NEWS RELEASE
A Responsible Care” Company
Methanex Corporation
1800 – 200 Burrard St.
Vancouver, BC Canada V6C 3M1
Investor Relations: (604) 661-2600
http://www.methanex.com
For immediate release
METHANEX REPORTS SECOND QUARTER RESULTS; EGYPT AND MEDICINE HAT PLANTS DRIVING HIGHER
PRODUCTION
JULY 27, 2011
For the second quarter of 2011, Methanex reported Adjusted EBITDA? of $103.7 million and net income attributable to
Methanex shareholders of $40.5 million ($0.43 per share on a diluted basis). This compares with Adjusted EBITDA!’ of
$77.9 million and net income attributable to Methanex shareholders of $34.6 million ($0.37 per share on a diluted basis)
for the first quarter of 2011.
Bruce Aitken, President and CEO of Methanex commented, “The Egypt and Medicine Hat plants have run very well since
their startup with the second quarter being our highest quarter of production since 2007. This led to higher earnings in the
second quarter and these plants provide further upside for the remainder of 2011 when the full impact of their production
will be reflected in our earnings.”
Mr. Aitken added, “The methanol pricing environment has stayed firm supported by healthy global demand and the
outlook is excellent with methanol demand growth expected to be strong and limited new capacity added to the industry
over the next few years.”
Mr. Aitken concluded, “We have a strong balance sheet with US$246 million of cash on hand and an undrawn credit
facility, and we believe we are well positioned to continue to invest to grow the Company. With the recent additions of
Egypt and Medicine Hat over the past quarter we are well positioned to increase our earnings and cash flows and continue
to deliver on our commitment to return excess cash to shareholders.”
A conference call is scheduled for July 28, 2011 at 12:00 noon ET (9:00 am PT) to review these second quarter results. To
access the call, dial the Conferencing operator ten minutes prior to the start of the call at (416) 340-8018, or toll free at
(866) 223-7781. A playback version of the conference call will be available for three weeks at (905) 694-9451, or toll free
at (800) 408-3053. The passcode for the playback version is 3412372. There will be a simultaneous audio-only webcast of
the conference call, which can be accessed from our website at www.methanex.com. The webcast will be available on our
website for three weeks following the call.
Methanex is a Vancouver-based, publicly traded company and is the world’s largest supplier of methanol to major
international markets. 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 INFORMATION WARNING
This Second Quarter 2011 press release contains forward-looking statements with respect to us and the chemical industry.
Refer to Forward-Looking Information Warning in the attached Second Quarter 2011 Management’s Discussion and
Analysis for more information.
1 Adjusted EBITDA ¡is a non-IFRS measure which does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA represents the
amount that is attributable to Methanex shareholders and is calculated by deducting the amount of Adjusted EBITDA associated with the 40%
non-controlling interest in the methanol facility in Egypt. Refer to Additional Information – Supplemental Non-IFRS Measures for a
reconciliation to the most comparable IFRS measure.
-end-
For further information, contact:
Jason Chesko
Director, Investor Relations
Tel: 604.661.2600
METHA EX Share Information Investor Information
e Methanex Corporation’s common shares are listed for All financial reports, news releases
A Responsible Care” Company trading on the Toronto Stock Exchange under the and corporate information can be
Interim Report symbol MX, on the Nasdaq Global Market under the accessed on our website at
For the symbol MEOH and on the foreign securities market of www.methanex.com.
Three Months Ended the Santiago Stock Exchange in Chile under the trading
June 30, 2011 symbol Methanex. Contact Information
Methanex Investor Relations
AtJuly 27, 2011 the Company had Transfer Agents £ Registrars 1800 – 200 Burrard Street
93,196,770 common shares issued CIBC Mellon Trust Company Vancouver, BC Canada V6C 3M1
and outstanding and stock options 320 Bay Street E-mail: investf4methanex.com
exercisable for 3,506,051 additional Toronto, Ontario, Canada M5H 4A6 Methanex Toll-Free:
common shares. Toll free in North America: 1-800-387-0825 1-800-661-8851
SECOND QUARTER MANAGEMENT’S DISCUSSION AND ANALYSIS
Except where otherwise noted, all currency amounts are stated in United States dollars.
This Second Quarter 2011 Management’s Discussion and Analysis (“MDg:A”) dated July 27, 2011 for Methanex Corporation (“the
Company”) should be read in conjunction with the Company’s condensed consolidated interim financial statements for the
periods ended June 30, 2011 and March 31, 2011, which are prepared in accordance with International Accounting Standards
(IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), as well as the 2010
Annual Consolidated Financial Statements and the MD8A included in the Methanex 2010 Annual Report, which were prepared in
accordance with Canadian generally accepted accounting principles (Canadian GAAP). The Methanex 2010 Annual Report and
additional information relating to Methanex is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. For a
discussion of the Company’s adoption of International Financial Reporting Standards (IFRS), refer to page 10 of this MDZA.
Three Months Ended Six Months Ended
Jun 30 Mar31 Jun30 Jun 30 June 30
($ millions, except where noted) 2011 2011 2010* 2011 2010%
Production (thousands of tonnes) (attributable to Methanex shareholders) 1,050 801 765 1,851 1,732
Sales volumes (thousands oftonnes):
Produced methanol (attributable to Methanex share holders) 970 848 900 1,818 1,824
Purchased methanol 664 835 678 1,499 1,282
Commission sales ‘ 231 172 107 403 257
Total sales volumes 1,865 1,855 1,685 3,720 3,363
Methanex average non-discounted posted price ($ per tonne) ? 421 436 330 428 341
Average realized price ($ per tonne) 3 363 367 284 365 294
Adjusted EBITDA (attributable to Methanex shareholders) 4 103.7 77.9 61.9 181.6 143.2
Cash flows from operating activities 77.6 124.5 39.4 202.2 108.5
Adjusted cash flows from operating activities (attributable to
Methanex shareholders) ? 86.5 80.4 53.0 166.9 144.6
Net income attributable to Methanex shareholders 40.5 34.6 14.8 75.1 41.8
Basic net income per common share attributable to Methanex shareholders 0.44 0.37 0.16 0.81 0.45
Diluted net income per common share attributable to Methanex shareholders 0.43 0.37 0.15 0.80 0.43
Common share information (millions of shares):
Weighted average number of common shares 93.0 92.7 92.2 92.7 92.2
Diluted weighted average number of common shares 94.6 94.3 93.3 94.3 93.4
Number of common shares outstanding, end of period 93.2 92.7 92.2 93.2 92.2
1 Commission sales represent volumes marketed on a commission basis related to the 36.9% of the Atlas methanol facility and 40% of the Egypt methanol facility that we do
not own.
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.
Average realized price is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, divided by the total sales volumes of
produced and purchased methanol.
* Adjusted EBITDA is a non-IFRS measure which does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA represents the amount that is attributable to
Methanex shareholders and is calculated by deducting the amount of Adjusted EBITDA associated with the 40% non-controlling interest in the methanol facility in Egypt.
Refer to Additional Information – Supplemental Non-IFRS Measures for a reconciliation to the most comparable IFRS measure.
3 Adjusted cash flows from operating activities is a non-IFRS measure which does not have any standardized meaning prescribed by IFRS. Adjusted cash flows from operating
activities is calculated by deducting changes in non-cash working capital and the amount of cash flows from operating activities associated with the 40% non-controlling
interest in the methanol facility in Egypt. Refer to Additional Information – Supplemental Non-IFRS Measures for a reconciliation to the most comparable IERS measure.
These amounts have been restated in accordance with IERS and have not been previously disclosed.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
PRODUCTION SUMMARY
Q2 2011 Q1 2011 Q22010| YTDQ22011 YTDQ22010
(thousands of tonnes) Capacity” Production] Production Production Production Production
Chile 1, 1, lll and IV 950 142 183 229 325 533
Atlas (Trinidad) (63.1% interest) 288 263 263 96 526 334
Titan (Trinidad) 225 186 121 224 307 441
New Zealand ? 213 207 203 216 410 424
Egypt (60% interest) 190 178 31 – 209 –
Medicine Hat 118 74 – – 74 –
1,984 1,050 801 765 1,851 1,732
1 The production capacity of our production facilities may be higher than original nameplate capacity as, over time, these figures have been adjusted to reflect
ongoing operating efficiencies at these facilities.
2 The production capacity of New Zealand represents only our 0.85 million tonne per year Motunui facility that we restarted in late 2008. Practical operating
capacity will depend partially on the composition of natural gas feedstock and may differ from the stated capacity above. We also have additional potential
production capacity that is currently idled in New Zealand (refer to the New Zealand section on page 3 for more information).
Chile
During the second quarter of 2011, we produced 142,000 tonnes in Chile operating one plant at approximately 50%
capacity. We continue to operate our methanol facilities in Chile significantly below site capacity. This is primarily due to
curtailments of natural gas supply from Argentina – refer to the Management’s Discussion and Analysis included in our
2010 Annual Report for more information.
Lower production at our Chile facilities during the second quarter of 2011 compared with the first quarter of 2011 was
primarily due to lower natural gas deliveries from ENAP due to the need for ENAP to satisfy incremental demand for natural
gas for residential purposes during the winter season in southern Chile. As we continue through the southern hemisphere
winter months when residential energy demand is at its peak, there is pressure on short-term natural gas supply/demand
fundamentals and increased risk that gas supply could fall below the level necessary to maintain the operation of one plant.
Lower methanol production for the first six months of 2011 compared with the same period in 2010 is due primarily to
lower gas production from ENAP.
Our goal is to progressively increase production at our Chile site with natural gas from suppliers in Chile. We are pursuing
investment opportunities with ENAP, GeoPark Chile Limited (GeoPark) and others to help accelerate natural gas
exploration and development in southern Chile. We are working with ENAP to develop natural gas in the Dorado Riquelme
block. Under the arrangement, we fund a 50% participation in the block and, as at June 30, 2011, we had contributed
approximately $105 million. Over the past few years, we have also provided GeoPark with $57 million (of which
approximately $40 million had been repaid at June 30, 2011) to support and accelerate GeoPark’s natural gas exploration
and development activities. GeoPark has agreed to supply us with all natural gas sourced from the Fell block under a ten-
year exclusive supply arrangement that commenced in 2008. During the second quarter of 2011 approximately 85% of
total production at our Chilean facilities was produced with natural gas supplied from the Fell and Dorado Riquelme
blocks.
Other investment activities are also supporting the acceleration of natural gas exploration and development in areas of
southern Chile. In late 2007, the government of Chile completed an international bidding round to assign oil and natural
gas exploration areas that lie close to our production facilities and announced the participation of several international oil
and gas companies. For two of the exploration blocks, we are participating in a consortium with other international oil and
gas companies with GeoPark as the operator. We have approximately 15% participation in the consortium and at June 30,
2011, we had contributed $3 million for our share of the exploration costs.
While significant investments have been made in the last few years for natural gas exploration and development in southern
Chile, the timelines for a significant increase in gas deliveries to our plants are much longer than we originally anticipated
and the short-term outlook for gas supply in Chile continues to be challenging. As a result, we are examining the viability
of utilizing coal gasification as a feedstock and relocation of capacity to an alternative location.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 2
MANAGEMENT’S DISCUSSION AND ANALYSIS
The future operating rate of our Chile site is primarily dependent on demand for natural gas for residential purposes, which
is higher in the southern hemisphere winter, production rates from existing natural gas fields, and the level of natural gas
deliveries from future exploration and development activities in southern Chile. We cannot provide assurance regarding the
production rates from existing natural gas fields or that we, ENAP, GeoPark or others will be successful in the exploration
and development of natural gas or that we will obtain any additional natural gas from suppliers in Chile on commercially
acceptable terms. As a result, we cannot provide assurance that we will be able to maintain the operation of one plant or
increase capacity utilization of our Chile assets and that either of these will not have an adverse impact on our results of
operations and financial condition.
