EX-99.3

2020 Proforma ¹

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2020 ANNUAL AUDITED

FINANCIAL STATEMENTS

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FINANCIAL STATEMENTS & NOTES



2020 At a Glance		79
Consolidated Statements of Earnings		80
Consolidated Statements of Comprehensive Income		80
Consolidated Statements of Cash Flows		81
Consolidated Statements of Changes in Shareholders’ Equity		82
Consolidated Balance Sheets		83
Note 1	Description of Business	84
Note 2	Basis of Presentation	84
Note 3	Segment Information	85
Note 4	Nature of Expenses	89
Note 5	Share-Based Compensation	90
Note 6	Other (Income) Expenses	92
Note 7	Finance Costs	92
Note 8	Income Taxes	93
Note 9	Net Earnings Per Share	95
Note 10	Financial Instruments and Related Risk Management	95
Note 11	Receivables	99
Note 12	Inventories	100
Note 13	Property, Plant and Equipment	101
Note 14	Goodwill and Other Intangible Assets	103
Note 15	Investments	105
Note 16	Other Assets	105
Note 17	Short-Term Debt	106
Note 18	Long-Term Debt	107
Note 19	Lease Liabilities	108
Note 20	Payables and Accrued Charges	108
Note 21	Pension and Other Post-Retirement Benefits	109
Note 22	Asset Retirement Obligations and Accrued Environmental Costs	113
Note 23	Share Capital	114
Note 24	Capital Management	115
Note 25	Business Combinations	117
Note 26	Commitments	119
Note 27	Guarantees	120
Note 28	Related Party Transactions	121
Note 29	Contingencies and Other Matters	121
Note 30	Accounting Policies, Estimates and Judgments	123

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		2020		Nutrien Annual Report 73

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

MANAGEMENT’S

RESPONSIBILITY

Management’s Responsibility for Financial Reporting

MANAGEMENT’S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements and related financial information are the responsibility of the management of Nutrien Ltd. (the “Company”). They have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and include amounts based on estimates and judgments. Financial information included elsewhere in this report is consistent with the consolidated financial statements.

The consolidated financial statements are approved by the Board of Directors on the recommendation of the audit committee. The audit committee appointed by the Board of Directors is composed entirely of independent directors. The audit committee discusses and analyzes the Company’s interim condensed consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) with management before such information is approved by the committee and submitted to securities commissions or other regulatory authorities. The audit committee and management also analyze the annual consolidated financial statements and MD&A prior to their approval by the Board of Directors.

The audit committee’s duties also include reviewing critical accounting policies and significant estimates and judgments underlying the consolidated financial statements as presented by management and approving the fees of our independent registered public accounting firm.

Our independent registered public accounting firm, KPMG LLP, performs an audit of the consolidated financial statements, the results of which are reflected in their Report of Independent Registered Public Accounting Firm for 2020. KPMG LLP has full and independent access to the audit committee to discuss their audit and related matters.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act, as amended, and National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS.

Under our supervision and with the participation of management, the Company conducted an evaluation of the design and effectiveness of our internal control over financial reporting as of the end of the fiscal year covered by this report, based on the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on this evaluation, management concluded that, as of December 31, 2020, the Company did maintain effective internal control over financial reporting.

The effectiveness of the Company’s internal control over financial reporting as at December 31, 2020 has been audited by KPMG LLP, as reflected in their Report of Independent Registered Public Accounting Firm for 2020.

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Chuck Magro

President and Chief Executive Officer

February 18, 2021

Pedro Farah

Executive Vice President and Chief Financial Officer

February 18, 2021



74 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Nutrien Ltd.

OPINION ON INTERNAL CONTROL OVER FINANCIAL REPORTING

We have audited Nutrien Ltd. and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income, cash flows, and changes in shareholders’ equity for the years then ended, and the related notes (collectively, the “consolidated financial statements”), and our report dated February 18, 2021 expressed an unqualified opinion on those consolidated financial statements.

BASIS FOR OPINION

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material

weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

DEFINITION AND LIMITATIONS OF INTERNAL CONTROL OVER FINANCIAL REPORTING

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Chartered Professional Accountants

Calgary, Canada

February 18, 2021



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 75

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Nutrien Ltd.

OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the accompanying consolidated balance sheets of Nutrien Ltd. and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income, cash flows, and changes in shareholders’ equity for the years then ended, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 18, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

BASIS FOR OPINION

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

CRITICAL AUDIT MATTERS

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

GOODWILL IMPAIRMENT ASSESSMENT OF THE RETAIL NORTH AMERICA GROUP OF CASH GENERATING UNITS

As discussed in Note 14 to the consolidated financial statements, the carrying amount of goodwill as of December 31, 2020 was $12,198 million, of which $6,869 million of goodwill has been allocated to the Retail North America group of cash generating units (“Retail North America CGU”). The Retail North America CGU is tested for impairment annually, and whenever events or changes in circumstances may indicate the carrying amount, including goodwill, exceeds its estimated recoverable amount. The calculation of the recoverable amount of the Retail North America CGU involved estimates including forecasted earnings before tax, interest, depreciation and amortization (“EBITDA”), terminal growth rate and the discount rate.



76 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

Report of Independent Registered Public Accounting Firm Continued

We identified the calculation of the recoverable amount of goodwill for the Retail North America CGU as a critical audit matter. A high degree of auditor judgment was required to evaluate the Company’s forecasted EBITDA, terminal growth rate and discount rate used to calculate the recoverable amount of the Retail North America CGU. Minor changes to these assumptions could have had a significant effect on the Company’s calculation of the recoverable amount of the Retail North America CGU. Additionally, the audit effort associated with this estimate required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the calculation of the recoverable amount of goodwill for the Retail North America CGU. This included controls related to the determination of forecasted EBITDA, terminal growth rate and the discount rate. We evaluated the Company’s forecasted EBITDA for the Retail North America CGU by comparing to historical results and forecasted planted acreage in the United States. We evaluated the terminal growth rate by comparing to the historical growth of the Retail North America CGU and to market information, including forecasted inflation and forecasted gross domestic product in the United States. We evaluated the Company’s historical forecasts of EBITDA by comparing to actual results to assess the Company’s ability to accurately forecast. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

•

evaluating the Company’s determination of the discount rate by comparing the inputs to the discount rate to publicly available market data for comparable entities and assessing the resulting discount rate, and

•

evaluating the Company’s estimate of the recoverable amount of the Retail North America cash generating unit by comparing the results of the Company’s estimate to publicly available market data and valuation metrics for comparable entities.

IMPAIRMENT OF THE AURORA CASH GENERATING UNIT

As discussed in Note 13 to the consolidated financial statements, the Company recorded an impairment of assets for the Aurora cash generating unit (“Aurora CGU”) of $545 million during the year ended December 31, 2020. The Company is required to assess each cash generating unit for an indicator of impairment at each reporting date, and whenever events or changes in circumstances may indicate the carrying amount of a cash generating unit exceeds its recoverable amount. An indicator of impairment was identified for the Aurora CGU at September 30, 2020, due to negative revisions to long-term forecasted global phosphate prices, which resulted in the Company performing an impairment test to calculate the recoverable amount. The calculation of the recoverable amount of the Aurora CGU involved estimates including the forecasted product net selling price, discount rate and the useful life of the mine. The useful life of the mine is derived from the most recent mineral reserves estimate, which requires the expertise of independent reserve engineering specialists.

We identified the calculation of the recoverable amount of the Aurora CGU as a critical audit matter. A high degree of auditor judgment was required to evaluate the Company’s estimate of the forecasted product net selling prices and discount rate used to calculate the recoverable amount of the Aurora CGU. Minor changes to these assumptions could have had a significant effect on the Company’s calculation of the recoverable amount and the resultant impairment loss. Auditor judgment was also required to assess the mineral reserves estimate which forms the basis of the useful life of the mine. Additionally, the audit effort associated with this estimate required specialized skills and knowledge.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 77

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

Report of Independent Registered Public Accounting Firm Continued

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the calculation of the recoverable amount of the Aurora CGU. This included controls related to the determination of forecasted product net selling prices, the discount rate, as well as the mineral reserves and useful life of the mine. We evaluated certain forecasted product net selling prices of the Company by comparing to external forecasts. We evaluated the current year product net selling prices by comparing to those assumptions used in the prior year forecast to assess the Company’s ability to accurately forecast. We assessed the methodology used by the Company to estimate the mineral reserves and resources for consistency with industry and regulatory standards. We evaluated the Company’s estimate of mineral reserves and resources by comparing the Company’s historical estimates to actual results. We assessed the competence, capabilities and objectivity of the Company’s personnel and third-party engineers who prepared the mineral reserve estimate. We involved valuation professionals with specialized skills and knowledge who assisted in evaluating the Company’s determination of the discount rate by comparing the inputs to the discount rate to publicly available market data and assessing the resulting discount rate.

IMPAIRMENT ASSESSMENT OF THE TRINIDAD CASH GENERATING UNIT

As discussed in Note 13 to the consolidated financial statements, the Company is required to assess each cash generating unit for an indicator of impairment at each reporting date, and whenever events or changes in circumstances may indicate the carrying amount of a cash generating unit exceeds its recoverable amount. An indicator of impairment was identified for the Trinidad cash generating unit (“Trinidad CGU”) at September 30, 2020, due to the indefinite closure of an ammonia plant in response to market conditions and lower long-term forecasted global ammonia prices, which resulted in the Company performing an impairment test to calculate the recoverable amount. The calculation of the recoverable amount of the Trinidad CGU involved estimates including forecasted production volumes, forecasted ammonia net selling price and the discount rate.

We identified the calculation of the recoverable amount of the Trinidad CGU as a critical audit matter. A high degree of auditor judgment was required to evaluate the Company’s estimate of the forecasted production volumes, ammonia net selling price and discount rate used to calculate the recoverable amount of the Trinidad CGU. Minor changes to these assumptions could have had a significant effect on the Company’s calculation of the recoverable amount of the Trinidad CGU. Additionally, the audit effort associated with this estimate required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the calculation of the recoverable amount of the Trinidad CGU. This included controls related to the determination of forecasted production volumes, ammonia net selling prices and the discount rate. We evaluated forecasted ammonia net selling prices by comparing to external forecasts. We evaluated forecasted production volumes by comparing to recent actual production, adjusted for the plant closure. We evaluated the current year actual ammonia net selling prices and production volumes by comparing to those assumptions used in the prior year forecast to assess the Company’s ability to accurately forecast. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s determination of the discount rate by comparing the inputs to the discount rate to publicly available market data and assessing the resulting discount rate.

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Chartered Professional Accountants

We have served as the Company’s auditor since 2018.

Calgary, Canada

February 18, 2021



78 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

2020 AT A GLANCE

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FIND OUT MORE AT NUTRIEN.COM



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 79

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF EARNINGS


For the years ended December 31	NOTE		2020			2019
						Note 2
Sales		3		20,908			20,084
Freight, transportation and distribution		4		855			768
Cost of goods sold		4		14,814			13,814
Gross margin				5,239			5,502
Selling expenses		4		2,813			2,505
General and administrative expenses		4		429			404
Provincial mining and other taxes		4		204			292
Share-based compensation		5		69			104
Impairment of assets		13, 14		824			120
Other (income) expenses		6		(2	)		215
Earnings before finance costs and income taxes				902			1,862
Finance costs		7		520			554
Earnings before income taxes				382			1,308
Income tax (recovery) expense		8		(77	)		316
Net earnings				459			992
Net earnings per share (“EPS”)		9
Basic				0.81			1.70
Diluted				0.81			1.70
Weighted average shares outstanding for basic EPS		9		569,657,000			582,269,000
Weighted average shares outstanding for diluted EPS		9		569,686,000			583,102,000

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME


For the years ended December 31 (net of related income taxes)	2020			2019
Net earnings		459			992
Other comprehensive income
Items that will not be reclassified to net earnings:
Net actuarial gain on defined benefit plans		75			7
Net fair value loss on investments		(7	)		(25	)
Items that have been or may be subsequently reclassified to net earnings:
Gain on currency translation of foreign operations		142			47
Other		(16	)		7
Other comprehensive income		194			36
Comprehensive income		653			1,028

(See Notes to the Consolidated Financial Statements)



80 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended December 31	NOTE		2020			2019
Operating activities
Net earnings				459			992
Adjustments for:
Depreciation and amortization				1,989			1,799
Share-based compensation		5		69			104
Impairment of assets		13, 14		824			120
Net gain on disposal of investment in Misr Fertilizers Production Company S.A.E. (“MOPCO”)		15		(250	)		–
(Recovery of) provision for deferred income tax				(9	)		177
Other long-term assets, liabilities and miscellaneous		16		(333	)		(17	)
Cash from operations before working capital changes				2,749			3,175
Changes in non-cash operating working capital:
Receivables				145			(64	)
Inventories				85			190
Prepaid expenses and other current assets				(10	)		(238	)
Payables and accrued charges				354			602
Cash provided by operating activities				3,323			3,665
Investing activities
Additions to property, plant and equipment		13		(1,423	)		(1,728	)
Additions to intangible assets		14		(126	)		(163	)
Business acquisitions, net of cash acquired		25		(233	)		(911	)
Proceeds from disposal of investment in MOPCO		15		540			–
Proceeds from disposal of discontinued operations, net of tax				–			55
Purchase of investments				(102	)		(198	)
Other				140			147
Cash used in investing activities				(1,204	)		(2,798	)
Financing activities
Transaction costs on long-term debt				(15	)		(29	)
(Repayment of) proceeds from short-term debt, net		17		(892	)		216
Proceeds from long-term debt		18		1,541			1,510
Repayment of long-term debt		18		(509	)		(1,010	)
Repayment of principal portion of lease liabilities		18, 19		(274	)		(234	)
Dividends paid		23		(1,030	)		(1,022	)
Repurchase of common shares		23		(160	)		(1,930	)
Issuance of common shares		23		–			20
Cash used in financing activities				(1,339	)		(2,479	)
Effect of exchange rate changes on cash and cash equivalents				3			(31	)
Increase (decrease) in cash and cash equivalents				783			(1,643	)
Cash and cash equivalents – beginning of year				671			2,314
Cash and cash equivalents – end of year				1,454			671
Cash and cash equivalents comprised of:
Cash				1,375			532
Short-term investments				79			139
				1,454			671
Supplemental cash flows information
Interest paid				498			505
Income taxes paid				156			29
Total cash outflow for leases				345			345

(See Notes to the Consolidated Financial Statements)



