Nutrien (NTR) 6-K Nutrien Delivers Improved Operating Results

Exhibit 99.3

NUTRIEN LTD.

INTERIM FINANCIAL STATEMENTS AND NOTES

AS AT AND FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020

Unaudited In millions of US dollars except as otherwise noted  

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of (Loss) Earnings

		Three Months Ended September 30						Nine Months Ended September 30
	Note	2020			2019			2020			2019
					Note 1						Note 1
SALES	2		4,205			4,169			16,807			16,581
Freight, transportation and distribution			204			210			653			596
Cost of goods sold			3,004			2,819			12,129			11,558
GROSS MARGIN			997			1,140			4,025			4,427
Selling expenses			676			607			2,081			1,835
General and administrative expenses			107			97			312			287
Provincial mining and other taxes			58			92			163			253
Share-based compensation expense (recovery)			29			(21	)		9			95
Impairment of assets	3		823			-			823			33
Other expenses	4		26			37			138			125
(LOSS) EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES			(722	)		328			499			1,799
Finance costs			129			147			401			413
(LOSS) EARNINGS BEFORE INCOME TAXES			(851	)		181			98			1,386
Income tax (recovery) expense	5		(264	)		40			(45	)		346
NET (LOSS) EARNINGS			(587	)		141			143			1,040
NET (LOSS) EARNINGS PER SHARE (“EPS”)
Basic			(1.03	)		0.25			0.25			1.78
Diluted			(1.03	)		0.24			0.25			1.77
Weighted average shares outstanding for basic EPS			569,146,000			572,887,000			569,818,000			585,421,000
Weighted average shares outstanding for diluted EPS			569,146,000			573,702,000			569,818,000			586,335,000

Condensed Consolidated Statements of Comprehensive (Loss) Income

	Three Months Ended September 30						Nine Months Ended September 30
(Net of related income taxes)	2020			2019			2020			2019
NET (LOSS) EARNINGS		(587	)		141			143			1,040
Other comprehensive income (loss)
Items that will not be reclassified to net (loss) earnings:
Net actuarial gain on defined benefit plans		-			-			3			-
Net fair value loss on investments		(4	)		(11	)		(25	)		(26	)
Items that have been or may be subsequently reclassified to net (loss) earnings:
Gain (loss) on currency translation of foreign operations		69			(71	)		(52	)		(36	)
Other		6			7			(12	)		5
OTHER COMPREHENSIVE INCOME (LOSS)		71			(75	)		(86	)		(57	)
COMPREHENSIVE (LOSS) INCOME		(516	)		66			57			983

 (See Notes to the Condensed Consolidated Financial Statements)

24

Unaudited In millions of US dollars except as otherwise noted  

Condensed Consolidated Statements of Cash Flows

			Three Months Ended September 30						Nine Months Ended September 30
	Note		2020			2019			2020			2019
						Note 1						Note 1
OPERATING ACTIVITIES
Net (loss) earnings				(587	)		141			143			1,040
Adjustments for:
Depreciation and amortization				500			457			1,490			1,363
Share-based compensation expense (recovery)				29			(21	)		9			95
Impairment of assets		3		823			-			823			33
(Recovery of) provision for deferred income tax				(161	)		31			(99	)		178
Other long-term liabilities and miscellaneous				(121	)		(23	)		(221	)		(23	)
Cash from operations before working capital changes				483			585			2,145			2,686
Changes in non-cash operating working capital:
Receivables				692			624			(1,455	)		(1,427	)
Inventories				407			541			1,153			1,239
Prepaid expenses and other current assets				(77	)		(23	)		936			801
Payables and accrued charges				(2,190	)		(1,138	)		(2,234	)		(2,053	)
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES				(685	)		589			545			1,246
INVESTING ACTIVITIES
Additions to property, plant and equipment				(266	)		(518	)		(927	)		(1,177	)
Additions to intangible assets				(19	)		(43	)		(87	)		(118	)
Business acquisitions, net of cash acquired		10		(43	)		(348	)		(216	)		(837	)
Proceeds from disposal of discontinued operations, net of tax				-			-			-			55
Purchase of investments				(13	)		(42	)		(79	)		(164	)
Other				(15	)		47			100			108
CASH USED IN INVESTING ACTIVITIES				(356	)		(904	)		(1,209	)		(2,133	)
FINANCING ACTIVITIES
Transaction costs on long-term debt				-			-			(15	)		(29	)
Proceeds from short-term debt, net				397			575			601			1,534
Proceeds from long-term debt		8		14			-			1,520			1,510
Repayment of long-term debt		8		-			(11	)		(507	)		(1,010	)
Repayment of principal portion of lease liabilities				(69	)		(49	)		(203	)		(166	)
Dividends paid		9		(257	)		(244	)		(771	)		(764	)
Repurchase of common shares		9		-			-			(160	)		(1,930	)
Issuance of common shares				-			1			-			18
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES				85			272			465			(837	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS				6			(5	)		(7	)		(22	)
DECREASE IN CASH AND CASH EQUIVALENTS				(950	)		(48	)		(206	)		(1,746	)
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD				1,415			616			671			2,314
CASH AND CASH EQUIVALENTS – END OF PERIOD				465			568			465			568
Cash and cash equivalents comprised of:
Cash				328			326			328			326
Short-term investments				137			242			137			242
				465			568			465			568
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid				85			111			334			353
Income taxes paid				27			46			92			1
Total cash outflow for leases				78			89			266			253

