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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to
            .

Commission File Number 333-129951





INNOPHOS, INC.

(Exact Name of Registrant as Specified in its Charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-1380712                          
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)
|                                                               | 
|259 Prospect Plains Road
Cranbury, New Jersey                  |  | 08512                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

Registrants Telephone Number, Including Area Code: (609) 495-2495





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definition of accelerated filer, large accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer   ̈    Accelerated
Filer   ̈    Non-accelerated
filer  x    Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

As of March 31, 2010, the registrant had 1,000 shares of common stock outstanding









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TABLE OF CONTENTS



|           |  |                                                                                       |  |     
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                       |  | Page
|PART I     |  |                                                                                      
|Item 1.    |  | Financial Statements                                                                  |  | 3   
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 23  
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 28  
|Item 4T.   |  | Controls and Procedures                                                               |  | 29  
|           | 
|PART II    |  |                                                                                      
|Item 1.    |  | Legal Proceedings                                                                     |  | 30  
|Item 1A.   |  | Risk Factors                                                                          |  | 30  
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 30  
|Item 3.    |  | Defaults Upon Senior Securities                                                       |  | 30  
|Item 4.    |  | (Removed and Reserved)                                                                |  | 30  
|Item 5.    |  | Other Information                                                                     |  | 30  
|Item 6.    |  | Exhibits                                                                              |  | 30  
|           | 
|Signatures |  | 31                                                                                   



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PART I



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share amounts, share amounts or where otherwise noted)



|                                            |  |               |         |                  |   |        
|------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                            |  | March 31,2010 |         | December 31,2009
|ASSETS                                      |  |               |         |                  |   |        
|Current assets:                             |  |               |         |                  |   |        
|Cash and cash equivalents                   |  | $             | 115,034 |                  | $ | 132,222
|Restricted cash                             |  |               |        |                  |   | 1,749  
|Accounts receivable, net                    |  |               | 71,342  |                  |   | 56,345 
|Inventories                                 |  |               | 114,711 |                  |   | 113,636
|Other current assets                        |  |               | 43,875  |                  |   | 45,638 
|                                            |  |               |         |                  |   |        
|Total current assets                        |  |               | 344,962 |                  |   | 349,590
|Property, plant and equipment, net          |  |               | 200,131 |                  |   | 204,527
|Goodwill                                    |  |               | 51,706  |                  |   | 51,706 
|Intangibles and other assets, net           |  |               | 49,686  |                  |   | 51,483 
|                                            |  |               |         |                  |   |        
|Total assets                                |  | $             | 646,485 |                  | $ | 657,306
|                                            |  |               |         |                  |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY        |  |               |         |                  |   |        
|Current liabilities:                        |  |               |         |                  |   |        
|Current portion of long-term debt           |  | $             |        |                  | $ |       
|Accounts payable, trade and other           |  |               | 36,877  |                  |   | 32,580 
|Other current liabilities                   |  |               | 32,114  |                  |   | 54,603 
|                                            |  |               |         |                  |   |        
|Total current liabilities                   |  |               | 68,991  |                  |   | 87,183 
|Long-term debt                              |  |               | 190,000 |                  |   | 190,000
|Other long-term liabilities                 |  |               | 36,756  |                  |   | 37,920 
|                                            |  |               |         |                  |   |        
|Total liabilities                           |  |               | 295,747 |                  |   | 315,103
|                                            |  |               |         |                  |   |        
|Commitments and contingencies (see note 11) |  |               |         |                  |   |        
|Stockholders equity                        |  |               | 350,738 |                  |   | 342,203
|                                            |  |               |         |                  |   |        
|Total stockholders equity                  |  |               | 350,738 |                  |   | 342,203
|                                            |  |               |         |                  |   |        
|Total liabilities and stockholders equity  |  | $             | 646,485 |                  | $ | 657,306
|                                            |  |               |         |                  |   |        

See notes to condensed consolidated financial
statements



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INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Operations (Unaudited)

(In thousands, except per share amounts, share amounts or where otherwise noted)



|                                    |  |                                  |         |   |                                  |   |         |  
|----------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | -
|                                    |  | Three months endedMarch 
31,2010 |         |   | Three months endedMarch 
31,2009 |  
|Net sales                           |  | $                                | 169,007 |   |                                  | $ | 190,817 |  
|Cost of goods sold                  |  |                                  | 132,301 |   |                                  |   | 121,024 |  
|                                    |  |                                  |         |   |                                  |   |         |  
|Gross profit                        |  |                                  | 36,706  |   |                                  |   | 69,793  |  
|                                    |  |                                  |         |   |                                  |   |         |  
|Operating expenses:                 |  |                                  |         |   |                                  |   |         |  
|Selling, general and administrative |  |                                  | 14,518  |   |                                  |   | 13,976  |  
|Research & development expenses     |  |                                  | 563     |   |                                  |   | 529     |  
|                                    |  |                                  |         |   |                                  |   |         |  
|Total operating expenses            |  |                                  | 15,081  |   |                                  |   | 14,505  |  
|                                    |  |                                  |         |   |                                  |   |         |  
|Operating income                    |  |                                  | 21,625  |   |                                  |   | 55,288  |  
|Interest expense, net               |  |                                  | 4,420   |   |                                  |   | 6,065   |  
|Foreign exchange (gain) loss        |  |                                  | (230    | ) |                                  |   | 415     |  
|Other income, net                   |  |                                  |        |   |                                  |   | (208    | )
|                                    |  |                                  |         |   |                                  |   |         |  
|Income before income taxes          |  |                                  | 17,435  |   |                                  |   | 49,016  |  
|Provision for income taxes          |  |                                  | 6,091   |   |                                  |   | 17,656  |  
|                                    |  |                                  |         |   |                                  |   |         |  
|Net income                          |  | $                                | 11,344  |   |                                  | $ | 31,360  |  
|                                    |  |                                  |         |   |                                  |   |         |  

See notes to condensed consolidated financial statements



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INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)



|                                                                                               |  |                                  |         |   |                                  |   |         |  
|---------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | -
|                                                                                               |  | Three months endedMarch 
31,2010 |         |   | Three months endedMarch 
31,2009 |  
|Cash flows from operating activities                                                           |  |                                  |         |   |                                  |   |         |  
|Net income                                                                                     |  | $                                | 11,344  |   |                                  | $ | 31,360  |  
|Adjustments to reconcile net income to net cash (used for) provided from operating activities: |  |                                  |         |   |                                  |   |         |  
|Depreciation and amortization                                                                  |  |                                  | 12,655  |   |                                  |   | 11,597  |  
|Amortization of deferred financing charges                                                     |  |                                  | 354     |   |                                  |   | 964     |  
|Deferred income tax benefit                                                                    |  |                                  | (557    | ) |                                  |   | (1,020  | )
|Deferred profit sharing                                                                        |  |                                  | (205    | ) |                                  |   | (189    | )
|Share-based compensation                                                                       |  |                                  | 721     |   |                                  |   | 542     |  
|Changes in assets and liabilities:                                                             |  |                                  |         |   |                                  |   |         |  
|Decrease in restricted cash                                                                    |  |                                  | 1,749   |   |                                  |   |        |  
|(Increase) decrease in accounts receivable                                                     |  |                                  | (14,997 | ) |                                  |   | 5,286   |  
|(Increase) decrease in inventories                                                             |  |                                  | (1,075  | ) |                                  |   | 13,788  |  
|Decrease in other current assets                                                               |  |                                  | 1,763   |   |                                  |   | 3,183   |  
|Increase in accounts payable                                                                   |  |                                  | 4,297   |   |                                  |   | 2,395   |  
|(Decrease) increase in other current liabilities                                               |  |                                  | (22,489 | ) |                                  |   | 3,076   |  
|Changes in other long-term assets and liabilities                                              |  |                                  | (10     | ) |                                  |   | 836     |  
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Net cash (used for) provided from operating activities                                         |  |                                  | (6,450  | ) |                                  |   | 71,818  |  
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Cash flows from investing activities:                                                          |  |                                  |         |   |                                  |   |         |  
|Capital expenditures                                                                           |  |                                  | (7,249  | ) |                                  |   | (3,051  | )
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Net cash used for investing activities                                                         |  |                                  | (7,249  | ) |                                  |   | (3,051  | )
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Cash flows from financing activities:                                                          |  |                                  |         |   |                                  |   |         |  
|Return of capital to parent                                                                    |  |                                  | (3,633  | ) |                                  |   | (3,704  | )
|Excess tax benefits from exercise of stock options                                             |  |                                  | 144     |   |                                  |   |        |  
|Principal payments of term-loan                                                                |  |                                  |        |   |                                  |   | (54,000 | )
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Net cash used for financing activities                                                         |  |                                  | (3,489  | ) |                                  |   | (57,704 | )
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Net change in cash                                                                             |  |                                  | (17,188 | ) |                                  |   | 11,063  |  
|Cash and cash equivalents at beginning of period                                               |  |                                  | 132,222 |   |                                  |   | 124,623 |  
|                                                                                               |  |                                  |         |   |                                  |   |         |  
|Cash and cash equivalents at end of period                                                     |  | $                                | 115,034 |   |                                  | $ | 135,686 |  
|                                                                                               |  |                                  |         |   |                                  |   |         |  

See notes to condensed consolidated financial statements



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INNOPHOS, INC. AND SUBSIDIARIES

Statements of Stockholders Equity and Other Comprehensive Income (Loss) (Unaudited)

(Dollars and shares in thousands)



|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  
|------------------------------------------------------- |  | ---------------- | ------- | -------------- | - | ------- | ------------------------------------------ |  | - | ------------------------ | - |  | - | ------- | -
|                                                        |  | RetainedEarnings |         | Paid-inCapital |   |         | AccumulatedOtherComprehensiveIncome/(Loss) |  |   | TotalShareholdersEquity |  
|Balance, January 1, 2009                                |  | $                | 194,197 |                | $ | 99,658  |                                            |  | $ | (2,024                   | ) |  | $ | 291,831 |  
|Net income                                              |  |                  | 65,427  |                |   |         |                                            |  |   |                          |   |  |   | 65,427  |  
|Change in pension and post-retirement plans, net of tax |  |                  |         |                |   |         |                                            |  |   | (226                     | ) |  |   | (226    | )
|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  
|Net income and other comprehensive income, net of tax   |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   | 65,201  |  
|Stock-based compensation                                |  |                  |         |                |   | 3,367   |                                            |  |   |                          |   |  |   | 3,367   |  
|Return of capital                                       |  |                  |         |                |   | (18,196 | )                                          |  |   |                          |   |  |   | (18,196 | )
|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  
|Balance, December 31, 2009                              |  | $                | 259,624 |                | $ | 84,829  |                                            |  | $ | (2,250                   | ) |  | $ | 342,203 |  
|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  
|Net income                                              |  |                  | 11,344  |                |   |         |                                            |  |   |                          |   |  |   | 11,344  |  
|Change in pension and post-retirement plans, net of tax |  |                  |         |                |   |         |                                            |  |   | 55                       |   |  |   | 55      |  
|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  
|Net income and other comprehensive income, net of tax   |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   | 11,399  |  
|Stock-based compensation                                |  |                  |         |                |   | 721     |                                            |  |   |                          |   |  |   | 721     |  
|Return of capital                                       |  |                  |         |                |   | (3,585  | )                                          |  |   |                          |   |  |   | (3,585  | )
|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  
|Balance, March 31, 2010                                 |  | $                | 270,968 |                | $ | 81,965  |                                            |  | $ | (2,195                   | ) |  | $ | 350,738 |  
|                                                        |  |                  |         |                |   |         |                                            |  |   |                          |   |  |   |         |  

See notes to condensed consolidated financial statements



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)

1. Basis of Statement Presentation:

Summary of Significant Accounting Policies

Innophos, Inc. is a wholly-owned subsidiary of Innophos Investments Holdings, Inc. (Investments Holdings), incorporated under
the laws of the State of Delaware. Innophos Investments Holdings, Inc. is a wholly-owned subsidiary of Innophos Holdings, Inc. (Holdings).

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of Innophos, Inc. and Subsidiaries, or Company, have been prepared
in accordance with generally accepted accounting principles for interim financial reporting and do not include all disclosures required by generally accepted accounting principles for annual financial reporting, and should be read in conjunction
with the audited consolidated and combined financial statements of the Company at December 31, 2009 and for the three years then ended.

The accompanying unaudited condensed consolidated financial statements of the Company reflect all adjustments, consisting only of normal
recurring accruals, which management considers necessary for a fair statement of the results of operations for the interim periods and is subject to year end adjustments. The results of operations for the interim periods are not necessarily
indicative of the results for the full year. The December 31, 2009 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the
United States of America.