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 81

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

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		–			–			–			–			–			–			–			–			992			992
Other comprehensive (loss) income		–			–			–			(25	)		7			47			7			36			–			36
Shares repurchased (Note 23)		(36,067,323	)		(992	)		–			–			–			–			–			–			(886	)		(1,878	)
Dividends declared		–			–			–			–			–			–			–			–			(754	)		(754	)
Effect of share-based compensation including issuance of common shares		474,655			23			17			–			–			–			–			–			–			40
Transfer of net actuarial gain on defined benefit plans		–			–			–			–			(7	)		–			–			(7	)		7			–
Transfer of net loss on sale of investment		–			–			–			3			–			–			–			3			(3	)		–
Transfer of net loss on cash flow hedges		–			–			–			–			–			–			8			8			–			8
Balance – December 31, 2019		572,942,809			15,771			248			(29	)		–			(204	)		(18	)		(251	)		7,101			22,869
Net earnings		–			–			–			–			–			–			–			–			459			459
Other comprehensive (loss) income		–			–			–			(7	)		75			142			(16	)		194			–			194
Shares repurchased (Note 23)		(3,832,580	)		(105	)		(55	)		–			–			–			–			–			–			(160	)
Dividends declared		–			–			–			–			–			–			–			–			(1,029	)		(1,029	)
Effect of share-based compensation including issuance of common shares		150,177			7			12			–			–			–			–			–			–			19
Transfer of net actuarial gain on defined benefit plans		–			–			–			–			(75	)		–			–			(75	)		75			–
Transfer of net loss on cash flow hedges		–			–			–			–			–			–			13			13			–			13
Balance – December 31, 2020		569,260,406			15,673			205			(36	)		–			(62	)		(21	)		(119	)		6,606			22,365

1	Any amounts incurred during a period were closed out 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 Consolidated Financial Statements)



82 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

CONSOLIDATED BALANCE SHEETS


As at December 31	NOTE		2020			2019
Assets
Current assets
Cash and cash equivalents				1,454			671
Receivables		11		3,581			3,542
Inventories		12		4,930			4,975
Prepaid expenses and other current assets				1,505			1,477
				11,470			10,665
Non-current assets
Property, plant and equipment		13		19,660			20,335
Goodwill		14		12,198			11,986
Other intangible assets		14		2,388			2,428
Investments		15		562			821
Other assets		16		914			564
TOTAL ASSETS				47,192			46,799
Liabilities
Current liabilities
Short-term debt		17		159			976
Current portion of long-term debt		18		14			502
Current portion of lease liabilities		19		249			214
Payables and accrued charges		20		8,058			7,437
				8,480			9,129
Non-current liabilities
Long-term debt		18		10,047			8,553
Lease liabilities		19		891			859
Deferred income tax liabilities		8		3,149			3,145
Pension and other post-retirement benefit liabilities		21		454			433
Asset retirement obligations and accrued environmental costs		22		1,597			1,650
Other non-current liabilities				209			161
TOTAL LIABILITIES				24,827			23,930
Shareholders’ Equity
Share capital		23		15,673			15,771
Contributed surplus				205			248
Accumulated other comprehensive loss				(119	)		(251	)
Retained earnings				6,606			7,101
TOTAL SHAREHOLDERS’ EQUITY				22,365			22,869
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				47,192			46,799

(See Notes to the Consolidated Financial Statements)

Approved by the Board of Directors,



Director		Director



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 83

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 1

Description of Business

Nutrien Ltd. (collectively with its subsidiaries, “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.

The Company is a corporation organized under the laws of Canada with its registered head office located at Suite 500, 122 – 1st Avenue South, Saskatoon, Saskatchewan, Canada. As at December 31, 2020, the Company had assets as follows:

NUTRIEN AG SOLUTIONS (“RETAIL”)

•

various retail facilities across the US, Canada, Australia and South America

•

private label and proprietary crop protection products and nutritionals

•

an innovative integrated digital platform for growers and crop consultants

POTASH

•

six operations in the province of Saskatchewan

NITROGEN

•

eight production facilities in North America: four in Alberta and one each in Georgia, Louisiana, Ohio and Texas

•

one large-scale operation in Trinidad

•

six upgrade facilities in North America: three in Alberta and one each in Georgia, Missouri, and Washington

•

50 percent investment in Profertil S.A. (“Profertil”), a nitrogen producer based in Argentina

PHOSPHATE

•

two mines and processing plants: one in Florida and one in North Carolina

•

phosphate feed plants in Illinois, Missouri and Nebraska

•

an industrial phosphoric acid plant in Ohio

CORPORATE AND OTHERS

•

investment in Canpotex Limited (“Canpotex”), a Canadian potash export, sales and marketing company owned in equal shares by Nutrien and another potash producer

•

22 percent investment in Sinofert Holdings Limited (“Sinofert”), a fertilizer supplier and distributor in China


*NOTE 2*				*Basis of Presentation*

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). We have consistently applied the same accounting policies throughout all periods presented, as if these policies had always been in effect, with the exception of the accounting standards adopted effective January 1, 2020, as disclosed in Note 30.

Certain immaterial 2019 figures have been reclassified in the consolidated statements of earnings, segment information, nature of expenses and other (income) expenses.

These consolidated financial statements were authorized for issue by the Board of Directors on February 18, 2021.

Sensitivity analyses included throughout the notes should be used with caution as the changes are hypothetical and not reflective of future performance. The sensitivities have been calculated independently of changes in other key variables. Changes in one factor may result in changes in another, which could increase or reduce certain sensitivities. These consolidated financial statements were prepared under the historical cost basis, except for items that IFRS requires to be measured at fair value. Details of our accounting policies are primarily disclosed in Note 30.



84 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 2

Basis of Presentation Continued

On March 11, 2020, the World Health Organization declared the spread of 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, valuation of inventory, goodwill and other

long-lived assets, financial assets, tax assets, pension obligations and assets, and revenue recognition. Based on the current assessment, there was not a material impact to these consolidated financial statements. As a result of the pandemic, we incurred directly attributable and incremental COVID-19 related expenses in other (income) expenses (Note 6). 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.


*NOTE 3*				*Segment Information*

The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it 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 produce.

The Executive Leadership Team (“ELT”), comprised of officers at the Executive Vice President level and above, is the Chief Operating Decision Maker (“CODM”). In 2020, the CODM 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. The CODM considers adjusted EBITDA to be a more meaningful measure because it is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. In addition, it provides a better indication of the

segment’s performance compared to EBITDA 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 period.

We determine the composition of the reportable segments based on factors including risks and returns, internal organization, and internal reports reviewed by the CODM. We allocate certain expenses across segments based on reasonable considerations such as production capacities or historical trends.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 85

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 3

Segment Information Continued

Financial information on each of these segments is summarized in the following tables:


2020		Retail		Potash		Nitrogen			Phosphate			Corporate and Others			Eliminations			Consolidated
Sales	– third party		14,748		2,265		2,572			1,241			82			–			20,908
	– intersegment		37		248		628			202			–			(1,115	)		–
Sales	– total		14,785		2,513		3,200			1,443			82			(1,115	)		20,908
Freight, transportation and distribution			–		367		460			241			–			(213	)		855
Net sales			14,785		2,146		2,740			1,202			82			(902	)		20,053
Cost of goods sold			11,049		1,183		2,265			1,166			74			(923	)		14,814
Gross margin			3,736		963		475			36			8			21			5,239
Selling expenses			2,795		9		27			6			(24	)		–			2,813
General and administrative expenses			135		7		8			10			269			–			429
Provincial mining and other taxes			–		201		1			–			2			–			204
Share-based compensation expense			–		–		–			–			69			–			69
Impairment of assets (Note 13)			–		23		27			769			5			–			824
Other expenses (income)			44		8		(288	)		6			228			–			(2	)
Earnings (loss) before finance costs and income taxes			762		715		700			(755	)		(541	)		21			902
Depreciation and amortization			668		452		599			218			52			–			1,989
EBITDA			1,430		1,167		1,299			(537	)		(489	)		21			2,891
Acquisition and integration related costs			–		–		4			–			56			–			60
Share-based compensation expense			–		–		–			–			69			–			69
Impairment of assets (Note 13)			–		23		27			769			5			–			824
COVID-19 related expenses			–		–		–			–			48			–			48
Foreign exchange loss, net of related derivatives			–		–		–			–			19			–			19
Loss on disposal of business			–		–		–			–			6			–			6
Net gain on disposal of investment in MOPCO (Note 15)			–		–		(250	)		–			–			–			(250	)
Adjusted EBITDA			1,430		1,190		1,080			232			(286	)		21			3,667
Assets			20,526		12,032		10,612			1,462			2,983			(423	)		47,192



86 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 3

Segment Information Continued


2019		Retail		Potash			Nitrogen			Phosphate			Corporate and Others			Eliminations			Consolidated
Sales	– third party		13,244		2,702			2,608			1,397			133			–			20,084
	– intersegment		38		207			612			203			–			(1,060	)		–
Sales	– total		13,282		2,909			3,220			1,600			133			(1,060	)		20,084
Freight, transportation and distribution			–		305			372			232			–			(141	)		768
Net sales			13,282		2,604			2,848			1,368			133			(919	)		19,316
Cost of goods sold			9,981		1,103			2,148			1,373			133			(924	)		13,814
Gross margin			3,301		1,501			700			(5	)		–			5			5,502
Selling expenses			2,484		9			25			5			(18	)		–			2,505
General and administrative expenses			112		6			15			7			264			–			404
Provincial mining and other taxes			–		287			2			1			2			–			292
Share-based compensation expense			–		–			–			–			104			–			104
Impairment of assets (Note 13 and 14)			–		–			–			–			120			–			120
Other expenses (income)			69		(4	)		(46	)		25			171			–			215
Earnings (loss) before finance costs and income taxes			636		1,203			704			(43	)		(643	)		5			1,862
Depreciation and amortization			595		390			535			237			42			–			1,799
EBITDA			1,231		1,593			1,239			194			(601	)		5			3,661
Merger and related costs			–		–			–			–			82			–			82
Acquisition and integration related costs			–		–			–			–			16			–			16
Share-based compensation expense			–		–			–			–			104			–			104
Impairment of assets (Note 13 and 14)			–		–			–			–			120			–			120
Foreign exchange loss, net of related derivatives			–		–			–			–			42			–			42
Adjusted EBITDA			1,231		1,593			1,239			194			(237	)		5			4,025
Assets			19,990		11,696			10,991			2,198			2,129			(205	)		46,799

Our Retail segment primarily generates revenue from sales of the following:


Crop nutrients				Dry and liquid macronutrient products including potash, nitrogen and phosphate, proprietary liquid micronutrient products and nutrient application services.
Crop protection products				Various third-party supplier and proprietary products designed to maintain crop quality and manage plant diseases, weeds, and other pests.
Seed				Various third-party supplier seed brands and proprietary seed product lines.
Merchandise				Fencing, feed supplements, livestock-related animal health products, storage and irrigation equipment, and other products.
Nutrien Financial				Financing solutions provided to Retail branches and customers in support of Nutrien’s agricultural product and service sales.
Services and other revenues				Product application, soil and leaf testing, crop scouting and precision agriculture services, water services and livestock marketing.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 87

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 3

Segment Information Continued

Our Potash, Nitrogen and Phosphate segments generate revenue from sales of the following products:

Products

Sales prices impacted by

Potash

• North American – primarily granular

• Offshore (international) – primarily granular and standard

• North American prices referenced at delivered prices (including transportation and distribution costs)

• International prices pursuant to term and spot contract prices (excluding transportation and distribution costs)

Nitrogen

• Ammonia, urea, urea ammonium nitrate, industrial grade ammonium nitrate and ammonium sulfate

• Global energy costs and supply

Phosphate

• Solid fertilizer, liquid fertilizer, industrial products and feed products

• Global prices and supplies of ammonia and sulfur

Revenue reported under our Corporate and Others segment primarily relates to our non-core Canadian business, which was sold in 2020.

Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment.


	2020			2019
Retail sales by product line
Crop nutrients		5,200			4,989
Crop protection products		5,602			4,983
Seed		1,790			1,712
Merchandise		943			598
Nutrien Financial		129			–
Services and other		1,241			1,000
Nutrien Financial elimination ¹		(120	)		–
		14,785			13,282
Potash sales by geography
Manufactured product
North America		1,275			1,283
Offshore ²		1,238			1,625
Other potash and purchased products		–			1
		2,513			2,909
Nitrogen sales by product line
Manufactured product
Ammonia		779			884
Urea		1,040			1,019
Solutions, nitrates and sulfates		816			812
Other nitrogen and purchased products		565			505
		3,200			3,220
Phosphate sales by product line
Manufactured product
Fertilizer		838			944
Industrial and feed		454			475
Other phosphate and purchased products		151			181
		1,443			1,600

1	Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.

2	Relates to Canpotex (Note 28).



88 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 3

Segment Information Continued

Financial information by geographic area is summarized in the following tables:


	Sales – Third Party					Non-Current Assets¹
		2020		2019			2020	2019
United States		12,373		12,561			15,268	15,685
Canada		2,565		2,504			17,435	17,503
Australia		3,231		1,961			1,305	1,172
Canpotex (Note 28)		1,238		1,625			–	–
Trinidad		101		113			644	691
Other		1,400	²	1,320	²		564	639
		20,908		20,084			35,216	35,690

1	Excludes financial instruments (other than equity-accounted investees), deferred tax assets and post-employment benefit assets.

2	Other third-party sales primarily relate to Argentina of $372 (2019 – $404), Brazil of $284 (2019 – $109), Europe of $183 (2019 – $210), and Others of $561 (2019 – $597).

Canpotex sales volumes by geographical area were as follows:


Canpotex Sales by market (%)	2020		2019
Latin America		32		31
China		22		22
India		14		10
Other Asian markets		25		27
Other markets		7		10


*NOTE 4*				*Nature of Expenses*


	2020			2019
Purchased and produced raw materials and product for resale ¹		12,110			11,335
Depreciation and amortization		1,989			1,799
Employee costs ²		2,450			2,205
Freight		963			845
Impairment of assets (Note 13 and 14)		824			120
Provincial mining and other taxes ³		204			292
Offsite warehouse costs		60			51
Merger and related costs		–			82
Acquisition and integration related costs		60			16
Contract services		617			567
Lease expense ⁴		60			66
Fleet fuel, repairs and maintenance		222			202
COVID-19 related expenses		48			–
Net gain on disposal of investment in MOPCO (Note 15)		(250	)		–
Other		649			642
Total cost of goods sold and expenses		20,006			18,222

1	Significant expenses include: supplies, energy, fuel, purchases of raw material (natural gas – feedstock, sulfur, ammonia and reagents) and product for resale (crop nutrients and protection products, and seed).

2	Includes employee benefits and share-based compensation.

3	Includes Saskatchewan potash production tax, and Saskatchewan resource surcharge and other of $86 and $118 (2019 – $190 and $102), respectively, as required under Saskatchewan provincial legislation.

4	Includes lease expense relating to short-term leases, leases of low value and variable lease payments.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 89

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 5

Share-based Compensation

We have share-based compensation plans (including those assumed from Potash Corporation of Saskatchewan Inc. (“PotashCorp”) and Agrium Inc. (“Agrium”)) for eligible employees and directors as part of their remuneration package, including Stock Options, Performance Share Units (“PSUs”), Restricted Share Units (“RSUs”) and Deferred Share Units (“DSUs”).

The following summarizes the Nutrien share-based compensation plans, under which we have awards available to be granted, and the assumed legacy plans of PotashCorp and Agrium, under which no awards will be granted:

Plans

Eligibility

Granted

Vesting Period

Maximum Term

Settlement

Stock Options

Officers and eligible employees

Annually

25% per year over four years

10 years

PSUs

Officers and eligible employees

Annually

On third anniversary of grant date based on total shareholder return over a three-year performance cycle, compared to average total shareholder return of a peer group of companies over the same period

Not applicable

Cash

RSUs

Eligible employees

Annually

On third anniversary of grant date and are not subject to performance conditions

Not applicable

Cash

DSUs

Non-executive directors

At the discretion of the Board of Directors

Fully vest upon grant

Not applicable

Cash ¹

SARs/TSARs ²

Awards no longer granted; legacy awards only

25% per year over four years

10 years

Cash

1	Directors can redeem their DSUs for cash only when they leave the Board of Directors for an amount equal to the market value of the common shares at the time of redemption or as mandated by the Nutrien DSU Plan.