 (See Notes to the Condensed Consolidated Financial Statements)

25

Unaudited In millions of US dollars except as otherwise noted  

Condensed Consolidated Statements of Changes in Shareholders’ Equity

										Accumulated Other Comprehensive (Loss) Income (“AOCI”)
	Number of Common Shares			Share Capital			Contributed Surplus			Net Fair Value Loss on Investments			Net Actuarial Gain on Defined Benefit Plans 1			Loss on Currency Translation of Foreign Operations			Other			Total AOCI			Retained Earnings			Total Equity 2
BALANCE – DECEMBER 31, 2018		608,535,477			16,740			231			(7	)		-			(251	)		(33	)		(291	)		7,745			24,425
Net earnings		-			-			-			-			-			-			-			-			1,040			1,040
Other comprehensive (loss) income		-			-			-			(26	)		-			(36	)		5			(57	)		-			(57	)
Shares repurchased (Note 9)		(36,066,766	)		(992	)		-			-			-			-			-			-			(886	)		(1,878	)
Dividends declared		-			-			-			-			-			-			-			-			(496	)		(496	)
Effect of share-based compensation including issuance of common shares		431,485			21			13			-			-			-			-			-			-			34
Transfer of net loss on sale of investment		-			-			-			4			-			-			-			4			(4	)		-
Transfer of net loss on cash flow hedges		-			-			-			-			-			-			8			8			-			8
BALANCE – SEPTEMBER 30, 2019		572,900,196			15,769			244			(29	)		-			(287	)		(20	)		(336	)		7,399			23,076
BALANCE – DECEMBER 31, 2019		572,942,809			15,771			248			(29	)		-			(204	)		(18	)		(251	)		7,101			22,869
Net earnings		-			-			-			-			-			-			-			-			143			143
Other comprehensive (loss) income		-			-			-			(25	)		3			(52	)		(12	)		(86	)		-			(86	)
Shares repurchased (Note 9)		(3,832,580	)		(105	)		(55	)		-			-			-			-			-			-			(160	)
Dividends declared		-			-			-			-			-			-			-			-			(770	)		(770	)
Effect of share-based compensation including issuance of common shares		35,706			1			10			-			-			-			-			-			-			11
Transfer of net loss on cash flow hedges		-			-			-			-			-			-			13			13			-			13
Transfer of net actuarial gain on defined benefit plans		-			-			-			-			(3	)		-			-			(3	)		3			-
BALANCE – SEPTEMBER 30, 2020		569,145,935			15,667			203			(54	)		-			(256	)		(17	)		(327	)		6,477			22,020

1 Any amounts incurred during a period were transferred to retained earnings at each period-end. Therefore, no balance exists at the beginning or end of period.