Trinidad
Our equity ownership of methanol facilities in Trinidad represents over 2.0 million tonnes of cost-competitive annual
capacity. During the second quarter of 2011 we produced 449,000 tonnes compared with 384,000 tonnes during the first
quarter of 2011. Production at these facilities was higher by 65,000 tonnes during the second quarter of 2011 compared
with the first quarter of 2011 due to unplanned maintenance activities at the Titan facility during the first quarter of 2011.
Our Atlas facility experienced an unplanned shutdown in late July 2011 and we are currently assessing the timing of a
major turnaround we had previously scheduled at this facility during the third quarter of 2011.
New Zealand
Our New Zealand facilities provide cost-competitive capacity and are underpinned by shorter term natural gas supply
contracts. During the second quarter of 2011, we produced 207,000 tonnes compared with 203,000 tonnes during the first
quarter of 2011. We are currently operating one 850,000 tonne per year plant at our Motunui facility in New Zealand and
we have natural gas contracts with a number of gas suppliers that will allow us to continue to operate this plant through
2012. We also have an additional 1.38 million tonnes per year of idled capacity in New Zealand, including a second
850,000 tonne per year Motunui plant and a 530,000 tonne per year plant at our nearby site in Waitara Valley. These
facilities provide the potential to increase production in New Zealand depending on the methanol supply and demand
dynamics and the availability of economically priced natural gas feedstock. We believe there has been continued
improvement in the natural gas supply outlook in New Zealand and we are focused on accessing additional natural gas
supply to increase production in New Zealand. We are continuing to pursue opportunities to obtain economically priced
natural gas with suppliers in New Zealand to underpin a restart of a second plant.
Egypt
The new 1.26 million tonne per year methanol plant in Egypt commenced commercial operations in mid-March and has
been operating well since that time. During the second quarter of 2011, the Egypt methanol facility produced 178,000
tonnes (60% interest). We have a 60% interest in the facility and have marketing rights for 100% of the production. This
facility is ideally situated on the Mediteranean Sea to supply the European market and is underpinned by a 25-year take-or-
pay natural gas purchase agreement where the gas price varies with methanol prices.
Medicine Hat
In late April 2011, we commenced production at our 470,000 tonne per year facility in Medicine Hat, Alberta and the
facility produced 74,000 tonnes for the second quarter of 2011. We have a program in place to purchase natural gas on the
Alberta gas market and to date we have contracted sufficient volumes of natural gas to meet approximately 80% of our
requirements when operating at capacity for the period from start-up to October 2012 with the remainder of natural gas
purchased on the spot market. We believe that the long term natural gas dynamics in North America will support the long
term operation of this facility.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
EARNINGS ANALYSIS
Our operations consist of a single operating segment – the production and sale of methanol. In addition to the methanol
that we produce at our facilities, we also purchase and re-sell methanol produced by others and we sell methanol on a
commission basis. We analyze the results of all methanol sales together, excluding commission sales volumes. The key
drivers of change in our Adjusted EBITDA for methanol sales are average realized price, sales volume and cash costs.
We own 60% of the 1.26 million tonne per year Egypt methanol facility and 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” interest in the methanol facility being presented as “non-controlling interests.” For purposes of
reviewing our operations, we analyze Adjusted EBITDA in the discussion below excluding the amounts associated with the
other investors’ 40% non-controlling interest.
For a further discussion of the definitions and calculations used in our Adjusted EBITDA analysis, refer to How We Analyze
Our Business. Also, refer to the Supplemental Non-IFRS Measures section on page 11 for a reconciliation of Adjusted
EBITDA to the most comparable IFRS measure.
For the second quarter of 2011, we recorded Adjusted EBITDA of $103.7 million and net income attributable to Methanex
Corporation shareholders of $40.5 million ($0.43 per share on a diluted basis). This compares with Adjusted EBITDA of
$77.9 million and net income attributable to Methanex Corporation shareholders of $34.6 million ($0.37 per share on a
diluted basis) and Adjusted EBITDA of $61.9 million and net income attributable to Methanex Corporation shareholders of
$14.8 million ($0.15 per share on a diluted basis) for the first quarter of 2011 and second quarter of 2010, respectively.
For the six months ended June 30, 2011, we recorded Adjusted EBITDA of $181.6 million and net income attributable to
Methanex Corporation shareholders of $75.1 million ($0.80 per share on a diluted basis). This compares with Adjusted
EBITDA of $143.2 million and net income attributable to Methanex Corporation shareholders of $41.8 million ($0.43 per
share on a diluted basis) during the same period in 2010.
Adjusted EBITDA (attributable to Methanex shareholders)
The changes in Adjusted EBITDA resulted from changes in the following;
Q2 2011 Q2 2011 YTD Q2 2011
compared with compared with compared with
($ millions) Q1 2011 Q2 2010 YTD Q2 2010
Average realized price $ (5) $ 131 $ 238
Sales volume (4) 3 15
Total cash costs 35 (92) (215)
$ 26 $ 42 $ 38
Average realized price
Three Months Ended Six Months Ended
Jun 30 Mar 31 Jun 30 Jun 30 Jun 30
($ per tonne, except where noted) 2011 2011 2010 2011 2010
Methanex average non-discounted posted price * 421 436 330 428 341
Methanex average realized price 363 367 284 365 294
Average discount 14% 16% 14% 15% 14%
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.
Over the first half of 2011, methanol demand has continued to be healthy with increases in demand driven by both
traditional and energy derivatives. Industry supply and demand conditions have remained relatively balanced and as a
result, the pricing environment has been stable (refer to Supply/Demand Fundamentals section on page 8 for more
information). Our average non-discounted posted price for the second quarter of 2011 was $421 per tonne compared with
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
$436 per tonne for the first quarter of 2011 and $330 per tonne for the second quarter of 2010. Our average realized price
for the second quarter of 2011 was $363 per tonne compared with $367 per tonne for the first quarter of 2011 and $284
per tonne for the second quarter of 2010. The change in our average realized price for the second quarter of 2011
decreased revenue by $5 million compared with the first quarter of 2011 and increased revenue by $131 million compared
with the second quarter of 2010. Our average realized price for the six months ended June 30, 2011 was $365 per tonne
compared with $294 per tonne for the same period in 2010 and this increased revenue by $238 million.
Sales volume
Total methanol sales volumes excluding commission sales volumes for the second quarter of 2011 were lower compared
with the first quarter of 2011 by 49,000 tonnes and this resulted in lower Adjusted EBITDA by $4 million. The total
methanol sales volumes excluding commission sales for the second quarter of 2011 and for the six month period ended
June 30, 2011 were higher than comparable periods in 2010 by 56,000 tonnes and 211,000 tonnes, respectively. The
higher sales volumes for the second quarter of 2011 and for the six month period ended June 30, 2011 compared with the
comparable periods in 2010 resulted in higher Adjusted EBITDA by $3 million and $15 million, respectively. We have
increased our sales volumes in 2011 compared with 2010 primarily to prepare for increased supply from the Egypt and
Medicine Hat methanol facilities.
Total cash costs
The primary driver of changes in our total cash costs are changes in the cost of methanol we produce at our facilities and
changes in the cost of methanol we purchase from others. Most of our production facilities are underpinned by natural gas
purchase agreements with pricing terms that include base and variable price components. The variable component is
adjusted in relation to changes in methanol prices above pre-determined prices at the time of production. We supplement
our production with methanol produced by others through methanol offtake contracts and purchases on the spot market to
meet customer needs and support our marketing efforts within the major global markets. We have adopted the first-in, first-
out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we produce or
purchase. Accordingly, the changes in Adjusted EBITDA as a result of changes in natural gas costs and purchased methanol
costs will depend on changes in methanol pricing and the timing of inventory flows.
The impact on Adjusted EBITDA from changes in our cash costs are explained below:
Q2 2011 Q2 2011 YTD Q2 2011
compared with compared with compared with
($ millions) Q1 2011 Q2 2010 YTD Q2 2010
Produced methanol costs, primarily natural gas $ 7 $ (21) $ (54)
Proportion of produced methanol sales 23 4 (18)
Purchased methanol costs (1) (59) (116)
Share-based compensation 9 (5) (3)
Logistics costs – (5) (14)
Other, net (3) (6) (10)
Change in Adjusted EBITDA $ 35 $ (92) $ (215)
Produced methanol costs, primarily natural gas
We purchase natural gas for the Chile, Trinidad, Egypt and New Zealand methanol facilities under natural gas purchase
agreements where the terms include a base price and a variable price component linked to the price of methanol. For all
periods presented, changes in natural gas costs associated with produced methanol were primarily due to the impact of
changes in methanol prices and the timing of inventory flows.
Proportion of produced methanol sales
The cost of purchased methanol ¡is generally higher than the cost of produced methanol. Accordingly, an increase in the
proportion of produced methanol sales results in a decrease in our overall cost structure for a given period. The proportion
of produced methanol sales for the second quarter of 2011 was higher compared to the first quarter of 2011 as a result of
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 5
MANAGEMENT’S DISCUSSION AND ANALYSIS
the production and sale of methanol from the methanol facilities in Egypt and Medicine Hat and this increased Adjusted
EBITDA by $23 million. For the three and six-month periods ended June 30, 2011 compared with same periods in 2010,
the impact of increased sales from the Egypt and Medicine Hat facilities was offset by lower sales from our Chile and
Trinidad production facilities. Due to production ramp-up and the timing of inventory flows, sales of Egypt and Medicine
Hat production in the second quarter of 2011 were less than half of the production capacity of those plants.
Purchased methanol costs
Purchased methanol costs during the second quarter of 2011 were similar to the first quarter of 2011. Purchase methanol
costs were higher for the three and six-month periods ended June 30, 2011 compared with the same periods in 2010
primarily as a result of higher methanol pricing.
Share-based compensation
We grant share-based awards as an element of compensation. Share-based awards granted include stock options, share
appreciation rights, tandem share appreciation rights, deferred share units, restricted share units and performance share
units.
For stock options, the cost is measured based on an estimate of the fair value at the date of grant and this grant-date fair
value is recognized as compensation expense over the related service period with no subsequent re-measurement in fair
value. Accordingly, share-based compensation expense associated with stock options will not vary significantly from period
to period. Commencing in 2010, we granted share appreciation rights (SARs) and tandem share appreciation rights (TSARs)
to replace grants of stock options with the objective to reduce dilution to shareholders. SARs and TSARs are units that grant
the holder the right to receive a cash payment upon exercise for the difference between the market price of the Company’s
common shares and the exercise price, which is determined at the date of grant. SARs and TSARs are measured based on
estimated fair value, which is determined using the Black-Scholes option pricing model.
Deferred, restricted and performance share units are grants of notional common shares that are redeemable for cash upon
vesting based on the market value of the Company’s common shares and are non-dilutive to shareholders. Performance
share units have an additional feature where the ultimate number of units that vest will be determined by the Company’s
total shareholder return in relation to a predetermined target over the period to vesting. The number of units that will
ultimately vest will be in the range of 50% to 120% of the original grant. For deferred, restricted and performance share
units, the fair value is initially measured at the grant date and subsequently re-measured based on the market value of the
Company’s common shares.
For all the share-based awards with the exception of stock options, the initial value and any subsequent change in fair value
is recognized in earnings over the related service period for the proportion of the service that has been rendered at each
reporting date. Accordingly, share-based compensation associated with these share-based awards may vary significantly
from period to period as a result of changes in the share price.
Share-based compensation expense was lower by $9 million in the second quarter of 2011 compared with the first quarter
of 2011 primarily due to higher share-based compensation expense recorded in Q1 2011 related to the requirement under
accounting rules for immediate recognition of share-based compensation issued to retirement eligible employees. Share-
based compensation expense was higher in the three and six-month periods ended June 30, 2011 compared with the
comparable periods in 2010, primarily as a result of changes in the share price.