Under the assumed legacy Agrium stock appreciation rights (“SARs”) plan, holders of tandem stock appreciation rights (“TSARs”) have the ability to choose between (a) receiving in cash the price of our shares on the date of exercise in excess of the exercise price of the right or (b) receiving common shares by paying the exercise price of the right. Our past experience and future expectation is that substantially all TSAR holders will elect to choose the first option.

The weighted average fair value of stock options granted was estimated as of the date of the grant using the Black-Scholes-Merton option-pricing model. The weighted average grant date fair value of stock options per unit granted in 2020 was $7.18 (2019 – $11.27). The weighted average assumptions by year of grant that impacted current year results are as follows:

Assumptions

Based On

Year of Grant

2020

2019

Exercise price per option

Quoted market closing price¹

42.23

53.54

Expected annual dividend yield (%)

Annualized dividend rate ²

4.36

3.22

Expected volatility (%)

Historical volatility ³

Risk-free interest rate (%)

Zero-coupon government issues ⁴

1.51

2.55

Average expected life of options (years)

Historical experience

8.5

7.5

1	Of common shares on the last trading day immediately preceding the date of the grant.

2	As of the date of the grant.

3	Of the Company’s share over a period commensurate with the expected life of the option.

4	Implied yield available on equivalent remaining term at the time of the grant.



90 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 5

Share-based Compensation Continued

The following table summarizes the activity related to our stock option plans:


	Number of Shares Subject to Option						Weighted Average Exercise Price
	2020			2019			2020		2019
Outstanding – beginning of year		9,191,480			9,044,237			56.88		58.41
Granted		2,293,802			1,376,533			42.23		53.54
Exercised		(123,403	)		(451,574	)		42.24		42.73
Forfeited or cancelled		(34,506	)		(502,016	)		57.45		86.53
Expired		(329,481	)		(275,700	)		75.92		76.59
Outstanding – end of year		10,997,892			9,191,480			53.59		56.88

The aggregate grant-date fair value of all stock options granted in 2020 was $16. The average share price in 2020 was $38.87 per share.

The following table summarizes information about our stock options outstanding as at December 31, 2020, with expiry dates ranging from May 2021 to February 2030:


	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Number			Weighted Average Exercise Price
$37.84 to $41.60		1,647,297		5		38.71		1,647,297			38.71
$41.61 to $43.36		2,293,802		9		42.23		–	¹		–
$43.37 to $45.40		1,492,667		7		44.50		988,275			44.50
$45.41 to $52.75		2,239,358		5		48.74		2,098,294			48.91
$52.76 to $78.86		1,645,867		7		57.60		821,067			61.68
$78.87 to $130.78		1,678,901		2		94.31		1,678,901			94.31
		10,997,892		6		53.59		7,233,834			57.97

1	Options granted in this range of exercise prices have not yet met the vesting period.

Information for all employee and director share-based compensation plans is summarized below:


	Units Granted in 2020		Units Outstanding as at December 31, 2020		Compensation Expense
	Units Granted in 2020		Units Outstanding as at December 31, 2020		2020		2019
Stock Options		2,293,802		10,997,892		14		19
PSUs		794,017		1,879,160		31		65
RSUs		486,194		1,304,858		22		18
DSUs		49,424		369,267		2		2
SARs/TSARs		–		1,576,172		–		–
						69		104



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 91

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 6

Other (Income) Expenses


	2020			2019
Merger and related costs		–			82
Acquisition and integration related costs		60			16
Foreign exchange loss, net of related derivatives		18			42
Earnings of equity-accounted investees		(73	)		(66	)
Bad debt expense		6			24
COVID-19 related expenses		48			–
Loss on disposal of business		6			–
Net gain on disposal of investment in MOPCO (Note 15)		(250	)		–
Other expenses		183			117
		(2	)		215


*NOTE 7*				*Finance Costs*


	2020			2019
Interest expense
Short-term debt		50			87
Long-term debt		392			387
Lease liabilities (Note 19)		34			34
COVID-19 related		19			–
Unwinding of discount on asset retirement obligations (Note 22)		33			54
Interest on net defined benefit pension and other post-retirement plan obligations (Note 21)		13			15
Borrowing costs capitalized to property, plant and equipment		(20	)		(18	)
Interest income		(1	)		(5	)
		520			554

Borrowing costs capitalized to property, plant and equipment in 2020 were calculated by applying an average capitalization rate of 3.9 percent (2019 – 4.6 percent) to expenditures on qualifying assets.



92 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 8

Income Taxes

Income Taxes Included in Net Earnings

We operate in a specialized industry and in several tax jurisdictions; as a result, our earnings are subject to various rates of taxation. The provision for income taxes differs from the amount that would have resulted from applying the Canadian statutory income tax rates to earnings (loss) before income taxes as follows:


	2020			2019
Earnings (loss) before income taxes
Canada		525			765
United States		(506	)		315
Australia		83			27
Trinidad		(44	)		(28	)
Other		324			229
		382			1,308
Canadian federal and provincial statutory income tax rate (%)		27			27
Income tax at statutory rates		103			353
Adjusted for the effect of:
Recovery of prior year taxes due to US legislative changes		(94	)		–
Non-taxable income		(59	)		(19	)
Change in recognition of tax losses and deductible temporary differences		(20	)		–
Impact of foreign tax rates		(18	)		(45	)
Production-related deductions		(12	)		(17	)
Impact of tax rate changes		(3	)		16
Non-deductible expenses		13			15
Foreign accrual property income		7			18
Other		6			(5	)
Income tax (recovery) expense included in net earnings		(77	)		316

Total income tax (recovery) expense, included in net earnings, was comprised of the following:


	2020			2019
Current income tax
Tax (recovery) expense for current year		(38	)		161
Adjustments in respect of prior years		(30	)		(22	)
Total current income tax (recovery) expense		(68	)		139
Deferred income tax
Origination and reversal of temporary differences		72			152
Adjustments in respect of prior years		(58	)		9
Change in recognition of tax losses and deductible temporary differences		(20	)		–
Impact of tax rate changes		(3	)		16
Total deferred income tax (recovery) expense		(9	)		177
Income tax (recovery) expense included in net earnings		(77	)		316



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 93

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 8

Income Taxes Continued

Deferred Income Taxes

In respect of each type of temporary difference, unused tax loss and unused tax credit, the amounts of deferred tax assets and liabilities recognized in the consolidated balance sheets as at December 31 and the amount of the deferred tax (recovery) expense recognized in net earnings were:


	Deferred Income Tax (Assets) Liabilities						Deferred Income Tax (Recovery) Expense Recognized in Net Earnings
	2020			2019			2020			2019
Deferred income tax assets
Asset retirement obligations and accrued environmental costs		(376	)		(387	)		20			25
Tax loss and other carryforwards		(370	)		(270	)		(98	)		(9	)
Lease liabilities		(201	)		(227	)		26			55
Pension and other post-retirement benefit liabilities		(161	)		(168	)		(12	)		(14	)
Long-term debt		(102	)		(107	)		3			3
Receivables		(50	)		(51	)		2			7
Inventories		(37	)		(59	)		20			(5	)
Payables and accrued charges		–			(25	)		25			(5	)
Other assets		(12	)		(22	)		17			14
Deferred income tax liabilities
Property, plant and equipment		3,637			3,647			(12	)		147
Goodwill and other intangible assets		471			523			(67	)		(58	)
Payables and accrued charges		72			–			72			–
Other liabilities		36			42			(5	)		17
		2,907			2,896			(9	)		177

Reconciliation of net deferred income tax liabilities:


	2020			2019
Balance – beginning of year		2,896			2,691
Business acquisitions (Note 25)		–			29
Income tax (recovery) expense recognized in net earnings		(9	)		177
Income tax charge recognized in other comprehensive income (“OCI”)		17			2
Other		3			(3	)
Balance – end of year		2,907			2,896

Amounts and expiry dates of unused tax losses and unused tax credits as at December 31, 2020, were:

Amount

Expiry Date

Unused federal operating losses

1,425

2021 – Indefinite

Unused federal capital losses

583

Indefinite

Unused investment tax credits

2021 – 2040

The unused tax losses and credits with no expiry dates can be carried forward indefinitely.

As at December 31, 2020, we had $735 of federal tax losses for which we did not recognize deferred tax assets.

We have determined that it is probable that all recognized deferred tax assets will be realized through a combination of future reversals of temporary differences and taxable income.

We did not recognize deferred tax liabilities related to temporary differences associated with investments in subsidiaries and

equity-accounted investees amounting to $8,911 as at December 31, 2020 (2019 – $9,183).

In 2020, previously unrecognized capital losses were utilized primarily as a result of the net gain on disposal of investment in MOPCO. In addition, as a result of the non-cash impairment of assets relating to our property, plant and equipment at White Springs, management revised its estimate of future taxable profits and derecognized deferred tax assets related to Florida tax losses and deductible temporary differences. In aggregate, the net decrease in unrecognized deferred tax assets was $20.



94 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 9

Net Earnings Per Share


	2020		2019
Weighted average number of common shares		569,657,000		582,269,000
Dilutive effect of stock options		29,000		777,000
Dilutive effect of share-settled PSUs		–		56,000
Weighted average number of diluted common shares		569,686,000		583,102,000

Options excluded from the calculation of diluted net earnings per share due to the option exercise prices being greater than the average market price of common shares were as follows:

2020

2019

Number of options excluded

9,875,797

4,539,529

Performance option plan years fully excluded

2011 – 2017

2010 – 2015

Stock option plan years fully excluded

2015, 2017 – 2020

2015, 2019


*NOTE 10*				*Financial Instruments and Related Risk Management*

Our ELT, along with the Board of Directors (including Board of Directors Committees), is responsible for monitoring our risk exposures and managing our policies to address these risks. Our strategic and risk management processes are integrated to ensure we understand the benefit from the relationship between strategy, risk and value creation. Outlined below are our risk management strategies we have developed to mitigate the financial market risks which we are exposed to.


Credit Risk				Risk Management Strategies
Receivables from customers				• establish credit approval policies and procedures for new and existing customers • extend credit to qualified customers through: • review of credit agency reports, financial statements and/or credit references, as available • review of existing customer accounts every 12 – 24 months based on the credit limit amounts • evaluation of customer and country risk for international customers • establish credit period: • 15 and 30 days for wholesale fertilizer customers • 30 days for industrial and feed customers • 30 – 360 days for Retail, including Nutrien Financial, customers • up to 180 days for select export sales customers, including Canpotex • transact on a cash basis with certain customers who may not meet specified benchmark creditworthiness or cannot provide other evidence of ability to pay • execute an agency arrangement with a financial institution with which we have only a limited recourse involvement • sell receivables to financial institutions which substantially transfer the risks and rewards • set eligibility requirements for Nutrien Financial to limit the risk of the receivables • may require security over certain crop or livestock inventories • set up provision using the lifetime expected credit loss method considering all possible default events over the expected life of a financial instrument. Receivables are grouped based on days past due and/or customer credit risk profile. Estimated losses on receivables are based on known troubled accounts and historical experience of losses incurred. Receivables are considered to be in default and are written off against the allowance when it is probable that all remaining contractual payments due will not be collected in accordance with the terms of the agreement
Cash and cash equivalents and derivative assets				• require acceptable minimum counterparty credit ratings • limit counterparty or credit exposure • select counterparties with investment-grade quality



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 95

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 10

Financial Instruments and Related Risk Management Continued

Maximum exposure to credit risk as at December 31:


	2020		2019
Cash and cash equivalents		1,454		671
Receivables ¹		3,498		3,438
Other current assets – derivatives		45		5
		4,997		4,114

1	Excluding income tax receivable.

LOGO

Risk

Risk Management Strategies

Liquidity

• establish an external borrowing policy to maintain sufficient liquid financial resources to fund our operations and meet our commitments and obligations in a cost-effective manner

• maintain an optimal capital structure

• maintain investment-grade credit ratings that provide ease of access to the debt capital and commercial paper markets

• maintain sufficient short-term credit availability

• uphold long-term relationships with a sufficient number of high-quality and diverse lenders

Refer to Note 17 for our available credit facilities.

The following maturity analysis of our financial liabilities and gross settled derivative contracts (for which the cash flows are settled simultaneously) is based on the expected undiscounted contractual cash flows from the date of the consolidated balance sheets to the contractual maturity date.


2020	Carrying Amount of Liability as at December 31		Contractual Cash Flows		Within 1 Year		1 to 3 Years		3 to 5 Years		Over 5 Years


Short-term debt ¹		159		159		159		–		–		–
Payables and accrued charges ²		5,781		5,781		5,781		–		–		–
Long-term debt, including current portion ¹		10,061		15,795		434		2,378		2,498		10,485
Lease liabilities, including current portion ¹		1,140		1,305		281		408		233		383
Derivatives		48		48		39		9		–		–
		17,189		23,088		6,694		2,795		2,731		10,868

1	Contractual cash flows include contractual interest payments related to debt obligations and lease liabilities. Interest rates on variable rate debt are based on prevailing rates as at December 31, 2020.

Excludes non-financial liabilities and includes trade payables of approximately $1.5 billion that are related to our prepaid inventory to secure product discounts. We consider these amounts to be part of our working capital. For these payables, we participated in arrangements where the vendors sold their right to receive payment to financial institutions without extending the original payment terms. These payables were paid in January and February 2021.



96 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 10

Financial Instruments and Related Risk Management Continued


Foreign Exchange Risk				Risk Management Strategies
Foreign currency denominated accounts				• execute foreign currency derivative contracts within certain prescribed limits for both forecast operating and capital expenditures to manage the earnings impact, including those related to our equity-accounted investees, that could occur from a reasonably possible strengthening or weakening of the US dollar

The fair value of our net foreign exchange currency derivative assets (liabilities) at December 31, 2020 was $14 (2019 – $2). The following table presents the significant foreign currency derivatives that existed at December 31:


	2020						2019
Sell/buy	Notional		Maturities		Average contract rate		Notional		Maturities		Average contract rate
Derivatives not designated as hedges
Forwards
USD/CAD ¹		514		2021		1.2796		337		2020		1.3096
CAD/USD		126		2021		1.2804		120		2020		1.3138
USD/AUD ²		28		2021		1.3661		78		2020		1.4593
AUD/USD		92		2021		1.3640		47		2020		1.4563
Options
USD/CAD – buy USD puts		70		2021		1.3147		–		–		–
USD/CAD – sell USD calls		55		2021		1.3665		–		–		–
AUD/USD – buy USD calls		61		2021		1.3216		–		–		–
Derivatives designated as hedges
Forwards
USD/CAD		254		2021		1.3190		–		–		–

1	Canadian Dollar

2	Australian Dollar

Market Risks

Type

Risk Management Strategies

Interest rate

Short-term and long-term debt

• use a portfolio of fixed and floating rate instruments

• align current and long-term assets with demand and fixed-term debt

• monitor the effects of market changes in interest rates

• use interest rate swaps, if desired

We do not believe we have material exposure to interest or price risk on our financial instruments as at December 31, 2020 and 2019.