2 All equity transactions were attributable to common shareholders.

(See Notes to the Condensed Consolidated Financial Statements)

26

Unaudited In millions of US dollars except as otherwise noted  

Condensed Consolidated Balance Sheets

			September 30						December 31
As at	Note		2020			2019			2019
ASSETS
Current assets
Cash and cash equivalents				465			568			671
Receivables				5,056			4,843			3,542
Inventories				3,829			3,873			4,975
Prepaid expenses and other current assets				531			440			1,477
				9,881			9,724			10,665
Non-current assets
Property, plant and equipment		3		19,308			20,045			20,335
Goodwill		10		12,179			11,983			11,986
Other intangible assets				2,352			2,330			2,428
Investments				809			809			821
Other assets				742			538			564
TOTAL ASSETS				45,271			45,429			46,799
LIABILITIES
Current liabilities
Short-term debt		7		1,644			2,287			976
Current portion of long-term debt		8		-			501			502
Current portion of lease liabilities				230			219			214
Payables and accrued charges				5,239			4,615			7,437
				7,113			7,622			9,129
Non-current liabilities
Long-term debt		8		10,041			8,555			8,553
Lease liabilities				847			793			859
Deferred income tax liabilities		5		3,053			3,137			3,145
Pension and other post-retirement benefit liabilities				446			425			433
Asset retirement obligations and accrued environmental costs				1,575			1,662			1,650
Other non-current liabilities				176			159			161
TOTAL LIABILITIES				23,251			22,353			23,930
SHAREHOLDERS’ EQUITY
Share capital		9		15,667			15,769			15,771
Contributed surplus				203			244			248
Accumulated other comprehensive loss				(327	)		(336	)		(251	)
Retained earnings				6,477			7,399			7,101
TOTAL SHAREHOLDERS’ EQUITY				22,020			23,076			22,869
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				45,271			45,429			46,799

(See Notes to the Condensed Consolidated Financial Statements)

27

Unaudited In millions of US dollars except as otherwise noted  

Notes to the Condensed Consolidated Financial Statements

As at and for the Three and Nine Months Ended September 30, 2020

NOTE 1  BASIS OF PRESENTATION

Nutrien Ltd. (collectively with its subsidiaries, known as “Nutrien”, “we”, “us”, “our” or the “Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.

These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are consistent with those used in the preparation of our 2019 annual consolidated financial statements. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2019 annual consolidated financial statements.

Certain immaterial 2019 figures have been reclassified in the condensed consolidated statements of (loss) earnings, condensed consolidated statements of cash flows and segment information.

In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year. On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. We have assessed our accounting estimates and other matters that require the use of forecasted financial information for the impact of the COVID-19 pandemic. The assessment included estimates of the unknown future impacts of the pandemic using information that is reasonably available at this time. Accounting estimates and other matters assessed include the allowance for expected credit losses of receivables from customers, inventory valuation, goodwill and other long-lived assets, financial assets, tax assets, pension obligation and assets, and revenue recognition. Based on our current assessment, there was not a material impact to these interim financial statements. As additional information becomes available, the future assessment of these estimates, including expectations about the severity, duration and scope of the pandemic, could differ materially in future reporting periods.

These interim financial statements were authorized by the audit committee of the Board of Directors for issue on November 2, 2020.

NOTE 2  SEGMENT INFORMATION

The Company has four reportable operating segments: Retail, Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produces. Sales reported under our Corporate and Others segment primarily relates to our non-core Canadian business which was sold in the third quarter of 2020.

In the third quarter of 2020, our Chief Operating Decision Maker changed the measure used to evaluate the performance of our operating segments from net earnings (loss) before finance costs, income taxes, and depreciation and amortization (“EBITDA”) to adjusted EBITDA. Adjusted EBITDA provides a better indication of the segments performance as it excludes the impact of impairments and other costs that are centrally managed by our corporate function. Due to the change in the measurement of the segments, we have presented adjusted EBITDA for the comparative periods.

