Methanex Reports Stronger EBITDA In the Fourth Quarter

Methanex Reports Stronger EBITDA In the Fourth Quarter 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 01/30/13 -- For the
fourth quarter of 2012, Methanex
(TSX:MX)(NASDAQ:MEOH)(SANTIAGO:Methanex) reported Adjusted EBITDA(1)
of $119 million and Adjusted net income(1) of $61 million ($0.64 per
share on a diluted basis(1)). This compares with Adjusted EBITDA(1)
of $104 million and Adjusted net income(1) of $36 million ($0.38 per
share on a diluted basis(1)) for the third quarter of 2012. For the
year ended December 31, 2012, Methanex reported Adjusted EBITDA(1) of
$429 million and Adjusted net income(1) of $180 million ($1.90 per
share on a diluted basis(1)). This compares with Adjusted EBITDA(1)
of $427 million and Adjusted net income(1) of $182 million ($1.93 per
share on a diluted basis(1)) for the year ended December 31, 2011. 
As a result of continuing challenges related to securing a
sustainable natural gas supply in Chile, Methanex recorded a non-cash
before-tax $297 million asset impairment charge ($193 million
after-tax) to write down the carrying value of its Chile assets.
Including the asset impairment charge related to the carrying value
of its Chile assets, Methanex reported a net loss attributable to
Methanex shareholders for the fourth quarter of 2012 of $140 million
($1.49 loss per share on a diluted basis). For the year ended
December 31, 2012, Methanex reported a net loss attributable to
Methanex shareholders of $68 million ($0.73 loss per share on a
diluted basis). 
John Floren, President and CEO of Methanex commented, "Methanol
prices increased during the fourth quarter and this led to higher
Adjusted EBITDA compared to last quarter. Entering the first quarter,
methanol demand has continued to be healthy and the pricing
environment has been relatively stable. The longer term outlook for
the industry looks very attractive with demand growth expected to
significantly outpace new capacity additions over the next few
years." 
Mr. Floren added, "A key area of focus for me as the new CEO will be
the successful execution of our value-creating growth projects in
Louisiana and New Zealand. While we are disappointed with our
progress on securing natural gas in Chile, these new initiatives in
Louisiana and New Zealand have the potential to add up to three
m
illion tonnes of capacity over the next few years which will enhance
supply to our customers and significantly improve cash generation for
shareholders." 
Mr. Floren concluded, "With over US$700 million of cash on hand, an
undrawn credit facility, a robust balance sheet, and strong cash flow
generation, we are well positioned to invest in the Louisiana
project, New Zealand expansion plans and other strategic growth
opportunities and continue to deliver on our commitment to return
excess cash to shareholders." 
A conference call is scheduled for January 31, 2013 at 12:00 noon ET
(9:00 am PT) to review these fourth quarter results. To access the
call, dial the Conferencing operator ten minutes prior to the start
of the call at (416) 340-8527, or toll free at (877) 240-9772. 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 6328000. Presentation slides summarizing
Q4-12 results and a simultaneous audio-only webcast of the conference
call can be accessed from our website at www.methanex.com. The
webcast will be available on the 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.  
FORWARD-LOOKING INFORMATION WARNING 
This Fourth Quarter 2012 press release contains forward-looking
statements with respect to us and the chemical industry. Refer to
Forward-Looking Information Warning in the attached Fourth Quarter
2012 Management's Discussion and Analysis for more information. 


 
1.  Adjusted EBITDA, Adjusted net income and Adjusted diluted net income per
    common share are non-GAAP measures which do not have any standardized
    meaning prescribed by GAAP. These measures represent the amounts that
    are attributable to Methanex Corporation shareholders and are calculated
    by excluding amounts associated with the 40% non-controlling interest in
    the methanol facility in Egypt, the mark-to-market impact of items which
    impact the comparability of our earnings from one period to another,
    which currently include only the mark-to-market impact of share-based
    compensation as a result of changes in our share price, Louisiana
    project relocation expenses and charges and asset impairment charges.
    Refer to the Additional Information - Supplemental Non-GAAP Measures 
    section of the attached Interim Report for the three months ended
    December 31, 2012 for reconciliations to the most comparable GAAP
    measures. 
 
Interim Report for the Three Months Ended December 31, 2012                
                                                                           
At January 30, 2013 the Company had 94,363,605 common shares issued and     
outstanding and stock options exercisable for 2,776,612 additional common   
shares.                                                                    
                                                                           
Share Information                       Investor Information               
Methanex Corporation's common           All financial reports, news        
shares are listed for trading on        releases and corporate information 
the Toronto Stock Exchange under        can be accessed on our website at  
the symbol MX, on the Nasdaq Global     http://www.methanex.com/           
Market under the symbol MEOH and on                                        
the foreign securities market of                                           
the Santiago Stock Exchange in                                             
Chile under the trading symbol                                             
Methanex.                                                                  
                                                                           
Transfer Agents & Registrars            Contact Information                
CIBC Mellon Trust Company               Methanex Investor Relations        
320 Bay Street                          1800 - 200 Burrard Street          
Toronto, Ontario, Canada M5H 4A6        Vancouver, BC Canada V6C 3M1       
Toll free in North America: 1-800-      E-mail: invest@methanex.com        
387-0825                                Methanex Toll-Free:                
                                        1-800-661-8851                     

 
FOURTH QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS 
Except where otherwise noted, all cu
rrency amounts are stated in
United States dollars. 
FINANCIAL AND OPERATIONAL HIGHLIGHTS 


 
--  A summary of net income (loss) attributable to Methanex shareholders,
    Adjusted net income(1) and Adjusted diluted net income per common
    share(1) is as follows: 
 
                                       Three Months Ended      Years Ended 
                                   ----------------------------------------
($ millions except number of shares  Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
and per share amounts)                 2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Net income (loss) attributable to                                          
Methanex shareholders               $ (140) $   (3) $    64 $  (68) $   201
  Mark-to-market impact of share-                                          
  based compensation, net of tax          8       -       1      14    (19)
  Louisiana project relocation                                             
  expenses and charges, net of tax                                         
    Cash expense                          -      21       -      23       -
    Non-cash charge                       -      18       -      18       -
  Asset impairment charge, net of                                          
  tax                                   193       -       -     193       -
---------------------------------------------------------------------------
Adjusted net income (1)             $    61 $    36 $    65 $   180 $   182
---------------------------------------------------------------------------
Diluted weighted average shares                                            
outstanding (millions)                   94      94      94      94      94
Adjusted diluted net income per                                            
common share (1)                    $  0.64 $  0.38 $  0.69 $  1.90 $  1.93
---------------------------------------------------------------------------
 
--  We recorded Adjusted EBITDA(1) of $119 million for the fourth quarter of
    2012 compared with $104 million for the third quarter of 2012. The
    increase in Adjusted EBITDA(1) was primarily due to an increase in
    average realized price to $389 per tonne for the fourth quarter of 2012
    from $373 per tonne for the third quarter of 2012. 
--  Production for the fourth quarter of 2012 was 1,067,000 tonnes compared
    with 1,025,000 tonnes for the third quarter of 2012. Refer to the
    Production Summary section. 
--  Sales of Methanex-produced methanol were 1,059,000 tonnes in the fourth
    quarter of 2012 compared with 1,053,000 in the third quarter of 2012. 
--  During the fourth quarter of 2012, we issued $350 million of unsecured
    notes due in 2019, increased our revolving credit facility to $400
    million and extended the term to 2016, and paid a $0.185 per share
    dividend to shareholders for a total of $17 million. 
--  As a result of continuing challenges related to securing a sustainable
    natural gas supply in Chile, we recorded a non-cash before-tax $297
    million asset impairment charge ($193 million after-tax) to write down
    the carrying value of our Chile assets. 
--  We continue to make good progress with our project to relocate an idle
    Chile facility to Geismar, Louisiana and the project remains on schedule
    and on budget. We recently announced that we have signed an agreement
    with Chesapeake Energy to supply the facility's natural gas requirements
    for a ten-year period. 
 
(1) These items are non-GAAP measures that do not have any standardized     
meaning prescribed by GAAP and therefore are unlikely to be comparable to   
similar measures presented by other companies. Refer to the Additional    
Information - Supplemental Non-GAAP Measures section for a description of
each non-GAAP measure and reconciliations to the most comparable GAAP       
measures.                                                                   

 
This Fourth Quarter 2012 Management's Discussion and Analysis
("MD&A") dated January 30, 2013 for Methanex Corporation ("the
Company") should be read in conjunction with the Company's condensed
consolidated interim financial statements for the period ended
December 31, 2012 as well as the 2011 Annual Consolidated Financial
Statements and MD&A included in the Methanex 2011 Annual Report.
Unless otherwise indicated, the financial information presented in
this interim report is prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). The Methanex 2011 Annual Report
and additional information relating to Methanex is available on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov.  


 
FINANCIAL AND OPERATIONAL DATA                                             
                                                                           
                                      Three Months Ended      Years Ended  
                                   ----------------------------------------
($ millions, except per share        Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
amounts and where noted)               2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Production (thousands of tonnes)                                           
(attributable to Methanex                                                  
shareholders)                         1,067   1,025     961   4,071   3,847
Sales volumes (thousands of                                                
tonnes):                                                                   
  Methanex-produced methanol                                               
  (attributable to Methanex                                                
  shareholders)                       1,059   1,053   1,052   4,039   3,853
  Purchased methanol                    664     641     644   2,565   2,815
  Commission sales (1)                  176     205     208     855     846
---------------------------------------------------------------------------
Total sales volumes                   1,899   1,899   1,904   7,459   7,514
Methanex average non-discounted                                            
posted price ($ per tonne) (2)          450     433     456     443     440
Average realized price ($ per                                              
tonne) (3)                              389     373     388     382     374
Adjusted EBITDA (attributable to                                           
Methanex shareholders) (4)              119     104     133     429     427
Adjusted cash flows from operating                                         
activities (attributable to                                                
Methanex shareholders) (4)              101     103     122     403     392
Cash flows from operating                                                  
activities                               98     131     158     458     480
Adjusted net income (attributable                                          
to Methanex shareholders) (4)            61      36      65     180     182
Net income (loss) attributable to                                          
Methanex shareholders                 (140)     (3)      64    (68)     201
Adjusted diluted net income per                                            
common share (attributable to                                              
Methanex shareholders) (4,5)           0.64    0.38    0.69    1.90    1.93
Basic net income (loss) per common                                         
share (attributable to Methanex                                            
shareholders)                        (1.49)  (0.03)    0.69  (0.73)    2.16
Diluted net income (loss) per                                              
common share (attributable to                                              
Methanex shareholders)               (1.49)  (0.03)    0.68  (0.73)    2.06
Common share information (millions                                         
of shares):                                                                
  Weighted average number of common                                        
  shares                                 94      94      93      94      93
  Diluted weighted average number                                          
  of common shares                       94      94      94      94      94
  Number of common shares                                                  
  outstanding, end of period             94      94      93      94      93
---------------------------------------------------------------------------
                                                                           
(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) 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 http://www.methanex.com/.                                     
(3) 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 Methanex-produced (attributable to Methanex     
shareholders) and purchased methanol.                                      
(4) These items are non-GAAP measures that do not have any standardized    
meaning prescribed by GAAP and therefore are unlikely to be comparable to  
similar measures presented by other companies. Refer to the Additional    
Information - Supplemental Non-GAAP Measures section for a description  
of each non-GAAP measure and reconciliations to the most comparable GAAP   
measures.                                                                  
(5) For the three month period and year ended December 31, 2012, stock     
options have been excluded from the calculation of diluted net loss per    
common share (attributable to Methanex shareholders) as their effect would 
be anti-dilutive. However, for the calculation of adjusted diluted net     
income per common share (attributable to Methanex shareholders) stock      
options have been included in the denominator and the diluted weighted     
average number of common shares is 95 million for the three month period   
and year ended December 31, 2012.                                          
---------------------------------------------------------------------------
PRODUCTION SUMMARY                                                         
                             Annual    2012    2011 Q4 2012 Q3 2012 Q4 2011
                           Capacity   Prod-   Prod-   Prod-   Prod-   Prod-
(thousands of tonnes)           (1)  uction  uction  uction  uction  uction
---------------------------------------------------------------------------
                                                                           
