tonnes (000’s)		Selling price ($/tonne)		Cost of product sold ($/tonne)		Margin ($/tonne)		Sales tonnes (000’s)		Selling price ($/tonne)		Cost of product sold ($/tonne)		Margin ($/tonne)
Retail
Crop nutrients
North America		5,739		413		320		93		5,653		459		364		95
International		1,000		332		303		29		1,155		376		351		25

Total crop nutrients		6,739		401		318		83		6,808		445		362		83


Wholesale
Nitrogen
North America
Ammonia		640		396						624		427
Urea		820		294						822		316
Other		493		230						463		256

Total nitrogen		1,953		311		214		97		1,909		338		210		128


Potash
North America		755		251						703		217
International		595		156						450		163

Total potash		1,350		209		151		58		1,153		196		170		26


Phosphate		567		479		452		27		525		553		505		48
Ammonium sulfate		199		276		115		161		171		294		118		176
ESN and other		918								904

Total Wholesale		4,987		305		237		68		4,662		328		252		76


Wholesale share of joint ventures
Nitrogen		159		439		347		92		216		301		270		31

Total Wholesale including proportionate share in joint ventures		5,146		309		241		68		4,878		327		253		74

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)

3.	Risk Management

Commodity price risk

Natural gas derivative financial instruments outstanding (notional amounts in millions of MMBtu)

June 30,

December 31,

2017

2016

Notional

Maturities

Average
contract
price ^(a)

Fair value
of assets
(liabilities)

Notional

Maturities

Average
contract
price ^(a)

Fair value
of assets
(liabilities)

Designated as hedges

AECO swaps

2017 – 2019

2.97

(43

)

2017 – 2018

2.90

(21

)

(43

)

(21

)

(a)	U.S. dollars per MMBtu


	Fair value of assets (liabilities)
Maturities of natural gas derivative contracts	2017			2018			2019
AECO swaps		(16	)		(23	)		(4	)


Impact of change in fair value of natural gas derivative financial instruments	June 30,		December 31,
	2017		2016
A $10-million impact to other comprehensive income requires movement in gas prices per MMBtu		0.16		0.29

The underlying risk of the derivative contracts is identical to the hedged risk; accordingly we have established a ratio of 1:1 for all natural gas hedges. Due to a strong correlation between AECO future contract prices and our delivered cost, we did not experience any ineffectiveness on our hedges, and accordingly we have recorded the full change in the fair value of natural gas derivative contracts designated as hedges to other comprehensive income.

Currency risk


Foreign exchange derivative financial instruments outstanding (notional amounts in millions of U.S. dollars)
	June 30, 2017									December 31, 2016
Sell/Buy	Notional		Maturities		Average contract price ^(a)		Fair value of assets (liabilities)			Notional		Maturities		Average contract price ^(a)		Fair value of assets (liabilities)
Forwards
USD/CAD		220		2017		1.31		2			—		—		—		—
CAD/USD		132		2017		1.31		(1	)		180		2017		1.34		—
EUR/USD		14		2017		0.91		(1	)		—		2017		0.94		—
USD/AUD		17		2017		1.33		—			14		2017		1.32		(1	)
AUD/USD		46		2017		1.32		(1	)		22		2017		1.34		1
CNY/AUD		16		2017		6.74		—			23		2017		7.16		—
Options
USD/CAD – buy USD puts		42		2017		1.30		1			—		—		—		—
USD/CAD – sell USD calls		56		2017		1.37		—			—		—		—		—
CAD/USD – buy USD calls		—		2017		1.33		—			—		—		—		—
CAD/USD – sell USD puts		—		2017		1.32		(6	)		—		—		—		—

								(6	)								—

(a)	Foreign currency per U.S. dollar

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


	June 30,						December 31,
	2017						2016
	Fair value				Carrying		Fair value				Carrying
	Level 1		Level 2		value		Level 1		Level 2		value
Financial instruments measured at fair value on a recurring basis
Cash and cash equivalents		—		319		319		—		412		412
Accounts receivable – derivatives		—		3		3		—		2		2
Other current financial assets – marketable securities		18		107		125		22		99		121
Other non-current financial assets – derivatives		—		2		2		—		—		—
Accounts payable – derivatives		—		36		36		—		7		7
Other financial liabilities – derivatives		—		18		18		—		16		16
Financial instruments measured at amortized cost
Current portion of long-term debt
Debentures		—		—		—		—		101		100
Fixed and floating rate debt		—		10		10		—		10		10
Long-term debt
Debentures		—		4,829		4,374		—		4,600		4,373
Fixed and floating rate debt		—		26		26		—		25		25

There have been no transfers between Level 1 and Level 2 fair value measurements in the six months ended June 30, 2017. We do not measure any of our financial instruments using Level 3 inputs.