28

Unaudited In millions of US dollars except as otherwise noted  

	Three Months Ended September 30, 2020
	Retail			Potash			Nitrogen			Phosphate			Corporate and Others			Eliminations			Consolidated
Sales   – third party		2,712			634			524			312			23			-			4,205
– intersegment		8			63			103			40			-			(214	)		-
Sales   – total		2,720			697			627			352			23			(214	)		4,205
Freight, transportation and distribution		-			106			87			60			-			(49	)		204
Net sales		2,720			591			540			292			23			(165	)		4,001
Cost of goods sold		2,059			303			482			293			20			(153	)		3,004
Gross margin		661			288			58			(1	)		3			(12	)		997
Selling expenses		669			3			7			1			(4	)		-			676
General and administrative expenses		34			2			3			2			66			-			107
Provincial mining and other taxes		-			58			-			-			-			-			58
Share-based compensation expense		-			-			-			-			29			-			29
Impairment of assets		-			22			27			769			5			-			823
Other (income) expenses		(34	)		(1	)		(16	)		10			67			-			26
(Loss) earnings before finance costs and income taxes		(8	)		204			37			(783	)		(160	)		(12	)		(722	)
Depreciation and amortization		170			124			131			60			15			-			500
EBITDA		162			328			168			(723	)		(145	)		(12	)		(222	)
Acquisition and integration related costs		-			-			-			-			10			-			10
Share-based compensation expense		-			-			-			-			29			-			29
Impairment of assets		-			22			27			769			5			-			823
COVID-19 related expenses		-			-			-			-			11			-			11
Foreign exchange loss, net of related derivatives		-			-			-			-			13			-			13
Loss on disposal of business		-			-			-			-			6			-			6
Adjusted EBITDA		162			350			195			46			(71	)		(12	)		670
Assets – at September 30, 2020		19,722			12,005			10,805			1,362			1,760			(383	)		45,271
	Three Months Ended September 30, 2019
	Retail			Potash			Nitrogen			Phosphate			Corporate and Others			Eliminations			Consolidated
Sales   – third party		2,489			748			564			333			35			-			4,169
– intersegment		10			68			115			43			-			(236	)		-
Sales   – total		2,499			816			679			376			35			(236	)		4,169
Freight, transportation and distribution		-			107			77			62			-			(36	)		210
Net sales		2,499			709			602			314			35			(200	)		3,959
Cost of goods sold		1,844			303			469			329			35			(161	)		2,819
Gross margin		655			406			133			(15	)		-			(39	)		1,140
Selling expenses		601			2			7			2			(5	)		-			607
General and administrative expenses		28			-			4			-			65			-			97
Provincial mining and other taxes		-			83			1			-			8			-			92
Share-based compensation recovery		-			-			-			-			(21	)		-			(21	)
Other (income) expenses		(12	)		1			1			7			40			-			37
Earnings (loss) before finance costs and income taxes		38			320			120			(24	)		(87	)		(39	)		328
Depreciation and amortization		152			110			127			58			10			-			457
EBITDA		190			430			247			34			(77	)		(39	)		785
Merger and related costs		-			-			-			-			21			-			21
Share-based compensation recovery		-			-			-			-			(21	)		-			(21	)
Foreign exchange loss, net of related derivatives		-			-			-			-			2			-			2
Adjusted EBITDA		190			430			247			34			(75	)		(39	)		787
Assets – at December 31, 2019		19,990			11,696			10,991			2,198			2,129			(205	)		46,799