Price

Natural gas derivative instruments

• diversify our forecast gas volume requirements, including a portion of annual requirements purchased at spot market prices, a portion at fixed prices (up to 10 years) and a portion indexed to the market price of ammonia

• acquire a reliable supply of natural gas feedstock and fuel on a location-adjusted, cost-competitive basis

Price

Investment at fair value

• ensure the security of principal amounts invested

• provide for an adequate degree of liquidity

• achieve a satisfactory return

In 2020, we entered into cash flow hedges on our interest rate derivative contracts which matured in the same year and had a total notional amount of $680.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 97

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 10

Financial Instruments and Related Risk Management Continued

Natural gas derivatives outstanding:

2020

2019

Notional ¹

Maturities

Average
Contract
Price ²

Fair Value
of Assets
(Liabilities)

Notional ¹

Maturities

Average
Contract
Price ²

Fair Value
of Assets
(Liabilities)

NYMEX swaps

2021 –
2022

3.89

(18

)

2020 –
2022

4.26

(30

)

1	In millions of Metric Million British Thermal Units (“MMBtu”).

2	US dollars per MMBtu.


Financial assets (liabilities)	2020								2019
Financial assets (liabilities)	Gross			Offset		Net Amounts Presented			Gross			Offset		Net Amounts Presented
Derivative instrument liabilities
Natural gas derivatives ¹		(18	)		–		(18	)		(30	)		–		(30	)
Other long-term debt instruments ²		(150	)		150		–			(150	)		150		–
		(168	)		150		(18	)		(180	)		150		(30	)

1	Cash margin deposits of $9 (2019 – $17) were placed with counterparties related to legally enforceable master netting arrangements.

2	Back-to-back loan arrangements that are not subject to any financial test covenants but are subject to certain customary covenants and events of default. We were in compliance with these covenants as at December 31, 2020.

Fair Value

Financial instruments included in the consolidated balance sheets are measured either at fair value or amortized cost. The following tables explain the valuation methods used to determine the fair value of each financial instrument and its associated level in the fair value hierarchy.


Financial Instruments at Fair Value				Fair Value Method
Cash and cash equivalents				Carrying amount (approximation to fair value assumed due to short-term nature)
Equity securities				Closing bid price of the common shares as at the balance sheet date
Debt securities				Closing bid price of the debt or other instruments with similar terms and credit risk (Level 2) as at the balance sheet date
Foreign currency derivatives not traded in an active market				Quoted forward exchange rates (Level 2) as at the balance sheet date
Foreign exchange forward contracts, swaps and options and natural gas swaps not traded in an active market				Based on a discounted cash flow model. Inputs included contractual cash flows based on prices for natural gas futures contracts, fixed prices and notional volumes specified by the swap contracts, the time value of money, liquidity risk, our own credit risk (related to instruments in a liability position) and counterparty credit risk (related to instruments in an asset position). Futures contract prices used as inputs in the model were supported by prices quoted in an active market and therefore categorized in Level 2.


Financial Instruments at Amortized Cost				Fair Value Method
Receivables, short-term debt and payables and accrued charges				Carrying amount (approximation to fair value assumed due to short-term nature)
Long-term debt				Quoted market prices (Level 1 or 2 depending on the market liquidity of the debt)
Other long-term debt instruments				Carrying amount



98 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 10

Financial Instruments and Related Risk Management Continued

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


	2020									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		1,454			–			1,454			671			–			671
Derivative instrument assets		45			–			45			5			–			5
Other current financial assets – marketable securities²		161			24			137			193			27			166
Investment at fair value through other comprehensive income (“FVTOCI”) (Note 15)		153			153			–			161			161			–
Derivative instrument liabilities		(48	)		–			(48	)		(33	)		–			(33	)
Amortized cost
Current portion of long-term debt
Notes and debentures		–			–			–			(494	)		–			(503	)
Fixed and floating rate debt		(14	)		–			(14	)		(8	)		–			(8	)
Long-term debt
Notes and debentures		(9,994	)		(3,801	)		(7,955	)		(8,528	)		(1,726	)		(7,440	)
Fixed and floating rate debt		(53	)		–			(53	)		(25	)		–			(25	)

1	During 2020 and 2019, there were no transfers between Level 1 and Level 2 for financial instruments measured at fair value on a recurring basis. Our policy is to recognize transfers at the end of the reporting period.

2	Marketable securities consist of equity and fixed income securities.


*NOTE 11*				*Receivables*


		Segment	2020			2019
Receivables from customers
	Third parties	Retail (Nutrien Financial) ¹		1,417			826
		Retail		1,158			1,682
		Potash, Nitrogen, Phosphate		391			428
	Related party – Canpotex	Potash (Note 28)		122			194
Less allowance for expected credit losses of receivables from customers				(69	)		(83	)
				3,019			3,047
Rebates				256			190
Income taxes (Note 8)				83			104
Other receivables				223			201
				3,581			3,542

1	Includes $1,147 of very low risk of default and $270 of low risk of default (2019 – $762 of very low risk of default and $64 of low risk of default).



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 99

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 11

Receivables Continued

Qualifying receivables from customers financed by Nutrien Financial represents high-quality receivables from customers that have been rated very low to low risk of default among Retail’s receivables from customers.

Customer credit with a financial institution of $444 at December 31, 2020, related to our agency agreement, is not recognized in our consolidated balance sheets. Through the

agency agreement, we only have a limited recourse involvement to the extent of an indemnification of the financial institution to a maximum of 5 percent (2019 – 5 percent) of the qualified customer loans. Historical indemnification losses on this arrangement have been negligible, and the average aging of the customer loans with the financial institution is current.


*NOTE 12*				*Inventories*


	2020		2019
Product purchased for resale¹		3,655		3,592
Finished products		384		524
Intermediate products		227		244
Raw materials		215		205
Materials and supplies		449		410
		4,930		4,975

1	Includes biological assets of $7 (December 31, 2019 – $33) measured at fair value less costs of disposal (“FVLCD”).

Inventories expensed to cost of goods sold during the year were $14,347 (2019 – $13,465).

LOGO



100 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 13

Property, Plant and Equipment

The majority of our tangible assets are buildings, machinery and equipment used to produce or distribute our products and render our services. Right-of-use (“ROU”) assets primarily include railcars, marine vessels, real estate and mobile equipment.


	Land and Improvements			Buildings and Improvements			Machinery and Equipment			Mine Development Costs			Assets Under Construction			Total
Useful life range (years)		2 – 80			1 – 60			1 – 80			2 – 60			n/a

Carrying amount – December 31, 2019		1,160			6,409			10,641			747			1,378			20,335
Acquisitions (Note 25)		8			27			42			–			–			77
Additions		25			91			224			1			1,077			1,418
Additions – ROU assets		–			24			299			–			–			323
Disposals		(5	)		(9	)		(34	)		–			–			(48	)
Transfers		46			58			923			164			(1,191	)		–
Foreign currency translation and other		(15	)		–			30			30			(10	)		35
Depreciation		(39	)		(198	)		(1,060	)		(82	)		–			(1,379	)
Depreciation – ROU assets		(2	)		(55	)		(222	)		–			–			(279	)
Impairment		(88	)		(42	)		(507	)		(137	)		(48	)		(822	)

Carrying amount – December 31, 2020		1,090			6,305			10,336			723			1,206			19,660

Balance – December 31, 2020 comprised of:
Cost		1,530			8,377			19,730			2,279			1,206			33,122
Accumulated depreciation and impairments		(440	)		(2,072	)		(9,394	)		(1,556	)		–			(13,462	)

Carrying amount – December 31, 2020		1,090			6,305			10,336			723			1,206			19,660

Balance – December 31, 2020 comprised of:
Owned property, plant and equipment		1,061			5,986			9,665			723			1,206			18,641
ROU assets		29			319			671			–			–			1,019

Carrying amount – December 31, 2020		1,090			6,305			10,336			723			1,206			19,660

Carrying amount – December 31, 2018		1,018			6,044			9,882			709			1,143			18,796
ROU assets recognized on adoption of IFRS 16, “Leases” (“IFRS 16”)		48			307			704			–			–			1,059
Acquisitions (Note 25)		17			136			61			–			37			251
Additions		14			30			225			–			1,487			1,756
Additions – ROU assets		–			22			177			–			–			199
Disposals		(3	)		(5	)		(84	)		–			–			(92	)
Transfers		108			145			932			110			(1,295	)		–
Foreign currency translation and other		(4	)		(37	)		(14	)		5			6			(44	)
Depreciation		(36	)		(187	)		(1,004	)		(77	)					(1,304	)
Depreciation – ROU assets		(2	)		(46	)		(186	)		–			–			(234	)
Impairment		–			–			(52	)		–			–			(52	)

Carrying amount – December 31, 2019		1,160			6,409			10,641			747			1,378			20,335

Balance – December 31, 2019 comprised of:
Cost		1,474			8,207			18,548			2,068			1,378			31,675
Accumulated depreciation and impairments		(314	)		(1,798	)		(7,907	)		(1,321	)		–			(11,340	)

Carrying amount – December 31, 2019		1,160			6,409			10,641			747			1,378			20,335

Balance – December 31, 2019 comprised of:
Owned property, plant and equipment		1,117			6,065			9,973			747			1,378			19,280
ROU assets		43			344			668			–			–			1,055

Carrying amount – December 31, 2019		1,160			6,409			10,641			747			1,378			20,335

n/a = not applicable



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 101

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 13

Property, Plant and Equipment Continued

Depreciation of property, plant and equipment was included in the following:


	2020		2019
Freight, transportation and distribution		138		137
Cost of goods sold		1,111		1,008
Selling expenses		393		344
General and administrative expenses		56		40
		1,698		1,529
Depreciation recorded in inventory		132		161
		1,830		1,690

LOGO

Impairment

In 2020, we recorded the following impairments:

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 amount ($)

995 (post-tax)

160 (pre-tax)

Valuation technique

FVLCD a Level 3 measurement

Value in use (“VIU”)

Key assumptions

End of mine life (proven and probable reserves) (year)

2050

2029

Post-tax discount rate (%)

10.5

12.0 (pre-tax – 16.0)

For our Aurora CGU, the recoverable amount 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 amount was based on pre-tax discounted cash flows until the end of the mine life.

The recoverable amount is most sensitive to the following key assumptions: our internal sales price forecasts, which consider projections from independent third-party data sources, discount 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, and mineral reserve technical reports, as well as industry and market trends.

The following table highlights sensitivities to the recoverable amount which could result in additional impairment losses or reversals of previously recorded losses:

Aurora

Key Assumptions

Change in Assumption

Increase (Decrease) to Recoverable Amount ($)

Net selling price

10 per tonne

150

Discount rate

1.0 percentage point

120



102 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 13

Property, Plant and Equipment Continued

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 amount.

We also 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 amount of the Trinidad CGU to its recoverable amount 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 amount to be equal to the carrying amount:


Key Assumptions				Change Required for Carrying Amount to Equal Recoverable Amount
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

In 2020, we also recorded $64 of impairment losses relating to other non-current assets (2019 – $52).


*NOTE 14*				*Goodwill and Other Intangible Assets*


				Other Intangibles
	Goodwill			Customer Relationships ²			Technology			Trade Names			Other			Total
Useful life range (years)		n/a			3 – 15			3 – 30			1 – 20	³		1 – 20

Carrying amount – December 31, 2019		11,986			1,584			351			62			431			2,428
Acquisitions (Note 25)		167			74			2			8			6			90
Additions – internally developed		–			–			106			–			16			122
Foreign currency translation and other		45			22			20			14			(22	)		34
Disposals		–			–			(3	)		–			–			(3	)
Amortization ¹		–			(165	)		(39	)		(9	)		(70	)		(283	)

Carrying amount – December 31, 2020		12,198			1,515			437			75			361			2,388

Balance – December 31, 2020 comprised of:
Cost		12,205			1,971			544			111			597			3,223
Accumulated amortization and impairment		(7	)		(456	)		(107	)		(36	)		(236	)		(835	)

Carrying amount – December 31, 2020		12,198			1,515			437			75			361			2,388

Carrying amount – December 31, 2018		11,431			1,554			117			90			449			2,210
Acquisitions (Note 25)		543			173			43			13			115			344
Additions – internally developed		–			–			197			–			2			199
Foreign currency translation and other		12			2			9			18			(25	)		4
Impairment		–			–			–			(35	)		(33	)		(68	)
Amortization ¹		–			(145	)		(15	)		(24	)		(77	)		(261	)

Carrying amount – December 31, 2019		11,986			1,584			351			62			431			2,428

Balance – December 31, 2019 comprised of:
Cost		11,993			1,906			429			92			597			3,024
Accumulated amortization and impairment		(7	)		(322	)		(78	)		(30	)		(166	)		(596	)

Carrying amount – December 31, 2019		11,986			1,584			351			62			431			2,428

1	Amortization of $254 was included in selling expenses during the year ended December 31, 2020 (2019 – $234).

2	The average remaining amortization period of customer relationships at December 31, 2020, was approximately 6 years.

3	Certain trade names have indefinite useful lives as there are no regulatory, legal, contractual, cooperative, economic or other factors that limit their useful lives.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 103

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 14

Goodwill and Other Intangible Assets Continued

Goodwill Impairment Testing

LOGO

We performed our annual impairment test on goodwill and did not identify any impairment; however, the recoverable amount for Retail – North America did not substantially exceed its carrying amount. In testing for impairment of goodwill, we calculate the recoverable amount for a CGU or groups of CGUs containing goodwill. We used the FVLCD methodology based on after-tax discounted cash flows (five-year projections and a terminal year thereafter) and incorporated assumptions an independent market participant would apply. We adjusted discount rates for each CGU or group of CGUs for the risk associated with achieving our forecasts (five-year projections)

and for the country risk premium in which we expect to generate cash flows. FVLCD is a Level 3 measurement. We use our market capitalization and comparative market multiples to corroborate discounted cash flow results.

The key assumptions with the greatest influence on the calculation of the recoverable amounts are the discount rates, terminal growth rates and cash flow forecasts. The key forecast assumptions were based on historical data and estimates of future results from internal sources as well as industry and market trends.