Logistics costs
For the second quarter of 2011 compared with the first quarter of 2011, logistics costs were similar. For the second quarter
of 2011 and the six month period ended June 30, 2011 compared with the comparable periods in 2010, logistics costs
were higher by $5 million and $14 million, respectively, due primarily to higher bunker fuel costs.
Other, net
For the second quarter of 2011 and the six month period ended June 30, 2011 compared with the comparable periods in
2010, other costs were higher primarily as a result of higher costs due to lower production at our facilities in Chile and
Trinidad and the impact of a weaker US dollar on the cost structure of our operations.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 6
MANAGEMENT’S DISCUSSION AND ANALYSIS
Depreciation and Amortization
Depreciation and amortization was $40 million for the second quarter of 2011 compared with $30 million for the first
quarter of 2011 and $35 million for the second quarter of 2010. The increase in depreciation and amortization for the
second quarter of 2011 compared with the first quarter 2011 ¡is primarily a result of the commencement of depreciation
associated with the methanol facilities in Egypt (100% basis) and Medicine Hat.
Depreciation and amortization was $69 million for the six month period ended June 30, 2011 compared with $71 million
in the same period in 2010. The commencement of depreciation associated with the methanol facilities in Egypt (100%
basis) and Medicine Hat was offset primarily by lower depreciation from our other methanol facilities as a result of lower
sales volumes of product from these facilities related to the timing of inventory flows.
Finance Costs
Three Months Ended Six Months Ended
Jun 30 Mar 31 Jun 30 Jun 30 Jun 30
($ millions) 2011 2011 2010 2011 2010
Finance costs before capitalized interest $ 17 $ 16 $ 17 $ 34 $ 34
Less capitalized interest – (7) (9) (7) (18)
Finance costs $ 17 $ 9 $ 8 $ 27 $ 16
Capitalized interest relates to interest costs capitalized during the construction of the 1.26 million tonne per year methanol
facility in Egypt (100% basis). The Egypt methanol facility commenced production in mid-March 2011 and accordingly, we
ceased capitalization of interest costs from this date.
Finance Income and Other Expenses
Three Months Ended Six Months Ended
Jun 30 Mar 31 Jun 30 Jun 30 Jun 30
($ millions) 2011 2011 2010 2011 2010
Finance income and other expenses $ 1 $ 5 $ – $ 6 $ 1
Finance income and other expenses for the second quarter of 2011 was $1 million compared with $5 million for the first
quarter of 2011 and nil for the second quarter of 2010. The decrease in finance income during the second quarter of 2011
compared with the first quarter of 2011 was primarily due to the impact of changes in foreign exchange rates.
Income Taxes
The effective tax rate for the second quarter of 2011 was approximately 25% compared with approximately 22% for the
first quarter of 2011 and approximately 24% for the second quarter of 2010.
We earn the majority of our pre-tax earnings in Trinidad, Egypt, and Chile. In Chile and Trinidad, the statutory tax rate is
35%. In Egypt, the statutory tax rate has increased from 20% to 25% effective July 31, 2011.
Our Atlas facility in Trinidad has partial relief from corporation income tax until 2014. In Chile the tax rate consists of a first
tier tax that is payable when income is earned and a second tier tax that is due when earnings are distributed from Chile.
The second tier tax is initially recorded as future income tax expense and is subsequently reclassified to current income tax
expense when earnings are distributed.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 7
MANAGEMENT’S DISCUSSION AND ANALYSIS
SUPPLY/DEMAND FUNDAMENTALS
During 2010, methanol demand growth was strong, increasing by 13%. In the first half of 2011, demand has continued to
be healthy and it is currently approximately 48 million tonnes on an annualized basis. Increases in demand have been
primarily driven by both traditional and energy derivatives in Asia (particularly in China).
Traditional derivatives account for about two-thirds of global methanol demand and are correlated to industrial production.
Energy derivatives account for about one third of global methanol
demand and over the last few years, high energy prices have
driven strong demand growth for methanol into energy Methanex Non-Discounted Regional Posted Prices *
applications such as gasoline blending and DME, primarily in Jul Jun May Apr
. . . . . . (US$ per tonne) 2011 2011 2011 2011
China. Methanol blending into gasoline in China has been
particularly strong and we believe that future growth in this United States 426 426 426 426
2
application is supported by recent regulatory changes in that Europe 418 438 434 438
Asia 420 420 395 395
country. Many provinces in China have implemented fuel
blending standards, and an M85 (or 85% methanol) national
standard took effect December 1, 2009. We expect an M15
national standard could be released in 2011. We believe demand
Discounts from our posted prices are offered to customers based on
various factors.
€295 for Q3 2011 (Q2 2011 – €305) converted to United States
dollars.
potential into energy derivatives will be stronger in a high energy price environment.
During the second quarter of 2011, shipments commenced from our 60% owned 1.26 million tonne per year plant in Egypt
and our 470,000 tonne per year plant in Medicine Hat. Demand growth has largely absorbed this new capacity. There are
currently five large-scale methanol plants outside of China not in production and as a result, market conditions are tight and
the pricing environment has strengthened. Our average non-discounted price for July 2011 is approximately $420 per
tonne and we recently announced increases in our North America and Asia non-discounted prices for August to $459 per
tonne and $470 per tonne, respectively.
Over the next few years, there is little new capacity expected to come on-stream outside China. There is a 0.85 million
tonne plant expected to restart in Beaumont, Texas in 2012 and a 0.7 million tonne plant expected to start up in Azerbaijan
in 2013. We expect that production from new capacity in China will be consumed in that country and that higher cost
production capacity in China will need to operate in order to satisfy demand growth.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated cash flows from operating activities in the second quarter of 2011 were $77.6 million compared with $124.5
million for the first quarter of 2011 and $39.4 million for the second quarter of 2010. The change in consolidated cash
flows from operating activities in the second quarter of 2011 compared with the first quarter of 2011 and the second quarter
of 2010 is primarily a result of changes in Adjusted EBITDA and changes in non-cash working capital.
Adjusted cash flows from operating activities, which excludes the amounts associated with the 40% non-controlling
interests in the methanol facility in Egypt and changes in non-cash working capital, were $86.4 million in the second
quarter of 2011 compared with $80.4 million for the first quarter of 2011 and $53.0 million for the second quarter of 2010.
The change in Adjusted cash flows from operating activities in the second quarter of 2011 compared with the first quarter of
2011 and the second quarter of 2010 is primarily a result of changes in Adjusted EBITDA. Refer to the Supplemental Non-
IFRS Measures section on page 11 for a reconciliation of Adjusted cash flows from operating activities to the most
comparable IFRS measure.
During the second quarter of 2011, the Board of Directors approved a 10 percent increase to our quarterly dividend to
shareholders, from US$0.155 to US$0.17 per share, and we paid a quarterly dividend of $16 million.
During the second quarter of 2011, a debt principal payment of $8 million was paid on the Atlas limited recourse debt
facilities.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 8
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Egypt limited recourse debt facilities require that certain conditions associated with plant construction and
commissioning be met by September 30, 2011 (“project completion”). These conditions include a 90 day plant reliability
test, which was successfully completed during July 2011, and finalization of certain land title registrations and related
mortgages which have not yet been completed that require action by Egyptian governmental entities. Project completion
must be achieved in order for the Egypt entity to make distributions to shareholders and failure to reach project completion
by September 30, 2011 would result in an event of default. We believe finalization of these items is not material to the
plant operations. We are seeking a waiver from the lenders in the event these items are not finalized before September 30,
2011. We cannot provide assurance that the land title registrations and related mortgages will be finalized and project
completion achieved by September 30, 2011 or that we would be able to obtain a waiver from the lenders.
At June 30, 2011, management believes the Company was in compliance with all of the covenants and default provisions
related to long-term debt obligations.
We have agreements in place to participate in or support natural gas exploration and development in southern Chile and
during the second quarter of 2011, we paid $12 million to support these initiatives. During the second quarter of 2011,
GeoPark repaid $2 million through natural gas deliveries to our plants in southern Chile (refer to the Production Summary
section on page 2 for more information).
We operate in a highly competitive commodity industry and believe it is appropriate to maintain a conservative balance
sheet and to maintain financial flexibility. Our cash balance at June 30, 2011 was $246 million. We have a strong balance
sheet and an undrawn $200 million credit facility provided by highly rated financial institutions that was extended early in
the third quarter of 2011 to mid-2015. 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 existing operations, is currently
estimated to total approximately $70 million for the period to the end of 2012. During the second quarter of 2011, we
completed commissioning our 470,000 tonne per year methanol plant in Medicine Hat, Alberta.
We believe we are well positioned to meet our financial commitments and continue to invest to grow the Company.
SHORT-TERM OUTLOOK
Into the third quarter of 2011, market conditions have tightened as a result of continued strong demand and planned and
unplanned outages across the industry and methanol prices have increased.
We increased our production in the second quarter of 2011. The new 1.26 million tonne per year methanol facility in Egypt
began operating in mid-March and produced at near full production rates in the second quarter of 2011. In April 2011, we
completed commissioning our 470,000 tonne per year plant in Medicine Hat, Alberta and commenced production. Due to
production ramp-up and the related timing of inventory flows, the full impact of Egypt and Medicine Hat production was
not reflected in our second quarter results. We expect to increase our earnings capability as the full impact of Egypt and
Medicine Hat production capacity is reflected in our sales volumes of produced product in the third quarter and beyond.
This may be partially offset in the short-term by the impact of lower production from the Atlas facility.
The methanol price will ultimately depend on the strength of the global economy, industry operating rates, global energy
prices, the rate of industry restructuring 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.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 9
MANAGEMENT’S DISCUSSION AND ANALYSIS
CONTROLS AND PROCEDURES
For the three months ended June 30, 2011, 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.
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
Transition from Canadian generally accepted accounting principles (Canadian GAAP) to IFRS
The first quarter of 2011 ended March 31, 2011 with comparative financial results for 2010 was our first interim period
reported under IFRS. All comparative figures in this second quarter interim report have been restated to be in accordance
with IFRS, unless specifically noted otherwise.
Our financial statements were prepared in accordance with Canadian GAAP until December 31, 2010. While IFRS uses a
conceptual framework similar to Canadian GAAP, there are significant differences in recognition, measurement and
disclosures. In our MD8A in the 2010 Annual Report, we disclosed the significant impacts on transition to IFRS. The
disclosure in our MDKA in the 2010 Annual Report is consistent with the impacts disclosed in the condensed consolidated
interim financial statements. For a description of the significant accounting policies the Company has adopted under IFRS,
including the estimates and judgments we consider most significant in applying those accounting policies, please refer to
note 2 of the condensed consolidated interim financial statements included in the interim report for the three months ended
March 31, 2011.
The adoption of IFRS resulted in some changes to the consolidated balance sheets and income statements of the Company
previously reported under Canadian GAAP. To help users of the financial statements better understand the impact of the
adoption of IFRS on the Company, we have provided reconciliations from Canadian GAAP to IFRS for total assets,
liabilities, and equity, as well as net income and comprehensive income for the comparative reporting periods. Please refer
to note 12 of the condensed consolidated interim financial statements for the reconciliations between IFRS and Canadian
GAAP for the period ended June 30, 2010 and refer to note 18 of the condensed consolidated interim financial statements
for the period ended March 31, 2011 for the reconciliations between IFRS and Canadian GAAP at the date of transition,
January 1, 2010 and for the year ended December 31, 2010.