Recently Issued Accounting Standards

In June 2009, the FASB issued an amendment to ASC topic 860 Transfers and Servicing. Among other items the provision removes the concept
of a qualifying special-purpose entity and clarifies that the objective of paragraph ASC 860-10-40-4 is to determine whether a transferor and all of the entities included in the transferors financial statements being presented have surrendered
control over transferred financial assets. This pronouncement is effective January 1, 2010. The implementation of this standard did not have a material impact on the Companys consolidated financial position and results of operations.

In June 2009, the FASB issued an amendment to ASC topic 810 Consolidation. The provisions of ASC 810 provide guidance in
determining whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the
activities of a variable interest entity that most significantly impacts the entitys economic performance, and the obligation to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable
interest entity. This pronouncement also requires ongoing reassessments of whether an enterprise is the primary beneficiary and eliminates the quantitative approach previously required for determining the primary beneficiary. New provisions of this
pronouncement are effective January 1, 2010. The implementation of this standard did not have a material impact on the Companys consolidated financial position and results of operations.

In October 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-13, Multiple-Deliverable Revenue Arrangements  a
consensus of the FASB Emerging Issues Task Force (EITF), which provides principles for allocation of consideration among its multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement.
The EITF introduces an estimated selling price method for valuing the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available, and significantly expands related disclosure
requirements. This standard is effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Alternatively, adoption may be on a retrospective basis, and early
application is permitted. The implementation of this standard will not have a material impact on the Companys consolidated financial position and results of operations.



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



2. Dividends:

The following is the dividend activity for the three months ended March 31, 2010 and 2009:



|                               |  |                         |       |      |   |      
|------------------------------ |  | ----------------------- | ----- | ---- | - | -----
|                               |  | Quarters ended March 31
|                               |  | 2010                    |       | 2009
|Dividends declared - per share |  | $                       | 0.17  |      | $ | 0.17 
|Dividends declared - aggregate |  |                         | 3,640 |      |   | 3,611
|                               |  |                        
|Dividends paid - per share     |  |                         | 0.17  |      |   | 0.17 
|Dividends paid - aggregate     |  |                         | 3,633 |      |   | 3,590

As all of the
business for Holdings and Innophos Investments Holdings, Inc. are transacted through Innophos, Inc. and Subsidiaries, Holdings and Innophos Investments Holdings, Inc. are dependent on earnings and distribution of funds from Innophos, Inc. and
Subsidiaries.

3. Share-Based Compensation:

Holdings compensation programs include share-based payments. The primary share-based awards and their general terms and conditions
currently in effect are as follows:



| |  |  | Restricted stock grants, which entitle the holder to receive, at the end of each vesting term, a specified number of shares of Holdings common stock,
and which also entitle the holder to receive dividends paid on such grants throughout the vesting period.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Stock options, which entitle the holder to purchase, after the end of a vesting term, a specified number of shares of Holdings common stock at an
exercise price per share set equal to the market price of the Companys common stock on the date of grant.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Performance share awards which entitle the holder to receive, at the end of a vesting term, a number of shares of Holdings common stock, within a range
of shares from zero to a specified maximum (generally 200%), calculated using a three year future average return on invested capital (i.e. the three year period 2010-2012 for a 2010 award) as defined solely by reference to Holdings own activities.
Dividends will accrue over the vesting period and are paid on performance share awards when fully vested.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Annual stock retainer grants, which entitle independent members of the Board of Directors to receive a number of shares of Holdings common stock equal
to a fixed retainer value.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Since these programs benefit the employees of Innophos, Inc. all amounts have
been recorded in our consolidated results.



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



The following table summarizes the components of share-based compensation expense, all
of which has been classified as selling, general and administrative expense:



|                                       |  |                                  |     |                                  |   |    
|-------------------------------------- |  | -------------------------------- | --- | -------------------------------- | - | ---
|                                       |  | Three Months EndedMarch 31, 2010 |     | Three Months EndedMarch 31, 2009
|Stock options                          |  | $                                | 211 |                                  | $ | 167
|Restricted stock                       |  |                                  | 4   |                                  |   | 1  
|Performance shares                     |  |                                  | 506 |                                  |   | 374
|                                       |  |                                  |     |                                  |   |    
|Total share-based compensation expense |  | $                                | 721 |                                  | $ | 542
|                                       |  |                                  |     |                                  |   |    

The fair value of the options granted during 2010 was
determined using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model were as follows:



|                                                        |  |   |         |  
|------------------------------------------------------- |  | - | ------- | -
|Non-qualified stock options                             |  |   |        
|Expected volatility                                     |  |   | 57.5    | %
|Dividend yield                                          |  |   | 3.6     | %
|Risk-free interest rate                                 |  |   | 2.8     | %
|Expected term                                           |  |   | 6 years |  
|Weighted average grant date fair value of stock options |  | $ | 10.46   |  

There were 169,150
options granted with a fair value of $1.7 million on March 11, 2010. These awards are classified as equity awards and vest equally through March 11, 2013. The related compensation expense is based on the date of grant fair value of $25.68
per common share. The compensation expense is amortized on a straight-line basis over the requisite vesting period. For these grants, the Company had chosen a blended volatility which consists of 50% historical volatility average of the peer group
and 50% historical volatility of Innophos. The expected term for the stock options is based on the simplified method since the Company has limited data on the exercises of stock options. These stock options qualify as plain vanilla stock
options in accordance with SAB 110. The dividend yield is the expected annual dividend payments divided by the average stock price up to the date of grant. The risk-free interest rates are derived from the U.S. Treasury securities in effect on the
date of grant whose maturity period equals the options expected term. The Company applies an expected forfeiture rate to stock-based compensation expense. The estimate of the forfeiture rate is based primarily upon historical experience of employee
turnover. As actual forfeitures become known, stock-based compensation expense is adjusted accordingly.

There were 79,500
performance shares granted, assuming achieving targeted return on invested capital, on March 11, 2010 with a fair value of $25.68 per common share, or $1.8 million in the aggregate which reflects forfeiture assumptions. The expected term for
the performance shares is a 3 year cliff vesting. Declared dividends will accrue on the performance shares and will vest over the same period. The compensation expense is amortized on a straight-line basis over the requisite vesting period.

4. Inventories:

Inventories consist of the following:



|                  |  |               |         |                  |   |        
|----------------- |  | ------------- | ------- | ---------------- | - | -------
|                  |  | March 31,2010 |         | December 31,2009
|Finished products |  | $             | 77,260  |                  | $ | 73,924 
|Raw materials     |  |               | 30,237  |                  |   | 31,770 
|Spare parts       |  |               | 7,214   |                  |   | 7,942  
|                  |  |               |         |                  |   |        
|                  |  | $             | 114,711 |                  | $ | 113,636
|                  |  |               |         |                  |   |        

Inventory reserves as of March 31, 2010 and
December 31, 2009 were $9,227 and $13,189, respectively.



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



5. Other Current Assets:

Other current assets consist of the following:



|                                     |  |               |        |                  |   |       
|------------------------------------ |  | ------------- | ------ | ---------------- | - | ------
|                                     |  | March 31,2010 |        | December 31,2009
|Creditable taxes (value added taxes) |  | $             | 6,770  |                  | $ | 4,028 
|Prepaid income taxes                 |  |               | 10,681 |                  |   | 10,435
|Deferred taxes                       |  |               | 11,792 |                  |   | 11,792
|Prepaids                             |  |               | 12,034 |                  |   | 13,110
|Other                                |  |               | 2,598  |                  |   | 6,273 
|                                     |  |               |        |                  |   |       
|                                     |  | $             | 43,875 |                  | $ | 45,638
|                                     |  |               |        |                  |   |       



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



6. Intangibles and Other Assets, net:

Intangibles and other assets consist of the following:



|                                                                                                                       |  |                    |  |               |        |                  |   |       
|---------------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | ------------- | ------ | ---------------- | - | ------
|                                                                                                                       |  | Useful life(years) |  | March 31,2010 |        | December 31,2009
|Developed technology and application patents, net of accumulated amortization of $10,640 for 2010 and $10,168 for
2009 |  | 10-20              |  | $             | 25,960 |                  | $ | 26,432
|Customer relationships, net of accumulated amortization of $4,198 for 2010 and $3,961 for 2009                         |  | 5-15               |  |               | 7,132  |                  |   | 7,369 
|Tradenames and license agreements, net of accumulated amortization of $3,504 for 2010 and $3,401 for 2009              |  | 5-20               |  |               | 5,856  |                  |   | 5,959 
|Capitalized software, net of accumulated amortization of $2,441 for 2010 and $2,279 for 2009                           |  | 3-5                |  |               | 424    |                  |   | 700   
|Non-compete agreement, net of accumulated amortization of $346 for 2010 and $315 for 2009                              |  | 5                  |  |               | 284    |                  |   | 315   
|                                                                                                                       |  |                    |  |               |        |                  |   |       
|Total Intangibles                                                                                                      |  |                    |  | $             | 39,656 |                  | $ | 40,775
|                                                                                                                       |  |                    |  |               |        |                  |   |       
|Deferred financing costs, net of accumulated amortization of $6,718 for 2010 and $6,364 for 2009                       |  |                    |  | $             | 5,861  |                  | $ | 6,215 
|Deferred income taxes                                                                                                  |  |                    |  |               | 783    |                  |   | 1,409 
|Other assets                                                                                                           |  |                    |  |               | 3,386  |                  |   | 3,084 
|                                                                                                                       |  |                    |  |               |        |                  |   |       
|Total other assets                                                                                                     |  |                    |  | $             | 10,030 |                  | $ | 10,708
|                                                                                                                       |  |                    |  |               |        |                  |   |       
|                                                                                                                       |  |                    |  | $             | 49,686 |                  | $ | 51,483
|                                                                                                                       |  |                    |  |               |        |                  |   |       

7. Other Current Liabilities:

Other current liabilities consist of the following:



|                      |  |               |        |                  |   |       
|--------------------- |  | ------------- | ------ | ---------------- | - | ------
|                      |  | March 31,2010 |        | December 31,2009
|Taxes                 |  | $             | 7,097  |                  | $ | 13,480
|Payroll related       |  |               | 7,819  |                  |   | 6,396 
|Freight and rebates   |  |               | 3,163  |                  |   | 3,794 
|Benefits and pensions |  |               | 3,758  |                  |   | 5,104 
|Interest              |  |               | 2,193  |                  |   | 8,626 
|Legal                 |  |               | 1,107  |                  |   | 2,820 
|Other                 |  |               | 6,977  |                  |   | 14,383
|                      |  |               |        |                  |   |       
|                      |  | $             | 32,114 |                  | $ | 54,603
|                      |  |               |        |                  |   |       



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



8. Debt and Interest:

Short-term borrowings and long-term debt consist of the following:



|                          |  |               |         |                  |   |        
|------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                          |  | March 31,2010 |         | December 31,2009
|Senior subordinated notes |  |               | 190,000 |                  |   | 190,000
|                          |  |               |         |                  |   |        
|                          |  | $             | 190,000 |                  | $ | 190,000
|Less current portion      |  |               |        |                  |   |       
|                          |  |               |         |                  |   |        
|                          |  | $             | 190,000 |                  | $ | 190,000
|                          |  |               |         |                  |   |        

In the second quarter of 2009, the Company and its
wholly owned subsidiary, Innophos Canada, Inc. (the Borrowers) entered into a Loan and Security Agreement (the Loan Agreement) with certain lenders (collectively, the Lenders) including Wachovia Bank, National
Association, as agent.

As of March 31, 2010, the Borrowers had $53.0 million excess availability above the minimum
excess availability requirements, as calculated in accordance with the Loan Agreement, and there was no amount outstanding on the revolving credit line. A total of $1.7 million in face amount of letters of credit were issued under the sub-facility
to support instruments outstanding under a prior credit facility terminated on that date.

In connection with the termination
of the 2004 Credit Facility dated as of August 13, 2004 in the second quarter of 2009, the Company paid the $72.7 million of outstanding term loan balance (principal and accrued interest) from cash on hand. This payment resulted in an
approximate $0.4 million charge to earnings for the acceleration of deferred financing charges. Prior to the termination of the term loan, the Company made a $53.6 million excess cash flow payment in the first quarter of 2009 which resulted in an
approximate $0.4 million charge to earnings for the acceleration of deferred financing charges.

The Senior Subordinated Notes
accrue interest from the issue date at a rate of 8.875% per annum, payable semi-annually in arrears on February 15 and August 15 of each year. Innophos Holdings, Inc. is dependent on the earnings and distributions from Innophos, Inc.
and subsidiaries to fund this obligation.

Holdings Senior Unsecured Notes accrued interest from the issue date at a rate of
9.5% per annum, payable semi-annually in arrears on April 15 and October 15 of each year.