For each CGU or group of CGUs, terminal growth rates and discount rates used were as follows:


	Terminal Growth Rate (%)				Discount Rate (%)
	2020		2019		2020		2019
Retail – North America		2.5		2.5		7.5		7.0
Retail – International ¹		2.0		2.0		7.8 – 16.0		7.5 – 15.0
Potash		2.5		2.5		8.0		8.0
Nitrogen		2.0		2.0		8.0		9.0

1	The discount rates reflect the country risk premium and size for our international groups of CGUs.

The Retail – North America group of CGUs recoverable amount exceeds its carrying amount by $1.7 billion, which is 13% of the carrying amount. Most of our goodwill arose from the merger between PotashCorp and Agrium in 2018 (the “Merger”), representing fair values at the merger date. Goodwill is more susceptible to impairment risk if business operating results or economic conditions deteriorate and we do not meet our forecasts. A reduction in the terminal growth rate, an increase in the discount rate or a decrease in forecasted EBITDA could cause impairment in the future. The following table indicates the percentage by which key assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount:

Key Assumptions

Change Required for Carrying
Amount to Equal

Recoverable Amount

Value Used in Impairment
Model

Terminal growth rate

0.8 percentage point decrease

2.5%

Forecasted EBITDA over forecast period

9.1 percent decrease

6 billion

Discount rate

0.7 percentage point increase

7.5%



104 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 15

Investments

Equity-accounted investees and investments at FVTOCI as at December 31 were comprised of:

Name

Principal Activity

Principal Place

of Business and

Incorporation

Proportion of Ownership
Interest and
Voting Rights Held
(%)

Carrying Amount

2020

2019

2020

2019

Equity-accounted investees

MOPCO

Nitrogen Producer

Egypt

–

270

Profertil

Nitrogen Producer

Argentina

233

212

Canpotex

Marketing and Logistics

Canada

–

Other associates and joint ventures

176

178

Total equity-accounted investees

409

660

Investments at FVTOCI

Sinofert

Fertilizer Supplier and Distributor

China/Bermuda

153

161

Total investments at FVTOCI

153

161

In 2020, as a result of our strategic decision to dispose of our investment in MOPCO, we received cash consideration of $540 for the disposal of the investment and settlement of legal claims. This resulted in a pre-tax gain of $250 recorded in other (income) expenses.

We continuously assess our ability to exercise significant influence or joint control over our investments. Our 22 percent ownership in Sinofert does not constitute significant influence

as we do not have any representation on the Board of Directors of Sinofert. We elected to account for our investment in Sinofert as FVTOCI as it is held for strategic purposes.

Future conditions related to Profertil may be affected by political, economic and social instability. We are exposed to foreign exchange risk related to fluctuations in the Argentine peso against the US dollar. This may also restrict our ability to obtain dividends from Profertil.


*NOTE 16*				*Other Assets*

Other assets as at December 31 were comprised of:


	2020		2019
Deferred income tax assets (Note 8)		242		249
Ammonia catalysts – net of accumulated amortization of $76 (2019 – $71)		89		89
Long-term income tax receivable (Note 8)		305		36
Accrued pension benefit assets (Note 21)		109		25
Other – net of accumulated amortization of $44 (2019 – $41)		169		165
		914		564



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 105

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 17

Short-Term Debt

We use our $4.5 billion commercial paper program for our short-term cash requirements. The commercial paper program is backstopped by the $4.5 billion unsecured revolving term credit facility (“Nutrien Credit Facility”). Short-term facilities are renegotiated periodically.

Short-term debt as at December 31 was comprised of:

Rate of Interest (%)

Total Facility Limit as
at December 31, 2020

2020

2019

Credit facilities

Unsecured revolving term credit facility ¹

Nil

4,500

–

Uncommitted revolving demand facility

Nil

500

–

Other credit facilities ²

0.8 – 36.0

740

159

326

Commercial paper

Nil

–

650

159

976

1	Matures April 10, 2023, subject to extension at the request of Nutrien provided that the resulting maturity date shall not exceed five years from the date of request.

Credit facilities are unsecured and consist of South American facilities with debt of $109 (2019 – $149) and interest rates ranging from 1.7 percent to 36.0 percent, Australian facilities with debt of $19 (2019 – $157) and an interest rate of 0.8 percent, and other facilities with debt of $31 (2019 – $20) and an interest rate of 1.0 percent.

The amount available under the commercial paper program is limited to the availability of backup funds under the Nutrien Credit Facility and excess cash invested in highly liquid securities. As at December 31, 2020, we were authorized to issue commercial paper up to $4,500 (2019 – $4,500). Principal covenants and events of default under the Nutrien Credit Facility include a debt to capital ratio (refer to Note 24) and other customary events of default and covenant provisions. Non-compliance with such covenants could result in

accelerated repayment and/or termination of the credit facility. We were in compliance with all covenants as at December 31, 2020.

In 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 18.



106 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 18

Long-Term Debt

We source our borrowings for funding purposes primarily through notes, debentures and long-term credit facilities. We have access to the capital markets through our base shelf prospectus.

Long-term debt as at December 31 was comprised of:


	Rate of Interest (%)		Maturity		2020			2019
Notes¹
		4.875		March 30, 2020		–			500
		3.150		October 1, 2022		500			500
		1.900		May 13, 2023		500			–
		3.500		June 1, 2023		500			500
		3.625		March 15, 2024		750			750
		3.375		March 15, 2025		550			550
		3.000		April 1, 2025		500			500
		4.000		December 15, 2026		500			500
		4.200		April 1, 2029		750			750
		2.950		May 13, 2030		500			–
		4.125		March 15, 2035		450			450
		7.125		May 23, 2036		300			300
		5.875		December 1, 2036		500			500
		5.625		December 1, 2040		500			500
		6.125		January 15, 2041		500			500
		4.900		June 1, 2043		500			500
		5.250		January 15, 2045		500			500
		5.000		April 1, 2049		750			750
		3.950		May 13, 2050		500			–
Debentures ¹		7.800		February 1, 2027		125			125
Other						67			33
						9,742			8,708
Add net unamortized fair value adjustments						404			424
Less net unamortized debt issue costs						(85	)		(77	)
						10,061			9,055
Less current maturities						(14	)		(508	)
Add current portion of net unamortized debt issue costs						–			6
						(14	)		(502	)
						10,047			8,553

1	Each series of notes and debentures is unsecured and has no sinking fund requirements prior to maturity. Each series is redeemable and has various provisions that allow redemption prior to maturity, at our option, at specified prices.

We are subject to certain customary covenants including limitation on liens, merger and change of control covenants, and customary events of default. As calculated in Note 24, we were in compliance with these covenants as at December 31, 2020.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 107

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 18

Long-Term Debt Continued

The following is a summary of changes in liabilities arising from financing activities:


	Short-Term Debt and Current Portion of Long-Term Debt			Current Portion of Lease Liabilities			Long-Term Debt			Lease Liabilities			Total
Balance – December 31, 2019		1,478			214			8,553			859			11,104
Cash flows ¹		(1,401	)		(274	)		1,526			–			(149	)
Additions and other adjustments to ROU assets		–			107			–			213			320
Reclassifications		11			194			(11	)		(194	)		–
Foreign currency translation and other non-cash changes		85			8			(21	)		13			85
Balance – December 31, 2020		173			249			10,047			891			11,360
Balance – December 31, 2018		1,624			8			7,579			12			9,223
Adoption of IFRS 16 (Note 13)		–			196			–			863			1,059
Cash flows ¹		(794	)		(234	)		1,481			–			453
Additions and other adjustments to ROU assets		–			50			–			75			125
Reclassifications		500			178			(500	)		(178	)		–
Foreign currency translation and other non-cash changes		148			16			(7	)		87			244
Balance – December 31, 2019		1,478			214			8,553			859			11,104

1	Cash inflows and cash outflows are presented on a net basis.


*NOTE 19*				*Lease Liabilities*


	Average Rate of Interest (%)		2020		2019
Lease liabilities – non-current		3.0		891		859
Current portion of lease liabilities		2.7		249		214
Total				1,140		1,073


*NOTE 20*				*Payables and Accrued Charges*

Payables and accrued charges consist primarily of amounts we owe to suppliers and prepayments made by customers planning to purchase our products for the upcoming growing season.

Payables and accrued charges as at December 31 were comprised of:


	2020		2019
Trade and other payables		4,415		4,016
Customer prepayments		1,800		1,693
Dividends		256		258
Accrued compensation		513		434
Current portion of asset retirement obligations and accrued environmental costs (Note 22)		162		148
Accrued interest		99		103
Current portion of share-based compensation (Note 5)		95		118
Current portion of derivatives		39		13
Income taxes (Note 8)		48		43
Current portion of pension and other post-retirement benefits (Note 21)		15		15
Other accrued charges and others		616		596
		8,058		7,437



108 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 21

Pension and Other Post-Retirement Benefits

We offer the following pension and other post-retirement benefits to qualified employees: defined benefit pension plans; defined contribution pension plans; and health, disability, dental and life insurance (referred to as other defined benefit) plans. Substantially all our employees participate in at least one of these plans.

Description of Defined Benefit Pension Plans

We sponsor defined benefit pension plans as follows:


	Plan Type	Contributions
United States	• non-contributory, • guaranteed annual pension payments for life, • benefits generally depend on years of service and compensation level in the final years leading up to age 65, • benefits available starting at age 55 at a reduced rate, and • plans provide for maximum pensionable salary and maximum annual benefit limits.	• made to meet or exceed minimum funding requirements of the Employee Retirement Income Security Act of 1974 and associated Internal Revenue Service regulations and procedures.
Canada		• made to meet or exceed minimum funding requirements based on provincial statutory requirements and associated federal taxation rules.
Supplemental Plans in US and Canada for Senior Management	• non-contributory, • unfunded, and • supplementary pension benefits.	• provided for by charges to earnings sufficient to meet the projected benefit obligations, and • payments to plans are made as plan payments to retirees occur.

Our defined benefit pension plans are funded with separate funds that are legally separated from the Company and administered through an employee benefits or management committee in each country, which is composed of our employees. The employee benefits or management committee is required by law to act in the best interests of the plan participants and, in the US and Canada, is responsible for the governance of the plans, including setting certain policies

(e.g., investment and contribution) of the funds. The current investment policy for each country’s plans generally does not include any asset/liability matching strategies or currency hedging strategies. Plan assets held in trusts are governed by local regulations and practices in each country, as is the nature of the relationship between the Company and the trustees and their composition.

Description of Other Post-Retirement Plans

We provide health care plans for certain eligible retired employees in the US, Canada and Trinidad. Eligibility for these benefits is generally based on a combination of age and years of service at retirement. Certain terms of the plans include:

•

coordination with government-provided medical insurance in each country;

•

certain unfunded cost-sharing features such as co-insurance, deductibles and co-payments – benefits subject to change;

•

for certain plans, maximum lifetime benefits;

•

at retirement, the employee’s spouse and certain dependent children may be eligible for coverage;

•

benefits are self-insured and are administered through third-party providers; and

•

generally, retirees contribute toward annual cost of the plans.

We provide non-contributory life insurance plans for certain retired employees who meet specific age and service eligibility requirements.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 109

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 21

Pension and Other Post-Retirement Benefits Continued

Risks

The defined benefit pension and other post-retirement plans expose us to broadly similar actuarial risks. The most significant risks include investment risk and interest rate risk as discussed below. Other risks include longevity risk and salary risk.



Investment Risk				A deficit will be created if plan assets underperform the discount rate used in the defined benefit obligation valuation. To mitigate investment risk, we employ:
				• a total return on investment approach whereby a diversified mix of equities and fixed income investments is used to maximize long-term return for a prudent level of risk; and • risk tolerance established through careful consideration of plan liabilities, plan funded status and corporate financial condition.

				Other assets such as private equity and hedge funds are not used at this time. Our policy is not to invest in commodities, precious metals, mineral rights, bullions or collectibles. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements and periodic asset/liability studies.
Interest Rate Risk				A decrease in bond interest rates will increase the pension liability; however, this is generally expected to be partially offset by an increase in the return on the plan’s debt investments.



110 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 21

Pension and Other Post-Retirement Benefits Continued

Financial Information

Movements in the pension and other post-retirement benefit assets (liabilities) were as follows:


	2020									2019
	Obligation			Plan Assets			Net			Obligation			Plan Assets			Net
Balance – beginning of year		(2,044	)		1,621			(423	)		(1,797	)		1,416			(381	)
Components of defined benefit expense recognized in earnings
Current service cost for benefits earned during the year		(36	)		–			(36	)		(40	)		–			(40	)
Interest (expense) income		(66	)		53			(13	)		(74	)		59			(15	)
Past service cost, including curtailment gains and settlements¹		133			(132	)		1			–			–			–
Foreign exchange rate changes and other		(3	)		(1	)		(4	)		(29	)		13			(16	)
Subtotal of components of defined benefit expense (recovery) recognized in earnings		28			(80	)		(52	)		(143	)		72			(71	)
Remeasurements of the net defined benefit liability recognized in OCI during the year
Actuarial gain arising from:
Changes in financial assumptions		(153	)		–			(153	)		(199	)		–			(199	)
Changes in demographic assumptions		12			–			12			14			–			14
Gain on plan assets (excluding amounts included in net interest)		–			230			230			–			193			193
Subtotal of remeasurements		(141	)		230			89			(185	)		193			8
Cash flows
Contributions by plan participants		(5	)		5			–			(5	)		5			–
Employer contributions		–			26			26			–			21			21
Benefits paid		96			(96	)		–			86			(86	)		–
Subtotal of cash flows		91			(65	)		26			81			(60	)		21
Balance – end of year ²		(2,066	)		1,706			(360	)		(2,044	)		1,621			(423	)
Balance comprised of:
Non-current assets
Other assets (Note 16)								109									25
Current liabilities
Payables and accrued charges (Note 20)								(15	)								(15	)
Non-current liabilities
Pension and other post-retirement benefit liabilities								(454	)								(433	)

1	During 2020, we transferred certain pension plan obligations to an insurance company.

2	Obligations arising from funded and unfunded pension plans are $(1,690) and $(376), respectively (2019 – $(1,652) and $(392)). Other post-retirement benefit plans have no plan assets and are unfunded.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 111

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 21

Pension and Other Post-Retirement Benefits Continued

Plan Assets

As at December 31, the fair value of plan assets of our defined benefit pension plans, by asset category, were as follows:


	2020						2019
	Quoted Prices in Active Markets for Identical Assets		Other ¹		Total		Quoted Prices in Active Markets for Identical Assets		Other ¹		Total
Cash and cash equivalents		9		33		42		8		112		120
Equity securities and equity funds
US		19		879		898		1		571		572
International		158		–		158		35		62		97
Debt securities ²		–		571		571		–		698		698
International balanced fund		–		–		–		–		112		112
Other		–		37		37		–		22		22
Total pension plan assets		186		1,520		1,706		44		1,577		1,621

Approximately 76 percent (2019 – 60 percent) of the Other plan assets are held in funds whose fair values are estimated using their net asset value per share. For the majority of these funds, the redemption frequency is immediate. The Plan Committee manages the asset allocation based upon our current liquidity and income needs.

2	Debt securities included US securities of 60 percent (2019 – 82 percent) and International securities of 40 percent (2019 – 18 percent).

We use letters of credit or surety bonds to secure certain Canadian unfunded defined benefit plan liabilities as at December 31, 2020.

We expect to contribute approximately $125 to all pension and post-retirement plans in 2021. Total contributions recognized as expense under all defined contribution plans for 2020 was $116 (2019 – $88).