IFRS 1 First-time Adoption of International Financial Reporting Standards
Adoption of IFRS requires the application of IFRS 1, First-time Adoption of International Financial Reporting Standards,
which provides guidance for an entity’s initial adoption of IFRS. IFRS 1 gives entities adopting IFRS for the first time a
number of optional exemptions and mandatory exceptions, in certain areas, to the general requirement for full retrospective
application of IFRS. In our MDáA in the 2010 Annual Report, we disclosed the optional exemptions available under IFRS
1 that we elected on transition to IFRS. The elections as previously disclosed are consistent with the elections as disclosed
in the condensed consolidated interim financial statements. Please refer to note 12 of the condensed consolidated interim
financial statements for a detailed description of the IFRS 1 exemptions we elected to apply.
IFRS Conversion
Our plan to convert our consolidated financial statements to IFRS at the change over date of January 1, 2011 with
comparative financial results included a formal project governance structure that included the Audit, Finance and Risk
Committee, senior management, and an IFRS steering committee to monitor progress and review and approve
recommendations. The IFRS transition plan progressed according to schedule and was comprehensive and addressed topics
such as the impact of IFRS on accounting policies and implementation decisions, infrastructure, business activities,
compensation matters and control activities.
Anticipated changes to IFRS
Consolidation and Joint Arrangement Accounting
In May 2011, the IASB issued new accounting standards related to consolidation and joint arrangement accounting. The
IASB has revised the definition of “control,” which is a criterion for consolidation accounting. In addition, changes to IFRS
in the accounting for joint arrangements were issued which, under certain circumstances, removed the option for
proportionate accounting and the equity method of accounting for such interests would need to be applied. The impact of
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 10
MANAGEMENT’S DISCUSSION AND ANALYSIS
applying consolidation accounting or equity accounting does not result in any change to net earnings or shareholders”
equity, but would result in a significant presentation impact. We are currently assessing the impact of these standards on
our financial statements. The effective date for these standards is for periods commencing on or after January 1, 2013, with
earlier adoption permitted.
Leases
As part of their global conversion project, the International Accounting Standards Board (IASB) and the U.S. Financial
Accounting Standards Board (“FASB”) issued a joint Exposure Draft proposing that lessees would be required to recognize
all leases on the statement of financial position. We have a fleet of ocean-going vessels under time charter agreements with
terms up to 15 years. The proposed rules would require these time charter agreements to be recorded on the Consolidated
Statements of Financial Position, resulting in a material increase to total assets and liabilities. The lASB and FASB currently
expect to issue a final standard in 2012.
ADDITIONAL INFORMATION — SUPPLEMENTAL NON-IFRS MEASURES
In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we
present certain supplemental non-IFRS measures. These are Adjusted EBITDA and Adjusted cash flows from operating
activities. These measures do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be
comparable to similar measures presented by other companies. These supplemental non-IFRS measures are provided to
assist readers in determining our ability to generate cash from operations. 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.
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 IFRS.
Adjusted EBITDA (attributable to Methanex shareholders)
Adjusted EBITDA differs from the most comparable IFRS measure, cash flows from operating activities, because ¡it does not
include changes in non-cash working capital, other cash payments related to operating activities, share-based compensation
expense, other non-cash items, taxes paid, finance income and other expenses, and Adjusted EBITDA associated with the
40% non-controlling interest in the methanol facility in Egypt.
The following table shows a reconciliation of cash flows from operating activities to Adjusted EBITDA:
Three Months Ended Six Months Ended
Jun 30 Mar 31 Jun 30 Jun 30 Jun 30
($ thousands) 2011 2011 2010 2011 2010
Cash flows from operating activities $ 77,634 $ 124,520 $ 39,445 $ 202,154 $ 108,466
Add (deduct):
Net (income) loss attributable to non-controlling
interests (6,220) 1,076 565 (5,144) 1,390
Changes in non-cash working capital 22,227 (44,486) 13,459 (22,259) 35,636
Other cash payments, including share-based
compensation 1,662 5,334 960 6,996 4,122
Share-based compensation expense (1,660) (10,080) 4,297 (11,740) (9,099)
Other non-cash items (1,392) (31) (766) (1,423) (1,308)
Income taxes paid 20,735 6,669 4,441 27,404 6,211
Finance income and other expenses (1,284) (4,859) (79) (6,143) (1,339)
Non-controlling interests adjustment 1 (8,038) (211) (454) (8,249) (893)
Adjusted EBITDA (attributable to Methanex shareholders) $ 103,664 $ 77,932 $ 61,868 $ 181,596 $ 143,186
1 This adjustment represents finance costs, income tax expense, and depreciation and amortization associated with the 40% non-controlling interest in the
methanol facility in Egypt.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 11
MANAGEMENT’S DISCUSSION AND ANALYSIS
Adjusted Cash Flows from Operating Activities (attributable to Methanex shareholders)
Adjusted cash flows from operating activities differs from the most comparable IFRS measure, cash flows from operating
activities, because it does not include changes in non-cash working capital and cash flows associated with the 40% non-
controlling interest in the methanol facility in Egypt.
The following table shows a reconciliation of cash flows from operating activities to Adjusted cash flows from operating
activities:
Three Months Ended Six Months Ended
Jun 30 Mar 31 Jun 30 Jun 30 Jun 30
($ thousands) 2011 2011 2010 2011 2010
Cash flows from operating activities $ 77,634 $ 124520 $ 39,445 $ 202,154 $ 108,466
Add (deduct) non-controlling interest adjustment:
Net (income) loss (6,220) 1,076 565 (5,144) 1,390
Non-cash items (7,180) (715) (483) (7,894) (885)
Changes in non-cash working capital 22,227 (44,486) 13,459 (22,259) 35,636
Adjusted cash flows from operating activities
(attributable to Methanex shareholders) $ 86,461 $ 80,395 $ 52,986 $ 166,857 $ 144,607
QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of selected financial information for the prior eight quarters is as follows:
Three Months Ended
Jun 30 Mar 31 Dec 31 Sep 30
($ thousands, except per share amounts) 2011 2011 2010″ 2010*
Revenue $ 622829 $ 619007 $ 570,337 $ 480,997
Net income? 40,529 34,610 27,009 28,662
Net income before unusual item? 40,529 34,610 27,009 6,439
Basic net income per common share? 0.44 0.37 0.29 0.31
Basic net income per common share before unusual item? 0.44 0.37 0.29 0.07
Diluted net income per common share? 0.43 0.37 0.29 0.31
Diluted net income per common share before unusual item? 0.43 0.37 0.29 0.07
Three Months Ended
Jun 30 Mar 31 Dec 31 Sep 30
($ thousands, except per share amounts) 2010* 2010″ 2009 * 2009 *
Revenue $ 448,543 $ 466,706 $ 381,729 $ 316,932
Net income (loss)? 14,804 27,045 25,718 (831)
Net income (loss) before unusual item? 14,804 27,045 25,718 (831)
Basic net income (loss) per common share? 0.16 0.29 0.28 (0.01)
Basic net income (loss) per common share before unusual item? 0.16 0.29 0.28 (0.01)
Diluted net income (loss) per common share? 0.15 0.29 0.28 (0.01)
Diluted net income (loss) per common share before unusual item? 0.15 0.29 0.28 (0.01)
* These amounts have been restated in accordance with IFRS.
2 Attributable to Methanex Corporation shareholders.
3 These figures are reported in accordance with Canadian GAAP, and have not been restated in accordance with IFRS, as the Company’s date of transition from
Canadian GAAP to IFRS was January 1, 2010.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 12
MANAGEMENT’S DISCUSSION AND ANALYSIS
FORWARD-LOOKING INFORMATION WARNING
This Second Quarter 2011 Management’s Discussion and Analysis (“MD8:A”) as well as comments made during the Second
Quarter 2011 investor conference call contain forward-looking statements with respect to us and our industry. Statements
that include the words “believes,” “expects,” “may,” “will,” “should,” “intends,” “plans,” “estimates,” “anticipates,” or other
comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.
More particularly and without limitation, any statements regarding the following are forward-looking statements:
* expected demand for methanol and its derivatives, * expected tax rates or resolutions to tax disputes,
* expected new methanol supply and timing for start-up + expected cash flows and earnings capability,
of the same,
e expected shut downs (either temporary or
permanent) or re-starts of existing methanol supply
(including our own facilities), including, without
limitation, timing of planned maintenance outages,
+ expected methanol and energy prices,
e expected levels and timing of natural gas supply to
our plants, including without limitation, levels of
natural gas supply from investments in natural gas
exploration and development in Chile and New
Zealand and availability of economically priced
natural gas in Chile, New Zealand and Canada,
e capital committed by third parties towards future
natural gas exploration in Chile and New Zealand,
e expected capital expenditures, including without
limitation, those to support natural gas exploration
and development in Chile and New Zealand and the
restart of our idled methanol facilities,
e anticipated production rates of our plants, including
without limitation, our Chilean facilities, the new
methanol plant in Egypt and the restarted Medicine
Hat facility,
* expected operating costs, including natural gas
feedstock costs and logistics costs,
ability to meet covenants or obtain waivers associated
with our long-term debt obligations, including without
limitation, the Egypt limited recourse debt facilities
which have conditions associated with finalization of
certain land title registration and related mortgages which
require actions by Egyptian governmental entities,
availability of committed credit facilities and other
financing,
shareholder distribution
distributions to shareholders,
strategy and anticipated
commercial viability of, or ability to execute, future
projects, capacity expansions, or plant relocations,
financial strength and ability to meet future financial
commitments,
expected global or regional economic activity (including
industrial production levels),
expected actions of governments, gas suppliers, courts,
tribunals or other third parties, and
expected impact on our results of operations in Egypt and
our financial condition as a consequence of actions taken
by the Government of Egypt and its agencies.
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, including, without limitation, future
expectations and assumptions concerning the following:
+ supply of, demand for, and price of, methanol, methanol
derivatives, natural gas, oil and oil derivatives,
e success of natural gas exploration in Chile and New
Zealand and our ability to procure economically priced
natural gas in Chile, New Zealand and Canada,
e production rates of our facilities, including without
limitation, our Chilean facilities, the new methanol plant
in Egypt and the restarted Medicine Hat facility,
e receipt or issuance of third party consents or approvals,
including without limitation, governmental registrations
of land title and related mortgages in Egypt, governmental
approvals related to natural gas exploration rights, rights
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
to purchase natural gas or the establishment of new fuel
standards,
operating costs including natural gas feedstock and
logistics costs, capital costs, tax rates, cash flows, foreign
exchange rates and interest rates,
availability of committed credit facilities and other
financing,
global and regional economic activity (including
industrial production levels),
absence of a material negative impact from major natural
disasters,
PAGE 13
e absence of a material negative impact from changes in
laws or regulations, and
* enforcement of contractual arrangements and ability to
perform contractual obligations by customers, suppliers
and other third parties.
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 primarily include those
attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in
various jurisdictions, including without limitation:
e conditions in the methanol and other industries,
including fluctuations in supply, demand and price for
methanol and its derivatives, including demand for
methanol for energy uses,
e the price of natural gas, oil and oil derivatives,
e the success of natural gas exploration and development
activities in southern Chile and New Zealand and our
ability to obtain any additional gas in Chile, New
Zealand, and Canada on commercially acceptable terms,
e the ability to successfully carry out corporate initiatives
and strategies,
e actions of competitors, suppliers, and financial
institutions,
actions of governments and governmental authorities,
including without limitation, implementation of policies
or other measures that could impact the supply or
demand for methanol or its derivatives,
changes in laws or regulations,
import or export restrictions, anti-dumping measures,
increases in duties, taxes and government royalties, and
other actions by governments that may adversely affect
our operations or existing contractual arrangements,
world-wide economic conditions, and
other risks described in our 2010 Management’s
Discussion and Analysis and this Second Quarter 2011
Management’s Discussion and Analysis.