29

Unaudited In millions of US dollars except as otherwise noted  

	Nine Months Ended September 30, 2020
	Retail			Potash			Nitrogen			Phosphate			Corporate and Others			Eliminations			Consolidated
Sales   – third party		12,091			1,798			1,925			923			70			-			16,807
– intersegment		27			191			481			146			-			(845	)		-
Sales   – total		12,118			1,989			2,406			1,069			70			(845	)		16,807
Freight, transportation and distribution		-			293			335			187			-			(162	)		653
Net sales		12,118			1,696			2,071			882			70			(683	)		16,154
Cost of goods sold		9,316			878			1,708			862			63			(698	)		12,129
Gross margin		2,802			818			363			20			7			15			4,025
Selling expenses		2,068			7			19			4			(17	)		-			2,081
General and administrative expenses		102			5			7			7			191			-			312
Provincial mining and other taxes		-			161			1			-			1			-			163
Share-based compensation expense		-			-			-			-			9			-			9
Impairment of assets		-			22			27			769			5			-			823
Other (income) expenses		(13	)		4			(25	)		19			153			-			138
Earnings (loss) before finance costs and income taxes		645			619			334			(779	)		(335	)		15			499
Depreciation and amortization		488			329			453			179			41			-			1,490
EBITDA		1,133			948			787			(600	)		(294	)		15			1,989
Acquisition and integration related costs		-			-			-			-			38			-			38
Share-based compensation expense		-			-			-			-			9			-			9
Impairment of assets		-			22			27			769			5			-			823
COVID-19 related expenses		-			-			-			-			30			-			30
Foreign exchange loss, net of related derivatives		-			-			-			-			4			-			4
Loss on disposal of business		-			-			-			-			6			-			6
Adjusted EBITDA		1,133			970			814			169			(202	)		15			2,899
Assets – at September 30, 2020		19,722			12,005			10,805			1,362			1,760			(383	)		45,271
	Nine Months Ended September 30, 2019
	Retail			Potash			Nitrogen			Phosphate			Corporate and Others			Eliminations			Consolidated
Sales   – third party		11,022			2,328			2,033			1,099			99			-			16,581
– intersegment		28			178			487			160			-			(853	)		-
Sales   – total		11,050			2,506			2,520			1,259			99			(853	)		16,581
Freight, transportation and distribution		-			252			275			178			-			(109	)		596
Net sales		11,050			2,254			2,245			1,081			99			(744	)		15,985
Cost of goods sold		8,546			892			1,652			1,092			99			(723	)		11,558
Gross margin		2,504			1,362			593			(11	)		-			(21	)		4,427
Selling expenses		1,816			7			21			5			(14	)		-			1,835
General and administrative expenses		82			-			11			3			191			-			287
Provincial mining and other taxes		-			237			2			1			13			-			253
Share-based compensation expense		-			-			-			-			95			-			95
Impairment of assets		-			-			-			-			33			-			33
Other expenses (income)		39			(2	)		(27	)		20			95			-			125
Earnings (loss) before finance costs and income taxes		567			1,120			586			(40	)		(413	)		(21	)		1,799
Depreciation and amortization		433			324			394			180			32			-			1,363
EBITDA		1,000			1,444			980			140			(381	)		(21	)		3,162
Merger and related costs		-			-			-			-			57			-			57
Share-based compensation expense		-			-			-			-			95			-			95
Impairment of assets		-			-			-			-			33			-			33
Foreign exchange loss, net of related derivatives		-			-			-			-			14			-			14
Adjusted EBITDA		1,000			1,444			980			140			(182	)		(21	)		3,361
Assets – at December 31, 2019		19,990			11,696			10,991			2,198			2,129			(205	)		46,799

30

Unaudited In millions of US dollars except as otherwise noted  

Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment to show how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three Months Ended   September 30				Nine Months Ended   September 30
	2020		2019		2020		2019
Retail sales by product line
Crop nutrients		780		769		4,092		4,082
Crop protection products		1,328		1,318		4,774		4,348
Seed		103		60		1,638		1,613
Merchandise		234		135		703		387
Services and other		275		217		911		620
		2,720		2,499		12,118		11,050
Potash sales by geography
Manufactured product
North America		358		437		1,002		1,084
Offshore 1		339		379		987		1,421
Other potash and purchased products		-		-		-		1
		697		816		1,989		2,506
Nitrogen sales by product line
Manufactured product
Ammonia		129		172		576		713
Urea		214		239		780		801
Solutions, nitrates and sulfates		177		193		606		613
Other nitrogen and purchased products		107		75		444		393
		627		679		2,406		2,520
Phosphate sales by product line
Manufactured product
Fertilizer		216		205		622		752
Industrial and feed		105		119		342		359
Other phosphate and purchased products		31		52		105		148
		352		376		1,069		1,259

1 Relates to Canpotex Limited (“Canpotex”) (Note 12).

NOTE 3  IMPAIRMENT OF ASSETS

During the three and nine months ended September 30, 2020, we recorded the following impairments of assets in the statement of (loss) earnings relating to our property plant and equipment:

Cash-generating units (“CGUs”)	Aurora	White Springs
Segment	Phosphate
Impairment indicator	Lower long-term forecasted global phosphate prices
Pre-tax impairment loss ($)	545	215
Recoverable value ($)	995 (post-tax)	160 (pre-tax)
Valuation technique	Fair value less costs of disposal (“FVLCD”) a Level 3 measurement	Value in use
Key assumptions
End of mine life (proven and probable reserves) (year)	2050	2029
Long-term growth rate (%)	2.0	n/a
Post-tax discount rate (%)	10.5	12.0 (pre-tax - 16.0)

For our Aurora CGU, the recoverable value was based on after-tax discounted cash flows (using a five-year projection and a terminal year thereafter to the expected mine life), which incorporated assumptions an independent market participant would apply. For our White Springs CGU, the recoverable value was based on pre-tax discounted cash flows until the end of the mine life.