The significant assumptions used to determine the benefit obligations and expense for our significant plans as at and for the year ended December 31 were as follows:


	Pension				Other
	2020		2019		2020			2019
Assumptions used to determine the benefit obligations ¹:
Discount rate (%)		2.83		3.35		2.66			3.20
Rate of increase in compensation levels (%)		4.57		4.66		n/a			n/a
Medical cost trend rate – assumed (%)		n/a		n/a		4.50 – 5.80	²		4.50 – 6.10	²
Medical cost trend rate – year reaches ultimate trend rate		n/a		n/a		2037			2037
Mortality assumptions ³ (years)
Life expectancy at 65 for a male member currently at age 65		20.6		20.5		20.2			20.3
Life expectancy at 65 for a female member currently at age 65		22.8		22.7		22.8			22.9
Average duration of the defined benefit obligations ⁴ (years)		15.4		14.6		15.2			15.8

1	The current year’s expense is determined using the assumptions that existed at the end of the previous year.

2	We assumed a graded medical cost trend rate starting at 5.80 percent in 2020, moving to 4.50 percent by 2037 (2019 – starting at 6.10 percent, moving to 4.50 percent by 2037).

3	Based on actuarial advice in accordance with the latest available published tables, adjusted where appropriate to reflect future longevity improvements for each country.

4	Weighted average length of the underlying cash flows.



112 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 21

Pension and Other Post-Retirement Benefits Continued

Of the most significant assumptions, a change in discount rates has the greatest potential impact on our pension and other post-retirement benefit plans, with sensitivity to change as follows:


			2020						2019
	Change in Assumption		Benefit Obligations			Expense in Earnings Before Income Taxes			Benefit Obligations			Expense in Earnings Before Income Taxes
As reported				2,066			52			2,044			71
Discount rate		1.0 percentage point decrease		360			10			340			10
		1.0 percentage point increase		(280	)		(10	)		(270	)		(10	)


*NOTE 22*				*Asset Retirement Obligations and Accrued Environmental Costs*

A provision is an estimated liability with uncertainty over the timing or amount that will be paid. The most significant asset retirement and environmental remediation provisions relate to costs to restore potash and phosphate sites to their original, or another specified, condition.

The pre-tax risk-free discount rate, expected cash flow payments and sensitivity to changes in the discount rate on the recorded liability for asset retirement obligations and accrued environmental costs at December 31, 2020, were as follows:

Discount Rate

Cash Flow

Payments
(years)¹

Discounted
Cash
Flows^2,3

+0.5%

-0.5%

Asset retirement obligations

(70

)

Retail

1 – 30

Potash

33 – 441

Phosphate

1 – 80

468

Corporate and other ^{4, 5}

1 – 482

640

Accrued environmental costs

(10

)

Retail

1 – 30

Corporate and other

1 – 20

461

1	Time frame in which payments are expected to principally occur from December 31, 2020. Adjustments to the years can result from changes to the mine life and/or changes in the rate of tailing volumes.

2	Risk-free discount rates reflect current market assessments of the time value of money and the risks specific to the timing and jurisdiction of the obligation. Risk-free rates range from 1.2 percent to 6.5 percent.

Total undiscounted cash flows are $2.8 billion. For the Potash segment, this represents total undiscounted cash flows in the first year of decommissioning. This excludes subsequent years of tailings dissolution, fine tails capping, tailings management area reclamation, post-reclamation activities and monitoring, and final decommissioning, which are estimated to take an additional 92 to 407 years.

For nitrogen sites, we have not recorded any asset retirement obligations as no significant asset retirement obligations have been identified or there is no reasonable basis for estimating a date or range of dates of cessation of operations. We considered the historical performance of our facilities as well as our planned maintenance, major upgrades and replacements, which can extend the useful lives of our facilities indefinitely.

5	Includes certain potash and phosphate sites that are non-operating sites, with the majority of phosphate site payments taking place over the next 55 years.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 113

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 22

Asset Retirement Obligations and Accrued Environmental Costs Continued

Following is a reconciliation of asset retirement obligations and accrued environmental costs:


	Asset Retirement Obligations			Accrued Environmental Costs			Total
Balance – December 31, 2019		1,254			544			1,798
Acquisitions		12			15			27
Disposals		–			(3	)		(3	)
Change in estimates		(9	)		2			(7	)
Recorded in earnings		31			3			34
Settled during the year		(88	)		(21	)		(109	)
Foreign currency translation and other		9			10			19
Balance – December 31, 2020		1,209			550			1,759
Balance – December 31, 2020 comprised of:
Current liabilities
Payables and accrued charges (Note 20)		121			41			162
Non-current liabilities
Asset retirement obligations and accrued environmental costs		1,088			509			1,597

We are subject to numerous environmental requirements under federal, provincial, state and local laws in the countries in which we operate. We have gypsum stack capping, closure and post-closure obligations through our subsidiaries, PCS Phosphate Company, Inc. in White Springs, Florida, and PCS

Nitrogen Inc. in Geismar, Louisiana, pursuant to the financial assurance regulatory requirements in those states. The recorded provisions may not necessarily reflect our obligations under these financial assurances.


*NOTE 23*				*Share Capital*

Authorized

We are authorized to issue an unlimited number of common shares without par value and an unlimited number of preferred shares. The common shares are not redeemable or convertible. The preferred shares may be issued in one or more series with rights and conditions to be determined by the Board of Directors.

Issued


	Number of Common Shares			Share Capital
Balance – December 31, 2019		572,942,809			15,771
Issued under option plans and share-settled plans		150,177			7
Repurchased		(3,832,580	)		(105	)

Balance – December 31, 2020		569,260,406			15,673



114 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 23

Share Capital Continued

Share Repurchase Programs

Commencement Date

Expiry

Maximum Shares
for Repurchase

2019 Normal Course Issuer Bid ¹

February 27, 2019

February 26, 2020

42,164,420

2020 Normal Course Issuer Bid ²

February 27, 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.

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. As at February 18, 2021, we had repurchased 710,100 of the maximum shares for repurchase.

On February 17, 2021, our Board of Directors approved a share repurchase program of up to a maximum of 28,468,448 or 5 percent of our outstanding common shares for cancellation. Subject to acceptance by the Toronto Stock Exchange, the 2021 share repurchase program will commence on March 1, 2021, and will expire on the earlier of February 28, 2022, the date on which we have acquired the maximum number of common shares allowable or the date we determine 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 repurchases:


	2020		2019
Number of common shares repurchased for cancellation		3,832,580		36,067,323
Average price per share (US dollars)		41.96		52.07
Total cost		160		1,878

Dividends Declared

Dividends declared for the years ended December 31 were as follows:


	2020			2019
Declared	Per Share		Declared	Per Share
February 19, 2020		0.45	May 10, 2019		0.43
May 6, 2020		0.45	July 30, 2019		0.45
August 10, 2020		0.45	December 13, 2019		0.45
December 10, 2020		0.45

		1.80			1.33

Subsequent to year-end, our Board of Directors declared a quarterly dividend of $0.46 per share payable on April 15, 2021, to shareholders of record on March 31, 2021. The total estimated dividend to be paid is $262.


*NOTE 24*				*Capital Management*

The objective of our capital allocation policy is to balance the return of capital to our shareholders, improvements in the efficiency of our existing assets, and delivery on our growth opportunities, while maintaining a strong balance sheet and flexible capital structure to optimize the cost of capital at an acceptable level of risk. Our goal is to pay a stable and growing dividend with a target payout that represents 40 to 60 percent of free cash flow after sustaining capital through the agricultural cycle.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 115

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 24

Capital Management Continued

We include total debt, adjusted total debt, adjusted net debt and adjusted shareholders’ equity as components of our capital structure. We monitor our capital structure and, based on changes in economic conditions, may adjust the structure by adjusting the amount of dividends paid to shareholders, repurchasing shares, issuing new shares, issuing new debt or retiring existing debt.

We use a combination of short-term and long-term debt to finance our operations. We typically pay floating rates of interest on short-term debt and credit facilities, and fixed rates on notes and debentures.

We monitor the following ratios:

2020

2019

Adjusted net debt to adjusted EBITDA

2.6

2.5

Debt to capital ¹ (Limit: 0.65:1.00)

0.34:1.00

0.33:1:00

Adjusted EBITDA to adjusted finance costs

7.4

8.0

1	Calculated as adjusted total debt to adjusted capital.

LOGO

Adjusted EBITDA is calculated in Note 3, while the calculation of the remaining components included in the above ratios are set out in the following tables:


	2020		2019
Short-term debt		159		976
Current portion of long-term debt		14		502
Current portion of lease liabilities		249		214
Long-term debt		10,047		8,553
Lease liabilities		891		859
Total debt		11,360		11,104
Letters of credit – financial		150		158
Adjusted total debt		11,510		11,262


	2020			2019
Total debt		11,360			11,104
Cash and cash equivalents		(1,454	)		(671	)
Unamortized fair value adjustments		(404	)		(424	)
Adjusted net debt		9,502			10,009


	2020		2019
Total shareholders’ equity		22,365		22,869
Accumulated other comprehensive loss		119		251
Adjusted shareholders’ equity		22,484		23,120
Adjusted total debt		11,510		11,262
Adjusted capital		33,994		34,382



116 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 24

Capital Management Continued


	2020			2019
Finance costs		520			554
Unwinding of discount on asset retirement obligations		(33	)		(54	)
Borrowing costs capitalized to property, plant and equipment		20			18
Interest on net defined benefit pension and other post-retirement plan obligations		(13	)		(15	)
Adjusted finance costs		494			503

In 2020, we filed a universal base shelf prospectus in Canada and the US qualifying the issuance of up to $5.0 billion of common shares, debt securities and other securities during a period of

25 months from March 16, 2020. In 2020, we filed a prospectus supplement to issue $1,500 of notes, as discussed in Note 18.


*NOTE 25*				*Business Combinations*

The Company’s business combinations include the acquisition of Retail businesses, including Ruralco Holdings Limited (“Ruralco”), and various digital agriculture, proprietary products and agricultural services.


	Ruralco	Other Acquisitions
Acquisition date	September 30, 2019	Various
Purchase price, net of cash and cash equivalents acquired	$330 On the acquisition date, we acquired 100% of the Ruralco stock that was issued and outstanding. Transaction costs are recorded in acquisition and integration related costs in other expenses.	2020 – $233 (2019 – $581, net of $100 previously held equity-accounted interest in Agrichem)
Goodwill and expected benefits of the acquisition	$236	$133 (2019 – $341)
Goodwill and expected benefits of the acquisition	The expected benefits of the acquisitions resulting in goodwill include: • synergies from expected reduction in operating costs • wider distribution channel for selling products of acquired businesses • a larger assembled workforce • potential increase in customer base • enhanced ability to innovate
Description	An agriservices business in Australia with approximately 250 operating locations.	2020 – 43 Retail locations including Tec Agro Group, a leading agriculture retailer in Brazil (2019 – 68 Retail locations including Actagro, LLC, a developer, manufacturer and marketer of environmentally sustainable soil and plant health products and technologies)



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 117

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 25

Business Combinations Continued

We allocated the following values to the acquired assets and assumed liabilities based upon fair values at their respective acquisition date:


	2020										2019

	Ruralco

	Preliminary ¹		Adjustments			Final Fair Value ²			Other Acquisitions ³		Other Acquisitions ³
Receivables		289		27			316	⁴		68		68
Inventories		117		(5	)		112			63		145
Prepaid expenses and other current assets		8		(1	)		7			4		38
Property, plant and equipment		136		4			140			73		115
Goodwill		202		34			236			133		341
Other intangible assets		165		43			208			47		179
Other non-current assets		31		(14	)		17			2		2
Total assets		948		88			1,036			390		888
Short-term debt		112		55			167			36		25
Payables and accrued charges		345		(21	)		324			108		156
Lease liabilities, including current portion		110		–			110			2		1
Other non-current liabilities		51		54			105			11		25
Total liabilities		618		88			706			157		207
Total consideration		330		–			330			233		681
Previously held equity-accounted interest in Agrichem		–		–			–			–		100
Total consideration, net of cash and cash equivalents acquired		330		–			330			233		581

1	Preliminary value as previously reported in our 2019 annual consolidated financial statements.

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. Adjustments recorded to the preliminary fair value primarily related to changes in the preliminary valuation assumptions, including refinement of our intangible assets and liabilities. All measurement adjustments were offset against goodwill.

3	This represents preliminary fair values. For certain acquisitions, we finalized the purchase price with no material change to the fair values disclosed in prior periods.

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



118 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 25

Business Combinations Continued

Assets

Ruralco

Other
Acquisitions

Valuation Technique and Judgments Applied

Property, plant and equipment

Market approach for land and certain types of personal property: sales comparison that measures the value of an asset through an analysis of sales and offerings of comparable assets.

Replacement costs for all other depreciable property, plant and equipment: measures the value of an asset by estimating the costs to acquire or construct comparable assets and adjusts for age and condition of the asset.

Other intangible assets

Income approach – multi-period excess earnings method: measures the value of an asset based on the present value of the incremental after-tax cash flows attributable to the asset after deducting contributory asset charges (“CACs”). Allocation of CACs is a matter of judgment and based on the nature of the acquired businesses’ operations and historical trends.

We considered several factors in determining the fair value of customer relationships, such as customers’ relationships with the acquired company and its employees, the segmentation of customers, historical customer attrition rates, and revenue growth.

Other provisions and contingent liabilities

Decision-tree approach of future costs and a risk premium to capture the compensation sought by risk-averse market participants for bearing the uncertainty inherent in the cash flows of the liability.

Financial Information Related to the Acquired Operations

1	Estimated annual sales and earnings before finance costs and income taxes (“EBIT”) if acquisitions occurred at the beginning of the year.


	2020 Actuals		2019 Actuals
From date of acquisition	Other Acquisitions		Ruralco			Other Acquisitions
Sales		190		249			312
EBIT		12		(2	)		(1	)


*NOTE 26*				*Commitments*

A commitment is a legally binding and enforceable agreement to purchase goods or services in the future. The amounts below reflect our commitments based on current expected contract prices.

At December 31, 2020, minimum future commitments under our contractual arrangements were as follows:


	Lease Liabilities¹		Long-Term Debt¹		Purchase Commitments		Capital Commitments		Other Commitments		Total
Within 1 year		281		434		1,268		87		132		2,202
1 to 3 years		408		2,378		757		16		118		3,677
3 to 5 years		233		2,498		72		6		53		2,862
Over 5 years		383		10,485		142		1		127		11,138
Total		1,305		15,795		2,239		110		430		19,879

1	Includes principal portion and estimated interest.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 119

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 26

Commitments Continued

Purchase Commitments

We have a long-term natural gas purchase agreement in Trinidad that expires on December 31, 2023. The contract provides for prices that vary primarily with ammonia market prices and annual escalating floor prices. The commitments included in the foregoing table are based on floor prices and minimum purchase quantities.

Profertil has long-term gas contracts denominated in US dollars that expire in 2021, which account for virtually all of Profertil’s gas requirements. YPF S.A., our joint venture partner in Profertil, supplies approximately 70 percent of the gas under these contracts.

The Carseland facility has a power co-generation agreement, expiring on December 31, 2026, which provides 60 megawatt-hours of power per hour. The price for the power is based on a fixed charge adjusted for inflation and a variable charge based on the cost of natural gas provided to the facility for power generation.

Agreements for the purchase of sulfur for use in production of phosphoric acid provide for specified purchase quantities and prices based on market rates at the time of delivery. Commitments included in the foregoing table are based on expected contract prices.

As part of the agreement to sell the Conda Phosphate operations (“CPO”), we entered into long-term strategic supply and offtake agreements which extend to 2023. Under the terms of the supply and offtake agreements, we will supply 100 percent of the ammonia requirements of CPO and purchase 100 percent of the monoammonium phosphate (“MAP”) product produced at CPO. The MAP production is estimated at 330,000 tonnes per year.