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 one’s 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
except as required by applicable securities laws.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 14
MANAGEMENT’S DISCUSSION AND ANALYSIS
HOW WE ANALYZE OUR BUSINESS
Our operations consist of a single operating segment – the production and sale of methanol. We review our results of operations by
analyzing changes in the components of our adjusted earnings before interest, taxes, depreciation and amortization (Adjusted
EBITDA) (refer to the Supplemental Non-IFRS Measures section on page 11 for a reconciliation to the most comparable IFRS
measure), depreciation and amortization, finance costs, finance income and other expenses, and income taxes.
In addition to the methanol that we produce at our facilities (“Methanex-produced methanol”), we also purchase and re-sell
methanol produced by others (“purchased methanol”) and we sell methanol on a commission basis. We analyze the results of all
methanol sales together, excluding commission sales volumes. The key drivers of change in our Adjusted EBITDA are average
realized price, cash costs and sales volume which 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 methanol multiplied by the current period total methanol sales volume
excluding commission sales volume plus the difference from period to period in commission income.
CASH 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 current period total methanol sales volume excluding commission
sales volume. 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 our 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% through a commission offtake agreement. We
account for this investment using proportionate consolidation which results in 63.1% of the revenues and expenses being included
in our financial statements with the remaining 36.9% portion included as commission income.
We own 60% of the 1.26 million tonne per year Egypt methanol facility and market the remaining 40% 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” interest in the methanol facility being presented as
“non-controlling interests”. For purposes of analyzing our results, we analyze Adjusted EBITDA and Adjusted cash flows from
operating activities excluding the amounts associated with the other investors” 40% non-controlling interest and include these
results in commission income on a consistent basis with how we present the Atlas facility.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT PAGE 15
MANAGEMENT’S DISCUSSION AND ANALYSIS
Methanex Corporation
Consolidated Statements of Income (unauditea)
(thousands of U.S. dollars, except number of common shares and per share amounts)
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
Revenue $ 622,829 $ 448,543 $ 1,241,836 $ 915,249
Cost of sales and operating expenses (note 6) 504,907 386,786 1,046,847 772,560
Depreciation and amortization (note 6) 39,713 35,444 69,413 70,529
Operating income 78,209 26,313 125,576 72,160
Finance costs (note 7) (17,350) (7,564) (26,543) (15,616)
Finance income and other expenses 1,284 79 6,143 1,339
Profit before income tax expense 62,143 18,828 105,176 57,883
Income tax expense:
Current (8,267) (5,349) (16,542) (12,408)
Deferred (7,127) 760 (8,351) (5,016)
(15,394) (4,589) (24,893) (17,424)
Net income $ 46,749 $ 14,239 $ 80,283 $ 40,459
Attributable to:
Methanex Corporation shareholders 40,529 14,804 75,139 41,849
Non-controlling interests 6,220 (565) 5,144 (1,390)
$ 46,749 $ 14,239 $ 80,283 $ 40,459
Income for the period attributable to Methanex Corporation shareholders
Basic net income per common share $ 0.44 $ 0.16 $ 0.81 $ 0.45
Diluted net income per common share $ 0.43 $ 0.15 $ 0.80 $ 0.43
Weighted average number of common shares outstanding 92,972,678 92,185,997 92,711,291 92,157,320
Diluted weighted average number of common shares outstanding 94,580,090 93,337,075 94,288,918 93,383,467
See accompanying notes to condensed consolidated interim financial statements.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 16
Methanex Corporation
Consolidated Statements of Comprehensive Income (unaudited)
(thousands of U.S. dollars)
Three Months Ended
Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
Net income 46,749 $ 14,239 80,283 $ 40,459
Other comprehensive income (loss):
Change in fair value of forward exchange contracts, net of tax (669) (253) (669) –
Change in fair value of interest rate swap contracts, net of tax (7,905) (11,597) (7,710) (18,770)
Interest rate swap cash settlement reclassified to interest expense – – 870 –
Interest rate swap cash settlement reclassified to property, plant and equipment – – 7,279 7,505
(8,574) (11,850) (230) (11,265)
Comprehensive income 38,175 $ 2,389 80,053 $ 29,194
Attributable to:
Methanex Corporation shareholders 35,117 7,592 74,733 35,089
Non-controlling interests 3,058 (5,203) 5,320 (5,895)
38,175 $ 2,389 80,053 $ 29,194
See accompanying notes to condensed consolidated interim financial statements.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
PAGE 17
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Methanex Corporation
Consolidated Statements of Financial Position (unaudited)
(thousands of U.S. dollars)
Jun 30 Dec 31
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 245,624 193,794
Trade and other receivables 351,444 320,027
Inventories 236,750 229,657
Prepaid expenses 31,280 26,877
865,098 770,355
Non-current assets:
Property, plant and equipment (note 3) 2,270,706 2,258,576
Other assets 115,686 113,263
2,386,392 2,371,839
$ 3,251,490 3,142,194
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade, other payables and accrued liabilities $ 309,962 259,039
Current maturities on long-term debt (note 5) 50,099 49,965
Current maturities on finance leases 6,264 11,570
Current maturities on other long-term liabilities 19,620 9,677
385,945 330,251
Non-current liabilities:
Long-term debt (note 5) 876,359 896,976
Finance leases 59,548 67,842
Other long-term liabilities 136,287 140,570
Deferred income tax liabilities 303,782 295,431
1,375,976 1,400,819
Equity:
Capital stock 453,840 440,092
Contributed surplus 22,297 25,393
Retained earnings 860,249 815,320
Accumulated other comprehensive loss (26,499) (26,093)
Shareholders’ equity 1,309,887 1,254,712
Non-controlling interests 179,682 156,412
Total equity 1,489,569 1,411,124
$ 3,251,490 3,142,194
See accompanying notes to condensed consolidated interim financial statements.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
PAGE 18
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Methanex Corporation
Consolidated Statements of Changes in Equity (unaudited)
(thousands of U.S. dollars, except number of common shares)
Accumulated
Number of Other Non-|
Common Capital Contributed Retained Comprehensive] – Shareholders’ Controlling Total
Shares Stock Surplus Earnings Loss Equity Interests Equity
Balance, January 1, 2010 92,108,242 | $ 427,792 $ 26,981 $ 776,139 $ (19,910) $ 1,211,002 $ 137,272| $ 1,348,274
Net income (loss) – – – 41,849 – 41,849 (1,390) 40,459
Other comprehensive loss – – – – (6,760) (6,760) (4,505) (11,265)
Compensation expense recorded
for stock options – – 875 – – 875 – 875
Issue of shares on exercise of
stock options 88,490 897 – – – 897 – 897
Reclassification of grant date
fair value on exercise of
stock options – 326 (326) – – – – –
Dividend payments to Methanex
Corporation shareholders – – – (28,575) – (28,575) – (28,575)
Dividend payments to
non-controlling interests – – – – – – (750) (750)
Capital contributions by –
non-controlling interests – – – – – – 12,400 12,400
Balance, June 30, 2010 92,196,732 429,015 27,530 789,413 (26,670) 1,219,288 143,027 1,362,315
Net income (loss) – – – 55,671 – 55,671 (600) 55,071
Other comprehensive income (loss) – – – (1,139) 577 (562) 385 (177)
Compensation expense recorded
for stock options – – 600 – – 600 – 600
Issue of shares on exercise of
stock options 435,290 8,340 – – – 8,340 – 8,340
Reclassification of grant date
fair value on exercise of
stock options – 2,737 (2,737) – – – – –
Dividend payments to Methanex
Corporation shareholders – – – (28,625) – (28,625) – (28,625)
Dividend payments to
non-controlling interests – – – – – – – –
Capital contributions by
non-controlling interests – – – – – – 13,600 13,600
Balance, December 31, 2010 92,632,022 440,092 25,393 815,320 (26,093) 1,254,712 156,412 1,411,124
Net income – – – 75,139 – 75,139 5,144 80,283
Other comprehensive income (loss) – – – – (406) (406) 176 (230)
Compensation expense recorded
for stock options . – 472 . – 472 – 472
Issue of shares on exercise of
stock options 534,318 10,180 – – – 10,180 – 10,180
Reclassification of grant date
fair value on exercise of
stock options – 3,568 (3,568) – – – – –
Dividend payments to Methanex
Corporation shareholders . – . (30,210) – (30,210) – (30,210)
Dividend payments to
‘non-controlling interests – – – – – – (1,250) (1,250)
Capital contributions by
non-controlling interests – – – – – – 19,200 19,200
Balance, June 30, 2011 93,166,340] $ 453,840 $ 22,297 $ 860,249 $ (26,499) $ 1,309,887 $ 179,682 | $ 1,489,569
See accompanying notes to condensed consolidated interim financial statements.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 19
Methanex Corporation
Consolidated Statements of Cash Flows (unaudited)
(thousands of U.S. dollars)
Three Months Ended
Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 46,749 $ 14239 $ 80,283 $ 40,459
Add (deduct) non-cash items:
Depreciation and amortization 39,713 35,444 69,413 70,529
Income tax expense 15,394 4,589 24,893 17,424
Share based compensation 1,660 (4,297) 11,740 9,099
Finance costs 17,350 7,564 26,543 15,616
Other 1,392 766 1,423 1,308
Income taxes paid (20,735) (4,441) (27,404) (6,211)
Other cash payments, including share-based compensation (1,662) (960) (6,996) (4,122)
Cash flows from operating activities before undernoted 99,861 52,904 179,895 144,102
Changes in non-cash working capital (note 10) (22,227) (13,459) 22,259 (35,636)
77,634 39,445 202,154 108,466
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments (15,839) (14,290) (30,210) (28,575)
Interest paid, including interest rate swap settlements (4,851) (6,176) (30,251) (30,896)
Repayment of limited recourse debt (8,641) (7,328) (24,840) (7,641)
Equity contributions by non-controlling interests 3,600 5,800 19,200 12,400
Dividend payments to non-controlling interests (1,250) (750) (1,250) (750)
Proceeds from limited recourse debt 2,700 5,500 2,700 37,100
Proceeds on issue of shares on exercise of stock options 8,524 218 10,180 897
Repayment of finance leases, including other long term liabilities (1,514) (2,915) (2,845) (5,826)
(17,271) (19,941) (57,316) (23,291)
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment (39,322) (27,142) (78,782) (58,333)
Oil and gas assets (11,897) (5,810) (17,497) (15,136)
GeoPark repayments 2,454 2,052 7,551 4,981
Project financing reserve accounts (2,209) – (2,209) –
Other assets – (9,498) – (9,498)
Changes in non-cash working capital related to investing activities (note 10) (3,570) 2,506 (2,071) 938
(54,544) (37,892) (93,008) (77,048)
Increase (decrease) in cash and cash equivalents 5,819 (18,388) 51,830 8,127
Cash and cash equivalents, beginning of period 239,805 196,303 193,794 169,788
Cash and cash equivalents, end of period $ 245,624 $ 177,915 $ 245,624 $ 177,915
See accompanying notes to condensed consolidated interim financial statements.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
PAGE 20
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Methanex Corporation
Notes to Condensed Consolidated Interim Financial Statements (unauditea)
Except where otherwise noted, tabular dollar amounts are stated in thousands of U.S. dollars.
1. Basis of Presentation:
These condensed consolidated interim financial statements are prepared in accordance with International Accounting
Standards (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB) on a
basis consistent with the significant accounting policies disclosed in note 2 of the most recent interim financial
statements and therefore should be read in conjunction with the condensed consolidated interim financial statements
for the period ended March 31, 2011. These condensed consolidated interim financial statements are part of the
period covered by the Company’s first International Financial Reporting Standards (IFRS) consolidated financial
statements for the year ending December 31, 2011 and therefore IFRS 1, First Time Adoption of IFRS has been applied.
The condensed consolidated interim financial statements do not include all of the information required for full annual
financial statements and were approved and authorized for issue by the Audit, Finance 8. Risk Committee of the Board
of Directors on July 27, 2011.