Holdings redeemed
for cash all remaining $56.0 million of the Senior Unsecured Notes on April 15, 2010, the Redemption Date. The redemption price for the Notes was 100% of the principal amount plus accrued and unpaid interest to the Redemption Date. Accelerated
deferred financing charges of $0.6 million will be recorded in the second quarter of 2010.

As of March 31, 2010, the
Company was in full compliance with all debt covenant requirements.

Total interest cash payments by the Company for all
indebtedness for the three months ended March 31, 2010 and March 31, 2009 was $8,560 and $9,764, respectively.

The
carrying value of our Senior Subordinated Notes and Holdings Senior Unsecured Notes are $190.0 million and $56.0 million, respectively. The fair values at March 31, 2010 (excluding accrued interest) are approximately $195.7 million and $56.0
million, respectively.



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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



Interest expense, net consists of the following:



|                                              |  |                    |       |   |               |   |       |  
|--------------------------------------------- |  | ------------------ | ----- | - | ------------- | - | ----- | -
|                                              |  | Three months ended |      
|                                              |  | March 31,2010      |       |   | March 31,2009 |  
|Interest expense                              |  | $                  | 4,357 |   |               |   | 5,395 |  
|Deferred financing cost                       |  |                    | 354   |   |               |   | 964   |  
|Interest income                               |  |                    | (126  | ) |               |   | (277  | )
|Less: amount capitalized for capital projects |  |                    | (165  | ) |               |   | (17   | )
|                                              |  |                    |       |   |               |   |       |  
|Total interest expense, net                   |  | $                  | 4,420 |   |               | $ | 6,065 |  
|                                              |  |                    |       |   |               |   |       |  

9. Other Long-term liabilities:

Other long-term liabilities consist of the following:



|                                                             |  |               |        |                  |   |       
|------------------------------------------------------------ |  | ------------- | ------ | ---------------- | - | ------
|                                                             |  | March 31,2010 |        | December 31,2009
|Environmental liabilities                                    |  | $             | 1,100  |                  |   | 1,100 
|Profit sharing liabilities                                   |  |               | 2,145  |                  |   | 2,350 
|Deferred income taxes                                        |  |               | 20,860 |                  |   | 22,043
|Pension and post retirement liabilities (US and Canada only) |  |               | 5,513  |                  |   | 5,240 
|Other Liabilities                                            |  |               | 7,138  |                  |   | 7,187 
|                                                             |  |               |        |                  |   |       
|                                                             |  | $             | 36,756 |                  | $ | 37,920
|                                                             |  |               |        |                  |   |       

10. Income Taxes:

The effective income tax rate on income before taxes was approximately 35% for the three months ended March 31, 2010 compared to
approximately 36% for the comparable period in 2009. The change in the effective tax rate is a result of a shift of earnings before tax combined with a change in tax rates for our operations in multiple tax jurisdictions. Currently, the Company is
under examination by certain foreign jurisdictions for its income tax returns for the years 2004 through 2008. As of March 31, 2010, no significant adjustments have been proposed to the Companys tax positions and the Company currently
does not anticipate any adjustments that would result in a material change to its financial position.

The Company is included
in a consolidated U.S. tax return of Innophos Holdings, Inc., however the income tax provision has been prepared on a separate return basis. The Mexican subsidiaries file separate tax returns and current income taxes receivable or payable are
reflected on the accompanying combined balance sheets.

Income taxes paid were $6,800 and $7,037 for the three months ended
March 31, 2010 and March 31, 2009, respectively.

11. Commitments and Contingencies

Environmental

The Companys operations are subject to extensive and changing federal and state environmental laws and regulations. The
Companys manufacturing sites have an extended history of industrial use, and soil and groundwater contamination have or may have occurred in the past and might occur or be discovered in the future.

Environmental efforts are difficult to assess for numerous reasons, including the discovery of new remedial sites, discovery of new
information and scarcity of reliable information pertaining to certain sites, improvements in technology, changes in environmental laws and regulations, numerous possible remedial techniques and solutions, difficulty in assessing the involvement of
and the financial capability of other potentially responsible parties and the extended time periods over which remediation occurs. Other than the items listed below, the Company is not aware of material environmental liabilities which are probable
and estimable. As the Companys environmental contingencies are more clearly determined, it is reasonably possible that amounts may need to be accrued. However, management does not believe, based on current information, that environmental
remediation requirements will have a material impact on the Companys results of operations, financial position or cash flows.



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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



Under the agreements by which the Company acquired the Phosphates Business and related
assets, the Company has certain rights of indemnification from the sellers for breach of representations, warranties, covenants and other agreements. The indemnification rights relating to undisclosed environmental matters are subject to certain
substantial limitations and exclusions and expired as of August 13, 2009.

Future environmental spending is probable at
our site in Nashville, TN, the eastern portion of which had been used historically as a landfill, and a western parcel previously acquired from a third party, which reportedly had housed, but no longer does, a fertilizer and pesticide manufacturing
facility. We have an estimated liability with a range of $0.9-$1.2 million.

The remedial action plan has yet to be finalized,
and as such, the Company has recorded a liability, which represents the Companys best estimate, of $1.1 million as of March 31, 2010.

The U.S. Environmental Protection Agency, or EPA, has indicated that compliance at facilities in the phosphate industry is a high
enforcement priority. After several years of expressing various concerns (without issuing any notice of violation) about aspects of our Geismar, LA operations, in March 2008, we received a letter from the Department of Justice, or DOJ, indicating
that EPA had referred the case for civil enforcement, contending, among other things, that we do not qualify for certain exemptions we have claimed, and alleging that we violate the Resource Conservation and Recovery Act (RCRA) at Geismar by failing
to manage two materials appropriately. Although the letter stated that EPA/DOJ intended to seek unspecified penalties and corrective action, it proposed discussions to explore possible resolution, which we undertook and are pursuing. During the
fourth quarter of 2008, the DOJ/EPA demanded that Innophos and its neighboring interconnected supplier, PCS, undertake certain interim measures to address DOJ/EPAs chief environmental concerns. We and PCS have initiated joint
technical efforts to explore solutions to the government concerns. Based on our contact with the agencies to date, we have determined it is probable that one of the process modifications will need to be undertaken in the near term, and likewise
probable that the capital expenditure and future operating expense of that modification will not be material, unless the DOJ adds terms and conditions that could result in the parties not reaching agreement. However, the second measure sought by
DOJ/EPA has not yet been fully evaluated from a technological or cost standpoint. The companies have proposed to DOJ/EPA a schedule for such evaluation, and although the government has not formally approved the schedule, the companies are proceeding
as proposed. Based upon work so far, there appears to be at least one technically viable approach, but both detailed costing and other approaches need to be evaluated. Even though the companies have begun substantial technical work in an attempt to
develop a feasible approach to address DOJ/EPAs concerns, we cannot guarantee that our technical efforts will be successful, whether either party would be willing to implement solutions or, depending on those factors and the agencies
position, whether this matter will be settled with DOJ/EPA or will require litigation. Should litigation become necessary to defend our operations at Geismar as compliant with environmental laws and regulations, no assurance can be given as to its
outcome. We have determined that a contingent liability is neither probable nor estimable at this time, but liability is reasonably possible.

Litigation

Mexican CNA Water Tax Claims

Nature and Extent.In November 2004, our Mexican subsidiary, Innophos Fosfatados, or Fosfatados, received notice from the CNA of
the Fresh Water Claims relating to water usage at our Coatzacoalcos, Veracruz, Mexico plant. As initially assessed, the claims extended from 1998-2002, but subsequently the 1998 claim was determined to be beyond the applicable statute of
limitations. As now assessed, the claims through 2002 total approximately $25.4 million (at current exchange rates as of April 23, 2010), including basic charges of $7.5 million and $17.9 million for interest, inflation and penalties.
Management believes that Fosfatados has valid bases for challenging the Fresh Water Claims, and that matter is being defended vigorously.

Rhodia Indemnity Confirmed.As a result of favorably concluded litigation in New York state courts against Rhodia, S.A. and
affiliates, or the New York Litigation, concerning their indemnification obligation for CNA claims as taxes under the agreement by which we purchased our business from those parties, Innophos is fully indemnified against the Fresh Water
Claims, as well as any like claims pertaining to periods prior to the closing date of purchase, August 13, 2004, were such liabilities to be sustained.

Further Proceedings.The Fresh Water Claims are currently pending reconsideration from appeals in the Mexican fiscal court system.
On October 29, 2009, the Tax Court on remand ruled unfavorably as to all of Fosfatados remaining defenses. On January 10, 2010, Fosfatados appealed the decision of the Tax Court on remand. On January 27, 2010, CNA also filed an
appeal challenging the prior decision that the CNA claim as to 1998 is beyond the applicable statute of limitations. The timing of a decision on this round of appeals is not known.



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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



A final determination of the Fresh Water Claims may require further appeals to the
Mexican Supreme Court and remands to the CNA or to lower courts, a process that might continue for several years. In the event that the appeals were to be decided against us and Rhodia were then unable to pay on its indemnification obligations, our
subsidiary could be required to satisfy a judgment for the entire amount claimed.

Possible Post-2002 Claims.If the
CNA Fresh Water Claims were sustained for the period now at issue, it is possible that the CNA would seek to claim similar higher duties, fees and other charges for fresh water extraction and usage from 2005 on into the future (2003 and 2004 are
believed to be beyond the statute of limitations), or the Post-2002 Fresh Water Claims. Management estimates that amounts involved would be approximately $6.4 million of additional basic charges to date at current exchange rates, $6.8 million
relating to interest, inflation, and penalties, and, under current operating conditions, approximately $1.2 million of additional basic charges per year at current exchange rates. Although not included in our court judgments in the New York
Litigation against Rhodia, we believe Rhodia is required to indemnify us fully for post-closing losses caused by breaches of covenants set forth in the agreement, which could represent the remainder of the Post-2002 Fresh Water Claims
exposure. Rhodia has contested indemnification responsibility for those breaches, but its motion for partial summary judgment to dismiss our claims was denied by the New York trial court in January 2009. It is possible that the New York Litigation
will proceed to trial or involve further motions to resolve remaining issues.

Based upon advice of counsel and our review of
the CNA Fresh Water Claims and the Post-2002 Fresh Water Claims, the facts and applicable law, management has determined that liability is reasonably possible, but is neither probable nor reasonably estimable. Accordingly, we did not establish a
liability on the balance sheet as of March 31, 2010. As additional information is gained, management will reassess the potential liability and establish any loss reserve as appropriate. The ultimate liability amount could be material to our
results of operations and financial condition.

Even though our indemnification rights have been confirmed by court judgments,
ultimately we are also dependent on Rhodia having sufficient financial capacity to meet its obligations should they arise. Rhodias financial position has improved significantly in recent quarters and we currently see no reason to suspect they
would be unable to meet their obligations.

Other Legal Matters

In June 2005, our subsidiary, Innophos Canada, Inc., was contacted by representatives of The Mosaic Company (a division of Cargill
Corporation), or Mosaic, seeking a meeting to discuss the status of an ongoing remedial investigation and clean-up Mosaic is conducting at its former fertilizer manufacturing site located north of Innophos Pt. Maitland, Ontario, Canada plant
site. The remediation is being overseen by the Provincial Ministry of Environment, or MOE. Mosaic stated that, in its view, we and Rhodia (our predecessor in interest prior to August 2004) were responsible for some phosphorus compound contamination
at a rail yard between the Innophos and Mosaic sites, and will be asked to participate in the clean-up. We have determined that this contingent liability is neither probable nor estimable at this time, but liability is reasonably possible. We have
notified Rhodia of the Mosaic claim, and we will seek all appropriate indemnification.

In March 2008, Sudamfos S.A., or
Sudamfos, an Argentine phosphate producer, filed a request for arbitration before the ICC International Court of Arbitration, Paris, France, or ICC, of a commercial dispute with Mexicana. Sudamfos claimed Mexicana agreed to sell Sudamfos certain
quantities of phosphoric acid for delivery in 2007 and 2008, and sought an order requiring Mexicana to sell approximately 12,500 metric tons during 2008 in accordance with the claimed agreement. Subsequently, Sudamfos withdrew the request for
arbitration. In October 2008, Mexicana filed a lawsuit in Mexico against Sudamfos to collect approximately $1.2 million representing the contract price for prior deliveries of acid that Sudamfos had refused to pay. In October 2009, Sudamfos answered
the suit and counterclaimed for $3.0 million based upon the agreement alleged in the arbitration request to sell additional acid, which agreement Mexicana denies. Management has determined that the outstanding receivable is fully collectible, and
that the contingent liability from the Sudamfos counterclaim is remote, and therefore no accrual is required.