  Chile I, III and IV (2)     2,800     313     554      59      59     113
  New Zealand (3)             2,230   1,108     830     378     346     211
  Atlas (Trinidad) (63.1%                                                  
  interest)                   1,150     826     891     180     255     195
  Titan (Trinidad)              900     786     711     189     186     180
  Egypt (60% interest)          760     557     532     129      62     132
  Medicine Hat                  470     481     329     132     117     130
---------------------------------------------------------------------------
                              8,310   4,071   3,847   1,067   1,025     961
---------------------------------------------------------------------------
(1) The production capacity of our facilities may be higher than original  
nameplate capacity as, over time, these figures have been adjusted to      
reflect ongoing operating efficiencies.                                    
(2) In July 2012, we reached a final investment decision to proceed with   
the project to relocate the Chile II facility to Geismar, Louisiana. The   
Chile capacity in the above table excludes the 1.0 million tonnes of annual
production capacity which is being relocated to Louisiana.                 
(3) The production capacity of New Zealand represents the two 0.85 million 
tonne facilities at Motunui and the 0.53 million tonne facility at Waitara 
Valley. In July, we restarted the second Motunui facility, but due to      
current distillation capacity constraints at the Motunui site, the combined
production capacity of both plants is approximately 1.5 million tonnes,    
compared with the combined nameplate capacity of 1.7 - 1.9 million tonnes, 
depending on natural gas composition (refer to the New Zealand section     
below).                                                                    

 
Chile 
We continue to operate our Chile facilities significantly below site
capacity and during the fourth quarter of 2012 we produced 59,000
tonnes in Chile operating one plant at approximately 20% of capacity. 
While investments have been made over the last few years for natural
gas e
xploration and development in southern Chile, the timeline for a
potential significant increase in gas production is much longer than
we had originally anticipated. As a result, the short-term outlook
for gas supply in Chile continues to be challenging and we recently
announced that we expect to idle our Chile operations in March 2013
because we do not expect to have sufficient natural gas feedstock to
keep our plant operating through the southern hemisphere winter. We
are continuing to work with Empresa Nacional del Petroleo (ENAP) and
others to secure sufficient natural gas to sustain our operations and
while the restart of a Chile plant is possible later in 2013, the
restart is dependent on securing a sustainable natural gas position
to operate over the medium term. 
As a result of the continuing challenges related to securing a
sustainable natural gas feedstock in Chile, we recorded a non-cash
before-tax $297 million asset impairment charge ($193 million
after-tax) to write down the carrying value of our Chile assets to
$245 million. The $245 million carrying value excludes the first
Chile facility that is being relocated to Geismar, Louisiana, but
includes the second facility that management also intends to relocate
to Geismar. 
The future of our Chile operations is primarily dependent on the
level of exploration and development in southern Chile and our
ability to secure a sustainable natural gas supply to our facilities
on economic terms. 
New Zealand 
Our New Zealand methanol facilities produced 378,000 tonnes of
methanol in the fourth quarter of 2012 operating at the current
annual site capacity of 1.5 million tonnes. We are currently
assessing the feasibility of debottlenecking the Motunui site and the
potential to restart our nearby 530,000 tonne Waitara Valley plant
which could add up to a further 900,000 tonnes of annual production
in New Zealand. 
Trinidad 
In Trinidad, we own 100% of the Titan facility with an annual
production capacity of 900,000 tonnes and have a 63.1% interest in
the Atlas facility with an annual production capacity of 1,150,000
tonnes (63.1% interest). The Titan facility produced 189,000 tonnes
in the fourth quarter of 2012 compared with 186,000 tonnes in the
third quarter of 2012. Production in the fourth quarter of 2012 was
impacted by periodic natural gas curtailments. 
The Atlas facility produced 180,000 tonnes in the fourth quarter of
2012 compared with 255,000 tonnes in the third quarter of 2012. The
Atlas facility was shut down at the end of September 2012 for repairs
and returned to production at the end of October 2012. 
We continue to experience some natural gas curtailments to our
Trinidad facilities due to a mismatch between upstream commitments to
supply the Natural Gas Company in Trinidad (NGC) and downstream
demand from NGC's customers which becomes apparent when an upstream
supply issue arises. We are engaged with key stakeholders to find a
solution to this issue, but in the meantime we expect to continue to
experience some gas curtailments to our Trinidad site. 
Egypt 
The Egypt methanol facility produced 129,000 tonnes (60% interest) in
the fourth quarter of 2012 compared with 62,000 tonnes in the third
quarter of 2012. We have a 60% equity interest in the facility and
marketing rights for 100% of the production. Production during the
fourth quarter of 2012 was lower than capacity due to an unplanned
maintenance outage and natural gas supply restrictions. 
During the third and fourth quarters of 2012, the Egypt facility
experienced periodic natural gas supply restrictions as a result of
increased electricity demand and ongoing operating issues with the
upstream gas infrastructure. This situation may persist in the future
and become more acute during the summer months when electricity
demand is at its peak. 
Medicine Hat 
Our 470,000 tonne per year facility in Medicine Hat, Alberta produced
132,000 tonnes in the fourth quarter of 2012 compared with 117,000
tonnes during the third quarter of 2012. We are currently
debottlenecking the Medicine Hat facility which will add a further
90,000 tonnes of annual production capacity to our Medicine Hat
operations by the end of the third quarter of 2013. 
FINANCIAL RESULTS 
For the fourth quarter of 2012 we recorded Adjusted EBITDA of $119
million and Adjusted net income of $61 million ($0.64 per share on a
diluted basis). This compares with Adjusted EBITDA of $104 million
and Adjusted net income of $36 million ($0.38 per share on a diluted
basis) for the third quarter of 2012. For the year ended December 31,
2012, we reported Adjusted EBITDA of $429 million and Adjusted net
income of $180 million ($1.90 per share on a diluted basis) compared
with Adjusted EBITDA of $427 million and Adjusted net income of $182
million ($1.93 per share on a diluted basis) for the year ended
December 31, 2011. 
After the non-cash before-tax $297 million asset impairment charge
($193 million after-tax) related to the carrying value of our Chile
assets, we reported a net loss attributable to Methanex shareholders
for the fourth quarter of 2012 of $140 million ($1.49 loss per share
on a diluted basis). For the year ended December 31, 2012, we
reported a net loss attributable to Methanex shareholders of $68
million ($0.73 loss per share on a diluted basis). For further
details, refer to note 4 of the attached condensed consolidated
interim financial statements for the period ended December 31, 2012. 
We calculate Adjusted EBITDA and Adjusted net income by excluding
amounts associated with the 40% non-controlling interest in Egypt
that we do not own, the mark-to-market impact of share-based
compensation as a result of changes in our share price and items
which are considered by management to be non-operational, including
asset impairment charges and Louisiana project relocation expenses
and charges. Refer to the Additional Information - Supplemental
Non-GAAP Measures section for a further discussion on how we
calculate these measures. 
A reconciliation from net income (loss) attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
diluted net income per common share is as follows: 


 
                                       Three Months Ended      Years Ended 
                                   ----------------------------------------
($ millions except number of shares  Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
and per share amounts)                 2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Net income (loss) attributable to                                          
Methanex shareholders               $ (140) $   (3) $    64 $  (68) $   201
  Mark-to-market impact of share-                                          
  based compensation, net of tax          8       -       1      14    (19)
  Louisiana project relocation                                             
  expenses and charges, net of tax                                         
    Cash expense                          -      21       -      23       -
    Non-cash charge                       -      18       -      18       -
  Asset impairment charge, net of                                          
  tax                                   193       -       -     193       -
---------------------------------------------------------------------------
Adjusted net income (1)             $    61 $    36 $    65 $   180 $   182
---------------------------------------------------------------------------
Diluted weighted average shares                                            
outstanding (millions)                   94      94      94      94      94
Adjusted diluted net income per                                            
common share (1,2)                  $  0.64 $  0.38 $  0.69 $  1.90 $  1.93
---------------------------------------------------------------------------

 
We review our financial results by analyzing changes in Adjusted
EBITDA, mark-to-ma
rket impact of share-based compensation, Louisiana
project relocation expenses and charges, depreciation and
amortization, finance costs, finance income and other expenses and
income taxes. A summary of our consolidated statements of income is
as follows: 


 
                                 Three Months Ended        Years Ended   
                             --------------------------------------------
                               Dec 31  Sep 30  Dec 31    Dec 31    Dec 31
($ millions)                     2012    2012    2011      2012      2011
-----------------------------------------------------  ------------------
Consolidated statements of                                               
income:                                                                  
  Revenue                     $   696 $   655 $   696 $   2,673 $   2,608
  Cost of sales and operating                                            
  expenses, excluding mark-                                              
  to-market impact of share-                                             
  based compensation            (565)   (539)   (546)   (2,171)   (2,128)
                                                                         
                                                                         
-----------------------------------------------------  ------------------
                                  131     116     150       502       480
Comprised of:                                                            
  Adjusted EBITDA                                                        
  (attributable to Methanex                                              
  shareholders) (1)               119     104     133       429       427
  Attributable to non-                                                   
  controlling interests            12      12      17        73        53
-----------------------------------------------------  ------------------
                                  131     116     150       502       480
  Depreciation and                                                       
  amortization                   (42)    (47)    (43)     (172)     (157)
  Mark-to-market impact of                                               
  share-based compensation        (8)       -     (1)      (16)        21
  Louisiana project                                                      
  relocation expenses and                                                
  charges                           -    (61)       -      (65)         -
  Asset impairment charge       (297)       -       -     (297)         -
-----------------------------------------------------  ------------------
  Operating income (1)          (216)       8     106      (48)       344
                                                                         
  Finance costs                  (15)    (18)    (18)      (71)      (62)
  Finance income and other                                               
  expenses                          3     (3)     (3)         1         2
  Income tax recovery                                                    
  (expense)                        93      15    (12)        84      (56)
-----------------------------------------------------  ------------------
  Net income (loss)           $ (135) $     2 $    73 $    (34) $     228
-------------------------------------------------------------------------
  Net income (loss)                                                      
  attributable to Methanex                                               
  shareholders                $ (140) $   (3) $    64 $    (68) $     201
-------------------------------------------------------------------------
                                                                         
(1) These items are non-GAAP measures that do not have any standardized  
meaning prescribed by GAAP and therefore are unlikely to be comparable to
similar measures presented by other companies. Refer to the Additional   
Information - Supplemental Non-GAAP Measures section for a description
of each non-GAAP measure and reconciliations to the most comparable GAAP 
measures.                                                                
(2) For the three month period and year ended December 31, 2012, stock   
options have been excluded from the calculation of diluted net loss per  
common share (attributable to Methanex shareholders) as their effect     
would be anti-dilutive. However, for the calculation of adjusted diluted 
net income per common share (attributable to Methanex shareholders) stock
options have been included in the denominator and the diluted weighted   
average number of common shares is 95 million for the three month period 
and year ended December 31, 2012.                                        

 
ADJUSTED EBITDA (ATTRIBUTABLE TO METHANEX SHAREHOLDERS) 
Our operations consist of a single operating segment - the production
and sale of methanol. We review the results of operations by
analyzing changes in the components of Adjusted EBITDA. For a
discussion of the definitions used in our Adjusted EBITDA analysis,
refer to the How We Analyze Our Business section. 
The changes in Adjusted EBITDA resulted from changes in the
following: 


 
                                    Q4 2012         Q4 2012            2012
                                   compared        compared        compared
                                       with            with            with
($ millions)                        Q3 2012         Q4 2011            2011
---------------------------------------------------------------------------
Average realized price        $          29   $           4   $          57
Sales volume                              4               4             (5)
Total cash costs                       (18)            (22)            (50)
---------------------------------------------------------------------------
Increase (decrease) in                                                     
Adjusted EBITDA               $          15   $        (14)   $           2
---------------------------------------------------------------------------
 
 
Average realized price                                                     
                                                                           
                                     Three Months Ended      Years Ended   
                                   ----------------------------------------
                                    Dec 31  Sep 30  Dec 31  Dec 31  Dec 31 
($ per tonne, except where noted)     2012    2012    2011    2012    2011 
---------------------------------------------------------------------------
Methanex average non-discounted                                            
posted price (1)                       450     433     456     443     440 
Methanex average realized price        389     373     388     382     374 
Average discount                       14%     14%     15%     14%     15% 
---------------------------------------------------------------------------
(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 http://www.methanex.com/.                                     