The recoverable value is most sensitive to the following key assumptions: our internal sales price forecasts which consider projections from an independent third-party data source, discount rates, long-term growth rates, and expected mine life. We used key assumptions that were based on historical data and estimates of future results from internal sources, external price benchmarks, mineral reserve technical reports, as well as industry and market trends.

31

Unaudited In millions of US dollars except as otherwise noted  

The following table highlights sensitivities to the recoverable value which could result in additional impairment losses or reversals of previously recorded losses. The sensitivities have been calculated independently of changes in other key variables.

	Aurora
Key Assumptions		Change in Assumption			Increase (Decrease) to Recoverable Value ($)
Net selling price	±		10 per tonne	±		150
Discount rate	±		1.0 percentage point	±		120

For our White Springs CGU, there were no reasonably possible changes in the key assumptions that would result in a substantial change in the recoverable value.

At September 30, 2020, we performed impairment testing on the Trinidad CGU, part of our Nitrogen segment, due to the indefinite closure of an ammonia plant in response to market conditions and lower long-term forecasted global ammonia prices. No impairment resulted from comparing the carrying value of the Trinidad CGU to its recoverable value determined on a FVLCD methodology. FVLCD was based on after-tax discounted cash flows (using a five-year projection and a 2.0% terminal growth rate) discounted at a post-tax rate of 12.6%.

The following table indicates the percentages by which key assumptions would need to change individually for the estimated Trinidad CGU recoverable value to be equal to the carrying value:

Key Assumptions	Change Required for Carrying Value to Equal Recoverable Value
Net selling price (5-year average)		4 percent decrease
Production volumes (5-year average)		5 percent decrease
Discount rate (post-tax)		0.9 percentage point increase

During the nine months ended September 30, 2020, we also recorded $63 of impairment losses relating to other non-current assets.

NOTE 4  OTHER EXPENSES (INCOME)

	Three Months Ended September 30					Nine Months Ended September 30
		2020		2019			2020		2019
Merger and related costs		-		21			-		57
Acquisition and integration related costs		10		-			38		-
Foreign exchange loss, net of related derivatives		14		2			1		14
Earnings of equity-accounted investees		(23	)	(6	)		(46	)	(53	)
Bad debt (recovery) expense		(18	)	3			9		38
COVID-19 related expenses		11		-			30		-
Loss on disposal of business		6		-			6		-
Other expenses		26		17			100		69
		26		37			138		125

32

Unaudited In millions of US dollars except as otherwise noted  

NOTE 5  INCOME TAXES

A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim period pre-tax earnings for each jurisdiction.

	Three Months Ended September 30					Nine Months Ended September 30
	2020			2019		2020			2019
Income tax (recovery) expense		(264	)		40		(45	)		346
Actual effective tax rate on loss/earnings (%)		26			22		14			25
Actual effective tax rate including discrete items (%)		31			22		(47	)		25
Discrete tax adjustments that impacted the tax rate		(48	)		1		(59	)		5

Income tax balances within the condensed consolidated balance sheets were comprised of the following:

Income Tax Assets and Liabilities	Balance Sheet Location	As at September 30, 2020		As at December 31, 2019
Income tax assets
Current	Receivables		50		104
Non-current	Other assets		213		36
Deferred income tax assets	Other assets		258		249
Total income tax assets			521		389
Income tax liabilities
Current	Payables and accrued charges		105		43
Non-current	Other non-current liabilities		40		44
Deferred income tax liabilities	Deferred income tax liabilities		3,053		3,145
Total income tax liabilities			3,198		3,232

NOTE 6  FINANCIAL INSTRUMENTS

Fair Value

Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 12 of the 2019 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.