Other Commitments

Other commitments consist principally of pipeline capacity, technology service contracts, throughput and various rail contracts, the latest of which expires in 2026, and mineral lease commitments, the latest of which expires in 2038.


*NOTE 27*				*Guarantees*

In the normal course of business, we provide indemnification agreements to counterparties in transactions such as purchase and sale contracts, service agreements, director/officer contracts, and leasing transactions. The terms of these indemnification agreements

•

may require us to compensate counterparties for costs incurred as a result of various events, including environmental liabilities and changes in (or in the interpretation of) laws and regulations, or as a result of litigation claims or statutory sanctions that may be suffered by a counterparty as a consequence of the transaction;

•

will vary based upon the contract, the nature of which prevents us from making a reasonable estimate of the

maximum potential amount that it could be required to pay to counterparties; and

•

have not historically resulted in any significant payments by Nutrien and, as at December 31, 2020, no amounts have been accrued in the consolidated financial statements (except for accruals relating to certain underlying liabilities).

We directly guarantee our share of certain commitments of Canpotex (such as railcar leases) under certain agreements with third parties. We would be required to perform on these guarantees in the event of default by the investee. No material loss is anticipated by reason of such agreements and guarantees.



120 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 28

Related Party Transactions

We transact with a number of related parties, the most significant being with our associates and joint ventures, key management personnel, and post-employment benefit plans.

Sale of Goods

We sell potash outside Canada and the US exclusively through 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 3. The receivable outstanding from Canpotex is shown in Note 11 and arose from sale transactions described above. It is unsecured and bears no interest. There are no provisions held against this receivable.

Key Management Personnel Compensation and Transactions with Post-Employment Benefit Plans

Compensation to key management personnel was comprised of:


	2020		2019
Salaries and other short-term benefits		16		15
Share-based compensation		26		31
Post-employment benefits		2		3
Termination benefits		–		12
		44		61

Disclosures related to our post-employment benefit plans, and associates and joint ventures, are shown in Note 21 and Note 15, respectively.


*NOTE 29*				*Contingencies and Other Matters*

Contingent liabilities, which are not recognized in the consolidated financial statements but may be disclosed, are possible obligations as a result of uncertain future events outside of our control or present obligations not recognized because the amount cannot be sufficiently measured or payment is not probable.

Accounting Estimates and Judgments

The following judgments are required to determine our exposure to possible losses and gains related to environmental matters and other various claims and lawsuits pending:

•

prediction of the outcome of uncertain events (i.e., being virtually certain, probable, remote or undeterminable);

•

determination of whether recognition or disclosure in the consolidated financial statements is required; and

•

estimation of potential financial effects.

Where no amounts are recognized, such amounts are contingent and disclosure may be appropriate. While the amount disclosed in the consolidated financial statements may not be material, the potential for large liabilities exists and, therefore, these estimates could have a material impact on our consolidated financial statements.

Supporting Information

Canpotex

Nutrien is a shareholder in Canpotex, which markets Canadian potash outside of Canada and the US. Should any operating losses or other liabilities be incurred by Canpotex, the

shareholders have contractually agreed to reimburse it in proportion to each shareholder’s productive capacity. Through December 31, 2020, we are not aware of any operating losses or other liabilities.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 121

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 29

Contingencies and Other Matters Continued

Mining Risk

The risk of underground water inflows and other underground risks is insured on a limited basis, subject to insurance market availability. Through December 31, 2020, we are not aware of any material losses or other liabilities that we have not accrued for.

Environmental Remediation, Legal and Other Matters

We are engaged in ongoing site assessment and/or remediation activities at a number of facilities and sites. Anticipated costs associated with these matters are added to accrued environmental costs in the manner described in Note 22.

We have established provisions for environmental site assessment and/or remediation matters to the extent that we consider expenses associated with those matters likely to be incurred. Except for the uncertainties described below, we do not believe that our future obligations with respect to these matters are reasonably likely to have a material adverse effect on our consolidated financial statements.

Legal matters with significant uncertainties include the following:

•

The United States Environmental Protection Agency (“US EPA”) has an ongoing enforcement initiative directed at the phosphate industry related to the scope of an exemption for mineral processing wastes under the US Resource Conservation and Recovery Act (“RCRA”). This initiative affects the Conda Phosphate plant previously owned by Nu-West Industries, Inc. (“Nu-West”), a wholly owned subsidiary of Agrium, and the Nutrien phosphoric acid facilities in Aurora, North Carolina; Geismar, Louisiana; and White Springs, Florida. All of these facilities received US EPA notices of violation (“NOVs”) that remain outstanding for alleged violations of RCRA and various other environmental laws. Notwithstanding the sale of the Conda Phosphate operations in January 2018, Nu-West remains responsible for environmental liabilities attributable to its historic activities and for resolution of the NOVs. All of the facilities have been and continue to be involved in ongoing discussions with the US EPA, the US Department of Justice and the related state agencies to resolve these matters. Due to the nature of the allegations, we are uncertain as to how the matters will be resolved. Based on settlements with other members of the

phosphate industry, we expect that a resolution could involve any or all of the following: 1) penalties, which we currently believe will not be material; 2) modification of certain operating practices; 3) capital improvement projects; 4) providing financial assurance for the future closure, maintenance and monitoring costs for the phosphogypsum stack system; and 5) addressing findings resulting from RCRA section 3013 site investigations.

•

We operate in countries that are parties to the Paris Agreement adopted in December 2015 pursuant to the United Nations Framework Convention on Climate Change. Each country that is a party to the Paris Agreement submitted an Intended Nationally Determined Contribution (“INDC”) toward the control of greenhouse gas emissions. The impacts on our operations of these INDCs and other national and local efforts to limit or tax greenhouse gas emissions cannot be determined with any certainty at this time.

In addition, various other claims and lawsuits are pending against the Company in the ordinary course of business. While it is not possible to determine the ultimate outcome of such actions at this time, and inherent uncertainties exist in predicting such outcomes, we believe that the ultimate resolution of such actions is not reasonably likely to have a material adverse effect on our consolidated financial statements.

The breadth of our operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating the taxes we will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation, and resolution of disputes arising from federal, provincial, state and local tax audits. The resolution of these uncertainties and the associated final taxes may result in adjustments to our tax assets and tax liabilities.

We own facilities that have been either permanently or indefinitely shut down. We expect to incur nominal annual expenditures for site security and other maintenance costs at some of these facilities. Should the facilities be dismantled, certain other shutdown-related costs may be incurred. Such costs are not expected to have a material adverse effect on our consolidated financial statements and would be recognized and recorded in the period in which they are incurred.



122 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments

The following discusses the significant accounting policies, estimates, judgments and assumptions that we have adopted and applied and how they affect the amounts reported in the consolidated financial statements. Certain of our policies involve accounting estimates and judgments because they require us to

make subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts could be reported under different conditions or using different assumptions.

Basis of Consolidation

These consolidated financial statements include the accounts of the Company and entities we control.

•

Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases. They are deconsolidated from the date that control ceases.

•

Intercompany balances and transactions are eliminated on consolidation.


Principal (wholly owned) Operating Subsidiaries	Location	Principal Activity
Potash Corporation of Saskatchewan Inc.	Canada	Mining and/or processing of crop nutrients and corporate functions
Agrium Inc.	Canada	Manufacturer and distributor of crop nutrients and corporate functions
Agrium Canada Partnership	Canada	Manufacturer and distributor of crop nutrients
Agrium Potash Ltd.	Canada
Agrium U.S. Inc.	US
Cominco Fertilizer Partnership	US
Loveland Products Inc.	US
Nutrien Ag Solutions (Canada) Inc.	Canada	Crop input retailer
Nutrien Ag Solutions, Inc.	US
Nutrien Ag Solutions Limited	Australia
PCS Nitrogen Fertilizer, LP	US	Production of nitrogen products in the US
PCS Nitrogen Trinidad Limited	Trinidad	Production of nitrogen products in Trinidad
PCS Phosphate Company, Inc.	US	Mining and/or processing of phosphate products
Phosphate Holding Company, Inc.	US	Mining and/or processing of phosphate products and production of nitrogen products in the US
Combined Rural Traders Pty Limited	Australia	Crop input retailer

Foreign Currency Transactions

Items included in our consolidated financial statements and those of our subsidiaries are measured using the currency of the primary economic environment in which the individual entity operates (the “functional currency”). The consolidated financial statements are presented in US dollars, which was determined to be the functional currency of the Company and the majority of our subsidiaries. In determining the functional currency of our operations, we primarily considered the currency that determines the pricing of transactions rather than focusing on the currency in which transactions are denominated.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions, and from the translation at period-end of monetary assets and liabilities denominated in foreign currencies are recognized and presented in the consolidated statements of earnings within other (income) expenses, as applicable, in the period in which they arise. Non-monetary assets measured at historical cost are translated at the average monthly exchange rate prevailing at the time of the transaction, unless the exchange rate in effect on the date of the transaction is available and it is apparent that such rate is a more suitable measurement.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 123

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Restructuring Charges

Plant shutdowns, sales of business units or other corporate restructurings may trigger restructuring charges. Incremental costs for employee termination, contract termination and other

exit costs are recognized as a liability and an expense when a detailed formal plan for restructuring has been demonstrably committed to and a reliable estimate can be made.

Revenue

We recognize revenue when we transfer control over a good or service to a customer.

Transfer of Control for Sale of Goods

Transfer of Control for Sale of Services

At the point in time when the product is

• purchased at our Retail farm center

• delivered and accepted by customers at their premises or

• loaded for shipping

Over time as the promised service is rendered

Judgment is used to determine whether we are acting as principal or agent by evaluating who:

•

has the primary responsibility for fulfilling the promised good;

•

bears the inventory risk; and

•

has discretion for establishing the price.

For transactions in which we act as an agent rather than the principal, revenue is recognized net of any commissions earned. The related commissions are recognized as the sales occurred or as unconditional contracts are signed.

We recognize profits on sales to Canpotex when there is a transfer of control, either at the time the product is loaded for shipping or delivered, depending on the terms of the contract.

Our sales revenue relating to our Potash, Nitrogen and Phosphate segments is generally recorded and measured based on the “freight on board” mine, plant, warehouse or terminal price specified in the contract (except for certain vessel sales or specific product sales that are shipped and recorded on a delivered basis), which reflects the consideration we expect to be entitled to in exchange for the goods or services, net of any variable consideration (e.g., any trade discounts or estimated volume rebates). Our customer contracts may provide certain product quality specification guarantees but do not generally provide for refunds or returns. Sales prices are based on North American and International benchmark market prices, which are variable and subject to global supply and demand, and other market factors.

For Retail, we do not provide general warranties; however, our customer contracts may provide certain product quality specification guarantees. Returns and incentives are estimated based on historical and forecasted data, contractual terms, and current conditions. Due to the nature of goods and services sold, any single estimate would have only a negligible impact on revenue.

Transportation costs are generally recovered from the customer through sales pricing. Where customer contracts include volume rebates, we estimate revenue at the earlier of the most likely amount of consideration we expect to receive or when it is highly probable that a significant reversal will not occur.

As the expected period between when control over a promised good or service is transferred and when the customer pays for that good or service is generally less than 12 months, we apply the practical expedient as provided in IFRS 15, “Revenue from Contracts with Customers,” and do not adjust the promised amount of consideration for the effects of financing.

Intersegment sales are made under terms that approximate market value.

Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. 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.



124 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Share-based Compensation

For awards with performance conditions that determine the number of options or units to which employees are entitled, measurement of compensation cost is based on our best estimate of the outcome of the performance conditions. Changes to vesting assumptions are reflected in earnings immediately for compensation cost already recognized.

For plans settled through the issuance of equity

For plans settled through cash

• fair value for stock options is determined on grant date using the Black-Scholes-Merton option-pricing model, and

• fair value for PSUs is determined on grant date by projecting the outcome of performance conditions.

• a liability is recorded based on the fair value of the awards each period.

Estimation involves determining:

•

stock option-pricing model assumptions as described in the weighted average assumptions table in Note 5;

•

forfeiture rate for options granted based on past experience and future expectations, and adjusted upon actual vesting;

•

projected outcome of performance conditions for PSUs, including the relative ranking of our total shareholder return,

including expected dividends, compared with a specified peer group using a Monte Carlo simulation option-pricing model and the outcome of our synergies relative to the target; and

•

the number of dividend equivalent units expected to be earned.

Income Taxes

Taxation on earnings (loss) is comprised of current and deferred income tax and requires significant judgment and estimation. Taxation is recognized in the statements of earnings unless it relates to items recognized either in OCI or directly in shareholders’ equity.


Current income tax				Deferred income tax
• is the expected tax payable on the taxable earnings for the year • is calculated using rates enacted or substantively enacted at the dates of the consolidated balance sheets in the countries where our subsidiaries and equity-accounted investees operate and generate taxable earnings • includes any adjustments made to income tax payable or recoverable in respect of previous years				• is recognized using the liability method • is based on temporary differences between carrying amounts of assets and liabilities and their respective income tax bases • is determined using tax rates that have been enacted or substantively enacted by the dates of the consolidated balance sheets and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled
Current and deferred income tax assets and liabilities are offset only if certain criteria are met.
The realized and unrealized excess tax benefits from share-based compensation arrangements are recognized in contributed surplus as current and deferred tax, respectively.

Uncertain income tax positions are accounted for using the standards applicable to current income tax liabilities and assets (i.e., both liabilities and assets are recorded when probable and measured at the amount expected to be paid to (or recovered from) the taxation authorities using our best estimate of the amount).

The final taxes paid, and potential adjustments to tax assets and liabilities, are dependent upon many factors including:

•

negotiations with taxation authorities in various jurisdictions;

•

outcomes of tax litigation; and

•

resolution of disputes arising from federal, provincial, state and local tax audits.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 125

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Deferred income tax is not accounted for

•

with respect to investments in subsidiaries and equity-accounted investees where we are able to control the reversal of the temporary difference and that difference is not expected to reverse in the foreseeable future; and

•

if arising from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are

•

recognized to the extent it is probable future taxable profit will be available to use deductible temporary differences and could be reduced if projected earnings are not achieved or increased if earnings previously not projected become probable.

•

reviewed at each balance sheet date and amended to the extent that it is no longer probable that the related tax benefit will be realized.

Financial Instruments

Financial assets are measured at amortized cost if the objective of the business model for the instrument or group of instruments is to hold the asset to collect the contractual cash flows and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest and is not designated as fair value through profit or loss (“FVTPL”).

For equity investments not held for trading, we may make an irrevocable election at initial recognition to recognize changes in fair value through OCI rather than profit or loss.

Financial instruments are classified and measured as follows:

Fair Value Classification

FVTPL

FVTOCI

Amortized Cost

Instrument type

Cash and cash equivalents and derivatives

Equity investments not held for trading

Receivables, short-term debt, payables and accrued charges, long-term debt, lease liabilities, other long-term debt instruments

Fair value gains and losses

Profit or loss

OCI

—

Interest and dividends

Profit or loss

Profit or loss: effective
interest rate

Impairment of assets

—

Profit or loss

Foreign exchange

Profit or loss

OCI

Profit or loss

Transaction costs

Profit or loss

OCI

Included in cost of instrument

Financial instruments are recognized at trade date when we commit to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flow from the investments have expired or we have transferred them and all the risks and rewards of ownership have been substantially transferred.