 
Overall methanol market conditions have remained balanced and pricing
has been relatively stable during the periods presented (refer to the
Supply/Demand Fundamentals section for more information). Our average
non-discounted posted price for the fourth quarter of 2012 was $450
per tonne compared with $433 per tonne for the third quarter of 2012
and $456 per tonne for the fourth quarter of 2011. Our average
realized price for the fourth quarter of 2012 was $389 per tonne
compared with $373 per tonne for the third quarter of 2012 and $388
per tonne for the fourth quarter of 2011. The change in average
realized price for the fou
rth quarter of 2012 increased Adjusted
EBITDA by $29 million compared with the third quarter of 2012 and
increased Adjusted EBITDA by $4 million compared with the fourth
quarter of 2011. Our average realized price for the year ended
December 31, 2012 was $382 per tonne compared with $374 per tonne for
the same period in 2011 and this increased Adjusted EBITDA by $57
million. 
Sales volume 
Methanol sales volumes excluding commission sales volumes were higher
in the fourth quarter of 2012 compared with the third quarter of 2012
by 29,000 tonnes and the fourth quarter of 2011 by 27,000 tonnes and
this resulted in higher Adjusted EBITDA by $4 million for each
comparable period. Methanol sales volumes excluding commission sales
volumes were lower for the year ended December 31, 2012 compared with
the comparable period in 2011 by 64,000 tonnes and this resulted in
lower Adjusted EBITDA by $5 million. 
Total cash costs 
The primary drivers of changes in our total cash costs are changes in
the cost of methanol we produce at our facilities (Methanex-produced
methanol) and changes in the cost of methanol we purchase from others
(purchased methanol). All of our production facilities except
Medicine Hat are underpinned by natural gas purchase agreements with
pricing terms that include base and variable price components. 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 Methanex-produced and purchased
methanol costs primarily 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: 


 
                                    Q4 2012         Q4 2012            2012
                                   compared        compared        compared
                                       with            with            with
($ millions)                        Q3 2012         Q4 2011            2011
---------------------------------------------------------------------------
  Methanex-produced                                                        
  methanol costs              $         (8)   $         (3)   $        (34)
  Insurance recovery                      9             (8)             (6)
  Proportion of Methanex-                                                  
  produced methanol sales               (4)             (3)              36
  Purchased methanol costs              (4)               2            (22)
  Logistics costs                       (5)             (2)            (10)
  Other, net                            (6)             (8)            (14)
---------------------------------------------------------------------------
                              $        (18)   $        (22)   $        (50)
---------------------------------------------------------------------------

 
Methanex-produced methanol costs 
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. The unique contractual terms of each
natural gas purchase agreement result in a different cost structure
for each of our facilities. For all periods presented,
Methanex-produced methanol costs were higher due to the impact of
higher methanol pricing on natural gas costs and a change in the mix
of production sold from inventory. 
Insurance recovery 
We experienced an equipment failure at our Atlas facility in July
2011. Our operations are covered by business interruption insurance
and we finalized our claim and recorded a recovery of $9 million in
the fourth quarter of 2012. 
Proportion of Methanex-produced methanol sales 
The cost of purchased methanol is directly linked to the selling
price for methanol at the time of purchase and the cost of purchased
methanol is generally higher than the cost of Methanex-produced
methanol. Accordingly, an increase in the proportion of
Methanex-produced methanol sales results in a decrease in our overall
cost structure for a given period. For the fourth quarter of 2012
compared with the third quarter of 2012 and the fourth quarter of
2011, lower proportion of Methanex-produced methanol sales decreased
Adjusted EBITDA by $4 million and $3 million, respectively. 
For the year ended December 31, 2012 compared with the same period in
2011, a higher proportion of Methanex-produced methanol sales
increased Adjusted EBITDA by $36 million. The impact of higher sales
volumes from the New Zealand, Egypt and Medicine Hat facilities was
partially offset by lower sales volumes from the Chile facilities. 
Purchased methanol costs 
Changes in purchased methanol costs for all periods presented are
primarily as a result of changes in methanol pricing. 
Logistics costs 
Logistics costs vary from period to period depending on the levels of
production from each of our production facilities and the resulting
impact on our supply chain. For the year ended December 31, 2012
compared with the same period in 2011, the logistics cost variance
was impacted by a one-time $7 million charge to earnings to terminate
a time charter vessel lease contract. 
Other, net 
In October 2012, we completed a restructuring of our Chile operations
which reduced the size of our workforce and resulted in a $5 million
charge in the fourth quarter of 2012. The remaining change in other,
net is primarily due to a portion of fixed manufacturing costs being
charged directly to earnings rather than to inventory due to lower
production at our facilities in Chile and Egypt. 
Mark-to-Market Impact of 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 all the
share-based awards, share-based compensation is recognized over the
related vesting period for the proportion of the service that has
been rendered at each reporting date. Share-based compensation
includes an amount related to the grant-date value and a
mark-to-market impact as a result of subsequent changes in the
Company's share price. The grant-date value amount is included in
Adjusted EBITDA and Adjusted net income. The mark-to-market impact of
share-based compensation as a result of changes in our share price is
excluded from Adjusted EBITDA and Adjusted net income and analyzed
separately below. 


 
                                      Three Months Ended      Years Ended  
                                   ----------------------------------------
                                     Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
                                       2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Methanex Corporation share price                                           
(1)                                 $ 31.87 $ 28.54 $ 22.82 $ 31.87 $ 22.82
Grant-date fair value expense                                              
included in Adjusted EBITDA and                                            
Adjusted net income                 $     3 $     3 $     3 $    20 $    16
Mark-to-market impact due to change                                        
in share price                            8       -       1      16    (21)
---------------------------------------------------------------------------
Total share-based compensation                                             
expense (recovery)                  $    11 $     3 $    
 4 $    36 $   (5)
---------------------------------------------------------------------------
(1) US dollar share price of Methanex Corporation as quoted on NASDAQ      
Global Market on the last trading day of the respective period.            

 
Share appreciation rights (SARs) and tandem share appreciation rights
(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. The fair value of SARs and TSARs are
re-measured each quarter using the Black-Scholes option pricing
model, which considers the market value of the Company's common
shares on the last trading day of the quarter. 
Deferred, restricted and performance share units are grants of
notional common shares that are redeemable for cash based on the
market value of the Company's common shares and are non-dilutive to
shareholders. For deferred, restricted and performance share units,
the value is initially measured at the grant date and subsequently
re-measured based on the market value of the Company's common shares
on the last trading day of each quarter. 
Louisiana Project Relocation Expenses and Charges 
In July 2012, we reached a final investment decision to proceed with
the project to relocate an idle Chile facility to Geismar, Louisiana
with an estimated project cost of approximately $550 million. The
project will add one million tonnes of annual production capacity and
is expected to be operational by the end of 2014. Under IFRS, certain
costs associated with relocating an asset are not eligible for
capitalization and are required to be charged directly to earnings.
During the second and third quarters of 2012, we recorded cash
expenses to earnings of $4 million ($2 million after tax) and $35
million ($21 million after-tax), respectively, of Louisiana project
relocation expenses. In addition, in association with this decision,
a non-cash $26 million ($18 million after-tax) charge was recorded to
earnings in the third quarter of 2012 related to the carrying value
of the Chile II facility that is being relocated to Louisiana. 
Depreciation and Amortization 
Depreciation and amortization was $42 million for the fourth quarter
of 2012 compared with $47 million for the third quarter of 2012 and
$43 million for the fourth quarter of 2011. Depreciation and
amortization was lower in the fourth quarter of 2012 compared with
the third quarter of 2012 primarily as a result of a higher
proportion of depreciation being charged directly to earnings rather
than to inventory in the third quarter due to lower production from
the Egypt facility. Depreciation and amortization was $172 million
for the year ended December 31, 2012 compared with $157 million for
the same period in 2011. The increase in depreciation and
amortization in 2012 compared with 2011 is primarily a result of
depreciation associated with the Egypt (100% basis) and Medicine Hat
methanol facilities which commenced operations in the first and
second quarters of 2011, respectively. 
Finance Costs 


 
                                      Three Months Ended      Years Ended  
                                   ----------------------------------------
                                     Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
($ millions)                           2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Finance costs before capitalized                                           
interest                            $    16 $    19 $    18 $    73 $    69
Less capitalized interest               (1)     (1)       -     (2)     (7)
---------------------------------------------------------------------------
Finance costs                       $    15 $    18 $    18 $    71 $    62
---------------------------------------------------------------------------

 
Finance costs before capitalized interest primarily relate to
interest expense on the unsecured notes and limited recourse debt
facilities. 
Capitalized interest in 2011 relates to interest costs capitalized
during the construction of the 1.26 million tonne per year methanol
facility in Egypt (100% basis) which commenced operations in March
2011. Capitalized interest in the third and fourth quarters of 2012
relates to interest costs capitalized for the Louisiana project. 


 
Finance Income and Other Expenses                                          
                                                                           
                                      Three Months Ended      Years Ended  
                                   ----------------------------------------
                                     Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
($ millions)                           2012    2012    2011    2012    2011
-----------------------------------------------------------  --------------
Finance income and other expenses   $     3 $   (3) $   (3) $     1 $     2
---------------------------------------------------------------------------

 
The change in finance income and other expenses for all periods
presented was primarily due to the impact of changes in foreign
exchange rates. 
Income Taxes 
A summary of our income taxes for 2012 compared with 2011 is as
follows: 


 
                                              Year Ended                   
                                              Dec 31 2012                  
                           ------------------------------------------------
                             Amounts excluding                             
                                     Louisiana                             
                                       Project  Louisiana Project          
                                    Relocation         Relocation          
                                  Expenses and       Expenses and          
                                Charges and an        Charges and          
                              Asset Impairment           an Asset          
($ millions)                            Charge  Impairment Charge     Total
---------------------------------------------------------------------------
Profit (loss) before income                                                
tax expense                 $            243.7 $          (362.0) $ (118.3)
Income tax recovery                                                        
(expense)                               (44.3)              128.0      83.7
---------------------------------------------------------------------------
Net income (loss)           $            199.4 $          (234.0) $  (34.6)
---------------------------------------------------------------------------
Effective tax rate                         18%                35%       71%
---------------------------------------------------------------------------
                                                                           
                                              Year Ended                   
                                              Dec 31 2011                  
                           ------------------------------------------------
                             Amounts excluding                             
                                     Louisiana                             
                                       Project  Louisiana Project          
                                    Relocation         Relocation          
                                  Expenses and       Expenses and          
                                Charges and an        Charges and          
                              Asset Impairment           an Asset          
($ millions)                            Charge  Impairment Charge     Total
---------------------------------------------------------------------------
Profit before income tax                                              
     
expense                       $          283.9   $              - $   283.9
Income tax expense                      (55.9)                  -    (55.9)
---------------------------------------------------------------------------
Net income                    $          228.0   $              - $   228.0
---------------------------------------------------------------------------
Effective tax rate                         20%                  -       20%
---------------------------------------------------------------------------

 
For the year ended December 31, 2012, the effective tax rate
excluding income taxes related to Louisiana project relocation
expenses and charges and the asset impairment charge was 18% compared
with 20% for the year ended December 31, 2011. 
We earn the majority of our pre-tax earnings in Trinidad, Egypt,
Chile, Canada and New Zealand. In Trinidad and Chile, the statutory
tax rate is 35% and in Egypt, the statutory tax rate is 25%. Our
Atlas facility in Trinidad has partial relief from corporation income
tax until 2014. We have significant loss carryforwards in Canada and
New Zealand which have not been recognized for accounting purposes.
During 2012, we earned a higher proportion of our consolidated income
from methanol produced in jurisdictions with low effective tax rates
and this contributed to a lower effective tax rate compared with
2011. 
SUPPLY/DEMAND FUNDAMENTALS 
We estimate that methanol demand, excluding methanol demand from
integrated methanol to olefins facilities, is currently approximately
52 million tonnes on an annualized basis. 
Traditional chemical derivatives consume about two-thirds of global
methanol demand and growth is correlated to industrial production.
Demand for methanol in traditional chemical derivatives has remained
relatively stable. 
Energy-related applications consume about one third of global
methanol demand and over the last few years high oil prices have
driven strong demand growth for methanol into energy applications
such as gasoline blending and DME, primarily in China. Growth of
methanol blending into gasoline in China has been particularly strong
and we believe that future growth in this application is supported by
regulatory changes in that country. Many provinces in China have
implemented fuel blending standards, and China also has national
standards in place for methanol fuel blending (M85 & M100, or 85%
methanol and 100% methanol, respectively). Methanol demand into
olefins ("MTO") is emerging as a significant methanol derivative.  In
China, there are three integrated and one merchant MTO plants in
production and there is a second merchant plant currently being
commissioned which could consume up to 1.8 million tonnes of methanol
per year. We believe demand potential into energy-related
applications and olefins production will continue to grow. 