The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost:

	September 30, 2020									December 31, 2019
Financial assets (liabilities) measured at	Carrying Amount			Level 1 1			Level 2 1			Carrying Amount			Level 1 1			Level 2 1
Fair value on a recurring basis
Cash and cash equivalents		465			-			465			671			-			671
Derivative instrument assets		31			-			31			5			-			5
Other current financial assets - marketable securities 2		155			23			132			193			27			166
Investments at FVTOCI 3		135			135			-			161			161			-
Derivative instrument liabilities		(35	)		-			(35	)		(33	)		-			(33	)
Amortized cost
Current portion of long-term debt
Notes and debentures		-			-			-			(494	)		-			(503	)
Fixed and floating rate debt		-			-			-			(8	)		-			(8	)
Long-term debt
Notes and debentures		(10,003	)		(7,911	)		(3,494	)		(8,528	)		(1,726	)		(7,440	)
Fixed and floating rate debt		(38	)		-			(38	)		(25	)		-			(25	)

1 During the period ended September 30, 2020, there were no transfers between Level 1 and Level 2 for financial instruments measured at fair value on a recurring basis.

2 Marketable securities consist of equity and fixed income securities. We determine the fair value of equity securities based on the bid price of identical instruments in active markets. We value fixed income securities using quoted prices of instruments with similar terms and credit risk.

3 Investments at fair value through other comprehensive income (“FVTOCI”) are comprised of shares in Sinofert Holdings Ltd.

33

Unaudited In millions of US dollars except as otherwise noted  

NOTE 7  SHORT-TERM DEBT

Short-term debt was comprised of:

	Rate of Interest (%)		Total Facility Limit as at September 30, 2020		As at September 30, 2020		As at December 31, 2019
Credit facilities
Unsecured revolving term credit facility		NIL		4,500		-		-
Uncommitted revolving demand facility		NIL		500		-		-
Other credit facilities 1		0.8 - 9.5		600		193		326
Commercial paper		0.2 - 0.6				1,451		650
						1,644		976
1 Other credit facilities are unsecured and consist of South American facilities with debt of $143 (December 31, 2019 – $149) and interest rates ranging from 2.0 percent to 9.5 percent, Australian facilities with debt of $24 (December 31, 2019 – $157) and an interest rate of 1.3 percent, and other facilities with debt of $26 (December 31, 2019 – $20) and interest rates ranging from 0.8 percent to 4.0 percent.

The amount available under the commercial paper program is limited to the availability of backup funds under the $4,500 unsecured revolving term credit facility and excess cash invested in highly liquid securities.

During the nine months ended September 30, 2020, we entered into new committed revolving credit facilities totaling approximately $1,500, all with the same principal covenants and events of default as our existing credit facilities. We closed these credit facilities after the issuance of the new notes as described in Note 8.

NOTE 8  LONG-TERM DEBT

The following tables summarize our long-term debt issuances and repayment activities during the nine months ended September 30, 2020:

	Rate of interest (%)		Maturity		Amount
Notes issued 2020		1.900		May 13, 2023		500
Notes issued 2020		2.950		May 13, 2030		500
Notes issued 2020		3.950		May 13, 2050		500
						1,500

The notes issued in 2020 are unsecured, rank equally with our existing unsecured notes, and have no sinking fund requirements prior to maturity. Each series is redeemable and provides for redemption prior to maturity, at our option, at specified prices.

	Rate of interest (%)		Maturity		Amount
Notes repaid 2020		4.875		March 30, 2020		500

In March 2020, we filed a base shelf prospectus in Canada and the US qualifying the issuance of up to $5,000 of common shares, debt and other securities during a period of 25 months from March 16, 2020. Issuance of securities requires us to file a prospectus supplement and is subject to availability of funding in capital markets. During the nine months ended September 30, 2020, we filed a prospectus supplement to issue $1,500 of notes, as described above.

34

Unaudited In millions of US dollars except as otherwise noted  

NOTE 9  SHARE CAPITAL

Share repurchase programs

	Board of Directors Approval		Expiry		Maximum Shares for Repurchase
2019 Normal Course Issuer Bid 1		February 20, 2019		February 26, 2020		42,164,420
2020 Normal Course Issuer Bid 2		February 18, 2020		February 26, 2021		28,572,458

1 The 2019 normal course issuer bid permitted the repurchase of up to 7 percent of our outstanding common shares for cancellation. As of the expiry date, we had repurchased 33,256,668 of the maximum shares for repurchase.