In addition, we
are party to legal proceedings and contractual disputes that arise in the ordinary course of our business. Except as to the matters specifically discussed, management does not believe that these matters represent probable liabilities. However, these
matters cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on our business, results of operations, financial condition, and/or cash flows.



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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



12. Pension:

Net periodic benefit expense for the United States plans for the three months ended March 31, 2010:



|                                            |  |                 |     |   |               |   |     |       |  |   |     |  
|------------------------------------------- |  | --------------- | --- | - | ------------- | - | --- | ----- |  | - | --- | -
|                                            |  | 2010            |    
|                                            |  | Pensionbenefits |     |   | Otherbenefits |   |     | Total | 
|Service cost                                |  | $               |    |   |               | $ | 90  |       |  | $ | 90  |  
|Interest cost                               |  |                 | 27  |   |               |   | 46  |       |  |   | 73  |  
|Expected return on assets                   |  |                 | (21 | ) |               |   |    |       |  |   | (21 | )
|Amortization of prior service cost          |  |                 | (1  | ) |               |   | 65  |       |  |   | 64  |  
|Amortization of unrecognized (gains)/losses |  |                 |    |   |               |   | (19 | )     |  |   | (19 | )
|                                            |  |                 |     |   |               |   |     |       |  |   |     |  
|Net periodic benefit expense                |  | $               | 5   |   |               | $ | 182 |       |  | $ | 187 |  
|                                            |  |                 |     |   |               |   |     |       |  |   |     |  

Net periodic benefit expense for the United States plans for the three months ended March 31, 2009:



|                                            |  |                 |     |   |               |   |     |       |  |   |     |  
|------------------------------------------- |  | --------------- | --- | - | ------------- | - | --- | ----- |  | - | --- | -
|                                            |  | 2009            |    
|                                            |  | Pensionbenefits |     |   | Otherbenefits |   |     | Total | 
|Service cost                                |  | $               |    |   |               | $ | 88  |       |  | $ | 88  |  
|Interest cost                               |  |                 | 26  |   |               |   | 41  |       |  |   | 67  |  
|Expected return on assets                   |  |                 | (24 | ) |               |   |    |       |  |   | (24 | )
|Amortization of prior service cost          |  |                 |    |   |               |   | 65  |       |  |   | 65  |  
|Amortization of unrecognized (gains)/losses |  |                 |    |   |               |   | (21 | )     |  |   | (21 | )
|                                            |  |                 |     |   |               |   |     |       |  |   |     |  
|Net periodic benefit expense                |  | $               | 2   |   |               | $ | 173 |       |  | $ | 175 |  
|                                            |  |                 |     |   |               |   |     |       |  |   |     |  

We made our entire cash contributions of $2.6 million for our U.S. defined contribution plan during the
first quarter of 2010 for the plan year 2009. The U.S. defined benefit cash contributions will be, at a minimum, approximately $0.1 million for 2010.

Net periodic benefit expense for the Canadian plans for the three months ended March 31, 2010:



|                                            |  |                 |      |   |               |   |       |  |   |      |  
|------------------------------------------- |  | --------------- | ---- | - | ------------- | - | ----- |  | - | ---- | -
|                                            |  | 2010            |     
|                                            |  | Pensionbenefits |      |   | Otherbenefits |   | Total | 
|Service cost                                |  | $               | 52   |   |               | $ | 13    |  | $ | 65   |  
|Interest cost                               |  |                 | 133  |   |               |   | 21    |  |   | 154  |  
|Expected return on assets                   |  |                 | (212 | ) |               |   |      |  |   | (212 | )
|Amortization of transition obligation       |  |                 |     |   |               |   | 7     |  |   | 7    |  
|Amortization of prior service cost          |  |                 | 25   |   |               |   |      |  |   | 25   |  
|Amortization of unrecognized (gains)/losses |  |                 | 23   |   |               |   | 5     |  |   | 28   |  
|Exchange rate changes                       |  |                 | (79  | ) |               |   | 15    |  |   | (64  | )
|                                            |  |                 |      |   |               |   |       |  |   |      |  
|Net periodic benefit expense                |  | $               | (58  | ) |               | $ | 61    |  | $ | 3    |  
|                                            |  |                 |      |   |               |   |       |  |   |      |  



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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



Net periodic benefit expense for the Canadian plans for the three months ended
March 31, 2009:



|                                            |  |                 |      |   |               |   |     |       |  |   |      |  
|------------------------------------------- |  | --------------- | ---- | - | ------------- | - | --- | ----- |  | - | ---- | -
|                                            |  | 2009            |     
|                                            |  | Pensionbenefits |      |   | Otherbenefits |   |     | Total | 
|Service cost                                |  | $               | 37   |   |               | $ | 9   |       |  | $ | 46   |  
|Interest cost                               |  |                 | 110  |   |               |   | 17  |       |  |   | 127  |  
|Expected return on assets                   |  |                 | (147 | ) |               |   |    |       |  |   | (147 | )
|Amortization of transition obligation       |  |                 |     |   |               |   | 6   |       |  |   | 6    |  
|Amortization of prior service cost          |  |                 | 4    |   |               |   |    |       |  |   | 4    |  
|Amortization of unrecognized (gains)/losses |  |                 | 19   |   |               |   | 1   |       |  |   | 20   |  
|Exchange rate changes                       |  |                 | 62   |   |               |   | (20 | )     |  |   | 42   |  
|                                            |  |                 |      |   |               |   |     |       |  |   |      |  
|Net periodic benefit expense                |  | $               | 85   |   |               | $ | 13  |       |  | $ | 98   |  
|                                            |  |                 |      |   |               |   |     |       |  |   |      |  

We made cash contributions to our Canadian defined benefit plan of $0.3 million during the three months
ended March 31, 2010. We expect to make additional cash contributions to our Canadian defined benefit plans of $0.7 million during the remainder of 2010.

13. Segment Reporting:

The Company discloses certain financial and supplementary information about its reportable segments, revenue by products and revenues by
geographic area. Operating segments are defined as components of an enterprise about which separate discrete financial information is evaluated regularly by the chief operating decision maker, in order to decide how to allocate resources and assess
performance. The primary key performance indicators for the chief operating decision maker are Sales and Operating Income. The Company reports its operations in three reporting segmentsUnited States, Mexico and Canada, each of which sells the
entire portfolio of products.



|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|----------------------------------------- |  | ------------- | ------- | ------ | - | ------ |  | ------------ | ------ |  | ----- | ------- | - |  | - | -------
|For the three months ended March 31, 2010 |  | United States |         | Mexico |   | Canada |  | Eliminations |        |  | Total
|Sales                                     |  | $             | 113,613 |        | $ | 45,607 |  | $            | 9,787  |  | $     |         |   |  | $ | 169,007
|Intersegment sales                        |  |               | 10,357  |        |   | 9,230  |  |              | 17,219 |  |       | (36,806 | ) |  |   |       
|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|Total sales                               |  | $             | 123,970 |        | $ | 54,837 |  | $            | 27,006 |  | $     | (36,806 | ) |  | $ | 169,007
|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|Operating income                          |  | $             | 18,362  |        | $ | 1,536  |  | $            | 1,727  |  | $     |        |   |  | $ | 21,625 
|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|Depreciation expense                      |  | $             | 6,932   |        | $ | 5,229  |  | $            | 494    |  | $     |        |   |  | $ | 12,655 
|                                          |  |               |         |        |  
|For the three months ended March 31, 2009 |  | United States |         | Mexico |   | Canada |  | Eliminations |        |  | Total
|Sales                                     |  | $             | 122,185 |        | $ | 58,427 |  | $            | 10,205 |  | $     |         |   |  | $ | 190,817
|Intersegment sales                        |  |               | 14,237  |        |   | 703    |  |              | 20,066 |  |       | (35,006 | ) |  |   |       
|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|Total sales                               |  | $             | 136,422 |        | $ | 59,130 |  | $            | 30,271 |  | $     | (35,006 | ) |  | $ | 190,817
|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|Operating income                          |  | $             | 40,873  |        | $ | 7,517  |  | $            | 6,898  |  | $     |        |   |  | $ | 55,288 
|                                          |  |               |         |        |   |        |  |              |        |  |       |         |   |  |   |        
|Depreciation and amortization expense     |  | $             | 6,192   |        | $ | 4,954  |  | $            | 451    |  | $     |        |   |  | $ | 11,597 



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



14. Condensed Combining Financial Statements:

The following condensed combined financial data is presented to segregate the assets, liabilities, and results of operations and cash
flows of the US operations (the Guarantors) and the Canadian and Mexican operations (the Non-guarantors). Innophos Inc. has issued debt and the Guarantor subsidiary is a 100% wholly owned subsidiary of Innophos Inc. The
Non-guarantors are 100% wholly-owned subsidiaries of the Guarantors. Innophos, Inc. and the Guarantor subsidiary will fully and unconditionally and jointly and severally, guarantee the Companys obligations under the Companys Senior
Subordinated Notes due 2014. Investments in subsidiaries are accounted for by the guarantor using the equity method of accounting. The Non-guarantors are presented on a combined basis. The principal combining adjustments are to eliminate
intercompany balances and transactions.

INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet

As of March 31, 2010

(In thousands)



|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|------------------------------------ |  | -------------- | ------- | ------------------- | - | ----------------------- |  | -------------------------- | ------- |  | ----- | -------- | - |  | - | -------
|                                     |  | Innophos, Inc. |         | GuarantorSubsidiary |   | Non-GuarantorSubsidiary |  | AdjustmentsandEliminations |         |  | Total
|ASSETS                               |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Current Assets:                      |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Cash and cash equivalents            |  | $              | 72,556  |                     | $ | 2                       |  | $                          | 42,476  |  | $     |         |   |  | $ | 115,034
|Accounts receivable, net             |  |                | 308,462 |                     |   |                        |  |                            | 287,549 |  |       | (524,669 | ) |  |   | 71,342 
|Inventories                          |  |                | 57,363  |                     |   |                        |  |                            | 57,348  |  |       |         |   |  |   | 114,711
|Other current assets                 |  |                | 22,770  |                     |   |                        |  |                            | 21,189  |  |       | (84      | ) |  |   | 43,875 
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total current assets                 |  |                | 461,151 |                     |   | 2                       |  |                            | 408,562 |  |       | (524,753 | ) |  |   | 344,962
|Property, plant and equipment, net   |  |                | 99,251  |                     |   |                        |  |                            | 100,880 |  |       |         |   |  |   | 200,131
|Goodwill                             |  |                | 7,237   |                     |   |                        |  |                            | 44,469  |  |       |         |   |  |   | 51,706 
|Investment in subsidiaries           |  |                | 240,263 |                     |   | 189,599                 |  |                            |        |  |       | (429,862 | ) |  |   |       
|Intercompany notes                   |  |                | 29,885  |                     |   |                        |  |                            |        |  |       | (29,885  | ) |  |   |       
|Intangibles and other assets, net    |  |                | 37,028  |                     |   |                        |  |                            | 12,658  |  |       |         |   |  |   | 49,686 
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total                                |  | $              | 874,815 |                     | $ | 189,601                 |  | $                          | 566,569 |  | $     | (984,500 | ) |  | $ | 646,485
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Current Liabilities:                 |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Current portion of long-term debt    |  | $              |        |                     | $ |                        |  | $                          |        |  | $     |         |   |  | $ |       
|Accounts payable, trade and other    |  |                | 294,930 |                     |   |                        |  |                            | 266,616 |  |       | (524,669 | ) |  |   | 36,877 
|Other current liabilities            |  |                | 20,784  |                     |   |                        |  |                            | 11,414  |  |       | (84      | ) |  |   | 32,114 
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total current liabilities            |  |                | 315,714 |                     |   |                        |  |                            | 278,030 |  |       | (524,753 | ) |  |   | 68,991 
|Long-term debt                       |  |                | 190,000 |                     |   |                        |  |                            | 29,885  |  |       | (29,885  | ) |  |   | 190,000
|Other long-term liabilities          |  |                | 18,363  |                     |   |                        |  |                            | 18,393  |  |       |         |   |  |   | 36,756 
|Total stockholders equity           |  |                | 350,738 |                     |   | 189,601                 |  |                            | 240,261 |  |       | (429,862 | ) |  |   | 350,738
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total                                |  | $              | 874,815 |                     | $ | 189,601                 |  | $                          | 566,569 |  | $     | (984,500 | ) |  | $ | 646,485
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet

As of December 31, 2009

(In thousands)



|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|------------------------------------ |  | -------------- | ------- | ------------------- | - | ----------------------- |  | -------------------------- | ------- |  | ----- | -------- | - |  | - | -------
|                                     |  | Innophos, Inc. |         | GuarantorSubsidiary |   | Non-GuarantorSubsidiary |  | AdjustmentsandEliminations |         |  | Total
|ASSETS                               |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Current Assets:                      |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Cash and cash equivalents            |  | $              | 72,079  |                     | $ | 2                       |  | $                          | 60,141  |  | $     |         |   |  | $ | 132,222
|Restricted cash                      |  |                |        |                     |   |                        |  |                            | 1,749   |  |       |         |   |  |   | 1,749  
|Accounts receivable, net             |  |                | 285,306 |                     |   |                        |  |                            | 264,519 |  |       | (493,480 | ) |  |   | 56,345 
|Inventories                          |  |                | 62,552  |                     |   |                        |  |                            | 51,084  |  |       |         |   |  |   | 113,636
|Other current assets                 |  |                | 27,395  |                     |   |                        |  |                            | 18,327  |  |       | (84      | ) |  |   | 45,638 
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total current assets                 |  |                | 447,332 |                     |   | 2                       |  |                            | 395,820 |  |       | (493,564 | ) |  |   | 349,590
|Property, plant and equipment, net   |  |                | 99,844  |                     |   |                        |  |                            | 104,683 |  |       |         |   |  |   | 204,527
|Goodwill                             |  |                | 7,237   |                     |   |                        |  |                            | 44,469  |  |       |         |   |  |   | 51,706 
|Investment in subsidiaries           |  |                | 238,013 |                     |   | 188,623                 |  |                            |        |  |       | (426,636 | ) |  |   |       
|Intercompany notes                   |  |                | 29,642  |                     |   |                        |  |                            |        |  |       | (29,642  | ) |  |   |       
|Intangibles and other assets, net    |  |                | 38,345  |                     |   |                        |  |                            | 13,138  |  |       |         |   |  |   | 51,483 
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total                                |  | $              | 860,413 |                     | $ | 188,625                 |  | $                          | 558,110 |  | $     | (949,842 | ) |  | $ | 657,306
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Current liabilities:                 |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Current portion of long-term debt    |  | $              |        |                     | $ |                        |  | $                          |        |  | $     |         |   |  | $ |       
|Accounts payable, trade and other    |  |                | 276,150 |                     |   |                        |  |                            | 249,910 |  |       | (493,480 | ) |  |   | 32,580 
|Other current liabilities            |  |                | 33,149  |                     |   |                        |  |                            | 21,538  |  |       | (84      | ) |  |   | 54,603 
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total current liabilities            |  |                | 309,299 |                     |   |                        |  |                            | 271,448 |  |       | (493,564 | ) |  |   | 87,183 
|Long-term debt                       |  |                | 190,000 |                     |   |                        |  |                            | 29,642  |  |       | (29,642  | ) |  |   | 190,000
|Other long-term liabilities          |  |                | 18,911  |                     |   |                        |  |                            | 19,009  |  |       |         |   |  |   | 37,920 
|Total stockholders equity           |  |                | 342,203 |                     |   | 188,625                 |  |                            | 238,011 |  |       | (426,636 | ) |  |   | 342,203
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        
|Total                                |  | $              | 860,413 |                     | $ | 188,625                 |  | $                          | 558,110 |  | $     | (949,842 | ) |  | $ | 657,306
|                                     |  |                |         |                     |   |                         |  |                            |         |  |       |          |   |  |   |        



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Operations

For the three months ended March 31, 2010

(In thousands)



|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|----------------------------------- |  | -------------- | ------- | - | ------------------- | - | ---- | ----------------------- |  | - | -------------------------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                    |  | Innophos, Inc. |         |   | GuarantorSubsidiary |   |      | Non-GuarantorSubsidiary |  |   | AdjustmentsandEliminations |   |  | Total |        
|Net Sales                           |  | $              | 123,970 |   |                     | $ |     |                         |  | $ | 81,843                     |   |  | $     | (36,806 | ) |  | $ | 169,007 |  
|Cost of goods sold                  |  |                | 94,816  |   |                     |   |     |                         |  |   | 74,291                     |   |  |       | (36,806 | ) |  |   | 132,301 |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Gross Profit                        |  |                | 29,154  |   |                     |   |     |                         |  |   | 7,552                      |   |  |       |        |   |  |   | 36,706  |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Operating expenses:                 |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Selling, general and administrative |  |                | 10,229  |   |                     |   |     |                         |  |   | 4,289                      |   |  |       |        |   |  |   | 14,518  |  
|Research & development expenses     |  |                | 563     |   |                     |   |     |                         |  |   |                           |   |  |       |        |   |  |   | 563     |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Total operating expenses            |  |                | 10,792  |   |                     |   |     |                         |  |   | 4,289                      |   |  |       |        |   |  |   | 15,081  |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Operating income                    |  |                | 18,362  |   |                     |   |     |                         |  |   | 3,263                      |   |  |       |        |   |  |   | 21,625  |  
|Interest expense, net               |  |                | 4,264   |   |                     |   |     |                         |  |   | 156                        |   |  |       |        |   |  |   | 4,420   |  
|Foreign exchange (gains) losses     |  |                | 84      |   |                     |   |     |                         |  |   | (314                       | ) |  |       |        |   |  |   | (230    | )
|Equity (income) loss                |  |                | (2,241  | ) |                     |   | (975 | )                       |  |   |                           |   |  |       | 3,216   |   |  |   |        |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Income (loss) before income tax     |  |                | 16,255  |   |                     |   | 975  |                         |  |   | 3,421                      |   |  |       | (3,216  | ) |  |   | 17,435  |  
|Provision for income taxes          |  |                | 4,911   |   |                     |   |     |                         |  |   | 1,180                      |   |  |       |        |   |  |   | 6,091   |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net income (loss)                   |  | $              | 11,344  |   |                     | $ | 975  |                         |  | $ | 2,241                      |   |  | $     | (3,216  | ) |  | $ | 11,344  |  
|                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  

INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Operations

For the three months ended March 31, 2009

(In thousands)



|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|----------------------------------- |  | -------------- | ------- | - | ------------------- | - | ------ | ----------------------- |  | - | -------------------------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                    |  | Innophos, Inc. |         |   | GuarantorSubsidiary |   |        | Non-GuarantorSubsidiary |  |   | AdjustmentsandEliminations |   |  | Total |        
|Net sales                           |  | $              | 136,422 |   |                     | $ |       |                         |  | $ | 89,402                     |   |  | $     | (35,007 | ) |  | $ | 190,817 |  
|Cost of goods sold                  |  |                | 84,522  |   |                     |   |       |                         |  |   | 71,509                     |   |  |       | (35,007 | ) |  |   | 121,024 |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Gross profit                        |  |                | 51,900  |   |                     |   |       |                         |  |   | 17,893                     |   |  |       |        |   |  |   | 69,793  |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Operating expenses:                 |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Selling, general and administrative |  |                | 10,498  |   |                     |   | 1      |                         |  |   | 3,477                      |   |  |       |        |   |  |   | 13,976  |  
|Research & development expenses     |  |                | 529     |   |                     |   |       |                         |  |   |                           |   |  |       |        |   |  |   | 529     |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Total operating expenses            |  |                | 11,027  |   |                     |   | 1      |                         |  |   | 3,477                      |   |  |       |        |   |  |   | 14,505  |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Operating income (loss)             |  |                | 40,873  |   |                     |   | (1     | )                       |  |   | 14,416                     |   |  |       |        |   |  |   | 55,288  |  
|Interest expense, net               |  |                | 5,498   |   |                     |   |       |                         |  |   | 567                        |   |  |       |        |   |  |   | 6,065   |  
|Foreign exchange (gains) losses     |  |                | (25     | ) |                     |   |       |                         |  |   | 440                        |   |  |       |        |   |  |   | 415     |  
|Other income                        |  |                |        |   |                     |   |       |                         |  |   | (208                       | ) |  |       |        |   |  |   | (208    | )
|Equity (income) loss                |  |                | (9,072  | ) |                     |   | (4,702 | )                       |  |   |                           |   |  |       | 13,774  |   |  |   |        |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Income (loss) before income tax     |  |                | 44,472  |   |                     |   | 4,701  |                         |  |   | 13,617                     |   |  |       | (13,774 | ) |  |   | 49,016  |  
|Provision for income taxes          |  |                | 13,112  |   |                     |   |       |                         |  |   | 4,544                      |   |  |       |        |   |  |   | 17,656  |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net income (loss)                   |  | $              | 31,360  |   |                     | $ | 4,701  |                         |  | $ | 9,073                      |   |  | $     | (13,774 | ) |  | $ | 31,360  |  
|                                    |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  



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INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2010

(In thousands)



|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ------------------- | - | ---- | ----------------------- |  | - | -------------------------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                                                                                      |  | Innophos, Inc. |         |   | GuarantorSubsidiary |   |      | Non-guarantorSubsidiary |  |   | AdjustmentsandEliminations |   |  | Total |        
|Cash Flows from operating activities                                                                  |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net income (loss)                                                                                     |  | $              | 11,344  |   |                     | $ | 975  |                         |  | $ | 2,241                      |   |  | $     | (3,216  | ) |  | $ | 11,344  |  
|Adjustments to reconcile net income (loss) to net cash provided from (used for) operating activities: |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Depreciation and amortization                                                                         |  |                | 6,932   |   |                     |   |     |                         |  |   | 5,723                      |   |  |       |        |   |  |   | 12,655  |  
|Amortization of deferred financing charges                                                            |  |                | 354     |   |                     |   |     |                         |  |   |                           |   |  |       |        |   |  |   | 354     |  
|Deferred income tax (benefit) provision                                                               |  |                | (721    | ) |                     |   |     |                         |  |   | 164                        |   |  |       |        |   |  |   | (557    | )
|Deferred profit sharing                                                                               |  |                |        |   |                     |   |     |                         |  |   | (205                       | ) |  |       |        |   |  |   | (205    | )
|Share-based compensation                                                                              |  |                | 721     |   |                     |   |     |                         |  |   |                           |   |  |       |        |   |  |   | 721     |  
|Equity (income) loss in non-guarantor subsidiaries                                                    |  |                | (2,241  | ) |                     |   | (975 | )                       |  |   |                           |   |  |       | 3,216   |   |  |   |        |  
|                                                                                                      |  |                |         |   |                    
|Changes in assets and liabilities:                                                                    |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Decrease in restricted cash                                                                           |  |                |        |   |                     |   |     |                         |  |   | 1,749                      |   |  |       |        |   |  |   | 1,749   |  
|(Increase)/decrease in accounts receivable                                                            |  |                | (23,156 | ) |                     |   |     |                         |  |   | (23,030                    | ) |  |       | 31,189  |   |  |   | (14,997 | )
|Decrease/(increase) in inventories                                                                    |  |                | 5,189   |   |                     |   |     |                         |  |   | (6,264                     | ) |  |       |        |   |  |   | (1,075  | )
|Decrease/(increase) in other current assets                                                           |  |                | 4,625   |   |                     |   |     |                         |  |   | (2,862                     | ) |  |       |        |   |  |   | 1,763   |  
|Increase/(decrease) in accounts payable                                                               |  |                | 18,780  |   |                     |   |     |                         |  |   | 16,706                     |   |  |       | (31,189 | ) |  |   | 4,297   |  
|Decrease in other current liabilities                                                                 |  |                | (12,365 | ) |                     |   |     |                         |  |   | (10,124                    | ) |  |       |        |   |  |   | (22,489 | )
|Changes in other long-term assets and liabilities                                                     |  |                | (154    | ) |                     |   |     |                         |  |   | 144                        |   |  |       |        |   |  |   | (10     | )
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net cash provided from (used for) operating activities                                                |  |                | 9,308   |   |                     |   |     |                         |  |   | (15,758                    | ) |  |       |        |   |  |   | (6,450  | )
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Cash flows from investing activities:                                                                 |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Capital expenditures                                                                                  |  |                | (5,342  | ) |                     |   |     |                         |  |   | (1,907                     | ) |  |       |        |   |  |   | (7,249  | )
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net Cash used for investing activities                                                                |  |                | (5,342  | ) |                     |   |     |                         |  |   | (1,907                     | ) |  |       |        |   |  |   | (7,249  | )
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Cash flows from financing activities:                                                                 |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Return of capital to parent                                                                           |  |                | (3,633  | ) |                     |   |     |                         |  |   |                           |   |  |       |        |   |  |   | (3,633  | )
|Excess tax benefits from exercise of stock options                                                    |  |                | 144     |   |                     |   |     |                         |  |   |                           |   |  |       |         |   |  |   | 144     |  
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net cash used for financing activities                                                                |  |                | (3,489  | ) |                     |   |     |                         |  |   |                           |   |  |       |        |   |  |   | (3,489  | )
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net change in cash                                                                                    |  |                | 477     |   |                     |   |     |                         |  |   | (17,665                    | ) |  |       |        |   |  |   | (17,188 | )
|Cash and cash equivalents at beginning of period                                                      |  |                | 72,079  |   |                     |   | 2    |                         |  |   | 60,141                     |   |  |       |        |   |  |   | 132,222 |  
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                                            |  | $              | 72,556  |   |                     | $ | 2    |                         |  | $ | 42,476                     |   |  | $     |        |   |  | $ | 115,034 |  
|                                                                                                      |  |                |         |   |                     |   |      |                         |  |   |                            |   |  |       |         |   |  |   |         |  