 
Methanex Non-Discounted Regional Posted Prices (1)                         
                                                Jan     Dec     Nov     Oct
(US$ per tonne)                                2013    2012    2012    2012
---------------------------------------------------------------------------
United States                                   482     482     482     439
Europe (2)                                      476     437     437     437
Asia                                            435     435     435     435
---------------------------------------------------------------------------
(1) Discounts from our posted prices are offered to customers based on     
various factors.                                                           
(2) EUR370 for Q1 2013 (Q4 2012 - EUR340) converted to United States       
dollars.                                                                   
---------------------------------------------------------------------------

 
During the fourth quarter of 2012, industry outages contributed to
upward pressure on pricing in Europe and North America, while pricing
in Asia was relatively stable. Our average non-discounted price in
the fourth quarter was $450 per tonne. Entering the first quarter,
market conditions and the pricing environment are relatively stable.
Our European non-discounted price for the first quarter of 2013
increased to EUR370 per tonne ($476 per tonne) and we recently
announced our North American non-discounted price for February at
$482 per tonne, which is unchanged from January. 
Over the next few years, there is a modest level of new capacity
expected to come on-stream relative to demand growth expectations.
There is a 0.8 million tonne plant expected to restart in
Channelview, Texas in late 2013 and a 0.7 million tonne plant
expected to start up in Azerbaijan in 2013. We are currently adding
90,000 tonnes of production capacity to our Medicine Hat, Alberta
facility and we are working on other initiatives which could increase
annual production in New Zealand by up to 0.9 million tonnes. We are
also relocating an idle Chile facility to Geismar, Louisiana which is
on track to add 1.0 million tonnes of annual production capacity by
the end of 2014. 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 
Cash flows from operating activities 
Cash flows from operating activities in the fourth quarter of 2012
were $98 million compared with $131 million for the third quarter of
2012 and $158 million for the fourth quarter of 2011. Cash flows from
operating activities for the year ended December 31, 2012 were $458
million compared with $480 million for the same period in 2011. 
The changes in cash flows from operating activities resulted from
changes in the following: 


 
                                    Q4 2012         Q4 2012            2012
                              compared with   compared with   compared with
($ millions)                        Q3 2012         Q4 2011            2011
---------------------------------------------------------------------------
Increase (decrease) in                                                     
Adjusted EBITDA                                                            
(attributable to Methanex                                                  
shareholders)                 $          15   $        (14)   $           2
Cash flows from operating                                                  
activities attributable to                                                 
non-controlling interests                 -             (5)              20
Changes in non-cash working                                                
capital                                (66)            (34)            (14)
Income taxes paid                      (10)               -              16
Cash portion of Louisiana                                                  
project relocation expenses                                                
and charges                              35               -            (39)
Other                                   (7)             (7)             (7)
---------------------------------------------------------------------------
Decrease in cash flows from                                                
operating activities          $        (33)   $        (60)   $        (22)
---------------------------------------------------------------------------

 
Adjusted cash flows from operating activities 
Adjusted cash flows from operating activities, which excludes the
amounts associated with the 40% non-controlling interests in the
methanol facility in Egypt, changes in non-cash working capital, and
the cash portion of Louisiana project relocation expenses and
charges, were $101 million in the fourth quarter of 2012 compared
with $103 million for the third quarter of 2012 and $122 million for
the fourth quarter of 2011. Adjusted cash flows from operating
activities for the year e
nded December 31, 2012 were $403 million
compared with $392 million for the same period in 2011. 
The changes in adjusted cash flows from operating activities resulted
from changes in the following: 


 
                                    Q4 2012         Q4 2012            2012
                              compared with   compared with   compared with
($ millions)                        Q3 2012         Q4 2011            2011
---------------------------------------------------------------------------
Increase (decrease) in                                                     
Adjusted EBITDA                                                            
(attributable to Methanex                                                  
shareholders)                 $          15   $        (14)   $           2
Income taxes paid                      (10)               -              16
Other                                   (7)             (7)             (7)
---------------------------------------------------------------------------
Increase (decrease) in                                                     
Adjusted cash flows from                                                   
operating activities          $         (2)   $        (21)   $          11
---------------------------------------------------------------------------

 
Refer to the Additional Information - Supplemental Non-GAAP Measures
section for a reconciliation of Adjusted cash flows from operating
activities to the most comparable GAAP measure. 
During the fourth quarter of 2012, we paid a quarterly dividend of
$0.185 per share, or $17 million. 
We operate in a highly competitive commodity industry and believe it
is appropriate to maintain a conservative balance sheet and to
maintain financial flexibility. During the fourth quarter of 2012, we
issued $350 million of 3.25% unsecured notes due in 2019 and our cash
balance at December 31, 2012 was $746 million, including $36 million
related to the non-controlling interest in Egypt. 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.
Also during the fourth quarter, we extended the maturity on our
revolving credit facility to 2016 and increased the amount to $400
million. 
Our planned capital maintenance expenditure program directed towards
maintenance, turnarounds and catalyst changes for existing operations
is currently estimated to total approximately $140 million to the end
of 2013, including major refurbishments at some of our plants. In
July 2012, we reached a final investment decision to proceed with the
project to relocate an idle Chile facility to Geismar, Louisiana with
estimated project costs of approximately $550 million. The plant is
expected to be operational by the end of 2014 and during 2012 we
spent $113 million on the project. We are in the process of
debottlenecking the Medicine Hat facility and are also considering
other projects in New Zealand to increase operating capacity. The
projects in New Zealand, if approved, and Medicine Hat will result in
additional capital expenditures of approximately $160 million by the
end of 2013. We believe that we have the financial capacity to fund
these growth initiatives with cash on hand, cash generated from
operations and the undrawn bank facility. 
We believe we are well positioned to meet our financial commitments,
invest to grow the Company and continue to deliver on our commitment
to return excess cash to shareholders. 
SHORT-TERM OUTLOOK 
Entering the first quarter 2013, methanol demand has remained healthy
and prices have been relatively stable. 
The methanol price will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand. We believe that
our financial position and financial flexibility, outstanding global
supply network and competitive-cost position will provide a sound
basis for Methanex to continue to be the leader in the methanol
industry and to invest to grow the Company. 
CONTROLS AND PROCEDURES 
For the three months ended December 31, 2012, 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. 
ANTICIPATED CHANGES TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
(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 consolidation accounting so that the
equity method of accounting for such interests would need to be
applied. The impact of applying consolidation accounting or equity
accounting does not result in any change to net earnings or
shareholders' equity, but will result in a significant presentation
impact. We currently account for our 63.1% interest in Atlas Methanol
Company using proportionate consolidation accounting and upon
adoption of these new standards effective January 1, 2013 we will
account for this entity using equity accounting. 
ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES 
In addition to providing measures prepared in accordance with
International Financial Reporting Standards (IFRS), we present
certain supplemental non-GAAP measures. These are Adjusted EBITDA,
Adjusted net income, Adjusted diluted net income per common share,
operating income and Adjusted cash flows from operating activities.
These measures do not have any standardized meaning prescribed by
generally accepted accounting principles (GAAP) and therefore are
unlikely to be comparable to similar measures presented by other
companies. These supplemental non-GAAP measures are provided to
assist readers in determining our ability to generate cash from
operations and improve the comparability of our results from one
period to another. We believe these measures are useful in assessing
operating performance and liquidity of the Company's ongoing business
on an overall basis. We also believe Adjusted EBITDA is frequently
used by securities analysts and investors when comparing our results
with those of other companies. 
Adjusted EBITDA (attributable to Methanex shareholders) 
Adjusted EBITDA differs from the most comparable GAAP measure, net
income attributable to Methanex shareholders, because it excludes
finance costs, finance income and other expenses, income tax expense
(recovery), depreciation and amortization, mark-to-market impact of
share-based compensation, Louisiana project relocation expenses and
charges and asset impairment charges. 
Adjusted EBITDA and Adjusted net income exclude the mark-to-market
impact of share-based compensation related to the impact of changes
in our share price on share appreciation rights, tandem share
appreciation rights, deferred share units, restricted share units and
performance share units. The mark-to-market impact related to
performance share units that is excluded from Adjusted EBITDA and
Adjusted net income is calculated as the difference between the grant
date value determined using a Methanex total shareholder return
factor of 100% and the fair value recorded at each period end. As
share-based awards will be settled in future periods, the ultimate
value of the units is unknown at the date of grant and therefore the
grant date value recognized in Adjusted EBITDA and Adjusted net
income may differ from the total settlement cost. 
The following table shows a reconciliation from net income (loss)
attributable to Methanex shareholders to Adjusted EBITDA: 


 
                                       Three Months Ended     Years Ended  
                                  
 ----------------------------------------
                                     Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
($ millions)                           2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Net income (loss) attributable to                                          
Methanex shareholders               $ (140) $   (3) $    64 $  (68) $   201
  Finance costs                          15      18      18      71      62
  Finance income and other expenses     (3)       3       3     (1)     (2)
  Income tax expense (recovery)        (93)    (15)      12    (84)      56
  Depreciation and amortization          42      48      43     172     157
  Mark-to-market impact of share-                                          
  based compensation                      8       -       1      16    (21)
  Louisiana project relocation                                             
  expenses and charges                    -      61       -      65       -
  Asset impairment charge               297       -       -     297       -
  Non-controlling interests                                                
  adjustment (1)                        (7)     (8)     (8)    (39)    (26)
---------------------------------------------------------------------------
Adjusted EBITDA (attributable to                                           
Methanex shareholders)              $   119 $   104 $   133 $   429 $   427
---------------------------------------------------------------------------
                                                                           
(1) This adjustment represents finance costs, finance income and other     
expenses, income tax expense, and depreciation and amortization associated 
with the 40% non-controlling interest in the methanol facility in Egypt.  

 
Adjusted Net Income and Adjusted Diluted Net Income per Common Share 
Adjusted net income and Adjusted diluted net income per common share
are non-GAAP measures because they exclude the mark-to-market impact
of share-based compensation and items that are considered by
management to be non-operational, including asset impairment charges
and Louisiana project relocation charges and expenses. The following
table shows a reconciliation of net income (loss) attributable to
Methanex shareholders to Adjusted net income and the calculation of
Adjusted diluted net income per common share: 


 
                                       Three Months Ended     Years Ended  
                                   ----------------------------------------
($ millions except number of shares  Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
and per share amounts)                 2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Net income (loss) attributable to                                          
Methanex shareholders               $ (140) $   (3) $    64 $  (68) $   201
  Mark-to-market impact of share-                                          
  based compensation                      8       -       1      16    (21)
  Louisiana project relocation                                             
  expenses and charges                                                     
    Cash expense                          -      35       -      39       -
    Non-cash charge                       -      26       -      26       -
  Asset impairment charge               297       -       -     297       -
  Income tax expense (recovery)                                            
  related to above items              (104)    (22)       -   (130)       2
---------------------------------------------------------------------------
Adjusted net income                 $    61 $    36 $    65 $   180 $   182
---------------------------------------------------------------------------
Diluted weighted average shares                                            
outstanding                              94      94      94      94      94
Adjusted diluted net income per                                            
common share (1)                    $  0.64 $  0.38 $  0.69 $  1.90 $  1.93
---------------------------------------------------------------------------
                                                                           
(1) For the three month period and year ended December 31, 2012, stock     
options have been excluded from the calculation of diluted net loss per    
common share (attributable to Methanex shareholders) as their effect would 
be anti-dilutive. However, for the calculation of adjusted diluted net     
income per common share (attributable to Methanex shareholders) stock      
options have been included in the denominator and the diluted weighted     
average number of common shares is 95 million for the three month period   
and year ended December 31, 2012.                                          

 
Adjusted Cash Flows from Operating Activities (attributable to
Methanex shareholders) 
Adjusted cash flows from operating activities differs from the most
comparable GAAP measure, cash flows from operating activities,
because it does not include cash flows associated with the 40%
non-controlling interest in the methanol facility in Egypt, changes
in non-cash working capital and the cash portion of Louisiana project
relocation expenses and charges. 
The following table shows a reconciliation of cash flows from
operating activities to adjusted cash flows from operating
activities: 