The Company’s condensed consolidated interim financial statements were prepared in accordance with accounting
principles generally accepted in Canada (Canadian GAAP) until December 31, 2010. The period ended March 31,
2011, with comparative results for 2010, was the Company’s first IFRS condensed consolidated interim financial
statements. Canadian GAAP differs from IFRS in some areas and accordingly, the significant accounting policies
applied in the preparation of these condensed consolidated interim financial statements have been consistently applied
to all periods presented except in instances where IFRS 1 either requires or permits an exemption. An explanation of
how the transition from Canadian GAAP to IFRS has affected the reported consolidated statements of income,
comprehensive income, financial position, and cash flows of the Company for the period ended June 30, 2010 is
provided in note 12. This note includes information on the provisions of IFRS 1 and the exemptions that the Company
elected to apply at the date of transition, January 1, 2010, and reconciliations of equity, net income and comprehensive
income for the comparative periods ended June 30, 2010. For a summary of the impact of transition from Canadian
GAAP to IFRS at the date of transition, January 1, 2010, as well as for the year ended December 31, 2010, refer to note
18 of the condensed consolidated interim financial statements for the first quarter of 2011 ended March 31, 2011.
These condensed consolidated interim financial statements include the Egypt methanol facility on a consolidated basis,
with the other investors” 40% share presented as non-controlling interest and our proportionate share of the Atlas
methanol facility.
2. 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 expenses and depreciation and amortization for the
three and six month periods ended June 30, 2011 is $490 million (2010 – $380 million) and $997 million (2010 – $742
million), respectively.
3. Property, plant and equipment:
Buildings, Plant
Installations $ Machinery Oil £ Gas Properties Other Total
Cost at June 30, 2011 $ 3,184,346 $ 58,905 $ 82,595 | $ 3,325,846
Accumulated depreciation at June 30, 2011 991,138 25,290 38,712 1,055,140
Net book value at June 30, 2011 $ 2,193,208 $ 33,615 $ 43,883 |$ 2,270,706
Cost at December 31, 2010 $ 3,097,928 $ 54,049 $ 116,203 |$ 3,268,180
Accumulated depreciation at December 31, 2010 929,079 20,092 60,433 1,009,604
Net book value at December 31, 2010 $ 2,168,849 $ 33,957 $ 55,770] $ 2,258,576
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 21
4. 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 condensed consolidated interim financial statements
are the following amounts representing the Company’s proportionate interest in Atlas:
Jun 30 Dec 31
Consolidated Statements of Financial Position 2011 2010
Cash and cash equivalents $ 25,953 $ 10,676
Other current assets 83,068 83,795
Property, plant and equipment 277,929 276,114
Other assets 14,757 12,548
Trade, other payables and accrued liabilities 33,171 23,934
Long-term debt, including current maturities (note 5) 71,743 79,577
Finance leases and other long-+erm liabilities, including current maturities 50,731 52,480
Deferred income tax liabilities 19,769 18,893
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
Consolidated Statements of Income (Loss) 2011 2010 2011 2010
Revenue $ 63,177 $ 42,266 $ 134,755 $ 95,102
Expenses (53,291) (41,667) (113,179) (88,844)
Income before income taxes 9,886 599 21,576 6,258
Income tax expense (1,759) (673) (3,532) (1,825)
Net income $ 8,127 $ a _$ 18,044 $ 4,433
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
Consolidated Statements of Cash Flows 2011 2010 2011 2010
Cash flows from operating activities $ 24,530 $ 17,225 $ 32,565 $ 30,612
Cash outflows from financing activities (9,861) (8,840) (11,523) (10,650)
Cash outflows from investing activities (4,397) (1,104) (5,765) (1,620)
5. Long-term debt:
Jun 30 Dec 31
2011 2010
Unsecured notes
8.75% due August 15, 2012 $ 199,372 $ 199,112
6.00% due August 15, 2015 149,011 148,908
348,383 348,020
Atlas limited recourse debt facilities 71,743 79,577
Egypt limited recourse debt facilities 485,219 499,706
Other limited recourse debt facilities 21,113 19,638
926,458 946,941
Less current maturities (50,099) (49,965)
$ 876,359 $ 896,976
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 22
5. Long-term debt (continued):
During the three and six month periods ended June 30, 2011, the Company made repayments on its Atlas limited
recourse debt facilities of $8.0 million, and other limited recourse debt facilities of $0.6 million and $1.2 million,
respectively. The Company also made repayments on its Egypt limited recourse debt facilities of $15.6 million during
the six month period ended June 30, 2011.
The covenants governing the Company’s unsecured notes apply to the Company and its subsidiaries excluding the
Atlas joint venture and Egypt entity (“limited recourse subsidiaries”) and include restrictions on liens and sale and lease-
back transactions, or merger or consolidation with another corporation or sale of all or substantially all of the
Company/’s assets. The indenture also contains customary default provisions.
The Company has a $200 million unsecured revolving bank facility provided by highly rated financial institutions and
this was extended in early July 2011 to May 2015. This facility contains covenant and default provisions in addition to
those of the unsecured notes as described above. Significant covenants and default provisions under this facility
include:
a) the obligation to maintain an EBITDA to interest coverage ratio of greater than 2:1 and a debt to capitalization
ratio of less than or equal to 50%, calculated on a four quarter trailing average basis in accordance with definitions
in the credit agreement which include adjustments related to the limited recourse subsidiaries,
b) a default if payment on any indebtedness of $10 million or more of the Company and its subsidiaries except for
the limited recourse subsidiaries is accelerated by the creditor, and
Cc) a default if a default occurs on any other indebtedness of $50 million or more of the Company and its subsidiaries
except for the limited recourse subsidiaries that permits the creditor to demand repayment.
The Atlas and Egypt limited recourse debt facilities are described as limited recourse as they are secured only by the
assets of the Atlas joint venture and the Egypt entity, respectively. Accordingly, the lenders to the limited recourse debt
facilities have no recourse to the Company or its other subsidiaries. The Atlas and Egypt limited recourse debt facilities
have customary covenants and default provisions which apply only to these entities including restrictions on the
incurrence of additional indebtedness and a requirement to fulfill certain conditions before the payment of cash or
other distributions.
The Egypt limited recourse debt facilities require that certain conditions associated with plant construction and
commissioning be met by September 30, 2011 (“project completion”). These conditions include a 90 day plant
reliability test, which was successfully completed during July 2011, and finalization of certain land title registrations
and related mortgages which have not yet been completed that require action by Egyptian governmental entities.
Project completion must be achieved in order for the Egypt entity to make distributions to shareholders and failure to
reach project completion by September 30, 2011 would result in an event of default. We believe finalization of these
items is not material to the plant operations. We are seeking a waiver from the lenders in the event these ¡items are not
finalized before September 30, 2011. We cannot provide assurance that the land title registrations and related
mortgages will be finalized and project completion achieved by September 30, 2011 or that we would be able to
obtain a waiver from the lenders.
Failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could
result in a default under the applicable credit agreement which would allow the lenders to not fund future loan
requests and to accelerate the due date of the principle and accrued interest.
At June 30, 2011, management believes the Company was in compliance with all of the covenants and default
provisions referred to above.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 23
6. Expenses by function:
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
Cost of sales $ 456,731 $ 353,170 $ 936,752 $ 690,836
Selling and distribution 78,811 64,251 153,847 130,834
Administrative expenses 9,078 4,809 25,661 21,419
Total expenses by function $ 544620 $ 422230 $ 1,116,260 $ 843,089
Cost of sales and operating expenses 504,907 386,786 1,046,847 772,560
Depreciation and amortization 39,713 35,444 69,413 70,529
Total expenses per Consolidated Statements of Income $ 544620 $ 422230 $ 1,116,260 $ 843,089
Included in total expenses for the three and six month periods ended June 30, 2011 are employee expenses of $31.4
million (2010 – $23.0 million) and $74.4 million (2010 – $62.2 million), respectively.
7. Finance costs:
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
Finance costs $ 17,350 $ 17,056 $ 33,773 $ 34,215
Less: capitalized interest related to Egypt plant under construction – (9,492) (7,230) (18,599)
$ 17,350 $ 7,564 $ 26543 $ 15,616
Finance costs are primarily comprised of interest on borrowings and finance lease obligations, amortization of deferred
financing fees, and accretion expense associated with site restoration costs. Interest during construction of the Egypt
methanol facility was capitalized until the plant was substantially completed and ready for productive use in mid-
March of 2011. The Company has interest rate swap contracts on its Egypt limited recourse debt facilities 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 of September 28, 2007 to March 31, 2015. For the three and
six month periods ended June 30, 2011 interest costs of nil (2010 – $9.5 million) and $7.2 million (2010 – $18.6
million), respectively, related to this project were capitalized.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 24
8. Net income per common share:
A reconciliation of the weighted average number of common shares outstanding is as follows:
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
Denominator for basic net income per common share 92,972,678 92,185,997 92,711,291 92,157,320
Effect of dilutive stock options 1,607,412 1,151,078 1,577,627 1,226,147
Denominator for diluted net income per common share ! 94,580,090 93,337,075 94,288,918 93,383,467
“Al outstanding options are dilutive and have been included in the diluted weighted average number of common shares calculation for the three
month and six month periods ended June 30, 2011. Outstanding tandem share appreciation rights (TSARs) may be settled in cash or common shares at
the holder’s option and for purposes of calculating diluted net income per common share, the more dilutive of cash-settled and equity-settled is used.
For 2010, TSARs that are accounted for as liability-based awards for accounting purposes have resulted in an adjustment to diluted net income per
common share as if they would be equity-settled.
The average market value of the Company’s shares for purposes of calculating the dilutive effect of stock options was
based on quoted market prices for the periods disclosed above.
9. Share-based compensation:
a) Stock options:
(1) Outstanding stock options:
Common shares reserved for outstanding stock options at June 30, 2011:
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, 2010 2,250 $ 9.56 4,574,257 $ 18.95
Granted – – 67,800 28.74
Exercised (2,250) 9.56 (104,253) 15.68
Cancelled – – (6,470) 13.40
Outstanding at March 31, 2011 – $ – 4,531,334 $ 19.18
Granted – – – –
Exercised – – (427,815) 20.03
Cancelled – – – –
Outstanding at June 30, 2011 – $ – 4,103,519 $ 19.09
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 25
9. Share-based compensation (continued):
a) Stock options (continued):
(1) Outstanding stock options (continued):
Information regarding the stock options outstanding at June 30, 2011 is as follows:
Options Outstanding at
June 30, 2011
Options Exercisable at
June 30, 2011
Weighted
Average
Remaining Number of Stock Weighted Number of Stock Weighted
Contractual Life Options Average Exercise Options Average
Range of Exercise Prices (Years) Outstanding Price Exercisable Exercise Price
Options denominated in USD
$6.33 to 11.56 4.4 1,254,625 $ 6.55 818,220 $ 6.67
$17.85 to 22.52 1.6 975,100 20.43 975,100 20.43
$23.92 to 28.74 3.4 1,873,794 26.79 1,743,161 26.77
3.3 4,103,519 $ 19.09 3,536,481 $ 20.37
(ii) Compensation expense related to stock options:
For the three and six month periods ended June 30, 2011, compensation expense related to stock options
included in cost of sales and operating expenses was $0.2 million (2010 – $0.3 million) and $0.5 million
(2010 – $0.9 million), respectively. The fair value of the stock option grant was estimated on the date of grant
using the Black-Scholes option pricing model.
b) Share appreciation rights and tandem share appreciation rights:
During 2010, the Company’s stock option plan was amended to include tandem share appreciation rights (TSARs)
and a new plan was introduced for share appreciation rights (SARs). A SAR gives the holder a right to receive a
cash payment equal to the amount the market price of the Company’s common shares exceeds the exercise price.
A TSAR gives the holder the choice between exercising a regular stock option or surrendering the option for a cash
payment equal to the amount the market price of the Company’s common shares exceeds the exercise price. All
SARs and TSARs granted have a maximum term of seven years with one-third vesting each year after the date of
grant.