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##### Table of Contents

INNOPHOS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except where noted)



INNOPHOS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2009

(In thousands)



|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ------------------- | - | ------ | ----------------------- |  | - | -------------------------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                                                                                     |  | Innophos, Inc. |         |   | GuarantorSubsidiary |   |        | Non-guarantorSubsidiary |  |   | AdjustmentsandEliminations |   |  | Total |        
|Cash Flows from operating activities                                                                 |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net income (loss)                                                                                    |  | $              | 31,360  |   |                     | $ | 4,701  |                         |  | $ | 9,073                      |   |  | $     | (13,774 | ) |  | $ | 31,360  |  
|Adjustments to reconcile net income (loss) to net cash provided from (used in) operating activities: |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Depreciation and amortization                                                                        |  |                | 6,192   |   |                     |   |       |                         |  |   | 5,405                      |   |  |       |        |   |  |   | 11,597  |  
|Amortization of deferred financing charges                                                           |  |                | 964     |   |                     |   |       |                         |  |   |                           |   |  |       |        |   |  |   | 964     |  
|Deferred income tax benefit                                                                          |  |                | 493     |   |                     |   |       |                         |  |   | (1,513                     | ) |  |       |        |   |  |   | (1,020  | )
|Deferred profit sharing                                                                              |  |                |        |   |                     |   |       |                         |  |   | (189                       | ) |  |       |        |   |  |   | (189    | )
|Stock based compensation                                                                             |  |                | 542     |   |                     |   |       |                         |  |   |                           |   |  |       |        |   |  |   | 542     |  
|Equity (income) loss in subsidiaries                                                                 |  |                | (9,072  | ) |                     |   | (4,702 | )                       |  |   |                           |   |  |       | 13,774  |   |  |   |        |  
|                                                                                                     |  |                |         |   |                    
|Changes in assets and liabilities:                                                                   |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|(Increase)/decrease in accounts receivable                                                           |  |                | (18,424 | ) |                     |   |       |                         |  |   | (15,933                    | ) |  |       | 39,643  |   |  |   | 5,286   |  
|Decrease in inventories                                                                              |  |                | 492     |   |                     |   |       |                         |  |   | 13,296                     |   |  |       |        |   |  |   | 13,788  |  
|Increase in other current assets                                                                     |  |                | 2,499   |   |                     |   |       |                         |  |   | 1,030                      |   |  |       | (346    | ) |  |   | 3,183   |  
|(Decrease)/increase in accounts payable                                                              |  |                | 24,101  |   |                     |   |       |                         |  |   | 17,937                     |   |  |       | (39,643 | ) |  |   | 2,395   |  
|Increase in other current liabilities                                                                |  |                | 451     |   |                     |   |       |                         |  |   | 2,279                      |   |  |       | 346     |   |  |   | 3,076   |  
|Changes in other long-term assets and liabilities                                                    |  |                | 59      |   |                     |   |       |                         |  |   | 777                        |   |  |       |        |   |  |   | 836     |  
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net cash provided from (used in) operating activities                                                |  |                | 39,657  |   |                     |   | (1     | )                       |  |   | 32,162                     |   |  |       |        |   |  |   | 71,818  |  
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Cash flows used for investing activities:                                                            |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Capital expenditures                                                                                 |  |                | (1,632  | ) |                     |   |       |                         |  |   | (1,419                     | ) |  |       |        |   |  |   | (3,051  | )
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net Cash used for investing activities                                                               |  |                | (1,632  | ) |                     |   |       |                         |  |   | (1,419                     | ) |  |       |        |   |  |   | (3,051  | )
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Cash flows used for financing activities:                                                            |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Repayments from subsidiaries                                                                         |  |                | 50,000  |   |                     |   |       |                         |  |   |                           |   |  |       | (50,000 | ) |  |   |        |  
|Net change in borrowing with Innophos, Inc                                                           |  |                |        |   |                     |   |       |                         |  |   | (50,000                    | ) |  |       | 50,000  |   |  |   |        |  
|Return of capital to parent                                                                          |  |                | (3,704  | ) |                     |   |       |                         |  |   |                           |   |  |       |        |   |  |   | (3,704  | )
|Principal payment of term loans                                                                      |  |                | (54,000 | ) |                     |   |       |                         |  |   |                           |   |  |       |        |   |  |   | (54,000 | )
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net cash used for financing activities                                                               |  |                | (7,704  | ) |                     |   |       |                         |  |   | (50,000                    | ) |  |       |        |   |  |   | (57,704 | )
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Net change in cash                                                                                   |  |                | 30,321  |   |                     |   | (1     | )                       |  |   | (19,257                    | ) |  |       |        |   |  |   | 11,063  |  
|Cash and cash equivalents at beginning of period                                                     |  |                | 61,295  |   |                     |   | 5      |                         |  |   | 63,323                     |   |  |       |        |   |  |   | 124,623 |  
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                                           |  | $              | 91,616  |   |                     | $ | 4      |                         |  | $ | 44,066                     |   |  | $     |        |   |  | $ | 135,686 |  
|                                                                                                     |  |                |         |   |                     |   |        |                         |  |   |                            |   |  |       |         |   |  |   |         |  

15. Subsequent Event:

The Company maintains finished goods, raw material and packaging inventories at an independently owned and operated warehouse in
Nashville, Tennessee. As a result of major flooding in the greater Nashville area during the first few days of May 2010, the warehouse suffered extensive water damage and has been shut down indefinitely. While the full extent of damage to material
in the warehouse is unknown at this time the Company believes the inventory value affected by the flood is less than $5.0 million. The Company has commenced the insurance claims process and currently estimates a net cost after insurance recovery in
the range of $1.0 to $3.0 million with the more likely outcome considered to be the lower end of the range.

The
Companys Nashville manufacturing facility experienced no flood damage and retains normal operating capability. The loss of finished goods and packing inventory stored at the warehouse, as well as uncertainties regarding the timing and location
of alternative storage and recovery of the areas transportation infrastructure, will create additional supply chain challenges to meet customer demand. The Company is executing a contingency plan to meet customer requirements and currently
anticipates it will be able to meet demand and avoid material loss of sales from the Nashville flooding. The Company maintains business interruption insurance, and at this time does not believe events in Nashville will bring that coverage into play.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS
|------- | ---------------------------------------------------------------------------------

This discussion contains forward-looking statements about our markets, the demand for our products and services and our future results.
We based these statements on assumptions that we consider reasonable. Actual results may differ materially from those suggested by our forward-looking statements for various reasons including those discussed in the Risk Factors as
contained in our 2009 Annual Report on Form 10-K and Forward-Looking Statements sections of that report.

Overview

Innophos is a leading North American producer of specialty phosphates. Most specialty phosphates are highly customized,
application-specific compounds that are engineered to meet customer performance requirements. Specialty phosphates are often critical to the taste, texture and performance of foods, beverages, pharmaceuticals, oral care products and other
applications. For example, specialty phosphates act as flavor enhancers in beverages, electrolytes in sports drinks, texture additives in cheeses, leavening agents in baked goods, calcium and phosphorus sources for nutritional supplements,
pharmaceutical excipients and cleaning agents in toothpaste.

Recent Trends and Outlook

First quarter 2010 results confirmed the encouraging volume trend seen in the second half of 2009. Specialty phosphates sequential volumes
were up 33% in Canada, 11% in the U.S. and 12% in Mexico as that operation regained market position. Overall, the 12% specialty phosphate volume increase represented the fourth consecutive quarter of sequential volume improvement. Selling prices
declined 4% sequentially overall and for each segment except Canada which declined 9%, and management expects to see overall average specialty phosphates pricing to improve slightly from this point.

Specialty phosphate volume is expected to continue to grow for the 2010 second quarter at a rate of 5% to 10% versus the first quarter
2010, with Mexico expected to continue showing strong improvement.

GTSP & Other volume increased significantly in
the 2010 first quarter compared to the fourth quarter 2009 primarily as greater production of purified phosphoric acid resulted in higher co-product production. Selling prices rose consistent with market increases for phosphate fertilizers, leading
to break-even operating income in the first quarter 2010 compared to a loss of $2 million in the same period 2009. Volume increases are expected to continue for the balance of the year, although timing of large orders will lead to variability in any
individual quarters results. Prices are expected to moderate from levels at the end of the 2010 first quarter, though average pricing for the second quarter should be favorable versus the first.

A portion of U.S. raw material costs reset down in January 2010 as previously disclosed, reflecting market conditions at the beginning of
the year. The $8 million per quarter benefit from this reset will affect gross profit from the second quarter onward. Since the beginning of the year, commodity fertilizer and related raw material prices such as sulfur and ammonia have increased,
and Innophos has responded with price increases in March that are expected to offset these increased raw material costs.

The
lagged nature of some of Innophos supply contracts means that a portion of Innophos costs towards the end of the first quarter and into the second quarter are advantaged versus current market raw material prices. Some moderation in market
prices is expected to occur before Innophos contracts reset for 2011. Based on these expectations, management currently estimates that an approximate $5 million per quarter cost increase from higher contract raw material prices will phase in
beginning with the fourth quarter 2010 and take full effect in the second quarter 2011.

Significant progress was made on
arrangements for future multi-sourced rock supply to the Mexican facility with a contract signed with one new strategic supplier and a trial shipment received from a second new supplier. Discussions are continuing with other potential strategic
suppliers.

Capital expenditures for 2010 are expected to be at the upper end of the of the previously announced $30 to $35
million range. Major items of expenditure are anticipated to include: the Mexican food grade acid expansion (completed during the first quarter); incremental improvements to existing Mexican food grade salts capability; completion of the ERP
project; additional debottlenecking and expansion of food grade salts capability in Canada and various U.S. locations; and finally, investment to enhance Mexicos capability to store, handle and process multiple grades of rock consistent with
the Companys supply chain diversification strategy as well as limited investment in evaluating our Mexican phosphate rock concessions.



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##### Table of Contents

Although net debt increased in the first quarter on higher working capital requirements, recent strong
cashflow generation is expected to continue overall for the year. This will allow management to continue with its previously stated objectives of maintaining the dividend, pursuing several bolt-on acquisition projects and continuing to seek
opportunities to optimize the cost and profile of remaining debt facilities.

Historical Performance

Results of Operations

The following table sets forth a summary of the Companys operations and their percentages of total revenue for the periods
indicated.



|                                     |  |                                  |       |   |                                  |       |   |        |   |       |   |  |       |  
|------------------------------------ |  | -------------------------------- | ----- | - | -------------------------------- | ----- | - | ------ | - | ----- | - |  | ----- | -
|                                     |  | Three months endedMarch 
31,2010 |       |   | Three months endedMarch 
31,2009 |      
|                                     |  | Amount                           |       |   | %                                |       |   | Amount |   |       | % | 
|Net sales                            |  | $                                | 169.0 |   |                                  | 100.0 |   |        | $ | 190.8 |   |  | 100.0 |  
|Cost of goods sold                   |  |                                  | 132.3 |   |                                  | 78.3  |   |        |   | 121.0 |   |  | 63.4  |  
|                                     |  |                                  |       |   |                                  |       |   |        |   |       |   |  |       |  
|Gross profit                         |  |                                  | 36.7  |   |                                  | 21.7  |   |        |   | 69.8  |   |  | 36.6  |  
|Operating expenses:                  |  |                                  |       |   |                                  |       |   |        |   |       |   |  |       |  
|Selling, general and administrative  |  |                                  | 14.5  |   |                                  | 8.6   |   |        |   | 14.0  |   |  | 7.3   |  
|Research & development expenses      |  |                                  | 0.6   |   |                                  | 0.4   |   |        |   | 0.5   |   |  | 0.3   |  
|                                     |  |                                  |       |   |                                  |       |   |        |   |       |   |  |       |  
|Operating income                     |  |                                  | 21.6  |   |                                  | 12.8  |   |        |   | 55.3  |   |  | 29.0  |  
|Interest expense, net                |  |                                  | 4.4   |   |                                  | 2.6   |   |        |   | 6.1   |   |  | 3.2   |  
|Foreign exchange (gains)/losses, net |  |                                  | (0.2  | ) |                                  | (0.1  | ) |        |   | 0.4   |   |  | 0.2   |  
|Other income                         |  |                                  |      |   |                                  |      |   |        |   | (0.2  | ) |  | (0.1  | )
|Provision for income taxes           |  |                                  | 6.1   |   |                                  | 3.6   |   |        |   | 17.6  |   |  | 9.2   |  
|                                     |  |                                  |       |   |                                  |       |   |        |   |       |   |  |       |  
|Net income                           |  | $                                | 11.3  |   |                                  | 6.7   |   |        | $ | 31.4  |   |  | 16.5  |  
|                                     |  |                                  |       |   |                                  |       |   |        |   |       |   |  |       |  

Three months ended March 31, 2010 compared to the three months ended March 31, 2009

Net Sales

Net sales represent the selling price of the products, net of any customer-related rebates, plus freight and any other items invoiced to
customers. Net sales for the three months ended March 31, 2010 were $169.0 million, a decrease of $21.8 million, or 11.4%, as compared to $190.8 million for the same period in 2009. Selling price decreases had a negative effect on revenue of
23.5% or $44.8 million which occurred across all product lines and segments. Volume and mix effects upon revenue were positive 12.0% or $23.0 million driven by U.S. and Canada Specialty Salts and Specialty Acids and Purified Phosphoric Acid.