 
                                       Three Months Ended      Years Ended 
                                   ----------------------------------------
                                     Dec 31  Sep 30  Dec 31  Dec 31  Dec 31
($ millions)                           2012    2012    2011    2012    2011
---------------------------------------------------------------------------
Cash flows from operating                                                  
activities                          $    98 $   131 $   158 $   458 $   480
Deduct non-controlling interest                                            
adjustment:                                                                
  Net income                            (5)     (4)     (9)    (34)    (27)
  Non-cash items                        (7)     (8)     (8)    (39)    (26)
Changes in non-cash working capital      15    (51)    (19)    (21)    (35)
Cash portion of Louisiana project                                          
relocation expenses and charges           -      35       -      39       -
---------------------------------------------------------------------------
Adjusted cash flows from operating                                         
activities (attributable to                                                
Methanex shareholders)              $   101 $   103 $   122 $   403 $   392
---------------------------------------------------------------------------

 
Operating Income 
Operating income is reconciled directly to a GAAP measure in our
consolidated statements of income. 
QUARTERLY FINANCIAL DATA (UNAUDITED) 
A summary of selected financial information for the prior eight
quarters is as follows: 


 
                                              Three Months Ended           
                                   ----------------------------------------
($ millions, except per share          Dec 31    Sep 30    Jun 30    Mar 31
amounts)                                 2012      2012      2012      2012
---------------------------------------------------------------------------
Revenue                             $     696 $     655 $     656 $     666
Adjusted EBITDA (1,2)                     119       104       113        93
Net income (loss) (1)                   (140)       (3)        52        22
Adjusted net income (1,2)                  61        36        44        39
Basic net income (loss) per common                                         
share (1)                     
         (1.49)    (0.03)      0.56      0.24
Diluted net income (loss) per                                              
common share (1)                       (1.49)    (0.03)      0.50      0.23
Adjusted diluted net income per                                            
share (1,2)                              0.64      0.38      0.47      0.41
---------------------------------------------------------------------------
                                                                           
                                              Three Months Ended           
                                   ----------------------------------------
($ millions, except per share          Dec 31    Sep 30    Jun 30    Mar 31
amounts)                                 2011      2011      2011      2011
---------------------------------------------------------------------------
Revenue                             $     696 $     670 $     623 $     619
Adjusted EBITDA (1,2)                     133       111       102        81
Net income (1)                             64        62        41        35
Adjusted net income (1,2)                  65        40        39        37
Basic net income per common share (1)    0.69      0.67      0.44      0.37
Diluted net income per common share (1)  0.68      0.59      0.43      0.37
Adjusted diluted net income per                                            
share (1,2)                              0.69      0.43      0.41      0.39
---------------------------------------------------------------------------
                                                                           
(1) Attributable to Methanex Corporation shareholders.                     
(2) These items are non-GAAP measures that do not have any standardized    
meaning prescribed by GAAP and therefore are unlikely to be comparable to  
similar measures presented by other companies. Refer to the Additional     
Information - Supplemental Non-GAAP Measures section for a description  
of each non-GAAP measure and reconciliations to the most comparable GAAP   
measures.                                                                  

 
FORWARD-LOOKING INFORMATION WARNING 
This Fourth Quarter 2012 Management's Discussion and Analysis
("MD&A") as well as comments made during the Fourth Quarter 2012
investor conference call contain forward-looking statements with
respect to us and our industry. These statements relate to future
events or our future performance. All statements other than
statements of historical fact are forward-looking statements.
Statements that include the words "believes", "expects", "may",
"will", "potential", "estimates", "target", "interest", "planning" 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 new methanol supply or restart of idled capacity and timing for
    start-up of the same, 
--  expected shutdowns (either temporary or permanent) or restarts of
    existing methanol supply (including our own facilities), including,
    without limitation, the timing and length of planned maintenance
    outages, 
--  expected methanol and energy prices, 
--  expected levels of methanol purchases from traders or other third
    parties, 
--  expected levels, timing and availability of economically priced natural
    gas supply to each of our plants, 
--  capital committed by third parties towards future natural gas
    exploration and development in the vicinity of our plants, 
--  our expected capital expenditures, including, without limitation, those
    to support natural gas exploration and development for our plants and
    the restart of our idled methanol facilities, 
--  anticipated production rates of our plants, 
--  expected operating costs, including natural gas feedstock costs and
    logistics costs, 
--  expected tax rates or resolutions to tax disputes, 
--  expected cash flows, earnings capability and share price, 
--  ability to meet covenants or obtain waivers associated with our long-
    term debt obligations, including, without limitation, the Egypt limited
    recourse debt facilities that have conditions associated with
    finalization of certain land title registration and related mortgages
    that require action by Egyptian governmental entities, 
--  availability of committed credit facilities and other financing, 
--  our shareholder distribution strategy and anticipated distributions to
    shareholders, 
--  commercial viability and timing of, or our ability to execute, future
    projects, plant restarts, capacity expansions, plant relocations, or
    other business initiatives or opportunities, including the planned
    relocation of one of our idle Chile methanol plants to Geismar,
    Louisiana ("Geismar") and certain initiatives in New Zealand, 
--  our financial strength and ability to meet future financial commitments,
--  expected global or regional economic activity (including industrial
    production levels), 
--  expected outcomes of litigation or other disputes, claims and
    assessments, 
--  expected actions of governments, government agencies, gas suppliers,
    courts, tribunals or other third parties, and 
--  expected impact on our operations in Egypt or our financial condition as
    a consequence of civil unrest or actions taken or inaction 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: 


 
--  the supply of, demand for, and price of methanol, methanol derivatives,
    natural gas, oil and oil derivatives, 
--  the success of our natural gas exploration and development in Chile and
    New Zealand and our ability to procure economically priced natural gas
    in Chile, New Zealand, Trinidad, Canada and the United States, 
--  production rates of our facilities, 
--  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, 
--  the availability of committed credit facilities and other financing, 
--  timing of completion and cost of the Geismar project and our initiatives
    to increase production in New Zealand and Canada, 
--  global and regional economic activity (including industrial production
    levels), 
--  absence of a material negative impact from major natural disasters, 
--  receipt of remaining required permits in connection with the Geismar
    project, 
--  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 or rights to purchase natural gas, 
--  receipt of governmental approvals related to natural gas exploration
    rights, 
--  absence of a material negative impact from changes in laws or
    regulations, 
--  absence of a material negative impact from political instability in the
    countries in which we operate, 
--  enforcement of contractual arrangements and ability to perform
    contractual obligations by customers, natural gas and other suppliers
    and other third parties, and 
--  satisfaction of conditions precedent contained in the Geismar project
    natural gas supply
 agreement.

 
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: 


 
--  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, 
--  the price of natural gas, coal, oil and oil derivatives, 
--  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 and New Zealand on commercially acceptable terms, 
--  the ability to successfully carry out corporate initiatives and
    strategies, 
--  actions of competitors, suppliers and financial institutions, 
--  conditions within the natural gas delivery systems that may prevent
    delivery of our natural gas supply requirements, 
--  competing demand for natural gas, especially with respect to domestic
    needs for gas and electricity in Chile and Egypt, 
--  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, 
--  satisfaction of conditions precedent contained in the Geismar project
    natural gas supply agreement, and 
--  other risks described in our 2011 Management's Discussion and Analysis
    and this Fourth Quarter 2012 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. 
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 Adjusted EBITDA (refer to the
Additional Information - Supplemental Non-GAAP Measures section for a
description of each non-GAAP measure and reconciliations to the most
comparable GAAP measures). 
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 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 revenue. 
CASH COST 
The change in Adjusted EBITDA as a result of changes in cash costs is
calculated as the difference from period to period in cash costs per
tonne multiplied by the current period total methanol sales volume
excluding commission sales volume in the current period. The cash
costs per tonne is the weighted average of the cash cost per tonne of
Methanex-produced methanol and the cash cost per tonne of purchased
methanol. The cash cost per tonne of Methanex-produced methanol
includes absorbed fixed cash costs per tonne and variable cash costs
per tonne. The cash cost per tonne of purchased methanol consists
principally of the cost of methanol itself. In addition, the change
in Adjusted EBITDA as a result of changes in cash costs includes the
changes from period to period in unabsorbed fixed production costs,
consolidated selling, general and administrative expenses and fixed
storage and handling costs. 
VOLUME 
The change in Adjusted EBITDA as a result of changes in sales volume
is calculated as the difference from period to period in total
methanol sales volume excluding commission sales volumes multiplied
by the margin per tonne for the prior period. The margin per tonne
for the prior period is the weighted average margin per tonne of
Methanex- produced methanol and margin per tonne of purchased
methanol. The margin per tonne for Methanex-produced methanol is
calculated as the selling price per tonne of methanol less absorbed
fixed cash costs per tonne and variable cash costs per tonne. The
margin per tonne for purchased methanol is calculated as the selling
price per tonne of methanol less the cost of purchased methanol per
tonne. 
We own 63.1% of the Atlas methanol facility and market the remaining
36.9% of its production through a commission offtake agreement. We
account for this investment using proportionate consolidation, which
results in 63.1% of its results being included in revenues and
expenses 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% of its production through a commission
offtake agreement. We account for this investment using consolidation
accounting, which results in 100% of the revenues and expenses being
included in our financial statements with the other investors'
interests in the methanol facility being presented as
"non-controlling interests". For purposes of analyzing our business,
Adjusted EBITDA, Adjusted net income and Adjusted cash flows from
operating activities exclude the amounts associated with the other
investors' 40% non-controlling interests, which are included in
commission income on a consistent basis with how we present the Atlas
facility. 


 
Methanex Corporation                                                       
Consolidated Statements of Income (Loss) (unaudited)                       
(thousands of U.S. dollars, except number of common shares and per share   
amounts)                                                                   
                                                                           
                                                                           
                                                                           
                            Three Months Ended            Years Ended      
                     ------------------------------------------------------
                            Dec 31       Dec 31        Dec 31        Dec 31
                              2012         2011          2012          2011
---------------------------------------------------------------------------
                                                                           
Revenue                $   695,654  $   696,499  $  2,672,954  $  2,608,037
Cost of sales and                                                          
operating expenses       (572,968)    (546,873)   (2,187,288)   (2,107,320)
Depreciation and                                                           
amortization              (41,543)     (43,558)     (171,635)     (156,667)
Louisiana project                                                          
relocation expenses                                                        
and charges (note 3)             -            -      (64,543)             -
Asset impairment                                                           
charge (note 4)          (296,976)            -     (296,976)             -
---------------------------------------------------------------------------
Operating income                                                           
(loss)                   (215,833)      106,068      (47,488)       344,050
Finance costs (note 6)    (14,880)     (17,868)      (71,314)      (61,797)
Finance income and                                                         
other expenses               2,521      (2,891)           509         1,667
---------------------------------------------------------------------------
Profit (loss) before                                                       
income tax expense       (228,192)       85,309     (118,293)       283,920
Income tax recovery                                                        
(expense):                                                                 
  Current                  (8,301)      (8,897)      (30,302)      (36,241)
  Deferred                 101,517      (3,292)       114,020      (19,679)
---------------------------------------------------------------------------
                            93,216     (12,189)        83,718      (55,920)
---------------------------------------------------------------------------
Net income (loss)      $ (134,976)  $    73,120  $   (34,575)  $    228,000
---------------------------------------------------------------------------
Attributable to:                                                           
  Methanex                                                                 
  Corporation                                                              
  shareholders           (139,853)       63,871      (68,105)       201,326
  Non-controlling                                                          
  interests                  4,877        9,249        33,530        26,674
---------------------------------------------------------------------------
                       $ (134,976)  $    73,120  $   (34,575)  $    228,000
---------------------------------------------------------------------------
                                                                           
Income (loss) for the                                                      
period attributable                                                        
to Methanex                                                                
Corporation                                                                
shareholders                                                               
  Basic net income                                                         
  (loss) per common                                                        
  share (note 7)       $    (1.49)  $      0.69  $     (0.73)  $       2.16
  Diluted net income                                                       
  (loss) per common                                                        
  share (note 7)       $    (1.49)  $      0.68  $     (0.73)  $       2.06
                                                                           
Weighted average                                                           
number of common                                                           
shares outstanding      94,092,591   93,239,059    93,755,509    93,026,482
Diluted weighted                                                           
average number of                                                          
common shares                                                              
outstanding             94,092,591   94,236,703    93,755,509    94,360,956
                                                                           
                                                                           
See accompanying notes to condensed consolidated interim financial         
statements.                                                                
                                                                           