(1) Outstanding SARs and TSAR:s:
SARs and TSARs outstanding at June 30, 2011:
SARs
TSARs
Number of Units
Exercise Price USD
Number of Units
Exercise Price USD
Outstanding at December 31, 2010 388,965 $ 25.22 735,505 $ 25.19
Granted 260,010 28.74 492,100 28.74
Exercised (8,730) 25.22 (5,750) 25.22
Cancelled (6,000) 25.22 – –
Outstanding at March 31, 2011 634,245 $ 26.66 1,221,855 $ 26.64
Granted 4,200 31.74 6,090 31.88
Exercised (2,700) 25.22 (2,050) 25.22
Cancelled – – – –
Outstanding at June 30, 2011′ 635,745 $ 26.70 1,225,895 $ 26.65
AtJune 30, 2011, 353,593 SARs and TSARs were exercisable. The Company has common shares reserved for outstanding TSARs.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 26
9. Share-based compensation (continued):
b) Share appreciation rights and tandem share appreciation rights (continued):
(ii) Compensation expense related to SARs and TSARs:
Compensation expense for SARs and TSAR:s is initially measured based on their fair value and is recognized
over the related service period. Changes in fair value each period are recognized in earnings for the
proportion of the service that has been rendered at each reporting date. The fair value at June 30, 2011 was
$16.0 million compared with the recorded liability of $12.5 million. The difference between the fair value and
the recorded liability of $3.5 million will be recognized over the weighted average remaining service period
of approximately 2 years. The weighted average fair value of the vested SARs and TSARs was estimated at June
30, 2011 using the Black-Scholes option pricing model.
For the three and six month periods ended June 30, 2011, compensation expense related to SARs and TSARs
included a recovery in cost of sales and operating expenses of $1.1 million (2010 – recovery of $1.0 million)
and an expense of $3.9 million (2010 – $2.2 million), respectively.
c) Deferred, restricted and performance share units:
Deferred, restricted and performance share units outstanding at June 30, 2011 are as follows:
Number of, Number of] Number of
Deferred Share| Restricted Share| Performance
Units] Units] Share Units
Outstanding at December 31, 2010 557,187 46,604 1,169,617
Granted 22,781 17,100 281,470
Granted in-lieu of dividends 2,900 334 5,786
Redeemed – – (343,931)
Cancelled – – (2,664)
Outstanding at March 31, 2011 582,868 64,038 | 1,110,278
Granted 506 – –
Granted in-lieu of dividends 3,157 364 6,243
Redeemed – – –
Cancelled – – (12,021)
Outstanding at June 30, 2011 586,531 64,402 | 1,104,500
Compensation expense for deferred, restricted and performance share units is measured at fair value based on the
market value of the Company’s 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 June 30, 2011 was $56.5 million compared
with the recorded liability of $47.0 million. The difference between the fair value and the recorded liability of $9.5
million will be recognized over the weighted average remaining service period of approximately 2 years.
For the three and six month periods ended June 30, 2011, compensation expense related to deferred, restricted
and performance share units included in cost of sales and operating expenses was $2.6 million (2010 – recovery of
$3.7 million) and $7.4 million (2010 – $6.0 million), respectively. This included an expense of $1.1 million (2010
– recovery of $5.0 million) and $1.7 million (2010 – $0.1 million) related to the effect of the change in the
Company’s share price for the three and six month periods ended June 30, 2011 respectively.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 27
10. Changes in non-cash working capital:
Changes in non-cash working capital for the three and six month periods ended June 30, 2011 were as follows:
Three Months Ended Six Months Ended
Jun 30 Jun 30 Jun 30 Jun 30
2011 2010 2011 2010
Decrease (increase) in non-cash working capital:
Trade and other receivables $ (6,418) $ (632) $ (31,417) $ (14,560)
Inventories (26,516) 2,712 (7,093) 4,788
Prepaid expenses (3,413) 2,639 (4,403) 6,040
Trade, other payables and accrued liabilities 4,322 (7,480) 50,923 (23,444)
(32,025) (2,761) 8,010 (27,176)
Adjustments for items not having a cash effect and working
capital changes relating to taxes and interest paid 6,228 (8,192) 12,178 (7,522)
Changes in non-cash working capital having a cash effect $ (25,797) $ (10,953) $ 20,188 $ (34,698)
These changes relate to the following activities:
Operating $ 6Q27227) $ (13,459 $ 22,259 $ (35,636)
Investing (3,570) 2,506 (2,071) 938
Changes in non-cash working capital $ (25,797) $ (10,953) $ 20,188 $ (34,698)
11. Financial instruments:
The following table provides the carrying value of each category of financial assets and liabilities and the related
balance sheet item:
Jun 30 Dec 31
2011 2010
Financial assets:
Financial asset at fair value through profit and loss (held for trading):
Cash and cash equivalents’ $ 245,624 $ 193,794
Project financing reserve accounts included in other assets’ 14,757 12,548
Loans and receivables:
Trade and other receivables, excluding current portion of GeoPark financing 349,087 316,070
GeoPark financing, including current portion 18,317 25,868
Total financial assets? $ 627,785 $ 548,280
Financial liabilities:
Other financial liabilities:
Trade, other payables and accrued liabilities $ 309,962 $ 259,039
Long-term debt, including current portion 926,458 946,941
Financial liabilities held for trading:
Derivative instruments designated as cash flow hedges’ 44,427 43,488
Total financial liabilities $ 1,280,847 $ 1,249,468
Y Cash and cash equivalents and project financing reserve accounts are measured at fair value based on quoted prices in active markets for identical
assets. The euro hedges and the Egypt interest rate swaps designated as cash flow hedges are measured at fair value based on industry accepted
valuation models and inputs obtained from active markets.
2 The carrying amount of the financial assets represents the maximum exposure to credit risk at the respective reporting periods.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 28
11. Financial Instruments (continued):
At June 30, 2011, all of the Company’s financial instruments are recorded on the balance sheet at amortized cost with
the exception of cash and cash equivalents, derivative financial instruments and project financing 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 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.
The Company has designated these interest rate swaps as cash flow hedges.
These interest rate swaps had outstanding notional amounts of $357 million as at June 30, 2011. The notional amounts
decrease over the expected repayment period. At June 30, 2011, these interest rate swap contracts had a negative fair
value of $43.0 million (2010 – $43.5 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 June 30, 2011, the Company had outstanding forward exchange
contracts designated as cash flow hedges to sell a notional amount of 41.3 million euro in exchange for US dollars and
these euro contracts have a negative fair value of $1.4 million. Changes in fair value of derivative financial instruments
designated as cash flow hedges have been recorded in other comprehensive income.
12. Transition to International Financial Reporting Standards:
For a description of the significant IFRS accounting policies, refer to note 2 of the condensed consolidated interim
financial statements for the first quarter ended March 31, 2011. Those IFRS accounting policies have been applied in
preparing the condensed consolidated interim financial statements for the period ended June 30, 2011, the
comparative information presented in these interim financial statements for the three and six month periods ended June
30, 2010 and the year ended December 31, 2010 and in the preparation of an opening IFRS statement of financial
position at January 1, 2010, the Company’s date of transition. An explanation of the IFRS 1 exemptions and the
required reconciliations between IFRS and Canadian GAAP are described below:
IFRS 1 First-Time Adoption of International Financial Reporting Standards
In preparing these condensed consolidated interim financial statements, the Company has applied IFRS 1, First-time
Adoption of International Financial Reporting Standards, which provides guidance for an entity’s initial adoption of
IFRS. IFRS 1 gives entities adopting IFRS for the first time a number of optional and mandatory exceptions, in certain
areas, to the general requirement for full retrospective application of IFRS. The following are the optional exemptions
available under IFRS 1 that the Company has elected to apply:
Business combinations
The Company has elected to apply IFRS 3, Business Combinations, prospectively to business combinations that occur
after the date of transition. The Company has elected this exemption under IFRS 1, which removes the requirement to
retrospectively restate all business combinations prior to the date of transition to IFRS.
Employee benefits
The Company has elected to recognize all cumulative actuarial gains and losses on defined benefit pension plans
existing at the date of transition immediately into retained earnings, rather than continuing to defer and amortize into
the results of operations. Refer to note 18 (b) of the March 31, 2011 condensed consolidated interim financial
statements for the impact on transition to IFRS.
Fair value or revaluation as deemed cost
The Company has used the amount determined under a previous GAAP revaluation as the deemed cost for certain
assets. The Company elected the exemption for certain assets which were written down under Canadian GAAP, as the
revaluation was broadly comparable to fair value under IFRS. The carrying value of those assets on transition to IFRS is
therefore, consistent with the Canadian GAAP carrying value on the transition date.
Share-based payments
The Company elected to not apply IFRS 2, Share-based Payments, to equity instruments granted before November 7,
2002 and those granted but fully vested before the date of transition to IFRS. As a result, the Company has applied IFRS
2 for stock options granted after November 7, 2002 that were not fully vested at January 1, 2010.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 29
12. Transition to International Financial Reporting Standards (continued):
Site restoration costs
The Company has elected to apply the IFRS 1 exemption whereby it has measured the site restoration costs at January
1, 2010 in accordance with the requirements in IAS 37, Provisions, by estimating the amount that would have been in
property, plant and equipment when the liabilities first arose, and discounted the transition date liability to that date
using the best estimate of the historical risk-free discount rate.
Oil and Gas Properties
The Company has elected to carry forward the Canadian GAAP full cost method of accounting oil and gas asset
carrying value as of January 1, 2010 as the balance on transition to IFRS.
Reconciliations between IFRS and Canadian GAAP
IFRS 1 requires an entity to reconcile equity, comprehensive income and cash flows for comparative periods. The
Company’s adoption of IFRS did not have a significant impact on total operating, investing or financing cash flows in
the prior periods. However, it did result in some presentation changes. Under Canadian GAAP, interest paid included
in profit and loss was classified as operating activities and capitalized interest was classified as investing activities.
Under IFRS, interest paid, including capitalized interest, is classified as financing activities. There were no other
significant adjustments to the statement of cash flows. In preparing these condensed consolidated interim financial
statements, the Company has adjusted amounts reported previously in financial statements prepared in accordance
with Canadian GAAP. An explanation of how the transition from Canadian GAAP to IFRS has affected the Company’s
statements of financial position, income, and comprehensive income is provided below:
Reconciliation of Assets, Liabilities and Equity
The below table provides a summary of the adjustments to the Company’s statement of financial position at June 30,
2010. For a summary of the adjustments to the Company’s statement of financial position at January 1, 2010 and
December 31, 2010, refer to note 18 of the condensed consolidated interim financial statements for the first quarter
ended March 31, 2011.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 30
12. Transition to International Financial Reporting Standards (continued):
Jun 30
2010
Total assets per Canadian GAAP $ 2,951,203
Leases (a) 58,491
Employee benefits (b) (10,162)
Site restoration costs (c) 1,259
Borrowing costs (d) 15,774
Investment in associates (i) 1,659
Total assets per IFRS $ 3,018,224
Total liabilities per Canadian GAAP $ 1,711,759
Leases (a) 71,502
Employee benefits (b) 5,312
Site restoration costs (c) 4,888
Borrowing costs (d) 6,309
Uncertain tax positions (e) 5,551
Share-based payments (f) 2,613
Deferred tax impact and other adjustments (g) (8,998)
Reclassification of non-controlling interests (h) (143,027)
Total liabilities per IFRS $ 1,655,909
Total equity per Canadian GAAP $ 1,239,444
Leases (a) (13,011)
Employee benefits (b) (15,473)
Site restoration costs (c) (3,629)
Borrowing costs (d) 9,464
Uncertain tax positions (e) (5,551)
Share-based payments (f) (2,613)
Deferred tax impact and other adjustments (g) 8,998
Reclassification of non-controlling interests (h) 143,027
Investment in associates (i) 1,659
Total equity per IFRS $ 1,362,315
Total liabilities and equity per IFRS $ 3,018,224
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 31
12. Transition to International Financial Reporting Standards (continued):
Reconciliation of Net Income
The below table provides a summary of the adjustments to net income for the three and six month periods ended June
30, 2010. For a summary of the adjustments to net income for the year ended December 31, 2010, refer to note 18 of
the condensed consolidated interim financial statements for the first quarter of 2011 ended March 31, 2011.