The Company calculates pure selling price dollar variances as the selling price for the current period minus the selling
price for the prior period, and then multiplies the resulting selling price difference by the prior period volume. The selling price dollar variance is then divided by the prior period sales dollars to calculate the percentage change. Volume/mix
variance is calculated as the total sales variance minus the selling price variance. The following table illustrates for the three months ended March 31, 2010 the percentage changes in net sales by reportable segment compared with the same
period in 2009, including the effects of price and volume/mix upon revenue:



|              |  |       |    |  |            |    |  |       |   
|------------- |  | ----- | -- |  | ---------- | -- |  | ----- | --
|              |  | Price |    |  | Volume/Mix |    |  | Total |   
|United States |  | (27.6 | %) |  | 20.6       | %  |  | (7.0  | %)
|Mexico        |  | (14.5 | %) |  | (7.4       | %) |  | (21.9 | %)
|Canada        |  | (25.1 | %) |  | 21.0       | %  |  | (4.1  | %)

The following
table illustrates for the three months ended March 31, 2010 the percentage changes for net sales by major product lines compared with the same period in 2009, including the effect of price and volume/mix effects upon revenue:



|                                    |  |       |    |  |            |    |  |       |   
|----------------------------------- |  | ----- | -- |  | ---------- | -- |  | ----- | --
|                                    |  | Price |    |  | Volume/Mix |    |  | Total |   
|Purified Phosphoric Acid            |  | (38.7 | %) |  | 11.2       | %  |  | (27.5 | %)
|Specialty Salts and Specialty Acids |  | (22.8 | %) |  | 21.0       | %  |  | (1.8  | %)
|STPP & Other Products               |  | (10.5 | %) |  | (11.8      | %) |  | (22.3 | %)

Going forward
Innophos will report sales variances under four product categories; Specialty Salts & Specialty Acids, Food & Technical Grade Acid, STPP & Detergent Grade Acid, and GTSP & Other. Specialty Salts &
Specialty Acids will be unchanged. Detergent Grade Acid will be



24



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##### Table of Contents

removed from Purified Phosphoric Acid leaving Food & Technical Grade Acid. STPP will be removed from STPP & Other leaving GTSP & Other. STPP will be combined with
Detergent Grade Acid forming the additional category STPP & Detergent Grade Acid. For the three months ended March 31, 2010 net sales for GTSP & Other was $12.4 million, a decrease of $5.3 million, or 29.9% as compared to
$17.7 million for the same period in 2009.

Gross Profit

Gross profit represents net sales less cost of goods sold. Gross profit for the three months ended March 31, 2010 was $36.7 million,
a decrease of $33.1 million, or 47.4%, as compared to $69.8 million for the same period in 2009. Gross margin decreased to 21.7% for the three months ended March 31, 2010 versus 36.6% for the same period in 2009. The change in gross profit was
primarily due to lower selling prices which had an unfavorable effect of $44.8 million. This was partially offset by favorable sales volume and mix which resulted in a net favorable effect of $11.7 million. Cost of goods sold on a replacement cost
basis would have been $8.3 million lower for the first quarter due to U.S. raw material cost resets effective January 1, 2010, but this benefit was delayed until the second quarter due to sale of existing higher cost inventory which was
depleted in the first quarter 2010.

Operating Expenses and Research and Development

Operating expenses consist primarily of selling, general and administrative, and R&D expenses. For the three months ended
March 31, 2010, these costs were $15.1 million, an increase of $0.6 million, or 4.1%, as compared to $14.5 million for the same period in 2009.

Operating Income

Operating income for the three months ended March 31, 2010 was $21.6 million, a decrease of $33.7 million, or 60.9%, as compared to
$55.3 million for the same period in 2009. Included in these results was break-even operating income for GTSP & Other for the three months ended March 31, 2010 compared to a $1.9 million loss for the same period in 2009. Operating
income as a percentage of net sales for the Company decreased to 12.8% versus 29.0% for the same period in 2009.

Interest
Expense, net

Net interest expense, including deferred financing amortization expense, for the three months ended
March 31, 2010 was $4.4 million, a decrease of $1.7 million, compared to $6.1 million for the same period in 2009. This decrease is primarily due to the pay off of the remaining balance of the Term Loan in the second quarter of 2009.

Foreign Exchange

Foreign exchange gain for the three months ended March 31, 2010 was $0.2 million compared to a loss of $0.4 million for the same
period in 2009. The U.S. dollar is the functional currency of our Mexican and Canadian operations. Consequently, foreign exchange gain or loss is recorded on remeasurement of non-U.S. dollar denominated monetary assets and liabilities. Such gains
and losses fluctuate from period to period as the foreign currencies strengthen or weaken against the U.S. dollar and the amount of non-U.S. dollar denominated assets and liabilities increases or decreases.

Provision for Income Taxes

The effective income tax rate on income before taxes was 35% for the three months ended March 31, 2010 compared to 36% for the same
period in 2009. The change in the effective tax rate is a result of a shift of earnings before tax combined with a change in tax rates for our operations in multiple tax jurisdictions.

Net Income

Net income for the three months ended March 31, 2010 was $11.3 million, a decrease of $20.1 million, compared to net income of $31.4
million for the same period in 2009, due to the factors described above.



25



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##### Table of Contents

Segment Reporting

The company reports its operations in three reporting segmentsUnited States, Mexico and Canada, each of which sells the entire
portfolio of products. The primary performance indicators for the chief operating decision maker are sales and operating income, with sales on a ship-from basis. The following table sets forth the historical results of these indicators by segment:



|                                        |  |                                  |         |   |                                  |   |         |                    |  |       |   
|--------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | ------------------ |  | ----- | --
|                                        |  | Three months endedMarch 
31,2010 |         |   | Three months endedMarch 
31,2009 |   |         | Net Sales % Change | 
|Segment Net Sales                       |  |                                  |         |   |                                  |   |         |                    |  |       |   
|United States                           |  | $                                | 113,613 |   |                                  | $ | 122,185 |                    |  | (7.0  | %)
|Mexico                                  |  |                                  | 45,607  |   |                                  |   | 58,427  |                    |  | (21.9 | %)
|Canada                                  |  |                                  | 9,787   |   |                                  |   | 10,205  |                    |  | (4.1  | %)
|                                        |  |                                  |         |   |                                  |   |         |                    |  |       |   
|Total                                   |  | $                                | 169,007 |   |                                  | $ | 190,817 |                    |  | (11.4 | %)
|                                        |  |                                  |         |   |                                  |   |         |                    |  |       |   
|Segment Operating Income                |  |                                  |         |   |                                  |   |         |                    |  |       |   
|United States                           |  | $                                | 18,362  |   |                                  | $ | 40,873  |                    |  |       |   
|Mexico                                  |  |                                  | 1,536   |   |                                  |   | 7,517   |                    |  |       |   
|Canada                                  |  |                                  | 1,727   |   |                                  |   | 6,898   |                    |  |       |   
|                                        |  |                                  |         |   |                                  |   |         |                    |  |       |   
|Total                                   |  | $                                | 21,625  |   |                                  | $ | 55,288  |                    |  |       |   
|                                        |  |                                  |         |   |                                  |   |         |                    |  |       |   
|Segment Operating Income % of net sales |  |                                  |         |   |                                  |   |         |                    |  |       |   
|United States                           |  |                                  | 16.2    | % |                                  |   | 33.5    | %                  |  |       |   
|Mexico                                  |  |                                  | 3.4     | % |                                  |   | 12.9    | %                  |  |       |   
|Canada                                  |  |                                  | 17.6    | % |                                  |   | 67.6    | %                  |  |       |   

Beginning with the quarterly period ending June 30, 2010, the Company will report its
operations on three new reporting segments  Specialty Phosphates U.S. & Canada, Specialty Phosphates Mexico and GTSP & Other. For the three months ended March 31, 2010 net sales and operating income for GTSP &
Other was $12.4 million and break-even respectively compared to $17.7 million and a loss of $1.9 million respectively for the same period in 2009.

Three months ended March 31, 2010 compared to the three months ended March 31, 2009

Segment Net Sales:

In the United States net sales decreased 7.0% for the three months ended March 31, 2010 when compared with the same period in 2009.
Selling prices decreased 27.6% with decreases across all product lines. Volume and mix impact upon revenue was an increase of 20.6% with increases across all product lines but most notably in Specialty Salts and Specialty Acids.

In Mexico net sales decreased 21.9% for the three months ended March 31, 2010 when compared with the same period in 2009 primarily
due to lower selling prices across all product lines.

In Canada net sales decreased 4.1% for the three months ended
March 31, 2010 when compared with the same period in 2009. Selling prices decreased sales by 25.1% which occurred across all product lines. Volume and mix impact upon revenue was an increase of 21.0% which occurred across all product lines.

Segment Operating Income % of Net Sales:

The 17.3% decrease in the United States for the three months ended March 31, 2010 compared with the same period in 2009 is mainly due
to decreased selling prices, and increased manufacturing expenses, mainly inventory related, partially offset by increased volume and mix impact on revenue and slightly lower raw material costs which did not reflect lower raw material replacement
costs effective January 1, 2010 due to the sale of existing higher cost inventories in the first quarter 2010.

The 9.5%
decrease in Mexico for the three months ended March 31, 2010 compared with the same period in 2009 is mainly due to decreased selling prices partially offset by decreased manufacturing expenses, mainly inventory related. Mexico results did not
realize the full benefit of lower rock costs for 2010 due to the sale of existing higher cost inventories in the first quarter 2010.



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The 50.0% decrease in Canada for the three months ended March 31, 2010 compared with
the same period in 2009 is primarily due to lower selling prices partially offset by favorable volume and mix impacts on revenue and lower raw material costs.

During the three month period ending March 31, 2010 depreciation and amortization expense was $6.9 million in the United States,
$0.5 million in Canada, and $5.2 million in Mexico.

Liquidity and Capital Resources

The following table sets forth a summary of the Companys cash flows for the periods indicated.



|                     |  |                                  |      |   |                                  |   |       |  
|-------------------- |  | -------------------------------- | ---- | - | -------------------------------- | - | ----- | -
|                     |  | Three months endedMarch 
31,2010 |      |   | Three months endedMarch 
31,2009 |  
|Operating Activities |  | $                                | (6.5 | ) |                                  | $ | 71.8  |  
|Investing Activities |  |                                  | (7.2 | ) |                                  |   | (3.1  | )
|Financing Activities |  |                                  | (3.5 | ) |                                  |   | (57.7 | )

Three months ended March 31,
2010 compared to three months ended March 31, 2009

Net cash from operating activities was a use of $6.5 million
for the three months ended March 31, 2010 as compared to source of $71.8 million for the same period in 2009, a decrease in cash of $78.3 million. The decrease in operating activities cash resulted primarily from unfavorable changes of $58.5
million in working capital and $20.1 million in net income as described earlier.

The change in working capital is a use of
cash of $30.8 million in 2010 compared to a source of cash of $27.7 million in 2009, a decrease in cash of $58.5 million. The decrease in cash is mainly due to increases in accounts receivable (due to sales increases on a sequential basis), and
decreased other current liabilities (mainly accrued short term incentive and other accruals).

Net cash used for investing
activities was $7.2 million for the three months ended March 31, 2010, compared to $3.1 million for the same period in 2009, an increase in the use of cash of $4.1 million. This increase was mainly due to the Companys enterprise resource
planning, or ERP, system and business process redesign project.

In the second quarter of 2009 the Company launched an ERP
project to upgrade its systems technology and to improve its position as a reliable specialty phosphate supplier. To date the Company has spent approximately $15.3 million on this project, of which approximately $8.7 million was capitalized as of
March 31, 2010, and future expenditures on the ERP project are expected to total approximately $8 to $10 million by the end of 2010, with the majority of this spending anticipated as capital expenditures.