Methanex Corporation                                                       
Consolidated Statements of Comprehensive Income (Loss) (unaudited)         
(thousands of U.S. dollars, except number of common shares and per share   
amounts)                                                                   
                                                                           
                                                                           
                                                                           
                                  Three Months Ended        Years Ended    
                             ----------------------------------------------
                                   Dec 31     Dec 31      Dec 31     Dec 31
                                     2012       2011        2012       2011
---------------------------------------------------------------------------
Net income (loss)              $(134,976)  $  73,120  $ (34,575)  $ 228,000
  Other comprehensive income                                               
  (loss):                                                                  
    Change in fair value of                                                
    forward exchange                                                       
    contracts, net of tax              23        361       (320)        326
    Change in fair value of                                                
    interest rate swap                                                     
    contracts, net of tax           (690)      (157)     (5,794)    (3,764)
    Realized loss on interest                                              
    rate swap contracts                                                    
    reclassified to interest                                               
    expense, net of tax             2,777      3,995      11,198     12,816
    Realized loss on interest                                              
    rate swap contracts                                                    
    reclassified to property,                                              
    plant and equipment                 -          -           -      7,279
    Actuarial losses on                                                    
    defined benefit pension                                                
    plans, net of tax             (1,135)   (10,258)     (1,135)   (10,258)
---------------------------------------------------------------------------
                                      975    (6,059)       3,949      6,399
---------------------------------------------------------------------------
Comprehensive income (loss)    $(134,001)  $  67,061  $ (30,626)  $ 234,399
---------------------------------------------------------------------------
Attributable to:                                                           
  Methanex Corporation                                                     
  shareholders                  (139,712)     56,275    (66,317)    201,193
  Non-controlling interests         5,711     10,786      35,691     33,206
---------------------------------------------------------------------------
                               $(134,001)  $  67,061  $ (30,626)  $ 234,399
---------------------------------------------------------------------------
                                                                           
                                                                           
See accompanying notes to condensed consolidated interim financial         
statements.                                                                
                                                                           
Methanex Corporation                                                       
Consolidated Statements of Financial Position (unaudited)                  
(thousands of U.S. dollars)                                                
                 
                                                          
                                                                           
                                                                           
                                                         Dec 31      Dec 31
AS AT                                                      2012        2011
---------------------------------------------------------------------------
                                                                           
ASSETS                                                                     
Current assets:                                                            
  Cash and cash equivalents                          $  745,610  $  350,711
  Trade and other receivables                           429,203     378,430
  Inventories (note 2)                                  253,023     281,015
  Prepaid expenses                                       28,314      24,465
---------------------------------------------------------------------------
                                                      1,456,150   1,034,621
Non-current assets:                                                        
  Property, plant and equipment (notes 3 and 4)       2,014,748   2,233,023
  Other assets (note 4)                                  73,724     125,931
---------------------------------------------------------------------------
                                                      2,088,472   2,358,954
---------------------------------------------------------------------------
                                                     $3,544,622  $3,393,575
---------------------------------------------------------------------------
                                                                           
LIABILITIES AND EQUITY                                                     
Current liabilities:                                                       
  Trade, other payables and accrued liabilities      $  353,744  $  327,130
  Current maturities on long-term debt (note 5)          53,334     251,107
  Current maturities on finance leases                    7,367       6,713
  Current maturities on other long-term liabilities      26,536      18,031
---------------------------------------------------------------------------
                                                        440,981     602,981
Non-current liabilities:                                                   
  Long-term debt (note 5)                             1,191,891     652,148
  Finance leases                                         48,612      55,979
  Other long-term liabilities                           193,823     178,172
  Deferred income tax liabilities                       191,578     302,332
---------------------------------------------------------------------------
                                                      1,625,904   1,188,631
Equity:                                                                    
  Capital stock                                         481,779     455,434
  Contributed surplus                                    15,481      22,281
  Retained earnings                                     805,661     942,978
  Accumulated other comprehensive loss                 (13,045)    (15,968)
---------------------------------------------------------------------------
  Shareholders' equity                                1,289,876   1,404,725
  Non-controlling interests                             187,861     197,238
---------------------------------------------------------------------------
  Total equity                                        1,477,737   1,601,963
---------------------------------------------------------------------------
                                                     $3,544,622  $3,393,575
---------------------------------------------------------------------------
                                                                           
                                                                           
See accompanying notes to condensed consolidated interim financial         
statements.                                                                
                                                                           
Methanex Corporation                                                       
Consolidated Statements of Changes in Equity (unaudited)                   
(thousands of U.S. dollars, except number of common shares)                
                                                                           
                                                                           
                                                                           
                            Number of                                      
                               Common     Capital   Contributed    Retained
                               Shares       Stock       Surplus    Earnings
---------------------------------------------------------------------------
Balance, December 31,                                                      
 2010                      92,632,022 $   440,092 $      25,393 $   813,819
  Net income                                                        201,326
  Other comprehensive                                                      
   income (loss)                                                   (10,258)
  Compensation expense                                                     
   recorded for stock                                                      
   options                          -           -           837           -
  Issue of shares on                                                       
   exercise of stock                                                       
   options                    615,733      11,393             -           -
  Reclassification of                                                      
   grant date fair
   value on exercise of                                                    
   stock options                    -       3,949       (3,949)           -
  Dividend payments to                                                     
   Methanex Corporation                                                    
   shareholders                     -           -             -    (61,909)
  Distributions to non-                                                    
   controlling interests            -           -             -           -
  Equity contributions by                                                  
   non-controlling                                                         
   interests                        -           -             -           -
---------------------------------------------------------------------------
Balance, December 31,                                                      
 2011                      93,247,755     455,434        22,281     942,978
  Net income (loss)                 -           -             -    (68,105)
  Other comprehensive                                                      
   income (loss)                    -           -             -     (1,135)
  Compensation expense                                                     
   recorded for stock                                                      
   options                          -           -           726           -
  Issue of shares on                                                       
   exercise of stock                                                       
   options                  1,062,215      18,819             -           -
  Reclassification of                                                      
   grant date fair value                                                   
   on exercise of stock                                                    
   options                          -       7,526       (7,526)           -
  Dividend payments to                                                     
   Methanex Corporation                                                    
   shareholders                     -           -             -    (68,077)
  Distributions to non-                                                    
   controlling interests            -           -             -           -
  Equity contributions by                                                  
   non-controlling                                                         
   interests                        -           -             -           -
---------------------------------------------------------------------------
Balance, December 31,                                                      
 2012                      94,309,970 $   481,779 $      15,481 $   805,661
---------------------------------------------------------------------------
                                                                           
See accompanying notes to condensed consolidated interim financial         
statements.                                                                
                                                                           
 
Methanex Corporation                                                       
Consolidated Statements of Changes in Equity (unaudited)                   
(thousands of U.S. dollars, except number of common shares)                
                                                                           
                                                                           
                              Accumu-                                      
                                lated                                      
                                Other                                      
                              Compre-      Share-          Non-            
                              hensive    holders'   Controlling       Total
                                 Loss      Equity     Interests      Equity
-----------------------------------------------------------------------
----
Balance, December 31,                                                      
 2010                     $  (26,093) $ 1,253,211 $     156,412 $ 1,409,623
  Net income                        -     201,326        26,674     228,000
  Other comprehensive                                                      
   income (loss)               10,125       (133)         6,532       6,399
  Compensation expense                                                     
   recorded for stock                                                      
   options                          -         837             -         837
  Issue of shares on                                                       
   exercise of stock                                                       
   options                          -      11,393             -      11,393
  Reclassification of                                                      
   grant date fair                                                         
   value on exercise of                                                    
   stock options                    -           -             -           -
  Dividend payments to                                                     
   Methanex Corporation                                                    
   shareholders                     -    (61,909)             -    (61,909)
  Distributions to non-                                                    
   controlling interests            -           -      (11,580)    (11,580)
  Equity contributions by                                                  
   non-controlling                                                         
   interests                        -           -        19,200      19,200
---------------------------------------------------------------------------
Balance, December 31,                                                      
 2011                        (15,968)   1,404,725       197,238   1,601,963
  Net income (loss)                 -    (68,105)        33,530    (34,575)
  Other comprehensive                                                      
   income (loss)                2,923       1,788         2,161       3,949
  Compensation expense                                                     
   recorded for stock                                                      
   options                          -         726             -         726
  Issue of shares on                                                       
   exercise of stock                                                       
   options                          -      18,819             -      18,819
  Reclassification of                                                      
   grant date fair value                                                   
   on exercise of stock                                                    
   options                          -           -             -           -
  Dividend payments to                                                     
   Methanex Corporation                                                    
   shareholders                     -    (68,077)             -    (68,077)
  Distributions to non-                                                    
   controlling interests            -           -      (46,068)    (46,068)
  Equity contributions by                                                  
   non-controlling                                                         
   interests                        -           -         1,000       1,000
---------------------------------------------------------------------------
Balance, December 31,                                                      
 2012                     $  (13,045) $ 1,289,876 $     187,861 $ 1,477,737
---------------------------------------------------------------------------
                                                                           
See accompanying notes to condensed consolidated interim financial         
statements.                                                                
                                                                           
Methanex Corporation                                                       
Consolidated Statements of Cash Flows (unaudited)                          
(thousands of U.S. dollars)                                                
                                                                           
                                                                           
                                                                           
                                 Three Months Ended         Years Ended   
                            -----------------------------------------------
                                  Dec 31     Dec 31      Dec 31      Dec 31
                                    2012       2011        2012        2011
---------------------------------------------------------------------------
                                                                           
CASH FLOWS FROM                                                            
OPERATING ACTIVITIES                                                       
  Net income (loss)           $(134,976)  $  73,120  $ (34,575)  $  228,000
  Add (deduct) non-cash                                                    
  items:                                                                   
    Depreciation and                                                       
    amortization                  41,543     43,558     171,635     156,667
    Louisiana project                                                      
    relocation non-cash                                                    
    charges                            -          -      25,688           -
    Asset impairment                                                       
    charge                       296,976          -     296,976           -
    Income tax expense                                                     
    (recovery)                  (93,216)     12,189    (83,718)      55,920
    Share based                                                            
    compensation                                                           
    expense (recovery)            11,027      3,859      35,907     (4,890)
    Finance costs                 14,880     17,868      71,314      61,797
    Other                          6,119      4,408      16,578       3,459
  Income taxes paid             (14,191)   (13,935)    (29,528)    (46,331)
  Other cash payments,                                                     
  including share-based                                                    
  compensation                  (14,897)    (1,484)    (33,774)    (10,303)
---------------------------------------------------------------------------
  Cash flows from                                                          
  operating activities                                                     
  before undernoted              113,265    139,583     436,503     444,319
  Changes in non-cash                                                      
  working capital (note 9)      (14,873)     18,851      21,774      35,388
---------------------------------------------------------------------------
                                  98,392    158,434     458,277     479,707
---------------------------------------------------------------------------
                                                                           
CASH FLOWS FROM                                                            
FINANCING ACTIVITIES                                                       
  Dividend payments to                                                     
  Methanex Corporation                                                     
  shareholders                  (17,428)   (15,852)    (68,077)    (61,909)
  Interest paid,                                                           
  including interest     
                                                  
  rate swap settlements          (6,371)    (5,062)    (64,914)    (60,467)
  Net proceeds on issue                                                    
  of long-term debt              343,796          -     590,344       2,700
  Repayment of long-                                                       
  term debt and limited                                                    
  recourse debt                  (8,135)    (8,133)   (251,105)    (49,650)
  Changes in project                                                       
  debt reserve accounts          (4,916)      3,918     (4,916)    (27,291)
  Equity contributions                                                     
  by non-controlling                                                       
  interests                            -          -       1,000      19,200
  Cash distributions to                                                    
  non-controlling                                                          
  interests                      (3,777)    (6,989)    (49,409)     (8,239)
  Proceeds on issue of                                                     
  shares on exercise of                                                    
  stock options                    5,552        370      18,819      11,393
  Repayment of finance                                                     
  leases and other long                                                    
  term liabilities               (1,727)    (1,574)     (6,712)     (5,964)
---------------------------------------------------------------------------
                                 306,994   (33,322)     165,030   (180,227)
---------------------------------------------------------------------------
                                                                           