2 The 2020 normal course issuer bid permits the repurchase of up to 5 percent of our outstanding common shares for cancellation and can expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.

Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities regulatory authorities, including private agreements.

The following table summarizes our share repurchase activities during the period:

	Three Months Ended  September 30				Nine Months Ended  September 30
	2020		2019		2020		2019
Number of common shares repurchased for cancellation		-		-		3,832,580		36,066,766
Average price per share (US dollars)		-		-		41.96		52.07
Total cost		-		-		160		1,878

Dividends declared

We declared dividends per share of $0.45 (2019 – $0.45) during the three months ended September 30, 2020, payable on October 16, 2020 to shareholders of record on September 30, 2020 and $1.35 (2019 – $0.88) during the nine months ended September 30, 2020.

NOTE 10  BUSINESS ACQUISITIONS

Ruralco

On September 30, 2019, we acquired Ruralco Holdings Limited (“Ruralco”) for a purchase price, net of cash and cash equivalents acquired, of $330. We have completed our assessment of identifying and measuring all the assets acquired and liabilities assumed. This assessment included a thorough review of all internal and external sources of information available on circumstances that existed at the acquisition date. We engaged independent valuation experts to assist in determining the fair value of certain assets acquired and liabilities assumed. The significant fair value considerations used in determining the allocation of purchase price are consistent with those disclosed in Note 4 of the 2019 annual consolidated financial statements.

Other Acquisitions

During the nine months ended September 30, 2020, we acquired several businesses, the largest of which was Tec Agro Group, a leading agriculture retailer in Brazil. The acquired businesses include 37 Retail locations in North and South America and Australia. Expected benefits of the acquisitions include expansion of geographical coverage for the sale of crop input products and services, an increased customer base and workforce, and synergies between Nutrien and the acquired businesses.

35

Unaudited In millions of US dollars except as otherwise noted  

The fair values allocated to the acquired assets and assumed liabilities were as follows:

	September 30, 2020
	Ruralco								Other Acquisitions
	Preliminary 1		Adjustments			Final Fair Value			Preliminary
Receivables		318		(2	)		316	2		69
Inventories		115		(3	)		112			63
Prepaid expenses and other current assets		8		(1	)		7			4
Property, plant and equipment		136		4			140			53
Goodwill		207		29			236			184
Other intangible assets		210		(2	)		208			-
Investments		15		-			15			-
Other assets		16		(14	)		2			-
Total assets		1,025		11			1,036			373
Short-term debt		167		-			167			36
Payables and accrued charges		363		(39	)		324			111
Lease liabilities, including current portion		110		-			110			-
Deferred income tax liabilities		42		(11	)		31			1
Other non-current liabilities		13		61			74			9
Total liabilities		695		11			706			157
Total consideration		330		-			330			216

1 As previously reported in our second quarter financial statements. We recorded additional adjustments to the preliminary fair value primarily related to changes in the preliminary valuation assumptions, including refinement of our liabilities. All measurement period adjustments were offset against goodwill.

2 Includes receivables from customers with gross contractual amounts of $260, of which $7 are considered to be uncollectible.

Financial information related to business acquisitions is as follows:

Pro Forma 1	Other Acquisitions
Sales		320
EBIT		24

1 Estimated annual sales and earnings before finance costs and income taxes (“EBIT”) if acquisitions occurred at January 1, 2020.

	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
From date of acquisition	Other Acquisitions		Other Acquisitions
Sales		60		100
EBIT		6		6

NOTE 11  SEASONALITY

Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets and trade payables. Our short-term debt also fluctuates during the year to meet working capital needs. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our vendors are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.

NOTE 12  RELATED PARTY TRANSACTIONS

We sell potash from our Canadian mines for use outside Canada and the United States exclusively to Canpotex. Canpotex sells potash to buyers in export markets pursuant to term and spot contracts at agreed upon prices. Our revenue is recognized at the amount received from Canpotex representing proceeds from their sale of potash, less net costs of Canpotex. Sales to Canpotex are shown in Note 2.

As at	September 30, 2020		December 31 ,2019
Receivables from Canpotex		201		194

36