Derivatives are used to lock in commodity prices, interest rates and exchange rates. For designated and qualified cash flow hedges:

•

the effective portion of the change in the fair value of the derivative is accumulated in OCI;

•

when the hedged forecast transaction occurs, the related gain or loss is removed from AOCI and included in the cost of inventory;

•

the hedging gain or loss included in the cost of inventory is recognized in earnings when the product containing the hedged item is sold or becomes impaired; and

•

the ineffective portions of hedges are recorded in net earnings in the current period.

We assess whether our derivatives hedging transactions are expected to be or were highly effective, both at the hedge’s inception and on an ongoing basis, in offsetting changes in fair values of hedged items. Hedge effectiveness related to our New York Mercantile Exchange (“NYMEX”) natural gas hedges is assessed on a prospective and retrospective basis using regression analyses. Potential sources of ineffectiveness are changes in timing of forecast transactions, changes in volume delivered, or changes in our credit risk or the counterparty. Measurement of ineffectiveness relating to our foreign exchange and interest rate hedges is based on a comparison of the cumulative changes in fair value of the hedging instrument and the cumulative change in the fair value of a hypothetical derivative with terms based on the hedged forecast cash flows. Potential sources of ineffectiveness are changes in timing or amounts of forecasted cash flows, embedded optionality, and changes in our credit risk or the credit risk of a counterparty.



126 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Net investment hedges relating to the commitment to purchase a foreign operation:

•

are considered a non-financial item and are accounted for similar to a cash flow hedge; and

•

the gain or loss from the hedging instrument is deferred in OCI and subsequently recorded as an adjustment to goodwill when the business combination occurs.

Financial assets and financial liabilities are offset, and the net amount is presented in the consolidated balance sheets when we:

•

currently have a legally enforceable right to offset the recognized amounts; and

•

intend either to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

Fair Value Measurements

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.

Fair value measurements are categorized into levels based on the degree to which inputs are observable and their significance:

•

Level 1 – Unadjusted quoted prices (in active markets accessible at the measurement date for identical assets or liabilities).

•

Level 2 – Quoted prices (in markets that are not active or based on inputs that are observable for substantially the full term of the asset or liability).

•

Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall measurement.

Determination of the level hierarchy is based on our assessment of the lowest level input that is significant to the fair value measurement and is subject to estimation and judgment.

Fair value estimates:

•

are at a point in time and may change in subsequent reporting periods due to market conditions or other factors;

•

can be determined using multiple methods, which can cause values (or a range of reasonable values) to differ; and

•

may require assumptions about costs/prices over time, discount and inflation rates, defaults, and other relevant variables.

Cash and Cash Equivalents

Highly liquid investments with a maturity of three months or less from the date of purchase are considered to be cash equivalents.

Receivables

Receivables from customers are recognized initially at fair value and subsequently measured at amortized cost less allowance for expected credit losses of receivables from customers.

Vendors may offer various incentives to purchase products for resale. Vendor rebates and prepay discounts are accounted for as a reduction of the prices of the suppliers’ products. Rebates based on the amount of materials purchased reduce cost of goods sold as inventory is sold. Rebates earned based on sales volumes of products are offset to cost of goods sold.

Rebates that are probable and can be reasonably estimated are accrued. Rebates that are not probable or estimable are accrued when certain milestones are achieved.

Estimation of rebates can be complex in nature as vendor arrangements are diverse. The amount of the accrual is determined by analyzing and reviewing historical trends to apply negotiated rates to estimated and actual purchase volumes. Estimated amounts accrued throughout the year could also be impacted if actual purchase volumes differ from projected volumes.

Inventories

Inventories are valued monthly at the lower of cost and net realizable value. Costs are allocated to inventory using the weighted average cost method.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 127

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Net realizable value is based on:


Products and raw materials				Materials and supplies
• selling price of the finished product (in ordinary course of business) less the estimated costs of completion and estimated costs to make the sale				• replacement cost

A writedown is recognized if the carrying amount exceeds net realizable value and may be reversed if the circumstances that caused it no longer exist. Various factors impact our estimates of

net realizable value, including inventory levels, forecasted prices of key production inputs, global nutrient capacities and crop price trends.

Property, plant and equipment

Owned

Right-of-use (leased)

Measurement

• cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses

• cost of major inspections and overhauls is capitalized

• maintenance and repair expenditures that do not improve or extend productive life are expensed in the period incurred

• cost less accumulated depreciation and any accumulated impairment losses

• lease payments are allocated between finance costs, and a reduction of the liability and discounted using the interest rate implicit in the lease, if available, or an incremental borrowing rate, being a rate that we would have to pay to borrow the funds required to obtain a similar asset, adjusted for term, security, asset value and the borrower’s economic environment

Depreciation method

• certain property, plant and equipment directly related to our Potash, Nitrogen and Phosphate segments – units-of-production – based on the shorter of estimates of reserves or service lives

• pre-stripping costs – units-of-production – over the ore mined from the mineable acreage stripped

• remaining assets – straight-line

• straight-line – over the shorter of the asset’s useful life and the lease term

Estimated useful lives, expected patterns of consumption, depreciation method and residual values are reviewed at least annually.



128 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Owned

Right-of-use (leased)

Judgment/practical expedients

Determining:

• costs, including income or expenses derived from an asset under construction, that are eligible for capitalization;

• timing to cease cost capitalization, generally when the asset is capable of operating in the manner intended by management, but also considering the circumstances and the industry in which the asset is to be operated, normally predetermined by management with reference to such factors as productive capacity;

• the appropriate level of componentization (for individual components for which different depreciation methods or rates
are appropriate);

• repairs and maintenance that qualify as major inspections and overhauls; and

• useful life over which such costs should
be depreciated.

Uncertainties are inherent in estimating reserve quantities, particularly as they relate to assumptions regarding future prices, the geology of our mines, the mining methods used, and the related costs incurred to develop and mine reserves. Changes in these assumptions could result in material adjustments to reserve estimates, which could result in impairments or changes to depreciation expense in future periods.

We have chosen to:

• include the use of a single discount rate for a portfolio of leases with reasonably similar characteristics,

• exclude initial direct costs in measuring ROU assets at the date of initial application,

• not separate non-lease components and instead to account for lease and non-lease components as a single arrangement, and

• use exemptions for short-term and low value leases which allow payments to be expensed as incurred.

Judgment is required to determine whether a contract or arrangement includes a lease and if it is reasonably certain that an extension option will be exercised.

Estimation is used to determine the useful lives of ROU assets, the lease term and the appropriate discount
rate applied to the lease payments to calculate the lease liability.

We seek to maximize operational flexibility in managing our leasing activities by including extension options when negotiating new leases. Extension options are exercisable at our option and not by the lessors. In determining if a renewal period should be included in the lease term, we consider all relevant factors that create an economic incentive for us to exercise a

renewal, including the location of the asset, the availability of suitable alternatives, the significance of the asset to operations, and our business strategy. Lease agreements do not contain significant covenants; however, leased assets may be used as security for lease liabilities and other borrowings.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 129

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Goodwill and Other intangible assets

Goodwill is carried at cost, is not amortized, and represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is allocated to a CGU or group of CGUs for impairment testing based on the level at which it is monitored by management, and not at a level higher than an operating segment. The allocation is made to the CGU or group of CGUs expected to benefit from the business combination in which the goodwill arose.

Other intangible assets are generally measured at cost less accumulated amortization and any accumulated impairment

losses. We use judgment to determine which expenditures are eligible for capitalization as intangible assets. Costs incurred internally from researching and developing a product are expensed as incurred until technological feasibility is established, at which time, the costs are capitalized until the product is available for its intended use. Judgment is required in determining when technological feasibility of a product is established. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. At least annually, the useful lives are reviewed and adjusted if appropriate.

Impairment of long-lived assets

To assess impairment, assets are grouped at the smallest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (this can be at the asset or CGU level).

At the end of each reporting period, we review conditions to determine whether there is any indication that an impairment exists that could potentially impact the carrying amounts of both our long-lived assets to be held and used (including property, plant and equipment, and investments), and our goodwill and other intangible assets. When such indicators exist, impairment testing is performed. Regardless, goodwill is tested at least annually (in the fourth quarter).

We review at each reporting period for possible reversal of the impairment for non-financial assets, other than goodwill.

Estimates and judgment involves:

•

identifying the appropriate asset, group of assets or CGU;

•

determining the appropriate discount rate for assessing the recoverable amount; and

•

making assumptions about future sales, market conditions, terminal growth rates and cash flow forecasts over the long-term life of the assets or CGUs.

We cannot predict if an event that triggers impairment or a reversal of impairment will occur, when it will occur or how it will affect reported asset amounts. Asset impairment amounts previously recorded could be affected if different assumptions were used or if market and other conditions change. Such changes could result in non-cash charges materially affecting our consolidated financial statements.

Equity-Accounted Investments

Investments in which we exercise significant influence (but do not control) or have joint control (as joint ventures) are accounted for using the equity method.

Significant influence is the power to participate in the financial and operating policy decisions of the investee, commonly referred to as an associate.

Pension and Other Post-Retirement Benefits

For employee retirement and other defined benefit plans:

•

accrued liabilities are recorded net of plan assets;

•

costs, including current and past service costs, gains or losses on curtailments and settlements, and remeasurements are actuarially determined on a regular basis using the projected unit credit method; and

•

past service cost is recognized in net earnings at the earlier of (a) when a plan amendment or curtailment occurs; or (b) when related restructuring costs or termination benefits are recognized.

Remeasurements, recognized directly in OCI in the period they occur, are comprised of actuarial gains and losses, return on

plan assets (excluding amounts included in net interest) and the effect of the asset ceiling (if applicable).

When a plan amendment occurs before a settlement, we recognize past service cost before any gain or loss on settlement.

Defined contribution plan costs are recognized in net earnings for services rendered by employees during the period.

Estimates and judgments are required to determine discount rates, health care cost trend rates, projected salary increases, retirement age, longevity and termination rates. These assumptions are determined by management and are reviewed annually by our independent actuaries.



130 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Our discount rate assumptions are impacted by:

•

the weighted average interest rate at which each pension and other post-retirement plan liability could be effectively settled at the measurement date;

•

country specific rates; and

•

the use of a yield curve approach based on the respective plans’ demographics, expected future pension benefits and medical claims. Payments are measured and discounted to

determine the present value of the expected future cash flows. The cash flows are discounted using yields on high-quality AA-rated non-callable bonds with cash flows of similar timing where there is a deep market for such bonds. Where we do not believe there is a deep market for such bonds (such as for terms in excess of 10 years in Canada), the cash flows are discounted using a yield curve derived from yields on provincial bonds rated AA or better to which a spread adjustment is added to reflect the additional risk of corporate bonds.

Asset Retirement Obligations and Accrued Environmental Costs

Provisions are:

•

measured at the present value of the cash flows expected to be required to settle the obligation; and

•

reviewed at the end of each reporting period for any changes, including the discount rate, foreign exchange rate, and amount or timing of the underlying cash flows, and adjusted against the carrying amount of the provision and any related asset; otherwise, it is recognized in net earnings.

As a result of the Merger, we recognized contingent liabilities, which represent additional environmental costs that are present obligations although cash outflows of resources are not probable. These contingent liabilities are subsequently measured at the higher of the amount initially recognized and the amount that would be recognized if the liability becomes probable.

Asset retirement obligations and accrued environmental costs include:

•

reclamation and restoration costs at our potash and phosphate mining operations, including management of materials generated by mining and mineral processing, such as various mine tailings and gypsum;

•

land reclamation and revegetation programs;

•

decommissioning of underground and surface operating facilities;

•

general cleanup activities aimed at returning the areas to an environmentally acceptable condition; and

•

post-closure care and maintenance.

Estimates for provisions take into account the following:

•

most provisions will not be settled for a number of years;

•

environmental laws and regulations and interpretations by regulatory authorities could change or circumstances affecting our operations could change, either of which could result in significant changes to current plans; and

•

the nature, extent and timing of current and proposed reclamation and closure techniques in view of present environmental laws and regulations.

It is reasonably possible that the ultimate costs could change in the future and that changes to these estimates could have a material effect on our consolidated financial statements. We use appropriate technical resources, including outside consultants, to develop specific site closure and post-closure plans in accordance with the requirements of the various jurisdictions in which we operate. Other than certain land reclamation programs, settlement of the obligations is typically correlated with mine life estimates.

Business Combinations

•

Consideration is measured at the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity instruments issued in exchange for control of the acquiree at the acquisition date. Foreign exchange hedge gains or losses which we designated a cash flow hedge are included in the consideration.

•

Identifiable assets acquired and liabilities assumed are generally measured at fair value.

•

The excess of total consideration for each acquisition plus non-controlling interest in the acquiree, over the fair value of the identifiable net assets acquired, is recorded as goodwill.

•

For each business combination, we elect to measure the non-controlling interest in the acquired entity either at fair value or at the proportionate share of the acquiree’s identifiable net assets.



In millions of US dollars unless otherwise noted	2020	Nutrien Annual Report 131

Overview

Management’s Discussion & Analysis

Three-Year Highlights

Financial Statements

Other Information

NOTE 30

Accounting Policies, Estimates and Judgments Continued

Purchase price allocation involves judgment in identifying assets acquired and liabilities assumed, and estimation of their fair values. To determine fair values, we used quoted market prices or widely accepted valuation techniques. Key assumptions include discount rates and revenue growth rates specific to the acquired assets or liabilities assumed. We performed a thorough review of all internal and external sources of information

available on circumstances that existed at the acquisition date. We also engaged independent valuation experts on certain acquisitions to assist in determining the fair value of certain assets acquired and liabilities assumed and related deferred income tax impacts.

Transaction costs are recorded in acquisition and integration related costs in other (income) expenses.

Standards, Amendments and Interpretations Effective and Applied

The IASB and IFRS Interpretations Committee (“IFRIC”) have issued certain standards and amendments or interpretations to existing standards that were effective, and we have applied.

We have adopted the following amended standards and interpretations with no material impact on our consolidated financial statements:

•

Conceptual Framework for Financial Reporting

•

Amendments to IAS 1 and IAS 8, Definition of Material

•

Amendments to IFRS 3, “Business Combinations”, Definition of a business

•

Interest Rate Benchmark Reform – Phase 1 – Amendments to IFRS 9, IAS 39 and IFRS 7

Standards, Amendments and Interpretations Not Yet Effective and Not Applied

The IASB and IFRIC have issued the following standards, amendments or interpretations to existing standards that were not yet effective and not applied as at December 31, 2020. The following amended standards and interpretations are being reviewed to determine the potential impact on our consolidated financial statements:

•

Amendments to IAS 1, Classification of liabilities as current or non-current

•

Amendment to IAS 16, “Property, plant and equipment”

•

Amendment to IAS 37, Onerous contracts

•

Annual improvements 2018 – 2020

•

Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

•

IFRS 17, “Insurance contracts”



132 Nutrien Annual Report	2020	In millions of US dollars unless otherwise noted