CASH FLOWS FROM                                                            
INVESTING ACTIVITIES                                                       
  Property, plant and                                                      
  equipment                     (23,247)   (35,171)   (134,716)   (127,524)
  Louisiana project                                                        
  expenditures                  (35,308)          -    (73,912)           -
  Oil and gas assets            (15,218)    (8,329)    (32,892)    (30,098)
  GeoPark repayments                   -          -      10,039       7,551
  Changes in non-cash                                                      
  working capital                                                          
  related to investing                                                     
  activities (note 9)             10,932      8,124       3,073       7,508
---------------------------------------------------------------------------
                                (62,841)   (35,376)   (228,408)   (142,563)
---------------------------------------------------------------------------
  Increase in cash and                                                     
  cash equivalents               342,545     89,736     394,899     156,917
  Cash and cash                                                            
  equivalents,                                                             
  beginning of period            403,065    260,975     350,711     193,794
---------------------------------------------------------------------------
  Cash and cash                                                            
  equivalents, end of                                                      
  period                      $  745,610  $ 350,711  $  745,610  $  350,711
---------------------------------------------------------------------------
                                                                           
See accompanying notes to condensed consolidated interim financial         
statements.                                                                

 
Methanex Corporation 
Notes to Condensed Consolidated Interim Financial Statements
(unaudited) 
Except where otherwise noted, tabular dollar amounts are stated in
thousands of U.S. dollars. 
1. Basis of presentation: 
Methanex Corporation (the Company) is an incorporated entity with
corporate offices in Vancouver, Canada. The Company's operations
consist of the production and sale of methanol, a commodity chemical.
The Company is the world's largest supplier of methanol to major
international markets in Asia Pacific, North America, Europe and
Latin America. 
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 those
followed in the most recent annual consolidated financial statements.
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 interests, and the
Company's proportionate share of the Atlas methanol facility. 
These 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 & Risk Committee of the Board of Directors on January 30,
2013.  
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 months and year ended
December 31, 2012 is $539 million (2011 - $539 million) and $2,082
million (2011 - $2,052 million), respectively.  
3. Property, plant and equipment:  


 
                    Buildings,                                             
                         Plant                                             
                 Installations                                             
                             &   Plant Under   Oil & Gas                   
                     Machinery  Construction  Properties   Other      Total
---------------------------------------------------------------------------
Cost at                                                                    
December 31,                                                               
2012               $ 3,279,720      $ 75,238    $ 80,368 $68,906 $3,504,232
Accumulated                                                                
depreciation at                                                            
December 31,                                                               
2012                 1,387,034             -      74,151  28,299  1,489,484
---------------------------------------------------------------------------
Net book value                                                             
at December 31,                                                            
2012               $ 1,892,686      $ 75,238    $  6,217 $40,607 $2,014,748
---------------------------------------------------------------------------
Cost at                                                                    
December 31,                                                               
2011               $ 3,209,597      $  1,326    $ 77,486 $88,642 $3,377,051
Accumulated                                                                
depreciation at                                                            
December 31,                                                               
2011                 1,070,267             -      32,990  40,771  1,144,028
---------------------------------------------------------------------------
Net book value                                                             
at December 31,                                                           
2011               $ 2,139,330      $  1,326    $ 44,496 $47,871 $2,233,023
---------------------------------------------------------------------------

 
In July 2012, the Board of Directors gave final approval to proceed
with the project to relocate an idle Chile facility to Geismar,
Louisiana with an estimated project cost of approximately $550
million. Under International Financial Reporting Standards, certain
costs incurred in relation to relocating an asset are not eligible
for capitalization to Property, Plant and Equipment and are required
to be charged directly to income. For the year ended December 31
2012, the Company incurred $112.8 million in expenditures related to
this project, of which $73.9 million was recorded to Property, Plant
and Equipment and the remaining $38.9 million ($23.3 million
after-tax) was recognized in Louisiana project relocation expenses
and charges in the Consolidated Statements of Income. In addition,
for the year ended December 31, 2012, the Company has charged to
income $25.7 million ($17.6 million after-tax) related to the
carrying value of the Chile facility being relocated. 
During the fourth quarter of 2012, the Company recorded an asset
impairment charge relating to the carrying value of its Chile
operations. See note 4 of these condensed consolidated interim
financial statements for more information. 
4. Asset impairment charge: 
The Company reviews the carrying value of long-lived assets for
impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. The Company recently
announced that it expects to idle its Chile operations in March 2013
due to an expected shortfall of natural gas feedstock to keep the
plant operating through the southern hemisphere winter. As a
consequence of the uncertain outlook for the supply of natural gas
feedstock to its Chile operations, the carrying value of the
Company's Chile assets was tested for recoverability at December 31,
2012. 
Recoverability was measured by comparing the carrying value of the
Chile assets to estimated pre-tax fair value. Estimated pre-tax fair
value was determined by measuring the pre-tax cash flows expected to
be generated from Chile assets over their estimated useful life
discounted by a before-tax discount rate. The before-tax discount
rate used of 13% was derived from the Company's estimated cost of
capital. 
There are two key variables that impact the Company's estimates of
future cash flows: (1) the methanol price and (2) the price and
availability of natural gas feedstock. Short-term methanol price
estimates are based on current supply and demand fundamentals and
current methanol prices. Long-term methanol price estimates are based
on the Company's view of long-term supply and demand, and
consideration is given to many factors, including, but not limited
to, estimates of global industrial production rates, energy prices,
changes in general economic conditions, future global methanol
production capacity, industry operating rates and the global industry
cost structure. The Company's estimate of the price and availability
of natural gas takes into consideration the current contracted terms,
as well as factors that it believes are relevant to supply under
these contracts and supplemental natural gas sources. Other
assumptions included in the Company's estimate of future cash flows
include the estimated cost incurred to maintain the facilities,
estimates of transportation costs and other variable costs incurred
in producing methanol in each period. 
Based on the test performed, the Company recorded a non-cash
before-tax asset impairment charge of $297 million ($193 million
after-tax) to write down the carrying value of the Chile assets at
December 31, 2012 to $245 million excluding the first facility that
is being relocated to Geismar, Louisiana. The before-tax asset
impairment charge was allocated as follows:  


 
                                         Three Months                      
                                            Ended            Years Ended   
                                   ----------------------------------------
                                       Dec 31    Dec 31    Dec 31    Dec 31
                                         2012      2011      2012      2011
---------------------------------------------------------------------------
Asset impairment charge allocated                                          
to:                                                                        
  Property, plant and equipment                                            
    Buildings, plant installations                                        
    & machinery                      $200,753  $      -  $200,753  $      -
    Oil & gas properties               22,724         -    22,724         -
  Other assets                                                             
    Oil & gas properties               73,499         -    73,499         -
---------------------------------------------------------------------------
Asset impairment charge              $296,976  $      -  $296,976  $      -
---------------------------------------------------------------------------

 
5. Long-term debt: 


 
                                                         Dec 31      Dec 31
                                                           2012        2011
---------------------------------------------------------------------------
Unsecured notes                                                            
  $350 million at 3.25% due December 15, 2019        $  343,828  $        -
  $250 million at 5.25% due March 1, 2022               246,326           -
  $150 million at 6.00% due August 15, 2015             149,344     149,119
  $200 million at 8.75% due August 15, 2012                   -     199,643
---------------------------------------------------------------------------
                                                        739,498     348,762
Atlas limited recourse debt facilities                   49,65
9      64,397
Egypt limited recourse debt facilities                  438,631     470,208
Other limited recourse debt facilities                   17,437      19,888
---------------------------------------------------------------------------
                                                      1,245,225     903,255
Less current maturities                                (53,334)   (251,107)
---------------------------------------------------------------------------
                                                     $1,191,891  $  652,148
---------------------------------------------------------------------------

 
During the three month period ended December 31, 2012, the Company
issued $350 million of unsecured notes bearing an interest rate of
3.25% and due December 15, 2019 (effective yield 3.40%). 
During the three months and year ended December 31, 2012, the Company
made repayments on its Atlas limited recourse debt facilities of $7.5
million and $15.0 million, respectively, and other limited recourse
debt facilities of $0.6 million and $2.5 million, respectively. The
Company has also made repayments on its Egypt limited recourse debt
facilities of $33.6 million during the year ended December 31, 2012. 
During the three month period ended December 31, 2012, the Company
entered into a $400 million revolving credit facility with a
syndicate of banks. The facility expires in December 2016 and
replaces the Company's previous revolving credit facility which would
have expired in mid-2015. 
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 that apply only to these entities, including restrictions
on the incurrence of additional indebtedness, a requirement to
fulfill certain conditions before the payment of cash or other
distributions and a restriction on these distributions if there is a
default subsisting. The Egypt limited recourse debt facilities also
contain a covenant to complete by March 31, 2013 certain land title
registrations and related mortgages that require action by Egyptian
government entities and which the Company does not expect to complete
by March 31, 2013. The Company is seeking a waiver from the lenders.
The Company does not believe that the finalization of these items is
material. The Company cannot assure you that we will be able to
obtain a waiver from the lenders. 
At December 31, 2012, management believes the Company was in
compliance with all of the covenants and default provisions related
to long-term debt obligations. 
6. Finance costs: 


 
                                   Three Months Ended       Years Ended    
                               --------------------------------------------
                                    Dec 31     Dec 31     Dec 31     Dec 31
                                      2012       2011       2012       2011
-----------------------------------------------------   -------------------
Finance costs                    $  15,789  $  17,868  $  72,897  $  69,027
Less capitalized interest                                                  
related to Egypt plant under                                               
construction                             -          -          -    (7,230)
Less capitalized interest                                                  
related to Louisiana plant                                                 
under construction                   (909)          -    (1,583)          -
---------------------------------------------------------------------------
                                 $  14,880  $  17,868  $  71,314  $  61,797
---------------------------------------------------------------------------

 
Finance costs are primarily comprised of interest on borrowings and
finance lease obligations, the effective portion of interest rate
swaps designated as cash flow hedges, amortization of deferred
financing fees, and accretion expense associated with site
restoration costs. Interest during construction is capitalized until
the plant is substantially completed and ready for productive use. 
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 to March 31, 2015. 
7. Net income (loss) per common share: 
Diluted net income (loss) per common share is calculated by
considering the potential dilution that would occur if outstanding
stock options and, under certain circumstances, tandem share
appreciation rights (TSARs) were exercised or converted to common
shares. During the three months and year ended December 31, 2012, the
Company incurred a net loss attributable to Methanex shareholders and
therefore the impact of the potential dilution of stock options and
TSARs is anti-dilutive. 
Outstanding 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, regardless of how the plan is accounted for.
Accordingly, TSARs that are accounted for using the cash-settled
method will require adjustments to the numerator and denominator if
the equity-settled method is determined to have a dilutive effect on
diluted net income per common share. During the year ended December
31, 2011, the Company recorded a share- based compensation recovery
related to TSARs. Therefore, for this period, the equity-settled
method has been determined to be the more dilutive for purposes of
calculating diluted net income per common share.  
A reconciliation of the net income (loss) used for the purpose of
calculating diluted net income (loss) per common share is as follows: 


 
                                   Three Months Ended       Years Ended    
                               --------------------------------------------
                                     Dec 31    Dec 31      Dec 31    Dec 31
                                       2012      2011        2012      2011
-----------------------------------------------------   -------------------
Numerator for basic net income                                             
(loss) per common share          $(139,853)  $ 63,871  $ (68,105)  $201,326
  Adjustment for the effect of                                             
  TSARs:                                                                   
    Cash settled recovery                                                  
    included in net income                -         -           -   (2,416)
    Equity settled expense                -         -           -   (4,327)
---------------------------------------------------------------------------
Numerator for diluted net                                                  
income (loss) per common share   $(139,853)  $ 63,871  $ (68,105)  $194,583
---------------------------------------------------------------------------

 
Stock options and TSARs, if calculated using the equity-settled
method, are considered dilutive when the average market price of the
Company's common shares during the period disclosed exceeds the
exercise price of the stock option or TSAR. A reconciliation of the
number of common shares used for the purposes of calculating basic
and diluted net income (loss) per common share is as follows: 


 
                              Three Months Ended          Years Ended      
                           ------------------------------------------------
                                 Dec 31      Dec 31      Dec 31      Dec 31
                                   2012        2011        2012        2011
---------------------------------------------------------------------------
Denominator for basic net                                                  
income (loss) per common                                                   
share                        94,092,591  93,239,059  93,755,509  93,026,482
  Effect of dilutive stock                                                 
  options                             -     997,644           -   1,305,480
  Effect of dilutive TSARs            -           -           -      28,994
---------------------------------------------------------------------------
Denominator for diluted net                                                
income (loss) per common                                                   
share (1)                    94,092,591  94,236,703  93,755,509  94,360,956
---------------------------------------------------------------------------
                                                                           