The Company is investing to grow its food, beverage and pharmaceutical phosphate business, especially geographically, and also to
diversify its raw material supply long term. Projects are underway in the U.S. to debottleneck and increase production capabilities of various specialty salts. Additionally, in conjunction with the investment in the Coatzacoalcos facility to more
than double its existing food grade purified phosphoric acid capacity which was completed in the first quarter 2010, the site personnel have conducted successful production tests of several additional food grade salts to enable a shift in focus from
detergency to the multiple food market segments served by salts and acid.

Innophos currently estimates that full exploration
costs to a proven reserves standard for the Santo Domingo deposit could require expenditures of $10 to $15 million over a three year period, inclusive of expenditures to date. This estimate includes mineral rights payments, taxes, mineral
resource measurement, beneficiation process design and completion of feasibility studies. Full expenditures would only occur if interim milestone goals were successfully attained. It is estimated that 2010 expenditures will be approximately $1 to $2
million with efforts primarily focused on the Santo Domingo deposit. Innophos intends to seek one or more partners for these efforts, but anticipates no difficulties in completing the exploration phase without a partnership.

Management projects total 2010 capital expenditures to approximate $30 to $35 million.

Net cash from financing activities for the three months ended March 31, 2010 was a use of $3.5 million compared to $57.7 million for
the same period in 2009, an increase in cash of $54.2 million. This is mainly due to a $54.0 million Term Loan principal payment in 2009.

Holdings redeemed for cash all remaining $56.0 million of the Senior Unsecured Notes on April 15, 2010, the Redemption Date. The
redemption price for the Notes was 100% of the principal amount plus accrued interest of $2.7 million to the Redemption Date.

We believe that on-hand cash combined with cash generated from operations, including our Mexican operations, will be sufficient to meet
our obligations such as debt service, tax payments, capital expenditures and working capital requirements for at least



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the next twelve months. We expect to fund all these obligations through our existing cash and our future operating cash flows. However, future operating performance for the Company is subject to
prevailing economic and competitive conditions and various other factors that are uncertain. If the cash flows and other capital resources available to the Company are insufficient to fund our debt and other liquidity needs, the Company may have to
take alternative actions that differ from the Companys current operating plan.

Were subject to Rhodias
ability to perform its obligations under our 2004 acquisition agreements, primarily to indemnify us (or provide security) against potential liabilities such as the CNA Fresh Water Claims currently estimated at $25 million for the periods through
2002. Even though our indemnification rights have been confirmed by court judgments, ultimately we are also dependent on Rhodia having sufficient financial capacity to meet its obligations should they arise. Rhodias financial position has
improved significantly in recent quarters and we currently see no reason to suspect they would be unable to meet their obligations.

If the CNA Fresh Water Claims were sustained for the periods through 2002, it is possible that the CNA would seek to claim similar higher
duties, fees and other charges for fresh water extraction and usage from 2005 on into the future (2003 and 2004 are believed to be beyond the statute of limitations). Management estimates that amounts involved would be approximately $13 million of
additional basic charges, interest, inflation, and penalties, and, under current operating conditions, approximately $1.2 million of additional basic charges per year. Although not included in our court judgments in the New York Litigation against
Rhodia, we believe Rhodia is required to indemnify us fully for post-closing losses caused by breaches of covenants set forth in the agreement. Rhodia has contested indemnification responsibility for those breaches, but its motion for
partial summary judgment to dismiss our claims was denied by the New York trial court in January 2009. It is possible that the New York Litigation will proceed to trial or involve further motions to resolve remaining issues.



|                                            |  |                           |         |      |   |         |  |      |        |      |   |        |  |            |        |  |   |         |  |   |        
|------------------------------------------- |  | ------------------------- | ------- | ---- | - | ------- |  | ---- | ------ | ---- | - | ------ |  | ---------- | ------ |  | - | ------- |  | - | -------
|                                            |  | Years ending December 31,
|Contractual Obligations                     |  | Total                     |         | 2010 |   | 2011    |  | 2012 |        | 2013 |   | 2014   |  | Thereafter
|2004 Senior Subordinated Notes Due 2014 (1) |  |                           | 265,882 |      |   | 8,431   |  |      | 16,863 |      |   | 16,862 |  |            | 16,863 |  |   | 206,863 |  |   |       
|Future service pension benefits             |  |                           | 9,632   |      |   | 537     |  |      | 642    |      |   | 735    |  |            | 825    |  |   | 902     |  |   | 5,991  
|Other (2)                                   |  |                           | 459,249 |      |   | 89,845  |  |      | 48,764 |      |   | 48,764 |  |            | 48,764 |  |   | 48,764  |  |   | 174,348
|Operating leases                            |  |                           | 18,538  |      |   | 4,111   |  |      | 3,688  |      |   | 2,824  |  |            | 2,690  |  |   | 2,246   |  |   | 2,979  
|                                            |  |                           |         |      |   |         |  |      |        |      |   |        |  |            |        |  |   |         |  |   |        
|Total contractual cash obligations (3)      |  | $                         | 753,301 |      | $ | 102,924 |  | $    | 69,957 |      | $ | 69,185 |  | $          | 69,142 |  | $ | 258,775 |  | $ | 183,318
|                                            |  |                           |         |      |   |         |  |      |        |      |   |        |  |            |        |  |   |         |  |   |        



|(1) | Amounts include fixed rate interest payments at 8.875% for years 2010 and thereafter.
|--- | -------------------------------------------------------------------------------------

|(2) | Represents minimum annual purchase commitments to buy raw materials from suppliers.
|--- | -----------------------------------------------------------------------------------

|(3) | Does not reflect the $56.0 million Senior Unsecured Notes which were issued by our ultimate parent, Innophos Holdings, Inc. on April 16, 2007. Holdings redeemed
for cash all remaining $56.0 million of the Senior Unsecured Notes on April 15, 2010, the Redemption Date. The redemption price for the Notes was 100% of the principal amount plus accrued interest to the Redemption Date.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical Accounting Estimates

There have been no material changes from the critical accounting estimates previously disclosed in our 2009 Annual Report on Form 10-K.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

We are exposed to certain market risks as part of our ongoing business operations. Primary exposures include changes in interest rates, as
borrowings under our Loan Agreement will bear interest at floating rates based on LIBOR plus an applicable borrowing margin. We manage our interest rate risk by balancing the amount of fixed-rate and floating-rate debt to the extent practicable
consistent with our credit status. For fixed-rate debt, interest rate changes do not affect earnings or cash flows. Conversely, for floating-rate debt, interest rate changes generally affect our earnings and cash flows, assuming other factors are
held constant.

At March 31, 2010, we had $190.0 million principal amount of fixed-rate debt and a $65.0 million
revolving credit facility, of which we had $53.0 million available above the minimum excess availability requirements, which has not been drawn upon. In addition, Innophos Holdings, Inc. had $56.0 million of senior unsecured notes. Holdings redeemed
for cash all remaining $56.0 million of the Senior Unsecured Notes on April 15, 2010, the Redemption Date. As all of the business for Innophos Holdings, Inc. is transacted through Innophos, Inc. and its subsidiaries, Innophos Holdings, Inc. is
dependent on the earnings and the distribution of funds from Innophos, Inc. and subsidiaries.

Changes in economic conditions
could result in higher interest rates, thereby increasing our interest expense should we need to draw on our revolving line of credit. Changes in economic conditions may also result in higher other operating expenses, reducing our



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funds available for capital investment, operations or other purposes. In addition, a substantial portion of our cash flow must be used to service debt, which may affect our ability to make future
acquisitions or capital expenditures. We may from time to time use interest rate protection agreements to minimize our exposure to interest rate fluctuation. Regardless of hedges, we may experience economic loss and a negative impact on earnings or
net assets as a result of interest rate fluctuations.

We do not currently, but may from time to time, hedge our commodity,
interest rate or currency rate risks.

We believe that our concentration of credit risk related to trade accounts receivable
is limited since these receivables are spread among a number of customers and are geographically dispersed. Our largest customer in 2008 represented 11% of that years sales, otherwise, no other customer accounted for more than 10% of our sales
in the last 3 years.

Foreign Currency Exchange Rates

The U.S. dollar is the functional currency of the Canadian and Mexican operations. Accordingly, these operations monetary assets and
liabilities are translated at current exchange rates, non-monetary assets and liabilities are translated at historical exchange rates, and revenue and expenses are translated at average exchange rates and at historical exchange rates for the related
revenue and expenses of non-monetary assets and liabilities. All translation gains and losses are included in net income.

Our
principal source of exchange rate exposure in our foreign operations consists of expenses, such as labor expenses, which are denominated in the foreign currency of the country in which we operate. A decline in the value of the U.S. dollar relative
to the local currency would generally cause our operational expenses (particularly labor costs) to increase (conversely, a decline in the value of the foreign currency relative to the U.S. dollar would cause these expenses to decrease). We believe
that normal exchange rate fluctuations consistent with recent historical trends would have a modest impact on our expenses, and would not materially affect our financial condition or results of operations. Nearly all of our sales are denominated in
U.S. dollars and our exchange rate exposure in terms of sales revenues is minimal.

Inflation and changing prices

Our costs and expenses will be subject to inflation and price fluctuations. Significant price fluctuations in raw materials, freight, and
energy costs, if not compensated for by cost savings from production efficiencies or price increases passed on to customers, could have a material effect on our financial condition and results of operations.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.



|ITEM 4T. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Disclosure Control and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934) that are designed to provide reasonable assurance that information required to be reported in the Companys consolidated financial statements and filings is recorded, processed, summarized and reported within the periods specified in the
rules and forms of the Securities and Exchange Commission, or SEC, and that such information is accumulated and communicated to the Companys management, including its principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

As of March 31, 2010, the Company completed an evaluation under the supervision and with the participation of the Companys
management, including the Companys principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based upon that evaluation, the
Principal Executive Officer and Principal Financial Officer concluded that the Companys disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during or with respect to the first quarter of 2010 that have
materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

The
information set forth in Note 11 to our consolidated condensed financial statements, Commitments and Contingencies, contained in this Quarterly Report on Form 10-Q is incorporated herein by reference.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There have
been no material changes from the risk factors previously disclosed in our 2009 Annual Report on Form 10-K.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|ITEM 4. | (REMOVED AND RESERVED)
|------- | ----------------------



|ITEM 5. | OTHER INFORMATION
|------- | -----------------

None.



|ITEM 6. | EXHIBITS
|------- | --------

(a)
Exhibits. The following exhibits are filed or furnished as part of this report:



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                      
|4.8         |  | Forms of Exhibits to the Loan and Security Agreement dated May 22, 2009 by and among Innophos, Inc. and Innophos Canada, Inc., as Borrowers, and Wachovia Bank, National Association,
TD Bank, N.A. and Israel Discount Bank, Wachovia Bank, National Association, as Administrative and Collateral Agent for Lenders, and Wachovia Capital Markets LLC, as Syndication Agent, Lead Arranger and Lead Bookrunner.
|            | 
|31.1        |  | Certification of Principal Executive Officer dated May 7, 2010 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         
|            | 
|31.2        |  | Certification of Principal Financial Officer dated May 7, 2010 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         
|            | 
|32.1*       |  | Certification of Principal Executive Officer dated May 7, 2010 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         
|            | 
|32.2*       |  | Certification of Principal Financial Officer dated May 7, 2010 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         



|* | Not to be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor deemed to be
incorporated by reference into any filing under that Act or the Securities Act of 1933.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.



INNOPHOS, INC./s/ Randolph GressBy:

Randolph GressIts:

Chief Executive Officer and Director(Principal Executive Officer)Dated: May 7, 2010INNOPHOS, INC./s/ Neil I. SalmonBy:

Neil I. SalmonIts:

Vice President and Chief Financial Officer(Principal Financial Officer)Dated: May 7, 2010




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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                      
|4.8         |  | Forms of Exhibits to the Loan and Security Agreement dated May 22, 2009 by and among Innophos, Inc. and Innophos Canada, Inc., as Borrowers, and Wachovia Bank, National Association,
TD Bank, N.A. and Israel Discount Bank, Wachovia Bank, National Association, as Administrative and Collateral Agent for Lenders, and Wachovia Capital Markets LLC, as Syndication Agent, Lead Arranger and Lead Bookrunner.
|            | 
|31.1        |  | Certification of Principal Executive Officer dated May 7, 2010 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         
|            | 
|31.2        |  | Certification of Principal Financial Officer dated May 7, 2010 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         
|            | 
|32.1        |  | Certification of Principal Executive Officer dated May 7, 2010 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         
|            | 
|32.2        |  | Certification of Principal Financial Officer dated May 7, 2010 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                         



32