Three months ended Six months ended
Jun 30 2010 Jun 30 2010
Net income per Canadian GAAP $ 11,735 $ 41,056
Leases (a) 252 134
Employee benefits (b) 421 1,176
Site restoration costs (c) 10 (15)
Uncertain tax positions (e) (120) (186)
Share based payments (f) 1,431 (1,984)
Deferred tax impact and other adjustments (g) 304 136
Investment in associates (i) 771 1,532
Total adjustments 3,069 793
Net income per IFRS attributable to Methanex Corporation shareholders $ 14,804 $ 41,849
Net loss per IFRS attributable to non-controlling interests (565) (1,390)
Total net income $ 14,239 $ 40,459
Reconciliation of Comprehensive Income
The below table provides a summary of the adjustments to comprehensive income for the three and six month periods
ended June 30, 2010. For a summary of the adjustments to comprehensive income for the year ended December 31,
2010, refer to note 18 of the condensed consolidated interim financial statements for the first quarter of 2011 ended
March 31, 2011.
Three months ended Six months ended
Jun 30 2010 Jun 30 2010
Comprehensive income per Canadian GAAP $ 4,523 $ 29,793
IFRS/CDN GAAP differences to net income (see table above) 3,069 793
Borrowing costs transferred to property, plant and equipment (d) – 4,503
Comprehensive income per IFRS attributable to Methanex Corporation shareholders $ 7,592 $ 35,089
Comprehensive loss per IFRS attributable to non-controlling interests (5,203) (5,895)
Total comprehensive income $ 2,389 $ 29,194
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 32
12. Transition to International Financial Reporting Standards (continued):
The items noted above in the reconciliations of the statement of financial position, income and comprehensive income
from Canadian GAAP to IFRS are described below:
a) Leases:
Canadian GAAP requires an arrangement that at its inception can be fulfilled only through the use of a specific
asset or assets, and which conveys a right to use that asset, may be a lease or contain a lease, and therefore should
be accounted for as a lease, regardless of whether it takes the legal form of a lease, and therefore should be
recorded as an asset with a corresponding liability. However, Canadian GAAP has grandfathering provisions that
exempts contracts entered into before 2004 from these requirements.
IFRS has similar accounting requirements as Canadian GAAP for lease-like arrangements, with IFRS requiring full
retrospective application. The Company has long-term oxygen supply contracts for its Atlas and Titan methanol
plants in Trinidad, executed prior to 2004, which are regarded as fimance leases under these standards.
Accordingly, the oxygen supply contracts are required to be accounted for as finance leases from original inception
of the lease. The Company measured the value of these finance leases and applied finance lease accounting
retrospectively from inception to determine the IFRS impact. As at June 30, 2010 this results in an increase to
property, plant and equipment of $58.5 million and other long-term liabilities of $71.5 million with a
corresponding decrease to retained earnings of $13.0 million.
In comparison to Canadian GAAP, for the three and six month periods ended June 30, 2010, this accounting
treatment resulted in lower cost of sales and operating costs, higher finance costs and higher depreciation and
amortization charges, with no significant impact to net earnings.
b) Employee benefits:
The Company elected the IFRS 1 exemption to recognize all cumulative actuarial gains and losses on defined
benefit pension plans existing at the date of transition immediately in retained earnings. As at June 30, 2010 this
results in a decrease to retained earnings of $15.5 million, a decrease to other assets of $10.2 million and an
increase to other long-term liabilities of $5.3 million.
In comparison to Canadian GAAP for the three and six month periods ended June 30, 2010, net earnings increased
by approximately $0.4 million and $1.2 million, respectively as a result of lower pension expense due to
immediate recognition to retained earnings of these actuarial losses on transition to IFRS.
Cc) Site restoration costs:
Under IFRS, the Company recognizes a liability to dismantle and remove assets or to restore a site upon which the
assets are located. The Company is required to determine a best estimate of site restoration costs for all sites
whereas under Canadian GAAP site restoration costs were not recognized with respect to assets with indefinite or
indeterminate lives. In addition, under IFRS a change in market-based discount rate will result in a change in the
measurement of the provision. As at June 30, 2010, adjustments to the financial statements to recognize site
restorations costs are recognized as an increase to other long-term liabilities of approximately $4.9 million and an
increase to property, plant and equipment of approximately $1.3 million, with the balancing amount recorded as a
decrease to retained earnings to reflect the depreciation expense and interest accretion since the date the liabilities
first arose. In comparison to Canadian GAAP for the three and six month periods ended June 30, 2010, there was
no significant impact to net earnings.
d) Borrowing costs:
IAS 23 prescribes the accounting treatment and eligibility of borrowing costs. 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. Under Canadian GAAP, cash settlements for these swaps during construction are recorded in
accumulated other comprehensive income for the Company’s 60% portion and 40% is recorded in non-controlling
interest. Under IFRS, the cash settlements during construction are recorded to property, plant and equipment.
Accordingly, there is an increase to property, plant and equipment of approximately $15.8 million at June 30,
2010. The increase to property, plant and equipment is offset by an increase to accumulated other comprehensive
income of approximately $9.5 and an increase in non-controlling interest of approximately $6.3 at June 30, 2010,
with no impact on net earnings.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 33
12. Transition to International Financial Reporting Standards (continued):
e)
h)
Uncertain tax positions:
IAS 12 prescribes recognition and measurement criteria of a tax position taken or expected to be taken in a tax
return. As at June 30, 2010, this resulted in an increase to income tax liabilities and a decrease to retained earnings
of approximately $5.6 million in comparison to Canadian GAAP. For the three and six month periods ended June
30, 2010 this has resulted in a decrease in net earnings of $0.1 million and $0.2 million, respectively with a
corresponding increase to income tax liabilities.
Share-based payments:
During 2010, the Company made its first grant of SARs and TSARs in connection with the employee long-term
incentive compensation plan.
Under Canadian GAAP, both SARs and TSARs are accounted for using the intrinsic value method. The intrinsic
value related to SARs and TSARs is measured by the amount the market price of the Company’s common shares
exceeds the exercise price of a unit. Changes in intrinsic value each period are recognized in earnings for the
proportion of the service that has been rendered at each reporting date. Under IFRS, SARs and TSARs are required
to be accounted for using a fair value method. The fair value related to SARs and TSARs is estimated using an
option pricing model. Changes in fair value estimated using an option pricing model each period are recognized
in earnings for the proportion of the service that has been rendered at each reporting date.
The fair value estimated using an option pricing model will be higher than the intrinsic value due to the time value
included in the estimated fair value. Accordingly, it is expected that the difference between the accounting
expense under IFRS compared with Canadian GAAP would be higher in the beginning life of a SAR or TSAR with
this difference narrowing as time passes and with total accounting expense ultimately being the same on the date
of exercise.
The difference in fair value method under IFRS compared with the intrinsic value method under Canadian GAAP,
has resulted in an increase to net earnings of approximately $1.4 million and a decrease to net earnings of $1.9
million for the three and six month periods ended June 30, 2010, respectively. The difference in fair value method
under IFRS compared with the intrinsic value method under Canadian GAAP resulted in an increase to other long-
term liabilities of approximately $2.6 million and corresponding decrease to shareholders” equity as at June 30,
2010.
Deferred tax impact and other adjustments:
This adjustment primarily represents the income tax effect of the adjustments related to accounting differences
between Canadian GAAP and IFRS. As at June 30, 2010, this has resulted in a decrease to deferred tax liabilities
and increase to retained earnings of approximately $9.0 million, with no significant impact to net earnings.
Reclassification of non-controlling interests from liabilities:
The Company has a 60% interest in EMethanex, the Egyptian company through which it has developed the
Egyptian methanol project. The Company accounts for this investment using consolidation accounting which
results in 100% of the assets and liabilities of EMethanex being included in the financial statements. The other
investors” interest in the project is presented as “non-controlling interests”. Under Canadian GAAP, the non-
controlling interests is classified as a liability whereas under IFRS the non-controlling interests is classified as
equity, but presented separately from the parent’s shareholder equity. This reclassification results in a decrease to
liabilities and an increase in equity of approximately $143.0 million as at June 30, 2010.
Investment in associates:
In 2010, the Company had a 20% equity interest in a DME production facility in China. The Company also had a
methanol sales agreement to supply methanol to this facility and these adjustments represent the difference
between Canadian GAAP and IFRS in the timing of recognition of earnings associated with methanol sales to the
equity investment.
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) PAGE 34
Methanex Corporation
Quarterly History (unaudited)
YTD|
2011| Q22011 Q12011 2010*| Q4 Q3 Q2 Qu 2009*| Q4 Q3 Q2 Qu
METHANOL SALES VOLUMES
(thousands of tonnes)
Company produced 1,818| 970 848 3,540| 831 885 900 924 3,764] 880 943 941 1,000
Purchased methanol 1,499| 664 835 2,880] 806 792 678 604 1,546| 467 480 329 270
Commission sales ‘ 403| 231 172 509 151 101 107 150. 638| 152 194 161 131
3,720| 1,865 1,855 6,929] 1,788 1,778 1,685 1,678 5,948| 1,499 1,617 1,431 1,401
METHANOL PRODUCTION
(thousands of tonnes)
Chile 325| 142 183 935| 208 194 229 304 942| 265 197 252 228
Titan, Trinidad 307 186 121 891 233 217 224 217 764] 188 188 165 223
Atlas, Trinidad (63.1%) 526| 263 263 884] 266 284 96 238 1,015| 279 257 275 204
New Zealand 410| 207 203 830] 206 200 216 208 822] 223 202 203 194
Medicine Hat 74 74 – – – – – – – – – – –
Egypt (60%) 209 178 31 – – – – – – – – – –
1,851 1,050 801 3,540| 913 895 765 967 3,543| 955 844 895 849
AVERAGE REALIZED METHANOL PRICE ?
($/tonne) 365| 363 367 306| 348 286 284 305 225| 282 222 192 199
($/gallon) 1.10] 1.09 1.10 0.92 1.05 0.86 0.85 0.92 0.68 0.85 0.67 0.58 0.60
PER SHARE INFORMATION* ($ per share)
Basic net income (loss) 0.81 0.44 0.37 1.05 0.29 0.31 0.16 0.29 0.01 0.28 (0.01) (0.06) (0.20)
Diluted net income (loss) 0.80 0.43 0.37 1.04 0.29 0.31 0.15 0.29 0.01 0.28 (0.01) (0.06) (0.20)
1 Commission sales represent volumes marketed on a commission basis related to the 36.9% of the Atlas methanol facility and 40% of the Egypt methanol facility that
we do not own.
2 Average realized price is calculated as revenue, excluding commissions eamed and the Egypt non-controlling interest share of revenue, divided by the total sales
volumes of produced and purchased methanol.
* The 2010 figures and related quarterly information are reported in accordance with IERS as the company’s date of transition from Canadian GAAP to IFRS was
January 1, 2010. These figures have not been previously disclosed. The 2009 figures and related quarterly data are reported in accordance with Canadian CAAP,
and have not been restated in accordance with IFRS.
* Per share information calculated using net income attributable to Methanex shareholders.
PAGE 35
METHANEX CORPORATION 2011 SECOND QUARTER REPORT
QUARTERLY HISTORY
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