(1) Due to the net loss attributable to Methanex shareholders, nil         
outstanding stock options for each of the three months and year ended      
December 31, 2012 are dilutive and have been included in the diluted       
weighted average number of common shares (2,159,090 and 3,039,284          
outstanding stock options for the three months and year ended December 31, 
2011, respectively, and 724,905 outstanding TSARs for the year ended       
December 31, 2011).                                                        

 
For the three months and year ended December 31, 2012, basic and
diluted net income (loss) per common share attributable to Methanex
shareholders were as follows: 


 
                                   Three Months Ended       Years Ended    
                               ----------------------   -------------------
                                    Dec 31     Dec 31     Dec 31     Dec 31
                                      2012       2011       2012       2011
-----------------------------------------------------   -------------------
Basic net income (loss) per                                                
common share                     $  (1.49)  $    0.69  $  (0.73)  $    2.16
Diluted net income (loss) per                                              
common share                     $  (1.49)  $    0.68  $  (0.73)  $    2.06
---------------------------------------------------------------------------

 
8. Share-based compensation:  
a) Stock options, share appreciation rights (SARs) and tandem share
appreciation rights (TSARs):  
(i) Outstanding units:  
Information regarding units outstanding and exercisable at December
31, 2012 is as follows: 


 
                         Units Outstanding at         Units Exercisable at 
                          December 31, 2012            December 31, 2012   
                 ----------------------------------------------------------
                     Weighted                                              
                      Average                                              
                    Remaining               Weighted               Weighted
                  Contractual   Number of    Average   Number of    Average
Range of Exercise        Life       Units   Exercise       Units   Exercise
Prices                (Years) Outstanding      Price Exercisable      Price
---------------------------------------------------------------------------
Stock options:                                                             
  $6.33 to 11.56          3.0     968,180 $     6.52     968,180 $     6.52
  $20.76 to 25.22         1.2   1,014,777      24.17     988,177      24.14
  $28.43 to 31.73         2.5     999,990      28.73     873,890      28.44
---------------------------------------------------------------------------
                          2.2   2,982,947 $    19.97   2,830,247 $    19.44
---------------------------------------------------------------------------
SARs:                                                                      
  $25.22 to 31.74         5.2     897,525 $    28.63     263,759 $    26.20
---------------------------------------------------------------------------
TSARs:                                                                     
  $23.36 to 31.88         5.2   1,815,535 $    28.45     616,880 $    26.12
---------------------------------------------------------------------------

 
(ii) Compensation expense related to stock options: 
For the three months and year ended December 31, 2012, compensation
expense related to stock options included in cost of sales and
operating expenses was $0.1 million (2011 - $0.1 million) and $0.7
million (2011 - $0.8 million), respectively. The fair value of each
stock option grant was estimated on the date of grant using the
Black-Scholes option pricing model.  
(iii) Compensation expense related to SARs and TSARs: 
Compensation expense for SARs and TSARs is measured based on their
fair value and is recognized over the vesting period. Changes in fair
value each period are recognized in net income (loss) for the
proportion of the service that has been rendered at each reporting
date. The fair value at December 31, 2012 was $18.0 million compared
with the recorded liability of $15.7 million. The difference between
the fair value and the recorded liability of $2.3 million will be
recognized over the weighted average remaining vesting period of
approximately 1.7 years. The weighted average fair value of the
vested SARs and TSARs was estimated at December 31, 2012 using the
Black-Scholes option pricing model. 
For the three months and year ended December 31, 2012, compensation
expense related to SARs and TSARs included an expense in cost of
sales and operating expenses of $3.6 million (2011 - expense of $1.0
million) and $10.8 million (2011 - recovery of $3.5 million),
respectively. This included an expense of $2.8 million (2011 -
expense of $0.1 million) and an expense of $3.1 million (2011 -
recovery of $10.4 million), respectively, related to the effect of
the change in the Company's share price for the three months and year
ended December 31, 2012.  
b) Deferred, restricted and performance share units: 
Deferred, restricted and performance share units outstanding at
December 31, 2012 are as follows:  


 
                                    Number of      Number of      Number of
                                     Deferred     Restricted    Performance
                                  Share Units    Share Units    Share Units
---------------------------------------------------------------------------
                                                                           
Outstanding at December 31,                                                
2011                                  597,911         48,588      1,103,049
  Granted                              21,085         20,400        358,330
  Granted in-lieu of dividends         10,551          1,274         19,160
  Redeemed                           (66,531)              -      (413,138)
  Cancelled                                 -              -       (15,329)
---------------------------------------------------------------------------
Outstanding at September 30,                                               
2012                                  563,016         70,262      1,052,072
---------------------------------------------------------------------------
  Granted                                 564              -              -
  Granted in-lieu of dividends          3,270            228          6,179
  Redeemed                                  -       (31,607)              -
  Cancelled                                 -              -        (4,382)
---------------------------------------------------------------------------
Outstanding at December 31,                                                
2012                                  566,850         38,883      1,053,869
---------------------------------------------------------------------------

 
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 vesting period.
Changes in fair value are recognized in earnings for the proportion
of the service that has been rendered at each reporting date. The
fair value of deferred, restricted and performance share units at
December 31, 2012 was $52.5 million compared with the recorded
liability of $46.9 million. The difference between the fair value and
the recorded liability of $5.6 million will be recognized over the
weighted average remaining vesting period of approximately 1.8 years. 
For the three months and year ended December 31, 2012, compensation
expense related to deferred, restricted and performance share units
included in cost of sales and operating expenses was an expense of
$7.3 million (2011 - expense of $2.6 million) and $24.4 million (2011
- recovery of $2.2 million), respectively. This included an expense
of $5.2 million (2011 - expense of $1.2 million) and $12.4 million
(2011 - recovery of $10.9 million), respectively, related to the
effect of the change in the Company's share price for the three
months and year ended December 31, 2012. 
9. Changes in non-cash working capital: 
Changes in non-cash working capital for the three months and year
ended December 31, 2012 were as follows:  


 
                                 Three Months Ended         Years Ended
                           ------------------------------------------------
                                 Dec 31      Dec 31      Dec 31      Dec 31
                                   2012        2011        2012        2011
---------------------------------------------------------------------------
Decrease (increase) in non-                                                
cash working capital:                                   
                   
  Trade and other                                                          
  receivables                $ (30,104)  $ (41,776)  $ (50,773)  $ (58,403)
  Inventories                  (29,704)    (35,886)      27,992    (51,358)
  Prepaid expenses                  257       6,541     (3,849)       2,412
  Trade, other payables and                                                
  accrued liabilities,                                                     
  including long-term                                                      
  payables included in                                                     
  other long-term                                                          
  liabilities                    51,069      96,180      46,379     119,170
                                                                           
                                                                           
---------------------------------------------------------------------------
                                (8,482)      25,059      19,749      11,821
Adjustments for items not                                                  
having a cash effect and                                                   
working capital changes                                                    
relating to taxes and                                                      
interest paid                     4,541       1,916       5,098      31,075
---------------------------------------------------------------------------
Changes in non-cash working                                                
capital having a cash                                                      
effect                       $  (3,941)  $   26,975  $   24,847  $   42,896
---------------------------------------------------------------------------
                                                                           
These changes relate to the                                                
following activities:                                                      
  Operating                  $ (14,873)  $   18,851  $   21,774  $   35,388
  Investing                      10,932       8,124       3,073       7,508
---------------------------------------------------------------------------
Changes in non-cash working                                                
capital                      $  (3,941)  $   26,975  $   24,847  $   42,896
---------------------------------------------------------------------------

 
10. Financial instruments: 
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 to March 31, 2015. The
Company has designated these interest rate swaps as cash flow hedges.
These interest rate swaps had an outstanding notional amount of $342
million as at December 31, 2012. The notional amount decreases over
the expected repayment period. At December 31, 2012, these interest
rate swap contracts had a negative fair value of $32.7 million (2011
- $41.5 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 December 31,
2012, the Company had outstanding forward exchange contracts
designated as cash flow hedges to sell a notional amount of 5.8
million euro in exchange for US dollars and these euro contracts had
a negative fair value of $0.2 million (2011 - positive fair value of
$0.4 million) recorded in trade, other payables and accrued
liabilities. Changes in fair value of derivative financial
instruments designated as cash flow hedges have been recorded in
other comprehensive income.  
11. Contingent liability: 
The Board of Inland Revenue of Trinidad and Tobago has issued
assessments against the Company's 63.1% owned joint venture, Atlas
Methanol Company Unlimited ("Atlas"), in respect of the 2005 and 2006
financial years. All subsequent tax years remain open to assessment.
The assessments relate to the pricing arrangements of certain
long-term fixed price sales contracts that extend to 2014 and 2019
related to methanol produced by Atlas. The impact of the amounts in
dispute for the 2005 and 2006 financial years is not significant.
Atlas has partial relief from corporation income tax until 2014. 
The Company has lodged objections to the assessments. Based on the
merits of the cases and legal interpretation, management believes its
position should be sustained.  


 
Methanex Corporation                                                       
Quarterly History (unaudited)                                              
                                                                           
                                                                           
                                                                           
                2012    Q4     Q3    Q2    Q1  2011    Q4    Q3    Q2    Q1
---------------------------------------------------------------------------
                                                                           
METHANOL                                                                   
SALES VOLUMES                                                              
(thousands of                                                              
tonnes)                                                                    
                                                                           
Methanex-                                                                  
produced       4,039 1,059  1,053 1,001   926 3,853 1,052   983   970   848
Purchased                                                                  
methanol       2,565   664    641   569   691 2,815   644   672   664   835
Commission                                                                 
sales (1)        855   176    205   276   198   846   208   235   231   172
---------------------------------------------------------------------------
                                                                           
               7,459 1,899  1,899 1,846 1,815 7,514 1,904 1,890 1,865 1,855
---------------------------------------------------------------------------
                                                                           
METHANOL                                                                   
PRODUCTION                                                                 
(thousands of                                                              
tonnes)                                                                    
                                                                           
Chile            313    59     59    82   113   554   113   116   142   183
New Zealand    1,108   378    346   210   174   830   211   209   207   203
Atlas,                                                                     
Trinidad                                                                   
(63.1%)          826   180    255   264   127   891   195   170   263   263
Titan,                                                                     
Trinidad         786   189    186   196   215   711   180   224   186   121
Egypt (60%)      557   129     62   164   202   532   132   191   178    31
Medicine Hat     481   132    117   118   114   329   130   125    74     -
---------------------------------------------------------------------------
                                                                           
               4,071 1,067  1,025 1,034   945 3,847   961 1,035 1,050   801
---------------------------------------------------------------------------
AVERAGE                                                                    
REALIZED                                                                   
METHANOL                                                                   
PRICE (2)                                                                  
  ($/tonne)      382   389    373   384   382   374   388   377   363   367
  ($/gallon)    1.15  1.17   1.12  1.15  1.15  1.12  1.17  1.13  1.09  1.10
                                                                           
PER SHARE                                                                  
INFORMATION                                                                
($ per share)                                                              
(3)                                                                        
  Basic net                                                                
  income                                                                   
  (loss)      (0.73)(1.49) (0.03)  0.56  0.24  2.16  0.69  0.67  0.44  0.37
  Diluted net                                                              
  income                                                                   
  (loss)      (0.73)(1.49) (0.03)  0.50  0.23  2.06  0.68  0.59  0.43  0.37
  Adjusted                                                                 
  diluted net                                                              
  income (4)    1.90  0.64   0.38  0.47  0.41  1.93  0.69  0.43  0.41  0.39
                                                                           
(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 
earned and the Egypt non-controlling interest share of revenue, divided by 
the total sales volumes of Methanex-produced (attributable to Methanex     
shareholders) and purchased methanol.                                      
(3) Per share information calculated using net income (loss) attributable  
to Methanex shareholders.                                                  
(4) This item is a non-GAAP measure that does not have any standardized    
meaning prescribed by GAAP and therefore is unlikely to be comparable to   
similar measures presented by other companies. Refer to the Additional     
Information - Supplemental Non-GAAP Measures section for a description  
of the non-GAAP measure and reconciliation to the most comparable GAAP     
measure.                                                                   

  
Contacts:
Jason Chesko
Director, Investor Relations
Methanex Corporation
604.661.2600
www.methanex.com
 
 
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