4.	Expenses


	Three months ended						Six months ended
Other expenses	June 30,						June 30,
	2017			2016			2017			2016
(Gain) loss on foreign exchange and related derivatives		(2	)		6			4			8
Interest income		(13	)		(16	)		(26	)		(29	)
Environmental remediation and asset retirement obligations		—			3			(1	)		5
Bad debt expense		22			21			29			29
Potash profit and capital tax		3			5			6			8
Merger and related costs		15			—			31			—
Other		18			32			10			41

		43			51			53			62

Debt

June 30,

December 31,

Maturity

Rate (%)^(a)

2017

2016

Short-term debt

Commercial paper

2017

1.49

1,089

306

Credit facilities

4.24

138

298

1,227

604

(a)	Weighted average rates at June 30, 2017

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2017

(millions of U.S. dollars, unless otherwise stated)

(Unaudited)


	Short-term debt		Long-term debt ^(a)
December 31, 2016		604		4,508
Cash flows reported as financing activities		615		(105	)
Non-cash changes
Other adjustments		—		8
Foreign currency translation		8		(1	)

June 30, 2017		1,227		4,410

(a)	Includes current portion

6.	Additional Information

Planned Merger with Potash Corporation of Saskatchewan Inc. (“PotashCorp”)

Agrium and PotashCorp entered into an agreement dated September 11, 2016 (the “Arrangement Agreement”), under which the companies will combine in a merger of equals into a newly incorporated parent entity, which will be named Nutrien, to be formed to manage and hold the combined businesses of both Agrium and PotashCorp. The Arrangement Agreement will be implemented by a proposed plan of arrangement (the “Arrangement”). Under the Arrangement, Agrium shareholders will receive 2.23 Nutrien shares for each Agrium share held, and PotashCorp shareholders will receive 0.40 of a Nutrien share for each PotashCorp share held. Following the completion of the Arrangement Agreement, Agrium and PotashCorp will become wholly-owned subsidiaries of Nutrien and Nutrien will continue the operations of Agrium and PotashCorp on a combined basis. Each of the share-based payment awards for each of Agrium and PotashCorp, whether vested or unvested, that are outstanding immediately prior to the completion of the Arrangement will convert into a Nutrien award.

On November 3, 2016, shareholders of both Agrium and PotashCorp approved the Arrangement. The Arrangement is anticipated to be completed near the end of the third quarter of 2017, subject to customary closing conditions including receipt of regulatory and court approvals.

The estimated costs to be incurred by Agrium and PotashCorp with respect to the Arrangement and related matters are expected to aggregate approximately $140-million.

The Arrangement Agreement contains provisions that restrict Agrium’s and PotashCorp’s ability to pursue alternatives to the Arrangement and, in specified circumstances, Agrium or PotashCorp could be required to pay the other party a non-completion fee of $485-million or $50-million as reimbursement for related expenses. The Arrangement Agreement also restricts Agrium and PotashCorp from increasing dividends or repurchasing their shares before completion of the Arrangement.

Additional information and the full text of the Arrangement Agreement and the Arrangement are included in Agrium and PotashCorp’s joint proxy circular filed on SEDAR on October 6, 2016.

Starpharma Holdings Limited

In June 2017, we acquired Starpharma Holdings Limited’s agrochemical business that is focused on the development of a proprietary polymer technology and is based in Melbourne, Australia. Our purchase price was $26-million (AUD$35-million).

Property, plant and equipment

We have completed our expansion project at our Borger nitrogen facility. We transferred $662-million from assets under construction to buildings and improvements, and machinery and equipment when the assets became available for use.